BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 994|
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THIRD READING
Bill No: AB 994
Author: Wright (D)
Amended: 6/19/00 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 8-0, 6/13/00
AYES: Bowen, Alarcon, Brulte, Kelley, Mountjoy, Murray,
Peace, Solis
NOT VOTING: Hughes, Speier, Vasconcellos
SENATE APPROPRIATIONS COMMITTEE : 11-0, 6/26/00
AYES: Alpert, Bowen, Escutia, Johnson, Karnette, Kelley,
Leslie, McPherson, Mountjoy, Perata, Vasconcellos
NOT VOTING: Johnston, Burton
ASSEMBLY FLOOR : 76-0, 1/26/00 - See last page for vote
SUBJECT : Telephone rates: bills: rural telephone
cooperatives
SOURCE : Author
DIGEST : This bill, relating to telephone rates and rural
telephone cooperatives, would do the following:
1.Extend from January 1, 2001, to January 1, 2005,
provisions which require the State Public Utilities
Commission (PUC) to maintain a program to establish a
local rate structure designed to reduce disparities in
rates charged by small, independent telephone
corporations.
CONTINUED
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2.Require the PUC to open a proceeding to adopt consumer
protection rules.
3.Require the PUC to submit a report by January 1, 2002, on
the feasibility of establishing rural telephone
cooperatives or other alternative service configurations
to promote rural telephone service.
Note: The Assembly votes were based on a prior version of
this bill which only included language related to the
telephone cooperative segment of the measure.
ANALYSIS : Current law limits the types of charges that
can be included in the telephone bill to
communications-related products and services, along with
non-communications products and services as approved by the
California Public Utilities Commission (CPUC). This
limitation sunsets on January 1, 2001. The PUC has a
proceeding underway to establish consumer protections if
and when that prohibition expires.
This bill extends that sunset until July 1, 2001. The bill
requires the PUC to open a proceeding to adopt consumer
protection rules.
Current law encourages the deployment of universal
telephone service in rural areas through a subsidy program
for small independent telephone corporations. The rural
telephone service subsidy statutes require the Legislative
Analyst to submit a report on the State's universal
telephone service programs in conjunction with its report
on the 2000-01 Budget Bill. That report has not been
prepared and is not in the process of being prepared. This
program sunsets on January 1, 2001.
This bill extends that sunset until January 1, 2005. The
bill also requires the Legislative Analyst to conduct the
review not later than February 1, 2001.
This bill requires the PUC to prepare a report on the
feasibility of establishing rural telephone cooperatives to
promote rural telephone service, including voice and data
transmission service, in California.
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Background
Telephone Service Billing . Responding to increasing
complaints about the unauthorized inclusion of charges on a
customer's telephone bill (also known as "cramming"), the
Legislature in 1998 restricted the types of charges that
could be included in the bill. Under the law, a telephone
bill may only contain charges for communications-related
goods and services. The statute also permitted the PUC to
permit non-communications related goods and services to be
included with the telephone bill but as a separate page.
These restrictions sunset on January 1, 2001.
Existing law sets up a variety of consumer protections for
goods and services billed through the telephone bill which
are not subject to the sunset provision noted above. These
protections include precluding a phone company from
shutting off service for non-payment of a
non-telephone-related services, clear labeling of
additional charges, creation of a toll-free customer care
number, and a rebuttable presumption that a charge which
hasn't been verified by the seller was not authorized.
Rural Telephone Service Subsidy . California has 21
incumbent local telephone companies, but the two largest -
Pacific Bell and GTE - serve about 98 percent of the
telephones in the State. The remaining companies serve
predominantly rural areas and as part of California's
ongoing commitment to universal service, the Legislature
created a program to subsidize telephone service provided
by the 17 smallest of these telephone companies. The
subsidy stemmed from the recognition that it's more
expensive for these companies to serve small, relatively
sparsely populated rural areas than it is for Pacific Bell
or GTE to serve large, more densely populated urban and
suburban areas. The goal of the subsidy program is to
ensure that basic telephone rates for these telephone
companies does not exceed 150 percent of Pacific Bell's
rate.
This subsidy is paid for by all telephone ratepayers via a
surcharge on their telephone bills. Those monies go into a
fund known as the California High Cost Fund-A (CHCF-A).
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For the last four years, the surcharge level has been zero
because the program's expenses have been paid for out of
the balance collected in prior years. This year, seven
telephone companies are to receive $6.9 million from
CHCF-A. In 1999, the total cost of the program was $4.9
million.
Recipients of CHCF-A Funding for 2000
Cal-Ore Telephone Company
Citizens Telecommunications Company of Tuolumne
Ducor Telephone Company
Sierra Telephone Company
Siskiyou Telephone Company
Ponderosa Telephone Company
Volcano Telephone Company
Telephone Cooperative Study . "Cooperatives" are
consumer-owned businesses created to take advantage of
scale and scope economies for the provision of specified
goods and services to members and, potentially,
non-members. Electric cooperatives have been successfully
formed to take advantage of the members aggregated buying
power to obtain discounts and services.
This bill requires the PUC to investigate rural telephone
cooperatives as a means of providing service to rural
California and to report to the Legislature by January 1,
2002. The State Auditor estimates that 112,000 people, or
three percent of the rural population, live in areas where
traditional phone service isn't offered. The author would
like to investigate whether telephone cooperatives are a
viable way for these unserved to obtain service. No
telephone cooperatives exist in California, though the
National Telephone Cooperative Association estimates that
two million residents are served by telephone cooperatives
in other states.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/27/00)
California Telephone Association
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GTE California Incorporated
Office of Ratepayer Advocates
ASSEMBLY FLOOR
AYES: Aanestad, Alquist, Aroner, Baldwin, Bates, Battin,
Baugh, Bock, Brewer, Briggs, Calderon, Campbell,
Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox,
Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh,
Florez, Frusetta, Gallegos, Granlund, Havice, Hertzberg,
House, Jackson, Kaloogian, Keeley, Knox, Kuehl, Leach,
Lempert, Leonard, Longville, Lowenthal, Machado, Maddox,
Maldonado, Margett, Mazzoni, McClintock, Migden, Nakano,
Olberg, Oller, Robert Pacheco, Rod Pacheco, Papan,
Pescetti, Reyes, Romero, Runner, Scott, Shelley, Soto,
Steinberg, Strickland, Strom-Martin, Thompson, Thomson,
Torlakson, Vincent, Washington, Wayne, Wesson, Wiggins,
Wildman, Wright, Zettel, Villaraigosa
NOT VOTING: Ackerman, Ashburn, Floyd, Honda
NC:kb 6/28/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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