BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 1299 (Bradford) - Telecommunications: universal service  
          programs: California Advanced Services Fund.
          
          Amended: July 10, 2013          Policy Vote: EU&C 8-2
          Urgency: No                     Mandate: No
          Hearing Date: August 12, 2013                     Consultant:  
          Marie Liu     
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: AB 1299 would create a new grant and loan program  
          for public housing agencies or nonprofits to fund broadband  
          connections and services for publically supported housing  
          communities.

          Fiscal Impact: 
              On-going costs of $150,000 from the Broadband Public  
              Housing Account within the California Advanced Services Fund  
              (special) for administrative costs to the California Public  
              Utilities Commission (CPUC) to administer the program.
              Cost pressures of up to $25 million California Advanced  
              Services Fund for the redirection of funds.

          Background: Existing law establishes the California Advanced  
          Services Fund (CASF), administered by the CPUC, to help fund  
          deployment of broadband infrastructure and bring high-speed  
          Internet access to all areas of the state. The CASF is funded  
          from a customer surcharge on intrastate communication services.  
          Section 821 of the Public Utilities Code authorizes the  
          collection of $125 million from 2011 to 2015 through surcharges  
          on customers (for a total of $225 over the life of the fund).  
          Generally no more than $25 million may be collected in each year  
          during this time period. Of this amount $100 million is  
          deposited in the Broadband Infrastructure Grant Account, $10  
          million to the Rural and Urban Regional Broadband Consortia  
          Grant Account, and $15 million into the Broadband Infrastructure  
          Revolving Loan Account. 

          CASF funding is available only to a "telephone corporation"  
          regulated by the CPUC.









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          Proposed Law: This bill would create a new account in the CASF,  
          the Broadband Public Housing Account (account), that would be  
          available to the CPUC to award up to $20 million in grants and  
          loans to a public housing agency or certain nonprofits to  
          connect broadband networks to publically supported housing  
          communities and $5 million in grants and loans for broadband  
          adoption programs for residents of publically supported housing  
          communities. 

          To fund this program, the CPUC would be required to transfer $20  
          million from the Broadband Infrastructure Grant Account and $5  
          million from the Broadband Revolving Loan Account. This transfer  
          would only occur if the CPUC is authorized to collect additional  
          funding for the CASF. Any funds that have not been awarded by  
          December 31, 2016 in the account would revert to the original  
          accounts. 

          Related Legislation: SB 740 (Padilla) would allow Wireless  
          Internet Service Providers to be eligible for funding from the  
          CASF and would authorize the collection of additional surcharges  
          to further fund the CASF. 

          AB 1555 (Perez) Chapter 24/2009 expanded CASF eligibility to  
          other entities only for the purpose of providing matching funds  
          made available through the American Reinvestment and Recovery  
          Act of 2009. 

          SB 1040 (Padilla) Chapter 317/2010 authorized collection of an  
          additional $125 million through 2015 (for a total of $225  
          million).

          Staff Comments: This bill would create a new grant and loan  
          program, which would result in new administrative costs to the  
          CPUC to develop and implement the program. Administrative costs  
          for this program would be influenced by both the level of  
          potential participation in the program and the fact that the  
          eligible entities may need additional technical assistance for  
          their participation as they are likely to have limited  
          experience with the CPU. Given that that there are approximately  
          113 public housing agencies in the state with approximately  
          3,300 active housing projects, the CPUC anticipates having to  
          potentially administer hundreds of grants and loans. Therefore,  
          the CPUC estimates that one Public Utility Regulatory Analyst II  
          would be needed and half a Public Utilities Counsel I would be  








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          necessary for a total on-going cost of approximately $150,000  
          per year. 

           

          Staff notes that the CPUC is currently reviewing the estimated  
          costs of reaching the state broadband goals, and therefore the  
          future needs of the CASF. Although this process has not been  
          completed, it is likely that the CASF will need additional  
          funding. Staff notes that the CPUC received $240.6 million in  
          applications for CASF funding in February for the latest round  
          of available funding. 

          This bill would only divert $25 million from the CASF if  
          additional funding is authorized by the Legislature. Staff notes  
          that SB 740 proposes an additional $90 million through 2020  
          (with no more than $25 million per year) while also expanding  
          eligibility for CASF funding. Staff notes that if and when the  
          CASF receives additional funding, it will not necessarily  
          include $25 million for the new grant program under this bill.