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Furthermore the language in proposed sec. 710 (b) highlighted below must be deleted. This section as written could prevent adoption of new regulations on non IP-enabled services and enforcement of existing regulations of non-IP-enabled services. The carriers easily could argue that such rule or enforcement of a rule impacting non IP-enabled services indirectly impacts or has the effect of regulating its IP-enabled services. The result would be endless disputes with industry.

    710 "(b) No department, agency, commission, or political subdivision of the state shall enact or, adopt, or enforce, either directly or indirectly, any law, rule, regulation, ordinance, standard, order, or other provision having the force or effect of law, that regulates or has the effect of regulating VoIP or other IP enabled service, unless authorized by federal law and expressly authorized by statute or pursuant to subdivision (c)."

The Communications Division recommends a Neutral position if the amendments above are adopted; except they also recommend OGA work with the author regarding some further suggested amendments, as noted below, which they believe are in the public interest.

In addition to the four "must have" amendments listed above, CD staff also recommends additional exceptions to the bill's general prohibition of CPUC regulation of IP-enabled services unless directed by statute. These exceptions would help ensure that Californians continue to have access to safe, reliable, high quality communications service.

They recommend the bill be amended to permit the CPUC:

RELEVANT PENDING LITIGATION OR LEGAL ISSUES

Legal Division staff asserts that the bill would prohibit local jurisdictions from regulating VoIP or IP-enabled services providers, including the ability impose local utility taxes on providers of telephone services. To the extent that those localities are collecting local utility taxes from VoIP or IP-enabled services providers, SB 1161 would void those local taxes. In addition, local governments retain police power pursuant to the California Constitution. The prohibition against any regulation, even by local subdivisions of the state, would conflict with the Constitutional authority that local governments today can exercise.

Other States:

Although approximately 17 other states have enacted deregulatory statutes such as this, and deregulatory statues are pending in 18 others, some of these have exceptions beyond what is proposed in this bill (e.g., consumer protection, rights-of-way issues).

Federal Regulation of VoIP Service Providers:

1 Utility Users Tax Revenue and Tax Rate for the Fiscal Year Ending June 30, 2010, State Controller's Office, available at: www.sco.ca.gov/Files-ARD-Local/LocRep/0910utilityuserstax.pdf.

2 Id.

3 Utility Users Tax Facts, rev. Sept. 2008, available at: www.californiacityfinance.com/UUTfacts08.pdf.

4 FCC Form 477 data as of December 30, 2010. This figure does not include VoIP connections available via Cable Operators and may be underestimated.

5 It is possible that the CPUC could compel a VoIP provider seeking to participate in the LifeLine program to abide by the CPUC's rules, specifically, G.O. 168, as a condition of receiving LifeLine subsidies. That proposition has not been tested in California to date specific to the LifeLine program.

6 Dismissing, without prejudice, CPSD Third-Party Verification Citation Forfeiture No. 116 Case #07-02-4445, Time Warner Cable Information Services

7 Order Instituting Rulemaking on the Commission's Own Motion to Require Interconnected Voice Over Internet Protocol Service Providers to Contribute to the Support of California's Public Purpose Programs, Rulemaking 11-01-008, Declaration of Rudy Sastra in Support of Petition for Modification.

8 Order Instituting Rulemaking on the Commission's Own Motion to Require Interconnected Voice Over Internet Protocol Service Providers to Contribute to the Support of California's Public Purpose Programs, Rulemaking 11-01-008, Motion of the Consumer Protection And Safety Division for Modification of the Scope of Rulemaking

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