BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2213 - Fuentes Hearing Date: June 15, 2010 A
As Amended: April 27, 2010 FISCAL B
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DESCRIPTION
Current law requires telephone corporations to provide a
discount rate for residential basic telephone service to
low-income customers and requires that each customer eligible
for this lifeline service be provided with one single party line
at his or her principal place of residence.
Current law authorizes provision of wireless telephone service
and does not classify wireless service as a residential basic
telephone service.
Current decisions of the California Public Utilities Commission
(CPUC) define "basic" telephone service as having 17 service
elements generally associated with traditional landline service,
including single-party local exchange service, equal access to
toll carriers, free unlimited incoming local calls, unlimited
access to 911 emergency services, a free directory listing and
directory, and access to other services.
This bill deletes references to lifeline service being a
residential basic telephone service and requires that an
eligible low-income subscriber be provided with one lifeline
subscription, as defined by the CPUC, to the household of that
lifeline subscriber.
This bill makes a finding that technologies beyond traditional
landline telephones could be used to offer low-income citizens
access to affordable, reliable, and high quality basic telephone
service.
This bill declares that if alternative technologies are used to
provide lifeline telephone service, they should provide
comparable access to emergency and community services as
traditional landline telephone service, and the CPUC shall
ensure that low-income consumers using alternative technologies
continue to have access to reliable, high quality and affordable
voice telecommunications service.
BACKGROUND
The Moore Universal Telephone Service Act sets the goal of
providing high quality telephone service at affordable rates to
the greatest number of citizens. The act requires the CPUC to
annually designate a class of lifeline service necessary to meet
minimum residential communications needs, develop eligibility
criteria for lifeline service (currently 150% of the federal
poverty level), and set the rates for lifeline service, which
are required to be not more than 50% of the rate for basic
telephone service. The CPUC sets lifeline rates based on AT&T's
basic service rate, resulting in current lifeline rates between
$5.47 and $6.03. Telephone companies are reimbursed for the
cost of offering the discount through a surcharge assessed on
all non-lifeline telephone customers. Because lifeline rates
are tied to AT&T's rates, consumer advocates are concerned that
the lifeline rate could increase after January 1, 2011, when
AT&T and other carriers under the Uniform Regulatory Framework
will be free to increase basic service rates without regulatory
approval.
The CPUC has an open proceeding to address lifeline rates and
other reforms to the lifeline program (R.06-05-028). A 2009
proposed decision in this proceeding that would have allowed
customers the option of alternative technologies such as
wireless for lifeline service was deemed to be in conflict with
current law that refers to lifeline service as basic residential
telephone service. In a related proceeding, the CPUC is
seeking to reform the California High Cost B-Fund, which
provides subsidies to carriers of last resort for providing
basic telephone service to residential customers in high-cost
areas (R.09-06-019). In these proceedings, the CPUC is
addressing how the elements of "basic" telephone service should
be updated to promote competitive and technological neutrality
in lifeline service while upholding the universal service goals
of ensuring that basic service is affordable for all low-income
households and available to all customers residing in high-cost
regions.
COMMENTS
1) Author's Purpose . According to the author, the purpose
of this bill is to remove statutory barriers that prevent
the CPUC from allowing lifeline service to be offered to
low-income customers with new technologies such as wireless
service rather than only with landline service. The author
cites the "ubiquity of cell phones and studies showing a
preference among low-income persons for cell phones" as
reasons why wireless service should be an option for
lifeline service.
2) Basic Service . This bill removes one, but not all,
reference to lifeline service as a "basic" service.
Keeping the word "basic" in these provisions may
automatically preclude wireless service as an option for
lifeline service because wireless does meet all of the
specified elements of basic service. However, the CPUC in
its pending proceedings has determined that the first step
in making the lifeline program technology neutral is to
update the definition of basic service. Because many of
the current elements of basic service ensure provision of
reliable, high quality service, it may be preferable to
keep the word "basic" in lifeline statutory provisions
while the CPUC, with stakeholder input, addresses whether
and how each of these elements should be modified to
accommodate new technologies. Thus, the author may wish to
consider amending the bill to retain all references in
current law to lifeline service as a "basic" telephone
service.
