BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 841 - Buchanan Hearing Date:
June 21, 2011 A
As Amended: May 23, 2011 FISCAL B
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DESCRIPTION
Current law requires the California Public Utilities Commission
(CPUC) to establish and maintain universal service programs to
ensure that affordable telephone service is ubiquitously available
to all residents, including low-income, deaf and disabled, and
those living in rural, high-cost areas of the state.
Current law and CPUC decisions require that all providers of
telecommunications services contribute to universal service
programs and establish surcharges on customer's intrastate
telecommunications service to fund these programs.
Current law requires that state universal service programs not be
inconsistent with federal universal service law and regulations of
the Federal Communications Commission (FCC).
Current ruling of the FCC authorizes states to require providers
of telecommunications service using Voice over Internet Protocol
(VoIP) to contribute to state universal service programs.
This bill requires the CPUC to require interconnected VoIP service
providers to contribute to state universal service programs and
specifies methodologies for calculating the contribution.
This bill states the finding of the Legislature that the sole
purpose of this bill is to require VoIP contribution to state
universal service programs and does not indicate the intent of the
Legislature with respect to any other purpose.
This bill includes an urgency clause to ensure that the CPUC has
the necessary statutory direction to fund the state's universal
service programs at the earliest possible time.
BACKGROUND
Universal Service is Long-standing State and Federal Policy -
Universal service - ensuring the availability of high quality,
affordable telephone service for all Americans - has been a
bedrock principle of telecommunications policy nationwide since
enactment of the Communications Act of 1934. The Legislature
enacted the Moore Universal Telephone Service Act in 1983 to
ensure that Californians have access to basic voice service that
is both affordable and ubiquitously available. The state
universal service programs administered by the CPUC include:
1. California High-Cost Fund A, which provides direct support
to the 14 small rural telephone companies that are under rate
of return regulation;
2. California High-Cost Fund B, which provides support for
large local exchange carriers (AT&T, Verizon, Frontier, and
SureWest) for the high-cost areas of their service
territories where the cost of providing basic service exceeds
$36 per month;
3. California Advanced Services Fund, which provides funding
for deploying broadband in unserved and underserved areas in
the state;
4. California LifeLine, which provides discounted basic
telephone services to eligible California households;
5. California Teleconnect Fund which provides a 50% discount
on selected telecommunications services to qualifying
schools, libraries, government-owned and operated hospitals
and health clinics, and community based organizations; and
6. Deaf and Disabled Telecommunications Program, which
provides telecommunications devices to deaf and disabled
subscribers.
These programs are funded with a surcharge on intrastate service
of landline and wireless customers. The CPUC establishes the
surcharge rate for each program based on program expenses and
current fund balances.
Universal Service Programs Evolve with Technologies - The state's
universal service programs were established at a time when
circuit-switched wireline telephone service was the main telephone
service used by California households. Since then, many customers
began subscribing to wireless service, which also requires paying
the universal service surcharge. Customers now increasingly are
getting voice telephone service through interconnected VoIP
service provided by cable companies and local exchange carriers
that offer voice, data and video through a broadband network.
According to the CPUC, as of December 2008, there were about 2.5
million VoIP users in the state, of which about 2 million are
residential subscribers. As traditional landline carriers
accelerate deployment of broadband infrastructure, a mass
migration of customers to VoIP is expected.
Because VoIP has not been considered a traditional
"telecommunications service" subject to the same regulation as
landline, or even wireless providers, VoIP customers have not been
required to pay state or federal universal service charges, and
state regulation of VoIP providers has been generally preempted.
In late 2010, without defining the scope of state authority over
VoIP, the FCC ruled that interconnected VoIP providers must
contribute to the federal universal service programs and that
states may require VoIP contribution to state universal service
programs. The FCC recognized that, as an ever-growing number of
customers get voice service from VoIP rather than landline
providers, the funding base for universal service programs
diminishes.
In January 2011, the CPUC opened a proceeding that proposed
requiring interconnected VoIP providers to contribute to state
universal service programs in order to ensure that funds are
collected in a competitively and technologically neutral manner
and are sufficient to advance universal service. Stakeholders,
including VoIP providers, are in general agreement with the CPUC's
proposal to require VoIP contribution to state universal service
programs. But there is substantial disagreement about whether the
CPUC can require this contribution through its regulatory
authority over "telephone corporations."
COMMENTS
1. Author's Purpose . According to the author, the purpose of
this bill is to ensure that California's universal service
programs are supported in an equitable manner by requiring
customers of interconnected VoIP service contribute to the
programs.
2. Same Approach as 911 Surcharge . Although the scope of any
state authority over VoIP service has been uncertain, the
Legislature has previously followed the approach of this
bill. SB 1040 (Kehoe, 2008) required interconnected VoIP
service providers to contribute to the state 911 program
funded by a customer surcharge on intrastate service. This
bill similarly achieves the limited purpose of requiring VoIP
contribution to state universal service programs without
indicating legislative intent as to the bigger controversial
question of whether the CPUC can regulate VoIP service for
any other purpose.
3. Ratepayer Impact . By ensuring that customers who migrate
to interconnected VoIP service contribute to state universal
service programs, this bill would decrease the chance of
having to increase universal surcharges on a diminishing base
of landline customers.
4. Related Legislation . SB 3 (Padilla) extends the
California High Cost Fund B program and also requires the
CPUC to require VoIP providers to contribute to the state's
universal service programs.
ASSEMBLY VOTES
Assembly Floor (77-0)
Assembly Appropriations Committee (17-0)
Assembly Utilities and Commerce Committee
(14-0)
POSITIONS
Sponsor:
AT&T
Support:
California Cable and Telecommunications Association
California Communications Association
Comcast
Frontier Communications
SureWest Communications
Technology Association of America
Time Warner Cable
Oppose:
None on file
Jacqueline Kinney
AB 841 Analysis
Hearing Date: June 21, 2011