BILL NUMBER: SB 379	CHAPTERED
	BILL TEXT

	CHAPTER  729
	FILED WITH SECRETARY OF STATE  SEPTEMBER 28, 2012
	APPROVED BY GOVERNOR  SEPTEMBER 28, 2012
	PASSED THE SENATE  AUGUST 30, 2012
	PASSED THE ASSEMBLY  AUGUST 23, 2012
	AMENDED IN ASSEMBLY  AUGUST 20, 2012
	AMENDED IN ASSEMBLY  JUNE 25, 2012
	AMENDED IN ASSEMBLY  JUNE 12, 2012
	AMENDED IN ASSEMBLY  MAY 23, 2012
	AMENDED IN SENATE  APRIL 25, 2011
	AMENDED IN SENATE  MARCH 25, 2011

INTRODUCED BY   Senator Fuller
   (Coauthors: Senators Berryhill, Cannella, Gaines, La Malfa, Rubio,
and Runner)
   (Coauthors: Assembly Members Buchanan, Conway, Beth Gaines, Grove,
Halderman, Jeffries, Logue, Nielsen, Olsen, and Perea)

                        FEBRUARY 15, 2011

   An act to amend Section 275.6 of the Public Utilities Code,
relating to telecommunications.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 379, Fuller. 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. This bill would
require a small independent telephone corporation that receives
support from the CHCF-A program to provide information regarding
revenues derived from the provision of unregulated internet access
service upon request from the commission and would require the
commission to treat this information as confidential.
   Under existing law, a violation of the Public Utilities Act or any
order, decision, rule, direction, demand, or requirement of the
commission is a crime.
   Because the provisions of this bill would be a part of the act and
because a failure by a small independent telephone corporation that
receives support from the CHCF-A program to provide information
regarding revenues derived from unregulated internet access service
when requested by the commission would be a crime, the bill would
impose a state-mandated local program by creating a new crime.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


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 exercise its regulatory authority
to maintain the California High-Cost Fund-A Program to provide
universal service 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.
   (b) For purposes of this section, 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 a fair opportunity 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 a
fair 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 a fair 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 communication services and the
deployment of broadband-capable facilities in the rate base of small
independent telephone corporations.
   (7) Ensure that support is not excessive so that the burden on all
contributors to the California High-Cost Fund-A Program is limited.
   (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(44)).
   (e) Upon request from the commission, a small independent
telephone corporation that receives support from the California
High-Cost Fund-A Program shall provide information regarding revenues
derived from the provision of unregulated internet access service by
that corporation or its affiliate within that corporation's
telephone service territory. The commission shall treat as
confidential any information provided pursuant to this subdivision.
   (f) 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.
   (g) 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.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.