3) The Broadband Question . A May 10 scoping plan in the
pending CPUC proceedings concludes that updating the
definition of basic telephone service is a threshold issue
to achieving competitive and technological neutrality in
lifeline service and in reforming the California High Cost
B-Fund, universal service programs that aim to make basic
telephone service affordable for all low-income households
and available to all customers residing in high-cost
regions. Thus, the ruling states that the revisions to the
definition of basic service for all purposes should be
addressed "comprehensively and consistently in a single
proceeding."
The CPUC scoping plan, however, does not direct that the
proceeding review the definition of basic service in light
of the Federal Communications Commission's (FCC) pending
proposal that federal universal service and high-cost
support programs be modified to ensure universal access to
broadband and voice services. The FCC issued a rulemaking
on April 21 seeking comments on a proposal to modify legacy
high-cost support for voice service in order to redirect
funding to support universal broadband. This follows the
FCC's February release of the National Broadband Plan,
which concluded that high-speed access to the Internet has
become a necessity in modern life. If the FCC adopts these
proposals over the coming years, state universal service
programs will be impacted and the CPUC may need to alter
its definition of basic service. The Telecommunications
Act of 1996 authorizes state universal service programs not
inconsistent with FCC rules on universal service. The
CPUC's pending proceedings may be an opportunity to begin
review of whether broadband should be part of basic service
that should be universally available to all Californians.
Accordingly, the author may wish to consider amending this
bill to direct the CPUC to do the following in the pending
proceedings: (1) identify issues and seek input on how to
update the definition of basic service in a manner that
preserves the option of including broadband at a later
date, and (2) establish a schedule, as dictated by ongoing
FCC action in its universal service proceeding, for when
the CPUC will address whether to include broadband in the
definition of basic service.
4) Ratepayer Impact . By authorizing the CPUC to establish
a lifeline service with technologies other than landline
service, this bill opens the door to lifeline services that
will almost certainly be more costly than landline service.
The lifeline program is funded by a surcharge levied on
all non-lifeline telephone and wireless subscribers. To be
affordable to lifeline-eligible customers, a wireless
option will require a larger subsidy than landline service,
which will result in a higher surcharge for ratepayers.
Even with a higher subsidy, wireless providers may not be
able to offer lifeline service at a rate as low as the
current landline lifeline service. If that is the case,
current law establishing the lifeline rate at 50% of basic
service rates will need to be amended, along with its
provisions that refer to lifeline as a residential service
(Public Utilities Code Section 874).
5) Comparable Terms of Service . This bill declares that if
alternative technologies are used to provide lifeline
telephone service, they should provide comparable access to
emergency and community services as traditional landline
telephone service, and the CPUC shall ensure that
low-income consumers using alternative technologies
continue to have access to reliable, high quality and
affordable voice telecommunications service. Some
stakeholders claim that this bill should include more
policy direction to ensure that any CPUC decision to make
lifeline technology neutral does not result in degradation
of lifeline service or imposition of inequitable
requirements on different providers of lifeline service.
6) Technical Amendment . This bill removes some, but not
all, of the references to lifeline service as a residential
service that preclude wireless from being a lifeline
option. In order to remove all statutory barriers to
expanding lifeline service for new technologies, the author
may wish to consider amending the bill to remove other
references to "residential" from provisions governing the
lifeline program.
ASSEMBLY VOTES
Assembly Utilities & Commerce (12-0)
Assembly Appropriations (16-0)
Assembly Floor (72-0)
POSITIONS
Sponsor:
Author.
Support:
AT&T
California Public Utilities Commission
Division of Ratepayer Advocates
Sprint (Support if Amended)
TURN (Support if Amended)
Oppose:
California Independent Telephone Companies (Oppose unless
Amended)
SureWest (Oppose unless Amended)
Jackie Kinney
AB 2213 Analysis
Hearing Date: June 15, 2010