BILL ANALYSIS
AB 991
Page 1
Date of Hearing: April 12, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
AB 991 (Papan) - As Amended: April 7, 1999
SUBJECT : Internet access.
SUMMARY : Requires the California Public Utilities Commission
(CPUC) to examine the technical feasibility of allowing
competitive local exchange carriers (LECs) to provide high
bandwidth data services (high speed data) over a single
telephone line provided by the incumbent LEC. If CPUC finds it
to be technically feasible, this bill requires CPUC to establish
rules and rates for sharing the telephone line. Specifically,
this bill :
1)Enacts the California High Speed Internet Act of 1999;
2)Requires CPUC to examine the technical feasibility of
requiring incumbent LECs to allow interconnecion by
competitive LECs for the purpose of providing high-speed data
services over telephone lines with voice services;
3)Requires CPUC to establish rules and rates for line sharing so
competitive LECs can provide high speed data services over
telephone lines with voice services provided by the incumbent
LEC; and
4)Requires that rules and rates be established by CPUC not later
than January 31, 2000.
EXISTING LAW
1)Authorizes CPUC to regulate public utilities, including
telephone corporations.
2)Requires CPUC to complete rulemaking and ratesetting
procedures within a reasonable time, not to exceed 18 months.
3)Provides that the Telecommunications Act of 1996 (1996 Act) is
intended to stimulate competition for all services, including
advanced services such as high-speed data services.
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FISCAL EFFECT : Unknown
COMMENTS :
1.The author has introduced this bill to give California
residential consumers a choice of high speed data providers
using "digital subscriber line" (DSL) technology. DSL is a
technology that allows a high speed data channel to run on
higher frequencies above the frequency used to deliver analog
voice signals. By separating the line into a voice channel
and a high-speed data channel, a single telephone line can
carry both voice and data services simultaneously and,
potentially, each service should be provided by a different
carrier. ( FCC First Report and Order and Further Notice of
Proposed Rulemaking , adopted, March 19, 1999, hereinafter
referred to as " March 19 NPRM "). DSL provides residential
users with the ability to connect to the Internet at speeds 50
times faster than modems. This bill is intended to ensure
that customers can choose to receive DSL service from either
the incumbent LEC or a competitive LEC at an affordable price.
Customers are able to receive DSL services from a competitive
LEC today, but must provide the service over a second line at
an additional cost of approximately $20 per month. The author
indicates excluding competitors from access to a shared line
artificially raises their costs and keeps them out of the
residential DSL market. The sponsor, High-Speed Access
Coalition, a coalition of internet service providers,
indicates that offering DSL on a shared line with existing
voice service is efficient, reduces costs and will make
residential DSL service more affordable.
2.FCC initiated a rulemaking procedure entitled "Deployment of
Wireline Services Offering Advanced Telecommunications
Capability" in August, 1998, in response to petitions
suggesting that FCC take specific actions to speed the
deployment by wireline carriers of advanced services. In the
March 19 NPRM, FCC adopted numerous measures designed to
facilitate the competitive deployment of advanced services.
For example, FCC adopted rules and established additional
standards that will strengthen FCC's collocation requirements.
FCC adopted certain spectrum compatibility and management
rules to allow competitive providers to deploy innovative
advanced services technology in a timely manner. FCC adopted
a further NPRM to explore several technical, operational,
economic, pricing, and cost allocation issues associated with
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line-sharing.
3.It is important to note that FCC distinguishes between
findings and tentative conclusions. A finding is a final
conclusion based on the record before FCC at the time of the
ruling. A tentative conclusion, on the other hand, is deemed
to be a premise that serves as the basis for further
discussion prior to coming to a final conclusion.
4.To that end, FCC tentatively concluded that nothing in the
1996 Act, FCC rules or caselaw precludes states from mandating
line sharing. FCC further tentatively concluded that line
sharing was technically feasible and that incumbent LECs must
provide requesting carriers with access to the transmission
frequencies above that used for analog voice services when the
LEC itself provides both exchange and advanced services over a
single line. While FCC made these seemingly direct tentative
conclusions, it also indicated that there are many unsettled
issues related to these tentative conclusions based on the
matters on which they seek further comment.
5.With respect to access to the local loop, FCC is seeking
comment on the following:
To what extent will the absence of line sharing require
dual investment in circuit switched for voice transmissions
and packet switched for data?
What constitutes the frequency above that used for
analog voice service that the incumbent LEC must unbundle?
Would setting an arbitrary line between a low frequency
and a high frequency channel arbitrarily freeze
technological development relating to the use of the local
loop?
