Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. Existing law authorizes the commission to fix just and reasonable rates and charges. Under that authority, the commission has adopted decisions adopting an incentive-based regulatory framework called the New Regulatory Framework for certain telephone corporations.

The existing Federal Telecommunications Act of 1996 preempts any state or local statute or regulation that may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service, but does not prohibit a state from imposing on a competitively neutral basis, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers. The prohibition also does not affect the authority of a state or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis.

Under existing law, the Federal Communications Commission licenses and partially regulates providers of commercial mobile radio service, including providers of cellular radiotelephone service, broadband Personal Communications Services (PCS), and digital Specialized Mobile Radio (SMR) services. Under existing law, no state or local government may regulate the entry of or the rates charged by any commercial mobile radio service, but is generally not prohibited from regulating the other terms and conditions of commercial mobile radio service. Where commercial mobile radio services are a substitute for land line telephone exchange service for a substantial portion of the telecommunications within a state, commercial mobile radio service providers are not exempted from requirements imposed by a state commission on all providers of telecommunications services that are necessary to ensure the universal availability of telecommunications services at affordable rates.

This bill would require the commission, by January 1, 2005, to commence a rulemaking or quasi-legislative proceeding to develop rules for harmonizing the regulation of the communications industry to eliminate regulations and policies that are no longer necessary as a result of technological advancements and competition in the communications industry, to promote competition, to promote investment that will improve quality of products, quality of service, and greater choices for consumers, and to promote economic growth. The bill would require the commission to adopt a final decision adopting rules by January 1, 2006. The bill would require that the commission rely on competitive forces in the communication industry to promote consumer choice and marketplace protection, whenever possible. The bill would provide that the transmission of communications over the Internet, whether by voice, data, video streams, or any combination thereof, does not, solely by reason of engaging in any of those activities, make a corporation or person providing the necessary software, hardware, transmission service, or the transmission path, a public utility or subject those activities to the jurisdiction of the commission. The bill would require the commission to report to the relevant policy committees of the Legislature on recommendations for any statutory changes necessary to comply with, or to advance the purposes of, the bill. The bill would require the commission to use existing resources to comply with the provisions of the bill.

Existing law makes any public utility and any corporation other than a public utility that violates the Public Utilities Act, or who fails to comply with any part of any order, decision, rule, direction, demand, or requirement of the commission guilty of a crime.

The provisions of this bill would be a part of the act and would require an order or other action of the commission to implement those provisions. Because a violation of those provisions or a violation of an order or other action by the commission to implement those provisions would be a crime, the bill would impose a state-mandated local program by creating new crimes.

This bill would provide that no reimbursement is required by this act for a specified reason.