BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 437 - Pavley Hearing Date:
May 5, 2009 S
As Introduced: February 26, 2009 Non-FISCAL B
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DESCRIPTION
Article 1, Section 1 of the California Constitution establishes
an individual's inalienable right to privacy.
Current law prohibits cellphone companies from charging
customers for having an unlisted telephone number.
This bill prohibits all telephone corporations, including
cellphone companies, from charging customers for having an
unlisted telephone number.
BACKGROUND
Unlisted/Unpublished - Telephone customers can protect the
privacy of their telephone number by having their number
unlisted (i.e. not published in the telephone directory) or
unpublished (i.e. not published in the telephone directory and
not available through the directory assistance operator). For
simplicity, this analysis uses the terms interchangeably.
Californians Like Unlisted Numbers - Californians value the
privacy of their telephone numbers. In 2007, roughly 40% of
AT&T's residential customers were unpublished; in 1995 (the
latest data available), roughly 50% of Verizon's, then GTE's,
residential customers were unlisted. Nationally the figure is
closer to 30%. (These figures do not include cellular telephone
numbers, 100% of which are unpublished.) The high percentage
of unpublished numbers is despite the charge for the privilege
of having an unpublished number. There is no extra charge to
have a listed telephone number.
Unlisted Number Charges - The price for having an unlisted
number varies from $1.25/mo. for AT&T to $1.50/mo. for Verizon,
SureWest and Frontier. These prices look like relative bargains
compared to other states, where the big telephone companies
charge as much as $5.50/mo. for an unlisted telephone number.
By deregulating rates for unlisted numbers the CPUC has chosen
not to constrain the price that that the telephone companies
charge. Theoretically the CPUC could invoke its general
regulatory authority to stop a rate increase, but there is
little track to record to indicate that it would do so.
California's small local telephone companies remain
traditionally regulated. By law these companies may not charge
to have an unlisted number until they are subject to
competition. Cellphone companies do not charge for unlisted
numbers, a requirement of state law.
Privacy Issues Everywhere - The telephone industry is deeply
immersed in privacy issues, from concerns over monitoring of the
content of calls by federal agencies, to location identification
of wireless callers, to limiting privacy intrusions into the
home through the use of Do-Not-Call lists. Caller ID and
Anonymous Call Rejection are services which the telephone
companies offer to help customers deal with privacy issues.
Whole industries have been created to unmask the privacy created
when a customer pays for an unlisted telephone number. And
these privacy questions will become increasingly thorny as
people increasingly conduct their lives electronically,
potentially leaving behind footprints of where they go, what
they look at, and what they do.
COMMENTS
1. Author Concerns - The author is concerned that telephone
customers have to pay fees every month to be unlisted. She
is also concerned that those rates could increase, based on
the experience in other states. Under this bill the author
is prohibiting unlisted number charges for traditional
telephone customers, just as is the case for cellphone
customers.
2. Many Opponents - The telephone industry is opposed to
the bill. They object on a number of grounds, including
that there are identifiable costs associated with unlisted
numbers, that encouraging unlisted numbers conflicts with
state and federal universal service policies, that the bill
regulates prices in competitive industries, and that the
bill is not competitively neutral. They also argue that
the bill sponsors have been inconsistent on the issue.
Others argue that the bill will encourage more unlisted
numbers, devaluing the functionality of the white pages and
directory assistance, thereby jeopardizing jobs associated
with gathering, certifying and publishing this type of
information.
3. Price Versus Cost - There is some argument over whether
the price of an unlisted number reflects the cost. Other
than the telephone companies, no one else knows because
telephone regulation no longer examines the cost of
providing service. Clearly there are costs associated with
both listed and unlisted numbers. The question is whether
there should be a separate charge for either.
4. Conflict with Universal Service? - Opponents suggest
that this bill conflicts with long-standing state and
federal policy supporting universal service. That
suggestion is misplaced. Universal service does not imply
that telephone customers must have published telephone
numbers. If that were the intent then there would be a law
barring unlisted numbers.
5. Is This a Privacy Issue? - Opponents argue that this
bill is about rate setting, not privacy. They argue that
the percentage of unlisted numbers is the roughly the same
for both the large telephone companies who charge for it as
the small telephone companies who do not. When unlisted
number charges are minimal that may well be true. But if
unlisted number charges were to rise to several dollars a
month, could it be that a high charge would stand in the
way of a customer choosing the privacy that comes with an
unlisted number?
6. Financial Impact on the Telephone Companies - The
prohibition on charging for unlisted numbers will reduce
telephone company revenues, in some cases substantially.
For AT&T the lost revenue will be about $50 million
annually. The companies can recover this lost revenue by
either raising other prices or reducing costs. Some
companies, like SureWest, have the misfortune of providing
service in one of the most competitive areas of the state.
It may be difficult for them to raise their rates given
that state of competition. Other parts of the state are
less competitive, but the result could be that basic
telephone rates would increase.
7. More Level Playing Field - By prohibiting traditional
telephone companies from charging for an unlisted number,
this bill extends to traditional telephone companies a
prohibition that already exists for cellular telephone
companies. Federally regulated VOIP providers are not
affected by this bill.
8. Free Choice - California law encourages customers to
list their telephone number by requiring free directory
listings and the distribution of free white pages
directories. But if a customer chooses not to have a
publicly available telephone number, that is his or her
right. This bill simply says that the telephone companies
should not be influencing that decision through their
pricing policies.
9. Prior Legislation - A similar bill was heard last year,
SB 1423 (Kuehl). That bill passed this committee but was
defeated on the Senate floor.
10. Technical Amendment - The
author has revised the section of law prohibiting cellphone
companies from charging for unlisted numbers (Section
2891.1(e)), broadening it to include all customers. It may
be clearer to leave Section 2891.1(e) as it is in current
law and simply add a section to encompass the customers of
traditional telephone companies.
POSITIONS
Sponsor:
The Utility Reform Network
Support:
Acci?n Latina
American Federation of State, County and Municipal Employees
California Labor Federation, AFL-CIO
Central City SRO Collaborative
Consumer Action
Consumer Federation of California
Dr. Betty Shabazz Family Resource Center
Marketing Services
Privacy Rights Clearinghouse
Utility Consumers' Action Network
322 individuals
Oppose:
AT&T
California Cable and Telecommunications Association
California Chamber of Commerce
California Communications Association
California's Independent Telephone Companies
California League of United Latin American Citizens
California Small Business Association
Coalition of California Utility Employees
Congress of California Seniors
Frontier Communications
State Association of Electrical Workers
SureWest
TELACU Development Corporation
Verizon
Randy Chinn
SB 437 Analysis
Hearing Date: May 5, 2009