BILL NUMBER: SB 379	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 23, 2012
	AMENDED IN SENATE  APRIL 25, 2011
	AMENDED IN SENATE  MARCH 25, 2011

INTRODUCED BY    Senators   Fuller 
   and Cannella   Senator
  Fuller 
    (   Coauthors: 
Senators   Berryhill,  
  La Malfa,    
Rubio,     and Vargas 
 ) 

                        FEBRUARY 15, 2011

   An act to amend  Section 709   Sections 275.6
and 739.3  of the Public Utilities Code, relating to
telecommunications.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 379, as amended, Fuller.  Telecommunications policies.
  Telecommunications: universal service: regulation.
 
   Existing law, 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. The universal service
principles include the principle that consumers in all regions of the
nation, including low-income consumers and those in rural, insular,
and high-cost areas, should have access to telecommunications and
information services, including interexchange services and advanced
telecommunications and information services, that are reasonably
comparable to those services provided in urban areas and that are
available at rates that are reasonably comparable to rates charged
for similar services in urban areas.  
   Existing law authorizes the Public Utilities Commission to
supervise and regulate every public utility in the state, including
telephone corporations, and to fix just and reasonable rates and
charges for the public utility. Existing law establishes the state's
universal service funds, including the California High-Cost Fund-A
Administrative Committee Fund (CHCF-A) and the California High-Cost
Fund-B Administrative Committee Fund (CHCF-B), in the State Treasury,
and provides that moneys in each of the state's universal service
funds are the proceeds of rates and are held in trust for the benefit
of ratepayers and to compensate telephone corporations for their
costs of providing universal service. Moneys in the funds may only be
expended to accomplish specified telecommunications universal
service programs, upon appropriation in the annual Budget Act or upon
supplemental appropriation.  
   Existing law, until January 1, 2015, requires the commission to
develop, implement, and maintain a suitable program to establish a
fair and equitable local rate structure aided by universal service
rate support to small independent telephone corporations that serve
rural areas and are subject to rate-of-return regulation by the
commission (the CHCF-A program).  
   This bill would revise the CHCF-A program to instead require the
commission, until January 1, 2015, to exercise its regulatory
authority to maintain the CHCF-A program to provide universal rate
support to small independent telephone corporations in amounts
sufficient to meet the revenue requirements established by the
commission through rate-of-return regulation in furtherance of the
state's universal service commitment to the continued affordability
and widespread availability of safe, reliable, high-quality
communications services in rural areas of the state. The bill would
specify eligibility requirements for small independent telephone
corporations to participate in the CHCF-A program and requirements
for the commission in maintaining the program.  
   Pursuant to its authority, the commission adopted decisions
implementing an incentive-based regulatory format called the new
regulatory framework for certain telephone corporations. Existing law
required the commission, by January 1, 2000, to commence a
proceeding to consider whether to establish a new regulatory
framework that (1) ensures that the public has universally available
access to basic local exchange service, (2) applies appropriate rules
to all telecommunications service providers, and (3) encourages the
provision of advanced, high-speed digital telecommunications services
to the public.  
   This bill would require the commission, by January 1, 2014, to
establish a streamlined process that allows small independent
telephone corporations the option of being regulated under a small
corporation uniform regulatory framework that includes underlying
principles, policies, and full pricing flexibility, similar to the
framework applicable to large- and mid-sized incumbent local exchange
carriers.  
   Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including telephone corporations,
as defined. Existing law declares the policies for telecommunications
for California, including to continue our universal service
commitment by assuring the continued affordability and widespread
availability of high-quality telecommunications services to all
Californians.  
   This bill would declare the policies for telecommunications for
California to include: (1) to continue our universal service
commitment by ensuring the continued affordability and widespread
availability of high-quality telecommunications services to all
Californians; and (2) to continue universal service rate support for
telephone corporations subject to rate-of-return regulation by the
commission for the purpose of providing rural areas of the state with
access to telecommunications services. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    In making the changes made by this act
to Section 275.6 of the Public Utilities Code, it is the intent of
the Legislature to preserve all of the following:  
   (a) Federal universal service funding for telephone corporations
participating in the California High-Cost Fund-A Program, thereby
reducing cost pressures on the program and minimizing the state
surcharge levels necessary to fund the program.  
   (b) Application of the Federal Communications Commission's cost
allocation and separation rules to the expenses and investments of
telephone corporations that participate in the California High-Cost
Fund-A Program.  
   (c) The discretion of the Public Utilities Commission in open
Rulemaking 11-11-007 to establish the regulatory requirements for the
California High-Cost Fund-A Program within the policy framework
provided by this act. 
   SEC. 2.    Section 275.6 of the   Public
Utilities Code   is amended to read: 
   275.6.  (a) The commission shall  develop, implement, and
  exercise its regulatory authority to  maintain
 a suitable program to establish a fair and equitable local
rate structure aided by   the California High-Cost
Fund-A Program to provide  universal service rate support to
small independent telephone corporations  that serve rural
areas and are subject to   in amounts sufficient to meet
the revenue requirements established by the commission through 
rate-of-return regulation  by the commission. The purpose of
the program shall be to promote the goals of universal telephone
service and to reduce any disparity in the rates charged by those
companies   in furtherance of the state's universal
service commitment to the continued affordability and widespread
availability of safe, reliable, high-quality communications services
in rural areas of the state  .
   (b) For purposes of this section,  "small independent
telephone corporations" means those independent telephone
corporations serving rural areas that are subject to rate-of-return
regulation by the commission, as determined by the commission.
  the following terms have the following meanings: 

