APPENDIX
NEW JERSEY UNIVERSAL SERVICE FUND
1. GOALS: The objectives of the Board in establishing the universal service fund are:
A. to develop a fully operable, competitively neutral universal service financing source and distribution mechanism. The funding mechanism must provide efficiency incentives to significantly reduce the aggregate subsidy required for universal service over time. Such mechanisms are necessary to ensure that an appropriate level of service is available in all areas and for all customers in the state.
B. to ensure that all citizens in the state have enhanced access to educational, cultural and information sources represented by advanced telecommunications systems such as the Internet.
C. to enhance the educational opportunities available to all of students New Jersey's students by ensuring that the costs of telecommunications services are not a barrier to the funding necessary to achieve distance learning, high-speed Internet access and other services that are based on telecommunications.
D. to increase the penetration rate of basic service to low income households through the following mechanisms.
2. PRINCIPLES: It is the Board's policy to:
A. ensure that high-quality basic telecommunications services remain available and affordable to all potential telecommunications customers in New Jersey regardless of linguistic, cultural, ethnic, physical, geographic, or income considerations.
B. provide for the progressive expansion of the definition of basic service as service capabilities advance and the need for advanced service ubiquity becomes prevalent, in order to avoid information rich and information poor stratification.
C. ensure that universal service providers adhere to interconnectivity, interoperability, common carriage, reliability, privacy and security guidelines.
D. provide incentives for efficient provisioning of universal services.
E. provide a competitively neutral universal service mechanism which will minimize market distortions. The mechanism must provide for competitive provisioning of basic service, affordable access for low income customers and a funding source to provide assistance to schools and libraries. The mechanism must be broad-based and sustainable.
F. ensure that the maximum amount of funding for telecommunications services that is available pursuant to federal universal service programs is actually obtained for the benefit of New Jersey's customers.
3. DEFINITIONS:
A. Universal service includes the following:
1. Residential single party, voice-grade access line
2. Usage package (400 minutes per month)
3. Touch-tone dialing
4. Non-toll calling to community of interest (local government and schools)
5. Cost-free blocking for Caller ID, Auto Callback, 900, 976, 976-like services
6. Toll blocking for all residential customers
7. Cost-free use of prepaid debit cards for eligible customers electing toll blocking, to enable them to make toll calls on a specific as-needed basis
8. Access to:
a. Telecommunications Relay Service
b. Operators and directory assistance
c. Emergency services (9-1-1/E9-1-1)
d. All available long distance (i.e., interexchange) carriers
e. Customer service
9. A directory listing and a directory
10. Repair service
In addition to the above, universal service includes the provision of services at special rates for schools and libraries:
11. Normal voice-grade access lines, capable of interconnection to the Internet, as well as other network capabilities, at a price equal to that of residential service in the same area;
12. High speed broadband services for distance learning, district network and Internet connections, at a price that is discounted from the lowest available price obtained pursuant to cooperative buying and bona fide responses to requests for service.
B. Services eligible for funding support.
1. The cost of the following services shall be included in the total amount eligible for support from the high cost fund:
a. Residential and single-line business single-party voice-grade access line.
2. The cost of the following services shall be included in the total amount eligible for support from the low income fund:
a. Residential single party, voice-grade access line
b. Usage package (400 minutes)
c. Non-toll calling to community of interest (local government and schools)
d. Cost-free blocking for Caller ID, Auto Callback, 900, 976, 976-like services, and toll blocking for eligible low income customers
3. The cost of the following services shall be included in the total amount eligible for support from the schools and libraries fund:
a. The difference between the lowest rate for business service that would be otherwise applicable and the residential rate at which all telecommunications services shall be provided to schools and libraries.
b. The schools and libraries discount computed per sub-paragraph 6.C.
