BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
Bill No: AB 1717 - Author: Perea Hearing Date: June
17, 2014 A
As Amended: May 28, 2014
FISCAL/Urgency B
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DESCRIPTION
Current law establishes the State Board of Equalization (BOE)
with duties that include administering tax and fee programs that
provide revenue for state and local government.
Current law, the Fee Collection Procedures Law, specifies
procedures for BOE collection of fees and taxes that fund
programs administered by other state agencies, including taxes
and fees that retailers collect from customers and remit to the
BOE for transfer to another agency.
Current law establishes the California Public Utilities
Commission (CPUC) to regulate utilities, including telephone
corporations, and establishes the CPUC Reimbursement Fee to be
collected from utility customers and remitted to the CPUC to
fund its operations.
Current law requires the CPUC to administer several universal
service programs, to ensure that all customers have
communications service, funded by surcharges on intrastate
communications service.
Current law requires the Public Safety Communications Office
(PSCO) within the Office of Emergency Services to administer the
state's 911 emergency telephone system with funds derived from a
surcharge on intrastate communication service that providers
remit to the BOE, which transfers the funds to the PSCO.
Current law authorizes cities and counties to collect User
Utility Taxes (UUTs) on utility and communications service,
which typically are revenues used for public safety and other
general purposes.
This bill establishes, effective January 1, 2016, a method for
collecting all of these state and local fees on prepaid wireless
communications service through a point-of-sale collection by
retailers of a Mobile Telephony Services (MTS) surcharge, who
are required to remit the fees to the BOE, which is required to
transfer the revenue to the CPUC, the PSCO and local agencies.
This bill requires the CPUC to annually compute and notify BOE
of a CPUC Reimbursement Fee and cumulative universal service
portion of the MTS surcharge, requires OES to notify BOE of the
911 portion of the MTS surcharge, and requires BOE to calculate
and post on its web site no later than December 1 a combined
surcharge that includes the local charges for each local
jurisdiction, which shall be effective April 1 of the following
year.
This bill allows retailers to retain 2% of fees collected on
prepaid service and allows the BOE to retain an uncapped amount
of fees remitted for prepaid service as payment for their
expenses incurred in administration and collection of the
charges, with expenses allocated by BOE on a pro rata basis
according to revenues collected for the CPUC, PSCO, and local
agencies.
This bill requires providers of prepaid service to guarantee not
less than $9.9 million per year in prepaid surcharge revenue to
the PSCO for the state 911 system, with BOE to bill each
provider a pro rata share of any deficiency.
This bill provides that payment of these prepaid fees is the
liability of the consumer and not the seller or provider of
service.
This bill exempts the purchase of prepaid service from the
prepaid surcharge if the consumer is certified as eligible for
the state or federal lifeline program and the seller is an
authorized lifeline provider.
This bill is an urgency measure, stating that it is necessary to
take effect immediately to provide a standardized collection
mechanism for prepaid mobile service in order to permit needed
financial support for programs necessary to serve the public or
telecommunications users.
BACKGROUND
Prepaid Wireless Service Growing - Telephone service
traditionally has been provided on a postpaid basis where
customers get a monthly bill for calls made and services
received in the prior month. With prepaid service, customers pay
in advance for a predetermined amount of calling minutes, or for
a fixed time period of use of unlimited minutes or data,
typically loaded onto a calling card or directly onto a mobile
phone, with options to reload once the calling minutes are used.
According to CTIA the Wireless Association, prepaid wireless is
an expanding multi-billion dollar business nationally, with
nearly a quarter of the nation's 300 million wireless consumers
currently using prepaid service. Prepaid service is popular for
"backup" phones kept in the car for emergencies and "starter"
phones for children so it is easy to control usage, and is
increasingly an attractive option for all wireless consumers who
do not want a fixed-term contract.
