BILL ANALYSIS Ó
AB 2570
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CONCURRENCE IN SENATE AMENDMENTS
AB
2570 (Quirk)
As Amended August 19, 2016
Majority vote
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|ASSEMBLY: |79-0 |(May 5, 2016) |SENATE: |39-0 |(August 23, |
| | | | | |2016) |
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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:
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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
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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.
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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