BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1012
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          Date of Hearing:   April 27, 2009

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                                Felipe Fuentes, Chair
                 AB 1012 (Perez) - As Introduced:  February 27, 2009
          
          SUBJECT  :   California Broadband Task Force.

           SUMMARY  :   Requires to California Broadband Task Force (task  
          force) to meet to develop a strategy to expedite accessing funds  
          provided pursuant to the federal American Recovery and  
          Investment Act of 2009 (ARRA).  

          1)Executive Order S-23-06 created a 21-member Task Force  
            composed of public and private stakeholders with the expertise  
            to advise policymakers on a framework for making California a  
            global leader in the telecommunications revolution.  

          2)Creates the California Advanced Services Fund (CASF) in order  
            to spur deployment of broadband infrastructure in un-served  
            and underserved areas within the state, in both rural and  
            urban areas, and encourage statewide policy to promote  
            broadband throughout the state.
           
          THIS BILL:
           
          1)Recognizes the establishment of the task force and requires it  
            to meet no later than 30 days after the effective date of this  
            bill to develop a strategy to expedite accessing funds  
            provided under ARRA.

          2)Requires the task force to submit the strategy to the relevant  
            policy and fiscal committees in each house of the Legislature  
            within 60 days of its first meeting.

           FISCAL EFFECT  :   Unknown. 

           COMMENTS  :   According to the author's office, this bill would  
          ensure that California is proactively engaged in new broadband  
          programs at the federal level, adequately prepared to provide  
          the corresponding federal agencies with feedback for improving  
          and expanding California's broadband infrastructure, and able to  
          identify funding sources and secure our state's fair share of  
          ARRA funding for the development and or expansion of a broadband  
          infrastructure that is affordable, reliable, and accessible to  








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          all Californians. 

          1)  Background:  ARRA, signed into law on February 17, 2009, was  
          intended to stimulate the U.S. economy in the wake of the  
          economic downturn. ARRA provides two sources of broadband  
          funding. The Broadband Technology Opportunities Program (BTOP)  
          is a $4.4 billion competitive grant program. The program  
          contains several set-asides including $250 million for  
          innovative programs that encourage the sustainable development  
          of broadband services, $200 million to upgrade technology and  
          capacity at public computing centers, and $350 million for to  
          support efforts to ensure access to affordable broadband and  
          ensure access to broadband use. BTOP is being administered by  
          the Commerce Department's National Telecommunications and  
          Information Administration (NTIA). Priority for these grants is  
          given to states that can provide matching funds and there must  
          be a single, centralized agency that applies for all grant  
          recipients under this program. 

          The second source of funding is the Distance Learning,  
          Telemedicine, and Broadband Program. This is a $2.5 billion  
          competitive grant program aimed at building broadband  
          infrastructure in rural areas that do not have sufficient access  
          to high-speed broadband service. Priority for these grants is to  
          be given to projects that will deliver end users a choice of  
          more than one service provider and provide service to the  
          highest proportion of rural residents that do not have access to  
          broadband.

          2)  The old Broadband Task Force:  Executive Order S-23-06, known  
          as the California Broadband Initiative, created a 21-member  
          Broadband Task Force comprised of public and private  
          stakeholders with the expertise to "advise policymakers on a  
          framework for making California a global leader in the  
          telecommunications revolution."  The task force was responsible  
          for delivering two reports. The first report describes  
          administrative actions that state government can immediately act  
          upon to increase broadband availability and adoption in  
          California. The second report contains a comprehensive  
          assessment of the state of broadband in California. It includes  
          detailed maps of wireline and wireless availability, analysis of  
          adoption, a pricing survey, and recommendations so that  
          California can take advantage of opportunities for and eliminate  
          any related barriers broadband access and adoption. 









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          The two reports have been completed. The task force is no longer  
          meeting. The recommendations of the reports were to be carried  
          out by the Business, Transportation and Housing Agency, and the  
          Office of the Chief Information Officer (OCIO) has inherited  
          some of these tasks. 