About 30 to 40 percent of prepaid service is sold directly by a
provider to a customer, either online, over the phone, or
otherwise. The other 60 to 70 percent is sold through retailers
such as grocery stores and big-box stores, to which providers
sell prepaid cards on a wholesale national basis, typically not
knowing in which state the cards will be sold or the service
used.
Statewide Fees and Surcharges - Current law imposes on
intrastate communications service a fee to support the state 911
system administered by PSCO, a fee to pay for the CPUC's
operations, and six separate surcharges to pay for the following
state universal service programs administered by the CPUC:
California High Cost Fund A;
California High Cost Fund B;
Deaf and Disabled Telecommunications Program;
California Teleconnect Fund;
California Advanced Services Fund; and
Lifeline Telephone Service.
All of these fees are assessed as a percentage of a customer's
intrastate communications service. These state and local
surcharges are easily determined and collected for post-paid
service and included on customer bills after service is used.
In a 1996 decision, the CPUC adopted an all-end-user-surcharge
mechanism in which surcharges are itemized on the customer's
bill in order to promote transparency so customers know what
they are paying to support universal service programs
(D.96-10-066).
With prepaid service, neither providers nor retailers selling
prepaid service know ahead how many minutes will be intrastate
calls or whether they will be made within the city or county
where the transaction occurs. For prepaid service sold by a
retailer that is not the provider, there is no direct billing
relationship between the seller and the user.
Local Fees and Charges - Local 911 fees and UUTs are assessed on
service provided within the jurisdiction of the city or county
imposing the tax. About 100 cities and three counties have
utility tax ordinances imposing charges on communications
service at about 35 different rates, some up to 11%. The total
UUT revenue currently remitted to local agencies on all wireless
service is estimated to be about $400 million. Service
providers, local agencies, and the BOE generally concur that
UUTs are largely unpaid for prepaid service.
National Strategy for Point-of-Sale Legislation - Given growing
customer demand for prepaid service, and lack of a convenient
way to determine intrastate use and bill prepaid customers, the
wireless industry has advocated nationwide a point-of-sale
collection methodology with model legislation endorsed in 2009
by the National Conference of State Legislatures. According to
CTIA, 32 states and the District of Columbia have adopted
point-of-sale legislation based on the model statute. However,
most of these other states have only a statewide 911 fee,
although Minnesota, Maine, and Nebraska have multiple statewide
surcharges like California, and several states also have local
911 fees. Point-of-sale legislation has been introduced in
California since 2009 but failed passage.
All Carriers Now Pay State Surcharges - TracFone is the
nation's, and California's, largest provider of prepaid wireless
service and provides only prepaid service, unlike other carriers
that offer both postpaid and prepaid wireless service. In 2003,
TracFone sought clarification through CPUC staff about whether
CPUC fees and surcharges apply to its service. TracFone claims
to have relied on staff indicating that it was exempt. The CPUC
opened a formal investigation against TracFone in 2009, and in
November 2011 issued a decision concluding that TracFone is a
telephone corporation subject to its jurisdiction and is
required to pay CPUC fees and surcharges (D.12-02-032). In March
2013, a state appellate court denied TracFone's petition for
review of that decision. In a second phase of the proceeding,
the CPUC ordered TracFone to pay about $24.4 million in past-due
surcharges and interest to the public purpose programs.
TracFone has appealed that penalty decision.
As a result of this proceeding, according to the CPUC, TracFone
and all other prepaid providers are now collecting and remitting
all necessary state surcharges and fees from their postpaid and
prepaid customers. The CPUC denied requests of carriers during
the TracFone proceeding to review the obligations of all prepaid
service providers to pay CPUC fees and surcharges and establish
a collection mechanism. The CPUC maintains that it
"intentionally does not prescribe any collection method for any
kind of wireless service, leaving carriers complete discretion
to implement the method that best meets their business needs,"
which may include embedding the surcharges and fees into the
rates for service.
