Consumer Federation of California

5/31 update: CFC-opposed AB 2395 failed to advance in the Assembly Appropriations Committee before the deadline passed May 27.

Reliable and affordable telephone service for millions of Californians is jeopardized by AB 2395 (Low, D-Campbell), a bill backed by industry behemoth AT&T that would let phone companies disconnect landline customers that the telecoms no longer want to serve.

Seeking bigger profits in the unregulated mobile and Internet Protocol (IP) phone sectors, AT&T has long neglected its traditional – and regulated – copper land lines, and phone service quality has suffered. With AB 2395, the giant phone company is poised to walk away from millions of customers who generate smaller profits. Consumer Federation of California (CFC) joins other consumer groups, advocates for rural, elderly, and low-income communities, and the labor movement in opposing AB 2395.

According to the Assembly Utilities and Commerce Committee, about 16.5 million traditional copper land lines remain in service in California. AT&T’s bill would create a pathway for phone companies to abandon residential land lines in 2020, even in areas where an adequate alternative phone option does not exist. While many consumers now have cell phones or IP phones as well as land lines, about 2.3 million Californians live in a home that only has a landline.

Under law, AT&T, Verizon, Cox, Citizens and Frontier Communications must provide phone service, upon request, to customers in their designated areas as “Carriers of Last Resort.” This includes a duty to provide land lines to residential customers in “high cost” areas. All phone customers’ bills include surcharges, which provide subsidies to carriers for serving high-cost areas (as well as for other public purpose programs such as lifeline services for low-income consumers and special phone services for deaf and disabled Californians).

AB 2395 will eliminate both customer choice and the current requirements for Carriers of Last Resort that ensure all Californians have access to reliable essential phone services.

BACKGROUND

It used to be that nearly everyone had Plain Old Telephone Service – POTS for short – provided by Ma Bell, the regulated nationwide AT&T monopoly. With the advent of fiber-optic cable for television, high-speed Internet connections, and mobile phones, an array of communications alternatives developed, catering primarily to heavily populated urban areas where the services could be rolled out most cost-effectively. Rural and low-income areas missed out, but at least telecom regulations required service providers to provide POTS phone service – delivered over networks and equipment paid for by phone customers over decades of the telecom’s monopoly status.

AB 2395 would remove the telecoms’ obligation to offer phone service to every area of the state. Under this bill, a telecom company could notify the California Public Utilities Commission (CPUC) of its intent to discontinue copper-line phone service to a given area as long as it could certify these conditions: that an alternative service was available to the customers via fiber optics or Internet; that customers could call a local emergency phone system; and that battery-powered backup was available to keep the phones on during power failures.

But the phone company would still be allowed to abandon its service obligation, and turn off copper-wire service without meeting the alternative service requirements, one year after notifying the CPUC – even if the CPUC has found that a phone provider could not make an alternative service available to every customer, and with no assurance that calls to local 911 or other emergency services will go through.

AT&T isn’t the only phone company eager to unload its obligation to serve landline customers. Verizon wanted to make the transition too, but that telecom took a very different route when it sold its 2.3 million-landline customer base in California, Texas and Florida to Frontier Communications last month. Frontier committed to regulators that it would maintain service to these traditional copper phone lines.

The CPUC loses all enforcement authority under AB 2395. Instead, millions of California’s low-income, chronically ill and disabled residents who depend on their copper-line telephone connection to the world could potentially be left with high-priced and often spotty or even non-existent alternatives.

The Assembly Utilities and Commerce Committee passed AB 2395 on a 10-3 ballot April 12, with Assembly Members Brian Dahle, R-Bieber, Roger Hernandez, D-West Covina, and Mark Stone, D-Scotts Valley, voting No.

Voting for AB 2395 – and against consumer interests – were Committee Chair Mike Gatto, D-Glendale, and Assembly Members Autumn Burke, D-Inglewood; Rocky Chávez, R-Oceanside; Susan Eggman, D-Stockton; Cristina Garcia, D-Bell Gardens; David Hadley, R-Manhattan Beach; Jay Obernolte, R-Big Bear Lake; Jim Patterson, R-Fresno; Bill Quirk, D-Hayward; and Philip Ting , D-San Francisco.

Absent, abstaining or not voting were Assembly Members Eduardo Garcia, D-Coachella, and Miguel Santiago, D-Los Angeles.

Related link: AB 2395

Tags: 2016 Legislation, AT&T, Cox, CPUC, Frontier Communciations, Internet Service, Medical Issues, Verizon