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,      |
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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