Estimating Intrastate Minutes - Because California has authority
to impose surcharges only on communications within its state
borders, a customer's intrastate minutes of use must be
estimated in connection with certain services. The Federal
Communication Commission (FCC) allows for three different
methods to make this allocation, including books and records
(actual data), traffic studies, or a "safe harbor" estimates
that about 63 percent of service revenues are for intrastate
calling and 37% interstate. AB 841 (Buchanan, 2011), which
required VoIP providers to pay state universal service program
surcharges, endorsed these same three methods for determining
intrastate VoIP service subject to the surcharge.
Although prepaid service can be used for voice or data, only the
voice service is subject to the surcharges because data is
considered an unregulated "information service." Thus, the
providers use an estimate to separate out the data (and texting)
usage of prepaid service and remit only on the estimated voice
service. For all wireless service, data usage is increasing
while voice usage is decreasing.
COMMENTS
1. Author's Purpose. According to the author, this bill
would establish a statewide system for point-of-sale
collection of state and local fees imposed on
communications service that are currently paid by end users
of postpaid customers, thereby ensuring that the prepaid
wireless sector of the communications market equitably
shares in the responsibility to fund the state 911 system,
state universal service programs, and CPUC operations paid
with the CPUC Reimbursement Fee, and also contribute to the
revenue of cities and counties generated by local fees and
UUTs.
2. Last Year's Bill Vetoed. This bill is the fourth
measure sponsored by the wireless industry attempting to
establish a point-of-sale collection of surcharges for
prepaid service in California. It is substantially similar
to AB 300 (Perea, 2013), which the Governor vetoed with the
following message:
I am returning Assembly Bill 300 without my signature.
This bill would establish an additional system for
collecting and remitting fees, surcharges and taxes
applicable to prepaid mobile services. These charges
would be collected from prepaid customers and remitted
to the Board of Equalization, while fees collected
from postpaid customers would continue to be remitted
directly to the CPUC, State 911 Fund and local
governments.
There is no question that the state needs an effective
system for capturing local taxes related to the sale
of prepaid phones. The solution, however, proposed by
this bill is duplicative, complex and will result in
significant and unnecessary costs to the state.
I encourage the author to partner with the local
governments and State Agencies affected by these
revenues and craft a bill with a more cost effective
solution.
3. BOE Now Estimates Significant Local Revenue Collections.
Although much of the debate over this bill is the same as
last year, a major new development is that BOE's estimate
of costs and revenues for the first time includes an
estimate that the bill will generate about $72 million in
revenue for local agencies that today is largely
uncollected. Thus, even though BOE's annual costs in
implementing the bill remain at about $11.4 million, the
bill requires that these costs will be deducted on a pro
rata basis from each category of charges - CPUC, state 911,
and local UUTs. The result is that the bill appears to
generate a net revenue increase for each category.
4. New Funding Guarantee for 911 Emergency Service.
Another new provision in this year's legislation is a
guarantee that the point-of-sale collection mechanism will
generate no less than $9.9 million for the state 911 fund.
This number is based on BOE's estimate that the bill will
generate $9.9 million for the 911 fund in 2014-15. The
bill requires BOE to annually determine whether $9.9
million is generated for the 911 fund and, if not, requires
BOE to bill each prepaid service provider its pro rata
share of the deficiency.
This funding guarantee was added to the bill in amendments
on the Assembly floor. Since then, BOE and the author have
agreed on amendments necessary to ensure that the guarantee
is an aggregate amount minus retailer and BOE expenses, and
that BOE can obtain data from the CPUC to bill the
appropriate service providers their pro rata portion of any
deficiency. In addition, the bill is blank as to the
expiration of the 911 funding guarantee, which the author
intends be through the end of 2019. Thus, the author and
committee may wish to consider amending the bill to ensure
the effectiveness of the 911 funding guarantee through
2019, as set forth in Appendix A.
