BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2545 - De La Torre Hearing Date: June 15, 20210 A
As Introduced: February 19, 2010 FISCAL B
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DESCRIPTION
Current law imposes a surcharge to fund 911 emergency telephone
service on amounts paid by every person in this state for
intrastate telephone service, including wireless and Voice over
Internet Protocol (VoIP) service.
This bill requires the California Public Utilities Commission
(CPUC) to open proceedings or expand the scope of existing
proceedings to determine an equitable manner for mobile
telephone service providers to collect the 911 surcharge from
users of prepaid communications services and to advise the State
Board of Equalization (BOE) of its determination.
BACKGROUND
The Warren 911 Emergency Assistance Act requires every local
public agency to establish and operate an emergency telephone
system using the digits 911. The purpose of the Act is to
ensure an efficient statewide system for delivery of 911 calls
to the appropriate local agency Public Safety Answering Points
(PSAPs) that answer and respond to requests for emergency
assistance. About two-thirds of 911 calls to PSAPs in California
are made from wireless telephones. The Act authorizes state
oversight of the 911 system in the State of California 9-1-1
Emergency Communications Office (State 911 Office) within the
Office of the State Chief Information Officer.
In order to fund the State 911 Office and local 911 telephone
facilities, the Emergency Telephone Users Surcharge Act imposes
a surcharge on amounts paid by every person in this state for
intrastate telephone service, including wireless and VoIP
service. The State 911 Office is required to annually determine
the amount of the surcharge, which must be at least 0.5% but not
more than 0.75%. Once the rate is set, BOE is required to
collect the surcharge monthly from service providers and deposit
the funds into the State Emergency Telephone Number Account
(SETNA) in the State Treasury. The Act requires service
providers to collect the 911 surcharge when billing for service
and requires the customer to pay the charge when paying for
service. For traditional postpaid telephone service, this means
customers pay the 911 surcharge as part of their monthly bill
for calls already made.
The rapid expansion of the wireless telecommunications market in
recent years has included growth in prepaid wireless services,
which is expected to reach $31.3 billion by the end of the
decade. Although prepaid telephones remain a fraction of the
overall mobile telephone market, sales of the category grew 13%
in North America last year, nearly three times faster than
traditional cell phone plans. Prepaid wireless customers make
up about 17% of all wireless customers, and the segment is
growing at a rate of 10 to 15% annually.
COMMENTS
1) Author's Purpose . - The purpose of this bill is to
ensure that the prepaid wireless sector of the
telecommunications market equitably shares in the
responsibility to fund the 911 emergency telephone system,
which benefits all telecommunication and wireless
customers. It is the author's intent that this be
accomplished through a CPUC proceeding to determine an
equitable manner for service providers to collect the 911
surcharge from users of prepaid wireless services.
2) Focus Only on Prepaid Wireless Service . While the
author intends that the CPUC proceeding required by this
bill focus on prepaid wireless services, references in the
bill to "prepaid communications service" are defined to
include both prepaid wireless service and prepaid wireline
calling card service. The bill also uses the term "mobile
telephony service providers," which includes mobile
services other than wireless telephone service. The CPUC
supports this bill if these definitions are clarified. In
order to ensure that the bill conforms to the author's
intent, the author may wish to consider amending the bill
to clarify that the CPUC open a proceeding or expand an
existing proceeding to determine an equitable manner for
collection of the 911 surcharge from users of prepaid
mobile telecommunications service.
3) Other Charges . Collecting the 911 surcharge on prepaid
wireless service is difficult because customers pay for the
service (typically a number of minutes of calling time) in
advance of using the service and there is no way to predict
how many of those minutes will be spent on intrastate calls
subject to the surcharge. Current law on collecting the
911 surcharge was designed to apply to postpaid service on
a monthly billing cycle, where the surcharge can be
calculated to apply to the intrastate calls actually made
during the prior month.
Other charges, in addition to the 911 surcharge, apply to
telecommunications services and are designed to be
collected on postpaid service. These include state and
local taxes and fees and charges for CPUC public purpose
programs such as Universal Lifeline Telephone Service,
California Teleconnect Fund, California High Cost Funds,
and Deaf and Disabled Telecommunications Program. By
focusing only on the collection of the 911 surcharge from
users of prepaid wireless service, this bill addresses only
one of several charges that are difficult to collect from
providers and users of prepaid service. CTIA and AT&T
claim that this bill is a piecemeal approach and advocate
initiating a process to bring stakeholders to the table to
develop a consensus on a process to collect all of these
charges. This bill appropriately requires the CPUC to
report its determination on an equitable manner to collect
the 911 surcharge on prepaid service to the BOE. But that
is only a first step in engaging all the relevant state and
local entities necessary to fully address how to equitably
collect the universe of charges applicable to prepaid
services.
ASSEMBLY VOTES
Assembly Utilities & Commerce (14-0)
Assembly Appropriations (17-0)
Assembly Floor (76-0)
POSITIONS
Sponsor:
Author
Support:
California State Sheriffs Association
League of California Cities
Peace Officers Research Association of California
California Public Utilities Commission (Support if Amended)
Oppose:
AT&T
CTIA - The Wireless Association (Oppose unless Amended)
Jackie Kinney
AB 2545 Analysis
Hearing Date: June 15