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Public utilities

Maintaining the Existing Funding Mechanism for Public Purpose Programs

Strategic Insights

— 2 min read

The California Public Utilities Commission is currently considering an order to update the surcharge mechanisms for public purpose programs, following the issuance of a rulemaking proceeding. The Voice on the Net Coalition (VON) has submitted reply comments in response to the order, arguing that the existing revenue-based funding mechanism should be maintained. VON believes that this approach is consistent with the current federal structure, complies with existing California law, and would not cause disruptions to any group of ratepayers or changes to the accounting and billing systems of contributing service providers.

Key Takeaways:

  • The FUSF contribution factor has grown from 20 percent in the first quarter of 2019 to the current 33.4 percent, resulting in calls for reform, including expansion of the revenue base to additional services and assessments based on connections or numbers.
  • VON agrees with commenters that suggest the Commission should maintain the existing revenue-based funding and not transition to a per-line fee, as it is consistent with the current federal structure and complies with existing California law.
  • RingCentral notes that California Public Utilities Code Section 285 requires registered interconnected VoIP providers to collect and remit surcharges on their California intrastate revenues, and recommends against the proposed per-line fee.
  • AT&T recommends that the Commission should not make fundamental changes to PPP assessment in the absence of changes to the FUSF contribution methodology, and that the stability of the fund would not be guaranteed by a per-line fee.
  • VON looks forward to working with the Commission and other stakeholders on charting a course that would provide stability in the funding of PPPs that is consistent with both state and federal law.

Statistics:

  • The FUSF contribution factor has grown from 20 percent in the first quarter of 2019 to the current 33.4 percent.
  • VON has been active in the reform of the contribution methodology used to support the FUSF for over a decade.
  • The proposal to switch to a per-line contribution mechanism would require significant modifications to service provider billing systems and would not align with the federal system.

Sources:

  • Comments before the Public Utilities Commission of the State of California, 21-03-002 Mechanisms to ensure Equity and Transparency of Fees, Taxes and Surcharges Assessed on Customers of Telecommunications Services in California.
  • Reply comments of the Voice on the Net Coalition, 21-03-002.
  • Opening comments of RingCentral, Inc., 21-03-002.
  • Opening comments of AT&T, 21-03-002.
  • Letter from the Ad Hoc Telecommunications User Committee, FCC Docket 06-122, filed April 22, 2021.
  • Recommended Decision of the State Members of the Federal-State Joint Board on Universal Service, FCC Docket No. 06-122, filed October 15, 2019.
  • We Need to Fundamentally Rethink How USF Programs are Funded, AT&T Public Policy Blog, posted July 21, 2020.

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