BILL ANALYSIS �
SB 3
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SENATE THIRD READING
SB 3 (Padilla)
As Amended June 20, 2011
2/3 vote. Urgency
SENATE VOTE :39-0
UTILITIES & COMMERCE 15-0
APPROPRIATIONS 17-0
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|Ayes:|Bradford, Fletcher, |Ayes:|Fuentes, Harkey, |
| |Buchanan, Fong, Fuentes, | |Blumenfield, Bradford, |
| |Furutani, Beth Gaines, | |Charles Calderon, Campos, |
| |Roger Hern�ndez, | |Davis, Donnelly, Gatto, |
| |Williams, Knight, Ma, | |Hall, Hill, Lara, |
| |Nestande, Skinner, | |Mitchell, Nielsen, Norby, |
| |Swanson, Valadao | |Solorio, Wagner |
| | | | |
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SUMMARY : Extends the sunset date for the California High Cost
Fund A (CHCF-A) and California High Cost Fund B (CHCF-B)
collections, and requires voice over Internet protocol (VoIP)
service providers to collect and remit surcharges to state
universal service programs. Specifically, this bill :
1)Extends the sunset date for CHCF-A from January 1, 2013, to
January 1, 2015.
2)Extends the sunset date for CHCF-B from January 1, 2012, to
January 1, 2015.
3)Requires the California 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)Makes finding on the Federal Communications Commission's (FCC)
proposal to reform the federal universal service program to
support voice and broadband and on the requirement in federal
law that state universal service programs not be inconsistent
with the federal program.
5)Contains an urgency clause, allowing this bill to take effect
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immediately upon enactment.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, extension of CHCF-A revenue collections and
expenditures for two years, potentially in the range of $20
million annually. Extension of CHCF-B revenue collections and
expenditures for three years, in the range of $50 million
annually. Unknown additional revenues to several universal
service funds from VoiP service providers. No additional state
administrative costs regarding VoiP, as the PUC has recently
opened a proceeding on this issue.
COMMENTS : 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 market place.
Background : Universal service has been an important public
policy objective on both the
federal and state level. The United States Congress first made
universal service a basic goal of telecommunications policy with
the passage of the Communications Act of 1934. In 1983, the
California Legislature enacted the Moore Universal Telephone
Service Act to ensure that consumers have access to basic voice
service that is both affordable and ubiquitously available.
To achieve this legislative goal, PUC created various public
programs such as the: 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 is intended to promote
universal service in unserved and underserved areas in the state
by awarding funding to qualifying certificated applicant
carriers; 4) California LifeLine, which provides discounted
basic telephone (landline) services to eligible California
households; 5) California Teleconnect Fund which is a program to
provide 50% discount on selected telecommunications services to
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qualifying schools, libraries, government-owned and operated
hospitals and health clinics, and community based organizations;
and, 6) Deaf and Disabled Telecommunications Program, which has
two components: a dual party relay system known as California
Relay Service (CRS) and a specialized equipment program known as
California Telephone Access Program (CTAP). Subsequent
legislation expanded DDTP to serve California individuals with
hearing, vision, speech, cognitive and mobility disabilities.
Similarly, federal universal service programs provide additional
funding to telephone companies to offset the expense of serving
high-cost areas so customers in those areas do not pay
substantially higher rates than customers in urban areas. These
universal service programs are designed to support landline
voice telephone service. Thus, the most efficient and
cost-effective investment for carriers today typically is
broadband facilities capable of providing voice, video, data,
and high-speed Internet access services. According to FCC,
these new technologies touch every aspect of modern life - the
workplace, commerce, education, health care, government
services, and public safety. Due to this technology evolution,
universal access to voice telephone service is no longer
sufficient. The 21st century digital economy requires that
virtually all citizens have access to broadband.
FCC has several pending proceedings that propose significant
transformation of federal universal service programs to provide
efficient, targeted support for broadband and voice service,
rather than just voice service, as outlined in FCC's National
Broadband Plan released in March 2010.
Commitment to affordable telephone service : In an effort to
continue California's
commitment to ensure affordable telephone service throughout the
state, this bill extends the sunset date for both CHCF-A from
January 1, 2013, to January 1, 2015, and CHCF-B from January 1,
2012, to January 1, 2015. These programs are funded by a
customer surcharge on intrastate services. Presently, PUC has
an open proceeding relating to reform of CHCF-B to consider how
to expand the definition of "basic service" to include more than
landline voice service.
Moreover, this bill makes findings on FCC's proposals to reform
the federal universal service program to support voice and
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broadband and on the requirement in federal law that state
universal service programs not be inconsistent with the federal
program.
What is VoIP service? : FCC's rules define "interconnected VoIP
service" as a service
that: 1) enables real-time, two-way voice communications; 2)
requires a broadband connection from the user's location; 3)
requires Internet protocol-compatible customer premises
equipment; and, 4) permits users generally to receive calls that
originate on the public switched telephone network (PSTN) and to
terminate calls to the PSTN. Interconnected VoIP services may
be fixed or nomadic. A fixed interconnected VoIP service can be
used at only one location, whereas a nomadic interconnected
service may be used at multiple locations. FCC data indicate
that there are, as of December 2008, some 2.5 million VoIP users
in California, of which approximately 2 million are residential
subscribers.
Level the playing field : Due to the increasing customer
migration to VoIP services, these customers presently do not
contribute to the California universal service programs. In
order to level the playing field, this bill directs PUC to
require interconnected VoIP service providers to collect and
remit surcharges on their California intrastate revenues in
support of the universal service funds.
In January 2011, 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. The limited objective of this rulemaking
is to ensure that the California universal service programs are
supported in a competitively and technologically neutral manner
and that contributions to the programs are sufficient to
preserve and advance universal service. Currently, some VoIP
providers collect surcharges and contribute to these funds
voluntarily.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0002247
SB 3
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