BILL ANALYSIS Ó AB 2570 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2570 (Quirk) As Amended August 19, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |79-0 |(May 5, 2016) |SENATE: |39-0 |(August 23, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: U. & C. SUMMARY: Makes changes to the state's LifeLine universal telephone service program specific to reimbursement procedures for wireless service provided to eligible low-income subscribers. The Senate amendments delete the previous content of the bill and replace it with the following: 1)Requires the California Public Utilities Commission (CPUC) to adopt a "portability freeze" rule for the state's LifeLine universal telephone service program by January 15, 2017. 2)Requires the CPUC to consider three criteria when adopting the port freeze rule: AB 2570 Page 2 a) A 60-day duration of the portability freeze. b) A period of time in which participants would be able to cancel their LifeLine service without penalty. c) A requirement that the administrator of the LifeLine program service provider with information concerning the subscriber's previous enrollment date and whether or not the subscriber has enrolled with another telephone corporation during the period of the portability freeze established by the CPUC. EXISTING LAW: 1)Establishes the Moore Universal Telephone Service Act to achieve universal service by making basic telephone service affordable to low-income households through the creation of a LifeLine class of service. Requires the CPUC and telephone corporations to employ every means to ensure that every qualified household is informed and afforded the opportunity to subscribe to the service. (Public Utilities Code Section 871) 2)Requires the CPUC to annually designate a class of lifeline service necessary to meet minimum communication needs, set the rates and charges for that service, develop eligibility criteria for that service, and assess the degree universal service has been achieved, including telephone penetration rates by income, ethnicity, and geography. (Public Utilities Code Section 873) 3)Requires a lifeline telephone service subscriber to be provided with one lifeline subscription, as defined by the CPUC, at his or her principal place of residence, and no member of that subscriber's family or household who maintains AB 2570 Page 3 residence at that place is eligible for lifeline telephone service. (Public Utilities Code Section 878) 4)Requires the CPUC to initiate proceedings to set rates for lifeline telephone service and requires telephone corporations providing LifeLine telephone service to apply a surcharge to service rates in order to cover program costs. (Public Utilities Code Section 879) FISCAL EFFECT: According to the Senate Appropriations Committee, this bill will have unknown minor costs to the CPUC Utilities Reimbursement Account. COMMENTS: 1)Background: The Moore Universal Service Telephone Act of 1987 made it a state priority to offer affordable telephone service to the greatest number of Californians. The subsequent California LifeLine Program provides basic telephone service to low-income households at a discounted price. The CPUC is required to set rates for LifeLine services and regulate various other aspects of the program within specified limitations. For example, LifeLine rates may not exceed more than 50% of the rate for basic telephone service. The maximum state subsidy for 2016 is about $12.65 per month. The federal LifeLine Program provides a monthly discount of about $9.25 per month. The CPUC also provides funding to cover the administrative costs of service providers, a one-time connection subsidy for new enrollees and enrollees that switch plans, and subsidies for other telephone taxes and surcharges for LifeLine enrollees. Program funds are collected from a surcharge on telephone bills for non-LifeLine customers. The CPUC adjusts the surcharge rate based on projected LifeLine program costs. A Federal Communications Commission decision adopted on March 31, 2016 noted the need to further incentivize investments by providers for high-quality LifeLine service offerings by requiring a 60-day portability freeze for voice services with exceptions to protect consumers. AB 2570 Page 4 2)Consumer Choice vs. Portability Freeze: This bill requires the CPUC to adopt a portability freeze rule to limit the ability of an eligible enrollee to transfer service and receive a subsidy if they have previously enrolled in the LifeLine program. Senate amendments appropriately give the CPUC discretion to balance the needs of consumers and providers. This bill requires the CPUC to consider the inclusion of specific elements as part of the portability freeze rule, including a 60 day time-period for the freeze, a termination period without penalty, and a requirement that the administrator provide real-time information to verify subscriber eligibility. Further, this bill would provide an opportunity for stakeholder input in creating the rule within the CPUC rulemaking process. Analysis Prepared by: Darion Johnston / U. & C. / (916) 319-2083 FN: 0004887