BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1299 - Bradford Hearing Date:
July 2, 2013 A
As Amended: April 25, 2013 FISCAL B
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DESCRIPTION
Current law establishes the California Advanced Services Fund
(CASF), administered by the California Public Utilities
Commission (CPUC), to help fund deployment of broadband
infrastructure and bring high-speed Internet access to all areas
of the state (Public Utilities Code Section 281).
Current law authorizes funding for the CASF from a customer
surcharge on intrastate communications service with $200 million
for the Broadband Infrastructure Grant Account, $15 million for
the Broadband Infrastructure Revolving Loan Account and $10
million for the Rural and Urban Regional Broadband Consortia
Account, with no more than $25 million to be collected each year
through 2015 (Public Utilities Code Section 281).
Current law provides that only a "telephone corporation" is
eligible to receive funding from the CPUC's universal service
programs including CASF (Public Utilities Code Section 270).
This bill authorizes $20 million from the Broadband
Infrastructure Grant Account to be used to connect broadband
networks to publicly supported housing communities and $5
million from that account for broadband adoption programs for
residents of publicly supported housing communities.
This bill makes a publicly supported housing community eligible
for a broadband adoption grant if the residential units have
existing broadband service, and authorizes grant recipients to
contract with other nonprofit or public agencies to help
implement the broadband adoption program, and requires the CPUC,
to the extent feasible, to allocate funds in a manner that
reflects the statewide distribution of publicly supported
housing communities.
This bill provides that if less than $20 million has been
awarded for public housing by December 31, 2016, the remainder
may be used for any other purpose permitted in the CASF program.
This bill defines "publicly supported housing community" as a
publicly subsidized housing multitenant attached dwelling unit
that is wholly owned by either a public housing agency or
nonprofit organization that receives public funding to subsidize
housing for low-income residents.
BACKGROUND
CASF Established - The CPUC established the CASF in 2007 to
promote broadband deployment statewide and to comply with state
law declaring that California's telecommunications policies
include closing the Digital Divide and assuring that all
Californians have universal access to high-quality,
state-of-the-art, advanced telecommunications services
(D.07-12-054). SB 1193 (Padilla, 2008) codified the CASF program
after the California Broadband Task Force reported that about
1.4 million (4 percent) of Californians lacked broadband and
nearly 50 percent had only low-speed Internet access. The
program provides grants and loans for broadband infrastructure,
with first priority for projects for unserved areas that have no
facilities-based broadband service provider, and then for
underserved areas, where broadband is not available at benchmark
speeds.
SB 1193 authorized $100 million in funding for CASF from a
customer surcharge on intrastate communications service,
including landline, wireless and Voice over Internet Protocol
(VoIP) service. SB 1040 (Padilla 2010) authorized another $125
million for the program, with collections of no more than $25
million per year through 2015. That bill also established a
CASF revolving loan program as an option for infrastructure
costs not covered by a CASF grant and specified some funding for
urban and regional consortia for non-capital costs of broadband
deployment projects, with total authorized funding of:
$200 million for the Broadband Infrastructure Grant
Account;
$15 million for the Broadband Infrastructure Revolving
Loan Account; and
$10 million for the Rural and Urban Regional Broadband
Consortia Account.
CASF Eligibility - Consistent with current law governing all
CPUC public purpose programs, CASF funding is available only to
a "telephone corporation" regulated by the CPUC. However, AB
1555 (Perez, 2009) suspended this requirement after enactment of
the American Reinvestment and Recovery Act of 2009 (ARRA) so
California applicants for ARRA broadband grants could use CASF
grants to meet the matching funds requirement. In October 2012,
in order to generate more projects for unserved areas, the CPUC
proposed expanding eligibility for infrastructure grants to
commercial and nonprofit entities that are not telephone
corporations, such as Wireless Internet Service Providers
(WISPs). Many of these entities have expressed interest in
providing broadband with unique plans and wireless technologies
that are viable for connection of end users in hard-to-serve
remote and rural areas where traditional telephone and cable
service providers do not invest. However, this eligibility
change requires statutory authorization similar to that provided
for ARRA broadband projects. SB 740 (Padilla, 2013) would
provide that authorization.
The CPUC has already awarded about $49 million of CASF funds for
broadband projects, with an additional $240.6 million in pending
applications. Some of these projects face challenges, and the
CPUC currently is reviewing actual levels of broadband service
in project areas to determine what funding will be awarded. On
top of whatever funding the CPUC awards to pending applicants,
an additional amount of the funding already authorized for
broadband infrastructure would be required for projects of WISPs
and other entities made eligible if SB 740 is enacted.
Public Housing and the Digital Divide - On April 29, 2013, the
Assembly Committee on Utilities and Commerce held an
informational hearing on broadband availability for residents of
California public housing. According to estimates from the CPUC
and California Emerging Technology Fund (CETF), there are about
300,000 publicly subsidized housing units in California, of
which about 200,000 to 250,000 are estimated to lack broadband
connections. Representatives from publicly-supported and
non-profit housing communities, situated primarily in urban
areas, testified that a majority of their properties lack
reliable broadband connectivity, citing the cost of building or
upgrading the infrastructure and maintaining the network and
inside wiring as the primary barrier to receiving broadband
service. Representatives of cable companies with facilities to
the curb near public housing buildings claim that in some cases
they have been denied access to public housing to install lines
that would enable service to individual units.