   (1) "Carrier of last resort" means a telephone corporation that is
required to fulfill all reasonable requests for service within its
service territory.  
   (2) "Rate base" means the value of a telephone corporation's plant
and equipment that is reasonably necessary to provide regulated
voice services and access to advanced services, and upon which the
telephone corporation is entitled to earn a reasonable rate of
return.  
   (3) "Rate design" means the mix of end user rates, high-cost
support, and other revenue sources that are targeted to provide an
opportunity to meet the revenue requirement of the telephone
corporation.  
   (4) "Rate-of-return regulation" means a regulatory structure
whereby the commission establishes a telephone corporation's revenue
requirements, and then fashions a rate design to provide the company
a fair opportunity to meet the revenue requirement.  
   (5) "Revenue requirement" means the amount that is necessary for a
telephone corporation to recover its reasonable expenses and tax
liabilities and earn a reasonable rate of return on its rate base.
 
   (6) "Small independent telephone corporations" are rural incumbent
local exchange carriers subject to commission regulation.  

   (c) In administering the California High-Cost Fund-A Program, the
commission shall do all of the following:  
   (1) Continue to set rates to be charged by the small independent
telephone corporations in accordance with Sections 451, 454, 455, and
728.  
   (2) Employ rate-of-return regulation to determine a small
independent telephone corporation's revenue requirement in a manner
that provides revenues and earnings sufficient to allow the telephone
corporation to deliver safe, reliable, high-quality voice
communication service and fulfill its obligations as a carrier of
last resort in its service territory, and to afford the telephone
corporation an opportunity to earn a reasonable return on its
investments, attract capital for investment on reasonable terms, and
ensure the financial integrity of the telephone corporation. 

   (3) Ensure that rates charged to customers of small independent
telephone corporations are just and reasonable and are reasonably
comparable to rates charged to customers of urban telephone
corporations.  
   (4) Provide universal service rate support from the California
High-Cost Fund-A Administrative Committee Fund to small independent
telephone corporations in an amount sufficient to supply the portion
of the revenue requirement that cannot reasonably be provided by the
customers of each small independent telephone corporation after
receipt of federal universal service rate support.  
   (5) Promote customer access to advanced services and deployment of
broadband-capable facilities in rural areas that is reasonably
comparable to that in urban areas, consistent with national
communications policy.  
   (6) Include all reasonable investments necessary to provide for
the delivery of high-quality voice services and the deployment of
broadband-capable facilities in the rate base of small independent
telephone corporations.  
   (d) In order to participate in the California High-Cost Fund-A
Program, a small independent telephone corporation shall meet all of
the following requirements:  
   (1) Be subject to rate-of-return regulation.  
   (2) Be subject to the commission's regulation of telephone
corporations pursuant to this division.  
   (3) Be a carrier of last resort in their service territory. 

