BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1315|
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THIRD READING
Bill No: AB 1315
Author: Fuentes (D)
Amended: 8/16/10 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 10-0, 6/29/10
AYES: Padilla, Dutton, Corbett, Florez, Kehoe, Lowenthal,
DeSaulnier, Simitian, Strickland, Wright
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : Telecommunications: Public Utilities
Commission
SOURCE : California Association of Competitive
Telecommunications
Companies
DIGEST : This bill provides that if an incumbent local
exchange carrier files a forbearance petition with the
Federal Communications Commission (FCC) requesting that the
FCC forbear from enforcing that carrier's duty to provide
to any requesting telecommunications carrier
nondiscriminatory access to network elements on an
unbundled basis at any technically feasible point on rates,
terms, and conditions that are just, reasonable, and
nondiscriminatory, within any metropolitan statistical area
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located in the state, the Public Utilities Commission (PUC)
would be required to
participate in that forbearance proceeding by filing
comments on the petition, providing data on competition in
the metropolitan statistical area that is the subject of
the petition, and taking any other action that advances the
state's policies promoting competition in
telecommunications markets. This bill requires the PUC to
develop a sample data request for collecting data on
competition in any California metropolitan statistical
area, and requires all providers of voice communications
services, as specified, to provide all data and other
information relevant to the forbearance petition requested
by the PUC.
Senate Floor Amendments of 8/16/10 make technical
refinements to the language specifying the activities
required of the PUC if a petition is filed with the FCC
requesting forbearance from local competition requirements.
ANALYSIS : Current federal law requires local exchange
carriers (LECs) to provide access to unbundled network
elements necessary for competitive carriers to offer local
telephone service to end users and allows the FCC to
forbear from enforcing these unbundling requirements if it
determines that they are not needed to ensure just and
reasonable rates or protect consumers and if forbearance is
in the public interest. Current federal law authorizes an
LEC to petition the FCC to forbear from enforcing
unbundling requirements in individual Metropolitan
Statistical Areas (MSAs), allows interested parties to
comment on a petition, requires the FCC to act on a
petition within 12 months, and provides that a petition is
deemed granted if the FCC fails to act within that time.
A current FCC decision approving AT&T's merger with Bell
South prohibits AT&T from petitioning the FCC for
forbearance from unbundling requirements until after June
29, 2010.
Background
The Telecommunications Act of 1996 (1996 Act) establishes a
pro-competitive, deregulatory national policy for
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telecommunications and allows competition in the local
exchange market. The market for local service had
historically been a monopoly because it is prohibitively
expensive for more than one provider to replicate last-mile
connections - the copper wire loops and transport
facilities to each customer's residence or business. The
1996 Act requires LECs to share their networks and allow
competitive local exchange carriers (CLECs) to lease
unbundled last-mile loops and transport elements that they
can combine with their own facilities to offer service to
end users. The Act recognizes that these unbundling
requirements were essential to development of local
competition.
The Act authorizes the FCC to forbear from enforcing these
unbundling requirements if it finds that (1) enforcement is
not necessary to ensure that rates are just, reasonable and
nondiscriminatory, (2) enforcement is not necessary to
protect consumers, and (3) forbearance is in the public
interest, which requires an analysis of whether forbearance
will promote competitive market conditions. An LEC can
seek forbearance from unbundling requirements in distinct
markets by filing a forbearance petition for individual
MSAs.
As a condition of FCC approval of its merger with Bell
South, AT&T voluntarily agreed in 2006 to not seek
forbearance from loop and transport unbundling requirements
until after June 29, 2010. After that date, AT&T is
eligible to file a forbearance petition for one or more of
the 26 California MSAs. So far, 11 Forbearance Petitions
have been filed nationwide, including petitions by Qwest
for Phoenix, Seattle, Denver, and Minneapolis-St. Paul, and
by Verizon for Boston, New York, Philadelphia, Pittsburgh,
Virginia Beach, and Providence. State public utilities
commissions participated in those proceedings and provided
data on the level of local competition. No petitions have
been filed for any California MSA. AT&T indicates that it
currently has no plans to file a forbearance petition in
California in the near future.
On June 22, 2010, the FCC issued a decision denying Qwest's
forbearance petition for Phoenix and establishing a new
analytical framework and data-driven standard for what a
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petitioner must establish to show that local competition is
sufficient to justify forbearance (Phoenix Decision). The
Phoenix Decision requires a petitioning LEC to show that it
does not have "market power," which includes the ability to
raise rates without losing customers to competitors. The
new framework requires a separate evaluation of the level
of competition for distinct retail services for residential
and small, medium, and large business customers and for
wholesale services such as loops and transport that CLECs
can lease to provide service. The petitioner's burden can
be met with data showing the market share for each product
that is served by competitors such as cable telephone
service, Voice over Internet Protocol, and possibly
wireless services. Many view the new standard established
in the Phoenix Decision as setting a very high bar for
forbearance petitioners to meet.
The California Association of Competitive
Telecommunications Companies (CALTEL), the bill's sponsor,
claims that CLECs rely on either unbundled network elements
to serve the vast majority of their customers, especially
to small business customers. CALTEL claims that, if a
forbearance petition is granted for a California MSA, CLECs
will be forced to exit the market because the cost of
alternative facilities is prohibitive. For example, a CLEC
that now leases for $9.48 a month one or more unbundled
loops to provide high-speed Internet service to a small
business customer would instead have to pay the regular
tariffed special access rate of at least $260 a month to
provide that customer comparable Internet speed. The
result would be less local exchange competition in
California and fewer service options for customers.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/17/10)
California Association of Competitive Telecommunications
Companies (source)
Small Business California
The Utility Reform Network
OPPOSITION : (Verified 8/17/10)
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Public Utilities Commission
ARGUMENTS IN SUPPORT : According to the author's office,
this bill will ensure that the PUC fully participates in
the FCC's proceeding when a forbearance petition is filed
for a California MSA and provides the FCC with thorough and
impartial data on the level of competition in that MSA.
ARGUMENTS IN OPPOSITION : According to the author's
office, "the intent of this bill is to ensure that the CPUC
fully participates in the FCC proceeding when a forbearance
petition is filed for a California MSA and provides the FCC
with thorough and impartial data on the level of
competition in that MSA. The author is concerned that one
of the former Bell Operating Companies operating in
California (AT&T and Verizon) could file a forbearance
petition, that if approved could allow the company to deny
competitive access to some of the Bell Operating Company's
own infrastructure. The CPUC is opposed to the bill as it
was amended on August 16, 2010, because the bill may have
the opposite impact from the stated intent of the author.
This bill provides a high level of specificity on how the
CPUC must respond to a forbearance petition. The
micro-management of CPUC actions in this bill would allow
some telephone service providers to withhold information
from CPUC about the competitive state of the telephone
market in California that the CPUC would need to file an
effective response to a forbearance petition. Thus, this
bill could make it less likely that the CPUC will
effectively participate at the FCC. The CPUC is actively
engaged in FCC proceedings and has filed in the past on
several forbearance proceedings."
DLW:mw 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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