20190315Decision Memo.pdf

DECISION MEMORANDUM
TO COMMISSIONER KJELLANDER
COMMISSION RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: DANIEL KLEIN
DATE: MARCH 14,2Ol9
RE:2OI8 IDAHO TELEPHONE SERVICE ASSISTANCE PROGRAM
ANNUAL REPORT; CASE NO. GNR-T-19-04.
BACKGROUND
Each year the Administrator of the Idaho 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 eligible
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 Health and Welfare
administers the program and grants limited federal "lifeline" contributions to Idaho'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 $ 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. Idaho Code $ 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. $ 54.201(a)(l).
DECISION MEMORANDUM I MARCH I4,2OI9
THE 2OI8 ANNUAL REPORT
In the annual report filed on March 6,2019, the ITSAP Administrator, Alyson Anderson,
reported a decrease in wireline access lines (14%), a decrease in wireless lines (6A%), and a
significant decrease in the number of ITSAP recipients (30%) from the previous year. The
number of wireless access lines has declined slightly in years past, but the administrator feels the
2018 drop 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 all. The gross surcharge
revenue for the year was reported at$,32 with $25 (78%) assessed on wireline services and $7
(22%) 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 revenue collected and
deposited into the fund in 2018 totaled $1.
The average number of wireline access lines per month reported to the Administrator was
244,988 compared to 285,773 in20l7, and the average number of wireless access lines per
month was 3 10,248 compared to 766,587 in 2017. Overall, there was a decrease of
approximately 497,124 in the total number of average monthly lines subject to the ITSAP
surcharge (555,236Iines per month compared to 1,052,360 in 2017). These numbers are inflated
due to a lack of wireless providers reporting line counts due to the surcharge suspension.
The average number of reported ITSAP recipients per month in 201 8 ( 1 ,787) decreased
by 30% from 2017 (2,555). Telecommunications companies received $56,822 in disbursements
for ITSAP credits paid to eligible recipients compared to $82,805 in 2017. Disbursements for
company administrative costs were $12,635, a decrease from 2017 ($17,129).
The Administrator's fees and expenses were $18,815 forthe year, which included $9100
for the tri-annual audit. The fund's cash balance at the end of the year was reported at
$1,229,046.
2OI9 BUDGET AND TRENDS
The ITSAP Administrator projects the funding requirements for 2019 will continue to
decrease. The Administrator estimates ITSAP reimbursements to the companies at
approximately $46,740. The ITSAP Administrator expenses are projected to be $11,500.
DECISION MEMORANDUM -2-MARCH 14,2019
To establish the 2019 budget, the Administrator estimates that the number of access lines
subject to the surcharge will be approximately 420,170 per month and the average number of
ITSAP recipients will deuease to approximately 2,077 per month. Based on this data,
Ms. Anderson projects the funding requirement for 2019 will be approximately $69,820, and the
end-of-year balance is expected to be about $1,159,226.
ADMINISTRATOR'S 2019 FUNDING RECOMMENDATIONS
Ms. Anderson states that there was another significant drop in credit recipients during
2018. The Administrator recommends that the surcharge rate continue to be suspended for an
additional year, but that all companies must report access lines to her during this period. The
Administrator affinns 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 2019 is projected to be $1 ,159,226.
STAFF ANALYSIS AND FUNDING RECOMMENDATION
Staff has reviewed the 2018 annual report, the proposed20lg 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 all wireline and
wireless access lines for another year. Staff believes the fund balance will be sufficient to meet
the 2019 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 2019
budget and approve the recommendation to suspend the surcharge rates for calendar year 2419.
Staff also recommends the Commission direct all companies to report access line counts to the
administrator while the surcharge is suspended.
DECISION MEMORANDUM -3-MARCH 14,2OI9
COMMISSION DECISION
L Does the Commission wish to accept the 2018 annual report and adopt the
Administrator's 20 I 9 budget?
2. Does the Commission wish to adopt the Administrator's recommendation to continue
suspending the ITSAP assessments for an additional year?
3. Does the Commission wish to direct all companies to report access line counts to the
administrator while the surcharge is suspended?
Daniel Klein
Udmemos/2O18 ITSAP Annual Reporl dec memo
DECISION MEMORANDUM -4 MARCH I4,2OI9