VETO  

Bill No: SB 704

Author: Bradford (D)

Amended: 9/6/19

Vote: 27

SENATE ENERGY, U. & C. COMMITTEE: 10-2, 4/24/19

AYES: Hueso, Bradford, Dodd, Hertzberg, Hill, McGuire, Rubio, Skinner, Stern, Wiener

NOES: Moorlach, Stone

NO VOTE RECORDED: Chang

SENATE APPROPRIATIONS COMMITTEE: 4-1, 5/16/19

AYES: Portantino, Bradford, Hill, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

SENATE FLOOR: 27-7, 5/21/19

AYES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Dodd, Durazo, Galgiani, Glazer, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Wieckowski, Wiener

NOES: Borgeas, Grove, Jones, Moorlach, Morrell, Nielsen, Stone

NO VOTE RECORDED: Bates, Chang, Umberg, Wilk

SENATE FLOOR: 33-7, 9/12/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener, Wilk

NOES: Borgeas, Grove, Jones, Moorlach, Morrell, Nielsen, Stone

ASSEMBLY FLOOR: 67-2, 9/10/19 - See last page for vote

SUBJECT: Telecommunications: Moore Universal Telephone Service Act

SOURCE: Author

DIGEST:

This bill clarifies the definition of a household for the purposes of Lifeline program eligibility, requires the California Public Utilities Commission (CPUC) to update outreach and enrollment rules for the program, and requires the CPUC to determine whether a Lifeline participant should allowed to obtain an additional Lifeline subscription for broadband services.

ANALYSIS:

Existing federal law:

1. Requires every telecommunications carrier providing interstate telecommunications services to contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient methods specified by the Federal Communications Commission (FCC) for preserving and advancing universal service. Contributions are deposited into the Universal Service Fund, which is administered by the Universal Service Administrative Company. (47 United States Code §254)
2. Makes various definitions for the purpose of the Lifeline program, including defining a “household” for the purpose of the federal any individual or group of individuals who are living together at the same address as one economic unit. A household may include related and unrelated persons. An “economic unit” consists of all adult individuals contributing to and sharing in the income and expenses of a household. An adult is any person eighteen years or older. If an adult has no or minimal income, and lives with someone who provides financial support to him/her, both people shall be considered part of the same household. Children under the age of 18 living with their parents or guardians are considered to be part of the same household as their parents or guardians. Only one Lifeline subscription per household is allowed. A violation of the one-per-household limitation constitutes a violation of FCC rules and will result in the subscriber's de-enrollment from the program. (47 Code of Federal Regulations §§54.400 and 54.410)

Existing state law:

1. Requires the CPUC to designate a class of Lifeline service necessary to meet minimum communications needs and set rates and eligibility criteria for that service. (Public Utilities Code §873)
2. Establishes eligibility criteria for the California Lifeline program.
3. Defines a “household” for Lifeline eligibility determinations as a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber. This definition excludes any industrial, commercial, or other nonresidential building. (Public Utilities Code §872)
4. Specifies that a Lifeline program participant may only obtain one Lifeline subscription at his or her principal residence. No other member of the participant’s family or household at that residence is eligible for Lifeline telephone service. An applicant for Lifeline telephone service may report only one address as the principal place of residence. (Public Utilities Code §878)
5. Requires the Department of Corrections and Rehabilitation (CDCR) and the Department of Motor Vehicles to ensure that eligible inmates released from state prisons have valid identification cards and requires CDCR to help exonerated state former inmates obtain certain transitional and supportive services, including enrollment in CalFresh and Medi-Cal. (Penal Code 3007.05)

This bill:

1. Requires the CPUC to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services in a new or existing proceeding. The CPUC must complete this proceeding by July 1, 2022.
2. Requires the CPUC to update Lifeline program rules in an existing proceeding by July 1, 2020, make the following changes at a minimum:
   1. Allow subscribers to enroll directly online using an electronic signature.
   2. Allow each lifeline subscriber to complete the subscriber’s annual recertification of eligibility online using an electronic signature and verify their identity without using a commission-issued personal identification number (PIN).
   3. Allow subscribers to recertify through an interactive voice response system.
3. Requires the CPUC to adopt updated rules for the lifeline program by July 1, 2021, that include the following:
   1. Methods for increasing enrollment, participation, and renewal with participation and renewal rates in other public purpose programs administered by the CPUC, such as the California Alternative Rates for Energy (CARE) program. The CPUC must consider automatically enrolling eligible CARE or federal Low-Income Home Energy Assistance Program (LIHEAP) participants in the lifeline program and using information and data otherwise available to the commission to increase outreach.
   2. Methods for increasing the utilization of community-based or nonprofit organizations (CBOs) and public agencies to conduct enrollment.
   3. Methods for increasing participation in the Lifeline program by members of the vulnerable or disadvantaged groups.
   4. Methods to increase enrollment and participation in the program by CalFresh participants. The commission shall consult with the State Department of Social Services and the State Department of Health Care Services for that purpose.
   5. Methods to phase out the use of noncarrier, non-governmental, for-profit third-party originators to enroll subscribers.
4. Redefines a “household” for the purposes of determining Lifeline eligibility as any group of individuals, including the subscriber, who live together at the same address as one economic unit. A household may include related and unrelated individuals. If an adult has no, or minimal, income and lives with someone who provides financial support to that adult, both persons will be considered part of the same household. A child under 18 years of age and living with a parent or guardian will be considered part of the same household as the parent or guardian.
5. Allows multiple Lifeline subscriptions at the same address if the subscribers are not part of the same household.
6. Allows an otherwise eligible individual who is one of the following to obtain a Lifeline subscription even if another member of his/her household also has a subscription:
7. A foster youth.
8. A formerly incarcerated individual.
9. A Native American.
10. A veteran.
11. Deaf.
12. Disabled.
13. A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC.
14. The CPUC may establish reasonable qualifications for a subscription provided to one of the above groups.
15. Requires the CPUC to work with the CDCR and the Department of Veterans Affairs to create outreach and enrollment programs for formerly incarcerated individuals and veterans.
16. Requires the CPUC to accept CDCR prison identification cards as a form of identification for Lifeline enrollment and consider accepting other forms of identification commonly issued to vulnerable populations. This bill authorizes the CPUC to establish enrollment criteria to increase Lifeline enrollment from formerly incarcerated youths and adults.
17. Makes conforming changes to the definition of an “economic unit” and “adult” for the purposes of determining program eligibility.
18. Repeals the existing definition of a “household” for the Lifeline program and existing provisions prohibiting multiple Lifeline subscriptions at a single address.

Background

The Lifeline programs: federal and state. Lifeline is one of several universal service programs addressing the affordability of communications services. California Lifeline subscribers can participate in both the federal Lifeline program and a California Lifeline program. The federal Lifeline program is regulated by the FCC, and the state Lifeline program is regulated by the CPUC. Both programs are funded through surcharges on telephone bills.

Prior to the 1984 break-up of the Bell telephone system, long-distance services helped subsidize local telephone costs. Following AT&T’s divestment of the Bell Operating Companies, long-distance and local telephone services were separated. The Reagan FCC established the Lifeline program to address concerns about the affordability of local telephone service for after this separation. The Lifeline program provides households at or below 135 percent of the federal poverty level with a monthly subsidy to obtain one fixed or wireless line with a participating communications provider, which may include a data package. California Lifeline subscribers may receive $13.75 per month from the state program in addition to the $9.25 from the federal program. As a result, California participants can receive a total of $23 per month towards their Lifeline service.

The inclusion of wireless and broadband. This bill requires the CPUC to open a proceeding to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services. This bill requires the CPUC to complete the proceeding by July 1, 2022. Initially, Lifeline provided a subsidy to help a low-income household cover the cost of a fixed telephone line. However, the Lifeline program has since evolved to offer support for other communications services. In 2005, the George W. Bush FCC modified the program, enabling subscribers to apply the subsidy to a fixed or wireless telephone line. In 2016, the Obama FCC issued the Lifeline Modernization Order, which made a number of changes to the Lifeline program, including permitting subscribers to apply the subsidy to fixed or mobile broadband services.

The “household” issue. When Lifeline was first established, the program was intended to subsidize one wireline telephone line per household. As a result, Lifeline subscribers have generally been limited on the ability to have more than one program subscription at a single address. As the program has evolved to encompass wireless and broadband services at the federal level, the FCC has also modified the definition of a “household” for the purposes of determining program eligibility. The FCC’s definition change intended to recognize more complex co-housing and living situations in which economically independent persons live at the same address.

While the federal regulatory definition of a household has been clarified to enable multiple lifeline subscribers to share the same address, California’s statutory definition of a household does not conform to the federal definition. Currently, existing state law defines a household for Lifeline eligibility as “…a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber.” Existing state law also prohibits any other member of a household from having a Lifeline subscription. The lack of conformity to the federal definition of a household does not provide clarity under state law as to whether otherwise eligible individuals with the same address who function as separate households may have separate Lifeline subscriptions. This bill conforms the definition of a household to the definition at the federal level and modifies restrictions on household eligibility rules to allow the enrollment of individuals in certain vulnerable populations by specifying that these individuals shall not be calculated as being in the same household simply because they share an address.

The Legislative Analyst’s Office (LAO) review and recommendations. The supplemental report to the 2018-19 Budget Act required the LAO to review the Lifeline program’s caseload and budget estimates and make recommendations on how the CPUC could improve budget and enrollment estimates. The supplemental report also required the LAO to analyze and recommend ways to improve Lifeline enrollment and re-certification. In April 2019, the LAO released a report addressing these requirements. In its report, the LAO noted that 40 percent of eligible households are currently enrolled in the program, and the LAO recommended that the Legislature direct the CPUC to evaluate the reasons why eligible households do not enroll in the program. While the LAO noted that the Legislature could wait for results from this evaluation before requiring program changes, the report also noted that the Legislature could consider adopting changes that appear to be relatively low cost and a benefit to enrollment.

The LAO’s report makes several more specific recommendations for improving Lifeline enrollment. These additional recommendations include suggesting that the Legislature could direct the CPUC to consider outreach and enrollment coordination with other state and local agencies and CBOs that frequently interact with eligible populations. The LAO’s report notes that most Lifeline participants are using the program for wireless subscriptions, and 80 percent of wireless Lifeline subscriptions are initiated through “street teams,” which are employed by carriers participating in the program to set up temporary booths at which they can enroll eligible households in the program. This bill requires the CPUC to adopt updated rules for the Lifeline program to address methods for increasing enrollment at rates for other low-income programs administered by the CPUC, methods for increasing enrollment through other programs serving low-income populations, and methods for enrolling individuals that are part of specific disadvantaged and vulnerable populations. This bill also requires the CPUC to adopt programs requirements that include methods for phasing out the use of street teams and increasing collaboration with CBOs and other public agencies to conduct outreach and enrollment programs.

