BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
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|SB 1066 - Bowen |Hearing Date:May 11, 1999 | S|
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|As Amended:May 10, 1999 | | B|
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DESCRIPTION
This bill makes legislative findings regarding California
and federal policies encouraging the rapid deployment of
advanced telecommunications services and the role that
competition can play in encouraging such deployment. The
bill further recognizes a recent tentative decision by the
Federal Communications Commission (FCC) regarding the
ability of others to share the telephone lines owned by the
local telephone companies.
This bill states legislative intent that the California
Public Utilities Commission (CPUC) should open a proceeding
to implement a process for the sharing of telephone lines.
The bill further states legislative intent that if the FCC
determines that line sharing is not feasible, that the
state should not adopt contrary regulations.
KEY QUESTION
Should the Legislature and the CPUC encourage line sharing?
BACKGROUND
Pursuant to federal and state law and policy, the
competitors to the local telephone companies are permitted
to purchase pieces of the local telephone company networks
in order to compete. This unbundling requirement is a
recognition of the unique monopoly position the incumbent
local networks enjoy and is an effort to promote
competition in the local telecommunications service arena.
In a January oversight hearing held by this committee, the
issue of "line sharing" was discussed at length. Line
sharing is a procedure where a single telephone line is
used, or shared, by two companies offering different
services. A telephone line is a pair of copper wires and
recent technological advances have increased the range of
frequencies which can be carried over that copper pair.
Under line sharing, two companies would split the
frequencies. More concretely, several competitors to the
incumbent local telephone companies (e.g. Pacific Bell and
GTE) expressed a desire in the January hearing to use some
of the frequencies to offer high speed telecommunications
service, while allowing the incumbent local telephone
company to continue to provide the traditional voice
telephone service over different frequencies.
One of the competitors had requested the CPUC to require
line sharing in California, but the CPUC declined to do so,
citing an inadequate record and a deference to the FCC.
In March, the FCC issued an order tentatively concluding
that line sharing is technically feasible. The FCC noted
"that if shared line access (i.e. line sharing) could be
made widely available, competition for advanced services
would grow more rapidly as consumers would not be required
to purchase a second telephone line in order to have access
to high-speed digital services, and competitors would offer
advanced services to markets, such as the residential
market, where loop costs make a stand-alone data service
uneconomic. Line sharing also holds the possibility of
enabling more providers to enter the advanced services
market and to enter the market in a manner that enables
them to incur no greater costs than the incumbent LEC
(local telephone company) or its affiliate will incur. As
a result, line sharing should promote consumer choice."
Despite this enthusiasm, the FCC declined to require line
sharing, citing the need for further information on
operational, pricing and other issues. The FCC also
tentatively concluded that nothing precludes the states
from mandating line sharing. The FCC decision permits
states to proceed with line sharing.
COMMENTS
1)As a result of the January oversight hearings, the author
introduced this bill to encourage competition, improve
availability, and lower prices for high speed internet
access.
2)This bill is supported by a variety of competitors to the
local telephone companies who belive line sharing
provides a viable means of making high speed Internet
access available to more people and businesses more
quickly, as well as by TURN, which notes that line
sharing is a potentially lucrative source of new revenue
to the local telephone company. As such, TURN believe
the new revenues should be considered when determining
the rates for basic telephone service.
3)Pacific Bell had opposed the prior version of the bill,
but has removed their opposition with the latest
amendments. GTE opposes the bill because they are
concerned that the bill requires the CPUC to implement
line sharing irrespective of the final outcome of the FCC
proceedings. The author believes the latest amendments,
which say that the state should not proceed with line
sharing of the FCC says that line sharing is not
feasible, address GTE's concerns.
4)This bill states the intent of the Legislature that the
CPUC should open a proceeding to implement line sharing.
Pending a final decision from the FCC and discussions
with the affected interests, the author may choose to
give the CPUC some direction relative to the pricing of
line sharing. Clearly, anyone who wants to share the
telephone line should be required to pay for the use of
the line. The question is, how can the service be priced
in a competitively equitable way?
POSITIONS
Support:
Covad Communications Company
High Speed Access Coalition (HiSAC)
MCI WorldCom
NorthPoint Communications
TURN
Oppose:
GTE, California Inc. (prior version of bill)
Randy Chinn
SB 1066 Analysis
Hearing Date: May 11, 1999