California Commissioners Oppose State VoIP Deregulation

The contested bill would renew a 2012 state law that will sunset at the end of this year. “At a time when California’s essential infrastructure must receive heightened scrutiny for its reliability during increasing catastrophic disasters, when telecommunications infrastructure is failing, and millions of Californians do not benefit from any competition in the communications marketplace, this bill proposes to severely restrict oversight of California’s communications grid,” the CPUC wrote.

California's Senate Energy, Utilities and Communications Committee had planned to weigh AB-1366 at a Tuesday hearing, but Friday showed the bill moved to its July 10 agenda. The committee didn’t explain the eight-day delay. The late change surprised The Utility Reform Network Executive Director Mark Toney, who in a Friday interview said it’s not often that the CPUC takes official positions on bills, with this incident the only time this legislative session he recalled the agency doing so. TURN thinks consumer protections should apply to voice regardless of technology, so it’s “outstanding” that the agency “finally weighed in,” said Toney.

Wireline, wireless and cable companies supported extending state deregulation, but the Communications Workers of America and consumer groups disagreed, at an earlier hearing in an Assembly committee (see 1904250024). Sponsor Assemblymember Lorena Gonzalez (D) later amended the bill to allow regulation for safety, outage reporting and California LifeLine reasons (see 1905300056). Gonzalez didn’t comment Friday on CPUC opposition.

"It would be a serious mistake to hand over control of California’s Internet policy to a Commission that has a history of impeding innovation, is prone to overregulation, and just last year attempted to tax consumer text messaging," said Courtney Jensen, TechNet executive director-California and the Southwest, in a Friday statement. TechNet "strongly supports" AB-1366, she said. Whereas "the legislature has actively and successfully worked to pass policies protecting consumers while expanding access to broadband and new technologies," the CPUC "remains overextended in its existing duties, and can take as long as a decade to make a regulatory decision."

The CPUC doesn’t often take strong public positions on legislation, but this time it’s “essential,” said California Commissioner Genevieve Shiroma at Thursday’s webcast meeting. The bill’s original purpose of letting VoIP develop as a technology “has been more than fulfilled,” said Commissioner Cliff Rechtschaffen. “We can provide this regulation without in any way undermining competition.” Letting the 2012 law sunset “really moves us into the modern world,” Commissioner Liane Randolph said.

Basic and long-standing protections “have been eroded over the last few years” due to the 2012 law, said Commissioner Martha Guzman Aceves. She cited, for example, a 2018 California Superior Court decision that Yelp may record VoIP calls without consent. Then Gov. Jerry Brown (D) had supported deregulation when a Democratic FCC was more actively protecting consumers, noted Guzman Aceves, who was Brown’s deputy legislative affairs secretary. Competition alone doesn’t protect consumers, she said.

Deregulation “is a barrier to sustaining and modernizing even the minimal requirements and standards that ensure reliable, resilient and universal service,” the CPUC wrote. “The state’s standards for communications companies are still tied to traditional telephone service, even though most Californians now rely on mobile and IP services.” The 2012 deregulation was meant to let VoIP develop, but that “has been achieved,” it said. “The once-nascent VoIP market now dominates the wireline marketplace.” California had 8.2 million VoIP wireline subscribers and 5.8 million switch-based subscribers in December 2017, the agency said. “At this rate, by 2021 nearly all wireline telephones will be VoIP-based.”

“I don't think legislators will care much about what the CPUC thinks,” emailed Tellus Venture Associates President Steve Blum, a consultant for local governments. California legislators have criticized the CPUC, and in 2016 tried to revamp the agency (see 1609020034). “They will care about what CWA thinks, though,” said Blum, noting that the union appeared to kill an AT&T-backed 2016 bill on copper retirement.

The commission is rarely present when lawmakers attack but will get a chance to respond at the upcoming Senate hearing because it’s taking a stand on AB-1366, Toney said. The TURN leader predicted a "contentious" meeting.