BILL ANALYSIS Ó AB 2395 Page 1 Date of Hearing: May 25, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2395 (Low) - As Amended May 16, 2016 ----------------------------------------------------------------- |Policy |Utilities and Commerce |Vote:|10 - 3 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill establishes a process for a telephone corporation to withdraw legacy public switched telephone network services and transition to Internet Protocol (IP) enabled services and networks, beginning January 1, 2020. Specifically, this bill: 1)Requires a telephone corporation to complete a customer education and outreach program explaining the IP transition, its benefits and advantages, and a description of the alternative services available to consumers. Requires the outreach to include information regarding timeframes and AB 2395 Page 2 notices of discontinuance of service. 2)Requires a telephone corporation planning to discontinue any voice grade single-line telephone service to give notice to the California Public Utilities Commission (PUC) certifying both following: a) The telephone corporation has completed the education and outreach program, and b) An alternative voice service is available and includes specified elements (The PUC's decision to confirm is limited to the consideration of only the specified elements.) 3)Presumes the telephone corporation has completed the requirements to withdraw if the PUC fails to complete its technical review within 120 days. 4)Authorizes a telephone corporation to discontinue any legacy telephone service, beginning January 1, 2020, upon completion of specified requirements or the failure of the PUC to complete its technical review. 5)Requires a telephone corporation to give 90 days prior notice to affected customers and to the PUC including specified information. 6)Requires the telephone corporation to continue providing the legacy telephone service in the affected area during the notice period, except to new customers and customers who AB 2395 Page 3 disconnect or change the features of the service 7)Authorizes a customer to petition the PUC, within 60 days after the receipt of a notice of withdrawal, to request a review of the availability of the alternative service at the customer's location. Limits the review to specified elements. Requires the PUC to issue an order disposing of the petition no later than 60 days after its filing. 8)Requires the PUC, if it determines after an investigation that no alternative service is available to the customers at the customer's location, to order the telephone corporation to continue providing service for no longer than 12 months after withdrawal. If the time period in the order expires and there still is no alternative provider, requires the PUC to order the telephone corporation to continue providing service until an alternative is available. FISCAL EFFECT: 1) From 2017 and 2020, the PUC estimates annual costs of $2 million for 14 permanent PY and one limited-term PY across four divisions to hold a proceeding and an additional $2.7 million for IT contracts and preliminary outreach efforts. 2) Beginning 2019, the PUC estimates annual costs of $730,000 for 7 limited-term PY to address public comment over a two-year period. 3) Beginning in 2020, unknown significant additional staffing requirements to be determined by the process that is adopted and the number of affected customers. AB 2395 Page 4 4) Additional unknown fiscal impacts on subsidy, public purpose and high-cost programs, licensing of alternative providers, impacts on other utilities, and legal conflicts. COMMENTS: 1)Purpose. According to the author, since 1999, Plain Old Telephone Service (POTS) has declined by 85% in the state. As of 2014, approximately 6% of Californians live in households with only a landline (which includes POTS and VOIP), a 44 percent decline from 2010. This bill modernizes our state's telecommunications regulations to ensure California is the world leader in telecomm innovation. 2)Background. In the 1980s, Congress broke up AT&T into seven smaller local companies. In 1996, the Telecommunications Act of 1996 (The Act) was enacted to force local companies to open up their networks to outside competition. As a result, The Act distinguished two types of telephone service providers, Incumbent Local Exchange Carriers (ILECs) and Competitive Local Exchange Carriers (CLECs). ILECs are telephone companies that provided local services prior to The Act, and own most of the infrastructure and facilities in a service area. CLECs are companies established by The Act that build and operate communication networks in existing ILEC service areas, and provide customers with an alternative to ILEC services. The Act was intended to promote competition between telephone service providers. 3)Carriers of Last Resort. Carriers of Last Resort (COLR) are carriers that are required to serve, upon request, all customers within their service area. This includes services AB 2395 Page 5 that are provided by the public purpose programs such as the Universal Lifeline Telephone Service, the Deaf and Disabled Telecommunications Program, and the California TeleConnect Fund, as well as providing basic service. California has about 25 COLRs which generally include all the ILECs, such as AT&T, Verizon, Frontier, and SureWest. Most ILECs were designated COLRs after The Act. Carriers who wish to become COLRs must obtain PUC approval. COLRs benefit by having access to high-cost fund subsidies that provide subsidies to small and large carriers for providing landline telephone services to residential customers in high cost areas. The PUC has mandated basic service elements for voice services for all COLRs. These services include: a) voice grade access to the public switched telephone network or successor network; b) real time two way communication; c) access to 911 services; d) access to residential backup power; e) access to directory services; f) billing protections; g) access to toll-free numbers; h) telephone relay services for deaf and disabled consumers; i) equal access to interexchange carriers; j) conditions of service notifications to consumers. 4)Opting Out. According to the PUC, California has rules for service withdrawal and the provision of basic service that are technology neutral. Any COLR can provide basic service using any technology that meets the requirements, and carriers should be able to comply with these rules without regard to technology or the digital format of the telecommunications Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081 AB 2395 Page 6