BILL ANALYSIS
SB 1712
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Date of Hearing: June 12, 2000
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
SB 1712 (Polanco) - As Amended: May 9, 2000
AS PROPOSED TO BE AMENDED
SENATE VOTE : 30-3
SUBJECT : Universal telephone service.
SUMMARY : Requires California Public Utilities Commission (CPUC)
to study and report to the Legislature on whether the definition
of universal service should be broadened to include video and
data services. Specifically, this bill :
1)Requires CPUC, by February 1, 2001, to institute an order to
open a proceeding to examine and investigate the current and
future definitions of universal service.
1)Makes various findings and declarations concerning the
inclusion of two-way voice, video, and data service into
universal service.
1)Requires the proceeding to include public hearings and
encourage participation by different interests, including, but
not limited to:
a) Consumer groups;
b) Communication service providers;
c) Facilities-based telephone providers;
d) Information service providers;
e) Rural and urban users;
f) Public interest groups;
g) Representatives of small and large businesses and
industry;
h) Local agencies;
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i) State agencies, including:
i) Trade and Commerce Agency;
ii) Business, Transportation, and Housing Agency;
iii) State and Consumer Services Agency;
iv) Department of Information Technology;
v) State Department of Education;
vi) State Department of Health Services;
vii) California State Library;
j) Colleges and Universities;
1)Defines the objectives of the study to include:
a) Investigating the feasibility of redefining universal
service to take into consideration trends in convergence of
voice, video, and data;
b) Evaluating the extent to which technological changes
reduced the relevance of existing regulatory regimes given
their current segmentation based on technology;
c) Recommendations on whether video, data, and Internet
Service Providers (ISPs) should be incorporated into an
enhanced Universal Lifeline Service program consistent with
findings and declarations concerning the inclusion of
two-way voice, video, and data service into universal
service;
d) Reevaluating prior definitions of basic service to
incorporate the latest technologies to provide California
residents with improved quality of life, expanded access to
education, training, and commerce resources, increased
access to public health and safety resources, and
assistance in bridging the "digital divide" through
expanded access to new technologies by low-income,
disabled, or otherwise disadvantaged residents;
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e) Assessing costs of providing enhanced universal lifeline
service and delineate the subsidy supported necessary to
maintain the redefined scope of universal service;
f) Designing and recommending an equitable and broad-based
subsidy support mechanism for universal service;
g) Developing a process to review and revise the definition
of universal service to reflect new technologies;
h) Considering whether similar regulatory treatment for the
provision of similar services is appropriate.
1)Specifies CPUC take into account the role played by diverse
but convergent industries and providers, in addition to
telephone service providers already regulated, even though
CPUC does not economically regulate many of these entities.
1)Specifies that recommendations are consistent with Public
Utilities Code Section 709 as well as consider that:
a) Universal service be provided at affordable prices;
b) Consumers be provided with access to necessary
information to make timely and informed choices about
telecommunications products and services;
c) Education, health care, community, and government
institutions be positioned as early recipients of new and
emerging technologies to maximize economic and social
benefits of the services.
1)Requires CPUC complete its investigation and report to the
Legislature by January 1, 2002.
EXISTING LAW requires CPUC to establish a class of lifeline
service necessary to meet minimum residential communications
needs and establish rates and charges for that service.
FISCAL EFFECT : Unknown.
COMMENTS :
1)According to the author, the purpose of this bill is to
require CPUC to review the existing definition of universal
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service and consider whether it should be expanded to include
advanced voice, video and data services. The author points
out that "advances in technology are bringing to the
marketplace new Internet accessing devices such as
televisions, hand-held computers and Internet phones."
Additionally, the author states that the evolution of
technology and the merging of historically diverse media (such
as cellular telephones with limited Internet access) warrants
a new definition of universal service that will include voice,
video, and data for California residents.
