Amended in Senate August 12, 2013

Amended in Senate June 10, 2013

Amended in Assembly April 16, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1407

Introduced by Assembly Member Bradford

March 13, 2013

An act to amend Sections 871.5 and 873 of, begin insert to add Sections 875.5 and 1001.7 to, end insert to repeal Sections 871.7, begin delete 878, end delete 879, 879.5, 880, 882, and 883 of, and to repeal and add Sections 872, 874, 875, 876, begin delete and end delete 877 begin insert , and 878 end insert of, the Public Utilities Code, relating to public communications.

LEGISLATIVE COUNSEL’S DIGEST

AB 1407, as amended, Bradford. Public utilities: voice communications service: lifeline program.

Existing law, the federal Telecommunications Act of 1996, establishes a program of cooperative federalism for the regulation of telecommunications to attain the goal of local competition, while implementing specific, predictable, and sufficient federal and state mechanisms to preserve and advance universal service, consistent with certain universal service principles. Under the act, universal service is an evolving level of telecommunications services that the Federal Communications Commission is required to establish periodically, taking into account advances in telecommunications and information technologies and services. Pursuant to the act, the Federal Communications Commission has established and revised a lifeline program that is available for qualifying low-income consumers.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. The Moore Universal Telephone Service Act establishes the Universal Lifeline Telephone Service program in order to provide low-income households with access to affordable basic residential telephone service. Existing law establishes the Universal Lifeline Telephone Service Trust Administrative Committee Fund in the State Treasury.

This bill would recast the Moore Universal Telephone Service Act so that it would provide a household, as defined, having an eligible customer, as defined, with high-quality voice communications service at affordable rates. The bill would state the intent of the Legislature to ensure that California residents have access to technologies and services and to promote technological neutrality by giving lifeline customers the ability to choose the communications provider and service that best meet their unique needs, while encouraging providers to participate in the lifeline program.

The Moore Universal Telephone Service Act requires the Public Utilities Commission to annually designate a class of lifeline service necessary to meet minimum residential, as defined, communications needs, to set the rates and charges for that service, to develop eligibility criteria for that service, and to assess the degree of achievement of universal service, including telephone penetration rates by income, ethnicity, and geography.

The bill would instead require the Public Utilities Commission to annually develop eligibility criteria for customers to participate in the program, assess the penetration rates for lifeline service by income, ethnicity, and geography, and to prepare and submit a report to the Legislature on the fiscal status of the lifeline program that includes a statement of the lifeline program surcharge level and revenues produced by the surcharge, the size of the Universal Lifeline Telephone Service Trust Administrative Committee Fund, the reason for a decline or increase in the size of the fund, if applicable, an accounting of program expenses, and an evaluation of options for controlling those expenses and increasing program efficiency.

The Moore Universal Telephone Service Act requires that the Universal Lifeline Telephone Service rates be set at no more than 50% of either the basic rate for measured residential telephone service or the basic flat residential telephone rate service, as applicable, exclusive of federally mandated end user access charges that are available to the residential subscriber. Existing law requires that the lifeline telephone service installation or connection charge, or both, be not more than 50% of the charge for basic residential service installation or connection.

The bill would repeal these requirements and instead require that through and including December 31, 2014, the nonrecurring service charge for commencing voice service for a single voice connection for a lifeline customer be no greater than $10. Until and including December 31, 2014, the lifeline provider would be eligible for reimbursement from the fund for the difference between the nonrecurring charge paid by a lifeline subscriber and the nonrecurring charge the lifeline provider charges for identical services in the ordinary course of business to subscribers that are not eligible customers, subject to the limitation that the reimbursement can be no more than $40 per connection. Beginning January 1, 2015, the Public Utilities Commission would be authorized to annually increase the nonrecurring service charge incurred by eligible customers, and the lifeline provider connection reimbursement, by an amount in proportion to the increase, if any, to the Consumer Price Index for All Urban Consumers (CPI-U). The begin insert bill would authorize the commission to authorize a lifeline provider to be reimbursed pursuant to these provisions, for commencing voice service for an eligible customer, only if that provider is the customer’s carrier of last resort for basic service. end insert

