BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 396|
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THIRD READING
Bill No: SB 396
Author: Battin (R)
Amended: 4/7/05
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 8-0, 4/19/05
AYES: Escutia, Morrow, Alarcon, Battin, Bowen, Cox, Dunn,
Kehoe
NO VOTE RECORDED: Campbell, Murray, Simitian
SENATE APPROPRIATIONS COMMITTEE : 11-0, 5/2/05
AYES: Migden, Aanestad, Alquist, Ashburn, Battin, Bowen,
Florez, Murray, Ortiz, Poochigian, Speier
NO VOTE RECORDED: Dutton, Escutia
SUBJECT : Telecommunications: call pricing
SOURCE : Author
DIGEST : This bill requires the Public Utilities
Commission to report to the Legislature, by July 1, 2007,
on the impact of toll call pricing in the Coachella Valley,
and whether additional steps are necessary to encourage
innovative pricing, and related matters.
ANALYSIS : Existing law requires telephone rates to be
fair and reasonable. The Public Utilities Commission (PUC)
is authorized to regulate rates for intrastate telephone
service.
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Current regulation, in the form of PUC Decision 98-06-075,
prohibits the filing of new complaints to establish new
Extended Area Service (EAS) routes in the state that extend
the geographic reach of local toll-free telephone calls.
This bill requires the PUC to report to the Legislature, by
July 1, 2007, on the impact of toll call pricing in the
Coachella Valley, whether additional steps are necessary to
encourage innovative pricing, and related matters.
This bill repeals its provisions on January 1, 2008.
Background
EAS is a telephone service authorized in certain designated
communities which extends the geographic reach of a local
toll-free calling area. Generally, the service territories
of the local telephone carriers are divided into local
exchanges. Each local exchange has a point designated as a
rate center which is used to measure the distance of calls
for billing purposes. For incumbent local exchange
carriers (ILECs), the prescribed distance is 12 miles. If
the rate centers are greater than 12 miles apart, the calls
between such exchanges are toll calls. EAS allows
customers in one exchange to extend the toll-free local
calling area into another exchange whose
rate center is more then 12 miles away. While EAS allows
certain callers to avoid paying toll charges, the remaining
ratepayers in the territory absorb the cost of that
benefit.
EAS routes have traditionally been established through
formal complaint cases filed by customers seeking to extend
their 12-mile local calling area when those customers
cannot reach a reasonable range of essential services
within their existing toll-free local calling area. These
essential services include police, fire, medical care,
legal services, schools, banking and
shopping.
The PUC has traditionally considered several criteria in
deciding whether to authorize an EAS route. In general,
these criteria include whether (1) a community of interest
exists between the affected local exchange and areas beyond
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the existing toll-free calling area, (2) there is customer
support for extending the area of service, and (3) the EAS
route can be implemented with reasonable rates.
Related Legislation
SB 1553 (Battin, 2002) was substantially similar to this
bill, as it also required the PUC to examine the impact of
toll call pricing in the Coachella Valley. SB 1553 was
vetoed by Governor Davis, asserting it was an unnecessary,
costly ($200,000), piecemeal approach to an issue of
statewide significance.
Comments
In January 1995, the PUC opened the market for
short-distance toll calls to competition. Because the
market is competitive, the PUC concluded that the public
interest would be served by allowing competitive pressures
to offer customers choices for toll calls, rather than
creating new EAS routes.
IntraLATA toll competition was instituted on January 1,
1995, whereby both business and residential customers could
choose from among multiple carriers to carry their
intraLATA calls, reducing the toll costs customers face for
calls beyond their local calling area. Concurrent with the
institution of
intraLATA competition, the toll rates of Pacific Bell (now
SBC) and GTE California (now Verizon) were significantly
reduced by the PUC. Today, many interexchange carriers
offer intraLATA toll calling plans at competitive rates.
AT&T, MCI and Sprint offer residential optional calling
plans that include intraLATA toll rates of no more then
$.05 per minute for calls made within California. These
companies also provide a bundled package, which means that
all telephone services are all packed into one low flat
rate per month.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
$85,000 over two years from the Public Utilities
Reimbursement account (PURA). Increased costs to the PUC
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are based on one new staff position, a PURA III, on a
limited term basis. PURA revenues are derived from an
annual fee imposed on utilities. Therefore, any increased
costs should be recovered from fee revenues.
SUPPORT : (Verified 5/3/05)
Office of Ratepayer Advocates
ARGUMENTS IN SUPPORT : Supporters of this bill feel EAS
meets essential calling needs that are not adequately
addressed by any other service
alternative. EAS routes are necessary in situations where
services that are essential to a community are not located
within the boundaries of a local telephone exchange.
People who live in rural communities where there are no
schools, no doctors and no county offices must conduct
essential daily activities in other communities. Without
EAS, residents of such small
communities would routinely have to place toll calls to
reach local services, including schools, doctors, city and
county departments, hospitals and emergency services.
NC:mel 5/4/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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