Major Changes to Teleconnect Fund

 

On April 25, 2019, the Public Utilities Commission officially voted to discontinue support under the California Teleconnect Fund (CTF) for voice services effective July 1, 2019. CTF is a public purpose program created in 1996 that enabled nonprofit community-based organizations to get telephone and internet services at a discount. Numerous changes to the program had been proposed, explored and debated over the past six years. This decision was not unexpected.  

Staff at Alternative Technologies participated to defend and preserve the level of discounts for voice service and to uphold the eligibility requirements for nonprofit organizations and their programs. We worked with allies including CalNonprofits and TURN, an organization focused on utility and carrier issues at the state level. We advocated on behalf of organizations involved in health, education and job training for residents who have fewer resources and less access to services. We believe that our participation had some influence in preserving the best parts of a program that we firmly believe benefits all Californians.

Which changes are potentially most significant for your organization? 

Eliminating discounts for voice services.

This will directly affect previously approved nonprofits throughout California. They will see an increase in the cost of their voice carrier services starting July 1, 2019.

Requiring that at least 50% of an organization’s mission and programs are CTF eligible.

In the future, all current recipients of the CTF discount will be required to re-apply for the discount through an “Application Renewal Process.” The PUC will contact organizations about that process in coming months. It is important that your organization maintain accurate name, address or contact information in their database. Failure to do so may cause a delay or cancellation of your discounts. To update your records at the CPUC, you can send your organization’s name, address or contact information to CTFHelp@cpuc.ca.gov. See the Official CTF Notice here.

There are other implications that will affect some customers or direct how carriers or PUC staff will conduct aspects of the program in the future. These include:

    • Expanding CTF-eligible services to include all mobile broadband services.
    • Updating the definition of a CTF-eligible Community Based Organization.
    • Adopting a cost allocation process for non-E-rate CTF participants.
    • Requiring the development of a CTF web-portal for applications and claims.

If you have an interest in understanding the full three-phase process of the comprehensive overhaul of the program, you can check the PUC website

Download the full 59-page CPUC Decision 19-04-013 here.

What’s the CTF “exemption” all about?

We’ve  had a number of customers and colleagues contact us to ask about recent changes to the Teleconnect Fund.

First, if you are already receiving the California Teleconnect Fund discount on your telephone bills, you will soon notice that it doesn’t provide as much benefit to your organization as it did in the past. That’s because the powers that be have interpreted the intent to focus on broadband, not telecommunications. (We disagree with this – but that’s another story).  Every organization that had been receiving a 50% discount on voice service, is now only receiving 25%.  Seem unfair?  Well, note that this cut in benefits is across the board (you weren’t singled out). Also, this new cut may not apply to you.

The “Exemption”

Your organization may be exempt from the change (and allowed to keep the 50% discount) if you are located in an officially-defined underserved area.  Generally, these are areas where broadband internet is not widely available – typically this means rural areas.  A list of organizations in underserved areas is on the CPUC website. Most Alternative Technologies customers are within the Bay Area and therefore not likely to be exempt and keep the 50% discount.  We’ll explain other changes in coming weeks.

Decision Modifying the Decision

The staff at the California Public Utilities Commission released a document a few days ago that clarifies several points on their July 2015 Decision. Specifically, the new document articulates how the CTF will stay at 25% for voice service even as E-rate support gets phased down to 0%.

Additionally, the decision states that community-based organizations in “underserved” areas are allowed an exemption from the cut in support (i.e. can continue to  receive 50% discount for voice service) when voice is the only carrier service they receive, and there are no better options. (More details, including definitions of “underserved” and an outline of an appeals process in the document, link below.)

These modifications are not official until voted on by the full Commission, which would happen April 8th, at the earliest.

As always, please note that our summary analysis is cursory, addressing topics relevant to a majority of nonprofits. For a complete understanding of rules that relate to other qualifying entity types (such as schools, libraries, community colleges, etc.), we always recommend consulting the original documents, which we have reposted here for your convenience.

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.