This bill is consistent with many of the recommendations made in the LAO’s review of the program; however, it also expands Lifeline eligibility for eligible individuals within specific populations that may be more likely to have complex household structures that may make distinctions between economic units at the same address more challenging. This bill allows eligible individuals to obtain a Lifeline subscription even if another member of the household has a subscription if the eligible individual is one of the following:

• A foster youth.
• A formerly incarcerated individual.
• A Native American.
• A veteran.
• Deaf.
• Disabled.
• A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC.

Individuals in these groups may be eligible for Lifeline; however, they may have circumstances that make complying with separate household restrictions difficult. These individuals may also live in transitional households with unique legal and economic conditions that make defining a household for the purposes of the Lifeline program more challenging than other eligible persons. To the extent that federal regulations permit these individuals to have multiple Lifeline subscriptions in a single household, this bill could help address universal service challenges for uniquely vulnerable and disadvantaged populations. However, if the FCC or the Universal Service Administrative Company determines that multiple lines within one household constitutes a program violation, households with multiple Lifeline subscriptions may be denied federal Lifeline benefits. This bill specifies that eligible individuals within these vulnerable populations may not be considered part of the same household simply because they share an address.

Related/Prior Legislation

AB 2652 (Quirk, 2018) would have required the CPUC to consider a 60-day portability freeze for Lifeline participants seeking to change providers. The bill also would have required the CPUC to adopt rules modifying the program’s enrollment and recertification process. The bill was vetoed.

AB 2537 (Carrillo, 2018) would have established the Lifeline Oversight Board and specify the board’s membership and duties. The bill died in the Senate.

AB 2570 (Quirk, Chapter 577, Statutes of 2016) required the CPUC to adopt a portability freeze rule for the Lifeline program by January 15, 2017. The bill required the CPUC to consider a 60-day freeze as part of its proceeding.

AB 1407 (Bradford, 2014) would have phased out the existing Lifeline program for basic landline service and created a new Lifeline discount of $11.85 per month for voice communication services from a telephone corporation or eligible wireless and Voice over Internet Protocol providers. The bill died in the Senate.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee, the CPUC estimates a total cost to implement this bill of just over $4.9 million. CPUC cost drivers include a media outreach campaign, which the CPUC estimates will cost approximately $4 million. Other CPUC cost drivers include a preceding to consider addition of a subsidy for broadband service, allowing more than one household member to receive a Lifeline discount, and phasing out for-profit third-party originators for enrollment.

SUPPORT: (Verified 10/14/19)

iFoster

Pacoima Beautiful

The Greenlining Institute

Youth Policy Institute

OPPOSITION: (Verified 10/14/19)

None received

ARGUMENTS IN SUPPORT: According to the author, “SB 704 delivers timely updates to the Lifeline Universal Service program to better-fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, network-dependent society.”

GOVERNOR'S VETO MESSAGE:

I am returning Senate Bill 704 without my signature.

This bill clarifies the definition of a household for the purposes of California LifeLine telephone service (LifeLine) program eligibility, requires the California Public Utilities Commission (CPUC) to update outreach and enrollment rules for the program, and requires the CPUC to determine whether a lifeline participant should be allowed to obtain an additional lifeline subscription for broadband services.

As LifeLine recently undertook a significant expansion through two new pilot programs that are still ongoing, this bill is premature. Additionally, while this bill may increase access to the LifeLine program, this bill has the potential to more than double the size and cost of the program and should be addressed through the budget.

ASSEMBLY FLOOR: 67-2, 9/10/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Frazier, Friedman, Gabriel, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Lackey, Levine, Limón, Low, Maienschein, Mayes, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NOES: Brough, Melendez

NO VOTE RECORDED: Bigelow, Choi, Flora, Fong, Gallagher, Kiley, Mathis, Obernolte, Patterson, Voepel

Prepared by: Sarah Smith / E., U., & C. / (916) 651-4107

10/22/19 14:46:43

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 704

Author: Bradford (D), et al.

Amended: 9/6/19

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 10-2, 4/24/19

AYES: Hueso, Bradford, Dodd, Hertzberg, Hill, McGuire, Rubio, Skinner, Stern, Wiener

NOES: Moorlach, Stone

NO VOTE RECORDED: Chang

SENATE APPROPRIATIONS COMMITTEE: 4-1, 5/16/19

AYES: Portantino, Bradford, Hill, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

SENATE FLOOR: 27-7, 5/21/19

AYES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Dodd, Durazo, Galgiani, Glazer, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Wieckowski, Wiener

NOES: Borgeas, Grove, Jones, Moorlach, Morrell, Nielsen, Stone

NO VOTE RECORDED: Bates, Chang, Umberg, Wilk

ASSEMBLY FLOOR: 67-2, 9/10/19 - See last page for vote

SUBJECT: Telecommunications: Moore Universal Telephone Service Act

SOURCE: Author

DIGEST:

This bill clarifies the definition of a household for the purposes of Lifeline program eligibility, requires the California Public Utilities Commission (CPUC) to update outreach and enrollment rules for the program, and requires the CPUC to determine whether a Lifeline participant should allowed to obtain an additional Lifeline subscription for broadband services.

Assembly Amendments

require the CPUC to take various steps to streamline the enrollment process for Lifeline and increase enrollment through collaboration with other programs with similar eligibility criteria. The amendments also authorize the CPUC to establish reasonable qualification criteria for a Lifeline program subscription provided to certain vulnerable or disadvantaged groups that generally have complex guardianship or household considerations.

ANALYSIS:

Existing federal law:

1. Requires every telecommunications carrier providing interstate telecommunications services to contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient methods specified by the Federal Communications Commission (FCC) for preserving and advancing universal service. Contributions are deposited into the Universal Service Fund, which is administered by the Universal Service Administrative Company. (47 United States Code §254)
2. Makes various definitions for the purpose of the Lifeline program, including defining a “household” for the purpose of the federal any individual or group of individuals who are living together at the same address as one economic unit. A household may include related and unrelated persons. An “economic unit” consists of all adult individuals contributing to and sharing in the income and expenses of a household. An adult is any person eighteen years or older. If an adult has no or minimal income, and lives with someone who provides financial support to him/her, both people shall be considered part of the same household. Children under the age of 18 living with their parents or guardians are considered to be part of the same household as their parents or guardians. Only one Lifeline subscription per household is allowed. A violation of the one-per-household limitation constitutes a violation of FCC rules and will result in the subscriber's de-enrollment from the program. (47 Code of Federal Regulations §§54.400 and 54.410)

Existing state law:

1. Requires the CPUC to designate a class of Lifeline service necessary to meet minimum communications needs and set rates and eligibility criteria for that service. (Public Utilities Code §873)
2. Establishes eligibility criteria for the California Lifeline program.
3. Defines a “household” for Lifeline eligibility determinations as a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber. This definition excludes any industrial, commercial, or other nonresidential building. (Public Utilities Code §872)
4. Specifies that a Lifeline program participant may only obtain one Lifeline subscription at his or her principal residence. No other member of the participant’s family or household at that residence is eligible for Lifeline telephone service. An applicant for Lifeline telephone service may report only one address as the principal place of residence. (Public Utilities Code §878)
5. Requires the Department of Corrections and Rehabilitation (CDCR) and the Department of Motor Vehicles to ensure that eligible inmates released from state prisons have valid identification cards and requires CDCR to help exonerated state former inmates obtain certain transitional and supportive services, including enrollment in CalFresh and Medi-Cal. (Penal Code 3007.05)

This bill:

1. Requires the CPUC to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services in a new or existing proceeding. The CPUC must complete this proceeding by July 1, 2022.
2. Requires the CPUC to update Lifeline program rules in an existing proceeding by July 1, 2020, make the following changes at a minimum:
   1. Allow subscribers to enroll directly online using an electronic signature.
   2. Allow each lifeline subscriber to complete the subscriber’s annual recertification of eligibility online using an electronic signature and verify their identity without using a commission-issued personal identification number (PIN).
   3. Allow subscribers to recertify through an interactive voice response system.
3. Requires the CPUC to adopt updated rules for the lifeline program by July 1, 2021, that include the following:
   1. Methods for increasing enrollment, participation, and renewal with participation and renewal rates in other public purpose programs administered by the CPUC, such as the California Alternative Rates for Energy (CARE) program. The CPUC must consider automatically enrolling eligible CARE or federal Low-Income Home Energy Assistance Program (LIHEAP) participants in the lifeline program and using information and data otherwise available to the commission to increase outreach.
   2. Methods for increasing the utilization of community-based or nonprofit organizations (CBOs) and public agencies to conduct enrollment.
   3. Methods for increasing participation in the Lifeline program by members of the vulnerable or disadvantaged groups.
   4. Methods to increase enrollment and participation in the program by CalFresh participants. The commission shall consult with the State Department of Social Services and the State Department of Health Care Services for that purpose.
   5. Methods to phase out the use of noncarrier, non-governmental, for-profit third-party originators to enroll subscribers.
4. Redefines a “household” for the purposes of determining Lifeline eligibility as any group of individuals, including the subscriber, who live together at the same address as one economic unit. A household may include related and unrelated individuals. If an adult has no, or minimal, income and lives with someone who provides financial support to that adult, both persons will be considered part of the same household. A child under 18 years of age and living with a parent or guardian will be considered part of the same household as the parent or guardian.
5. Allows multiple Lifeline subscriptions at the same address if the subscribers are not part of the same household.
6. Allows an otherwise eligible individual who is one of the following to obtain a Lifeline subscription even if another member of his/her household also has a subscription:
7. A foster youth.
8. A formerly incarcerated individual.
9. A Native American.
10. A veteran.
11. Deaf.
12. Disabled.
13. A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC.
14. The CPUC may establish reasonable qualifications for a subscription provided to one of the above groups.
15. Requires the CPUC to work with the CDCR and the Department of Veterans Affairs to create outreach and enrollment programs for formerly incarcerated individuals and veterans.
16. Requires the CPUC to accept CDCR prison identification cards as a form of identification for Lifeline enrollment and consider accepting other forms of identification commonly issued to vulnerable populations. This bill authorizes the CPUC to establish enrollment criteria to increase Lifeline enrollment from formerly incarcerated youths and adults.
17. Makes conforming changes to the definition of an “economic unit” and “adult” for the purposes of determining program eligibility.
18. Repeals the existing definition of a “household” for the Lifeline program and existing provisions prohibiting multiple Lifeline subscriptions at a single address.

Background

The Lifeline programs: federal and state. Lifeline is one of several universal service programs addressing the affordability of communications services. California Lifeline subscribers can participate in both the federal Lifeline program and a California Lifeline program. The federal Lifeline program is regulated by the FCC, and the state Lifeline program is regulated by the CPUC. Both programs are funded through surcharges on telephone bills.

