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 ----------------------------------------------------------------- |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 Page 2 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 Page 3 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