BILL ANALYSIS 1 1 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 9 0 9 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