There are currently a number of programs within the U.S.
Department of Housing and Urban Development that public housing
entities and in some cases nonprofit organizations can
potentially apply to for funding for broadband deployment and
adoption activities, including Neighborhood Networks. The
California Tax Credit Allocation Committee provides scoring
points in the calculation of a tax credit for low-income housing
that includes free broadband for tenants. Some of the California
ARRA-funded broadband adoption projects focus on low-income
communities. In addition, the Federal Communications
Commission, broadband service providers and nonprofit
organizations have implemented broadband adoption programs such
as Comcast Essentials and Connect2Compete that offer low-cost
broadband to low-income users, along with digital literacy
activities. CETF also has focused on broadband for low-income
housing, including efforts with the Housing Authority of the
City of Los Angeles.
COMMENTS
1. Author's Purpose . According to the author, this bill
will help bridge the Digital Divide and advance
California's policies to extend broadband service to all
California communities regardless of their location or
income. This bill 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.
2. Served But Not Connected . From the beginning, the
CASF's first priority has been to help fund broadband
infrastructure in areas of the state without any broadband
service (unserved), and secondly in areas where broadband
service is not available at benchmark speeds deemed
adequate to participate in the modern digital economy
(underserved). The overall goal of CASF is to bring
adequate broadband service to all Californians. This bill
is consistent with that goal but brings a new twist to the
program in order to help connect public housing residents
in locations that would not otherwise be eligible for CASF
funding because they are "served" by a broadband provider.
As stated by the author, a broadband cable running to the
street or curb does not bring Internet access to public
housing residents if the building's individual units are
not wired for broadband. This bill also authorizes use of
CASF funds specifically for broadband adoption projects,
which the CASF does not currently authorize. Because this
bill reallocates CASF funds for a unique new purpose, there
should be a separate account and statutory direction.
Thus, the author and committee may wish to consider
amending the bill to establish a separate Broadband Public
Housing Account and recast all the program requirements as
a stand-alone subdivision of Section 281 (as reflected in
the attached mock-up).
3. Making Public Housing Eligible . This bill makes an
entity that is not a telephone corporation eligible for
funding from a CPUC public purpose program, which is
prohibited by Section 270 of the Public Utilities Code. An
express exception to that prohibition is required. In
addition, this bill's definition of an eligible "public
housing community" needs technical clarification to conform
with federal program definitions. Thus, the author and
committee may wish to consider amending the bill to make a
public housing community, as defined, eligible for CASF
funding (as reflected in the attached mock-up).
4. Grants and Loans Authorized . This bill authorizes use
of funds from the CASF Broadband Infrastructure Grant
Account in order to make grants to public housing entities
for inside wiring and adoption. Currently, the CASF funds
a portion of infrastructure project costs with grants, with
remaining costs eligible for funding from the Broadband
Revolving Loan Account. A similar approach should apply for
public housing projects with funds from both of those
accounts. In addition, this bill provides that the $25
million for public housing projects that is not awarded by
December 31, 2016, may be used for any other CASF purpose
and instead should be returned proportionally to the two
funds from which it was transferred. Thus, the author and
committee may wish to consider amending the bill to
authorize grants and loans for public housing broadband
projects with a transfer of funds from the Broadband
Infrastructure Grant Account and the Broadband
Infrastructure Revolving Loan Account and return to those
accounts any funds not used for public housing projects (as
reflected in the attached mock-up).
5. Participation in Existing Programs . The CASF program,
like other public purpose programs, is intended to provide
subsidies to fill in where there is "market failure" and
where other private resources are not available to achieve
universal service goals. In addition, the program rules
currently require applicants to provide up to 30 percent of
project costs, although there is no statutory prohibition
on funding all of an eligible project if otherwise
consistent with statutory authorization. Likewise, the
commission should award CASF funds for public housing with
consideration of the availability of other funding sources
for that project, including any financial contribution from
the broadband service provider that will gain new customers
from newly wired public housing units. Accordingly, the
author and committee may wish to consider amending this
bill to require the CPUC to consider the availability of
other funding sources for an applicant's project, any
financial contribution from the broadband service provider,
the availability of any other public or private broadband
adoption or deployment program, including tax credits and
other incentives, and whether the applicant has sought
funding from, or participated in, any reasonably available
program, and to authorize the commission to require an
applicant to provide match funding, but prohibit denial of
funding solely because an applicant is receiving funding
from another source.
6. Contingent on Funding . This bill does not authorize any
new collection of funds for establishing the public housing
program within CASF. The author has agreed to amend the
bill to authorize the funding for the public housing
program with funds collected in excess of the amount
already authorized to be collected through 2015, as
reflected in the attached mock-up.
7. Mock-up of Amendments . All amendments recommended in
comments 2 through 6, plus some technical language
clean-up, are reflected in the attached mock-up.
8. Ratepayer Impact . This bill does not authorize any new
collection of ratepayer funds for the purposes of this
bill.
ASSEMBLY VOTES
Assembly Floor (58-17)
Assembly Appropriations Committee (13-4)
Assembly Utilities and Commerce Committee
(13-1)
POSITIONS
Sponsor:
Author
California Emerging Technology Fund
Support:
AT&T
California Public Utilities Commission, if amended
City and County of San Francisco
Division of Ratepayer Advocates
Oppose:
None on file
Jacqueline Kinney
AB 1299 Analysis
Hearing Date: July 2, 2013