   (4) Qualify as a rural telephone company under federal law (47
U.S.C. Section 153(37)).  
   (c) 
    (e)  The commission shall structure the programs
required by this section so that any charge imposed to promote the
goals of universal service reasonably equals the value of the
benefits of universal service to contributing entities and their
subscribers. 
   (d) 
    (f)  This section shall remain in effect only until
January 1, 2015, and as of that date is repealed, unless a later
enacted statute, that is enacted before January 1, 2015, deletes or
extends that date.
   SEC. 3.    Section 739.3 of the   Public
Utilities Code   is amended to read: 
   739.3.  (a) The commission shall develop, implement, and maintain
a suitable program to establish a fair and equitable local rate
structure aided by universal service rate support to small
independent telephone corporations serving rural and small
metropolitan areas. The purpose of the program shall be to promote
the goals of universal telephone service and to reduce any disparity
in the rates charged by those companies.
   (b) For purposes of this section, small independent telephone
corporations means those independent telephone corporations serving
rural areas, as determined by the commission.
   (c) The commission shall develop, implement, and maintain a
suitable, competitively neutral, and broadbased program to establish
a fair and equitable local rate support structure aided by universal
service rate support to telephone corporations serving areas where
the cost of providing services exceeds rates charged by providers, as
determined by the commission. The commission shall develop and
implement the program on or before October 1, 1996. The purpose of
the program shall be to promote the goals of universal telephone
service and to reduce any disparity in the rates charged by those
companies. Except as otherwise explicitly provided, this subdivision
does not limit the manner in which the commission collects and
disburses funds, and does not limit the manner in which it may
include or exclude the revenue of contributing entities in
structuring the program.
   (d) The commission shall structure the programs required by this
section so that any charge imposed to promote the goals of universal
service reasonably equals the value of the benefits of universal
service to contributing entities and their subscribers.
   (e) The commission shall investigate reducing the level of
universal service rate support, or elimination of universal service
rate support in service areas with demonstrated competition.
   (f) By July 1, 2010, the commission shall prepare and submit to
the Legislature a report on the affordability of basic telephone
service in areas funded by the California High-Cost Fund-B
Administrative Committee Fund. The report, among other things, shall
provide information on prices and costs of basic telephone service,
and penetration and utilization rates of basic telephone service by
income, ethnicity, age, and other demographic characteristics, using
surveys and other methods of identifying the factors affecting
affordability of basic telephone service for customers and
noncustomers. The report shall describe the characteristics of
noncustomers and their reasons for not having telephone service. The
report shall identify those persons most at risk of losing basic
telephone service. The report shall be funded out of the California
High-Cost Fund-B Administrative Committee Fund. 
   (g) By January 1, 2014, the commission shall establish a
streamlined process that allows a small independent telephone
corporation the option of being regulated under a small corporation
uniform regulatory framework that includes underlying principles,
policies, and full pricing flexibility, similar to the framework
applicable to large- and mid-sized incumbent local exchange carriers.
The small corporation uniform regulatory framework should take
effect no later than 180 days from the date that the small
independent telephone corporation chooses to adopt the small
corporation uniform regulatory framework. Nothing in this section
prohibits a small independent telephone corporation opting into
regulation pursuant to this subdivision from participating in the
California High-Cost Fund-B Program.  
   (g) 
    (h)  This section shall only apply to the California
High-Cost Fund-B Administrative Committee Fund program. 
   (h) 
    (i)  This section shall remain in effect only until
January 1, 2015, and as of that date is repealed, unless a later
enacted statute, that is enacted before January 1, 2015, deletes or
extends that date. 
  SECTION 1.    Section 709 of the Public Utilities
Code is amended to read:
   709.  The Legislature hereby finds and declares that the policies
for telecommunications in California are as follows:
   (a) To continue our universal service commitment by ensuring the
continued affordability and widespread availability of high-quality
telecommunications services to all Californians.
   (b) To focus efforts on providing educational institutions, health
care institutions, community-based organizations, and governmental
institutions with access to advanced telecommunications services in
recognition of their economic and societal impact.
   (c) To continue universal service rate support for telephone
corporations subject to rate-of-return regulation by the commission
for the purpose of providing rural areas of the state with access to
telecommunications services.
   (d) To encourage the development and deployment of new
technologies and the equitable provision of services in a way that
efficiently meets consumer needs and encourages the ubiquitous
availability of a wide choice of state-of-the-art services.
   (e) To assist in bridging the "digital divide" by encouraging
expanded access to state-of-the-art technologies for rural,
inner-city, low-income, and disabled Californians.
   (f) To promote economic growth, job creation, and the substantial
social benefits that will result from the rapid implementation of
advanced information and communications technologies by facilitating
adequate long-term investment in the necessary infrastructure.
   (g) To promote lower prices, broader consumer choice, and
avoidance of anticompetitive conduct.
   (h) To remove the barriers to open and competitive markets and
promote fair product and price competition in a way that encourages
greater efficiency, lower prices, and more consumer choice.
   (i) To encourage fair treatment of consumers through provision of
sufficient information for making informed choices, establishment of
reasonable service quality standards, and establishment of processes
for equitable resolution of billing and service problems.