by the telephone corporation. Most prepaid wireless customers are therefore not purchasing prepaid wireless phone cards at a third party retailer to procure services. As discussed, a lesser part of the prepaid wireless market, namely 25.17%, is transacted at a third party retailer. This is the market segment that the new MTS surcharge collection and remittance process was designed to collect from. According to 2014 data, indirect sales annually account for about 3.34% of those surcharges and fees collected by the Commission from telephone corporations and VoIP providers. Chart 1: California Telecommunications Market by Service and Sales Type DISCUSSION Calculating the MTS Surcharge The Act requires the Commission to start the calculation of the new prepaid MTS surcharge rates, which will become effective on January 1, 2016, by October 1, 2015, to post notice of the proposed rates by October 8, 2015, and to notify the BOE and Office of Emergency Services of the rates, as well as the method used for calculation. The Commission will thereafter start the calculation of the new MTS surcharge rates by October 1st and post notice by October 8th of subsequent years, until the Act becomes inoperative in 2020. The Act directs the Commission to prepare a resolution, or other public document, to provide public notice of the proposed MTS rates and to adopt the proposed rates. In response to this requirement, this resolution provides the methodology and specific calculations used to arrive at the new prepaid MTS surcharge rates for 2016. The proposed rates are to be assessed on the sale of intrastate prepaid wireless telephone services in California. Although the Act shifts certain surcharge collection activities to the BOE, due to the bifurcation of the collection and remittance process for surcharges and user fees between prepaid wireless services and all other services, the Act has resulted in increased costs and administrative activity for the Commission. The State legislature has authorized the CPUC to hire additional staff and develop new systems and business processes for the special MTS surcharge. This includes, but is not limited to, at least two new processes, one for those fees required to be remitted directly by prepaid wireless carriers and another for those funds collected by the BOE.
by the telephone corporation. Most prepaid wireless customers are therefore not purchasing prepaid wireless phone cards at a third party retailer to procure services. As discussed, a lesser part of the prepaid wireless market, namely 25.17%, is transacted at a third party retailer. This is the market segment that the new MTS surcharge collection and remittance process was designed to collect from. According to 2014 data, indirect sales annually account for about 3.34% of those surcharges and fees collected by the Commission from telephone corporations and VoIP providers. Chart 1: California Telecommunications Market by Service and Sales Type DISCUSSION Calculating the MTS Surcharge The Act requires the Commission to start the calculation of the new prepaid MTS surcharge rates, which will become effective on January 1, 2016, by October 1, 2015, to post notice of the proposed rates by October 8, 2015, and to notify the BOE and Office of Emergency Services of the rates, as well as the method used for calculation. The Commission will thereafter start the calculation of the new MTS surcharge rates by October 1st and post notice by October 8th of subsequent years, until the Act becomes inoperative in 2020. The Act directs the Commission to prepare a resolution, or other public document, to provide public notice of the proposed MTS rates and to adopt the proposed rates. In response to this requirement, this resolution provides the methodology and specific calculations used to arrive at the new prepaid MTS surcharge rates for 2016. The proposed rates are to be assessed on the sale of intrastate prepaid wireless telephone services in California. Although the Act shifts certain surcharge collection activities to the BOE, due to the bifurcation of the collection and remittance process for surcharges and user fees between prepaid wireless services and all other services, the Act has resulted in increased costs and administrative activity for the Commission. The State legislature has authorized the CPUC to hire additional staff and develop new systems and business processes for the special MTS surcharge. This includes, but is not limited to, at least two new processes, one for those fees required to be remitted directly by prepaid wireless carriers and another for those funds collected by the BOE.