Full Text of the Teleconnect Fund Decision of July 2015

The complete text of the 90-page decision addressing discount rate changes, revised eligibility requirements and other changes can be found here: Decision on CTF Phase 1 and 2- July 23 2105-153445700

PUC Compromise Decision on Teleconnect Fund

Since late May, much attention has been on the PUC to learn what changes were in store for the California Teleconnect Fund (CTF). PUC staff had proposed dozens of changes to the program, starting with what size organizations could participate, what programs would qualify, which carrier services would be reimbursed, and specific reporting requirements for organizations receiving the discount, as well as for the carriers participating in the program. While the proposed changes were not solely focused on community-based organizations, these nonprofit groups potentially stood to lose the most from the proposed changes (see prior posts).

The California Association of Nonprofits sent task force members and staff to meet with PUC officials. There were discussions about the disproportionate impacts on rural organizations, organizations that continue to rely on voice service for communications with their clients, and more.

In the final decision, voice service discounts were partially preserved (25% subsidy, down from 50%, beginning in July 2016). This is good news for all CTF-eligible organizations in California as it allows for continued discounted service for voice as well as internet-based VoIP service. (If you use Alternative’s VoIP service, you will receive a separate communication on this subject from us, as well as suggestions for how to maintain records to preserve your organization’s CTF eligibility in future years.)

Significant restrictions on eligibility were passed. It is likely that new requirements will preclude some community-based organizations that would have qualified in the past. Also, a new process of re-qualifying (every three years) is likely to reduce the pool of CBO recipients further.

For more information about how recent changes to the Teleconnect Fund will affect your organization’s carrier costs, email chrisf@alternativetechs.com.



We did it! Decision Postponed!

We just learned moments ago (Wed, 5/21 4:25 pm) that a vote on the Proposed Decision is being ‘held’ (postponed). We strongly suspect that this delay has been caused due to the outcry from the nonprofit community catalyzed by the action alert organized in conjunction with the California Association of Nonprofits Task Force.

We will meet again to determine next steps.  Contact ChrisF@alternativetechs.com to how to get more involved.


Legal analysis of the proposed exclusion of voice and VoIP

Cooper, White & Cooper LLP, a law firm representing small, mostly rural, telephone companies, took a look at the proposed exclusion of voice and VoIP from the CTF.  This excerpt is from the opening comments submitted to the PUC on May 11, 2015 (emphasis ours):

“… the Commission should reject those parts of the Proposed Decision which would phase out support for voice services and modify the eligibility requirements for CBOs to require the provision of direct or indirect advanced services to individuals within a community. It would constitute legal error for the Commission to adopt these proposals.” 

Insights from other parties to the proceedings

Comments from the official parties to the proceeding are starting to circulate. (Don’t worry, you don’t need to be an official party to comment to Commissioners).

The Executive Director of the California Emerging Technologies Fund, an expert in the area of advancing nonprofits in the Internet area, made great points (from direct knowledge and experience) to counter the 50% proposal, the $5 million revenue limit,  board composition proposal and more.   Here is an excerpt from their submission (emphasis ours):

“… the Commission is going in the wrong direction by requiring organizations seeking the CTF discount to engage in the eligible work in 50% of their programs. There are fewer than 5 funders in California supporting community technology programs, that explicitly mention closing the Digital Divide. Therefore the Commission is likely to cut from the CTF most of the programs doing this work…”

Hopefully, staff and the board will listen. Be sure to contact the PUC directly with your comments.

CalNonprofit Task Force on the Teleconnect Fund

Yesterday there was a conference call for members of the California Association of Nonprofits (http://calnonprofits.org). Good discussion. Interesting case of one organization with state mandate to provide voice access to a disadvantaged population – that will now likely not qualify.

They are contacting all the commissioners with their objections to the Proposed Decision. You should too.

Here is a link to the template letter that the staff of the California Association of Nonprofits put together. Members and nonmembers alike are encouraged to use it. Please do so soon.

Download the sample letter to use when contacting PUC Commissioners and staff with your concerns.

The worst parts of the Proposed Decision (& why)

Earlier posts gave a cursory summary of changes to the Teleconnect Fund, with special attention to CBO eligibility. On closer inspection, it looks worse: the 50% of mission requirement, and direct access vs. administrative use provisions.

  • If the “50% of mission” for CBOs is adopted, there will be plenty of wrangling over vagueness. But clarification will only serve to weed out the organizations with integrated programs, often the best deliverers of service.
  • The revenue limit ($5 million) may exclude very worthy organizations with effective programs. We’re all for the underdog, and small is beautiful, but this cap may not be appropriate. (Especially given that private schools are allowed endowments of up to$50 million!)
  • The board composition requirements are off-base. Board composition is not a measure of program value or social utility. In the nonprofit community, diverse boards are considered a best practice. (And don’t forget philanthropy.)
  • Removing voice and VoIP service eligibility shows a lack of understanding of both original intent and direct service nonprofits, particularly those serving disadvantaged communities that require telephones to connect the client population with their programs.

