BILL ANALYSIS �
AB 1299
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 1299 (Bradford) - As Amended: April 25, 2013
SUBJECT : Telecommunications: universal service programs:
California Advanced Services Fund
SUMMARY : Requires the PUC to fund grants for the deployment
and adoption of broadband services in publicly supported housing
communities using the California Advanced Services Program
(CASF). Specifically, this bill :
1)Authorizes the PUC to appropriate $20 million from the
Broadband Infrastructure Grant Account to award grants to
connect broadband networks to publicly supported multitenant
affordable housing dwellings.
2)Authorizes the PUC to appropriate $5 million from the
Broadband Infrastructure Grant Account to award grants to fund
broadband adoption programs, as specified.
3)Defines publicly supported housing community and non-profit
affordable housing.
4)Specifies if such funds are not awarded by December 31, 2016
that they may be used for another purpose within CASF.
5)Requires the PUC to award grants for this program in a manner
that reflects the statewide distribution of those publicly
supported housing communities.
6)States the PUC shall prepare a report beginning January 1,
2015 on the implementation status of the publicly supported
housing communities' broadband deployment and adoption
efforts.
EXISTING LAW :
1)Establishes the CASF in the State Treasury and requires that
moneys in those funds are the proceeds of rates and are held
in trust for the benefit of ratepayers and to compensate
telephone corporations for their costs of providing universal
service and may be expended only to accomplish specified
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telecommunications universal service programs, upon
appropriation in the annual Budget Act or upon supplemental
appropriation. (Public Utilities Code 270)
2)Requires the PUC to develop, implement and administer the CASF
to encourage deployment of high-quality advanced
communications services to all Californians that will promote
economic growth, job creation, and substantial social benefits
of advanced information and communications technologies, as
provided in specific decisions of the PUC and in the CASF
statute. (Public Utilities Code 281)
3)Requires that $100 million, collected by a surcharge
authorized by the PUC, after January 1, 2011, is to be
deposited into the Broadband Infrastructure Account. (Public
Utilities Code 281)
4)Authorizes the PUC to collect an additional sum not to exceed
$125 million after January 1, 2011, for a sum of total moneys
collected through the surcharge not to exceed $225 million.
(Public Utilities Code 281)
5)Authorizes the PUC to collect the additional sum through the
2015 calendar year. (Public Utilities Code 281)
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "the term Digital Divide
refers to the gap that prevents access to the Internet by
individuals, households, businesses and geographic areas at
different socio-economic levels. Closing the Digital Divide is
essential to economic prosperity and quality of life for all
Californians. Access to broadband internet technology affords
citizens with the opportunity to communicate with family and
friends, conduct personal and business activities, achieve
academic success, research employment offerings, and access
community resources. Many students in California's schools are
not learning the skills necessary for tomorrow's world. These
students are at greater risk of falling behind in academic
achievement. While few suggest the Digital Divide is the primary
cause of the educational achievement gap, a growing body of
evidence suggests that digital inequalities can evolve into
future disparities in academic achievement and career success.
Thus, it is imperative that statewide broadband policies are
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realized in all California communities so that benefits of
broadband can be made available to everyone, regardless of their
location or income.
AB 1299 recognizes that bridging the Digital Divide will require
new public policy that encourages investment in deployment and
adoption of broadband technology in publicly subsidized
affordable housing developments."
1)The CASF : In 2007, as part of a High-Cost Fund-B rulemaking,
the PUC created the CASF
to help promote the deployment of broadband infrastructure in
unserved areas of the state. As part of the decision, the PUC
reduced the annual allocation of money to the High-Cost Fund-B
by $315.4 million and implemented a phased-in reduction in the
ratepayer surcharge from 1.3% on all intrastate calls to .25%.
The PUC created the program and assessed a surcharge on
telephone ratepayers to fund the program, however, the PUC did
not have clear legislative authority to assess the surcharge or
to expend the funds. SB 1193 (Padilla) Chapter 393, Statutes of
2008, provided that authority by statutorily establishing the
CASF; however, SB 1193 prohibited the PUC from collecting more
than $100 million.
The PUC prioritized CASF expenditures to areas where no
facilities-based provider offered broadband service. A
secondary priority was for funding in underserved areas where no
facilities-based provider offered broadband service at benchmark
download transmission speeds of at least 3 megabits per second
and upload speeds of at least 1 megabit per second. By
Resolution T-17143, dated June 12, 2008, the PUC adopted filing
requirements and scoring criteria for the award of CASF funds
and a timeline for further filings and for final approval of
awards.
After the enactment of the American Reinvestment and Recovery
Act of 2009 (Recovery Act), the PUC revised the CASF program to
allow California companies to use CASF grants as a match for
Recovery Act broadband grants. AB 1555 (Perez Chapter 24,
Statues of 2009) expanded CASF eligibility to any entity
applying for CASF funding in conjunction with a Recovery Act
funding request.
Subsequently Governor Schwarzenegger signed into law SB 1040
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(Padilla, Chapter 317, Statutes of 2010) which provided an
additional $125 million, and expanded the program into three
accounts:
$100 million to the Broadband Infrastructure Grant
Account (for a total of $200 million),
$10 million to the Rural and Regional Urban Consortia
Account, and
$15 million to the Broadband Infrastructure Loan
Account.
The Broadband Infrastructure Grant Account funds the capital
costs of broadband infrastructure projects in unserved and
underserved areas in California. Carriers eligible to apply for
a grant award must hold a certificate of public convenience and
necessity (CPCN) or Wireless Identification Registration (WIR)
from the PUC.
