BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1299
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          ASSEMBLY THIRD READING
          AB 1299 (Bradford)
          As Amended  April 25, 2013
          Majority vote 

           UTILTIES & COMMERCE             13-1                 
          APPROPRIATIONS      13-4        
           
           ----------------------------------------------------------------- 
          |Ayes:|Bradford, Patterson,      |Ayes:|Gatto, Bocanegra,         |
          |     |Bonilla, Buchanan,        |     |Bradford,                 |
          |     |Chávez, Fong, Garcia,     |     |Ian Calderon, Campos,     |
          |     |Gorell, Roger Hernández,  |     |Eggman, Gomez, Hall,      |
          |     |Quirk, Rendon, Skinner,   |     |Ammiano, Linder, Pan,     |
          |     |Williams                  |     |Quirk, Weber              |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Beth Gaines               |Nays:|Harkey, Bigelow,          |
          |     |                          |     |Donnelly, Wagner          |
           ----------------------------------------------------------------- 
           SUMMARY  :   Requires the Public Utilities Commission (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 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 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 PUC to award grants for this program in a manner that  
            reflects the statewide distribution of those publicly  
            supported housing communities.








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          6)States PUC shall prepare a report beginning January 1, 2015,  
            on the implementation status of the publicly supported housing  
            communities' broadband deployment and adoption efforts.

           FISCAL EFFECT  :   According to the Assembly Appropriations  
          Committee;

          1)Redirects up to $25 million (special fund) for the new grant  
            program.

          2)Increased administrative costs to PUC of approximately   
            $150,000.

           COMMENTS  :

           1)The CASF  :  In 2007, as part of a High-Cost Fund-B rulemaking,  
            PUC created CASF to help promote the deployment of broadband  
            infrastructure in unserved areas of the state.  As part of the  
            decision, 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%. 

            PUC created the program and assessed a surcharge on telephone  
            ratepayers to fund the program, however, 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  
            CASF; however, SB 1193 prohibited PUC from collecting more  
            than $100 million.  

            After the enactment of the American Reinvestment and Recovery  
            Act of 2009 (Recovery Act),  PUC revised CASF program to allow  
            California companies to use CASF grants as a match for  
            Recovery Act broadband grants.  AB 1555 (V. Manuel Pérez),  
            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  
            (Padilla), Chapter 317, Statutes of 2010, which provided an  
            additional $125 million, and expanded the program into three  
            accounts:








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             a)   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 PUC.

             b)   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.

             c)   The Revolving Loan Account supplements financing for  
               projects also receiving CASF grant funding.  Up to 20% of  
               total project cost is eligible for financing.  Applicant  
               and project eligibility is the same as the Infrastructure  
               Grant Account.

           2)Broadband in affordable housing communities  :  Barriers exist  
            in certain publicly supported and non-profit affordable  
            housing developments in California.  This bill authorizes 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 the number of  
            unserved or underserved Californians who reside in affordable  
            housing dwellings is practically impossible.  However, the  
            bill allows PUC to develop the appropriate policies and  








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            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 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.  This bill recognizes this need and  
            does so by requiring PUC to prepare a report due January 1,  
            2015, on the implementation status of the publicly supported  
            housing broadband deployment and adoption efforts.   








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            Furthermore, provisions in this bill authorize PUC to use any  
            funds not awarded by December 31, 2016, for any other purpose  
            permitted under CASF. 

           
          Analysis Prepared by  :    DaVina Flemings / U. & C. / (916)  
          319-2083 


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