C. The local service provider itself, without special funding, must also offer an eligible low income residential assistance program with the following services, at no charge:
1. Touch-tone dialing
2. Cost-free blocking for Caller ID, Auto Callback, 900, 976, 976-like services
3. Toll blocking. For eligible customers electing this service:
a. No denial of service for non-payment of toll bills
b. New service with no deposit requirement, when the customer elects toll blocking service
c. A full waiver of the service connection charge for establishing local service4. Access to:
a. Telecommunications Relay Service
b. Operators and directory assistance
c. Emergency services (9-1-1/E9-1-1)
d. All available long distance (i.e., interexchange) carriers
e. Customer service5. A directory listing and a directory
6. Repair service
7. Access to 9-1-1, where available, when local service has been disconnected.
D. Initially, Incumbent Local Exchange Carrier ("ILEC") shall be that Local Exchange Carrier
providing service in a given geographic area as of January 1, 1996. Over time, if the Board so
determines, the Incumbent Local Exchange Carrier in a given area may be another carrier.
E. In each area of the State, the Provider of Last Resort shall initially be the ILEC. The Provider of
Last Resort shall be required to make available to all customers a package of services at least equal
to those defined as universal service, above. In addition, the Provider of Last Resort shall be
required to provide advanced broadband services to schools and libraries.
F. The New Jersey Universal Service Fund shall be administered as a single amount and shall be
funded by assessments charged to all telecommunications providers in the State of New Jersey.
Separate amounts shall be collected and distributed from the fund for the New Jersey Low Income
Fund ("NJLIF"), the New Jersey School and Library Fund ("NJSLF") and the New Jersey High
Cost Fund ("NJHCF").
4. UNIVERSAL SERVICE FUNDING CRITERIA
A. All telecommunications carriers certified by the Board to provide service in New Jersey shall pay into the USF pool via a USF charge. For purposes of this sub-paragraph, a telecommunications carrier shall be defined as any entity providing two-way communications services, whether voice, data or information, including but not limited to wire-line, wireless, cable and Internet service providers.
B. The determination of USF carrier charges paid by a carrier will be, consistent with the Joint
Board Recommendations, based upon each carrier's gross intrastate and interstate revenues, net of
payments to other carriers (for access charges and interconnection services). If a Court of
competent jurisdiction rules that it is impermissible for the Joint Board to assess USF funding on the
basis of both intrastate and interstate revenues, then the Board will revisit this issue at such time.
C. The USF charge percentage for each company will be based on a statewide aggregation of
required subsidies for all USF-eligible services for the NJLIF, the NJSLF and the NJHCF.
5. NEW JERSEY LOW INCOME FUND ("NJLIF")
A. Goals. The goals of the New Jersey Low Income Fund are:
1. to achieve a 94% penetration rate among low income households;
2. to ensure that the maximum amount of funding of telecommunications services for low income customers is obtained from federal programs for such funding.
B. Principles:
1. All LECs shall be responsible for pursuing the objective of achieving a 94% penetration rate among low income households in their service territories;
2. LECs shall have the flexibility to develop innovative strategies to contribute to the attainment of this objective;
3. In service territories where there is a substantial population of non-English speakers, LECs shall communicate with such customers in their native languages, both in written and oral communications. This shall be a factor used by the Board in assessing each local carrier's contribution to pursuit of universal service targets;
4. LECs shall submit required annual reports describing their efforts to attain the objectives set forth above.
C. LEC eligibility for funding. To be eligible for funding from the NJLIF or the NJHCF, a local exchange service provider must make available to qualifying low income customers:
1. all of the elements of universal service defined in sub-paragraph 3.A.
2. an intrastate discount at the amount needed to provide the maximum level of matching federal discounts, as follows:
The Federal-State Joint Board has recommended a baseline level of federal support of $5.25 per month. An additional $1.75 per month in federal support would be available at one-half the rate at which state assistance is made available to eligible customers. Accordingly, $3.50 of state assistance would be required to obtain the indicated $1.75 of additional federal support, for a total support level of $10.50 per month per eligible low income customer.
