BILL ANALYSIS
AB 2213
Page 1
Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2213 (Fuentes) - As Introduced: February 18, 2010
SUBJECT : Moore Universal Telephone Service Act.
SUMMARY : Updates the low-income residential telephone service
statute to allow eligibility for current communications
technologies. Specifically, this bill :
1)Replaces the definition of "residential" for California's
low-income residential telephone service with a definition of
"household."
2)Provides that a Lifeline telephone service subscriber be
provided with one Lifeline subscription at his or her
principal place of residence.
EXISTING LAW :
1)Creates the Moore Universal Telephone Service Act (Moore Act)
which sets the goal of providing high quality telephone
service at affordable rates to the greatest number of
citizens. The Moore Act provides that low-income customers of
telephone corporations shall be offered discounted telephone
rates for residential telephone service.
2)Establishes the established the Universal Lifeline Telephone
Service (Lifeline) program in order to provide low-income
households with access to affordable basic residential
telephone service.
3)Authorizes the California Public Utilities Commission (CPUC)
to determine the eligibility for the Lifeline program. The
CPUC has set the eligibility level at 150% of the federal
poverty level.
4)Provides that Lifeline residential customer rates should be
set at no more than 50% of the rate for basic telephone
service.
FISCAL EFFECT : Unknown
AB 2213
Page 2
COMMENTS : According to the author, the purpose of this bill is
to modernize the current Lifeline program that provides discount
telephone service for low-income residential customers to give
customers more choices when applying the Lifeline program
discount. To date the discount applies to a limited number of
service providers, excluding new competitive services such as
wireless.
1) Background : In 1987, the Legislature approved the Moore Act.
The Moore Act had the goal of providing high quality telephone
service to all Californian's regardless of income. The Moore Act
provided that each telephone corporation shall provide a
discount rate for basic residential telephone service to
low-income customers. The program only applies to residential
customers. Historically, the CPUC and the wireless telephone
companies have taken the position that wireless telephone
service is not a residential service, so the Lifeline program is
only available to landline customers.
The Lifeline rate is set by the CPUC, but the statute provides
that it shall be at least 50% of the rate the telephone
corporation charges other customers for basic or measured rate
residential telephone service. In implementing the Moore Act
the PUC opted to set one Lifeline rate statewide based on the
rate of the telephone company with the lowest overall telephone
rates. Currently the statewide rate is based on AT&T's basic
rate of service and results in a monthly Lifeline rate of
between $5.47 and $6.03 depending on the telephone company. The
telephone companies are reimbursed for the cost of the discount
through a surcharge assessed on all telephone customers,
including Lifeline customers.
In 2007, the CPUC completed a proceeding referred to as the
Uniform Regulatory Framework (URF). The URF proceeding resulted
in the deregulation of most remaining rate controls of the four
largest telephone corporations in California. The basis for
lifting the last of the rate regulations was a determination
that there was effective competition for telephone service in
almost all areas of the state. The CPUC found that the
proliferation of cell phones, cable companies providing
telephone service, and internet-based telephone services created
a competitive market for residential telephone service. One
result of the URF is that these telephone companies' basic
telephone rates will not be regulated in the future and the
companies may increase the rates with little notice. The avoid
AB 2213
Page 3
rate shock, the CPUC provided that the telephone companies could
not increase their basic rates by more than $3.25 in 2009 and in
2010. After 2010, the basic rate will be unregulated. This
deregulation of basic residential rates makes the current
structure of tying the Lifeline discounts to one telephone
company's rates much less practicable and potentially much more
expensive. To address this problem the PUC opened a subsequent
proceeding to determine how to set Lifeline discounts in the
future.
2) Changes to the Lifeline program : The CPUC's Lifeline
proceeding also seeks to allow Lifeline customers more access to
competing telecommunications providers. The proposed decision
allows alternative technologies such as wireless telephone
companies and companies that offer voice over internet protocol
(VoIP) service to offer Lifeline discounts. This is a policy
change that may violate current law. Current law provides that
the Lifeline discounts shall be offered to "residential
subscribers." The wireless companies have argued in a number of
proceedings and Legislative matters that they do not provide
"residential service" and are consequently not subject to
statutes providing for specific consumer protections and privacy
protections for residential customers. The proposed decision
declares that wireless service is now a residential service
without providing any basis in the record on why that change is
justified nor does it assess the impact on other areas of law
that apply only to "residential service."
The proposed decision leaves a number of issues unaddressed. The
proposed decision does not discuss how each low-income resident
will qualify for a wireless discount or if it will be limited to
one account per household as it is with the current Lifeline
service. The proposed decision does not address if the wireless
phones must meet all of the same service quality standards that
apply to wireline telephones today. The proposed decision does
not address how to account for situations where the discounted
wireless phone is moved from the household that qualified for
the Lifeline service, leaving that home with no telephone access
at all.
3) What is "Basic" : Basic telephone service is construed to
mean hardwire, land-line, residential telephone service within
the context of current statute regulating California's Lifeline
program. The author would like to provide the CPUC the
flexibility to review the Lifeline program and not be
AB 2213
Page 4
technologically restricted by the term "basic."
SUGGESTED AMENDMENTS: To bring the code up to date and to allow
the commission the flexibility to evaluate applying Lifeline
service to alternative telecommunications technologies, the
committee may wish to adopt the following amendments :
1)Page 2, line 4, delete "local".
2)Page 2, delete lines 13-24, and replace with: "(d) If
alternative technologies are used to provide lifeline
telephone services, the technologies should provide comparable
access to emergency and community services as traditional
landline services, and the commission must ensure that
low-income citizens using such technologies continue to have
access to reliable, high-quality, and affordable voice
telecommunications services.
3)Page 3, line 9, delete "basic".
REGISTERED SUPPORT / OPPOSITION :
Support
Division of Ratepayer Advocates (DRA)
Sprint (if amended)
The Utility Reform Network (TURN) (if amended)
Opposition
None on file.
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083