Prior to the 1984 break-up of the Bell telephone system, long-distance services helped subsidize local telephone costs. Following AT&T’s divestment of the Bell Operating Companies, long-distance and local telephone services were separated. The Reagan FCC established the Lifeline program to address concerns about the affordability of local telephone service for after this separation. The Lifeline program provides households at or below 135 percent of the federal poverty level with a monthly subsidy to obtain one fixed or wireless line with a participating communications provider, which may include a data package. California Lifeline subscribers may receive $13.75 per month from the state program in addition to the $9.25 from the federal program. As a result, California participants can receive a total of $23 per month towards their Lifeline service.

The inclusion of wireless and broadband. This bill requires the CPUC to open a proceeding to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services. This bill requires the CPUC to complete the proceeding by July 1, 2022. Initially, Lifeline provided a subsidy to help a low-income household cover the cost of a fixed telephone line. However, the Lifeline program has since evolved to offer support for other communications services. In 2005, the George W. Bush FCC modified the program, enabling subscribers to apply the subsidy to a fixed or wireless telephone line. In 2016, the Obama FCC issued the Lifeline Modernization Order, which made a number of changes to the Lifeline program, including permitting subscribers to apply the subsidy to fixed or mobile broadband services.

The “household” issue. When Lifeline was first established, the program was intended to subsidize one wireline telephone line per household. As a result, Lifeline subscribers have generally been limited on the ability to have more than one program subscription at a single address. As the program has evolved to encompass wireless and broadband services at the federal level, the FCC has also modified the definition of a “household” for the purposes of determining program eligibility. The FCC’s definition change intended to recognize more complex co-housing and living situations in which economically independent persons live at the same address.

While the federal regulatory definition of a household has been clarified to enable multiple lifeline subscribers to share the same address, California’s statutory definition of a household does not conform to the federal definition. Currently, existing state law defines a household for Lifeline eligibility as “…a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber.” Existing state law also prohibits any other member of a household from having a Lifeline subscription. The lack of conformity to the federal definition of a household does not provide clarity under state law as to whether otherwise eligible individuals with the same address who function as separate households may have separate Lifeline subscriptions. This bill conforms the definition of a household to the definition at the federal level and modifies restrictions on household eligibility rules to allow the enrollment of individuals in certain vulnerable populations by specifying that these individuals shall not be calculated as being in the same household simply because they share an address.

The Legislative Analyst’s Office (LAO) review and recommendations. The supplemental report to the 2018-19 Budget Act required the LAO to review the Lifeline program’s caseload and budget estimates and make recommendations on how the CPUC could improve budget and enrollment estimates. The supplemental report also required the LAO to analyze and recommend ways to improve Lifeline enrollment and re-certification. In April 2019, the LAO released a report addressing these requirements. In its report, the LAO noted that 40 percent of eligible households are currently enrolled in the program, and the LAO recommended that the Legislature direct the CPUC to evaluate the reasons why eligible households do not enroll in the program. While the LAO noted that the Legislature could wait for results from this evaluation before requiring program changes, the report also noted that the Legislature could consider adopting changes that appear to be relatively low cost and a benefit to enrollment.

The LAO’s report makes several more specific recommendations for improving Lifeline enrollment. These additional recommendations include suggesting that the Legislature could direct the CPUC to consider outreach and enrollment coordination with other state and local agencies and CBOs that frequently interact with eligible populations. The LAO’s report notes that most Lifeline participants are using the program for wireless subscriptions, and 80 percent of wireless Lifeline subscriptions are initiated through “street teams,” which are employed by carriers participating in the program to set up temporary booths at which they can enroll eligible households in the program. This bill requires the CPUC to adopt updated rules for the Lifeline program to address methods for increasing enrollment at rates for other low-income programs administered by the CPUC, methods for increasing enrollment through other programs serving low-income populations, and methods for enrolling individuals that are part of specific disadvantaged and vulnerable populations. This bill also requires the CPUC to adopt programs requirements that include methods for phasing out the use of street teams and increasing collaboration with CBOs and other public agencies to conduct outreach and enrollment programs.

This bill is consistent with many of the recommendations made in the LAO’s review of the program; however, it also expands Lifeline eligibility for eligible individuals within specific populations that may be more likely to have complex household structures that may make distinctions between economic units at the same address more challenging. This bill allows eligible individuals to obtain a Lifeline subscription even if another member of the household has a subscription if the eligible individual is one of the following:

• A foster youth.
• A formerly incarcerated individual.
• A Native American.
• A veteran.
• Deaf.
• Disabled.
• A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC.

Individuals in these groups may be eligible for Lifeline; however, they may have circumstances that make complying with separate household restrictions difficult. These individuals may also live in transitional households with unique legal and economic conditions that make defining a household for the purposes of the Lifeline program more challenging than other eligible persons. To the extent that federal regulations permit these individuals to have multiple Lifeline subscriptions in a single household, this bill could help address universal service challenges for uniquely vulnerable and disadvantaged populations. However, if the FCC or the Universal Service Administrative Company determines that multiple lines within one household constitutes a program violation, households with multiple Lifeline subscriptions may be denied federal Lifeline benefits. This bill specifies that eligible individuals within these vulnerable populations may not be considered part of the same household simply because they share an address.

Related/Prior Legislation

AB 2652 (Quirk, 2018) would have required the CPUC to consider a 60-day portability freeze for Lifeline participants seeking to change providers. The bill also would have required the CPUC to adopt rules modifying the program’s enrollment and recertification process. The bill was vetoed.

AB 2537 (Carrillo, 2018) would have established the Lifeline Oversight Board and specify the board’s membership and duties. The bill died in the Senate.

AB 2570 (Quirk, Chapter 577, Statutes of 2016) required the CPUC to adopt a portability freeze rule for the Lifeline program by January 15, 2017. The bill required the CPUC to consider a 60-day freeze as part of its proceeding.

AB 1407 (Bradford, 2014) would have phased out the existing Lifeline program for basic landline service and created a new Lifeline discount of $11.85 per month for voice communication services from a telephone corporation or eligible wireless and Voice over Internet Protocol providers. The bill died in the Senate.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee, the CPUC estimates a total cost to implement this bill of just over $4.9 million. CPUC cost drivers include a media outreach campaign, which the CPUC estimates will cost approximately $4 million. Other CPUC cost drivers include a preceding to consider addition of a subsidy for broadband service, allowing more than one household member to receive a Lifeline discount, and phasing out for-profit third-party originators for enrollment.

SUPPORT: (Verified 9/9/19)

iFoster

Pacoima Beautiful

The Greenlining Institute

Youth Policy Institute

OPPOSITION: (Verified 9/9/19)

None received

ARGUMENTS IN SUPPORT: According to the author, “SB 704 delivers timely updates to the Lifeline Universal Service program to better-fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, network-dependent society.”

ASSEMBLY FLOOR: 67-2, 9/10/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Frazier, Friedman, Gabriel, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Lackey, Levine, Limón, Low, Maienschein, Mayes, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Waldron, Weber, Wicks, Wood, Rendon

NOES: Brough, Melendez

NO VOTE RECORDED: Bigelow, Choi, Flora, Fong, Gallagher, Kiley, Mathis, Obernolte, Patterson, Voepel

Prepared by: Sarah Smith / E., U., & C. / (916) 651-4107

9/10/19 23:01:49

**** END ****

SENATE THIRD READING

STR Bill Id:SB 704

Author:(Bradford)

As Amended Ver:September 6, 2019

Majority vote

SUMMARY:

Makes numerous changes to the California LifeLine Program which provides discounts to low-income households to access basic residential telephone service.

Major Provisions

Requires the California Public Utilities Commission (CPUC), by July 1, 2020, to update the program to allow subscribers to enroll online using an electronic signature, and annually recertify eligibility online and through an interactive voice response system.

Requires the CPUC, by July 1, 2021, to adopt updated program rules that, at a minimum, 1) increase program enrollment, participation, and renewal, commensurate with participation and renewal in other CPUC public purpose programs, 2) increase utilization of community-based or nonprofit organizations, and public agencies, to enroll subscribers, 3) increase program participation by members of vulnerable or disadvantaged groups, 4) increase program enrollment and participation by participants in CalFresh, and 5) consider methods to phase out use of noncarrier, nongovernmental-contractor, for-profit third-party originators to enroll subscribers.

Requires the CPUC to develop outreach and enrollment programs for the formerly incarcerated and for veterans, and accept alternative forms of identification for enrollment purposes.

Allows multiple lifeline subscribers to share the same address if they are not part of the same household, as defined, and declares an individual who is any of the following shall be provided with a Lifeline subscription, even if an additional Lifeline subscription is issued to another member of the household: 1) a foster youth, 2) formerly incarcerated, 3) a Native American, 4) a veteran, 5) deaf, 6) disabled, or 7) a member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the lifeline program, as determined by the CPUC.

COMMENTS:

California LifeLine Program: The California LifeLine Program is a universal service program that helps low-income households lower the cost of their phone bills by providing discounts for home phone and cell phone service to qualified California residents. The California LifeLine Program works in conjunction with the federal LifeLine program which provides an additional discount. Together each program participant can currently receive a monthly maximum discount of $13.75 from the California LifeLine Program and $9.25 from the Federal LifeLine Program. The Program is funded through a surcharge, which as of September 2018, is set a 4.75% of each customer's phone bill for intrastate telecommunications service. Individuals may qualify for LifeLine if they are enrolled in certain public assistance programs or if their household's total annual gross income is at or below 135% of the federal poverty level.

LAO Report: As part of the 2018-19 budget, the Legislature directed the Legislative Analyst's Office (LAO) to review the LifeLine program and make recommendations about ways to improve participation in the program. The LAO report found that only about 40% of eligible households are enrolled in the program. The report notes that there were several reasons why eligible households might not participate in the program, including that households might be unaware of the program or need to renew; prefer a non-LifeLine telephone plan or carrier; or have difficulty completing the enrollment and/or renewal process. The report recommended the Legislature direct the CPUC to conduct a formal evaluation of the major reasons why eligible households do not enroll in the program, and to wait for the results of such an evaluation before directing the CPUC to make major changes to the program. However, the report also notes that the Legislature could consider adopting other changes that appear to be relatively low cost and that are likely to have some enrollment benefits. While the author does not cite the LAO report, the bill seems to make many of the changes suggested by the LAO.

According to the Author:

SB 704 delivers timely updates to the LifeLine Universal Service program to better fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, technology-dependent society. This includes overdue program updates that will lower unnecessary barriers to enrollment and re-enrollment, as well as improve the program's ability to provide essential services to vulnerable, already-eligible populations.