5. Ensuring Long-Term Support for the State's 911 System.
All revenues from the 911 fee are deposited into the State
Emergency Telephone Number Account (SETNA), which funds the
state 911 system including about 458 local Public Safety
Answering Points (PSAPs) that receive 911 calls and
dispatch first responders. The SETNA has been in a
structural deficit for years, with annual surcharge revenue
declining from about $133 million in 2005-06 to about $80
million in 2012-13. The 911 fee was increased effective
2014 to the statutory maximum of 0.75 percent.
Nonetheless, the state faces an enormous challenge to fund
PSAP upgrades to enable text to 911 (already available from
the carriers) and Next Generation 911 services.
While the 911 funding guarantee helps mitigate this
challenge, the BOE analysis of this bill recommends a
thorough review of the 911 fee to determine a more
up-to-date surcharge mechanism to provide a sufficient
revenue stream for the statewide 911 system. In addition
to impact from the decline of landline telephone service
and increased prepaid wireless usage, certain security,
medical, and telemetry devices directly access the 911
system with no intrastate service subject to the 911 fee.
ECaTS, the PSCO vendor that manages data and analytics on
all 911 uses, reports that it can identify all of these 911
uses that are not paying the fee. In addition, SB 1211
(Padilla), now pending in the Assembly, amends provisions
also in this bill in order to help establish transparency
and accountability for the 911 fee, laying the foundation
for necessary funding increases for texting and Next Gen
upgrades and long-term sustainability of the system. Thus,
the author and committee may wish to consider supplementing
the 911 funding guarantee by amending this bill to also
incorporate those provisions of SB 1211, as set forth in
Appendix B.
6. Why Not Just a Local Collection Mechanism? Since the
CPUC's success in its legal action against TracFone, all
providers of prepaid service currently remit surcharges to
the CPUC. Similarly, providers of prepaid service
currently remit the 911 fee to the BOE. Local agencies,
however, report that they receive very little UUT revenue
on prepaid service. Both service providers and BOE report
that the exact amount of uncollected UUT revenue is
unknown. BOE states that some unknown small amount of its
estimated $72 million per year that would be collected if
this bill is enacted is currently remitted by providers to
local agencies. Muni Services states that in many cities
the UUT is the second highest source of general fund
revenue after the sales tax and their revenue loss is
growing as prepaid service expands: "California agencies
with existing UUT are losing revenues from prepaid wireless
and in some cases the loss is as high as 25% in last 3
years. Extrapolating the increased use of prepaid wireless
over time, over $100 million a year of local taxes is at
risk without corrective legislation."
Reasons cited for why local agencies have not found an
effective way to enforce collection of their UUTs include
lack of resources and risk of litigation with ordinances
based on post-paid billing. In addition, TracFone's
pending legal action against the City of Los Angeles
seeking a refund of UUTs remitted for prepaid service
before TracFone ceased remitting "places a dark cloud over
the enforceability of our UUT ordinance," according to
MuniServices.
7. Who Benefits From This Bill? After several years of
prepaid legislation that has failed passage, this bill
still faces opposition because it provides financial
benefits or compensation to some stakeholders but appears
likely to cause financial harm to others. Here's the
breakdown:
Customers of all postpaid and prepaid landline,
wireless and VoIP communications service who pay all the
surcharges will benefit if the net revenue estimates hold
true for the long-term. If they do not, all customers
will need to pay increased surcharges or receive reduced
benefits from the programs these surcharges support;
Service providers benefit because they will no
longer be required to pay surcharges out of profits, and
prepaid customers will instead pay the surcharges on top
of the price for service;
Local governments benefit because they will have a
new revenue stream from UUTs and local fees that have
been largely unpaid by prepaid service providers to date,
thereby providing increased funding for local services
and programs. BOE estimates local revenue at about $72
million in 2014-15;
Retailers benefit by keeping two percent of all
surcharges collected as reimbursement for their expenses.
