BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 437 - Pavley Hearing
Date: January 13, 2010 S
As Amended: December 15, 2009 Non-FISCAL B
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DESCRIPTION
Current orders of the California Public Utilities Commission
(CPUC) permit a subscriber of traditional landline telephone
service to opt out of or cancel a contract for services without
paying an early termination fee within 30 days if a local
exchange carrier (carrier) notifies a subscriber of a rate
increase or the imposition of more restrictive terms and
conditions under a service agreement.
Current orders of the CPUC require carriers to provide notice of
a rate increase or more restrictive term or condition through a
bill insert, a separately mailed notice, or an email when a
subscriber has opted into electronic mail communication.
This bill requires a carrier to notify a subscriber of any rate
or service change within 60 days of its effective date with the
notice specifically placed on the front of a subscriber's bill
with specified content.
BACKGROUND
A carrier, or a local exchange service provider as referenced in
this bill, is a privately held telephone company that provides
traditional landline service to a customer.
For most carriers the CPUC has eliminated pricing regulation for
all telephone services except basic residential service in
effect deregulating or detariffing the industry. Instead of
filing prices, service descriptions, and terms and conditions
(called tariffs) for phone services such as Caller ID, Call
Waiting, and Call Forwarding with the CPUC, carriers may now
offer services through service agreements directly with
consumers. The CPUC does require specified notice of rates and
services and also maintains regulatory authority over several
discounted telephone service programs including the California
Lifeline, California Teleconnect Fund, Deaf & Disabled
Telecommunications, and Public Policy Payphone.
Carriers that serve areas where the cost to provide services is
very high (usually due to remoteness and geography) remain fully
regulated by the CPUC. They are also local exchange carriers
but are commonly referred to as High Cost Fund-A and High Cost
Fund-B providers.
Only landline service is under the jurisdiction of the CPUC;
other telephone service providers including wireless and cable
are not subject to state regulation.
COMMENTS
1. Notice Requirements/Need for Bill - This measure
requires that a carrier place a notice of a change in rate
or terms and conditions on the front of a bill with
specified content within 60-days or two billing cycles of
the effective date of the change. The information required
in this bill is consistent with current regulatory notice
requirements of the CPUC except that the CPUC does not
specify the placement of the notice on the bill and
requires the carrier to provide the notice within only
30-days of the effective date.
The author is concerned that current notice requirements
are too short in time and too lenient in placement allowing
a carrier to bury the notice in a cumbersome bill or
provide it separate from a bill where a subscriber is not
likely to see it. Additionally, where the notice does gain
the attention of the subscriber she opines that 30 days is
not sufficient time to allow the subscriber to research a
change of provider and switch service. She opines that the
need is also driven by the deregulation of telephone
service in 2007 by the CPUC, since which time subscribers
have seen terms of service grow increasingly complex and
rates of service continue to climb.
2. Carrier Response - Opponents are comprised of current
carriers which continue to be frustrated by mandates on
their business practice which do not exist for other
carriers such as wireless and cable effectively placing
them at a disadvantage with their competitors. They opine
that the current 30-day notice is a standard in the retail
marketplace with providers of all different types of
services and that with only two phone calls a subscriber
can easily terminate their service and sign on with a new
carrier. The placement and content of the notice
requirement is also troublesome due to limited space on the
front of the bill and, for some carriers, a billing system
that applies across many state lines and is not easily or
cheaply modified.
The carriers also indicate few, if any, complaints about
the 30 day notice requirements. The CPUC advises that two
complaints were received on this issue in 2009.
3. Rate Changes vs. Increases - This bill mandates notice
of any changes in rates or services which may inadvertently
limit the ability of a provider to inhibit the carrier's
ability to reduce rates or add additional services as soon
as possible. The author may wish to consider limiting the
notice requirements to increases in rates or reductions in
service.
4. Technical Amendment - The bill refers to a "local
exchange service provider" but should be phrased
consistently with the orders of the CPUC which uses "local
exchange carrier."
POSITIONS
Sponsor:
The Utility Reform Network
Support:
Division of Ratepayer Advocates
Oppose:
AT&T
California Cable & Telecommunications Association
California Communications Association
Verizon
Kellie Smith
SB 437 Analysis
Hearing Date: January 13, 2010