BILL ANALYSIS Ó
AB 841
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Date of Hearing: May 9, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 841 (Buchanan) - As Amended: May 5, 2011
SUBJECT : Telecommunications: universal service
SUMMARY : Authorizes the California Public Utilities Commission
(PUC) to require interconnected Voice over Internet Protocol
(VoIP) service providers to collect and remit surcharges on
their California intrastate revenues in support of the universal
service funds.
EXISTING LAW :
1)Authorizes the PUC to supervise and regulate every public
utility in the state, including telephone corporations.
2)Establishes six funds in the State Treasury through which the
state's universal service programs are funded.
3)Requires that moneys in the funds may only be expended for
specified purposes and upon appropriation in the annual Budget
Act or upon supplemental appropriation.
4)States that the Federal Telecommunications Act of 1996
establishes a program of cooperative federalism for the
regulation of telecommunications to attain the goal of local
competition, while implementing specific, predictable, and
sufficient federal and state mechanisms to preserve and
advance universal service, consistent with certain universal
service principles.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "as consumers move from
traditional wireline communications towards technology such as
VoIP, the result is a reduction in the traditional wireline
revenue. The state must adapt to this changing environment in
order to ensure the universal service funds are protected.
Although California interconnected VoIP providers connect to the
public switched telephone network and benefit from the state
universal service programs, their customers have not been paying
into the funds at the state level. AB 841 addresses this by
AB 841
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requiring interconnected VoIP providers to contribute to the
state universal service funds in a manner consistent with
federal law."
1) Background : Universal service has been an important public
policy objective on both the federal and state level. The
United States Congress first made universal service a basic goal
of telecommunications policy with the passage of the
Communications Act of 1934. In 1983, the California Legislature
enacted the Moore Universal Telephone Service Act to ensure that
consumers have access to basic voice service that is both
affordable and ubiquitously available.
To achieve this legislative goal, the PUC created various public
programs such as the: 1) California High-Cost Fund A, which
provides direct support to the 14 small rural telephone
companies that are under rate of return regulation; 2)
California High-Cost Fund B, which provides support for large
local exchange carriers (AT&T, Verizon, Frontier, and SureWest)
for the high-cost areas of their service territories where the
cost of providing basic service exceeds $36 per month; 3)
California Advanced Services Fund, which is intended to promote
universal service in unserved and underserved areas in the state
by awarding funding to qualifying certificated applicant
carriers; 4) California LifeLine, which provides discounted
basic telephone (landline) services to eligible California
households; 5) California Teleconnect Fund which is a program to
provide 50% discount on selected telecommunications services to
qualifying schools, libraries, government-owned and operated
hospitals and health clinics, and community based organizations,
and 6) Deaf and Disabled Telecommunications Program, which has
two components: a dual party relay system known as California
Relay Service (CRS) and a specialized equipment program known as
California Telephone Access Program (CTAP). Subsequent
legislation expanded DDTP to serve California individuals with
hearing, vision, speech, cognitive and mobility disabilities.
2) What is VoIP service : During the past decade, the
telecommunications industry has experienced advances in
technology, shifts in the competitive markets, and major changes
in service and price structures. Of increasing importance among
these recent changes in technology is the migration of voice
service away from the circuit-switched platform, to routed or
soft-switched "packetized" telephone transmission relying on the
Internet protocol (IP). With IP, the network routes a call over
different network pathways maintained by the carrier or carriers
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carrying the voice service, not over one sustained circuit, and
as a consequence the network's voice delivery is more efficient
and less expensive to provision. All voice services, along with
other network services, are now transitioning to this
increasingly common transmission protocol as a converged network
is adapted to carry voice, data, and video bits seamlessly from
the point of view of the consumer. FCC data indicate that there
are, as of December 2008, some 2.5 million VoIP users in
California, of which approximately 2 million are residential
subscribers.
The Federal Communications Commission's (FCC) rules define
"interconnected VoIP service" as a service that: 1) enables
real-time, two-way voice communications; 2) requires a broadband
connection from the user's location; 3) requires Internet
protocol-compatible customer premises equipment, and 4) permits
users generally to receive calls that originate on the public
switched telephone network (PSTN) and to terminate calls to the
PSTN. Interconnected VoIP services may be fixed or nomadic. A
fixed interconnected VoIP service can be used at only one
location, whereas a nomadic interconnected service may be used
at multiple locations.
3) Level the playing field : Due to the increasing customer
migration to VoIP services, these customers presently do not
contribute to the California universal service programs. In
order to level the playing field, this bill authorizes the PUC
to require interconnected VoIP service providers to collect and
remit surcharges on their California intrastate revenues in
support of the universal service funds.
On January 13, 2011, the PUC opened a Rulemaking to address
whether to require interconnected VoIP service providers within
California to collect and remit state public purpose program
surcharges on intrastate revenues. It is unclear what progress
the PUC has made on this issue.
4)Suggested amendments: On page 2, line 15, the author and this
committee may wish to
replace "may" with "shall" as it relates to the PUC requiring
VoIP service providers to collect and remit surcharges on their
California intrastate revenues in support of the universal
service funds.
REGISTERED SUPPORT / OPPOSITION :
AB 841
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Support
AT&T (Sponsor)
California Cable and Telecommunications Association (CCTA)
Frontier Communications
Technology Association of America (TechAmerica)
Verizon
Opposition
California Public Utilities Commission (CPUC) (unless amended)
The Utility Reform Network (TURN) (unless amended)
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083