We are writing to inform you about important proposed changes by the California Public Utilities Commission (CPUC) that could significantly impact the operations of VoIP and wireless service providers operating in the state. The CPUC has issued an Administrative Law Judge’s Ruling and a comprehensive Staff Proposal, outlining amendments to General Order 133-D. These changes are designed to enhance service quality standards. Notably, however, these proposed rule changes also represent a historic test of the CPUC’s jurisdictional authority to regulate VoIP and/or wireless services, challenging the deference and respect state utility commissions have historically given to the Federal Communications Commission (FCC) when it comes to regulating these service types.
The CPUC staff report takes a very broad view of the state commission’s legal authority to regulate VoIP and wireless services. The CPUC appears to lump everything together as “voice” services, justifying its attempt to expand its regulatory jurisdiction without even referencing federal preemption or the long history of states deferring and demurring to regulate, except to require VoIP and wireless to contribute to state programs and support state funds like USF and TRS. Specifically, the staff report states:
“Voice service, irrespective of technology type, is a key component of essential utility service to enable health, safety, and full participation in society. Whether it is mass nationwide or statewide outages, community isolation outages, or individual outages, communications service outages cause frequent and significant disruptions to Californians. In California, multiple government data sources have indicated that communications outages in recent years across different technology platforms, such as plain old telephone service (POTS), Voice over Internet Protocol (VoIP), and wireless, have either maintained high occurrence rates or even increased over the years. From 2016 to 2023, the number of POTS lines in California decreased by 49 percent from 6,229,123 to 3,204,881. Conversely, the number of VoIP and wireless subscriptions have increased. This shift from POTS to VoIP and wireless services also coincided with a change in the regulatory environment. Public Utility Code Section 710, which largely prevented the Commission from regulating VoIP services, sunset on January 1, 2020, opening the door for the Commission to assert regulatory authority more fully over VoIP services.”
However, the sunsetting of Public Utility Code Section 710 did not and should not affect the FCC’s Vonage Order and the preemption of state regulation of nomadic interconnected VoIP. Despite this, the CA PUC staff’s position indicates that the Commission is well-prepared and on the precipice of announcing a major shift in its regulatory approach, as our firm predicted in its Client Advisories tracking another ongoing proceeding at the CA PUC. For a detailed analysis, refer to our issue analysis and discussion article on the acute impacts of the California PUC’s VoIP regulation here.
Overview of Proposed Changes
The CPUC’s proposed amendments to General Order 133-D represent a significant shift towards more stringent service quality standards. The goal is to address persistent issues with service outages and ensure that all Californians have reliable access to essential communication services.
- Single Thresholds versus Multiple Thresholds: Currently, service quality standards utilize single thresholds, such as “less than 24 hours” for resolving issues. However, the CPUC staff finds these single thresholds inadequate in capturing the severity of service failures. The proposed change introduces multiple thresholds that reflect increasing severities with escalating penalties. This new structure aims to provide a more nuanced approach to service quality, focusing on both network outages and service outages.
- Installation Standard: The current standard requires General Rate Case (GRC) Incumbent Local Exchange Carriers (ILECs) to install 95% of new service requests within five business days. The proposed change extends this requirement to Uniform Regulatory Framework (URF) ILECs and increases the standard to 100% of new installation requests being met within five business days, with certain exceptions. This change is intended to ensure prompt service delivery across a broader range of providers.
- Answer Time Standard: The current answer time standard mandates that live agents answer 80% of phone calls within 60 seconds each month. The proposed change maintains this standard but adds that 100% of customer service calls must be answered within five minutes. Additionally, carriers must offer a chat component on their webpage and provide a postal mail option for those without access to voice services. Billing-related inquiries must be addressed and reconciled by the next billing cycle.
- Automatic Customer Credit Fine Mechanism: A new penalty mechanism introduces an automatic customer credit for service disruptions. This includes a $5 per-day credit for all customers and a $10 per-day credit for those in disadvantaged communities and areas of affordability concern. This measure aims to incentivize providers to maintain high service quality and promptly address outages.
- General Fund Fine: In addition to customer credits, the CPUC proposes an additional fine payable to the State’s General Fund. This fine would be equivalent to the total customer credits issued, ensuring that service providers face significant financial consequences for service failures.
- Capital Investment-in-lieu-of-fine: The CPUC is considering reforms to the current investment-in-lieu-of-fine mechanism, which has not resulted in meaningful improvements to statewide service quality. The proposal suggests that increasing the penalty amount could drive more substantial investments in infrastructure, leading to better service outcomes.
- Wireless Coverage Maps: Wireless carriers would be required to create and maintain detailed coverage maps with customer-facing interfaces. These maps should verify coverage at specific locations, enhancing transparency and helping customers understand service availability in their areas.
- Reporting Requirements: The proposed changes maintain the current reporting requirements, including those mandated by the Federal Communications Commission (FCC) and the reporting of Major Service Interruptions. Additionally, providers must notify customers of the aggregate annual fine amounts paid, increasing transparency and accountability.
Justification of CPUC Authority Over VoIP and Wireless Services
The CPUC justifies its authority over VoIP and wireless services through a broad interpretation of its mandate to ensure reliable and high-quality communication services for all Californians. The Commission’s jurisdiction extends to any entity providing telephone service within the state, which includes interconnected VoIP and wireless providers. This authority is rooted in the need to protect public safety, ensure access to emergency services, and uphold consumer rights across all communication platforms.
Impacts on VoIP and Wireless Service Providers
If adopted, the proposed rules will have significant implications for VoIP and wireless service providers:
- Increased Accountability: Multiple thresholds for service quality will require providers to address varying severities of service failures, ensuring that even minor issues are promptly resolved.
- Stricter Installation Timelines: The extension of installation standards to URF ILECs and the requirement to meet 100% of new installation requests within five business days will necessitate more efficient processes and resource allocation.
- Enhanced Customer Service Requirements: Providers must improve their customer service capabilities, ensuring quick response times and offering multiple channels for customer interaction, including online chat and postal mail options.
- Financial Incentives and Penalties: The introduction of automatic customer credits and additional fines payable to the State’s General Fund will impose direct financial consequences for service disruptions, motivating providers to maintain high service quality.
- Infrastructure Investments: Potential reforms to the investment-in-lieu-of-fine mechanism may require significant capital investments to improve infrastructure, driving long-term improvements in service reliability.
- Transparency in Service Availability: The requirement for detailed wireless coverage maps will enhance transparency and help customers make informed decisions about their service providers.
- Ongoing Compliance with Reporting Standards: Providers will need to adhere to stringent reporting requirements, including customer notifications of fines, ensuring continued accountability and regulatory oversight.
We encourage all affected service providers to review the proposed amendments in detail and assess their potential impacts on your operations. Preparing for these changes now will help ensure compliance and maintain high standards of service for your customers. At the same time, we urge impacted service providers to participate in the rulemaking process, as nothing is final yet. Parties wishing to file comments on the Staff Proposal must file and serve comments by September 2, 2024. Reply comments must be filed and served by September 17, 2024.
For further information or assistance in understanding these proposals or if you wish to participate by filing comments or reply comments in the proceeding, please do not hesitate to contact Jonathan S. Marashlian at jsm@commlawgroup.com.
