Overview
The Department of Telecommunications and Cable (DTC) was established under Section 1 of Chapter 25C of the Massachusetts General Laws as modified by Section 29 of Chapter 19 of the Acts of 2007. DTC is overseen by the Office of Consumer Affairs and Business Regulation (OCABR) and is led by a commissioner, who is appointed by the Governor.
According to DTC’s fiscal year 2020 annual report,
The Department’s mission is to: (1) oversee the telecommunications and cable industries in accordance with the statutory obligations imposed by the Commonwealth of Massachusetts and the federal government; (2) work to ensure that consumers receive high-quality communications at just and reasonable rates; (3) promote sustainable competition which will increase the welfare of all Massachusetts residents and businesses; (4) maintain and enforce consumer protections, consistent with the public interest, particularly where market forces alone are not sufficient to do so, including investigating and responding to inquiries and complaints from consumers, providers, carriers, and other interested parties; and (5) provide expert input into the development of telecommunications- and cable-related policies for the Commonwealth and the federal government.
The state appropriations for DTC in fiscal years 2019 and 2020 were $2,935,009 and $3,054,028, respectively. DTC’s appropriation is funded through an assessment on telecommunication and cable providers’ intrastate operating revenue generated by the sale of cable television and telephone services in Massachusetts. DTC is located at 1000 Washington Street in Boston. It comprises four divisions: the Administration Division, the Consumer Division, the Competition Division, and the Legal Division. During the audit period, DTC had 22 full-time employees.
Administrative Division
This division provides administrative support to DTC for budget preparation, purchases, accounts receivable and payable, payroll, and the publication of notices of department hearings. It also provides administrative support for DTC evidentiary hearings2 and public hearings3 and is DTC’s liaison with OCABR.
Consumer Division
This division enforces and monitors compliance with Massachusetts laws as well as DTC regulations and policies protecting consumers of telecommunication and cable services. It also handles consumer inquiries and investigates consumer complaints.
Competition Division
According to DTC’s fiscal year 2020 annual report,
The Competition Division provides technical and analytical support to the Commissioner, all Divisions of the Department, and other Administration officials, in the regulation of the telecommunications and cable industries in Massachusetts.
Competition Division staff members work with the Legal Division to draft discovery questions to, and review discovery responses from, companies involved in DTC investigations. It also helps prepare and finalize Final Orders related to ongoing investigations.
Legal Division
This division provides legal support to DTC. Working with the other divisions, the Legal Division ensures compliance by telecommunication and cable providers with state laws, DTC orders and decisions, and other requirements. It also conducts adjudicatory proceedings that vary in complexity and frequency.
Enhanced 911 Surcharge
Section 18H(a) of Chapter 6A of the General Laws imposes a surcharge, referred to hereafter as the Enhanced 911 (E911) surcharge, on each subscriber or end user of communication services4 (e.g., wireless telephone services) capable of accessing and using an E911 system (see “Appendix”). The purpose of the surcharge is to recover prudently incurred costs associated with providing E911 services and to provide the E911 Fund with adequate reserves to cover any unanticipated costs. The surcharge revenue is collected by communication service providers. According to Section 18H of Chapter 6A of the General Laws,
b. The department of telecommunications and cable shall be responsible for establishing the new surcharge, and all future surcharges, upon petition of the department. The department of telecommunications and cable, at its discretion but not more than once per calendar year, may investigate the prudence of the department’s revenue and expenditures for the purpose of recalculating the surcharge. . . . The department of telecommunications and cable shall adopt rules that provide for the funding of prudently incurred expenses associated with [E911 services and programs, including disability access programs] by means of the surcharge. . . .
d. The surcharge revenues shall be expended for the administration and programs of the department including, but not limited to, salaries, enhanced 911 training programs, enhanced 911 public education programs, the creation of [public safety answering point, or PSAP] customer premises equipment for, and maintenance of, primary and regional PSAPs, [grant and disability access] programs . . . , and for the implementation and administration of enhanced 911 service in the commonwealth.
Para. b of Section 18H also requires DTC to adopt rules to ensure that only prudently incurred expenses are funded with the revenue generated by the E911 surcharge. DTC’s role is to set the surcharge amount and investigate the prudence and reasonableness of the State 911 Department’s projected revenue and expenses.
