Poverty in New Jersey is substantial and growing, despite the strong economy in recent years. In 1989, 8.2% of all New Jersey persons (622,000) lived below the federal Poverty Level. By 1997, that figure had grown to 9.3% of all New Jersey persons (737,000). This increase in Poverty in New Jersey occurred despite the fact that nationally, the poverty rate went down during the same time period. Analysis of the most recent income data shows that the number of low-income households in New Jersey is increasing, not decreasing, and that the number of households with low-incomes continues to remain high in New Jersey.

As we know, the inability to obtain affordable, accessible telephone service can create life threatening situations for the poor. Frequently, the most important problem arising from the lack of access to telephone service is the denial of access to agencies and essential institutions that can provide help, especially related to timely access to medical attention. Lack of telephone service is also a significant barrier to employment for low-income household.

BA-NJ’s filing fails to meet the explicit statutory criteria to maintain and promote the affordability of local telephone service. Not only has BA-NJ presented a flawed analysis of what represents "affordability," but BA-NJ has also failed to address the heart of affordability considerations: whether there is affordable telephone service for New Jersey’s low-income households. BA-NJ’s filing fails to provide explicit programs to address these important universal service concerns, and therefore, must be rejected.

A. Require BA-NJ to fund its Lifeline program to allow low-income consumers to gain the full extent of federal assistance for local phone service

BA-NJ's Lifeline program should be extended to allow New Jersey consumers to gain an additional $1.75 federal matching credit, increasing the existing Lifeline credit for BA-NJ’s low-income customers to the full available Lifeline benefit of $10.50 in reductions on their monthly charges for local telephone service. Eligibility should also be broadened to include all households living with annual incomes at or below 150% of the federal poverty level, and to permit automatic enrollment for those persons who are categorical eligible for participation in the program based on their receipt of certain means-tested public benefit programs.

B. Require BA-NJ to extend and expand its Access New Jersey funding for the state's schools and libraries;

Access New Jersey was established through agreement reached in April 1997 by the Board of Public Utilities, BA-NJ and the Division of Ratepayer Advocate. Access New Jersey is designed to link K-12 schools and libraries to the Internet and provides about $130 million in savings over a four year period (1997 - 2001). Access New Jersey includes educational discounts for telecommunications services, free customer service equipment, and network development as follows:

• Educational discounts, ranging from 31 to 72 percent off of tariffed rates for ISDN, frame relay, SMDS, and ATM;
• A network for high-speed voice, video and data exchange for those schools and libraries served by BA-NJ; and
• Funds for the electronics needed by schools and libraries to connect computers and video equipment to the high-speed network.

New Jersey's schools and libraries have a continued need for assistance in helping to bring them connections to the Internet. Unique characteristics that may present hardships for them in obtaining adequate funding for telecommunications services include: a large number of older school buildings which require higher wiring costs, and the separate costs of the services themselves. Since existing federal funding will not be sufficient to help all of New Jersey's schools and libraries meet this need, BA-NJ can play a critical role in filling the gap by: (1) extending its commitment to Access New Jersey for an additional four years, and (2) expanding the services provided through Access New Jersey to include new technologies such as DSL, which are necessary to gain high speed Internet access.

C. Create a High Cost Fund to promote competition in high cost wire centers.

The benefits of competition will not exist in high cost areas without a system to ensure that competitors are as interested in serving high cost, generally rural, areas as they are in serving the lower cost areas of the state. In order for all of New Jersey to benefit from competition, it is essential that telecommunications firms do not bypass the high cost areas of the State.

The goal of the High Cost Fund is to provide an incentive for all service providers to serve high cost areas in the State. The Ratepayer Advocate historically has recommended that for purposes of identifying high cost areas, 50% of the local loop and related non-traffic sensitive costs should be allocated to local exchange service. Accordingly, those carriers serving residential and single line business customers in wire centers with costs that are greater than two times the statewide average price for local exchange service would be eligible for support from the High Cost Fund.

Funding for the Universal Service Fund should be obtained as a percentage of revenue assessment on all telecommunication providers in New Jersey.