The level of intrastate discount shall be at least $3.50 and shall be increased if the Federal Communications Commission adopts a program that requires a greater level of state support to achieve the maximum level of support available under the federal low income program.
D. Customer eligibility requirements. Funding for low income subscribers will be based on
participation in any of the following state/federal programs:
1. Home Energy Assistance Program (HEAP):
2. Lifeline Utility Credit/Tenants Lifeline Assistance;
3. Food Stamp Program;
4. Aid to Families with Dependent Children (AFDC);
5. Supplemental Security Income – Medicaid (SSI), Blind, Disabled and Aged;
6. Pharmaceutical Assistance to the Aged or Disabled (PAAD);
7. Medicaid (including any state program that might supplant Medicaid);
8. General Assistance.
E. Computation of support. Support shall be provided to the LEC for each served eligible low
income customer, in an amount equal to the difference between the LEC's statewide average rate
for residential service and the LEC's discounted rate charged to such customers for those services.
LECs assume the burden of demonstrating to the Commission funding need based upon the criteria
established.
6. NEW JERSEY SCHOOL AND LIBRARY FUND ("NJSLF")
A. Goals. The goals of the New Jersey School and Library Fund shall be to:
1. improve the quality and efficiency of the educational process by promoting the accessibility of
information services in all schools and libraries, regardless of location or local economic
circumstance;
2. make distance learning possible throughout the state;
3. ensure linkage to the Internet;
4. encourage the continued cooperation and support of all New Jersey businesses, and the
telecommunications companies in particular;
5. ensure that the maximum amount of funding for school and library telecommunications is
obtained from federal programs.
B. Customer (school, library) eligibility requirements.
1. Schools eligible for funding shall be all public and non-public schools in the State of New Jersey
meeting the statutory definitions of elementary and secondary schools found in the Elementary and
Secondary Education Act of 1965, must not operate as a for-profit business, and must not have an
endowment exceeding $50 million. Libraries must be "eligible for participation in State-based plans
for funds under title III of the Library Services and Construction Act," and must not operate as a
for-profit business.
2. Schools and libraries must meet certain criteria, to be developed by the Board, to ensure that the
pre-discount telecommunications services that they obtain are at the lowest price possible.
Accordingly, schools and libraries are:
a. required to enter into telecommunications purchasing compacts with other schools and libraries
and school districts, to ensure that the benefits of buying power are maximized. Any school or
library not entering into a purchasing compact shall receive discounted telecommunications upon
application to and approval by the Board.
b. required to purchase telecommunications services at the lowest price available, as established by
competitive bidding.
c. required to establish that they have taken all actions necessary to document and support the
maximum amount of support possible under any federal programs designed to support
telecommunications services of schools and libraries.
C. Funding support.
1. Schools and libraries in New Jersey shall receive a total amount of support pursuant to the plan
approved on November 7, 1996 by the Federal-State Joint Board in CC Docket No. 96-45,
unless such plan shall be increased by the Federal Communications Commission ("FCC"), in which
case the total amount of support shall be that approved by the FCC.
2. Schools and libraries shall also receive support by receiving all telecommunications at the
statewide average rate for equivalent services provided to residential customers.
3. The amount of the NJSLF shall be the amount computed pursuant to sub-paragraphs 1 and 2
above, less any support received from the federal school and library program.
4. If a school due to local conditions finds that the level of funding for which it is eligible under the
federal and state programs is insufficient, then it shall be afforded an opportunity to apply to the
State Department of Education to change that funding. The Department of Education shall make a
recommendation, taking into account the needs of all schools in the state, and the Board shall take
that recommendation into account in ordered a revision to the funding mechanisms otherwise
resulting from the federal formula.
To Table of Contents
7. NEW JERSEY HIGH COST FUND ("NJHCF")
A. Goal. The goal of the New Jersey High Cost Fund shall be to provide carriers with the same
incentive to provide service in all areas of the state.