DTC did not review the surcharge amount during our audit period, as it had approved the current amount ($1.50) for fiscal years 2018 through 2024 in the Final Order for the proceeding associated with DTC Docket Filing 18-2.5
Standard of Review
DTC implemented a standard of review to satisfy the requirement of adopting rules to ensure that only prudently incurred expenses would be funded with revenue generated by the E911 surcharge. Each Final Order DTC issues includes a “Standard of Review” section that is based on past Final Orders of the Department of Telecommunications and Energy (DTC’s predecessor). It describes how DTC assesses whether expenses are, or will be, prudently incurred. According to the “Standard of Review” section of the Final Order for the proceeding associated with DTC Docket Filing 20-1,
When reviewing 911 Department petitions, the DTC must determine whether the 911 Department’s allocations and expenditures are, or will be, prudently incurred. . . . When examining whether an expense is, or will be, prudently incurred, the DTC assesses whether circumstances, at the time the decision was made, adequately justified the reasonableness of the expense. . . . The DTC will not substitute its own judgment for that of the 911 Department as to what is reasonably required to perform the 911 Department’s statutory obligations. . . . Expenses are deemed prudent if they are necessary for the funding of the 911 Department’s provision of enhanced 911 services and programs, including disability access programs in the Commonwealth and, at the same time, maintain a stable surcharge level. . . .
The 911 Department has the authority to determine what is necessary for the provisioning of enhanced 911 service, but that necessity must be viewed in relation to cost. . . . Accordingly, the DTC strives to maintain a reasonable, stable surcharge in order to protect the interests of communications service ratepayers. . . . The DTC thus must oversee the costs of provisioning enhanced 911 services, but that oversight is limited to determining whether the 911 Department’s expenses are prudently incurred.
State 911 Department Budgetary Proceedings
Section 18H(c) of Chapter 6A of the General Laws requires the State 911 Department to petition DTC for approval of projected total expenses that exceed the previous fiscal year’s total expenses by 10% or more. DTC may investigate the reasonableness of the expenses through a type of adjudicatory proceeding that it calls a State 911 Department budgetary proceeding. This type of proceeding is conducted in accordance with procedural rules in Section 1 of Title 207 of the Code of Massachusetts Regulations. DTC has 90 days after the date of a petition to conduct its review and issue a decision. A petition is automatically approved if DTC does not issue its decision within that time.
Attorneys from DTC’s Legal Division serve as presiding officers, designated to conduct the proceedings. Analysts from the Competition Division serve as staff members in the proceedings. Third parties can submit a Notice of Intervention with the purpose of participating in a proceeding. DTC conducted two State 911 Department budgetary proceedings during the audit period, associated with DTC Docket Filings 19-2 and 20-1 in calendar years 2019 and 2020, respectively.
State 911 Department Petition
The State 911 Department’s petition lists the expense categories for which it seeks approval, with a description of how each expense will fund an E911 service or program. Expense items are grouped into the following categories: administration, grant programs, 911 administration and operation, and disability access and other programs. With each petition, the State 911 Department includes an Exhibit A, which is an itemized breakdown of the E911 Fund’s actual and projected revenue and expenses from the previous and current petition years.
Order of Notice
Within 20 days after receiving a petition, DTC must send an Order of Notice notifying the State 911 Department of its intent to investigate. Within the Order of Notice is the requirement for the State 911 Department to publish the Notice of Public Hearing in the Boston Globe. The State 911 Department must reply with proof of publication. Any parties that file any documents during a proceeding are required to distribute them to all other parties who will appear in the proceeding.
Analysis and Information Requests
DTC’s staff analyzes Exhibit A as part of the review of a State 911 Department petition. DTC’s staff verifies calculations, compares the changes from previous-year expenses to the current year’s projection, and identifies any outliers (line items with large fluctuations from year to year) that require additional information.
Based on the results of the analysis, as part of the discovery phase of the proceeding, DTC and any interveners may issue a set of Information Requests to obtain supporting documents that will substantiate figures presented by the State 911 Department and explain changes since the previous year.
The State 911 Department issues responses to Information Requests from DTC and interveners. The responses inform the questions asked by the presiding officer and staff members during the evidentiary hearing.
Evidentiary Hearing
DTC’s presiding officer conducts an evidentiary hearing where analysts ask questions of the State 911 Department staff members, who give testimony under oath. After a hearing in which additional information was required but was not readily available, parties can submit Record Requests, to which the State 911 Department files responses. After the hearing, DTC sends a transcript to all parties.
Final Order
At the end of every proceeding, after the hearing, the presiding officer issues a Final Order. The Final Order contains the history of the proceeding, DTC’s analysis of projected revenue and expenses, DTC’s statements on the stability of the E911 surcharge and the condition of the E911 Fund, and DTC’s decision about whether the expenses are prudently incurred and reasonable in accordance with the “Standard of Review” section. DTC’s general counsel and commissioner review and approve the Final Order before it is issued.
| Date published: | May 3, 2022 |
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