BILL NUMBER: AB 3606 ENROLLED 08/24/94 BILL TEXT PASSED THE ASSEMBLY AUGUST 24, 1994 PASSED THE SENATE AUGUST 22, 1994 AMENDED IN SENATE AUGUST 17, 1994 AMENDED IN SENATE AUGUST 8, 1994 AMENDED IN SENATE JULY 7, 1994 AMENDED IN ASSEMBLY APRIL 18, 1994 AMENDED IN ASSEMBLY APRIL 4, 1994 INTRODUCED BY Assembly Member Moore FEBRUARY 25, 1994 An act to amend Section 709 of, and to add Section 709.5 to, the Public Utilities Code, relating to public utilities. LEGISLATIVE COUNSEL'S DIGEST AB 3606, Moore. Public utilities: telecommunications services. Under existing law, the Public Utilities Commission is vested with regulatory authority over public utilities. This bill would make a legislative finding and declaration that a policy for telecommunications in California is to promote lower prices, broader consumer choice, and avoidance of anticompetitive conduct. The bill would state the legislative intent that all telecommunications markets subject to commission jurisdiction be opened to competition not later than January 1, 1997, and require the commission to take steps to ensure that competition in telecommunications markets is fair and that the state's universal service policy is observed. The bill would provide that if any local exchange telephone company obtains the right to offer cable television or video dialtone service within its service territory from a regulatory body or court of competent jurisdiction, any cable television corporation may immediately have the right to enter into the local telecommunications market within the service territory of that local exchange carrier by filing for approval a certificate of public convenience and necessity, if necessary, which shall be expeditiously reviewed by the commission. The bill would require the commission to expedite its open network architecture and network development, interconnection, and other related dockets so that whatever additional rules and regulations that may be necessary to achieve fair local exchange competition shall be in place no later than January 1, 1997. Since violations of orders, decisions, rules, or other requirements of the Public Utilities Commission are misdemeanors, this bill would impose a state-mandated local program by creating new crimes. The bill would incorporate changes to Section 709 of the Public Utilities Code proposed by SB 1966 to become operative if both bills are chaptered and this bill is chaptered last. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares as follows: (a) Competition is emerging in telecommunications market sectors, including local telephone service and video service. (b) The development of competition can be fostered through appropriate statutory and regulatory changes at the federal, state, and local levels. (c) Appropriate interconnection arrangements, appropriate telephone number portability, appropriate equal access to all competitors, and appropriate network unbundling are necessary in order to fully develop competition in local telecommunications markets. (d) Some local exchange telephone corporations are seeking to enter the market for cable television and similar services. California's two largest local exchange telephone corporations have requested authority from the Federal Communications Commission to offer video dialtone service within their franchised service areas. Those same corporations have also initiated court action to enter into the provision of cable television service within their service areas. Any local exchange telephone corporation may provide cable television service outside its service area consistent with federal and state law. (e) In order to facilitate and initiate the development of competition in local telecommunications markets, interim arrangements for interconnection and network unbundling are feasible and desirable. (f) Competitive markets generally encourage greater efficiency, lower prices, and more consumer choice than noncompetitive markets. (g) Competitive markets do not serve all consumers well. Consequently, for essential services, such as telecommunications services, other mechanisms are necessary to remedy these market failures. Competitive markets also fail to ensure that certain societal goals are met, such as universal service. Attaining these goals requires the establishment of other mechanisms. It is explicitly the intent of the Legislature in enacting this act not to affirm or abrogate any contractual agreements between cable operators and their respective franchising authorities. SEC. 2. Section 709 of the Public Utilities Code is amended to read: 709. The Legislature hereby finds and declares that the policies for telecommunications in California are as follows: (a) To continue our universal service commitment by assuring the continued affordability and widespread availability of high-quality telecommunications service to all Californians. (b) To encourage the development and deployment of new technologies and the equitable provision of services in a way which efficiently meets consumer need and encourages the ubiquitous availability of a wide choice of state-of-the-art services. (c) To promote economic growth, job creation, and the substantial social benefits that will result from the rapid implementation of advanced information and communications technologies by assuring adequate long-term investment in the necessary infrastructure. (d) To promote lower prices, broader consumer choice, and avoidance of anticompetitive conduct. SEC. 2.5. Section 709 of the Public Utilities Code is amended to read: 709. The Legislature hereby finds and declares that the policies for telecommunications in California are as follows: (a) To continue our universal service commitment by assuring the continued affordability and widespread availability of high-quality telecommunications service to all Californians. (b) To encourage the development and deployment of new technologies and the equitable provision of services in a way which efficiently meets consumer need and encourages the ubiquitous availability of a wide choice of state-of-the-art services. (c) To promote economic growth, job creation, and the substantial social benefits that will result from the rapid implementation of advanced information and communications technologies by adequate long-term investment in the necessary infrastructure. (d) To promote lower prices, broader consumer choice, and avoidance of anticompetitive conduct. (e) To remove the barriers to open and competitive markets and promote fair product and price competition in a way that encourages greater efficiency, lower prices, and more consumer choice. SEC. 3. Section 709.5 is added to the Public Utilities Code, to read: 709.5. (a) It is the intent of the Legislature that all telecommunications markets subject to commission jurisdiction be opened to competition not later than January 1, 1997. The commission shall take steps to ensure that competition in telecommunications markets is fair and that the state's universal service policy is observed. (b) To the extent possible, competition in intraexchange telecommunications markets shall be coincident with competition in video markets. (c) The commission shall expedite its open network architecture and network development, interconnection, universal service, and other related dockets so that whatever additional rules and regulations that may be necessary to achieve fair local exchange competition shall be in place no later than January 1, 1997. (d) If any local exchange telephone company obtains the right to offer cable television or video dialtone service within its service territory from a regulatory body or court of competent jurisdiction, any cable television corporation or its affiliates may immediately have the right to enter into the intraexchange market within the service territory of that local exchange carrier by filing for approval of a certificate of public convenience and necessity, if necessary, which shall be expeditiously reviewed by the commission. (e) If the local exchange corporation is subject to the commission's standards for the interconnection of networks, network unbundling, and service quality, the cable television corporation or its affiliates may be subject to the commission's standards for the interconnection of networks, network unbundling, and service quality, for that portion of their network dedicated to intraexchange telecommunications service. In addition, all corporations offering intraexchange telecommunications service shall be subject to the commission's consumer protection regulations. SEC. 4. Section 2.5 of this bill incorporates amendments to Section 709 of the Public Utilities Code proposed by both this bill and SB 1966. It shall only become operative if (1) both bills are enacted and become effective on January 1, 1995, (2) each bill amends Section 709 of the Public Utilities Code, and (3) this bill is enacted after SB 1966, in which case Section 2 of this bill shall not become operative. SEC. 5. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs which may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, changes the definition of a crime or infraction, changes the penalty for a crime or infraction, or eliminates a crime or infraction. Notwithstanding Section 17580 of the Government Code, unless otherwise specified in this act, the provisions of this act shall become operative on the same date that the act takes effect pursuant to the California Constitution.