begin insert The end insert bill would require that every eligible customer be given a discount of $11.85 per month, in addition to any federally supported lifeline discount provided to customers of an eligible telecommunications carrier, and would, beginning January 1, 2015, authorize the commission to annually adjust the support amount in proportion to the increase, if any, in the CPI-U. The bill would provide that an eligible customer is not entitled to any combined monthly federal and state lifeline support in excess of the customer’s monthly rate. The bill would require that state lifeline support be provided only after federal lifeline support, if any, is received by an eligible customer.

begin insert

The bill would require that all providers participating in the California lifeline program offer lifeline service at the same rates that were in effect on July 1, 2013, through and including December 31, 2014. The bill would require every lifeline provider, on first contact by a prospective eligible customer, to inform the customer of the availability of the lifeline discount and how that customer may qualify for and obtain the discount. The bill would provide that a lifeline provider that is a prospective eligible customer’s carrier of last resort for basic service remains subject to any customer notification obligations applicable to the provision of basic service.

end insert begin insert

The Public Utilities Act prohibits any telephone corporation from beginning the construction of, among other things, a line, plant, or system, or of any extension thereof, without having first obtained from the commission a certificate that the present or future public convenience and necessity require or will require that construction (certificate of public convenience and necessity).

end insert begin insert

This bill would prohibit the commission from denying or revoking a certificate of public convenience and necessity applied for by or issued to a telephone corporation that provides retail or wholesale telecommunications services on the grounds that the telephone corporation also provides Voice over Internet Protocol service or any other unregulated service.

end insert

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill would be a part of the act and would require action by the Public Utilities Commission to implement its requirements, and because the bill would expand the class of lifeline providers, the bill would impose a state-mandated local program by expanding the scope of a crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) Technological advances in Internet and mobile
communications have resulted in a variety of new voice
communications offerings beyond traditional wireline telephone
service, such as mobile telephony service, commonly known as
cellular telephone service, and Voice over Internet Protocol service.

(b) California consumers are increasingly choosing these new
voice communications services, while conversely, traditional
telephone subscriptions are decreasing.

(c) The Moore Universal Telephone Service Act should be
modernized in order to maintain the vitality of its original policy
goals by acknowledging that technologies, services, and business
models other than traditional telephone service can be used to offer
low-income citizens access to affordable, reliable, and high-quality
communications service.

(d) In enacting this act, it is the intent of the Legislature to ensure
that California residents have access to technologies and services
and to promote technological neutrality by giving lifeline customers
the ability to choose the voice communications service provider
and service that best meets their unique needs, while encouraging
mobile telephony service and other nontraditional providers to
participate in the lifeline program.

SEC. 2.  

Section 871.5 of the Public Utilities Code is amended
to read:

871.5.  

The Legislature finds and declares all of the following:

(a) The offering of high-quality voice communications service
at affordable rates to the greatest number of citizens has been a
longstanding goal of the state.

(b) The Moore Universal Telephone Service Act is an important
means for achieving universal service by making voice
communications service affordable to low-income households
through the lifeline program.

(c) The Federal Communications Commission has recently
reformed and modernized the federal universal service fund’s
lifeline program by, among other things, adopting a technology
neutral approach to lifeline.

(d) Every means should be employed by the commission to
ensure that every household qualified to receive lifeline support
is informed of and is afforded the opportunity to obtain that
support. Nothing in this section effects an eligible
telecommunications carrier’s obligations to advertise the
availability of its offerings and charges for those offerings using
media of general distribution under Section 54.201(d)(2) of Title
47 of the Code of Federal Regulations. The commission shall not
impose any additional advertising obligations on lifeline providers.

(e) The furnishing of lifeline support is in the public interest.
The commission, in administering the lifeline program, should
implement the program in a way that is equitable,
nondiscriminatory, and without competitive consequences for the
telecommunications industry in California.

SEC. 3.  