1)A January 2000 report by the California Research Bureau (CRB),
"Profile of California Computer and Internet Users," estimates
that the information technology sector has contributed 35% of
the country's economic growth since 1998. The report goes on
to list the benefits of the information-technology innovation
to include increasing students academic performance, expanding
individuals' ability to successfully participate in the labor
force, and expanding markets and increasing competition as
consumers use e-commerce. However, data provided in that same
report showed that, even though California is ahead of the
national average in percent of households with computers and
Internet access, only half of all Californians in 1998 had
computers at home and only 23.3% of the state's population
used computers to access the Internet. The report further
showed that there are significant gaps in terms of income
levels, education, and racial groups in computer ownership and
Internet access. This is commonly referred to as the "digital
divide" - the dichotomy between those that have access to
electronic technology and those that do not.
1)AB 3643 (Polanco), Chapter 278, Statutes of 1994, required
CPUC to open a proceeding to examine the current and future
definitions of universal service, and mandated that public
hearings be held so as to encourage participation from a broad
array of interests. Consequently, in 1996 CPUC issued
Decision 96-10-066 (D. 96-10-066), which finalized its
universal service rules. D. 96-10-066 defines universal
service as the concept that basic service should be available
to virtually everyone in California at affordable rates. The
decision defines basic service as including 17 elements, such
as the ability to place calls, the ability to receive free
unlimited incoming calls, Lifeline, or discounted, rates and
charges for eligible customers, and voice grade connection to
public switched telephone network. The definition of basic
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service does not include access to video or data services.
1)Additionally, AB 3643 called for a periodic review of the
basic service elements in order to ensure that the definition
is kept current. D. 96-10-066 recommends that CPUC undertake
review of the service elements three years after completion of
an initial review. The initial review consisted of the
adoption of final universal service rules in the proceeding.
The triennial review is scheduled to occur this year.
According to CPUC report entitled "Universal Service Report to
the Governor and the Legislature," published December 1, 1999,
among the issues CPUC will address is the definition of basic
service, consistent with its goals to provide for addition of
new services to basic service as new services become more
widely used. CPUC intends on using the current version of
this bill as a vehicle for its review of basic service.
1)This bill requires that recommendations by CPUC be consistent
with Public Utilities Code Section 709. The section
reiterates California's commitment to universal service
through continued affordability and widespread availability of
telecommunications service, to encourage development and
deployment of new technologies, to promote economic growth and
job creation through rapid implementation of advanced
information technologies, to promote lower prices and broader
consumer choice, and to remove barriers to open and
competitive markets.
1)D. 96-10-066 spells out criteria for the addition of elements
to basic service. Included is a provision that a substantial
majority (65%) of residential customers must subscribe to the
service. As noted in paragraph 2 above, the percent of
households in California accessing the Internet is well
beneath the viability threshold in D. 96-10-066 for inclusion
as an element of basic service. According to figures
published by the United States Department of Commerce
(Commerce Department) and the United States Department of
Agriculture, high-speed Internet access technologies such as
DSL and Cable TV Modems have even lower levels of deployment.
This raises the question as to whether enough people access
the Internet to make inclusion as an element of basic service
worthwhile. For that reason customer penetration needs to be
considered by CPUC as it proceeds with its review.
1)Other factors CPUC might want to consider during its review
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are the fact that not everyone will want Internet access or
will want to pay for it, and the cost of expanding universal
service to encompass video and data technology. Many
households in California that have basic telephone service and
computers can access the Internet at low or no charge through
conventional dial-up service offered by commercial ISPs.
Along those lines, even though one of the major reasons cited
for not having Internet access by households with computers is
cost (16.8%, based a 1999 report by the Commerce Department),
the primary reason cited for never having Internet access is
not wanting it (25.7%). Also, basic DSL through Pacific Bell
currently runs $39/month, with a $99 fee for technician
installation. If that charge is subsidized so that low-income
customers are able to have access, this could dramatically
increase the monthly charges for basic telephone service that
people pay today.
REGISTERED SUPPORT / OPPOSITION :
Support
California Public Utilities Commission
Pacific Bell
Opposition
None on file.
Analysis Prepared by : Jonathan Buttle / U. & C. / (916)
319-2083