Verizon Proposes $1.95/month Rate Increase; Spares Lifeline Customers

In an April 14, 2009 tariff filing with the New York Public Service Commission, Verizon proposes to increase its residential monthly charge for local exchange access lines by $1.95 in those exchanges with the smallest local calling areas, to be effective on June 20th. As part of the filing, flat rate usage charges for all other New York rate groups would be reduced to keep the total charge for all Verizon flat rate customers at $23 per month.

Verizon stated that Lifeline rates for low income customers would not increase and the total flat rate service charge for Lifeline customers in rate groups outside those exchanges with the smallest calling areas will actually see a reduction of $1.95 per month.

The charge for Verizon’s flat rate (unlimited local) service has two components: the basic service access line rate and the local usage rate. Historically, these rates differed based on the size of the customer’s local calling area (Group 1 covers local calling areas with 1 through 3,600 lines, Group 3 covers 3,601 through 17,000, Group 5 covers 17,001 through 60,000, Group 7 covers 60,001 through 260,000, and Group 9 covers 260,001 through 650,000), but, with the proposed changes, the rates will now be identical for all rate groups.

Essentially what the tariff charge would accomplish is to raise the basic service access line portion of the charge for Group 1 from $13.85 to $15.80, the same rate already charged in other parts of the state. At the same time, the local usage charge in Groups 3, 5, 7, and 9 will decrease from $11.15 per month to $9.20 everywhere outside the Group 1 exchanges, where the rates will remain at $9.20 per month. These changes will result in $23 per month charges for all Verizon exchanges. Since the local usage portion would be a uniform $7.20 statewide, Flat Rate Lifeline service will be reduced by $1.95 per month outside of Group 1.

Flat Rate Lifeline service provides unlimited local telephone calls, while Basic Lifeline would continue to cost $1 per month, with each local call costing about a dime.

While many Lifeline customers will benefit from this tariff filing (because they are Flat Rate Lifeline customers in Groups 3, 5, 7, or 9), that does not mean that the state’s Lifeline program is a success. Since 1996, Lifeline enrollment in New York State has dropped from a peak exceeding 750,000 subscribers to around 300,000 today. This anemic amount represents a fraction of those eligible to participate. The January 2009 statistical reports from the state Office of Temporary and Disability Assistance (“OTDA”) indicate that 1,173,412 households across the state receive SNAP (Food Stamp) assistance – one of several eligibility conferring criteria for Lifeline eligibility. (at Table 16) While OTDA has an automatic enrollment program in place with Verizon to confidentially link people receiving qualifying benefits with Verizon’s Lifeline program, there are obviously gaps in the process, because only about 300,000 persons have Lifeline assistance, and there are additional eligibility-conferring programs beyond SNAP.

In contrast, California has fewer SNAP households than New York. Yet the January 2009 California Public Utilities Commission ("CAPUC") Lifeline report “Efforts to Improve California LifeLine Program Accessibility” shows that California enrolls more than 2.1 million low income telephone customers in its Lifeline assistance program - about seven times the number of New York Lifeline customers. The report indicates that CAPUC is committed to enrolling all customers eligible for the reduced rate and devotes significant staff resources to work toward fuller enrollment, and is planning to enroll more low income customers:

The [California] Commission is considering a number of initiatives to further increase Lifeline participation. One proposal is to increase the income eligibility requirement from its current level that approximates 150% of the Federal Poverty Guideline (FPG) to 200% of the FPG. Current enrollment in LifeLine is about 2.1 million, whereas the CARE energy program (which has a 200% FPG enrollment criteria) has about 3.6 million participants.

While it is good that Verizon’s proposed tariff changes will not negatively impact current Lifeline customers in New York, until the PSC confronts all the issues inherent in the dwindling Lifeline enrollment numbers, more and more New York households that qualify for Lifeline will continue to pay more for phone service than they should. Meanwhile, universal service surcharges paid by New York's consumers, many of them eligible for Lifeline, will go to reduce phone bills for residents of other states.

Lou Manuta