BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2545|
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THIRD READING
Bill No: AB 2545
Author: De La Torre (D)
Amended: 8/17/10 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 9-0, 6/15/10
AYES: Padilla, Dutton, Corbett, Florez, Kehoe, Lowenthal,
Simitian, Strickland, Wright
NO VOTE RECORDED: Cox, Oropeza
SENATE APPROPRIATIONS COMMITTEE : 11-0, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Walters, Wolk, Wyland, Yee
ASSEMBLY FLOOR : 76-0, 5/13/10 - See last page for vote
SUBJECT : Prepaid Communications servers: taxes, fees,
surcharges:
report
SOURCE : Author
DIGEST : This bill requires that no later than 60 days
after the effective date of this bill, the California
Public Utilities Commission (CPUC) shall conduct a public
process for the purpose of developing recommendations for
an equitable and uniform method of collection for state and
local government imposed communications taxes, fees, and
surcharges from prepaid communications end-user consumers.
This process is to consist of regularly scheduled meetings
CONTINUED
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and shall provide a reasonable opportunity to comment on
oral and written recommendations before they become final.
The CPUC is to report its recommendations to the
Legislature no later than 18 months from the date upon
which the interested parties process has convened.
ANALYSIS : The Warren 911 Emergency Assistance Act (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 (PSAP) 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 percent but not more
than 0.75 percent. Once the rate is set, the Board of
Equalization is required to collect the surcharge monthly
from service providers and deposit the funds into the State
Emergency Telephone Number Account 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 percent in North America last
year, nearly three times faster than traditional cell phone
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plans. Prepaid wireless customers make up about 17 percent
of all wireless customers, and the segment is growing at a
rate of 10 to 15 percent annually.
This bill requires that no later than 60 days after the
effective date of this bill, the CPUC shall conduct a
public process for the purpose of developing
recommendations for an equitable and uniform method of
collection for state and local government imposed
communications taxes, fees, and surcharges from prepaid
communications end-user consumers. This process is to
consist of regularly scheduled meetings and shall provide a
reasonable opportunity to comment on oral and written
recommendations before they become final. The CPUC is to
report its recommendations to the Legislature no later than
18 months from the date upon which the interested parties
process has convened.
For the purpose of this bill, "communications taxes, fees,
and surcharges" means any and all taxes, fees, and
surcharges on communications services imposed or authorized
by the stat or a local government, including, but not
limited to, all of the following:
1. The State Emergency Telephone Users Surcharge (SETUS).
2. The California High Cost Fund-A (CHCF-A) Administrative
Committee Fund Surcharge.
3. The California High Cost Fund-B (CHCF-B) Administrative
Committee Fund Surcharge.
4. The California Advanced Services Fund (CASF) Surcharge.
5. The California Teleconnect Fund (CTF) Surcharge.
6. The Deaf and Disabled Telecommunications Program (DDTP)
Surcharge.
7. The Public Utilities Commission Reimbursement Account
(PUCKA) Surcharge.
8. The Universal Lifeline Telephone Service CULTS)
Surcharge.
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9. Any 911 tax, fee, or surcharge.
10 Any local utility users tax imposed by a local
government.
For purposes of this bill, "prepaid communications"
includes both prepaid calling card telephone service and
prepaid wireless service.
This bill requires the CPUC to provide notification of, and
an invitation to participate in, the interested parties
process established in this section to interested parties,
including, but not limited to, a representative or
representatives of all of the following:
1. The State Board of Equalization.
2. The State Chief Information Officer.
3. The Controller.
4. The Department of Finance.
5. Local governments.
6. Local law enforcement agencies.
7. The wireless, wireline, and cable communications
industries, including the CTIA-The Wireless Association,
the California Communications Association, and the
California Cable and Telecommunications Association.
8. Taxpayers and general industry, including the California
Taxpayers' Association and the California Chamber of
Commerce.
9. The retail industry, including the California Retailers
Association.
10.Consumer representatives and consumer advocacy
organizations, including the Utility Reform Network and
the Division of Ratepayer Advocates.
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11.Any other public or private entities as deemed
appropriate by the Public Utilities Commission.
The interested parties process and development of
recommendations shall include, but shall not be limited to,
consideration of all of the following:
1. The mechanism for collection of communications taxes,
fees, and surcharges.
2. The point of collection of communications taxes, fees,
and surcharges.
3. The appropriate entity or entities to collect the
communications taxes, fees, and surcharges and
distribute the revenues to the appropriate account.
4. The costs of administration for state government, local
governments, and industry sectors.
5. The date or dates on which the recommendations should
take effect.
A report is to be submitted pursuant to subdivision (a)
shall be submitted in compliance with Section 9795 of the
Government Code.
The requirement for submitting a report imposed by this
bill is inoperation on September 16, 2016.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/17/10)
California Public Utilities commission (if amended)
California State Sheriffs Association
League of California Cities
Peace Officers Research Association of California
OPPOSITION : (Verified 8/17/10)
AT&T
CTIA - The Wireless Association (unless amended)
ARGUMENTS IN SUPPORT : This author's office states this
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bill ensures that the prepaid wireless sector of the
telecommunications market equitably shares in the
responsibility to fund the 911 emergency telephone systems,
which benefits all telecommunication and wireless
customers. It is the intent of the author's office to
accomplish through a CPUC proceeding, to determine an
equitable manner for service providers to collect the 911
surcharge from users of prepaid wireless services.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Tom Berryhill, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer,
Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey,
Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries,
Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma,
Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Silva, Smyth, Solorio, Audra Strickland,
Swanson, Torlakson, Torres, Torrico, Tran, Villines,
Yamada, John A. Perez
NO VOTE RECORDED: Caballero, Norby, Skinner, Vacancy
DLW:do 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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