BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 834 - Bowen Hearing
Date: April 22, 2003 S
As Amended: April 10, 2003 FISCAL B
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DESCRIPTION
Current law declares it's the policy of the state of
California to: a) Encourage the ubiquitous availability of
a wide choice of state-of-the-art services; and, b) Promote
economic growth by encouraging the rapid implementation of
advanced communications technologies.
This bill requires the California Public Utilities
Commission (CPUC) to consider how to encourage more
competition in the high-speed communications services
industry and make appropriate recommendations to the
Legislature by July 1, 2004.
BACKGROUND
The late 1990's saw a burst of competitive activity in the
telecommunications industry as the federal
Telecommunications Act of 1996 opened the door to new
competitors. From about a dozen competitors in 1996 to
over 150 in 1998 to nearly 500 in 1999, new competitors
installed thousands of miles of fiber optic line and
created many new services, such as digital subscriber line
(DSL).
At the turn of the century, the "dot com" boom went bust,
triggering a swift and drastic reduction in the need for
telecommunications capacity. Once promising
telecommunications companies perished as their markets
vanished, as did their access to capital. Making matters
worse were the high profile examples of corporate
misconduct, where some telecommunications competitors
participated in questionable, and some times fraudulent,
accounting practices. By 2001, the 500 telecommunications
competitors had dwindled to less than 100.
In some areas of the state, such as parts of San Diego and
Orange counties, there is relatively vigorous competition
on the high speed communications service front. However,
it's just as common for customers to either have no choice
between DSL and cable broadband or no broadband service
available at all. The CPUC noted in its 2002 Competition
Report that 24% of cities have no broadband service, 34%
have only DSL service, 18% have only cable broadband
service, and just 24% have a choice between DSL and cable
service. Looking more closely within those two services,
there is little competition among DSL providers and among
cable providers. The vast majority of residential DSL
service is provided by the incumbent local telephone
company (i.e., SBC and Verizon) and its affiliates, with
97% of residential broadband revenue going to the incumbent
and its affiliate. Business DSL service is much more
competitive, with 59% of business DSL revenue going to the
incumbent and its affiliate.
The availability of a widespread broadband infrastructure
has long been seen as a key to the next stage of growth of
the California economy. In Connecting to Compete in the
New Economy , a report prepared for the Great Valley Center,
the authors note technology has the potential to transform
the Central Valley. They see advanced an communications
infrastructure as the key technology to the area being able
to exploit its natural strengths in agriculture,
specialized manufacturing, warehousing, and distribution.
TechNet, the lobbying arm for the high tech industry, has
issued a call for a national broadband policy as a means of
staying competitive, educating the workforce, and
increasing productivity.
COMMENTS
Getting The Services . Current law is designed to encourage
a wide choice of state-of-the-art telecommunications
services, but as noted in the "Background" section and
during an informational hearing the committee held last
year, competition is more of a theory than a reality in
most parts of the state.
This isn't to say there are no innovations on the horizon.
Wireless broadband service has started to become
commercially available and improved network technology may
improve data transmission capacity over existing
telecommunications networks. The notion of delivering
broadband services over electric power lines looks
promising, though it's in the very early stages of
development.
This bill requires the CPUC to look at and develop ways it
can encourage more competition in the high speed
communications services business.
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Randy Chinn
SB 834 Analysis
Hearing Date: April 22, 2003