Arguments in Support:

According to The Greenlining Institute, "SB 704 will facilitate increased program participation among low-income families, including many household of color. Additionally, the bill will make it easier for populations who have struggled to participate in the program - including foster youth, veterans, and formerly incarcerated individuals – to take advantage of the benefits offered by the LifeLine program. But many Californians continue to cite affordability as a barrier to getting telephone service. SB 704 will help ensure that every Californian has access to the educational and employment opportunities that are essential for thriving in today's economy."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, the CPUC estimates a total cost to implement this bill of just over $4.9 million. CPUC cost drivers include a media outreach campaign, which the CPUC estimates will cost approximately $4 million. Other CPUC cost drivers include a preceding to consider addition of a subsidy for broadband service, allowing more than one household member to receive a Lifeline discount, and phasing out for-profit third-party originators for enrollment.

VOTES:

SENATE FLOOR: 27-7-4

YES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Dodd, Durazo, Galgiani, Glazer, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Wieckowski, Wiener

NO: Borgeas, Grove, Jones, Moorlach, Morrell, Nielsen, Stone

ABS, ABST OR NV: Bates, Chang, Umberg, Wilk

ASM COMMUNICATIONS AND CONVEYANCE: 9-1-3

YES: Santiago, Boerner Horvath, Bonta, Cervantes, Holden, Kamlager-Dove, Low, Quirk‑Silva, Rodriguez

NO: Brough

ABS, ABST OR NV: Eduardo Garcia, Chen, Patterson

ASM APPROPRIATIONS: 14-1-3

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Diep, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Brough

ABS, ABST OR NV: Bigelow, Fong, Obernolte

UPDATED:

VERSION: September 6, 2019

CONSULTANT: Edmond Cheung / C. & C. / (916) 319-2637 FN: 0002027

SENATE THIRD READING

STR Bill Id:SB 704

Author:(Bradford)

As Amended Ver:September 3, 2019

Majority vote

SUMMARY:

Makes numerous changes to the California LifeLine Program which provides discounts to low-income households to access basic residential telephone service.

Major Provisions

Requires the California Public Utilities Commission (CPUC), by July 1, 2020, to update the program to allow subscribers to enroll online using an electronic signature, and annually recertify eligibility online and through an interactive voice response system.

Requires the CPUC, by July 1, 2021, to adopt updated program rules that, at a minimum, 1) increase program enrollment, participation, and renewal, commensurate with participation and renewal in other CPUC public purpose programs, 2) increase utilization of community-based or nonprofit organizations, and public agencies, to enroll subscribers, 3) increase program participation by members of vulnerable or disadvantaged groups, 4) increase program enrollment and participation by participants in CalFresh, and 5) consider methods to phase out use of for-profit third-party originators to enroll subscribers.

Requires the CPUC to develop outreach and enrollment programs for the formerly incarcerated and for veterans, and accept alternative forms of identification for enrollment purposes.

Allows multiple lifeline subscribers to share the same address if they are not part of the same household, as defined, and declares an individual who is any of the following shall be provided with a Lifeline subscription, even if an additional Lifeline subscription is issued to another member of the household: 1) a foster youth, 2) formerly incarcerated, 3) a Native American, 4) a veteran, 5) deaf, 6) disabled, or 7) a member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the lifeline program, as determined by the CPUC.

COMMENTS:

California LifeLine Program: The California LifeLine Program is a universal service program that helps low-income households lower the cost of their phone bills by providing discounts for home phone and cell phone service to qualified California residents. The California LifeLine Program works in conjunction with the federal LifeLine program which provides an additional discount. Together each program participant can currently receive a monthly maximum discount of $13.75 from the California LifeLine Program and $9.25 from the Federal LifeLine Program. The Program is funded through a surcharge, which as of September 2018, is set a 4.75% of each customer's phone bill for intrastate telecommunications service. Individuals may qualify for LifeLine if they are enrolled in certain public assistance programs or if their household's total annual gross income is at or below 135% of the federal poverty level.

LAO Report: As part of the 2018-19 budget, the Legislature directed the Legislative Analyst's Office (LAO) to review the LifeLine program and make recommendations about ways to improve participation in the program. The LAO report found that only about 40% of eligible households are enrolled in the program. The report notes that there were several reasons why eligible households might not participate in the program, including that households might be unaware of the program or need to renew; prefer a non-LifeLine telephone plan or carrier; or have difficulty completing the enrollment and/or renewal process. The report recommended the Legislature direct the CPUC to conduct a formal evaluation of the major reasons why eligible households do not enroll in the program, and to wait for the results of such an evaluation before directing the CPUC to make major changes to the program. However, the report also notes that the Legislature could consider adopting other changes that appear to be relatively low cost and that are likely to have some enrollment benefits. While the author does not cite the LAO report, the bill seems to make many of the changes suggested by the LAO.

According to the Author:

SB 704 delivers timely updates to the LifeLine Universal Service program to better fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, technology-dependent society. This includes overdue program updates that will lower unnecessary barriers to enrollment and re-enrollment, as well as improve the program's ability to provide essential services to vulnerable, already-eligible populations.

Arguments in Support:

According to The Greenlining Institute, "SB 704 will facilitate increased program participation among low-income families, including many household of color. Additionally, the bill will make it easier for populations who have struggled to participate in the program - including foster youth, veterans, and formerly incarcerated individuals – to take advantage of the benefits offered by the LifeLine program. But many Californians continue to cite affordability as a barrier to getting telephone service. SB 704 will help ensure that every Californian has access to the educational and employment opportunities that are essential for thriving in today's economy."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, the CPUC estimates a total cost to implement this bill of just over $4.9 million. CPUC cost drivers include a media outreach campaign, which the CPUC estimates will cost approximately $4 million. Other CPUC cost drivers include a preceding to consider addition of a subsidy for broadband service, allowing more than one household member to receive a Lifeline discount, and phasing out for-profit third-party originators for enrollment.

VOTES:

SENATE FLOOR: 27-7-4

YES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Dodd, Durazo, Galgiani, Glazer, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Wieckowski, Wiener

NO: Borgeas, Grove, Jones, Moorlach, Morrell, Nielsen, Stone

ABS, ABST OR NV: Bates, Chang, Umberg, Wilk

ASM COMMUNICATIONS AND CONVEYANCE: 9-1-3

YES: Santiago, Boerner Horvath, Bonta, Cervantes, Holden, Kamlager-Dove, Low, Quirk‑Silva, Rodriguez

NO: Brough

ABS, ABST OR NV: Eduardo Garcia, Chen, Patterson

ASM APPROPRIATIONS: 14-1-3

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Diep, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Brough

ABS, ABST OR NV: Bigelow, Fong, Obernolte

UPDATED:

VERSION: September 3, 2019

CONSULTANT: Edmond Cheung / C. & C. / (916) 319-2637 FN: 0001781

Date of Hearing: August 21, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 704

Author:(Bradford) – As Amended Ver:July 2, 2019

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill makes numerous changes to the California Lifeline Program—a program to provide discounts to basic landline and wireless phone service to qualifying low-income residents to further the state’s universal telecommunications service goals—to increase program participation.

Most notably, this bill requires the CPUC to:

1. By July 1, 2020, along with the Department of Social Service (DSS) and the Department of Health Care Services (DHCS), develop and enter into agreements with each agency, respectively, that require each agency to share with the CPUC specified information on individuals enrolled in programs administered or overseen by those agencies or that meet certain criteria for enrollment in the Lifeline program.
2. By July 1, 2020, update the program to address allowing subscribers to enroll and annually recertify eligibility online and using an interactive voice response system.
3. By July 1, 2020, determine whether a Lifeline subscriber will be permitted an additional Lifeline subscription for broadband service, and requires the CPUC to issue a decision in the preceding by July 1, 2022.
4. By July 1, 2021, adopt updated program rules to, at a minimum, (a) increase program enrollment and participation and renewal commensurate with participation and renewal in other CPUC public purpose programs, such as the California Alternative Rates for Energy (CARE) Program, (b) increase utilization of community-based or nonprofit organizations, and public agencies, to enroll subscribers, and (c) consider methods to phase out use of for-profit third-party originators to enroll subscribers.
5. Develop outreach and enrollment programs for the formerly incarcerated and for veterans, and accept alternative forms of identification for enrollment purposes.
6. Allows multiple lifeline subscribers to share the same address if they are not part of the same household, as defined, and declares an individual who is any of the following shall be provided with a Lifeline subscription, even if an additional Lifeline subscription is issued to another member of the household: (a) a foster youth, (b) formerly incarcerated, (c) a Native American, (d) a veteran, (e) deaf, (f) disabled or (g) a member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the lifeline program, as determined by the CPUC.

FISCAL EFFECT:

The CPUC estimates a total cost to implement this bill of just over $6 million. CPUC cost drivers include a media outreach campaign, which the CPUC estimates will cost approximately $4 million. Other CPUC cost drivers include a preceding to consider addition of a subsidy for broadband service, allowing more than one household member to receive a Lifeline discount, phasing out for-profit third-party originators for enrollment and securing electronic access to DSS and DHCS data.

More ominously, the CPUC anticipates about $339 million in local assistance to increase Lifeline program participation and renewal commensurate with participation and renewal in other CPUC public purpose programs, such as the CARE Program. The Care Program has a participation rate of nearly 90%, whereas the Lifeline participation rate is about 40%.

Additionally, DSS expressed to the committee the bill would entail “significant and on-going” costs, largely related to automation, though DSS was unable to quantify these costs at the time this analysis was written.

COMMENTS:

Universal telephone service is state law. Statute calls for achievement of universal service by making basic telephone service affordable to low-income households through the creation of a lifeline class of service. The law requires the CPUC and telephone corporations to employ every means to ensure that every qualified household is informed and afforded the opportunity to subscribe to the service.

Recently, the Legislative Analyst’s Office (LAO) completed a review of the CPUC’s administration of the Lifeline program and released a report calling for changes to the program, as required by the Supplemental Report of the 2018-19 Budget Act. According to the LAO:

Currently, about 40 % of eligible households are enrolled in the program. There are several reasons why an eligible household might not enroll or renew in the program, including that the household might (1) be unaware of the program or need to renew, (2) prefer a non‑LifeLine telephone plan or carrier, or (3) have difficulty completing the enrollment and/or renewal process. CPUC is currently planning to implement some changes intended to improve enrollment and renewal. However, CPUC has not conducted a large‑scale study of the primary reasons why eligible households do not participate in the program.

The LAO suggested a number of potential changes to the Lifeline program. However, the LAO recommended generally that the Legislature direct the CPUC to conduct a formal evaluation of the major reasons why eligible households do not enroll in the Lifeline program and that the Legislature “might want to wait for the results of such an evaluation before directing CPUC to make major changes to the program.”

