Consumer Federation of California

A key state Senate committee is backing phone giant AT&T Inc. in a clash with regulators over how to update the state’s LifeLine program that provides cut-rate phone service for 1.2 million low-income consumers who now must use old-fashioned land lines.

The Senate Energy, Utilities and Communications Committee voted 6 to1 on Monday to support a bill turning LifeLine into a voucher system, providing discounts on phone services and getting rid of most oversight by the California Public Utilities Commission. The bill goes to the Senate Appropriations Committee in August.

Users now pay about $7 a month for a LifeLine package of basic services determined by the PUC. Lifeline, similar to other state programs providing lower-cost electricity and natural gas service for the poor, is financed by ratepayers through a small surcharge on monthly bills.

The commission is wrapping up plans to expand Lifeline so that participants, say a couple making $25,000 a year, can get affordable cellphone service along with features currently available from the land-line program, such as free access to toll-free numbers and unlimited incoming calls.

Instead, AT&T — a Sacramento lobbying powerhouse — and other telecommunications companies want to offer participants $11.85 worth of discounts a month, but leave the monthly phone charge to be set by the phone companies, not the PUC.

The overall price of phone service is key to people in the LifeLine program, said Ron McClellan, 68, a retired truck driver who lives alone in the Crenshaw district of Los Angeles.

“Right now, I need to pay as little as possible because the money just is not there,” he said. McClellan said he’d like a cellphone to make emergency calls, doctors appointments and to talk to relatives.

The PUC, which has been working on the LifeLine transition to wireless phones for two years, says it’s on schedule to unveil the new program in January.

But AT&T and influential lawmakers say they don’t want to wait and complained that the PUC takes too much time to craft new policies.

As a result, the telephone companies and lawmakers are seeking to rush through a bill that the PUC and its supporters say would strip regulators of much of their authority to design a 21st Century LifeLine system. The bill’s author, Assemblyman Steven Bradford (D-Gardena), insists that AB 1407 must be passed right away because “it’s critical to staying up on technology.”

AT&T said it supports the bill so that more low-income consumers can participate in LifeLine using cellphones. In a written statement the company accused the PUC of dragging its feet.

The PUC and consumer advocates are infuriated, saying the legislation is a stalking horse for the phone companies, which want to eliminate one of the last remnants of PUC telephone regulation. They accuse AT&T of pushing for a California LifeLine that is similar to a federal program that hands out cheap cellphones with minimal service features.

The AT&T measure would repeal the PUC’s authority to set rates and lock into law an $11.85 discount that a LifeLine customer could apply toward any voice service offered by a participating cellphone company. The discount could be increased in future years, but only to compensate for inflation.

“Basically, it would turn the California Lifeline program into a copycat of the federal program,” PUC Commissioner Michael Florio said. “To lock in the federal program with no ability to make any changes without having to go back to the Legislature seems to be quite backward.”

Most of the major consumer and ratepayer advocates are siding with the PUC. But AT&T has rallied support from a number of groups, such as the NAACP of California, that represent ethnic groups, senior citizens and business associations. Many of them are regular recipients of AT&T charitable contributions.

Consumer advocates worry that the phone companies are trying to bypass the PUC so they can raise prices at will.

“This appears to be an end run around the process already ongoing at the PUC,” said Stephanie Chen, energy and telecommunications director for the Greenlining Institute in Berkeley, an advocacy group for racial and economic justice.

“My only guess is that proponents of the bill feel they are not going to get the program they want out of the PUC process, so they are coming to the Legislature and asking for what they want. It’s like when a kid doesn’t get what he wants from Mom, so she asks Dad instead,” Chen said.

AT&T has a history of getting its way in the California Legislature, according to Maplight.org, a nonpartisan Internet provider of information about money in politics. It made $841,000 in campaign contributions in 2011-12 legislative session, Maplight reported, winning on six out of nine bills on which it took public positions. AT&T spent $4.4 million on lobbying of government officials during the same period, the California secretary of state reported.