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Thursday, July 1, 2004

Upping the Ante: Universal Service at CPUC and CaPUC
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Today the Lifeline fee in Colorado jumped 20 percent. Don't let statistics fool you. The fee went from 10 to 12 cents a month per line. Over in California, the CaPUC scheduled a vote to reinstate a monthly surcharge to fund a state E-Rate program. The rate has been set at zero for 18 months and, pending approval, will rise to .16 percent in August.

No one should fault regulators for implementing the law. However, a close reading of CaPUC's previous order on the California Teleconnect Fund hints at the shenanigans possible with universal service. In December 2002, CaPUC revised the fiscal year budget of the CTF from $159+ million to $59 million. Simultaneously, the CFT charge dropped to zero because most of the necessary revenues were in hand. Cost-consciousness? Not likely. Consumers may have missed the footnote explaining the $100 million assumption of claims that had already been paid. The same order required firms to keep the CFT line item on consumers' bills. Perhaps it was a wise precaution. Repeal of the CFT was unlikely and the CaPUC would eventually raise the rate from zero to fund the program. But can't firms make billing decisions without regulatory help? A cynic might say that the requirement simply set the stage for next week's vote. This time around the charge is not a "new tax" but rather an "increase of an old tax." But cynicism, like an opaque subsidy system, is a dirty business and we should eschew it entirely.

posted by @ 2:53 PM | General

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