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