BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 3 (Padilla)
Hearing Date: 04/25/2011 Amended: 04/12/2011
Consultant: Brendan McCarthy Policy Vote: EU&C 11-0
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BILL SUMMARY: SB 3, an urgency measure, extends the sunset of
the California High Cost Fund B program for two years. The bill
also requires providers of voice over internet protocol service
to contribute to universal service programs. The bill requires
the Public Utilities Commission to participate in any Federal
Communications Commission proceedings relating to universal
telecommunication service.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Revenues from extending($25,000) ($51,000) ($25,000) Special
*
the High Cost Fund B
program
Expenditures from the High $25,000 $51,000
$25,000Special *
Cost Fund B program
New revenues from VoIP Unknown additional revenues Various
**
providers
Participation in FCC $175 Special
***
proceedings
* California High-Cost Fund-B Administrative Committee Fund.
** Several universal service funds administered by the Public
Utilities Commission.
*** Public Utilities Commission Utilities Reimbursement Account.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Under current law, the Public Utilities Commission oversees a
variety of programs to ensure universal access to
telecommunications services by California residents. These
programs are supported by surcharges paid by telecommunications
SB 3 (Padilla)
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customers, based on intrastate telephone calls. In 2011-12, the
Public Utilities Commission is projecting total expenditures
from these programs of about $650 million. The California High
Cost Fund B program is one universal service program that
provides financial support to large local phone companies that
provide service in rural areas of the state, to ensure universal
access by offsetting the higher costs to provide such service in
rural areas. The statutory authorization for the California High
Cost Fund B program sunsets on January 1, 2012.
Under current law, providers of intrastate calls using voice
over internet protocol (VoIP) service are not required to
contribute to the state's universal access programs. (Some of
the large providers of VoIP service voluntarily collect and
remit charges for universal service to the Public Utilities
Commission.) A recent ruling by the Federal Communications
Commission requires such providers to contribute to federal
universal service programs and authorizes states to require them
to contribute to state universal service programs. The Public
Utilities Commission has recently begun a proceeding to consider
whether VoIP providers should contribute to universal service
programs.
SB 3 extends the sunset of the California High Cost Fund B
program until January 1, 2014.
The bill requires providers of intrastate calls using VoIP
service to contribute to the state's universal service programs.
The bill also requires the Public Utilities Commission to
participate in any proceedings at the Federal Communications
Commission relating to universal service programs and to report
to the Legislature on issues relating to universal
telecommunications service.
This bill is an urgency measure.
Extending the sunset of the California High Cost Fund B program
will generate revenues of about $51 million per year, to be
available, upon appropriation of the Legislature, for support of
universal telecommunications service. The sunset extension also
authorizes, upon appropriation by the Legislature, expenditure
of those funds.
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By extending the requirement to contribute to universal service
programs to VoIP providers, the bill will generate unknown
additional revenues. The total number intrastate VoIP calls made
by California residents is unknown. While some VoIP carriers
currently collect charges for universal service programs, the
share of total VoIP calls that are served by these carriers is
unknown. By bringing all VoIP calls into the program, the bill
will result in some additional revenues for the universal
service programs. After the initial increase in revenues to the
universal service programs, including VoIP in these programs
will keep total revenues into these programs relatively steady
as more customers shift from traditional telephone service to
VoIP service.
The Public Utilities Commission indicates that it will cost
about $175,000 to participate in Federal Communications
Commission proceedings and report to the Legislature.