Although retailers currently have no legal obligation to
collect state and local taxes and fees on communications
service, some retailer groups have agreed to collect them
at point-of-sale for prepaid service provided they
collect a single aggregated charge statewide, remit all
funds to BOE (with which they are familiar for remitting
sales tax) rather than to different agencies, and get
reimbursed for their administrative costs;
The BOE benefits somewhat by being reimbursed for
actual costs for their administrative costs in collecting
the MTS surcharge from retailers and distributing it to
the CPUC, PSCO, and local agencies, plus other duties;
BOE currently is compensated for its actual costs in
collecting the 911 fee; and
� The PSCO may benefit because the newly estimated
local revenues will offset its costs, likely producing
net revenue, and because of the 911 funding guarantee.
1. Will Low-Income Customers Bear the Burden? The group
that definitely will not benefit from this bill are
customers of prepaid service because they will be required
to pay an additional amount on top of the price of service,
which they do not currently pay. As pointed out by The
Utility Reform Network (TURN), The Greenlining Institute,
and the Office of Ratepayer Advocates (ORA), this will
especially affect low-income people who are a significant
portion of the prepaid market. TURN states: "AB 1717
creates a mandated mechanism of surcharges and a convenient
excuse for all carriers to shift the burden directly to the
consumer." According to Greenlining, the lowest cost
prepaid plans will have the highest per-minute surcharge,
creating a disproportionate burden on consumers who can
only afford to buy additional minutes in smaller bundles.
On the other hand, low-income customers eligible for
lifeline service will not be required to pay the new
surcharge for prepaid service from an authorized lifeline
provider, although that would not include prepaid service
from a retailer that is not a provider.
2. Will Surcharge Revenues Increase or Decrease in the Long
Term? Although the BOE's estimate of local revenue
collections appears to indicate that this bill will produce
net revenue for the CPUC, 911, and local agencies,
stakeholders still engage in somewhat of a numbers battle
over whether this bill will result in more or less
surcharge revenue than currently collected for prepaid
service. The uncertainty inherent in any projection of
future revenue is exacerbated by the fact that prepaid
service is a rapidly growing market segment and the need to
estimate what portion of service will be for calls within
California versus interstate. Industry claims that revenue
will increase because carriers now calculate surcharges
based on wholesale cost of prepaid service, which is at
least ten percent less than the retail price of service
that the surcharge required by this bill will be based on.
Industry also points to the bill requiring the surcharge to
apply to an entire prepaid sale amount even if usage is for
data or minutes are never used. This could create more
revenue as customers' data use increases because the
current system substracts an estimated data usage.
The CPUC counters that the industry's prediction of
increased revenue is misleading because carriers currently
are required to remit based on retail sales revenue and
because revenue needed for public purpose programs and user
fees is a fixed sum, independent of the means of
collection. The CPUC also points to the bill creating
expenses to "split the rolls" between prepaid and post-paid
revenues, which currently are remitted in a combined
amount.
3. Local Government and Taxation Issues. This bill
establishes a tiered approach for collecting UUTs and local
fees similar to the provisions adopted last year in AB 300
in the Committee on Governance and Finance. Related issues
are in the jurisdiction of that committee.
4. Related Legislation.
AB 2545 (de La Torre, 2010) required a public process to
recommend a prepaid wireless service collection mechanism
and was essentially a study bill. Status: Failed passage
on the Senate floor.
AB 1050 (Ma, 2012) required a point-of-sale collection of
state and local surcharges on prepaid service somewhat
similar to this bill. Status: Died in the Senate Committee
on Governance and Finance.
AB 300 (Perea, 2013) established a prepaid surcharge
collection mechanism substantially similar to this bill.
Status: Vetoed by the Governor.
5. Double Referral. Should this bill be approved by the
committee, it will be re-referred to the Senate Committee
on Governance and Finance for its consideration.
ASSEMBLY VOTES
Assembly Floor (71-2)
Assembly Appropriations Committee
(15-0)
Assembly Revenue & Taxation Committee
(9-0)
Assembly Utilities and Commerce Committee
(9-0)
POSITIONS
Sponsor:
CTIA - The Wireless Association
Support:
AT&T
Blackhawk Network, Inc.
