BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1814| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 1814 Page 2 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 AB 1814 Page 3 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 AB 1814 Page 4 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 **** END ****