Carriers Resist Possible Calif. LifeLine Changes

The CPUC staff plan would provide an SSA up to $20.75, increase the wireless broadband allowance MSS to 25 GB from 5 GB, and boost the wireline broadband speed MSS to 100 Mbps download and 20 Mbps upload from 25/3 Mbps currently (see 2311070045). For wireless, staff proposed a “dynamic approach” where a LifeLine participant would move between two tiers “automatically based on their monthly data consumption without need for action.” Tier 1 would offer 5 GB of data with a fixed SSA of up to $10.75, while Tier 2 would provide 25 GB of data and 10 GB hot spot data with a fixed subsidy of up to $20.75.

The CPUC staff proposal is “untethered from marketplace realities and is not economically feasible for the vast majority of California LifeLine providers,” said the National Lifeline Association, representing many wireless LifeLine providers. The proposed dynamic approach "would be unfair, extremely difficult to implement in practice, and would wreak havoc on business planning, forecasting and investment,” NaLA commented. The association proposed a $20.75 California SSA, which would be combined with $9.25 from federal Lifeline, and an MSS of “no more than unlimited voice, text and 6 GB.” That would restrict outliers while allowing most LifeLine providers “to meet the minimum and compete to improve offerings to serve low-income households,” it said.

“No retail wireless or wireline broadband offering currently in existence entails the sort of continuous monthly monitoring of usage required to satisfy the Staff Proposal’s dynamic MSS conditions,” Verizon’s TracFone Wireless commented. Staff seem to believe -- incorrectly -- that many LifeLine consumers don’t buy more data because they don’t want it, added TracFone: The true reason might be that they can’t afford it. T-Mobile's Assurance Wireless agreed that the two-tier plan would be "logistically challenging and highly inefficient to implement.” Instead, the CPUC should "tie a single fixed SSA amount to a single MSS tier capped at 6 GB and give LifeLine providers the option to offer supplemental data to customers exceeding this data usage threshold."

Staff’s dynamic plan received support from the Center for Accessible Technology. “Customers’ selections of higher data plans are the result of providers’ marketing efforts, rather than those customers’ actual data needs,” CforAT said. “The current system, where carriers upsell customers with large data plans without regard for actual usage, incentivizes providers to engage in arbitrage, because they can accept a subsidy that pays for far more data than what LifeLine participants actually use.” A performance-based structure “will more appropriately compensate providers while maintaining the stability of the LifeLine fund,” it said. However, the CPUC’s independent Public Advocates Office (PAO) urged higher data allotments for both proposed wireless tiers.

TracFone also disagreed with a proposed network management rule for wireless providers, which would say, "Service providers may not throttle speeds … except in accordance with reasonable network management practices, such as during an emergency where first responders require priority above other customers.” The carrier said, "Although network management often occurs during emergencies, it is in no way limited to such events." TracFone will perform the same network management for LifeLine plans as it does for “analogous non-LifeLine plans at an equivalent price point,” it said. “However, Verizon and TracFone require the freedom to employ network management practices that prioritize the data for other plans at higher price points that provide different data offerings and speeds.”

Others raised concerns with staff’s wireline proposal. For that technology, CPUC staff proposed setting a voice-only tier SSA that would equal the lesser of $20.75 or 55% of a wireline service provider’s combined rate and end-user common line charge. For a second tier bundling voice and broadband, staff proposed a fixed $20.75 SSA.

AT&T supports setting an SSA specific to each voice provider but disagrees with creating a $20.75 cap or changing advice letter requirements, the carrier commented. Meanwhile, Charter Communications said the proposed wireline SSA changes could lead to higher rates and discourage participation.

A small RLEC coalition said the proposal "overlooks the impact on rate-of-return carriers and their customers, creates the possibility of substantial rate increases for low-income households and potential shortfalls for carriers, and improperly perpetuates the fixation on broadband and data ‘bundles’ that has dominated LifeLine reforms for the past several years.” The CPUC should adopt the proposal's "recommendation to fix the SSA at $20.75 as an interim step and aggressively pursue Legislative solutions that will provide more comprehensive, long-term options to usher the LifeLine program into the broadband era," the rural telcos said.

"The wireline SSA falls short for voice only customers, as the inclusion of a copayment is harmful to low-income customers especially for customers in high-cost areas,” commented PAO: Give those customers the full $20.75. Also, PAO questioned the staff proposal omitting stand-alone broadband plans, especially given the FCC's affordable care program funding could run out soon.

The CPUC must stop setting SSA based on the highest basic service rate for carriers of last resort (COLRs), which has been AT&T's rate for about a decade, said The Utility Reform Network. If the commission grants AT&T’s pending application to end its COLR obligations (see 2312200071), the 2025 SSA would decrease by about 18%, commented TURN. While the consumer group said it generally supported staff’s proposal, it noted that the wireline section doesn't address what will happen if the FCC eliminates federal Lifeline support for voice-only service. The CPUC can't "plan the California LifeLine wireline SSA around the assumption that the FCC will reverse course or indefinitely continue its moratorium on voice-only support.”

Some asked the CPUC to host talks with stakeholders before moving forward with a proposed decision. Small RLECs suggested that the CPUC “take stock of the fate of the ACP program over the next few weeks and then convene a workshop to discuss options.”

Cox voiced concerns with the timing of a proposal that would overturn longtime policies in the midst of a pending comprehensive California LifeLine review. There seems to be no pressing need to change MSS or SSA, said Cox: Before making such major changes, the CPUC should let pending LifeLine pilot projects finish, respond to a May 2022 program assessment and see what happens with ACP funding and upcoming changes to federal Lifeline.