BILL ANALYSIS
SB 396
Page 1
Date of Hearing: June 13, 2005
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
SB 396 (Battin) - As Amended: April 7, 2005
SENATE VOTE : 38 - 0
SUBJECT : Telecommunications: call pricing.
SUMMARY : This bill requires the California Public Utilities
Commission (PUC) to examine the impact of toll call pricing in
the Coachella Valley and consider whether additional options are
needed to serve that area. Specifically, this bill :
1)Requires the PUC to prepare and submit a report to the
Legislature by July 1, 2007, detailing:
a) The impact of toll call pricing in the Coachella Valley
and whether additional options are needed to serve that
area; and
b) The need for additional steps to encourage incumbent and
competitive carriers to provide innovative pricing plans.
2)Allows the PUC to consider whether customer education efforts,
or other measures that are in the public interest, are
necessary in the Coachella Valley.
3)Sunsets on January 1, 2008.
EXISTING LAW
1)Authorizes the PUC to regulate rates for intrastate telephone
service.
2)Prohibits the establishment of new Extended Area Service (EAS)
routes in the state that extend the geographic reach of local
toll-free telephone calls.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to relieve some residents in the Coachella Valley of the
predicament of incurring toll charges for calling only two miles
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away due to the unique toll call structure in that area. This
bill requires the PUC to assess whether there are other options
that can be provided to these residents and report findings and
recommendations to the Legislature by July 1, 2007.
1)Background: Most residential telephone service allows for
customers to place calls within a
local calling area without an extra charge. That area is known
as the "local exchange." Within each local exchange is a point
known as the "rate center," which is used to measure the
distance of calls for billing purposes. If the rate centers for
two local exchanges are within 12 miles of each other, then the
cost for calls between those two exchanges is included in the
monthly flat-rate for local residential service. Calls between
local exchanges that are more than 12 miles between rate centers
are toll calls.
Historically, the PUC has approved EAS routes in circumstances
where customers cannot reach a reasonable range of "essential
services" within their existing toll-free local calling area.
An EAS extends the toll-free geographic area of a community
beyond the standard 12-mile limit so that residents can reach
"essential services," including law enforcement, schools, city
and county departments, hospitals, and emergency services
without paying a toll. While creating a new EAS route lets
certain local callers avoid paying toll charges, the remaining
ratepayers in the territory absorb the cost of that benefit.
In January, 1995, the PUC opened the market for short-distance
toll calls (known as intraLATA calls) to competition.
Concurrent with the commencement of intraLATA competition, the
toll rates of Pacific Bell (now SBC) and GTE California (now
Verizon) were significantly reduced by the PUC. In June, 1998,
the PUC declared a moratorium on the creation of new EAS routes
after determining that the market was competitive and that there
was no need to create additional EAS routes because of the
reduced cost of placing toll calls.
2)Need for the bill: Currently, some residents of the Coachella
Valley are subject to toll call
pricing even when the distance between rate centers is less than
12 miles. For example, a residential call from Rancho Mirage to
Indian Wells (approximately 3 miles away) cannot be made without
the customer paying an extra toll cost (unless the customer has
a flat-rate plan for unlimited calling). According to the
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Office of Ratepayer Advocates (ORA), this is due to the area's
unique toll call structure. These additional costs place an
extra burden on those living in small communities throughout the
Coachella Valley without free calling access to schools,
doctors, or county offices essential for daily life.
3)Statewide issue: This bill requires the PUC to re-address
toll rate and toll competition
issues in a single geographic area, despite the fact that the
population growth and economic changes facing residents of the
Coachella Valley may not be unique to that community. Because
many communities may be facing situations like that in the
Coachella Valley, it may be more efficient to consider the
issues identified in the bill on a statewide basis. While a
statewide approach would potentially involve a larger, more
complex report, it would avoid potentially numerous separate
reports in subsequent years addressing the same or similar
issues in different geographic locations.
4)Related legislation: SB 1553 (Battin) of 2002 also required
the PUC to examine the impact
of toll call pricing in the Coachella Valley. SB 1553 was
approved by this committee on a 14-0 vote, but was vetoed by
Governor Davis who expressed concerns over the cost of preparing
the report and of taking a piecemeal approach to an issue of
statewide significance.
REGISTERED SUPPORT / OPPOSITION :
Support
California Public Utilities Commission
Office of Ratepayer Advocates
Opposition
None on file.
Analysis Prepared by : Adam Hunt / U. & C. / (916) 319-2083