B. LEC eligibility for funding. Any certified local exchange company providing all of the services
defined as universal service per sub-paragraph 3.A shall be eligible for universal service funding
support from the NJHCF. The amount of support shall be on a per customer basis multiplied by the
number of residential and single-line business customers served in high cost study areas as defined
in sub-paragraph 7.C.3.
C. Computation of support. Any facilities-based LEC is eligible for funding support from the
NJHCF, according to the following methodology:
1. In any given study area, defined as a wire center per sub-paragraph 7.C.2, only those carriers
providing all of the services defined as universal service per sub-paragraph 3.A shall be eligible to
receive support from the NJHCF.
2. The calculation of the high cost fund subsidy will be done on the basis of existing ILEC wire
center boundaries, which will be designated as cost study areas.
Any LEC may petition the Board to adopt an alternative cost study area based on the specific
characteristics of its service territory or its specific business operating practices. The petitioning
LEC will have the burden of proof in demonstrating that its alternative proposed cost study area
boundaries will permit a more efficient comparison of costs and revenues.
3. High cost study areas shall be defined as those wire centers in which the average proxy cost per
residential and single-line business line service exceeds twice the statewide average price for such
services. Proxy costs shall be determined for the services included in sub-paragraph 3.B.
4. For each LEC, the amount of support available from the high cost fund shall be computed for
each high cost study area, using the following formula:
For wire centers with proxy costs greater than two times the statewide average price:
Wire center cost per line for services in sub-paragraph 3.B
x 50%
-------------------------
= Cost eligible for support
- Statewide average price of services sub-paragraph 3.B
-----------------------------------------------------
= Amount of support, per line served
x Residential and single-line business lines services
---------------------------------------------------
= Amount of support to be provided
The total amount recoverable by each LEC shall be the sum of the above computation for each
high cost study area served by the LEC.
5. Disbursements from the fund will be calculated based on 12 months of historical information on
the number of residential and single-line business customers served within each high cost study
area. The amount of subsidy received shall be adjusted to account for any subsidies received from
any federal universal service high cost fund adopted by the FCC.
D. The incumbent LEC will retain the carrier of last resort obligation. Any carrier accepting USF
monies must be willing to serve all residential and single-line business customers in all areas in which
it provides service in a non-discriminatory manner.
8. FUND ADMINISTRATION
A. The Universal Service Funds shall be managed by a neutral, third-party organization selected by
the Board through an RFP process.