While the author does not cite the LAO report, the bill seems to make many of the changes suggested by the LAO. According to the author:

SB 704 delivers timely updates to the LifeLine Universal Service program to better fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, technology-dependent society. This includes overdue program updates that will lower unnecessary barriers to enrollment and re-enrollment, as well as improve the program’s ability to provide essential services to vulnerable, already-eligible populations.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: July 10, 2019

ASSEMBLY COMMITTEE ON COMMUNICATIONS AND CONVEYANCE

Miguel Santiago, Chair

SBPCA Bill Id:SB 704

Author:(Bradford) – As Amended Ver:July 2, 2019

SENATE VOTE: 27-7

SUBJECT: Telecommunications: Moore Universal Telephone Service Act

SUMMARY: Makes various changes to the California LifeLine Program. Specifically, this bill:

1. Requires the California Public Utilities Commission (CPUC), by July 1, 2020, in an existing proceeding, determine whether a lifeline telephone service subscriber shall be permitted an additional lifeline subscription for broadband services. The CPUC shall issue a decision in the proceeding by no later than July 1, 2022.
2. Requires the CPUC, by July 1, 2020, as part of an existing proceeding, to update the lifeline program to address, at a minimum, all of the following:
   1. Allowing subscribers to enroll directly online using an electronic signature;
   2. Allowing each lifeline subscriber to complete the subscriber’s annual recertification of eligibility online using an electronic signature and verify their identity using personally identifiable information on file with the third-party administrator without using a CPUC-issued personal identification number (PIN); and,
   3. Allowing subscribers to recertify through an interactive voice response system.
3. Requires the CPUC, by July 1, 2021, as a part of an existing proceeding, to adopt updated rules for the lifeline program that reflect specified program updates and include, at a minimum, all of the following:
   1. Methods for increasing enrollment, participation, and renewal in the lifeline program by eligible low-income individuals commensurate with participation and renewal rates in other public purpose programs administered by the CPUC, such as the California Alternative Rates for Energy program;
   2. Methods for increasing the utilization of community-based or nonprofit organizations, as well as public agencies, to enroll subscribers in the lifeline program;
   3. Methods for increasing participation in the lifeline program by members of the vulnerable or disadvantaged groups, as specified; and,
   4. Consideration of methods to phase out the use of for-profit third-party originators to enroll subscribers.
4. Requires the CPUC to do all of the following:
   1. Develop, in consultation with the Department of Corrections and Rehabilitation (CDCR), an outreach and enrollment program for the formerly incarcerated as a part of CDCR’s reentry services; and,
   2. Develop, in consultation with the Department of Veterans Affairs (CalVet), an outreach and enrollment program for veterans.
5. Requires the CPUC to accept, for enrollment purposes, identification issued to eligible inmates released from state prisons and identification issued to eligible juvenile offenders released from a state juvenile facility, as specified.
6. Requires the CPUC, in addition to any other proof of identification required for enrollment in the lifeline program, to consider accepting, for enrollment purposes, alternative forms of identification to increase participation in the lifeline program by members of vulnerable or disadvantaged groups, as specified.
7. Authorizes the CPUC to establish enrollment criteria to increase participation by formerly incarcerated individuals that reflect the distinct challenges they encounter upon release from a juvenile facility, state prison, or other such facility.
8. Requires the CPUC and the Department of Social Services (CDSS) to develop and enter into a memorandum of understanding or an interagency agreement by July 1, 2020 that shall, at a minimum, require CDSS to share with the CPUC, to the extent authorized by federal law, on a recurring, nonrecurring, or real-time basis as needed by the CPUC, all of the following:
   1. Whether or not a particular individual is enrolled in a particular public assistance program administered by CDSS;
   2. Whether or not a particular individual’s income is at or below a certain percentage of the federal poverty guidelines;
   3. Information from its databases necessary to verify information received on a lifeline application; and,
   4. A list of participants in public assistance programs administered by CDSS that is relevant to their enrollment or potential enrollment in the lifeline program.
9. Requires the CPUC and the Department of Health Care Services (DHCS) to develop and enter into a memorandum of understanding or an interagency agreement by July 1, 2020, that shall, at a minimum, require DHCS to share with the CPUC, to the extent authorized by federal law, on a recurring, nonrecurring, or real-time basis as needed by the CPUC, all of the following:
   1. Whether or not a particular individual is enrolled in a particular public assistance program administered by DHCS;
   2. Whether or not a particular individual’s income is at or below a certain percentage of the federal poverty guidelines;
   3. Information from its databases necessary to verify information received on a lifeline application; and,
   4. A list of participants in public assistance programs administered by DHCS that is relevant to their enrollment or potential enrollment in the lifeline program.
10. Makes conforming changes to the definition of “adult” to mean any person 18 years of age or older, and “economic unit” to mean all adult individuals contributing to and sharing in the income and expenses of a household for purposes of determining program eligibility.
11. Redefines a “household” for the purposes of determining Lifeline eligibility as any group of individuals, including the subscriber, who are living together at the same address and as one economic unit. A household may include related and unrelated persons. If an adult has no, or minimal, income and lives with someone who provides financial support to that adult, both persons shall be part of the same household. A child under 18 years of age and living with a parent or guardian shall be part of the same household as the parent or guardian.
12. Requires a lifeline telephone service subscriber to be provided with one lifeline subscription, as defined by the CPUC, per household and no other member of that household is eligible for lifeline telephone service, except as specified. A lifeline telephone service subscriber is eligible for lifeline service at only one address.
13. Specifies that multiple lifeline telephone service subscribers may maintain the same address if they are not of the same household.
14. Authorizes multiple Lifeline subscriptions at the same address if the subscribers are not part of the same household, as specified.
15. Specifies that a lifeline telephone service subscriber who is any of the following shall be provided with one lifeline subscription, as defined by the CPUC and additional to the subscription of any other member of the household, so long as the subscriber is eligible for lifeline service:
    1. A foster youth;
    2. Formerly incarcerated;
    3. A Native American;
    4. A veteran;
    5. Deaf;
    6. Disabled; or,
    7. A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the lifeline program, as determined by the CPUC.

EXISTING LAW:

1. Establishes the Moore Universal Telephone Service Act to achieve universal service by making basic telephone service affordable to low-income households through the creation of a lifeline class of service. Requires the CPUC and telephone corporations to employ every means to ensure that every qualified household is informed and afforded the opportunity to subscribe to the service. (Public Utilities Code (PUC) Section 871 et seq.)
2. Defines “household” for lifeline eligibility determination to mean a residential dwelling that is the principal place of residence of the lifeline telephone service subscriber, and excludes any industrial, commercial, or other nonresidential building. (PUC Section 872)
3. Requires a lifeline telephone service subscriber to be provided with one lifeline subscription, as defined by the CPUC, at his or her principal place of residence, and no other member of that subscriber’s family or household who maintains residence at that place is eligible for lifeline telephone service. An applicant for lifeline telephone service may report only one address in this state as the principal place of residence. (PUC Section 878)
4. Requires the CPUC to annually do all of the following:
   1. Designate a class of lifeline service necessary to meet minimum communications needs;
   2. Set the rates and charges for that service;
   3. Develop eligibility criteria for that service; and,
   4. Assess the degree of achievement of universal service, including telephone penetration rates by income, ethnicity, and geography. (PUC Section 873)
5. Specifies that the lifeline telephone service rates and charges shall be as follows:
   1. In a residential subscriber’s service area where measured service is not available, the lifeline telephone service rates shall not be more than 50 percent of the rates for basic flat rate service, exclusive of federally mandated end user access charges, available to the residential subscriber; and,
   2. In a residential subscriber’s service area where measured service is available, the subscriber may elect either of the following:
      1. A lifeline telephone service measured rate of not more than 50 percent of the basic rate for measured service, exclusive of federally mandated end user access charges, available to the residential subscriber; or,
      2. A lifeline flat rate of not more than 50 percent of the rates for basic flat rate service, exclusive of federally mandated end user access charges, available to the residential subscriber. (PUC Section 874)
6. Requires the CPUC to require every telephone corporation providing telephone service within a service area to file a schedule of rates and charges providing a class of lifeline telephone service. Every telephone corporation providing service within a service area shall inform all eligible subscribers of the availability of lifeline telephone service, and how they may qualify for and obtain service, and shall accept applications for lifeline telephone service according to procedures specified by the CPUC. (PUC Section 876)

FISCAL EFFECT: Unknown. This bill has been keyed fiscal by the Legislative Counsel.

COMMENTS:

1. Author’s Statement: According to the author, “SB 704 delivers timely updates to the LifeLine Universal Service program to better fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, technology-dependent society. This includes overdue program updates that will lower unnecessary barriers to enrollment and re-enrollment, as well as improve the program’s ability to provide essential services to vulnerable, already-eligible populations.
2. Background: The CPUC is tasked with developing and implementing programs to advance universal service. Universal service means that a minimum level of telecommunications service is available to everyone at a reasonable rate. The CPUC implements a number of public programs to promote universal service, including the California High Cost Fund-A, the California High Cost Fund-B, the California LifeLine Program, the California Teleconnect Fund, the California Advanced Services Fund, and the California Deaf and Disabled Telecommunications Program.

Such universal service programs are generally developed to provide support either for providers in areas of the state where it might not make economic sense to provide telecommunications services to certain areas, such as rural, remote, and sparsely populated areas; or support for individuals who otherwise might struggle to access affordable telecommunications services, such as low income, deaf and disabled, or individuals living in or serving disadvantage communities and institutions.

The universal service programs are funded through a surcharge on each customer’s phone bill for intrastate telecommunications services. The surcharge for each program is typically adjusted on an annual basis to ensure adequate funding to cover carrier claims and administrative costs. As of February 2019, the total surcharge for all universal service programs is 6.94 percent of each customer’s phone bill for intrastate telecommunications service.

1. California LifeLine Program: The California LifeLine Program was created in 1984 to provide access for low-income households to affordable basic residential telephone service. The California LifeLine Program helps consumers lower the cost of their phone bills by providing discounts for home phone and cell phone service to qualified California residents. The California LifeLine Program works in conjunction with the federal LifeLine program which provides an additional discount on phone service for qualifying low-income subscribers. Together each program participant can currently receive a monthly maximum discount of $13.75 from the California LifeLine Program in addition to a monthly maximum discount of $9.25 from the Federal LifeLine Program. As of September 2018, the surcharge for Universal Lifeline Telephone Service is 4.75 percent of each customer’s phone bill for intrastate telecommunications service.

To qualify for LifeLine, individuals must be enrolled in certain public assistance programs, such as, Medicaid/Medi-Cal; Supplemental Security Income; CalFresh, Food Stamps or Supplemental Nutrition Assistance Program; Women, Infants and Children Program; National School Lunch Program, among others. In addition, individuals may also qualify if their household’s total annual gross income is at or below 135 percent of the federal poverty level.

