by Assemblyman Mark Leno
November 17, 2005

In this era of rising state budget deficits why would California’s Public Utilities Commission (CPUC) give away $330 million due California as a result of the merger between telecommunication giants SBC and AT&T?  Compared to our State deficit of $6 billion it may be small change, but it would go a long way if prudently invested in our communities. 

Under California law the CPUC has an obligation to ensure that California’s ratepayers, including underserved communities such as seniors, individuals with disabilities, low income residents and at-risk youth, share in the economic benefits of utility mergers such as the one between SBC and AT&T. 

Nonetheless, as the CPUC is poised to give its stamp of approval to the largest telecom merger in the history of our country, two Commissioners have proposed that we forfeit these funds.  After an 8-month review of this case, Administrative Law Judge Thomas Pulsifer determined that, under California law, the combined company is obligated to distribute $330 million of the merger’s economic benefits to California’s consumers.  Commissioners Michael Peevey and Susan Kennedy presented an alternate proposal absolving the company of this obligation.

Such an action could not come at a worse time.  The number of Californians who remain unconnected to 21st century technology is unconscionable in a day and age when technology literacy is such an important factor in educational and economic success.  The digital disparity for children is stark: fully 84% of white children have Internet access at home, while only 41% of black children and 42% of Latino children enjoy the same benefits. 

Moreover, these and other underserved communities are the most likely to be hurt rather than helped by telecom consolidation.  These communities are the least likely to see any real competition that will lower prices, or new technologies rolled out to their neighborhoods.

In recent history the CPUC has consistently acted to assure that Californians receive their fair share of such mega-mergers while also dedicating close to one-third of the public benefit dollars to underserved communities.  In 1997, in the merger between Pacific Bell and SBC, the Community Technology Foundation of California was established to address the information technology needs of Californians in underserved communities.

Programs funded by the Community Technology Foundation of California have helped to close the technology gap in our underserved communities.  At-risk youth have learned technology skills that will give them a chance to earn a solid income.  Home-bound individuals with disabilities now have access to employment opportunities because of access to the Internet.  Low-income seniors have access to critical information about health care and government services.  Homeless mothers can now apply for jobs and housing online, enabling them to lift themselves and their children out of poverty. 

The CPUC should not shortchange the public by allowing the $330 million due Californians to end up in the company’s coffers outside our state.  In addition, public interest in the future success of our state and of all Californians requires that a full third of these funds be invested in the technology and access needs of California’s most underserved communities.

Mark Leno represents San Francisco in the state Assembly of California.