Briefing Report: California LifeLine Program

Thursday, March 6, 2014

On January 16, 2014 the California Public Utilities Commission (CPUC) approved the expansion of the California LifeLine Program.  The LifeLine Program will now include wireless telephone service and low-income California residents without social security numbers (SSN), but who have some form of valid government-issued identification, will be eligible to enroll in the program.

History

The Moore Universal Telephone Service Act (hereinafter “the Act”)1 was passed in 1983.  The Act required the CPUC to design and implement a program to “ensure the availability of basic local minimum telephone service, and to encourage the equitable sharing of the costs of that service among all users of telecommunications services…”  Thus, the CPUC created the LifeLine Program which provides discounted basic landline telephone service to qualified California residents.  The program is funded by a surcharge on all-end-user customer billings, except for those enrolled in the LifeLine Program, for intrastate telecommunications services.  The current LifeLine surcharge rate is 1.150%.

Landline Service

California’s LifeLine Program offers discounted landline service either as a flat-rate local telephone service or measured local telephone service.  The flat-rate service offers unlimited local calls and charges the lesser of the range $5.47 to $6.84 or half of the carrier’s residential flat-rate local telephone service.  The measured service offers 60 local calls per month, with additional calls billed at a different rate depending on the carrier, and charges the lesser of the range $2.91 to $3.66 or half of the carrier’s residential measured rate for local phone service.  LifeLine limits the service connection charge to $10, waives deposits for local phone service, provides toll restriction and toll blocking services for free, and exempts participants from paying federal, state, and local taxes or surcharges.

Eligibility

A resident may qualify for the California LifeLine Program if the applicant or another person in the household is enrolled in any one of the following:  Medicaid/Medi-Cal; Low Income Home Energy Assistance Program; Supplemental Security Income; Federal Public Housing Assistance or Section 8; CalFresh, Food Stamps, or Supplemental Nutrition Assistance Program; Women, Infants and Children Program; Healthy Families Category A; National School Lunch Program; Temporary Assistance for Needy Families (TANF); Tribal TANF; Bureau of Indian Affairs General Assistance; Head Start Income Eligible (Tribal only); and Food Distribution Programs on Indian Reservations.  A person may also qualify for the LifeLine Program if the household’s total annual gross income is at or less than the following limits:  $25,100 for 1-2 member households; $29,300 for 3 member households; and $35,400 for 4 member households.  For households larger than four, the income limit increases by $6,100 for each additional household member.  For applicants qualifying on an income basis, documentation is required to show the household income is within the annual income limits.

New applications to the LifeLine Program must be approved by the California LifeLine Administrator prior to receiving the discount.  The applicant must submit a completed application and the appropriate documentation to show the applicant qualifies for the telephone discount.  Only one discount is allowed per household for each residential address. In order to continue receiving the LifeLine discount, a participant must complete an annual renewal form.

Applicants meeting the program requirements may choose to receive a discount on landline service through California’s program or on wireless service through the federal Lifeline program.  Within the federal program there are four approved wireless service providers in California.  Each of the providers offers different calling features and contractual arrangements.

CPUC Rulemaking 11-03-013

Last month the CPUC approved a proposed decision by Commissioner Catherine J.K. Sandoval to expand the California LifeLine Program.  In an announcement regarding the Rulemaking, Commissioner Sandoval stated, “This decision …gives LifeLine-eligible Californians new wireline and wireless options to connect with employers, schools, businesses, and social services through voice, text, or data.”

The expanded program will provide $5.75/mo. in reimbursement to the LifeLine carrier when an eligible participant chooses a wireless plan offering 501-999 minutes and $12.65/mo. to a carrier for an eligible participant with a wireless plan offering 1,000 minutes or more per month.  The LifeLine carrier will also be eligible to receive $9.25/mo. in federal Lifeline funds.

