BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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                                 THIRD READING


          Bill No:  AB 1814
          Author:   Reyes (D)
          Amended:  8/6/02 in Senate
          Vote:     21

           
           SENATE ENERGY, U.&C. COMMITTEE  :  6-2, 6/25/02
          AYES:  Bowen, Alarcon, Dunn, Murray, Sher, Vasconcellos
          NOES:  Morrow, Battin

           ASSEMBLY FLOOR  :  49-28, 4/4/02 - See last page for vote


           SUBJECT  :    Internet service providers:  notice of service  
          termination

           SOURCE  :     Author


           DIGEST  :    This bill requires 30-day notice by an Internet  
          service provider (ISP) to a customer of service termination  
          or service transfer to another ISP.

           ANALYSIS  :    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 and Professions Code  
          Section 17000 et seq.), which allows civil penalties of up  
          to $2,500 to be recovered in a civil action by the attorney  
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          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 proposed transfer of  
          service to another Internet service provider or of proposed  
          termination of service, 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  







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          termination.

          This bill prohibits a contract from permitting termination  
          of service with cause without less than 30 day's notice.

          The bill would become inoperative if federal law is enacted  
          on this subject.

           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  







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          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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  8/5/02)

          California Public Interest Research Group
          California School Employees Association
          Greenlining Institute

           OPPOSITION  :    (Verified  8/5/02) (prior to latest  
          amendments)

          American Electronics Association
          California Alliance for Consumer Protection

           ASSEMBLY FLOOR  :
          AYES:  Alquist, Aroner, Calderon, Canciamilla, Cardenas,  
            Cardoza, Chan, Chavez, Chu, Cohn, Corbett, Correa, Diaz,  
            Dutra, Firebaugh, Florez, Frommer, Goldberg, Havice,  
            Horton, Jackson, Keeley, Kehoe, Koretz, Liu, Longville,  
            Lowenthal, Maldonado, Matthews, Migden, Nakano, Nation,  
            Negrete McLeod, Oropeza, Papan, Pavley, Reyes, Salinas,  
            Shelley, Simitian, Steinberg, Strom-Martin, Thomson,  
            Vargas, Washington, Wayne, Wiggins, Wright, Wesson
          NOES:  Aanestad, Ashburn, Bates, Bogh, Briggs, Bill  
            Campbell, John Campbell, Cogdill, Cox, Daucher,  
            Dickerson, Harman, Hollingsworth, Kelley, La Suer, Leach,  
            Leonard, Leslie, Maddox, Robert Pacheco, Rod Pacheco,  
            Pescetti, Richman, Runner, Strickland, Wyland, Wyman,  
            Zettel


          NC:sl  8/7/02   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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