Section 871.7 of the Public Utilities Code is repealed.

SEC. 4.  

Section 872 of the Public Utilities Code is repealed.

SEC. 5.  

Section 872 is added to the Public Utilities Code, to
read:

872.  

As used in this article, the following terms have the
following meanings:

(a) “Eligible customer” means any person who has, after
providing adequate supporting documentation, been determined
to be eligible to receive lifeline support by a third-party lifeline
administrator. A lifeline provider shall not be obligated to provide,
nor shall any person be entitled to receive, any lifeline support
until that person has been determined to be an eligible customer
by a third-party lifeline administrator. A customer applying to
become an eligible customer shall not be required to first establish
service as a condition for lifeline eligibility.

(b) “Household” means any individual or group of individuals
who are living together at the same address as one economic unit.
A household may include related and unrelated persons. An
“economic unit” consists of all adult individuals contributing to
and sharing in the income and expenses of a household. An adult
is any person 18 years of age or older. If an adult has no or minimal
income, and lives with someone who provides financial support
to him or her, both people shall be considered part of the same
household. Children under 18 years of age living with their parents
or guardians are considered to be part of the same household as
their parents or guardians.

(c) (1) “Lifeline provider” means any telephone corporation or
alternative provider that meets all of the following requirements:

(A) Provides voice communications services that are eligible
for federal universal service support pursuant to Section 54.101
(a) of Title 47 of the Code of Federal Regulations.

(B) Collects and remits surcharges for begin delete the lifeline program end delete begin insert end insert begin insert all
universal service programs funded through those funds created
pursuant to Section 270 and for the emergency telephone system
described in Section 41030 of the Revenue and Taxation Code end insert .

(C) Voluntarily chooses to participate in the lifeline program
or is otherwise mandated to offer basic service begin delete as of January 1,
2013 end delete .

(D) Agrees to comply with, and be held liable for any violations
of, this article and any commission rules implementing this article,
as enforced by the commission.

(2) Any “lifeline provider,” including a local exchange carrier,
may use any technology, or multiple technologies, within the
provider’s service territory begin insert , except as otherwise required pursuant
to the obligation of a carrier of last resort to provide basic service
to any customer upon request, including any eligible customer end insert .

SEC. 6.  

Section 873 of the Public Utilities Code is amended
to read:

873.  

The commission shall annually do all of the following:

(a) Develop eligibility criteria for eligible customers to
participate in the lifeline program. The commission shall not
increase lifeline income limits from those in effect on January 1,
2013, except for an annual adjustment to reflect inflation based
on changes to the United States Consumer Price Index for All
Urban Consumers (CPI-U).

(b) Assess the penetration rates for the lifeline program by
income, ethnicity, and geography. This information shall be
annually reported to the Legislature by the commission in a
document that can be made public.

(c) Not withstanding Section 10231.5 of the Government Code,
not later than March 31 of each year, prepare and submit a report
to the Legislature on the fiscal status of the lifeline program. The
report shall be submitted in compliance with Section 9795 of the
Government Code. The report shall include a statement of the
lifeline program surcharge level and revenues produced by the
surcharge, the size of the Universal Lifeline Telephone Service
Trust Administrative Committee Fund, the reason for a decline or
increase in the size of the fund, if applicable, an accounting of
program expenses, and an evaluation of options for controlling
those expenses and increasing program efficiency.

SEC. 7.  

Section 874 of the Public Utilities Code is repealed.

SEC. 8.  

Section 874 is added to the Public Utilities Code, to
read:

874.  

