BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 909 - Reyes Hearing Date:
June 24, 2003 A
As Amended: June 18, 2003 FISCAL B
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DESCRIPTION
Current California telecommunications policy calls for consumers
to be provided with sufficient information for making informed
choices and the establishment of processes for equitable
resolution of billing and service problems.
California law , as of January 1, 2004, will require cellular
telephone service providers to establish a means by which
customers can obtain current information on their calling plans
and usage.
This bill finds the telecommunications industry is evolving
towards bundled service offerings, that customers have a right to
make informed decisions, and that customers can only do this if
they're able to determine how much they're being charged for
local and long-distance calling.
This bill requires every provider of local telephone service to
provide customers who buy a bundle of both local and
long-distance services with information showing the estimated
charge for local service and the estimated total monthly usage
for long-distance service.
This bill sunsets on January 1, 2007.
BACKGROUND
Increasingly telecommunications companies are bundling their
service offerings, offering a discount to people who buy a
package of services. Some of those bundled service offerings
include flat-rate pricing where the customer can use all the
phone service they want for a fixed charge. MCI, for example,
allows unlimited local and long-distance calling for about $40
month and Verizon has a similar program.
These programs don't provide customers with individual call
detail (e.g. time of call, destination, duration), because that
information is arguably immaterial since the customer is paying
the same fee every month regardless of what time they make a
call, where they call, or how long they stay on a particular
call. Not having to track those details and provide the
information to customers arguably lowers a company's costs, which
may be reflected in the price of the bundled plan offered to
customers.
This bill deals with two separate issues, both related to
customer information. The first issue is the bundling of
services, and whether a customer should be able to identify the
separate prices for the individual services. The second issue
deals with flat rate pricing, and whether a customer should be
able to know how much of a service (e.g. how many minutes) he or
she is using.
COMMENTS
1.What Am I Paying For Local Service? This bill allows customers
to find out how much of their monthly bundled bill is
attributable to local service. It's questionable how useful
that information will be to a customer, since the charge is
only an estimate given that the package of services is offered
at a discount, and the discount only applies if the customer
buys the whole package. As such, the author and committee may
wish to consider whether giving customers the ability to obtain
the estimated charge for local service is beneficial.
2.How Many Long-Distance Minutes Am I Using? This bill allows
customers to ask their bundled service provider how many
minutes of long-distance service they're using during the
month. However, for the information to be useful to customers
who want to try and "cost compare" various services, it should
also contain the minutes of use for short-distance calls. To
accomplish that, the author and committee may wish to consider
replacing "long distance" with "non-local." The author and
committee may also wish to consider clarifying when a company
would have to provide this information to a customer. Could a
customer ask for an up-to-the-day update of the minutes used in
their current billing period? Or would a company only have to
provide it as part of a regular bill, covering only the minutes
used during that billing period?
3.Increasing The Cost At The Buffet? Some telecommunications
companies assert that when they developed their all-you-can-eat
plans, they were priced at a specific level because the
companies knew their costs would be lower since they didn't
need to collect, process, and render bills with detailed
information about every telephone call. Being forced to track
the minutes each customer uses so a company can provide that
information to any customer who requests it may lead companies
to increase their all-you-can-eat prices.
This bill tries to address that issue by requiring companies to
make the information available only when a customer asks for it
and limiting the information a customer can get to the total
number of minutes of used. Furthermore, the bill doesn't
preclude a company from charging a separate fee to a customer
who wants access to this type of information.
4.What About Those Who Order A La Carte? One circumstance not
directly addressed in this bill is when the customer buys a set
number of minutes for a fixed price that isn't part of a bundle
of local and long-distance service.
Last year, the Legislature passed and the Governor signed SB
1903 (O'Connell), Chapter 286, Statutes of 2002, dealing with
such a circumstance for wireless customers. That measure
requires cellular telephone service providers to establish a
means by which customers can obtain current information on
their calling plans and usage after January 1, 2004.
Since that information would be useful to a land-line customer
who doesn't want to be hit with higher per-minute charges once
they're used up the bucket of minutes they've pre-purchased,
the author and committee may wish to consider expanding this
bill to cover that circumstance.
5.Why Let The Sun Go Down? This measure sunsets on January 1,
2007, but it's unclear why such a sunset is necessary or
appropriate.
6.Technically Speaking . The bill requires telephone companies to
provide total monthly usage for long-distance service. As a
technical matter, customer bills are rendered for billing
periods which may not coincide with months, so the author and
committee may wish to consider replacing "monthly" with
"billing period."
7.Related Legislation . AB 1379 (Calderon) delays the effective
date of SB 1903 from January 1, 2004 to January 1, 2005, and
makes some definitional changes. AB 1379 is pending in the
Senate Energy, Utilities, & Communications Committee.
ASSEMBLY VOTES
Assembly Floor (44-29)
Assembly Appropriations Committee (17-7)
Assembly Utilities and Commerce Committee
(8-2)
POSITIONS
Sponsor:
Author
Support:
MCI
Office of Ratepayer Advocates
The Utility Reform Network
Oppose:
Verizon
Randy Chinn
AB 909 Analysis
Hearing Date: June 24, 2003