BILL ANALYSIS SB 1712 Page 1 SENATE THIRD READING SB 1712 (Polanco) As Amended June 12, 2000 Majority vote SENATE VOTE :30-3 UTILITIES & COMMERCE 10-0 APPROPRIATIONS 21-0 ----------------------------------------------------------------- |Ayes:|Wright, Pescetti, |Ayes:|Migden, Campbell, | | |Calderon, Cardenas, | |Ackerman, Alquist, | | |Frusetta, Maddox, | |Aroner, Ashburn, Brewer | | |Mazzoni, Reyes, Vincent, | |Cedillo, Corbett, Davis, | | |Wesson | |Kuehl, Maldonado, Papan, | | | | |Romero, Runner, Shelley, | | | | |Thomson, Wesson, Wiggins, | | | | |Wright, Zettel | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY: Requires the 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. 2)Makes various findings and declarations concerning the inclusion of two-way voice, video, and data service into universal service. 3)Requires the proceeding to include public hearings and encourage participation by numerous different interests, including, but not limited to, consumer groups, telecommunications providers, business and industry groups and state and local agencies. 4)Defines the objectives of the study which include the feasibility of redefining universal service to take into consideration trends in convergence of voice, video, and data, and technological changes that justify homogenization of regulations and regulatory jurisdictions. SB 1712 Page 2 5)Specifies that CPUC take into account that it does not economically regulate many providers of voice, video, and data services. 6)Specifies that recommendations made be consistent with Public Utilities Code Section 709 and its assurances of universal service commitment. 7)Requires CPUC to 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 : CPUC indicates minor absorbable costs to complete the study. COMMENTS : According to the author, the purpose of this bill is to require CPUC to review the existing definition of universal service and consider whether it should be expanded to include advanced voice, video and data services. He points out that "advances in technology are bringing to the marketplace new Internet accessing devices such as televisions, hand-held computers and Internet phones." 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 accessed 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 SB 1712 Page 3 those that do not. 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 head 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 (i.e., 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 service does not include access to video or data services. Additionally, Chapter 278 called for a periodic review of the basic service elements in order to insure that the definition is kept current. D. 96-10-066 recommends CPUC undertake review of the service elements three years after completion of an initial review. This initial review consisted of the adoption of final universal service rules in the proceeding. The triennial review is scheduled for sometime this year. According to CPUC report entitled "Universal Service Report to the Governor and the Legislature," published December 1, 1999, 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 this bill as a vehicle for its review of basic service. Analysis Prepared by : Jonathan Buttle / U. & C. / (916) 319-2083 FN: 0005531