Calif. Commission Says Newly Installed USF Flat Fee Won't Cost Lives

T-Mobile shows no dire situation warranting injunction of California’s shift to connections-based contribution for state USF, the California Public Utilities Commission said Friday at the 9th U.S. Circuit Court of Appeals. The agency urged the court to deny the carrier and its subsidiaries’ emergency request to freeze the CPUC order requiring a $1.11 monthly flat fee as of April 1. “No lives hang in the balance,” wrote the CPUC. “No one is threatened with deportation.”

The 9th Circuit last week denied T-Mobile's request for immediate administrative stay while deciding its emergency motion for stay or injunction pending appeal in case 23-15490. The opening brief for T-Mobile's overall appeal from the U.S. District Court of Northern California is due May 1, with the CPUC’s answer due May 30. The carrier is challenging the district court’s March 31 denial of preliminary injunction. T-Mobile also tried, but failed, to get the district court to order a stay pending the 9th Circuit appeal (see 2304100006).

“T-Mobile’s business will not be destroyed absent immediate judicial intervention,” the CPUC told the 9th Circuit Friday. Rather than show the district court abused its discretion, the carrier mostly rehashes arguments that the lower court rejected, the commission said.

The way T-Mobile has litigated the case undermines its claim that it will suffer irreparable financial harm without an injunction, added the CPUC. The carrier waited three months to sue after the CPUC’s October order and agreed to a schedule “that put the district court’s decision on the eve of the new rule’s effective date,” the agency noted. “That languor hardly bespeaks an injury that is truly irreparable -- let alone an emergency.” And T-Mobile seems "content to wait" for the appeal rather than proceed on the merits in the district court, it said. T-Mobile never sought an administrative appeal or state court review, the CPUC noted.

Switching back to a revenue-based mechanism now would cost the CPUC an estimated $1.39 million, on top of how much it cost to change to the connections-based system, said the commission: That might be less than the amount that T-Mobile claims it will suffer -- about $11 million monthly -- but the court should consider that the CPUC is a publicly funded agency “rather than one of the largest phone companies in the world.” The broader communications industry will likely face costs to switch back, the CPUC added. “This on top of the confusion that implementing the new mechanism and then immediately reverting to the old one would cause.”

Cooperative federalism is at the core of the 1934 Communications Act and 1996 Telecom Act, said the state commission. "That the Commission’s rule differs from the FCC’s rule does not make the two inconsistent within the meaning of Section 254." The district court agreed the PUC need not be in "lockstep" with the FCC and that new mechanism was equitable since the fee applies evenly to all California customers regardless of their chosen carrier, the agency said.

"Although more people than ever are using telecommunications services, due to changes in technology and patterns of use, less and less of the resulting revenue is surchargeable,” said the CPUC, explaining its switch to a flat fee based on number of access lines. “Year-over-year declines in the intrastate billing base for surcharges have thus resulted in lower surcharge amounts collected for all of the California programs compared to the amount forecasted." These trends forced the CPUC to keep raising the surcharge on a declining base, which was “unfair to those who must pay those ever-higher amounts and unsustainable in the long term,” it said.

Nebraska, New Mexico and Utah previously shifted to connections, while Arizona has partly funded its program this way since 1989, noted the California commission: "Other states stray still farther from the federal rule,” like Washington state paying from its general fund. T-Mobile hasn’t shown that it’s suffering in any of those states, the CPUC said.