Introduction
The CHCF-B Fund, provides subsidies to phone companies in high cost areas of the state. This is a proceeding opened to satisfy the requirements for review of the B-Fund program; institute urgently-needed reforms; and respond to concerns of the Legislature, consumer groups, and DRA as to the size of the fund. The docket is R.06-06-028. For more information, visit CPUC_CHCF-B.
Advocacy
Due largely to DRA's analysis and comments, the Commission in September 2007 voted unanimously (D.07-09-020) to reduce the “California High Cost Fund B” (CHCF-B) by over 70 percent (while preserving its operation in limited areas). Ratepayers are expected to save approximately $300 million annually on customer phone bill.
About
- The CHCF-B was designed to promote universal phone service by protecting people living in areas determined as “high-cost” from being charged higher rates for basic phone service. The first Commission Ruling was issued on June 29, 2006. D.07-11-039 and D.08-04-061 modified D.07-09-020 and resolved TURN’s Application for Rehearing of Decision 07-09-020. DRA filed its Response on October 24, 2007.
- The fund reimburses large ILECs (like AT&T and Verizon) for charging rural and suburban customers similar rates to urban customers, who because of greater density, are less costly to serve. However, the Commission agreed with DRA that, especially given the pricing flexibility allowed in the newly de-regulated telecommunications environment, the connection between payments to ILECs and service provision to purportedly high-cost customers has become increasingly hazy. Changes in population density have resulted in areas that were once “high-cost” have become much less so with increasing population density. However, many of these areas are still being subsidized. Since the original Decision designating areas as “high-cost” was issued in 1996, and was based on cost data older than that, the “high-cost” designations are likely no longer accurate.
- The Commission proceeding reviewing the CHCF-B, required by Senate Bill (SB) 1276, will continue with consideration of the issue of updating the determination of “high-cost areas” to be subsidized.
- Phase 2 of this proceeding is examining the sequencing, coordination, design, and implementation issues relating to a reverse auction mechanism and cost proxy model updating. The Ruling outlining Phase 2 issues was issued on October 5, 2007. DRA filed Opening and Reply Comments on November 9 and 28, 2007 respectively.
- Meanwhile, in December 2007 the Commission voted unanimously (D.07-12-054) to implement the California Advanced Services Fund (CASF). This fund will use a limited amount of the remaining funds from the reduced CHCF-B to subsidize the building of broadband infrastructure in currently unserved and underserved areas, which will help promote the state’s goal of ubiquitous broadband access. DRA filed additional Comments on the California Advanced Services Fund on February 20, 2008.