20180323Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONNR KJELLANDER
COMMISSION RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:DANIEL KLEIN
MARCH 20,2018DATE:
RE:2OT7II}AHO TELEPHONE SERVICE ASSISTANCE PROGRAM ANNUAL
REPORT; CASE NO. GNR-T-18-03.
BACKGROUND
Each year the Administrator of the ldaho Telecommunications Service Assistance Program
(ITSAP) files a report detailing the activities and status of the program during the previous year and
submits a recommended budget for the next year. ITSAP provides eligibte recipients with a
reduction in the cost of residential basic local exchange telephone service. Funds for the program
are raised through a surcharge on all end-user business, residential, and wireless access service
lines not receiving the ITSAP credit. The Commission determines the uniform statewide monthly
surcharge and the Idaho Department of l{ealth and Welfare administers the program and grants
limited federal "lifeline" contributions to ldaho's low-income customers. Idaho Code $ 56-901(l).
Idaho telephone companies provide assistance in the form of a monthly discount of $2.50 to
eligible subscribers, Idaho Code fi 56-902(l). To be eligible for the ITSAP assistance, the
applicant must be the head of a household and meet narrowly targeted eligibility criteria based
solely on income or factors established by the Department of Health and Welfare. ldaho Cade
$ 56-903(l), To be eligible to receive reimbursement for providing low-income benefits (ITSAP
and the federal Lifeline assistance), a company must be designated as an eligible
telecommunications carrier (ETC) by a state commission, 47 C.F.R. $ 5a.201(a)(l).
THE 2017 ANNUAL RtrPORT
In the annual report filed on March 6,2018, the ITSAP Administrator, Alyson Anderson,
reported a decrease in wireline access lines (21%), a decrease in wireless lines (45%), and a
IDECISION MEMORANDUM MARCH 24,2418
significant decrease in the number of ITSAP recipients (34%) from the previous year. The number
of wireless access lines has declined slightly in years past, but the administrator feels the 2017 dip
is an aberration in reporting. When the surcharge rate was suspended in May 2017, many
companies began reporting zero access lines, or did not report at alt. The gross surcharge revenue
for the year was repo(ed at$77,703 - $17,779 (24%\ was assessed on wireline services and
$54,924 (76%) was assessed on wireless services. The Administrator explains that ETCs remit net
surcharge revenue, which is gross surcharge revenue less any assistance credits provided to eligible
recipients and the ETC's administrative costs. Thus, net surcharge r€venue collected and deposited
inro the fund in 2017 totaled s84,073.
The average number of wireline access lines per month reported to the Administrator was
285,773 compared to 363,888 in 2016, and the average number of wireless access lines per month
was 766,587 compared to 1,384,720 in 2016. Overall, there was a decrease of approximately
696,248 in the total number of average monthly lines subject to the ITSAP surcharge (1,052,360
lines per month compared to 1,748,608 in 2016). These numbers are inflated due to a lack of
wireless providers repo(ing line counts due to the surcharge suspension.
The average number of reported ITSAP recipients per month in2017 (2,555) decreased by
34Yo from 2016 (3,880). Telecommunications companies received $82,805 in disbursements for
ITSAP credits paid to eligible recipients compared to $126,830 in 2016. Disbursements for
company administrative costs were $17,129, a decrease from 2015 ($23,235).
The Administrator's fees and expenses were $ 1A,269 for the year. The fund's cash balance
at the end of the year was reported at $1,317,286.
2OI7 BUDGET AND TRENDS
The ITSAP Administrator projects the funding reguirements for 2018 will continue to
decrease. The Administrator estimates that the ITSAP reimbursements to the companies at
approximately $62,310. The ITSAP Administrator expenses are projected to be $20,875; including
a triennial audit and legal fees.
To establish the 201 8 budget, the Administrator estimates that the number of access lines
subject to the surcharge will be approximately 716,579 per month and the average number of
ITSAP recipients will decrease to approximately 2,077 per month. Based on this data, Ms.
Anderson projects the funding requirement for 2018 will be approximately $96,394, and the end-
of-year balance is expected to be about $1,220,891.
DECISION MEMORANDUM -2-MARCH 20,2018
ADMINISTRATOR'S 2OI7 FUNDING RECOMMENDATIONS
Ms. Anderson states that there was another significant drop in credit recipients during 2017.
The Administrator recommends that the surcharge rate continue to be suspended an additional year,
but that all companies must report access lines to her during this period. The Administrator affirms
that the fund balance will be more than sufficient to reimburse companies for assistance credits
provided, as well as maintain an adequate balance for unexpected occurrences, The estimated
balance for the end-of-year 201 8 is projected to be $ I ,270,891.
STAFF ANALYSIS AND FUNDING RECOMMENDATION
Staffhas reviewed the 2017 annual report, the proposed 2018 budget, and the funding
recommendation. Staff agrees with the Administrator's assessment and supports the
Administrator's recommendation to continue suspending the surcharge rates for allwireline and
wireless access lines for another year. Staff believes the fund balance will be sufficient to meet the
201 8 expenses as well as provide for any unforeseen changes to the number of ITSAP recipients.
Thus, Staff recommends that the Commission approve the Administrator's 2018 budget and
approve the recommendation to suspend the surcharge rates for calendar year 2018. Staff also
recommends the Commission direct all companies to report access line counts to the administrator
while the surcharge is suspended.
COMMISSION DECISION
I. Does the Commission wish to accept the 2017 annual report and adopt the
Administrator's 201 8 budget?
2. Does the Commission wish to adopt the Adminislrator's recommendation to continue
suspending the ITSAP assessments for calendar year 2018?
3. Does the Commission wish to direct all companies to report access line counts to the
administrator while the surcharge is suspended?
Udmcmos20l T ITSAP Annual Rcpon dcc mcmo
DECISION MEMORANDUM -3-
Daniel KIein
MARCH ZA,2A$