BILL ANALYSIS �
SB 3
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Date of Hearing: July 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 3 (Padilla) - As Amended: June 20, 2011
Policy Committee:
UtilitiesVote:15-0
Urgency: Yes State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill extends the sunset dates for the California High Cost
Fund A (CHCF-A) and B (CHCF-B) collections, respectively, and
requires interconnected Voice over Internet Protocol (VoIP)
service providers to collect and remit state surcharges for
state universal service programs. Specifically, this bill:
1)Extends the sunset date for the CHCF-A from January 1, 2013 to
January 1, 2015.
2)Extends the sunset date for the CHCF-B from January 1, 2012 to
January 1, 2015.
3)Requires the Public Utilities Commission (PUC) to require
interconnected VoIP service providers to collect and remit
surcharges on their California intrastate revenues in support
of the universal service funds.
4)Stipulates that (3) will be operative only if AB 841
(Buchanan), which contains identical language and is pending
in the Senate, is not enacted.
FISCAL EFFECT
1)Extension of CHCF-A revenue collections and expenditures for
two years, potentially in the range of $20 million annually.
2)Extension of CHCF-B revenue collections and expenditures for
three years, in the range of $50 million annually.
3)Unknown additional revenues to several universal service funds
SB 3
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from VoiP service providers. No additional state
administrative costs regarding VoiP, as the PUC has recently
opened a proceeding on this issue.
COMMENTS
1)Background . Two programs promote universal telephone service
in rural, high-cost areas: CHCF-A supports the 14 small rural
telephone companies that are under rate-of-return regulation;
CHCF B 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. The PUC establishes the
surcharge rate for each fund in an annual resolution based on
carrier claims and balance in the funds. In addition to these
two programs, various other surcharges fund the following
programs to promote universal phone service:
a) California LifeLine, which provides discounted basic
telephone (landline) services to eligible California
households.
b) Deaf and Disabled Telecommunications Program, which
includes a dual-party relay system known as California
Relay Service (CRS) and a specialized equipment program
known as California Telephone Access Program (CTAP).
c) 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.
d) California Advanced Services Fund, which is intended to
promote universal service in unserved and underserved areas
in the state by awarding funding to qualifying certificated
applicant carriers.
2)VoIP . Federal Communications Commission data indicate that, as
of December 2008, there were 2.5 million VoIP users in
California, of which approximately 2 million were residential
subscribers. On January 13, 2011, the PUC opened a Rulemaking
to address whether to require interconnected VoIP service
providers within California to collect and remit state public
purpose program surcharges on intrastate revenues.
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3)Purpose . According to the author, the purpose of this bill is
to ensure that California continues programs that help every
Californian get connected to the telecommunications network at
affordable rates in order to increase the value of the network
for all subscribers and to ensure that these programs are
appropriately modified to reflect changes in technology and
the telecommunications marketplace.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081