BILL ANALYSIS Ó AB 1299 Page 1 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. AB 1299 Page 2 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: AB 1299 Page 3 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 AB 1299 Page 4 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. AB 1299 Page 5 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 FN: 0000952