BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1383 - Bowen Hearing Date:
April 23, 2002 S
As Amended: April 22, 2002 Non-FISCAL
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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.
Current law provides that public utilities that violate the
notice requirement above 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 similar requirements on providers of
electronic mail services.
This bill requires electronic mail service providers to give
customers at least 30 days notice prior to terminating the
customer's service, unless otherwise permitted by law or
contract.
This bill defines the term "provider" to mean the entity that
controls a customer's email address, but not the entity making
the underlying network or access available to the provider or
the customer.
This bill states a provider can't be held liable under the
provisions of the bill if the customer's email service is cut
off because of the action or inaction of the entity making the
underlying network or access available to the provider or
customer.
This bill gives customers the right to sue a provider for
violation of the bill to recover actual damages or liquidated
damages of up to $50.
This bill provides that the remedies specified are in addition
to any other remedies or penalties available in law.
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.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 author and committee may
with to consider whether the language should be clarified to
allow providers to shut down service to customers who act in
violation of their contract but preclude providers from
shutting off service to people who did not act in violation of
the contract. This would preclude providers from simply
placing a clause in contracts stating that service may be
terminated at any time for any reason.
2.Definition of "Provider of Email Services." The bill defines
a provider of email services as "the entity that controls a
customer's email address," which might be interpreted to
include corporations and other entities that provide email
services to employees through in-house computer networks and
servers. The author and the committee may wish to consider
whether to clarify that this bill only deals with commercial
providers of email services, not corporate providers. This
can be accomplished by adding the term "commercial" to the
definition of "provider."
3.Damages. The bill allows a customer to recover actual damages
or up to $50 in liquidated damages, whichever is more. By
comparison, laws that apply to telephone, electric, gas,
water, cable and satellite provide for potentially much higher
penalties for not providing adequate notice before terminating
service. The author and the committee may wish to consider
whether the liquidated damages would be sufficient to allow a
corporate or self-employed customer to recover costs
associated with having its email communication disrupted,
including losing access to email messages from its own clients
and customers sending purchase orders or requesting
information.
4.Related Legislation. AB 1814 (Reyes), which is pending in
this committee, requires Internet service providers, unless
otherwise specified by law or contract, to notify customers 30
days in advance of exiting the business of providing Internet
access services.
POSITIONS
Sponsor:
Author
Support:
California Alliance for Consumer Protection
Consumers Union
Oppose:
American Electronics Association
Microsoft
Jennie Bretschneider
SB 1383 Analysis
Hearing Date: April 23, 2002