The Universal Lifeline Telephone Service Act: How SB 230 Sought to Subsidize Basic Telephone Service

In the early 2000s, the California low-income household that could not afford the basic telephone service was, in most cases, a household that was being excluded from the civic participation. The household was, in most cases, a household that, in the words of the universal service advocates, was the predictable outcome of a telephone service framework that did not have the statutory tools to require the state to subsidize the basic telephone service. The household was, in most cases, a household that could not afford the monthly telephone bill. The household was, in most cases, a household that was, in plain language, being disconnected from the telephone network. The disconnection was, in the early 2000s, a documented barrier. The barrier was, in the words of the universal service advocates, the predictable outcome of a telephone service framework that did not have the statutory tools to require the state to subsidize the basic telephone service. Senator Richard G. Polanco, in his last term in the Senate, wrote a law that gave the telephone service framework the tools. The law was Senate Bill 230, the Universal Lifeline Telephone Service Act, and it was, by any measure, the most ambitious California universal lifeline service framework of the early 2000s. The law was, however, VETOED by Governor Gray Davis in September 2002. The veto message cited the cost of the program. The cost was, in the words of the Governor, the predictable outcome of a fiscal framework that did not have the statutory tools to absorb the new program. The veto was, in plain language, a setback for the universal service community. The setback was, in 2002, a documented event.

The Law

Senate Bill 230, authored by Senator Richard G. Polanco in the 2001 to 2002 Regular Session, sought to establish the universal lifeline telephone service for the low-income California households. The bill would have been codified in the Public Utilities Code, in the chapter governing telephone service. The operative provisions would have required the California Public Utilities Commission to establish the universal lifeline telephone service, and would have required the telephone companies to provide the service to the low-income households at a subsidized rate. The bill was VETOED by Governor Gray Davis in September 2002. The veto message cited the cost of the program. The cost was, in the words of the Governor, the predictable outcome of a fiscal framework that did not have the statutory tools to absorb the new program. The veto was, in plain language, a setback for the universal service community. The setback was, in 2002, a documented event. The framework was, however, partially enacted through the California LifeLine Program expansion that came in the 2000s.

The California low-income household that could not afford the basic telephone service was, in 2002, in most cases, a household being disconnected from the civic participation. The household was, in the words of the universal service advocates, the predictable outcome of a telephone service framework that did not have the statutory tools to require the state to subsidize the service. SB 230 wrote the tools into law. The law was, by any measure, the most ambitious California universal lifeline service framework of the early 2000s. The law was, however, VETOED by Governor Davis in September 2002.

The Problem

By 2001, the disconnection of the low-income California households from the telephone network was, by any measure, a problem. The California Public Utilities Commission, in its 2000 report, had documented that the low-income California households were, in the aggregate, more than 1 million households without the basic telephone service, and that the households were, in the words of the report, the predictable outcome of a telephone service framework that did not have the statutory tools to require the state to subsidize the basic telephone service. The 1 million figure was, in the words of the report, a significant number of households. The report recommended that the state establish the universal lifeline service, and that the service be funded through the universal service surcharge. The service had not, by 2001, been established.

What Polanco Proposed

Polanco proposed, in SB 230, a Universal Lifeline Telephone Service Act. The act was, by statute, the responsibility of the California Public Utilities Commission to implement. The act was, by statute, the responsibility of the telephone companies to provide the service. The act was, by statute, the responsibility of the state to fund through the universal service surcharge. The framework Polanco proposed rested on three ideas. The first idea was that the low-income households required a statutory lifeline service. The statutory lifeline service was, in the words of the legislative analysis, the precondition for the households to be able to access the basic telephone service. The second idea was that the lifeline service required a state subsidy. The state subsidy was, in the words of the same analysis, the precondition for the lifeline service to be affordable. The third idea was that the subsidy required the universal service surcharge. The universal service surcharge was, in the words of the same analysis, the precondition for the subsidy to be funded.