(a)  begin insert The commission may authorize a lifeline provider to
be reimbursed pursuant to this section for commencing voice
service for an eligible customer only if that provider is the
customer’s carrier of last resort for basic service. end insert

begin insert (b) end insert begin insert   end insert Until and including December 31, 2014, the nonrecurring
service charge for commencing voice service for a single voice
connection for a lifeline customer shall be no more than ten dollars
($10). Until and including December 31, 2014, a lifeline provider
shall be eligible for reimbursement from the Universal Lifeline
Telephone Service Trust Administrative Committee Fund for the
difference between the nonrecurring charge paid by a lifeline
subscriber and the nonrecurring charge the lifeline provider charges
for identical service in the ordinary course of business to
subscribers that are not eligible customers, subject to the limitation
that the reimbursement to the lifeline provider shall be no more
than forty dollars ($40) per connection.

begin delete

(b)

end delete

begin insert (c) end insert  Beginning January 1, 2015, the commission may annually
increase the nonrecurring service charge incurred by eligible
customers by an amount in proportion to the increase, if any, to
the Consumer Price Index for All Urban Consumers (CPI-U). If
the commission exercises this authority, then it also shall increase
the lifeline provider connection reimbursement by a proportionate
amount.

SEC. 9.  

Section 875 of the Public Utilities Code is repealed.

SEC. 10.  

Section 875 is added to the Public Utilities Code, to
read:

875.  

(a) Except as provided in subdivision (b), every eligible
customer shall be given a discount of eleven dollars and eighty-five
cents ($11.85) per month, in addition to any federally supported
lifeline discount provided to customers of an eligible
telecommunications carrier. Beginning January 1, 2015, the
commission may annually adjust the support amount in proportion
to the increase, if any, in the Consumer Price Index for All Urban
Consumers (CPI-U).

(b) An eligible customer shall not be entitled to any combined
monthly federal and state lifeline support in excess of the eligible
customer’s monthly rate. State lifeline support shall be provided
only after federal lifeline support, if any, is received by an eligible
customer. Lifeline providers shall be eligible for reimbursement
from the Universal Lifeline Telephone Service Trust
Administrative Committee Fund in an amount not to exceed the
amount of state lifeline support that is actually received by an
eligible customer.

(c) To the extent necessary to support the lifeline program, the
commission may assess a lifeline surcharge in an amount not to
exceed 3.3 percent of the subscriber’s charges for intrastate
telephone communications services or interconnected Voice over
Internet Protocol (VoIP) service. The methodology for applying
the lifeline surcharge to interconnected VoIP service shall be that
set forth in subdivision (e) of Section 285.

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 875.5 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 875.5. end insert   

(a) Through and including December 31, 2014, all
providers participating in the California lifeline program shall
offer lifeline service at the same rates that were in effect on July
1, 2013.

(b) Every lifeline provider, on first contact by a prospective
eligible customer, shall inform the customer of the availability of
the lifeline discount and how that customer may qualify for and
obtain the discount. A provider may present that information orally,
electronically, or in print form.

(c) A lifeline provider that is a prospective eligible customer’s
carrier of last resort for basic service shall also remain subject to
any customer notification obligations applicable to the provision
of basic service.

end insert

begin delete SEC. 11. end delete
begin insert SEC. 12. end insert   

Section 876 of the Public Utilities Code is repealed.

begin delete SEC. 12. end delete
begin insert SEC. 13. end insert   

Section 876 is added to the Public Utilities Code, to
read:

876.  

(a) The commission shall, upon a request of a provider,
designate as begin insert a end insert lifeline begin delete providers end delete begin insert provider end insert a telephone corporation
or alternative provider that meets the requirements of subdivision
(c) of Section 872. The commission begin delete shall, upon a request of a
provider, designate the lifeline provider as an eligible
telecommunications carrier end delete begin insert shall not, in exercising its delegated
authority under federal law to designate eligible
telecommunications carriers, or in exercising its authority under
this section to designate state lifeline providers, deny a request to
be designated based on the requesting entity providing any VoIP
or IP-enabled service end insert . The commission shall not, as a condition
for either designation, impose any obligation that exceeds the
obligations imposed on state-designated eligible
telecommunications carriers in Subpart E (commencing with
Section 54.400) of Part 54 of Title 47 of the Code of Federal
Regulations begin insert , except that designation as a lifeline provider does
not eliminate or diminish any obligation of a carrier of last resort
to provide basic service to any customer upon request, including
any eligible customer end insert .