Boost
California Communications Association
California Professional Firefighters
California State Association of Counties
California's Independent Telecommunications Companies
City of Bellflower
City of Burbank
City of Cathedral City
City of Culver City
City of El Segundo
City of Gardena
City of Gilroy
City of Glendale
City of Hawthorne
City of La Verne
City of Lakewood
City of Rancho Cordova
City of Redwood City
City of Sacramento
City of San Gabriel
City of San Luis Obispo
City of Santa Barbara
City of Santa Fe Springs
City of Seal Beach
Consolidated Communications Inc.
George Runner, Member, State Board of Equalization, Second
District
Jerome E. Horton, Chairman, State Board of Equalization, Fourth
District
MuniServices
Sprint
T-Mobile
TracFone Wireless, Inc.
Virgin Mobile
Oppose:
California Police Chiefs Association
California Public Safety 9-1-1 Coalition
California Public Utilities Commission
The Greenlining Institute
The Utility Reform Network
Jacqueline Kinney
AB 1717 Analysis
Hearing Date: June 17, 2014
Appendix A
SEC. 2. Section 319 is added to the Public Utilities Code, to
read:
319.
(d) The commission shall have enforcement authority to ensure
the proper remittances over retail transactions of a prepaid
MTS provider, pursuant to the Prepaid Mobile Telephony Services
Surcharge Collection Act (Part 21 (commencing with Section
42001) of Division 2 of the Revenue and Taxation Code), where
the prepaid mobile telephony services (prepaid MTS) provider is
also the seller. The commission shall collaborate with the
State Board of Equalization in exercising its enforcement
authority pursuant to this subdivision.
(e) (1) Carriers providing prepaid mobile telephony
servicePrepaid MTS providers shall remit to the commission the
fee established for telephone corporations pursuant to
subdivision (a) of Section 431 on the intrastate portion of
the revenues received for prepaid mobile telephony service
through December
31, 2015.
(2) Carriers providing prepaid mobile telephony
servicePrepaid MTS providers shall remit to the commission
the telecommunications universal service surcharges
established for telephone corporations on the intrastate
portion of the revenues received for prepaid mobile
telephony service through December 31, 2015.
(f) (1) This section does not relieve carriers providing
prepaid mobile telephony service prepaid MTS providers of
their continuing obligation to report prepaid mobile
telephony service revenues to the commission in a manner
prescribed by the commission.
(2) When reporting prepaid mobile telephony service revenues
to the commission, carriers providing prepaid mobile
telephony service prepaid MTS providers shall report the
intrastate revenue portion subject to the reimbursement fee
and the telecommunications universal service surcharges, as
well as total state wireless revenue.
(3) Reports made pursuant to this subdivision are subject to
Section 583 and any related orders of the commission.
SEC. 6. Section 41033 is added to the Revenue and Taxation
Code, to read:
41033.
(a) For purposes of this section, the following terms have the
following meanings:
(1) "Prepaid mobile telephony services" has the same meaning
as defined in Section 42004.
(2) "Prepaid MTS provider" has the same meaning as defined in
Section 42004.
(3) "Prepaid MTS 911 Account" means the Prepaid MTS 911
Account created in the Prepaid Mobile
Telephony Services Surcharge Fund pursuant to Section 42023.
(4) "Retail transaction" has the same meaning as defined in
Section 42004.
(5) "Seller" has the same meaning as defined in Section 42004.
