Consumer Federation of California

Industry-backed legislation that would bar California officials from regulating Voice over Internet Protocol (VoIP) service in the Golden State drew opposition this week from lawyers at the California Public Utilities Commission.

The regulatory body’s Legal Division is urging commissioners to oppose Senate Bill 1161, which seeks to preempt the CPUC and other state entities from regulating VoIP-enabled voice and data transmissions unless expressly authorized by federal law and state statute.

The CPUC, to date, has no regulatory activities regarding VoIP or other IP-enabled services.

The commission’s Legal Division argues that S.B. 1161 is so broadly written that, if enacted, the legislation would impede the CPUC’s regulation of non-IP wireline and wireless service.

What’s more, they say, the law would deregulate carriers that are not, at present, considered VoIP providers.

In a May 8 memorandum to commissioners, CPUC Government Affairs Director Lynn Sadler reiterated the Legal Division’s argument that if the bill were amended to make all of the exceptions needed to preserve the commission’s ability to administer its existing programs, "the exceptions arguably would swallow the rule," Sadler wrote.

"Especially, Legal Division asserts the CPUC, as the constitutional agency with the expertise in telecommunications, should retain flexibility to determine whether and how to regulate VoIP and IP-enabled services," Sadler added.

The Legal Division also has argued that under S.B. 1161, the CPUC would be allowed to hear and address complaints from VoIP service carriers but not from consumers, "thereby inhibiting one of the CPUC’s primary functions to protect ratepayers," Sadler wrote in the memo.  

The bill was introduced by Sen. Alex Padilla (D-Los Angeles), chairman of the Senate Committee on Energy, Utilities and Communications, which April 17 voted unanimously to advance the bill.

Padilla has said the bill is aimed at encouraging broadband deployment by providing industry regulatory certainty.

Bipartisan-backed S.B. 1161 is sponsored by TechAmerica, TechNet and the Silicon Valley Leadership Group, and supported by such companies as AT&T Inc. (NYSE:T), Cisco Systems (Nasdaq: CSCO), Microsoft (Nasdaq: MSFT), Qualcomm (Nasdaq: QCOM) and Verizon Communications (NYSE: VZ).

Also supporting the measure are the California Chamber of Commerce and the California Manufacturers & Technology Association, both influential trade groups.

CalChamber Vice President of Government Affairs Marc Burgat called the bill a "job creator," in a letter of support.

"SB 1161 would ensure that California maintains its competitive edge and continues to provide a regulatory environment that promotes advancements in internet technology," Burgat wrote. "Such continued advancements would result in widespread access to communication technologies and would allow for solutions to challenges in healthcare, energy, education, public safety, and economic development."

Padilla’s bill has drawn widespread opposition from consumer groups, including AARP California, Center for Media Justice, Privacy Rights Clearinghouse, The Greenlining Institute and the Utility Consumers’ Action Network.

Critics say the bill would effectively strip the CPUC of its oversight authority over landline and cellular phone services.

"SB 1161 is a stealth vehicle for the gradual deregulation of telecommunications in California," the Consumer Federation of California declared on their website. "Consumers need the CPUC to have the power to investigate complaints of bad service or unfair charges on bills, regardless of the technology used to provide phone service."

S.B. 1161 is pending consideration by the Senate Appropriations Committee.  The panel has set a May 14 hearing on the bill.