(b) The commission shall require a lifeline provider to offer
only the minimum service elements to eligible lifeline customers
set forth in Section 54.101 (a) of Title 47 of the Code of Federal
Regulations. Lifeline support may be applied to any bundle or
package that includes voice service.

begin delete SEC. 13. end delete
begin insert SEC. 14. end insert   

Section 877 of the Public Utilities Code is repealed.

begin delete SEC. 14. end delete
begin insert SEC. 15. end insert   

Section 877 is added to the Public Utilities Code, to
read:

877.  

(a) Lifeline discounts shall be limited to one per
household. Nothing in this section effects the ability of a member
of a household to obtain an additional lifeline discount if that
member is medically certified as deaf or hard of hearing and has
continuous access to teletypewriter equipment, or its functional
equivalent, pursuant to Section 2881, and has been determined to
be an eligible customer by a third-party lifeline administrator.

(b) An applicant for lifeline support may report only one address
in the state as a principal place of residence.

begin delete SEC. 15. end delete
begin insert SEC. 16. end insert   

Section 878 of the Public Utilities Code is repealed.

begin insert

begin insert SEC. 17. end insert   

end insert

begin insert Section 878 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 878. end insert   

This article does not eliminate or diminish the obligation
of a carrier of last resort to provide basic service to any customer
upon request, including to any eligible customer.

end insert

begin delete SEC. 16. end delete
begin insert SEC. 18. end insert   

Section 879 of the Public Utilities Code is repealed.

begin delete SEC. 17. end delete
begin insert SEC. 19. end insert   

Section 879.5 of the Public Utilities Code is repealed.

begin delete SEC. 18. end delete
begin insert SEC. 20. end insert   

Section 880 of the Public Utilities Code is repealed.

begin delete SEC. 19. end delete
begin insert SEC. 21. end insert   

Section 882 of the Public Utilities Code is repealed.

begin delete SEC. 20. end delete
begin insert SEC. 22. end insert   

Section 883 of the Public Utilities Code is repealed.

begin delete

SEC. 21.  

By May 1, 2014, the Public Utilities Commission
shall revise General Order 153 to bring the lifeline program into
compliance with the changes made by this act. The commission
shall allow a lifeline provider a reasonable period of time, as
determined by the commission, to implement the requirements or
obligations of the Moore Universal Telephone Service Act as
amended by this act. The commission shall not adopt any
obligations, rules, or standards that exceed, or otherwise add to,
those that are expressly required by this act.

end delete

begin insert

begin insert SEC. 23. end insert   

end insert

begin insert Section 1001.7 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 1001.7. end insert   

The commission shall neither deny nor revoke a
certificate of public convenience and necessity applied for by or
issued to a telephone corporation that provides retail or wholesale
telecommunications services on the grounds that the telephone
corporation also provides Voice over Internet Protocol service or
any other unregulated service. This section does not expand the
commission’s existing jurisdiction over any service or affect any
provision of Section 710. This section does not give any telephone
corporation any new rights or powers.

end insert

begin insert

begin insert SEC. 24. end insert   

end insert

begin insert (a) end insert begin insert   end insert begin insert This act does not create or expand the Public
Utilities Commission’s jurisdiction over any provider, service, or
technology. In implementing this act, the commission shall not
impose any new obligation, standard, or requirement upon any
provider, service, or technology that is not expressly required by
the act. end insert

begin insert

(b) By May 1, 2014, the commission shall revise General Order
153 to bring it into compliance with this act. The commission shall
eliminate or modify any rule that imposes substantive requirements
upon lifeline providers beyond the express terms of this act, but
may retain, modify, or enact rules governing the administration
of the lifeline program that are not inconsistent with this act,
including rules governing enrollment processes, eligibility forms,
the third-party administrator, the calculation of the fund and
establishment of the surcharge, reporting and remittances of
surcharges, use of electronic communications, and audits and
records. The commission shall allow a lifeline provider a
reasonable period of time to implement the requirements or
obligations of this act.

end insert

begin delete SEC. 22. end delete
begin insert SEC. 25. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.