B. The Universal Service Funds will begin collecting contributions 90 days from the selection of a
fund administrator.
C. The ongoing necessity of the Universal Service Funds will be reviewed biennially by the Board.
To Table of Contents
Table 1
Telephone Penetration and Availability
United States New Jersey New York Pennsylvania Delaware Dist. of Col.
------------- ------------ ------------ -------------- ------------ -------------
Units Avail Units Avail Units Avail Units Avail Units Avail Units Avail
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
November 1983 91.41 93.68 94.14 95.11 90.84 92.15 95.11 97.12 95.01 96.60 94.72 95.61
Average 1984 91.59 93.67 94.79 96.08 91.77 93.56 94.85 96.50 94.25 95.73 94.89 96.28
Average 1985 91.82 93.85 94.88 96.19 92.05 93.55 95.26 96.59 94.78 96.23 93.57 95.25
Average 1986 92.25 94.09 94.87 96.14 93.17 94.31 96.34 97.40 94.67 96.31 92.21 93.99
Average 1987 92.38 94.24 95.01 96.33 92.73 94.16 96.36 97.30 96.52 97.27 92.43 94.23
Average 1988 92.74 94.55 94.41 95.86 92.39 94.00 96.19 97.09 96.97 97.94 94.59 95.94
Average 1989 93.11 94.85 94.82 96.09 92.31 94.01 96.95 97.50 96.64 97.45 92.68 94.83
Average 1990 93.27 94.98 94.66 95.86 91.12 92.76 96.85 97.60 95.97 97.06 91.44 93.20
Average 1991 93.42 95.13 93.64 95.23 91.90 93.44 96.79 97.80 96.42 97.48 90.93 92.59
Average 1992 93.81 95.34 94.41 95.28 93.36 94.54 96.89 97.74 96.46 97.80 88.66 90.50
Average 1993 94.17 95.57 94.32 95.10 93.51 94.79 97.28 98.03 96.54 96.75 90.23 91.74
Average 1994 93.83 95.42 92.93 94.11 93.08 94.35 96.95 97.98 95.48 97.07 90.00 91.15
Average 1995 93.93 95.20 92.27 93.20 92.90 93.87 96.80 97.53 96.23 96.77 90.90 92.27
November 1983 2.73 1.43 (0.57) (1.53) 3.70 3.44 3.60 2.92 3.31 1.93 Average 1984 3.20 2.41 0.19 (0.12) 3.26 2.83 2.66 2.05 3.30 2.61 Average 1985 3.06 2.34 0.23 (0.30) 3.44 2.73 2.96 2.38 1.75 1.39 Average 1986 2.62 2.05 0.91 0.21 4.08 3.31 2.41 2.22 (0.04) (0.10) Average 1987 2.63 2.09 0.35 (0.08) 3.98 3.06 4.14 3.03 0.05 (0.01) Average 1988 1.67 1.31 (0.35) (0.55) 3.45 2.54 4.23 3.40 1.85 1.40 Average 1989 1.71 1.23 (0.80) (0.84) 3.84 2.65 3.53 2.60 (0.43) (0.02) Average 1990 1.39 0.87 (2.15) (2.23) 3.58 2.61 2.70 2.08 (1.83) (1.78) Average 1991 0.22 0.10 (1.52) (1.69) 3.37 2.67 3.00 2.35 (2.49) (2.54) Average 1992 0.60 (0.05) (0.46) (0.80) 3.08 2.40 2.64 2.46 (5.16) (4.84) Average 1993 0.15 (0.47) (0.66) (0.78) 3.10 2.46 2.36 1.18 (3.94) (3.83) Average 1994 (0.90) (1.31) (0.74) (1.07) 3.12 2.56 1.65 1.65 (3.82) (4.27) Average 1995 (1.67) (2.00) (1.03) (1.33) 2.87 2.33 2.30 1.57 (3.03) (2.93)
Source: FCC Monitoring Report, CC Docket No. 87-339, Table 1.3 (FCC, May 1996).
Telephone Penetration by State
(Annual Average Percentage of Households with Telephone Service)
State 1984 1995 Change
Alabama 88.4 % 92.2 % 3.7 % *
Alaska 86.5 93.6 7.1 *
Arizona 86.9 93.8 6.8 *
Arkansas 86.6 89.4 2.8
California 92.5 94.5 2.1 *
Colorado 93.2 96.6 3.4 *
Connecticut 95.5 96.9 1.4
Delaware 94.3 96.2 2.0 *
District of Columbia 94.9 90.9 -4.0 **
Florida 88.7 93.9 5.2 *
Georgia 86.2 90.0 3.8 *
Hawaii 93.5 94.7 1.2
Idaho 90.7 95.1 4.4 *
Illinois 94.2 93.6 -0.6
Indiana 91.6 94.4 2.9 *
Iowa 96.2 96.4 0.2
Kansas 94.3 93.9 -0.5
Kentucky 88.1 92.1 4.0 *