The decision states a LifeLine participant may not be forced to choose a plan bundled with video or data, or a family plan in order to be eligible for the LifeLine discount.  The LifeLine carriers must offer one plan that contains only LifeLine-compliant voice services and may contain domestic messaging.  The carriers must allow a participant to apply the LifeLine discount to other plans, including family and promotional plans, which contain LifeLine-compliant telephone services.  For plans with 1,000 or more voice minutes, the carrier must provide unlimited access to several three-digit special service numbers including, but not limited to, 211 (Community Information and Referral Services), 311 (Non-emergency Police and other Governmental Services, 511 (Traffic and Transportation Information), 611 (Repair Services), and 911 (Emergency Services).

It is anticipated that the inclusion of wireless services within the California LifeLine Program will increase the number of applicants.  To address this anticipated increase and resulting impact to the LifeLine fund, the CPUC is freezing the reimbursement amounts available to LifeLine carriers until June 30, 2015.

The CPUC’s decision will also begin a process to allow eligible low-income residents, who do not have SSNs, to apply for the LifeLine Program.  These residents must have a valid government-issued identification, be otherwise qualified for the LifeLine Program, and have the supporting documents required for eligibility.  The CPUC asserts this expansion is necessary to facilitate public safety and economic participation and is not inconsistent with federal rules.  For fraud prevention reasons the federal Lifeline program requires an applicant to provide the last four digits of his/her SSN.

Participants who do not have SSNs will ONLY be eligible for support from the California LifeLine Program.  The CPUC intends to request a waiver from the Federal Communications Commission (FCC) for the SSN requirement in order to access federal Lifeline funding.  The CPUC asserts California’s strong LifeLine Program management rules and computer database deters fraud and catches duplicate claims before LifeLine service is authorized.

Conclusion

The original Act stated, “Communication by telephone is a basic human need in modern society, and must be made available to all Californians at reasonable cost for basic minimum use.”  The Act charged the CPUC with designating “a class of universal telephone service necessary to meet minimum residential communications needs, including access to telephone service for emergency communications with public agencies and private medical services and for additionally maintaining necessary social contacts by the elderly, the handicapped, and the infirm.”

Thirty years later, LifeLine has morphed into a potentially costly program that no longer meets its original intent.  Consumers’ need for basic telephone services were met through the provision of landline services.  Everyone in the residence had access to the telephone and it was provided at a reasonable rate.  The fact that the number of LifeLine applicants has been declining over the years is not justification for an expansion of the program into wireless services.  When a consumer chooses to forego the California LifeLine Program and opt for unsubsidized wireless service, they are making a personal decision regarding their budget priorities.  California ratepayers should not have to pay to accommodate an individual’s preference for a subsidized wireless phone over a landline phone.

The LifeLine Program was intended to ensure residents had access to telephone services for emergency communications.  In fact, the recent CPUC decision states, “… LifeLine service promotes access to affordable telecommunications services, public safety, and creates safer communities.”  How is this condition met when the telephone does not remain in the house?  What will happen when Mom or Dad takes the phone to work and Grandma is at home with the kids and an accident occurs?  How is Grandma supposed to call for help when there is no phone in the house?  Furthermore, the CPUC decision does not require a California LifeLine wireless telephone service work inside the home; although it is required with landline service.2  The CPUC stated, “By continuing to require that LifeLine wireline work inside the home, Caifornia LifeLine participants will have the option of choosing a LifeLine telephone service that is required to work inside the home if that is an aspect of their minimum communications needs they value highly.”

The CPUC argues this expansion will connect California residents to employers, schools, businesses, and social services, but that goal was and could continue to be met by the existing LifeLine Program.  This new program simply increases costs to other telecommunication ratepayers in order to accommodate a technology preference rather than provide a basic service.  Additionally, this new program creates a public safety issue for the family members at home without access to a telephone and raises the potential for fraud within the system. 




1 The Moore Universal Telephone Service Act was originally enacted in Chapter 1143 of the Statutes of 1983.  The legislation contained a sunset provision to repeal the Act as of January 1, 1989.  In 1987 the original Act was repealed and recast in Public Utilities Code §§ 871 et seq. by Chapter 163 of the Statutes of 1987.
2 California Public Utilities Commission, Rulemaking 11-03-013, Page 58.

For more information on this report or other Energy issues, contact Kerry Yoshida, Senate Republican Office of Policy at 916/651-1501.