Agenda Date:  April 28, 1999
Item Number:

Docket:  UT-990429
   
Company Name: Telecommunications Companies - General
   Washington Telephone Assistance Program
   
Staff:    Rebecca Beaton, Regulatory Consultant
    Bob Shirley, Regulatory Consultant
    
Recommendation: 

Approve the filing in Docket Number UT-990429 by the Department of Social and 
Health Services to reduce the client threshold rate for the Washington 
Telephone Assistance Program from $7.50 to $4.00 per month per client to become 
effective July 1, 1999.

Discussion:
On March 15, 1998, the Commission received a request by the Department of 
Social and Health Services (DSHS), Washington Telephone Assistance Program 
(WTAP), to approve a reduction in the client threshold amount from the current 
$7.50 per client to $4.00 in order to receive the maximum available federal 
funding which would provide more generous program benefits, and reduce a fund 
surplus by WTAP.   DSHS has requested the revision to become effective July 1, 
1999.  

Background:
On May 8, 1997, the Federal Communications Commission (FCC) issued its Report 
and Order, FCC Order 97-157 (FCC Order) implementing key portions of Section 
254 of the Telecommunications Act of 1996 (the Federal Act), which addresses 
universal service.  Among other matters, the order identified services to be 
supported by federal universal service funds and the mechanisms whereby such 
funding will be provided.   Funding support for state telephone assistance 
programs and lifeline services were among the items earmarked for federal 
funding. A revised lifeline program was made available to all states with 
matching support funds available beginning January 1, 1998.

DSHS has, by legislative mandate, the jurisdiction and responsibility of 
funding the state telephone assistance program and federal lifeline programs.  
DSHS informed the Washington Commission in 1998 that the agency intended to 
accept additional federal funding and would implement such through options that 
included baseline and threshold revisions in the program.  

In March 1998, the WTAP client threshold rate paid by the client was reduced 
from $9.25 to $7.50.  This reduction to the client increased federal support 
from $3.50 per client to $5.25.  The FCC made available additional federal 
support equal to one half of any support generated by state action, to a 
maximum of $1.75.  To obtain this additional support, states must reduce local 
service rates charged to lifeline clients.  DSHS’ proposed reduction of $3.50 
in the WTAP client threshold will allow it to receive the additional federal 
matching funds.  This will bring the monthly federal support for WTAP to $7.00 
per client, the maximum available. 

In 1997 and 1998, the WTAP fund was allowed to grow in anticipation of 
telephone rate increases and participation increases.  Telephone rate increases 
were limited and participation increases were offset by reduced welfare (TANF) 
caseloads.  Increased federal funding available also reduced WTAP costs.  

The five year budget projection provided to the Commission for WTAP assumes a 
client threshold of $4.00.  The fund balance would thus be spent down by Fiscal 
Year 2003.  This takes into account the cost of community voice mail as written 
in House Bill 1461 and Senate Bill 5332.  Without this cost, the projected fund 
balance will be inappropriately large by the end of the current program 
authorization. 

The budget projection provided by DSHS does not include potential increases in 
participation through the outreach program now underway.  The DSHS goal for 
1999 is to increase participation by ten percent (10,000 clients).  The issue 
of larger subsidies should basic rates increase is a constant concern to the 
program administrators.  Costs are evaluated continually and adjustment of the 
client threshold would be one way of covering increased costs.  In addition to 
budget considerations, DSHS has had regular discussions with U S WEST and GTE 
Northwest regarding the request to reduce the client threshold.  These two 
companies have the majority of WTAP clients in Washington.  The response to 
DSHS has been positive.

Staff is satisfied with the information and projections provided by DSHS and 
recommends that the Commission approve the request by DSHS and order the client 
threshold amount to be revised to $4.00 per month per client.  This action is 
consistent with Washington’s telecommunications policy goal of preservation of 
affordable universal service as enunciated in RCW 80.36.300.  It is further 
noted that RCW 80.36.410-475 adequately addresses the specifics for the program 
implementation, client base and administrative requirements. 

Conclusion:
Staff recommends the Commission approve the filing by DSHS to reduce the 
threshold amount paid for basic telecommunications services for each client of 
the Washington Telephone Assistance Program by July 1, 1999.