BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 841
Author: Buchanan (D)
Amended: 5/23/11 in Assembly
Vote: 27 - Urgency
SENATE ENERGY, UTILITIES & COMMUN. COMM. : 10-0, 06/21/11
AYES: Padilla, Fuller, Berryhill, Corbett, De León,
DeSaulnier, Rubio, Simitian, Strickland, Wright
NO VOTE RECORDED: Pavley
SENATE APPROPRIATIONS COMMITTEE : 6-0, 07/11/11
AYES: Kehoe, Walters, Alquist, Emmerson, Pavley, Steinberg
NO VOTE RECORDED: Lieu, Price, Runner
ASSEMBLY FLOOR : 77-0, 06/01/11 - See last page for vote
SUBJECT : Telecommunications: universal service: Voice
over Internet
Protocol
SOURCE : AT&T
DIGEST : This bill authorizes the California Public
Utilities Commission (PUC) to require interconnected Voice
over Internet Protocol (VoIP) service providers to collect
and remit state universal surcharges on their California
intrastate revenues.
ANALYSIS : Existing law:
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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.
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 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
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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.
These programs are funded with a surcharge on intrastate
service of landline and wireless customers. The PUC
establishes the surcharge rate for each program based on
program expenses and current fund balances.
Universal Service Programs Evolve with Technologies . The
state's universal service programs were established at a
time when circuit-switched wireline telephone service was
the main telephone service used by California households.
Since then, many customers began subscribing to wireless
service, which also requires paying the universal service
surcharge. Customers now increasingly are getting voice
telephone service through interconnected VoIP service
provided by cable companies and local exchange carriers
that offer voice, data and video through a broadband
network. According to the PUC, as of December 2008, there
were about 2.5 million VoIP users in the state, of which
about 2 million are residential subscribers. As
traditional landline carriers accelerate deployment of
broadband infrastructure, a mass migration of customers to
VoIP is expected.
Because VoIP has not been considered a traditional
"telecommunications service" subject to the same regulation
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as landline, or even wireless providers, VoIP customers
have not been required to pay state or federal universal
service charges, and state regulation of VoIP providers has
been generally preempted. In late 2010, without defining
the scope of state authority over VoIP, the FCC ruled that
interconnected VoIP providers must contribute to the
federal universal service programs and that states may
require VoIP contribution to state universal service
programs. The FCC recognized that, as an ever-growing
number of customers get voice service from VoIP rather than
landline providers, the funding base for universal service
programs diminishes.
In January 2011, the PUC opened a proceeding that proposed
requiring interconnected VoIP providers to contribute to
state universal service programs in order to ensure that
funds are collected in a competitively and technologically
neutral manner and are sufficient to advance universal
service. Stakeholders, including VoIP providers, are in
general agreement with the PUC's proposal to require VoIP
contribution to state universal service programs. But
there is substantial disagreement about whether the PUC can
require this contribution through its regulatory authority
over "telephone corporations."
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
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Major Provisions 2011-12 2012-13
2013-14 Fund
New revenues from VoIP
unknown additional revenues, potentially
Special*
providers in the millions or tens of millions
* Several universal service funds administered by the
Public Utilities Commission.
SUPPORT : (Verified 7/11/11)
AT&T (source)
California Cable and Telecommunications Association
California Communications Association
Frontier Communications
SureWest Communications
Technology Association of America
ASSEMBLY FLOOR :
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jones, Knight,
Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza,
Miller, Mitchell, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Valadao, Wagner,
Wieckowski, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Gorell, Jeffries, V. Manuel Pérez
RM:nl 7/12/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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