BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1712
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          SENATE THIRD READING
          SB 1712 (Polanco)
          As Amended June 12, 2000
          Majority vote

           SENATE VOTE  :30-3  
           
           UTILITIES & COMMERCE 10-0       APPROPRIATIONS      21-0        
           
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          |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.    








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          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  








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          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 

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