1. LAO Report: As part of the 2018-19 budget, the Legislature directed the Legislative Analyst’s Office (LAO) to review the LifeLine program budget estimates and make recommendations on how the CPUC could improve the accuracy of the estimates, as well as assess and make recommendations about ways to improve participation in the program. The LAO report noted that only about 40 percent of eligible households are enrolled in the program. The report found that there were several reasons why eligible households might not participate in the program, including that households might be unaware of the program or need to renew; prefer a non-LifeLine telephone plan or carrier; or have difficulty completing the enrollment and/or renewal process. The report recommended the Legislature direct the CPUC to conduct a formal evaluation of the major reasons why eligible households do not enroll in the program, and to wait for the results of such an evaluation before directing the CPUC to make major changes to the program. However, the report also noted that the Legislature could consider adopting other changes that appear to be relatively low cost and that are likely to have some enrollment benefits.

This bill makes various changes to the California LifeLine Program that are consistent with many of the recommendation made in the LAO’s report. The bill requires the CPUC to update the program in an existing proceeding by July 1, 2020, to allow subscribers to enroll online using an electronic signature; to recertify using personal information already on file with a third party administrator, and to recertify through an interactive voice response system. The bill also requires the CPUC in an existing proceeding, by July 1, 2021, to adopt updated program rules that include methods to increase participation by eligible individuals, including low-income and members of the vulnerable or disadvantaged groups, increase the utilization of community-based or nonprofit organizations, and develop methods to phase out the use of for-profit third-party originators.

1. Veterans & the Formerly Incarcerated Population: Veterans and the formerly incarcerated population represent a critical group of individuals who may benefit from Lifeline and other public assistance programs. California is home to approximately 1.8 million veterans; more than any other state. In January 2016, the U.S. Department of Housing and Urban Development reported that 40,000 of the nation’s homeless were veterans, and 24 percent of them live in California. Of that, 58 percent of California’s homeless veterans were unsheltered. Veterans returning to civilian life face a myriad of barriers to employment, including mental health challenges and access to affordable housing. In addition, providing resources to formerly incarcerated individuals is critical to furthering the goal of reducing recidivism rates in the State.

Certainly Lifeline can help reduce the cost of accessing telecommunications services, especially for those who may have limited incomes or may not have stable housing. Access to affordable telecommunications services not only provides individuals with a means of communications in emergencies, but with the evolution of telecommunications services to include wireless and broadband technology, it also serves as a means for individuals to access additional support and resources.

This bill requires the CPUC to develop an outreach and enrollment program with CDCR and CalVet to increase participation in the lifeline program from veterans and the formerly incarcerated. In addition, this bill requires the CPUC to accept alternative forms of identification issued to released inmates or juvenile offenders for enrollment purposes. The bill requires the CPUC to consider accepting alternative forms of identification to increase participation in the lifeline program by members of the vulnerable or disadvantaged groups, and authorizes it to establish enrollment criteria to increase participation by formerly incarcerated individuals. Furthermore, this bill requires the CPUC to develop and enter into an agreement with CDSS and DHCS that would require the departments to share specified information with the CPUC to assist it in increasing participation in the lifeline program.

1. Household Eligibility: In 2010, the Legislature passed AB 2213 (Fuentes), Chapter 381, Statutes of 2010, which among other things, specified that a lifeline subscriber can only have one lifeline subscription at their principle place of resident, and no other member of that subscribers family or household is eligible for lifeline service. Since then, Lifeline has expanded to include other communications services, such as wireless telephone and broadband services. As the program evolved so too did the federal definition of a “household” for purposes of determining program eligibility.

The CPUC currently limits Lifeline subscription to one per household, with households being an individual or group of individuals who are living together at the same address as one economic unit. An economic unit consists of all adult individuals contributing to and sharing in the income and expenses of a household. While the federal definition of “household” has changed to recognize more complex co-housing and living arrangements therefore enabling multiple lifeline subscribers to share the same address, the state definition has not.

This bill makes conforming definitional changes to program for the purposes of determining eligibility which would allow multiple lifeline subscribers to live at the same address but are not part of the same household. By providing clarity as to whether otherwise eligible individuals with the same address who function as separate households may have separate Lifeline subscriptions, this bill could help increase participation in the program by uniquely vulnerable and disadvantaged populations, such as veterans or the formerly incarcerated who may reside in veteran homes or halfway houses until they are able to earn enough income to resident on their own.

1. Arguments in Support: According to The Greenlining Institute, “SB 704 will facilitate increased program participation among low-income families, including many household of color. Additionally, the bill will make it easier for populations who have struggled to participate in the program - including foster youth, veterans, and formerly incarcerated individuals – to take advantage of the benefits offered by the LifeLine program. But many Californians continue to cite affordability as a barrier to getting telephone service. SB 704 will help ensure that every Californian has access to the educational and employment opportunities that are essential for thriving in today’s economy.”
2. Previous Legislation: AB 2652 (Quirk) of 2018 requires the CPUC to adopt a portability freeze and a rule to improve the cost-effectiveness of the delivery of the California LifeLine Program. Status: Vetoed by the Governor.

ab 3111 (e. Garcia) of 2018 required the CPUC, in consultation with CDCR and CalVet, to develop outreach and enrollment programs for the California LifeLine Program for the formerly incarcerated and veterans. Status: Died in the Assembly Committee on Appropriations.

AB 2570 (Quirk) of 2016 required the CPUC to adopt a portability freeze rule for the California LifeLine Program that limits the ability of subscribers to change services. Status: Chaptered by the Secretary of State, Chapter 577, Statutes of 2016.

AB 2213 (Fuentes) of 2010 replaced the definition of “residential” for California’s low-income residential telephone service with a definition of “household” and defines household as a residential dwelling that is the principal place of residence of the lifeline telephone service subscriber. Status: Chaptered by the Secretary of State, Chapter 381, Statutes of 2010.

REGISTERED SUPPORT / OPPOSITION:

Support

iFoster

The Greenlining Institute

Opposition

None on file.

Analysis Prepared by: Edmond Cheung / C. & C. / (916) 319-2637

 THIRD READING  

Bill No: SB 704

Author: Bradford (D)

Amended: 4/11/19

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 10-2, 4/24/19

AYES: Hueso, Bradford, Dodd, Hertzberg, Hill, McGuire, Rubio, Skinner, Stern, Wiener

NOES: Moorlach, Stone

NO VOTE RECORDED: Chang

SENATE APPROPRIATIONS COMMITTEE: 4-1, 5/16/19

AYES: Portantino, Bradford, Hill, Wieckowski

NOES: Jones

NO VOTE RECORDED: Bates

SUBJECT: Telecommunications: Moore Universal Telephone Service Act

SOURCE: Author

DIGEST:

This bill clarifies the definition of a household for the purposes of Lifeline program eligibility, requires the California Public Utilities Commission (CPUC) to update outreach and enrollment rules for the program, and requires the CPUC to determine whether a Lifeline participant should allowed to obtain an additional Lifeline subscription for broadband services.

ANALYSIS:

Existing federal law:

1. Requires every telecommunications carrier providing interstate telecommunications services to contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient methods specified by the Federal Communications Commission (FCC) for preserving and advancing universal service. Contributions are deposited into the Universal Service Fund, which is administered by the Universal Service Administrative Company. (47 United States Code §254)
2. Makes various definitions for the purpose of the Lifeline program, including defining a “household” for the purpose of the federal any individual or group of individuals who are living together at the same address as one economic unit. A household may include related and unrelated persons. An “economic unit” consists of all adult individuals contributing to and sharing in the income and expenses of a household. An adult is any person eighteen years or older. If an adult has no or minimal income, and lives with someone who provides financial support to him/her, both people shall be considered part of the same household. Children under the age of 18 living with their parents or guardians are considered to be part of the same household as their parents or guardians. Only one Lifeline subscription per household is allowed. A violation of the one-per-household limitation constitutes a violation of FCC rules and will result in the subscriber's de-enrollment from the program. (47 Code of Federal Regulations §§54.400 and 54.410)

Existing state law:

1. Requires the CPUC to designate a class of Lifeline service necessary to meet minimum communications needs and set rates and eligibility criteria for that service. (Public Utilities Code §873)
2. Establishes eligibility criteria for the California Lifeline program.
3. Defines a “household” for Lifeline eligibility determinations as a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber. This definition excludes any industrial, commercial, or other nonresidential building. (Public Utilities Code §872)
4. Specifies that a Lifeline program participant may only obtain one Lifeline subscription at his or her principal residence. No other member of the participant’s family or household at that residence is eligible for Lifeline telephone service. An applicant for Lifeline telephone service may report only one address as the principal place of residence. (Public Utilities Code §878)

This bill:

1. Requires the CPUC to open a proceeding by July 1, 2020 to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services. The CPUC must complete this proceeding by July 1, 2022.
2. Requires the CPUC to adopt updated rules for the lifeline program by July 1, 2020, that include the following:
   1. Methods for increasing enrollment, participation, and renewal with participation and renewal rates in other public purpose programs administered by the CPUC, such as the California Alternative Rates for Energy (CARE) program.
   2. Methods for increasing the utilization of community-based or nonprofit organizations (CBOs) and public agencies to conduct enrollment.
   3. Methods for increasing participation in the Lifeline program by members of the vulnerable or disadvantaged groups
3. Redefines a “household” for the purposes of determining Lifeline eligibility as any group of individuals, including the subscriber, who live together at the same address as one economic unit. A household may include related and unrelated individuals. If an adult has no, or minimal, income and lives with someone who provides financial support to that adult, both persons will be considered part of the same household. A child under 18 years of age and living with a parent or guardian will be considered part of the same household as the parent or guardian.
4. Allows multiple Lifeline subscriptions at the same address if the subscribers are not part of the same household.
5. Allows an otherwise eligible individual who is one of the following to obtain a Lifeline subscription even if another member of his/her household also has a subscription:
6. A foster youth
7. A formerly incarcerated individual
8. A Native American
9. A veteran
10. Deaf
11. Disabled
12. A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC.
13. Makes conforming changes to the definition of an “economic unit” and “adult” for the purposes of determining program eligibility.
14. Repeals the existing definition of a “household” for the Lifeline program and existing provisions prohibiting multiple Lifeline subscriptions at a single address.

Background

The Lifeline programs: federal and state. Lifeline is one of several universal service programs addressing the affordability of communications services. California Lifeline subscribers can participate in both the federal Lifeline program and a California Lifeline program. The federal Lifeline program is regulated by the FCC, and the state Lifeline program is regulated by the CPUC. Both programs are funded through surcharges on telephone bills.

Prior to the 1984 break-up of the Bell telephone system, long-distance services helped subsidize local telephone costs. Following AT&T’s divestment of the Bell Operating Companies, long-distance and local telephone services were separated. The Reagan FCC established the Lifeline program to address concerns about the affordability of local telephone service for after this separation. The Lifeline program provides households at or below 135 percent of the federal poverty level with a monthly subsidy to obtain one fixed or wireless line with a participating communications provider, which may include a data package. California Lifeline subscribers may receive $13.75 per month from the state program in addition to the $9.25 from the federal program. As a result, California participants can receive a total of $23 per month towards their Lifeline service.