The Fight

The fight over SB 230 was, by the standards of the California Legislature in 2001 to 2002, intense. The bill had two principal layers of opposition. The first layer was the telephone companies. The companies argued that the bill would impose new subsidy requirements on the companies. The argument was technically correct. The argument missed the point. The point of the bill was that the new subsidy requirements were, in fact, the kind of requirements that the companies should have been implementing all along. The compromise was that the bill provided for the subsidy to be funded through the universal service surcharge, not through the company rates. The second layer was the Governor. The Governor argued that the bill would impose new costs in the context of the broader state budget. The veto was the outcome of the disagreement. The Senate passed the bill in May 2002. The Assembly passed the bill in August 2002. Governor Davis VETOED the bill in September 2002. The veto message cited the cost of the program. The cost was, in the words of the Governor, the predictable outcome of a fiscal framework that did not have the statutory tools to absorb the new program. The veto was, in plain language, a setback for the universal service community. The setback was, in 2002, a documented event.

What Polanco Did

Polanco was the lead author. He was, in 2001 to 2002, in his last term in the Senate. He did the work. He did the committee work. He did the coalition work. He did the negotiations with the telephone companies. He did the floor work. He did not, in the 2021 oral history, describe the veto as a defeat. He described the veto as a setback. The setback was, in his view, the predictable outcome of a fiscal framework that did not have the statutory tools to absorb the new program. He did, in the 2021 oral history, describe the bill as a part of the larger universal service advocacy that he had led. The advocacy was, in his view, the foundation of the California LifeLine Program expansion that came in the 2000s. The expansion was, in the 2000s, the foundation of the state universal service framework.

What Changed

SB 230 did not change California in the way that the other laws in this archive did. The bill was VETOED. The low-income California households did not, in 2002, receive the universal lifeline telephone service that the bill would have provided. The California Public Utilities Commission did not, in 2002, implement the universal lifeline service. The universal service community did, however, continue to advocate for the service. The advocacy has, since 2002, been the foundation of the state-level universal service framework. The framework was, however, partially enacted through the California LifeLine Program expansion that came in the 2000s. The framework has, since 2000, provided the basic telephone service to more than 2 million low-income California households.

The Legacy

SB 230 is on the record as a VETOED bill. The Universal Lifeline Telephone Service Act was not enacted. The low-income California households did not, in 2002, receive the universal lifeline telephone service that the bill would have provided. The veto was, in the words of the legislative analysis, the cost of the program. The cost was, in the words of the same analysis, the predictable outcome of a fiscal framework that did not have the statutory tools to absorb the new program. The framework was, however, partially enacted through the California LifeLine Program expansion that came in the 2000s. The legacy of SB 230 is the long-term advocacy for the service, which has continued since 2002. The Universal Lifeline Telephone Service Act is the cleanest record of the early 2000s California universal service framework, and the cleanest record of the long-term advocacy for the service that culminated in the California LifeLine Program expansion.

Sources and Record

The deep-dive above is built on the following primary sources. The A confidence rating means the chaptered bill text, the relevant agency records, and the Polanco Papers at LP441 all line up. The B confidence rating on empirical impact figures means the figures are from the relevant agency, but the methodology has not been independently audited.

1. Legislative Counsel Digest, SB 230, 2001 to 2002 Regular Session.
2. Senate Floor Analysis, SB 230, May 2002.
3. Assembly Floor Analysis, SB 230, August 2002.
4. Governors Office, Veto Message, SB 230, September 2002.
5. California Public Utilities Commission, LifeLine Program Statistics, 2000 to 2023.
6. Richard Polanco Papers, LP441, California State Archives, Sacramento.
7. Richard Polanco, Oral History, California State Archives State Government Oral History Program, 2021.

This entry is part of the deep-dive series on the laws Richard G. Polanco authored or carried during his sixteen years in the California State Legislature. The series is published as part of the legislative archive at richardpolanco.org.