The big question is why.

The bigger question might even be “why do this at all?”  The overall economy is good, and the CTF program gets high marks for assistance to groups where help is needed.

Worst of all – the PUC isn’t sure of the effects – at least that’s what they say (emphasis ours):

“We adopt the cohort of program changes today, with the proviso that the financial impacts of these reforms should be assessed once experience with new practices yield enough data to be evaluated. This includes impacts on all stakeholders, ratepayers, CTF participants and their service-benefiting populations, telecommunications carriers and internet service providers.”

In other words, the proposal is to make the changes to eligibility now and then assess the impact later.  Isn’t the PUC already in a position to run some scenarios? We think the Commission should do more research before cutting programs – or share the data they have already.




CTF Eligibility Restrictions for Community-Based Organizations

Under the proposed criteria, your organization must have/do one of the following:

  • Education that is like a traditional school (see further notes below)
  • Direct access to computers (computer lab or drop-in, like a library)
  • Direct delivery of health care services (state licensed, accepting MediCal and MediCare)
  • Job placement services
  • 2-1-1 referral

Also, your organization must meet these new requirements:

  • The program (above) must be more than 50% of your mission
  • Your service must be supplied directly to individuals at specific geographic locations
  • Your organization must have revenues of less than $5 million (exceptions for local chapter structure)
  • Your clients must use the computer with their own fingers (exceptions for disabled, language barrier and others)
  • Your board members must live in the community the organization serves

There are further increased restrictions for organizations qualifying with health service delivery and educational instruction.

The new criteria defines education very narrowly, even as the rest of the world changes how it learns. The proposal currently reads that education is eligible when it is a “regular, ongoing, pre-school or K-12 academic educational or instructional program, that can also include ESL and language education, literacy, job training, technology instruction, and information on public benefit and social services programs eligibility and access.” Religious organizations are specifically excluded (they might qualify under the Pre- and K-12 Schools category or they may provide one the other types of instruction listed above). Planning or promoting educational instruction are “administrative functions” and are specifically excluded.

Nonprofits may qualify in the category of Health Services if they are staffed by onsite licensed personnel AND take MediCare and MediCal (or provide low cost services) AND serve designated area needs and qualify for certain FCC programs (see Proposed Decision for details).

If you are confused, contact the PUC staff. If you feel that your CTF elegibility status may be threatened, contact a PUC commissioner and ask them to vote against the Proposed Decision on OIR R.13-01-010.


Summary of Proposed Decision

The Proposed Decision on the CTF has serious implications for community-based organizations, but the comprehensive review does not focus only on eligibility questions.  Here is a brief list of proposed changes in the proposal (except those on CBO eligibility which will be in our next post):

  • Revision of goals to emphasize Californians not organizations
  • Change to emphasize “direct service” to make it clear that the CTF subsidy is targeted at in-person, hands-on access to the internet, not “administration” or “operations” costs for organizations
  • New sole focus on high-speed Internet connectivity, and elimination of voice and VoIP services
  • Emphasis on need in communities with lower rates of Internet adoption
  • Requirement to re-certify every 3 years (down from every 5 years; reporting TBD)
  • Added automatic eligibility for stand-alone Head Start facilities recognized by the State of California
  • Added public and non-profit private pre-kindergarten (private schools still eligible!)
  • Added public and nonprofit “Critical Access Hospitals”
  • Removed cap on benefit to community colleges
  • California Telehealth Network facilities (CTNs) will have to individually qualify under CBO criteria
  • Dark fiber leasing to be allowed
  • Carriers will need to post services, pricing and CTF eligibility on their websites.


Proposed Decision on CTF is not good for nonprofits


For almost 20 years nonprofits in California have benefitted from public policy passed by the state legislature that created the California Teleconnect Fund. Decision 96-10-066 holds most of the details. The basic overview is that all ratepayers in our state pay a small fee on their monthly bills to create a fund that would allow other institutions to pay reduced rates (a discount). Schools, libraries and public hospitals were all eligible to participate. Community-based organizations which administered programs in areas of job training, education and health service delivery were also able to apply and become eligible.

There was some debate at that time over which organizations would become eligible (see Decision 96-10-066), but ultimately compromises were reached and the program was established – and later expanded, to include other institutions including community colleges, 211 referral organizations and more.  (This is not intended to be a fully comprehensive history here.)

Bad news

In January 2013 the staff of the PUC put out a public notice called an Order Instituting Rulemaking. That marked the beginning of a two-year comprehensive review of the program with an intermittent series of hearing and comment periods.

Yesterday, the PUC issued a “Proposed Decision.”  It’s 84 pages and very hard to find on the PUC website so we’re making it available here:

Proposed Decision on Teleconnect Fund Order Instituting Rulemaking

If you have time, take a look. We skipped ahead to the section on CBO eligibility and it’s nothing but bad news.

In the next few days we will do some summarizing.  We’re talking to the California Assocation of Nonprofits task force about what might be done next.