California VoIP Deregulation Bill Advances to Full Assembly Vote

"For newer technologies that are coming out and have yet to come out, are we going to apply old utility-type regulation to the new stuff?” State Sen. Alex Padilla (D) asked at the hearing. Bill sponsor Padilla stood alongside other industry backers, including representatives from TechAmerica and TechNet. “There is no forced migration to VoIP,” said Robert Callahan, TechAmerica state government affairs director. “The fiscal impact for this bill is zero, from our perspective.” Other supporters included Microsoft, Skype, Cisco, Comcast, the Asian Pacific Chamber of Commerce, Los Angeles Chamber of Commerce, AT&T, California Cable and Telecommunications Association, Charter Communications, Time Warner Cable, California Chamber of Commerce, California Retailers Association and Verizon.

Only one assemblyman voted no. “Why should [the commission] not regulate the fixed VoIP?” asked Assemblyman Mike Gatto (D). “It looks and appears like a phone to the little old lady.” At the hearing’s start, he said he didn’t know which way he would vote but ultimately dissented from his colleagues. “Our mothers do not lose all their rights and protections as basic service customers,” Padilla told Gatto. “A landslide of customer complaints that we don’t see today” may emerge over the next eight years and create the need for more VoIP regulation, Padilla said, saying he isn’t trying to stand up for any VoIP company or industry. “VoIP is still in a relatively nascent stage,” both technologically and from a market penetration standpoint, he said.

The California Public Utilities Commission requests the VoIP deregulation bill include amendments preserving commission authority, the PUC said in an analysis submitted Tuesday (http://xrl.us/bnjxqq). “Concerns remain that SB 1161 will tie the Commission’s hands if it decides in the future that there is a need to reassess its regulatory role over VoIP,” the PUC analysis said. “The bill could prevent the CPUC from acting quickly to address problems that may arise regarding the provision of IP-enabled services that are not addressed in statute.” The commission’s requested amendments would allow the PUC to hear and address VoIP complaints involving providers operating “under a certificate of public convenience and necessity,” to regulate intrastate retail and wholesale IP-enabled special access services, to retain authority over electric and communications facilities and pole attachments and to subject VoIP providers to registration if determined necessary.

The PUC doesn’t agree it should lose authority over VoIP. “Based on the FCC’s Universal Service Order and the Eighth Circuit’s decision in Minnesota PUC v. FCC,” the analysis said, “it is clear that the Vonage Order did not preempt all state regulation of VoIP.” The bill’s backers have argued the FCC’s 2004 Vonage order establishes FCC oversight, not state. The bill’s fiscal impact is $500,496 if not amended and $228,097 if amended, the PUC said, due to the proceedings it would need to open to examine certain questions. The PUC said “there is no current problem addressed by the bill” and attributes its existence to the author’s and backers’ “fear” of unnecessary regulation.

The state commission would still be able to “monitor and discuss” VoIP if the bill passes, the Appropriations Committee’s Tuesday analysis said (http://xrl.us/bnjxqy). “No state commission regulates VoIP as a telephone utility,” it said, saying 24 states and D.C. have passed laws “clarifying that VoIP services are not the subject of state-level regulation.” The California bill would cost the PUC about $730,000 in “one-time special fund costs” for proceedings, the analysis said.

The bill’s consumer opposition remains, the hearing demonstrated. It had caused Padilla to add clarifying amendments earlier this year (CD June 25 p6). “If this bill did exactly what Sen. Padilla said it does, we would not have a problem,” said Legislative Representative Lenny Goldberg of the Utility Reform Network. There will be “no recourse to file a consumer complaint,” said Legislative Advocate Ignacio Hernandez of the Consumer Federation of California. “That is why the telecom companies are so supportive of this bill -- and it is a national campaign.” Legislative Director Angie Wei of the California Labor Federation said the bill would “handcuff” the PUC as fixed VoIP grows more common. “You don’t know if it’s a VoIP line or a copper line -- the systems look the same,” she said. “VoIP is the market of the future.” Greenlining Institute Consulting Counsel Paul Goodman said he believed major telcos will seek to kill their copper lines. AARP Associate State Director of Advocacy Michael Richard worried seniors will have no recourse on issues of cramming and slamming and asked that these consumers not be silenced.

SB-1161 may be introduced for a floor vote in the Assembly as soon as Aug. 16, Assembly staff said. If passed, it will then need to return to the Senate to have the version amended in the Assembly in June approved, staff said.