          3)  Other existing broadband programs in California:  There are  
          also two existing programs that are tasked with advancing  
          broadband in California. The CASF is an expected two-year  
          program that was authorized by SB 1193 (Padilla), Chapter 393,  
          Statutes of 2008. CASF provides grants to telephone corporations  
          for projects that will provide broadband services to areas  
          currently without broadband access and build out facilities in  
          underserved areas if funds are still available. Funds are  
          collected using an end-user surcharge billed and collected by  
          telecommunications carriers. The total allocation for the CASF  
          is $100 million. CASF has already allocated over $9 million in  
          broadband infrastructure grants.

          The second program is the California Emerging Technology Fund  
          (CETF). The CETF is a non-profit corporation established  
          pursuant to requirements from the PUC in approving the mergers  
          of SBC-AT&T and Verizon-MCI. The merged companies were required  
          to contribute a total of $60 million over 5 years to advance  
          broadband.

          4)  Maximizing ARRA Funding:  California is already in a good  
          position to maximize ARRA funding. There are already two  
          entities with funds available for match requirements that also  
          have systems in place for accepting grant applications and  
          distributing funds. CETF has also begun the work to find private  
          companies to take advantage of broadband funding. Given the fact  
          that CASF and CETF have already done a significant amount of  
          work in this area, and because CASF is overseen by the PUC,  the  
          committee may wish to consider amending the bill to ask the PUC  
          to develop a strategy to expedite accessing funds provided under  
          ARRA that is to be submitted to the Legislature by a specific  
          date.
           

          5)  Who's in charge?  This bill re-creates the task force and asks  
          them to develop a strategy to expedite the accessing of ARRA  
          funding. One mater that is underscored by this requirement is  
          that there has been some confusion regarding which entity in  
          California is in charge of accessing the ARRA broadband funding.  








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          The requirements of BTOP specify that there must be a single,  
          centralized agency that applies for all grant recipients under  
          this program, and also requires a 20 percent match. Since there  
          are so many different entities involved in broadband advancement  
          in California, it was not clear at the time of the passage of  
          ARRA which entity had both the expertise and the resources to  
          meet these requirements. 

          The Legislative Analyst's Office (LAO) also noted this issue in  
          their March 2009 analysis of the stimulus package, and  
          recommended that the California Public Utilities Commission  
          (PUC) be designated the PUC as the state entity to access these  
          funds. According to the LAO, this would have improved the  
          Legislature's oversight of the state's access to and use of  
          these funds to ensure that the state is maximizing funding for  
          which it is eligible and that the expenditure of the funds is  
          consistent with legislative priorities. The legislature also  
          raised these issues in a joint informational hearing held by  
          this committee with the Senate Energy Committee in March of this  
          year. During that hearing representatives from both the CIO's  
          office and the PUC discussed various efforts they had made  
          toward accessing the ARRA funding. 

          Rather than literally designate a single entity to access the  
          funding, the Administration chose to create a hybrid system. The  
          entity that applied for the funding was listed as the "State of  
          California," but the OCIO was designated by the Administration  
          to coordinate the broadband grants. The OCIO is accepting grant  
          applications, but the prioritization of those applications as  
          well as implementation will be a joint effort between the CIO,  
          the PUC and the CETF. Funding for the match requirement will  
          come from the CASF and the CETF. This hybrid system lacks the  
          oversight required to ensure expenditure of the funds is  
          consistent with legislative priorities. Therefore,  the author  
          may wish to consider amending the bill to designate the PUC as  
          the state entity to access these funds  , consistent with the  
          LAO's recommendation. 

          6)  Urgency clause:  This bill contains an urgency clause. Since  
          all grant awards are to be made by the end of September 30,  
          2010, and grants are to be completed within two years of their  
          approval, it is imperative that the strategy required in this  
          bill be developed as soon as possible.   

           REGISTERED SUPPORT / OPPOSITION  :   








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           Support 
           
          None on file.

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Nina Kapoor / U. & C. / (916) 319-2083