BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 841
                                                                  Page  1


          ASSEMBLY THIRD READING
          AB 841 (Buchanan)
          As Amended  May 23, 2011
          2/3 vote.  Urgency 

           UTILITIES & COMMERCE           14-0                 
          APPROPRIATIONS      17-0        
           
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          |Ayes:|Bradford, Fletcher,       |Ayes:|Fuentes, Harkey,          |
          |     |Buchanan, Fong, Fuentes,  |     |Blumenfield, Bradford,    |
          |     |Furutani, Roger           |     |Charles Calderon, Campos, |
          |     |Hernández, Huffman,       |     |Davis, Donnelly, Gatto,   |
          |     |Knight, Ma, Nestande,     |     |Hall, Hill, Lara,         |
          |     |Skinner, Swanson, Valadao |     |Mitchell, Nielsen, Norby, |
          |     |                          |     |Solorio, Wagner           |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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.  

           FISCAL EFFECT  :  According to Assembly Appropriations Committee, 
          no additional state costs, as the PUC has recently opened a 
          proceeding on this specific topic.

           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, these customers do not contribute to 
          the state universal service funds.  AB 841 (Buchanan) addresses 
          this by requiring interconnected VoIP providers to contribute to 
          the state universal service funds in a manner consistent with 
          federal law.

           Background  :  Universal service has been an important public 
          policy objective on both the federal and state level.  The 








                                                                  AB 841
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          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 established universal 
          service programs: 

          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.

          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.  


          Due to the increasing customer migration to VoIP services, VoIP 
          customers presently do not contribute to the California 
          universal service programs.  In order to level the playing 
          field, this bill authorizes PUC to require interconnected VoIP 
          service providers to collect and remit surcharges on their 








                                                                  AB 841
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          California intrastate revenues in support of the universal 
          service funds.  

          On January 13, 2011, 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 
          PUC has made on this issue.

          The most recent amendments seek to clarify that this bill only 
          addresses the collection of the specified state surcharge funds 
          by VoIP providers.


          Analysis Prepared by  :    DaVina Flemings / U. & C. / (916) 
          319-2083 


                                                                FN: 0001098