BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1858|
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THIRD READING
Bill No: SB 1858
Author: Dunn (D)
Amended: 4/29/04
Vote: 21
SENATE ENERGY, UTILITIES & COM. COMMITTEE : 6-0, 4/13/04
AYES: Bowen, Alarcon, Dunn, McClintock, Murray, Sher
NO VOTE RECORDED: Morrow, Battin, Vasconcellos
SUBJECT : Telephone corporations: statewide emergency
telephone
system
SOURCE : Author
DIGEST : This bill requires the Public Utilities
Commission to review the rates and charges by telephone
corporations for "911" emergency telephone service to
ensure that those rates and charges are just and
reasonable.
ANALYSIS : Current law provides for a "911" emergency
telephone services program administered by the Department
of General Services' Telecommunications Division (DGS-TD).
This program, funded through a surcharge on telephone
bills, pays for the equipment and services needed by local
public safety agencies to answer the "911" call.
Current law requires that all telephone rates be just and
reasonable.
CONTINUED
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This bill requires the California Public Utilities
Commission (CPUC) to review the rates and charges by
telephone corporations for "911" service to ensure that
those rates and charges are just and reasonable.
Background
The state's 911 program is paid for by a surcharge on every
customer's telephone bill. That surcharge is statutorily
capped at 0.75 percent of a customer's phone bill, and has
been set at 0.72 percent by DGS-TD since 1995. The
surcharge raises about $140 million annually.
About 25 percent of that money goes to public safety
agencies that use the competitive bidding process to buy
telephones and computers necessary to respond to 911 calls.
The remaining 75 percent of the 911 budget is spent for
telephone and database services provided by regulated
telephone companies. A discussion about the cost pressures
on the 911 fund is incomplete without reviewing these
costs.
There has been pressure for additional spending authority
out of the 911 fund. Last year, some public safety
agencies felt DGS-TD didn't provide adequate funding for
the equipment those agencies feel they need to respond to
911 service calls.
Additional pressure comes from the costs incurred to
upgrade the telephones and computers to make 911 service
for cellular phones comparable to 911 service for
traditional phones.
Comments
What The Phone Companies Do . The 911 services provided by
the regulated telephone companies are database services and
network services. The database services provide the 911
caller's telephone number and location, as well as the
jurisdictional boundaries of the public safety agencies,
and comprise 50 percent of the 911 budget.
Network services are the electronic transportation of calls
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connecting the public safety answering points throughout
the state. Though the prices of these services are
regulated at the CPUC, the CPUC hasn't examined the pricing
structure since at least 1994.
CPUC Pricing Review . Prior to the opening of telephone
markets to competition, the CPUC would ensure just and
reasonable prices by periodically and comprehensively
examining the costs of providing service.
Based on those costs, the CPUC established prices designed
to allow a utility to recover all its costs, plus a
reasonable return on its investment. Since the late 1980's
the CPUC has relaxed its regulatory grip and utilized a
regulatory system which calibrates the degree of regulation
for a particular service with the degree of competition for
that service.
The periodic cost reviews, known as general rate cases,
have largely disappeared, which explains why the cost of
911 service hasn't been looked at in over a decade.
DGS-TD is considering whether these database and network
services can be purchased competitively and has issued a
"request for information," the precursor to putting
something out to bid via a "request for proposal."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
NC:nl 4/29/04 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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