The Rural and Urban Regional Broadband Consortia Grant Account
provides funding for the cost of broadband deployment and
adoption activities other than the capital cost of facilities.
Eligible recipients include, but is not limited to local and
regional governments, public safety, K-12 education, health care
and community based organizations.
The Revolving Loan Account supplements financing for projects
also receiving CASF grant funding. Up to twenty percent of total
project cost is eligible for financing. Applicant and project
eligibility is the same as the Infrastructure Grant Account.
1)CASF awards and expenditures : As of December 31, 2012, the
cumulative total CASF award funding is as follows:
The Broadband Infrastructure Grant Account: The PUC
authorized $41.08 million for 34 projects that will
benefit 255,246 households when completed.
o Unserved areas $2.31 million for 15
projects benefitting 16,530 households
o Underserved areas: $38.77 million for 19
projects benefitting 238,716 households
o At total of 1,777 new subscribers since
program initiation (45% subscription rate).
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The Rural and Urban Regional Broadband Consortia
Grant Account: The PUC authorized $2.85 million for 14
consortia grantees in 2012, and has provided grantees
with a three-year budget allowance of $8.55 million.
The Broadband Infrastructure Revolving Loan Account:
As of year-end the PUC had not received any loan
applications. Currently, there are 7 loan applications
pending.
1)Have we closed the digital divide : This question was the
topic of an informational
hearing in March 2013. The hearing examined efforts to close the
Digital Divide in California, examined the status of broadband
deployment by communications providers, and discussed barriers
and possible remedies to deploying broadband infrastructure in
unserved and underserved areas of the state, specifically urban
communities. Much of the testimony provided by several of the
panelists confirmed that California has made notable strides
over the last decade to close the Digital Divide thus a gap
remains in many of the rural and urban areas of the state.
According to the PUC's California Broadband Report, statewide as
of June 2011, an estimated 72.9% of all households subscribe to
fixed broadband services. It found that of households which have
been determined to have geographic access to fixed broadband
services, an estimated 74.6% subscribe.
2)Broadband in affordable housing communities : Barriers exist in
certain publicly supported
and non-profit affordable housing developments in California.
AB 1299 authorizes the PUC to appropriate $20 million from the
Broadband Infrastructure Grant Account to fund grants for
deployment of broadband services and adoption programs in
publicly-supported housing communities. Representatives from
publicly-supported and non-profit housing communities, situated
primarily in urban areas, testified at the hearing that a
majority of their properties lack reliable broadband
connectivity. The housing panelists claimed the costs associated
with building or upgrading the infrastructure and maintaining
the network is the primary barrier to receiving broadband
services for the many disadvantaged residents that reside in
these affordable housing developments. California Emerging
Technology Fund (CETF) conservatively estimates there are
200,000-250,000 such publicly-supported housing units in
California - the exact number is being determined by further
investigation by CETF staff. Obtaining an approximate figure on
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the number of unserved or underserved Californians who reside in
affordable housing dwellings is practically impossible.
However, the bill allows the PUC to develop the appropriate
policies and criteria to awards grants that would effectively
achieve the goal of closing the digital gap in public housing
communities while also ensuring grants are distributed in a
manner that reflects the statewide distribution of the publicly
supported housing communities.
3)If you build it will they come? Provisions in this bill
authorize the PUC to appropriate $5
million to fund grants for broadband adoption programs in
publicly supported housing communities. Deploying broadband
services in a publicly supported housing community would ensure
the standard cables, and infrastructure required for power,
television and telephone service is installed - which is a first
step. On the other hand it does not offer a guarantee that
disadvantaged residents will see the value in subscribing to the
broadband service. Factors contributing to a disadvantaged
residents' lack of enthusiasm to subscribe to voice, cable or
internet service is notably the costs associated with the
subscription. In addition, a housing resident may have limited
knowledge in understanding the benefits of digital literacy and
the societal benefits of adopting broadband services.
Representatives from the housing panel testified at the hearing
that some of their properties have free computer learning
centers which provide their residents with opportunity to access
the internet. Children who reside at these properties can also
utilize the computer learning center to complete homework or
conduct research for other activities. With this bill, a
publicly supported housing community would be eligible to apply
for a grant provided that the units in the housing community to
be served have existing broadband services or will have
broadband services at the time the grant for adoption is
implement. Eligible housing communities will also have the
ability to collaborate with a non-profit or public agency to
assist in implementation of a broadband adoption program.
4)Accountability and transparency : CASF is a public purpose
program funded by surcharges assessed on end user's telephone
bills throughout the state. It is therefore important that
the program achieve its objective and be transparent
throughout the process. AB 1299 recognizes this need and does
so by requiring the PUC to prepare a report due January 1,
2015 on the implementation status of the publicly supported
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housing broadband deployment and adoption efforts.
Furthermore, provisions in this bill authorize the PUC to use
any funds not awarded by December 31, 2016 for any other
purpose permitted under CASF.
REGISTERED SUPPORT / OPPOSITION :
Support
AT&T (if amended)
Boys & Girls Clubs of Santa Monica
California Cable & Telecommunications Association (CCTA)
California Center for Rural Policy (CCRP)
City and County of San Francisco
Division of Ratepayer Advocates (DRA)
Housing Authority of the City of Los Angeles
Humboldt State University
International Institute of Los Angeles
Kids Progress, Inc.
Laura Baca, Pupil Services and Attendance Counselor, UCLA
YouthSource Center
LINC Housing
Los Angeles Regional Broadband Consortia
Mutual Housing California
Non-Profit Housing Association of Northern California (NPH)
Shields for Families
UCLA Community Based Learning Program
Verizon
Opposition
None on file.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083