The inclusion of wireless and broadband. This bill requires the CPUC to open a proceeding to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services. This bill requires the CPUC to complete the proceeding by July 1, 2022. Initially, Lifeline provided a subsidy to help a low-income household cover the cost of a fixed telephone line. However, the Lifeline program has since evolved to offer support for other communications services. In 2005, the George W. Bush FCC modified the program, enabling subscribers to apply the subsidy to a fixed or wireless telephone line. In 2016, the Obama FCC issued the Lifeline Modernization Order, which made a number of changes to the Lifeline program, including permitting subscribers to apply the subsidy to fixed or mobile broadband services.

The “household” issue. When Lifeline was first established, the program was intended to subsidize one wireline telephone line per household. As a result, Lifeline subscribers have generally been limited on the ability to have more than one program subscription at a single address. As the program has evolved to encompass wireless and broadband services at the federal level, the FCC has also modified the definition of a “household” for the purposes of determining program eligibility. The FCC’s definition change intended to recognize more complex co-housing and living situations in which economically independent persons live at the same address.

While the federal regulatory definition of a household has been clarified to enable multiple lifeline subscribers to share the same address, California’s statutory definition of a household does not conform to the federal definition. Currently, existing state law defines a household for Lifeline eligibility as “…a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber.” Existing state law also prohibits any other member of a household from having a Lifeline subscription. The lack of conformity to the federal definition of a household does not provide clarity under state law as to whether otherwise eligible individuals with the same address who function as separate households may have separate Lifeline subscriptions. This bill conforms the definition of a household to the definition at the federal level and modifies restrictions on household eligibility rules to allow multiple Lifeline subscriptions at the same address if the subscribers are otherwise eligible for the program and are separate households.

The Legislative Analyst’s Office (LAO) review and recommendations. The supplemental report to the 2018-19 Budget Act required the LAO to review the Lifeline program’s caseload and budget estimates and make recommendations on how the CPUC could improve budget and enrollment estimates. The supplemental report also required the LAO to analyze and recommend ways to improve Lifeline enrollment and re-certification. In April 2019, the LAO released a report addressing these requirements. In its report, the LAO noted that 40 percent of eligible households are currently enrolled in the program, and the LAO recommended that the Legislature direct the CPUC to evaluate the reasons why eligible households do not enroll in the program. While the LAO noted that the Legislature could wait for results from this evaluation before requiring program changes, the report also noted that the Legislature could consider adopting changes that appear to be relatively low cost and a benefit to enrollment.

The LAO’s report makes several more specific recommendations for improving Lifeline enrollment. These additional recommendations include suggesting that the Legislature could direct the CPUC to consider outreach and enrollment coordination with other state and local agencies and CBOs that frequently interact with eligible populations. The LAO’s report notes that most Lifeline participants are using the program for wireless subscriptions, and 80 percent of wireless Lifeline subscriptions are initiated through “street teams,” which are employed by carriers participating in the program to set up temporary booths at which they can enroll eligible households in the program. This bill requires the CPUC to adopt updated rules for the Lifeline program to address methods for increasing enrollment at rates for other low-income programs administered by the CPUC, collaboration with CBOs and other public agencies in outreach and enrollment, and methods for enrolling individuals that are part of specific disadvantaged and vulnerable populations.

This bill is consistent with many of the recommendations made in the LAO’s review of the program; however, it also expands Lifeline eligibility for eligible individuals within specific populations that may be more likely to have complex household structures that may make distinctions between economic units at the same address more challenging. The bill allows eligible individuals to obtain a Lifeline subscription even if another member of the household has a subscription if the eligible individual is one of the following:

• A foster youth
• A formerly incarcerated individual
• A Native American
• A veteran
• Deaf
• Disabled
• A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC

Individuals in these groups may be eligible for Lifeline; however, they may have circumstances that make complying with separate household restrictions difficult. These individuals may also live in transitional households with unique legal and economic conditions that make defining a household for the purposes of the Lifeline program more challenging than other eligible persons. To the extent that federal regulations permit these individuals to have multiple Lifeline subscriptions in a single household, this bill could help address universal service challenges for uniquely vulnerable and disadvantaged populations. However, if the FCC or the Universal Service Administrative Company determines that multiple lines within one household constitutes a program violation, households with multiple Lifeline subscriptions may be denied federal Lifeline benefits.

Related/Prior Legislation

AB 2652 (Quirk, 2018) would have required the CPUC to consider a 60-day portability freeze for Lifeline participants seeking to change providers. The bill also would have required the CPUC to adopt rules modifying the program’s enrollment and recertification process. The bill was vetoed.

AB 2537 (Carrillo, 2018) would have established the Lifeline Oversight Board and specify the board’s membership and duties. The bill died in the Senate.

AB 2570 (Quirk, Chapter 577, Statutes of 2016) required the CPUC to adopt a portability freeze rule for the Lifeline program by January 15, 2017. The bill required the CPUC to consider a 60-day freeze as part of its proceeding.

AB 1407 (Bradford, 2014) would have phased out the existing Lifeline program for basic landline service and created a new Lifeline discount of $11.85 per month for voice communication services from a telephone corporation or eligible wireless and Voice over Internet Protocol providers. The bill died in the Senate.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Committee on Appropriations:

• The CPUC indicates that in order to increase participation of eligible low-income individuals in the Lifeline Program commensurate with participation and renewal rates in other public purpose programs such as CARE, it would need four new positions at a cost of about $800,000 and an additional $4.1 million to conduct outreach activities. (Universal Lifeline Telephone Service Fund)
• This bill could result in significant cost pressure to permit additional members of a household to receive a Lifeline subsidy. While the CPUC does not have sufficient information to estimate the potential number of newly eligible participants, even a one percent increase would correspond to a cost of about $8 million and doubling program participation would lead to additional costs of over $300 million. However, a precise amount would depend on the number of new participants.

SUPPORT: (Verified 5/16/19)

iFoster

Pacoima Beautiful

The Greenlining Institute

TruConnect Mobile

Youth Policy Institute

OPPOSITION: (Verified 5/16/19)

None received

ARGUMENTS IN SUPPORT: According to the author:

SB 704 delivers timely updates to the Lifeline Universal Service program to better-fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, network-dependent society.

Prepared by: Sarah Smith / E., U., & C. / (916) 651-4107

5/18/19 11:23:13

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 704 (Bradford) - Telecommunications: Moore Universal Telephone Service Act

Bill Summary:

This bill clarifies the definition of a household for the purposes of Lifeline program eligibility and requires the California Public Utilities Commission (CPUC) to update outreach and enrollment rules for the program. This bill also requires the CPUC to determine whether a Lifeline participant should allowed to obtain an additional Lifeline subscription for broadband services.

Fiscal Impact:

• The CPUC indicates that in order to increase participation of eligible low-income individuals in the Lifeline Program commensurate with participation and renewal rates in other public purpose programs such as the California Alternate Rates for Energy (CARE), it would need four new positions at a cost of about $800,000 and an additional $4.1 million to conduct outreach activities. (Universal Lifeline Telephone Service Fund)
• This bill could result in significant cost pressure to permit additional members of a household to receive a Lifeline subsidy. While the CPUC does not have sufficient information to estimate the potential number of newly eligible participants, even a one percent increase would correspond to a cost of about $8 million and doubling program participation would lead to additional costs of over $300 million. However, a precise amount would depend on the number of new participants.

Background:

Existing law requires the CPUC to designate a class of Lifeline service necessary to meet minimum communications needs and set rates and eligibility criteria for that service and also establishes eligibility criteria for the California Lifeline program.

Existing law defines a “household” for Lifeline eligibility determinations as a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber. This definition excludes any industrial, commercial, or other nonresidential building. The law specifies that a Lifeline program participant may only obtain one Lifeline subscription at his or her principal residence. No other member of the participant’s family or household at that residence is eligible for Lifeline telephone service. An applicant for Lifeline telephone service may report only one address as the principal place of residence.

Lifeline is one of several universal service programs addressing the affordability of communications services. California Lifeline subscribers can participate in both the federal Lifeline program and a California Lifeline program. The federal Lifeline program is regulated by the FCC, and the state Lifeline program is regulated by the CPUC. Both programs are funded through surcharges on telephone bills.

Prior to the 1984 break-up of the Bell telephone system, long-distance services helped subsidize local telephone costs. Following AT&T’s divestment of the Bell Operating Companies, long-distance and local telephone services were separated. The Reagan FCC established the Lifeline program to address concerns about the affordability of local telephone service for after this separation.

Proposed Law:

This bill requires the CPUC to open a proceeding by July 1, 2020 to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services. The CPUC must complete this proceeding by July 1, 2022.

This bill requires the CPUC to adopt updated rules for the Lifeline program by July 1, 2020, that include the following:

1. Methods for increasing enrollment, participation, and renewal with participation and renewal rates in other public purpose programs administered by the CPUC, such as the California Alternative Rates for Energy (CARE) program.
2. Methods for increasing the utilization of community-based or nonprofit organizations (CBOs) and public agencies to conduct enrollment.
3. Methods for increasing participation in the Lifeline program by members of the vulnerable or disadvantaged groups

This bill redefines a “household” for the purposes of determining Lifeline eligibility as any group of individuals, including the subscriber, who live together at the same address as one economic unit. A household may include related and unrelated individuals. If an adult has no, or minimal, income and lives with someone who provides financial support to that adult, both persons will be considered part of the same household. A child under 18 years of age and living with a parent or guardian will be considered part of the same household as the parent or guardian.

This bill allows multiple Lifeline subscriptions at the same address if the subscribers are not part of the same household. This bill also allows an otherwise eligible individual, as specified, to obtain a Lifeline subscription even if another member of his/her household also has a subscription.

Related Legislation:

AB 2652 (Quirk, 2018) would have required the CPUC to consider a 60-day portability freeze for Lifeline participants seeking to change providers. The bill also would have required the CPUC to adopt rules modifying the program’s enrollment and recertification process. The bill was vetoed.

AB 2537 (Carrillo, 2018) would have established the Lifeline Oversight Board and specify the board’s membership and duties. The bill died in the Senate.

AB 2570 (Quirk, Chapter 577, Statutes of 2016) required the CPUC to adopt a portability freeze rule for the Lifeline program by January 15, 2017. The bill required the CPUC to consider a 60-day freeze as part of its proceeding.

Staff Comments: The Lifeline program provides households at or below 135 percent of the federal poverty level with a monthly subsidy to obtain one fixed or wireless line with a participating communications provider, which may include a data package. California Lifeline subscribers may receive $13.75 per month from the state program in addition to the $9.25 from the federal program. As a result, California participants can receive a total of $23 per month towards their Lifeline service. However, Lifeline subscribers have generally been limited on the ability to have more than one program subscription at a single address.