(b) Beginning with the calendar year beginning January 1,
2016, and ending with the calendar year ending December 31,_ ,
not less than nine million nine-hundred thousand dollars
($9,900,000) shall be paid to the Prepaid MTS 911 Account for
each calendar year for prepaid mobile telephony services. Any
deficiency in payment to the Prepaid MTS 911 Account, below
this amount, resulting from retail transactions by sellers
during each calendar year, shall be the responsibility of
prepaid MTS providers. , (b) For each fiscal year, beginning
with the fiscal year commencing July 1, 2016, and ending with
the fiscal year commencing July 1, 2019, the board shall
calculate the following on or before the November 1 following
the end of such fiscal year:
(1) The total collections for the fiscal year of that portion
of the prepaid MTS surcharge that is for the emergency
telephone users surcharge, net of any amounts that a seller
was permitted to deduct and retain pursuant to subdivision (e)
of section 42010;
(2 ) Less the expenses incurred and reimbursed to the board
for the fiscal year from that portion of the prepaid MTS
surcharge that is for the emergency telephone users surcharge
pursuant to subdivision (e) of section 42020.
The board shall provide notification of whether the amount
calculated in this section exceeds or is less than nine
million nine-hundred thousand dollars ($9,900,000) on its
Internet website by the December 15 following such
calculation, along with the underlying calculations,
assumptions, and methodology.
(c) On November 15, 2017, and by November 15 of each year
thereafter, the board shall determine whether nine million
nine-hundred thousand dollars ($9,900,000) was paid to the
Prepaid MTS 911
Account pursuant to Section 42023, for retail transactions
occurring during the previous calendar year. If in any calendar
year for any fiscal year the resulting calculation in (b) is
less than nine million nine-hundred thousand dollars
($9,900,000) was paid to the Prepaid MTS 911 Account, the board
shall , the deficiency shall be the responsibility, on a pro
rata basis as provided in this paragraph, of each prepaid MTS
provider. The board shall calculate the deficiency and bill
each prepaid MTS provider its pro rata share of that deficiency
A based on each prepaid MTS provider's pro rata share shall be
calculated based upon each provider's percentage share of
total California intrastate prepaid mobile telephony services
revenues, as reported to the California Public Utility
Commission pursuant to section 319(f) of the Public Utility
Code.
(d) A prepaid MTS provider shall remit the amount billed to
it pursuant to subdivision (c) to the board, and the board
shall deposit all amounts remitted to the Prepaid MTS 911
Account.
(d) The California Public Utility Commission shall provide the
board, within 45 days of request, the name and address of each
prepaid MTS provider and each prepaid MTS provider's California
intrastate prepaid mobile telephone services revenue, along with
the provider's percentage share of total California intrastate
prepaid mobile telephony services revenue, and any other
information the board deems necessary.
(e) The obligation of each prepaid MTS provider shall be
enforced by serving a notice in the manner prescribed for
service of a notice of a deficiency determination, not later
than three years after the date the board determines that the
calculation specified in subdivision (b) results in a deficiency
for the previous fiscal year. Notwithstanding any provisions to
the contrary in this part, a petition for a redetermination of a
notice issued pursuant to this subdivision may be filed within
60 days after service upon the person of notice thereof. Solely
for purposes of a notice issued pursuant to this subdivision,
interest shall begin to accrue at the expiration of the 60-day
period. If a petition for redetermination is not filed within
the 60-day period, the determination becomes final at the
expiration of that period. All determinations made by the board
under this section are due and payable at the time they become
final. If they are not paid when due and payable, a penalty of
10 percent of the amount of the determination, exclusive of
interest and penalties shall be added thereto. Interest shall
apply in accordance with Article 6 (commencing with Section
41095). The liability imposed by this section shall be
collected by the board in accordance with the provisions of this
part.
(eg) This section shall remain in effect only until January
1, 2019, and as of that date is repealed, unless a later
enacted statute, that is enacted before January 1, _, deletes
or extends that date.
SEC. 7. 42004.
For purposes of this part, the following terms have the
following meanings:
(f) "Mobile data service" has the same meaning as defined in
Section 224.4 of the Public Utilities Code.
(g) "Mobile telephony service" or "MTS" has the same meaning
as defined in Section 224.4 of the Public
Utilities Code.
