PSC Takes its Time (Again) while Telecom Universal Service Programs Sag

There was a time when the New York State Public Service Commission could rightfully consider itself to be a leader. It had a reputation of being the first (or, at the very least, one of the first) state commissions around the country to take initiatives on a variety of topics, such as

• state matching of federal Lifeline support to reduce bills for low income telephone customers,
• Lifeline service eligibility broader than the federal program
  
• automatic enrollment of Lifeline customers,
• creation of TAF, the third party administrator for Lifeline, E911, TTY and state universal service programs
  
• telephone fair practices rules similar to HEFPA,
  
• billing and collection reforms to protect local service from termination,
• number conservation to avoid unnecessary new area codes,
  
• opening telephone service to competition on a level playing field,
  
• permitting the state’s Baby Bell (now Verizon) to offer in-region long distance service, and
• establishing guidelines for the migration of customers between local telephone providers.

It was not uncommon for other states to cite to the actions of the New York Commission when it came to such issues or even to copy its orders word for word. These accolades seem like the distant past when one looks at the PSC these days, with telephone subscribership sagging, Lifeline enrollment plummeting, Lifeline eligibility narrower than the federal standard allows, new telephone service providers exempted from basic consumer protections of TFPA, new telephone service providers allowed to escape contribution to essential universal service programs, and profligate dispensation of numbers requiring a premature area code change in 315.

We’ve discussed how slowly the Commission and its Staff responded to the telephone number resource request crisis perpetrated by new providers in rural parts of the state which have prematurely led to numbering shortages in urban and suburban areas as well (see ALJ Recommends "Overlay" Telephone Area Code Requiring 11-Digit Dialing, Despite Plentiful Numbers and Exchange Codes in Central New York's 315 Area), and the failure to reverse the loss of low-income Lifeline assistance by 400,000 customers (see New York's Household Telephone Penetration and Lifeline Enrollment Falling). But, did you know that on the vital topic of ensuring every New Yorker has access to telephone service and being able to reach 911 emergency services and the relay service for the deaf, our state now lags behind such regulatory heavyweights as Kansas, Maine, Missouri, Nebraska, and New Mexico?

These five states assess Voice over Internet Protocol (VoIP) providers, in addition to traditional telephone companies, to support Lifeline discount telephone service, E-911 access, and the relay service. Generally, all providers are mandated to pay a percentage of their intrastate revenues into the fund to support these worthwhile, vital services or a surcharge is placed on customer bills. New York’s state universal service fund, known as the Targeted Accessibility Fund (TAF), only requires local exchange carriers - i.e., the traditional landline phone companies - to contribute. This, despite the fact that Verizon, for example, loses tens of thousands of its New York State customers every month to cable companies offering VoIP voice service. These companies do not contribute one cent to the New York TAF, which has now resulted in a steep and continuing drop in TAF assessments to support the universal service programs. It does not need to be this way.

The New York Commission is well aware of its ability to assess VoIP telephone service providers to support TAF on an equal footing, but has chosen to do nothing, even though the continued viability of TAF is at stake. In recent comments to the FCC regarding proposed changes to the federal Universal Service Fund and intercarrier compensation, the PSC cited to an amicus brief filed in April 2008 by the FCC in a case in the Eighth Circuit regarding Vonage, a prominent VoIP voice provider, in which the FCC stated that requiring VoIP providers to contribute to state universal service funds “does not frustrate federal policy.” The New York PSC added in its comments that it believes “that providing for competitively neutral contributions from VoIP providers advances both federal and state policy goals.”

The FCC position declared in federal court is correct, and is sufficient to begin the process of assessing VoIP providers. See FCC: VoIP Providers Can be Required to Support State Universal Service Fund: Where is New York? Now, the New York PSC has said it too believes this, and rightfully so. But, has the New York Commission actually taken any steps to assess VoIP providers and resolve the TAF funding crisis, or to insist that they provide the same consumer protections? The answer is no.

Real steps to correct this situation may not even begin for a couple of years, under the Commission as currently constituted. See Will Governor Paterson Repurpose the Public Service Commission to Protect Consumers?

Once again, New York has lost its place as a leader among state commissions, now falling behind other states working more aggressively to ensure universal service goals are met. There is no reason to wait any longer to take a competitively neutral approach and require VoIP providers to aid in resolving our universal service issues.

Lou Manuta