BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  May 25, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2395 (Low) - As Amended May 16, 2016


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          |Policy       |Utilities and Commerce         |Vote:|10 - 3       |
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          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  








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            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  








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            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.








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             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  








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            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








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