Louisiana 89.7 92.6 3.0 *
Maine 93.4 95.7 2.3 *
Maryland 95.7 96.4 0.7
Massachusetts 95.9 95.9 0.0
Michigan 92.8 95.2 2.3 *
Minnesota 95.8 97.3 1.4
Mississippi 82.4 86.5 4.1 *
Missouri 91.5 94.4 2.9 *
Montana 91.0 94.2 3.2 *
Nebraska 95.7 97.1 1.4
Nevada 90.4 92.6 2.2
New Hampshire 94.3 96.2 1.9
New Jersey 94.8 92.3 -2.5 **
New Mexico 82.0 86.4 4.4 *
New York 91.8 92.9 1.1
North Carolina 88.3 93.4 5.1 *
North Dakota 94.6 97.2 2.6 *
Ohio 92.4 94.0 1.6 *
Oklahoma 90.3 91.5 1.3
Oregon 90.6 96.4 5.8 *
Pennsylvania 94.9 96.8 2.0 *
Rhode Island 93.6 96.0 2.4 *
South Carolina 83.7 90.5 6.8 *
South Dakota 93.2 94.3 1.1
Tennessee 88.5 93.0 4.5 *
Texas 88.4 91.3 2.9 *
Utah 92.5 97.6 5.1 *
Vermont 92.3 96.5 4.2 *
Virginia 93.1 95.9 2.9 *
Washington 93.0 95.7 2.7 *
West Virginia 87.7 92.7 5.0 *
Wisconsin 95.2 97.3 2.1 *
Wyoming 89.9 94.1 4.2 *
Total United States 91.6 93.9 2.3 *
* Increase is statistically significant at the 95% confidence level. ** Decrease is statistically significant at the 95% confidence level. Details may not add due to rounding.
Source: FCC Monitoring Report, CC Docket No. 87-339, Table 1.2 (FCC, May 1996).
Table 3
Link-Up America
(Lifeline Connection Assistance and Deferred Payments)
Reimbursement Subscribers Assistance
to Local Receiving per
Companies Assistance Subscriber
------------- ----------- ----------
United States $18,360,042 823,682 $22.29
New Jersey $8,176 342 23.91
New York 8,982,669 327,122 27.46
Pennsylvania 1,968,954 99,105 19.87
Delaware 126 7 18.00
Dist. of Col. 24,616 1,920 12.82
Source: FCC Monitoring Report, CC Docket No. 87-339, Table 2.2 (FCC, May 1996).
Table 4
Lifeline Assistance
(End User Subscriber Line Charge Waiver)
Reimbursement Subscribers Assistance
to Local Receiving per
Companies Assistance Subscriber
------------- ----------- ----------
United States $137,106,068 4,913,947 $27.90
New Jersey $0 0
New York 27,158,582 705,876 38.48
Pennsylvania 0 0
Delaware 0 0
Dist. of Col. 523,886 10,252 51.10
Source: FCC Monitoring Report, CC Docket No. 87-339, Table 2.3 (FCC, May 1996).
To Table of Contents
Table 5
TSLRIC - Joint Costs of Switched Services
Service added to a Business Only Network
Wire Center, All Copper Technology
Wire Centers
with Cost/2
Above Wire Centers
State-wide with Cost
Average Above
Price of State-Wide
$8.81 Average
---------- ------------
1. Residential lines 47,787 1,395,122
2. Monthly TSLRIC $1,075,495 $14,659,125
3. Cost per line $22.51 $10.51
4. Cost per line / 2 $11.25 $10.51
5. Statewide average cost 8.81 8.81
------ ------
6. Excess cost per line $2.44 $1.70
7. Excess cost per line $4.89 $2.17
8. Number of lines 47,787 1,395,122
-------- ----------
9. Amount per month $233,488 $3,022,467
10. Annual HCF amount $2,801,852 $36,269,609
========== ===========
11. Residential and
Business lines 57,416 2,014,494
12. Monthly TSLRIC $1,284,688 $20,550,421
13. Cost per line $22.38 $10.20
14. Cost per line / 2 $11.19 $10.20
15. Statewide average cost 8.81 8.81
------ ------
16. Excess cost per line $2.38 $1.39
17. Number of lines 57,416 2,014,494
-------- ----------
18. Amount per month $136,509 $2,802,729
19. Annual HCF amount $1,638,110 $33,632,748
========== ==========