This bill conforms the definition of a household to the definition at the federal level and modifies restrictions on household eligibility rules to allow multiple Lifeline subscriptions at the same address if the subscribers are otherwise eligible for the program and are separate households. By permitting members of a household to receive a Lifeline subsidy, this bill would result in potentially significant costs for additional subsidies that would depend on the number of eligible participants. The CPUC indicates that the current participation rate for the Lifeline program is about 45 percent and to increase the participating rate to closely mirror the participating rates of other successful programs, it would require a commensurate increase in the program’s local assistance budget.

-- END --

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2019 - 2020 Regular

Bill No: SB 704 Hearing Date: 4/24/2019

SUBJECT: Telecommunications: Moore Universal Telephone Service Act

DIGEST: This bill clarifies the definition of a household for the purposes of Lifeline program eligibility, requires the California Public Utilities Commission (CPUC) to update outreach and enrollment rules for the program, and requires the CPUC to determine whether a Lifeline participant should allowed to obtain an additional Lifeline subscription for broadband services.

ANALYSIS:

Existing law:

1. Requires every telecommunications carrier providing interstate telecommunications services to contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient methods specified by the Federal Communications Commission (FCC) for preserving and advancing universal service. Contributions are deposited into the Universal Service Fund, which is administered by the Universal Service Administrative Company. (47 United States Code §254)
2. Makes various definitions for the purpose of the Lifeline program, including defining a “household” for the purpose of the federal any individual or group of individuals who are living together at the same address as one economic unit. A household may include related and unrelated persons. An “economic unit” consists of all adult individuals contributing to and sharing in the income and expenses of a household. An adult is any person eighteen years or older. If an adult has no or minimal income, and lives with someone who provides financial support to him/her, both people shall be considered part of the same household. Children under the age of 18 living with their parents or guardians are considered to be part of the same household as their parents or guardians. Only one Lifeline subscription per household is allowed. A violation of the one-per-household limitation constitutes a violation of FCC rules and will result in the subscriber's de-enrollment from the program. (47 Code of Federal Regulations §§54.400 and 54.410)
3. Requires the CPUC to designate a class of Lifeline service necessary to meet minimum communications needs and set rates and eligibility criteria for that service. (Public Utilities Code §873)
4. Establishes eligibility criteria for the California Lifeline program.
5. Defines a “household” for Lifeline eligibility determinations as a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber. This definition excludes any industrial, commercial, or other nonresidential building. (Public Utilities Code §872)
6. Specifies that a Lifeline program participant may only obtain one Lifeline subscription at his or her principal residence. No other member of the participant’s family or household at that residence is eligible for Lifeline telephone service. An applicant for Lifeline telephone service may report only one address as the principal place of residence. (Public Utilities Code §878)

This bill:

1. Requires the CPUC to open a proceeding by July 1, 2020 to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services. The CPUC must complete this proceeding by July 1, 2022.
2. Requires the CPUC to adopt updated rules for the lifeline program by July 1, 2020, that include the following:
   1. Methods for increasing enrollment, participation, and renewal with participation and renewal rates in other public purpose programs administered by the CPUC, such as the California Alternative Rates for Energy (CARE) program.
   2. Methods for increasing the utilization of community-based or nonprofit organizations (CBOs) and public agencies to conduct enrollment.
   3. Methods for increasing participation in the Lifeline program by members of the vulnerable or disadvantaged groups
3. Redefines a “household” for the purposes of determining Lifeline eligibility as any group of individuals, including the subscriber, who live together at the same address as one economic unit. A household may include related and unrelated individuals. If an adult has no, or minimal, income and lives with someone who provides financial support to that adult, both persons will be considered part of the same household. A child under 18 years of age and living with a parent or guardian will be considered part of the same household as the parent or guardian.
4. Allows multiple Lifeline subscriptions at the same address if the subscribers are not part of the same household.
5. Allows an otherwise eligible individual who is one of the following to obtain a Lifeline subscription even if another member of his/her household also has a subscription:
6. A foster youth
7. A formerly incarcerated individual
8. A Native American
9. A veteran
10. Deaf
11. Disabled
12. A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC.
13. Makes conforming changes to the definition of an “economic unit” and “adult” for the purposes of determining program eligibility.
14. Repeals the existing definition of a “household” for the Lifeline program and existing provisions prohibiting multiple Lifeline subscriptions at a single address.

Background

The Lifeline programs: federal and state. Lifeline is one of several universal service programs addressing the affordability of communications services. California Lifeline subscribers can participate in both the federal Lifeline program and a California Lifeline program. The federal Lifeline program is regulated by the FCC, and the state Lifeline program is regulated by the CPUC. Both programs are funded through surcharges on telephone bills.

Prior to the 1984 break-up of the Bell telephone system, long-distance services helped subsidize local telephone costs. Following AT&T’s divestment of the Bell Operating Companies, long-distance and local telephone services were separated. The Reagan FCC established the Lifeline program to address concerns about the affordability of local telephone service for after this separation. The Lifeline program provides households at or below 135 percent of the federal poverty level with a monthly subsidy to obtain one fixed or wireless line with a participating communications provider, which may include a data package. California Lifeline subscribers may receive $13.75 per month from the state program in addition to the $9.25 from the federal program. As a result, California participants can receive a total of $23 per month towards their Lifeline service.

The inclusion of wireless and broadband. This bill requires the CPUC to open a proceeding to determine whether a Lifeline subscriber should be permitted to obtain an additional Lifeline subscription for broadband services. This bill requires the CPUC to complete the proceeding by July 1, 2022. Initially, Lifeline provided a subsidy to help a low-income household cover the cost of a fixed telephone line. However, the Lifeline program has since evolved to offer support for other communications services. In 2005, the George W. Bush FCC modified the program, enabling subscribers to apply the subsidy to a fixed or wireless telephone line. In 2016, the Obama FCC issued the Lifeline Modernization Order, which made a number of changes to the Lifeline program, including permitting subscribers to apply the subsidy to fixed or mobile broadband services.

The “household” issue. When Lifeline was first established, the program was intended to subsidize one wireline telephone line per household. As a result, Lifeline subscribers have generally been limited on the ability to have more than one program subscription at a single address. As the program has evolved to encompass wireless and broadband services at the federal level, the FCC has also modified the definition of a “household” for the purposes of determining program eligibility. The FCC’s definition change intended to recognize more complex co-housing and living situations in which economically independent persons live at the same address.

While the federal regulatory definition of a household has been clarified to enable multiple lifeline subscribers to share the same address, California’s statutory definition of a household does not conform to the federal definition. Currently, existing state law defines a household for Lifeline eligibility as “…a residential dwelling that is the principal place of residence of the Lifeline telephone service subscriber.” Existing state law also prohibits any other member of a household from having a Lifeline subscription. The lack of conformity to the federal definition of a household does not provide clarity under state law as to whether otherwise eligible individuals with the same address who function as separate households may have separate Lifeline subscriptions. This bill conforms the definition of a household to the definition at the federal level and modifies restrictions on household eligibility rules to allow multiple Lifeline subscriptions at the same address if the subscribers are otherwise eligible for the program and are separate households.

The Legislative Analyst’s Office (LAO) review and recommendations. The supplemental report to the 2018-19 Budget Act required the LAO to review the Lifeline program’s caseload and budget estimates and make recommendations on how the CPUC could improve budget and enrollment estimates. The supplemental report also required the LAO to analyze and recommend ways to improve Lifeline enrollment and re-certification. In April 2019, the LAO released a report addressing these requirements. In its report, the LAO noted that 40 percent of eligible households are currently enrolled in the program, and the LAO recommended that the Legislature direct the CPUC to evaluate the reasons why eligible households do not enroll in the program. While the LAO noted that the Legislature could wait for results from this evaluation before requiring program changes, the report also noted that the Legislature could consider adopting changes that appear to be relatively low cost and a benefit to enrollment.

The LAO’s report makes several more specific recommendations for improving Lifeline enrollment. These additional recommendations include suggesting that the Legislature could direct the CPUC to consider outreach and enrollment coordination with other state and local agencies and CBOs that frequently interact with eligible populations. The LAO’s report notes that most Lifeline participants are using the program for wireless subscriptions, and 80 percent of wireless Lifeline subscriptions are initiated through “street teams,” which are employed by carriers participating in the program to set up temporary booths at which they can enroll eligible households in the program. This bill requires the CPUC to adopt updated rules for the Lifeline program to address methods for increasing enrollment at rates for other low-income programs administered by the CPUC, collaboration with CBOs and other public agencies in outreach and enrollment, and methods for enrolling individuals that are part of specific disadvantaged and vulnerable populations.

This bill is consistent with many of the recommendations made in the LAO’s review of the program; however, it also expands Lifeline eligibility for eligible individuals within specific populations that may be more likely to have complex household structures that may make distinctions between economic units at the same address more challenging. The bill would allow eligible individuals to obtain a Lifeline subscription even if another member of the household has a subscription if the eligible individual is one of the following:

• A foster youth
• A formerly incarcerated individual
• A Native American
• A veteran
• Deaf
• Disabled
• A member of another vulnerable or disadvantaged group commonly presenting complex guardianship or household compositions that would benefit from inclusion in the Lifeline program, as determined by the CPUC

Individuals in these groups may be eligible for Lifeline; however, they may have circumstances that make complying with separate household restrictions difficult. These individuals may also live in transitional households with unique legal and economic conditions that make defining a household for the purposes of the Lifeline program more challenging than other eligible persons. To the extent that federal regulations permit these individuals to have multiple Lifeline subscriptions in a single household, this bill could help address universal service challenges for uniquely vulnerable and disadvantaged populations. However, if the FCC or the Universal Service Administrative Company determines that multiple lines within one household constitutes a program violation, households with multiple Lifeline subscriptions may be denied federal Lifeline benefits.

Prior/Related Legislation

AB 2652 (Quirk, 2018) would have required the CPUC to consider a 60-day portability freeze for Lifeline participants seeking to change providers. The bill also would have required the CPUC to adopt rules modifying the program’s enrollment and recertification process. The bill was vetoed.

AB 2537 (Carrillo, 2018) would have established the Lifeline Oversight Board and specify the board’s membership and duties. The bill died in the Senate.

AB 2570 (Quirk, Chapter 577, Statutes of 2016) required the CPUC to adopt a portability freeze rule for the Lifeline program by January 15, 2017. The bill required the CPUC to consider a 60-day freeze as part of its proceeding.

AB 1407 (Bradford, 2014) would have phased out the existing Lifeline program for basic landline service and created a new Lifeline discount of $11.85 per month for voice communication services from a telephone corporation or eligible wireless and Voice over Internet Protocol providers. The bill died in the Senate.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

iFoster

Pacoima Beautiful

The Greenlining Institute

TruConnect Mobile

Youth Policy Institute

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to the author:

“SB 704 delivers timely updates to the Lifeline Universal Service program to better-fulfill its mission: ensuring all Californians, especially low-income and disadvantaged families, have access to basic telecommunications service in our modern, network-dependent society.”

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