How can FCC construct regulations that promote local
competition and technological innovation?
1.Though the FCC tentatively concluded that line sharing is
technically feasible, several operational issues remain to be
resolved, including the following:
What effect line sharing would have on analog voice
service?
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Should carriers be allowed to request just the voice
channel of a line?
Should carriers be allowed to request any unused portion
of a line?
To what extent will LEC operations support systems need
to be modified in order to allow two carriers to share a
line?
Which entity should manage the multiplexing equipment if
two carriers are offering services over the same loop?
How and by whom should problems on the line be handled?
1.The above listed questions illustrate many of the issues that
may arise from two carriers providing services over the same
line. In addition, to the access and operational issues
outlined above, FCC also seeks further comment from interested
parties on the following economic, pricing and cost allocation
issues:
How will line sharing would affect federal and state
access charge and universal service regimes?
What are the pricing consequences of line sharing on the
price of the unbundled local loop?
Should the entire cost of the loop be imputed to the
voice channel or be divided equally or otherwise between
the two services sharing the facility?
What effect would line sharing have on the ability of
new entrants' ability to compete with incumbents?
How will line sharing stimulate or retard innovation?
How will line sharing affect investment in local
exchange facilities?
Whether a competitive LEC's ability to deliver voice
services over a packet-switched network obviates the need
to share a loop with the incumbent LEC?
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1.The paragraphs above describe the numerous issues that must be
resolved prior establishing rules and rates to allow line
sharing of the incumbent LEC telephone lines. This bill
requires CPUC to examine further issues related to technical
feasibility, and then by January 31, 2000, establish rules and
rates for line sharing. Based on FCC tentative conclusions
and the remaining questions that need to be answered, the
Utilities and Commerce Committee should be cautious in
mandating that CPUC begin to establish rules and rates when so
many issues remain unanswered. Furthermore, [SB 960
(Leonard), Chapter 859, Statutes of 1996], in an effort to
streamline CPUC proceedings, requires it to complete
rulemaking proceedings within 18 months. CPUC has instituted
proceedings to comply with the mandates of SB 960. This bill,
however, requires that the rulemaking occur with a 30-day time
frame. The suggested time period is unreasonable and
impossible to comply with. If CPUC were to comply with the
statutorily mandated timeframes of SB 960, rather than the
unrealistic 30-day timeframe embodied in the bill, the
rulemaking would be completed by mid-2001. Additionally, if
CPUC were to embark on a separate rulemaking and establish
rules or rates, which do not comply with FCC directives, CPUC
would have to establish a rulemaking procedure to modify its
rules and rates.
2.FCC has established the following timeframes in which it will
be addressing the issues outlined above. Comments in response
to the numerous questions posed are due to FCC by June 15,
1999. Reply Comments are due by July 15, 1999. While FCC has
not stated at this time when the Report and Order will be
issued, discussions with FCC staff indicate that this is a
priority item and should be decided expeditiously. Rather
than require CPUC to duplicate FCC proceedings, the author
should amend the bill to require CPUC to participate in and/or
monitor FCC rulemaking process. This recommendation would
enable CPUC to avail itself of the expertise and direction of
FCC policymakers that have been reviewing issues related to
advanced services since 1998. At the completion of FCC
proceedings, CPUC should be required to institute an expedited
rulemaking proceeding and establish rules and rates, as
directed by FCC. Based on the belief that FCC will complete
its rulemaking expeditiously, CPUC would be in a position to
establish rules and rates within a shorter timeframe. CPUC
has estimated that having the benefit of FCC record from this
rulemaking would enable its rulemaking process to be cut in
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half, or approximately 9 months. CPUC may also be able to
implement rules and rates through arbitration agreements
between carriers if FCC's direction is clear. Arbitration
agreements can be completed in a much shorter time frame than
rulemaking proceedings. Thus, the author should consider
amending the bill to require CPUC to establish rules and rates
pursuant to the most efficient manner based on the outcome of
FCC proceedings.
REGISTERED SUPPORT / OPPOSITION :
Support
Association of Local Telecommunications Services
Brainstorm Networks
California Users Broadcasters Group
Competitive Telecommunications Association
Covad Communications Company
Digital Generation Systems
Direct Network Access, Ltd.
High-Speed Access Coalition
Information Technology Association of America
Information Technology Ventures
Interwest Partners
MCI WorldCom
NorthPoint Communications
Qwest Communications, Inc.
Rhythms NetConnections, Inc.
1 individual
Opposition
California Telephone Association
GTE California
Pacific Bell
Analysis Prepared by : Carolyn Veal-Hunter / U. & C. /
(916)319-2083