BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1299|
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THIRD READING
Bill No: AB 1299
Author: Bradford (D)
Amended: 9/4/13 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMMITTEE : 8-2, 7/2/13
AYES: Padilla, Corbett, De Le�n, DeSaulnier, Hill, Pavley,
Wolk, Wright
NOES: Fuller, Knight
NO VOTE RECORDED: Cannella
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/30/13
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
ASSEMBLY FLOOR : 58-17, 5/29/13 - See last page for vote
SUBJECT : Telecommunications: universal service programs:
California Advanced Services Fund
SOURCE : California Emerging Technology Fund
DIGEST : This bill requires the Public Utilities Commission
(PUC) to fund grants for the deployment and adoption of
broadband services in publicly supported communities using the
Broadband Public Housing Account (Housing Account) established
within the California Advanced Services Fund (CASF), as
specified.
ANALYSIS :
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Existing law:
1. The federal Telecommunications Act of 1996:
A. Establishes a program of cooperative federalism for
the regulation of telecommunications to attain the goal of
local competition, while implementing specific,
predictable, and sufficient federal and state mechanisms
to preserve and advance universal service, consistent with
certain universal service principles.
B. States that the universal service principles include
the principle that consumers in all regions of the nation,
including low-income consumers and those in rural,
insular, and high-cost areas, should have access to
telecommunications and information services, including
interexchange services and advanced telecommunications and
information services, that are reasonably comparable to
those services provided in urban areas and that are
available at rates that are reasonably comparable to rates
charged for similar services in urban areas.
C. Authorizes each state to adopt regulations to provide
for additional definitions and standards to preserve and
advance universal service within the state, only to the
extent that they adopt additional specific, predictable,
and sufficient mechanisms that do not rely on or burden
federal universal service support mechanisms.
1. States that the PUC has regulatory authority over public
utilities, including telephone corporations, as defined.
2. Establishes the CASF in the State Treasury and requires that
monies 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
telecommunications universal service programs, upon
appropriation in the annual Budget Act or upon supplemental
appropriation.
3. Requires the PUC to develop, implement, and administer the
CASF to encourage deployment of high-quality advanced
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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 specified decisions of PUC and
in the CASF statute.
4. Establishes three accounts, the Broadband Infrastructure
Grant Account (BIGA), the Rural and Urban Regional Broadband
Consortia Grant Account, and the Broadband Infrastructure
Revolving Loan Account within the CASF.
5. Prohibits PUC from collecting, before January 1, 2011, more
than $100,000,000, for deposit into the CASF through the
surcharge authorized by the PUC.
6. Authorizes the PUC to collect an additional sum not to
exceed $125,000,000, after January 1, 2011, for a sum total
of monies collected through the surcharge not to exceed
$225,000,000 and authorizes the PUC to collect the additional
sum through the 2015 calendar year.
7. Requires that of the monies collected after January 1, 2011,
$100,000,000 is to be deposited into the BIGA, $10,000,000 is
to be deposited into the Rural and Urban Regional Broadband
Consortia Grant Account and used for specified purposes, and
$15,000,000 is to be deposited into the Broadband
Infrastructure Revolving Loan Account and used for specified
purposes.
This bill:
1. Establishes the Housing Account within the CASF and
authorizes the PUC to transfer $20,000,000 from the BIGA and
$5,000,000 from the Broadband Revolving Loan Account to the
Housing Account if the PUC is otherwise authorized to collect
funds for purposes of the CASF in excess of the $225,000,000
the PUC is authorized to collect through December 31, 2015.
2. Authorizes not more than $20,000,000 from the Housing
Account to be available for grants and loans to a publicly
supported community, as defined, to finance a project to
connect a broadband network to that publicly supported
community.
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3. Authorizes not more than $5,000,000 from the Housing Account
be available for grants and loans to a publicly supported
community to support programs designed to increase adoption
rates for broadband services for residents of that publicly
supported community.
4. Requires the PUC, in reviewing a project application to
consider the availability of other funding sources for that
project, any financial contribution from the broadband
service provider to the project, 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.
5. Authorizes the PUC to require an applicant to provide match
funding, and prohibits the PUC from denying funding for a
project solely because the applicant is receiving funding
from another source.
6. Defines "publicly subsidized" to mean either that the housing
development receives financial assistance from the United
States Department of Housing and Urban Development (HUD)
pursuant to an annual contribution contract or is financed
with low-income housing tax credits, tax-exempt mortgage
revenue bonds, general obligation bonds, or local, state, or
federal loans or grants and the rents of the occupants, who
are lower income households, do not exceed those prescribed
by deed restrictions or regulatory agreements pursuant to the
terms of the financing or financial assistance.
7. Defines "publicly supported community" to mean a publicly
subsidized multifamily housing development that is wholly
owned as specified.
8. States that this bill is contingent upon the successful
enactment of SB 740 (Padilla).
Background
CASF established . PUC 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
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have universal access to high-quality, state-of-the-art,
advanced telecommunications services. SB 1193 (Padilla, Chapter
393, Statutes of 2008) codified the CASF program after the
California Broadband Task Force reported that about 1.4 million
(4%) of Californians lacked broadband and nearly 50% 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
service. SB 1040 (Padilla, Chapter 393, Statutes of 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 BIGA;
$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 existing law governing all
PUC public purpose programs, CASF funding is available only to a
"telephone corporation" regulated by the PUC. However, AB 1555
(Perez, Chapter 24, Statutes of 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 PUC 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
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and cable service providers do not invest. However, this
eligibility change requires statutory authorization similar to
that provided for ARRA broadband projects.
The PUC 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
PUC currently is reviewing actual levels of broadband service in
project areas to determine what funding will be awarded. On top
of whatever funding the PUC 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 Utilities and Commerce Committee held an informational
hearing on broadband availability for residents of California
public housing. According to estimates from the PUC 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 HUD 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
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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
According to the author's office, 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
On-going costs of $150,000 from the Housing Account within
the CASF (special) for administrative costs to the PUC to
administer the program.
Cost pressures of up to $25 million CASF for the redirection
of funds, which would be offset by additional surcharges
collected pursuant to SB 740.
SUPPORT : (Verified 9/5/13)
California Emerging Technology Fund (source)
AT&T
City and County of San Francisco
Division of Ratepayer Advocates
Public Utilities Commission
ASSEMBLY FLOOR : 58-17, 5/29/13
AYES: Achadjian, Alejo, Ammiano, Atkins, Blumenfield,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Cooley, Daly,
Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto, Gomez,
Gonzalez, Gordon, Gorell, Gray, Hagman, Hall, Roger Hern�ndez,
Jones-Sawyer, Levine, Linder, Lowenthal, Medina, Mitchell,
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Mullin, Muratsuchi, Nazarian, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Weber, Wieckowski, Williams, Yamada, John A. P�rez
NOES: Allen, Bigelow, Conway, Dahle, Donnelly, Beth Gaines,
Grove, Harkey, Jones, Logue, Maienschein, Mansoor, Melendez,
Morrell, Olsen, Wagner, Waldron
NO VOTE RECORDED: Bloom, Holden, Nestande, Wilk, Vacancy
JG:k 9/5/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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