BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1814 - Reyes Hearing Date:
June 25, 2002 A
As Amended: April 1, 2002 Non-FISCAL
B
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8
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DESCRIPTION
Current law requires long-distance telephone companies to
provide 30 days notice to customers before going out of the
long-distance business or discontinuing service for an entire
class of customers.
Current law provides no specific penalty for long distance
telephone companies that violate the above notice requirement.
However, penalties may be applied under the state's Unfair
Practices Act (Business & Professions Code 17000 et seq.),
which allows civil penalties of up to $2,500 to be recovered in
a civil action by the attorney general or a district attorney.
Current law requires electric, gas, heat, and water utilities to
provide at least 15 days notice before cutting off service due
to the customer's failure to pay a delinquent account balance.
Public utilities that violate this requirement are subject to a
misdemeanor punishable by a fine up to $1,000 or imprisonment up
to one year, or both.
Current law requires cable and satellite companies to provide at
least 15 days notice before cutting off service due to a
customer's failure to pay a delinquent account balance.
Current law gives city and county governments the ability to set
penalties for cable and satellite companies that violate the
above notice requirement, but limits those penalties to no more
than $200 per day, not to exceed a total of $600 per
occurrence.
Current law does not place any such requirements on providers of
electronic mail services.
This bill requires Internet service providers to notify
customers 30 days in advance of voluntarily exiting the business
of providing Internet access services, unless otherwise
permitted by law or contract.
This bill requires the advance notice to include: a description
of any proposed transfer of services; any applicable rates,
terms and conditions of the new service; a statement that the
customer has the right to transfer to a service provider of his
or her choice; and a toll-free customer service telephone number
customer.
This bill prohibits an Internet service provider from charging
the customer for transferring a customer to a new service in a
case where the provider is exiting the business.
This bill provides that it preempts local government and local
agency rules regarding notice of email service termination.
BACKGROUND
Consumers and businesses have come to rely on email services to
conduct business, much as they rely on telephone and other
utility services. Many companies allow customers to order
products and services through email; students enrolled in
distance education programs rely on receiving and submitting
assignments electronically; employees communicate with
co-workers at offsite locations via email; patients access their
medical records via the Internet; and many people use email to
take care of everyday business they used to handle by mailing
letters and making phone calls.
On December 1, 2001, more than 850,000 subscribers of
Excite@Home email services provided via AT&T Broadband were cut
off from service without notice and left without Internet access
for several days before being moved to a new network. The
service shut down came on the heels of Excite@Home's September
2001 bankruptcy filing and its failure to reach a financial
agreement with AT&T, which would have allowed for a smooth
transition period for customers to be moved to a new provider.
Excite@Home was able to reach agreements with other cable
companies, such as Comcast and Cox Communications, whose
customers experienced no interruptions in service.
Tens of thousands of customers whose services were abruptly shut
down were California residents and businesses, who experienced
problems getting customer service and technical assistance,
restoring Internet and email services on the new network, and
retrieving lost email messages and website data.
Many believe email service has become as essential to conducting
business as telephone and other utility services for many
individuals and companies. This bill extends protections to
email users similar to the protections enjoyed by customers of
telephone, electricity, gas, water, cable, and satellite
providers who can't shut down services without providing
adequate notice to their customers.
COMMENTS
1)Voluntary Exit. This bill requires 30 days advance notice to
customers when an Internet service provider is "voluntarily
exiting the business of providing Internet connection service"
(see Page 2, Lines 10-11). However, in the Excite@Home case,
AT&T provided its customers with Internet services by
subcontracting the provision of those services to Excite@Home.
It's unclear whether AT&T or Excite@Home would be considered
the Internet service provider under this bill. If AT&T were
considered the provider, then the notice requirements in this
bill would not apply. Since the goal of the bill is to
protect consumers against sudden disruptions in service, it's
unclear why the protection should apply only when a provider
goes out of business. As such, the author and the committee
may wish to consider amending the bill to remove the language
limiting its provisions to situations where a provider exits
the business.
2)Shutting Down Spammers and Hackers. While the bill requires
30 days notice before terminating service, it allows a
provider to cut off service without providing that notice if
the customer violates the service contract. This allows
providers to shut down spammers, hackers, and others who
violate the terms of their contract with the provider as soon
as they're identified. However, the bill also allows
providers to place a clause in contracts stating that services
may be terminated at any time for any reason, thereby
nullifying the intent of the bill. To preclude that
possibility, the author and the committee may with to consider
whether the bill should clarify that no Internet service
provider may terminate a contract without cause. This can be
accomplished by adding the following provision to Page 2, Line
31:
"(c) No contract for electronic mail service may permit
termination of service without cause."
3)Remedies. The bill does not provide specific remedies that
would allow a customer cut off from service without the
appropriate notice to recover damages suffered from the
provider. The author and the committee may wish to consider
whether the bill should specifically give customers the right
to recover damages, if they're cut off from Internet access
without appropriate notice. SB 1383 (Bowen), a similar bill
which the committee approved earlier this year, allows
customers to recover actual damages or up to $50 in liquidated
damages, whichever is more, from a provider that violates the
bill's notice requirements. The liquidated damages are
intended to be sufficient to allow a customer to recover costs
associated with having their email communication disrupted.
This can be accomplished by adding the following language to
Page 2, Line 31:
"(d) A customer may bring an action in any court of
competent jurisdiction against the provider of electronic
mail service for a violation of subdivision (a) and may
seek either actual damages, or liquidated damages in the
amount of fifty dollars ($50). The provisions of this
section shall be in addition to any other remedies or
penalties available at law."
4)Federal preemption . In order to address a concern that the
bill might eventually come into conflict with a federal law or
regulation, the author and the committee may wish to consider
adding the following language to the bill:
"(e) This section shall become inoperative on and after
the date that a federal law or regulation is enacted that
regulates notice requirements in the event of the
termination of Internet service."
5)Related Legislation. SB 1383 (Bowen), which this committee
passed on a 6-1 vote earlier this year, is pending before the
Assembly Jobs, Economic Development, and the Economy
Committee. That bill requires Internet service providers to
notify customers 30 days in advance terminating a customer's
email services and is similar to the manner in which this
analysis suggests that AB 1814 be amended.
ASSEMBLY VOTES
Assembly Floor (49-28)
Assembly Jobs, Economic Development, And The Economy Committee
(8-4)
POSITIONS
Sponsor:
Author
Support:
California Public Interest Research Group
California School Employees Association
Greenlining Institute
Oppose:
American Electronics Association
California Alliance for Consumer Protection
Jennie Bretschneider
AB 1814 Analysis
Hearing Date: June 25, 2002