(h) "Person" includes any individual, firm, partnership,
joint venture, limited liability company, association, social
club, fraternal organization, corporation, estate, trust,
business trust, receiver, assignee for the benefit of
creditors, trustee, trustee in bankruptcy, syndicate, the
United States, this state, any city, county, city and county,
municipality, district, or other political subdivision of the
state, or any other group or combination acting as a unit.
(i) "Prepaid consumer" or "consumer" means a person who
purchases prepaid mobile telephony
services in a retail transaction.
(j) "Prepaid mobile telephony services" means the right to
utilize a mobile device authorized by the Federal
Communications Commission for mobile telecommunications
services or information services, including the download of
digital products delivered electronically, content, and
ancillary services, or both telecommunications services and
information services, that must be purchased in advance of
usage in predetermined units or dollars. For these purposes,
"telecommunications service" and "information service" have the
same meanings as defined in Section 153 of Title 47 of the
United States Code.
(k) "Prepaid MTS provider" means a person telephone
corporation pursuant to California Public Utilities Code
Section 234 that provides prepaid mobile telephony services
pursuant to a license issued by the Federal Communications
Commission.
(l) "Prepaid MTS surcharge" means the surcharge that
consists of the emergency telephone users surcharge and the
Public Utilities Commission surcharges, as calculated
pursuant to subdivision (b) of Section 42010, that is
required to be collected by a seller from a prepaid
consumer.
(n) "Retail transaction" means the purchase of prepaid
mobile telephony services, either alone or in combination
with mobile data or other services, from a seller for any
purpose other than resale in the regular course of business.
For these purposes, a "purchase" means any transfer of title
or possession, exchange, or barter, conditional or otherwise.
(o) "Seller" means a person that sells prepaid mobile
telephony service to a person in a retail transaction.
42010.
(e) A seller who is not a prepaid MTS provider shall be
permitted to deduct and retain an amount equal to 2 percent of
the amounts that are collected by the seller from prepaid
consumers in a retail transaction for the prepaid MTS
surcharge and local charges, except in a retail transaction
that involves both of the following:, on a pro rata basis
according to the amount of revenues collected by the retailer
for:
(1) that portion of the prepaid MTS surcharge that is for the
emergency telephone users surcharge,
(2) that portion of the prepaid MTS surcharge that is for the
Public Utilities Commission surcharges, and
(3) local charges.
(1) The seller is the provider of prepaid mobile telephony
services pursuant to Section 224.4 of the
Public Utilities Code, or a telephone corporation pursuant to
Section 234 of the Public Utilities Code.
(2) The seller sells the prepaid mobile telephony services
directly to the prepaid consumer.
Appendix B
SB 1211 -- SEC. 2.
Section 41030 of the Revenue and Taxation Code is amended to
read:
(a) The Office of Emergency Services shall determine annually,
on or before October 1, a surcharge rate that it estimates will
produce sufficient revenue to fund the current fiscal year's 911
costs. The surcharge rate shall be determined by dividing the
costs (including incremental costs) the Office of Emergency
Services estimates for the current fiscal year of 911 plans
costs approved pursuant to Section 53115 of Article 6
(commencing with Section 53100) of Chapter 1 of Part 1 of
Division 2 of Title 5 of the Government Code, less the
available balance in the State Emergency Telephone Number
Account in the General Fund, by its estimate of the charges for
intrastate telephone communications services and VoIP service to
which the surcharge will apply for the period of January 1 to
December 31, inclusive, of the next succeeding calendar year,
but in no event shall such surcharge rate in any year be greater
than three-quarters of 1 percent nor less than one-half of 1
percent.
(b) When determining the surcharge rate, the office shall
include the costs it expects to incur to plan, test, implement,
and operate Next Generation 911 technology and services,
including text to 911 service, consistent with the plan and
timeline required by Section 53121 of the Government Code.
(c) At least one month before determining the surcharge rate
pursuant to subdivision (a), the office shall prepare a summary
of the calculation of the proposed surcharge and make it
available to the Legislature and the 911 Advisory Board, and on
the office's Internet Web site.