Amended in Senate May 7, 2013

Senate Bill No. 740

Introduced by Senator Padilla

February 22, 2013

An act to amend Section 281 of the Public Utilities Code, relating to telecommunications, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 740, as amended, Padilla. Telecommunications: universal service programs: California Advanced Services Fund.

Existing law, the federal Telecommunications Act of 1996, 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. 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. The act 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.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations, as defined. Existing law establishes the California High-Cost Fund-A Administrative Committee Fund, the California High-Cost Fund-B Administrative Committee Fund, the Universal Lifeline Telephone Service Trust Administrative Committee Fund, the Deaf and Disabled Telecommunications Program Administrative Committee Fund, the Payphone Service Providers Committee Fund, the California Teleconnect Fund Administrative Committee Fund, and the California Advanced Services Fund begin delete (CASF) end delete begin insert , referred to as the CASF, end insert in the State Treasury and requires that moneys in the 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. Existing law requires the commission to develop, implement, and administer the CASF to encourage deployment of high-quality advanced 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 the commission and in the CASF statute.

Existing law requires that begin delete $100,000,000 end delete begin insert moneys end insert , collected by the surcharge, authorized by the commission, after January 1, 2011, begin delete is end delete begin insert are end insert to be deposited into begin delete the Broadband Infrastructure Account end delete begin insert 3 separate accounts within the CASF end insert . Existing law authorizes the commission to collect an additional sum not to exceed $125,000,000, after January 1, 2011, for a sum total of moneys collected through the surcharge not to exceed $225,000,000. Existing law authorizes the commission to collect the additional sum through the 2015 calendar year.

begin delete This bill would instead require that $200,000,000 be deposited into the Broadband Infrastructure account. The bill would increase the amount of additional money the commission is authorized to collect to $225,000,000, with a sum total not to exceed $325,000,000. end delete The bill would authorize the commission to collect the additional money until 2020.

begin insert

This bill would provide that the goal of the CASF program is, no later than December 31, 2015, to approve funding for infrastructure projects that will provide broadband access to no less than 98% of California households and would provide that it is the intent of the Legislature to authorize collection of additional surcharge amounts necessary to achieve this program goal. In awarding infrastructure grants, this bill would require that priority be given to projects that provide last-mile broadband connection to households that are unserved by an existing facilities-based broadband provider. This bill would provide that a middle-mile broadband project is eligible for an infrastructure grant even if it passes through an area served by an existing facilities-based broadband provider, as long as the project applicant can demonstrate that the project provides last-mile broadband connection to households that are unserved by any existing facilities-based broadband provider.

end insert

This bill would provide that, notwithstanding the requirement that moneys in the funds are to be used to compensate telephone corporations for their costs of providing universal service, an entity that is not a telephone corporation is eligible to apply to participate in the CASF program if the entity otherwise meets the eligibility requirements and complies with program requirements established by the commission. begin insert This bill would provide that a local governmental agency may be eligible for an infrastructure grant only if the infrastructure project is for an unserved area, the commission has conducted an open application process and no other eligible entity applied, and the commission determines that within the region of the local agency’s jurisdiction there is less than 98% broadband deployment. end insert

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 281 of the Public Utilities Code is
amended to read:

281.  

(a) The commission shall develop, implement, and
administer the California Advanced Services Fund begin insert program end insert to
encourage deployment of high-quality advanced communications
services to all Californians that will promote economic growth,
job creation, and the substantial social benefits of advanced
information and communications technologies, as provided in
Decision 07-12-054 and Decision 09-07-020 and this section. begin delete The end delete

begin insert

(b) The goal of the program is, no later than December 31,
2015, to approve funding for infrastructure projects that will
provide broadband access to no less than 98 percent of California
households. In awarding infrastructure grants, priority shall be
given to projects that provide last-mile broadband connection to
households that are unserved by an existing facilities-based
broadband provider. However, a middle-mile broadband project
is eligible for an infrastructure grant even if it passes through an
area served by an existing facilities-based broadband provider,
as long as the project applicant can demonstrate that the project
provides last-mile broadband connection to households that are
unserved by any existing facilities-based broadband provider.

end insert

begin insert ( end insert begin insert c) end insert begin insert   end insert begin insert The end insert commission shall establish the following accounts within
the fund:

(1) The Broadband Infrastructure Grant Account.

(2) The Rural and Urban Regional Broadband Consortia Grant
Account.

(3) The Broadband Infrastructure Revolving Loan Account.

begin delete

(b)

end delete

begin insert ( end insert begin insert d) end insert  (1) All moneys collected by the surcharge authorized by
the commission pursuant to Decision 07-12-054, whether collected
before or after January 1, 2009, shall be transmitted to the
commission pursuant to a schedule established by the commission.
The commission shall transfer the moneys received to the
Controller for deposit in the California Advanced Services Fund.
Moneys collected after January 1, 2011, shall be deposited in the
following amounts in the following accounts:

(A)  begin delete Two end delete begin insert One end insert hundred million dollars begin delete ($200,000,000) end delete
begin insert ($100,000,000) end insert into the Broadband Infrastructure Grant Account.

(B) Ten million dollars ($10,000,000) into the Rural and Urban
Regional Broadband Consortia Grant Account.

(C) Fifteen million dollars ($15,000,000) into the Broadband
Infrastructure Revolving Loan Account.

(2) All interest earned on moneys in the fund shall be deposited
in the fund.

(3) The commission shall not collect moneys, by imposing the
surcharge described in paragraph (1) for deposit in the fund, in an
amount that exceeds one hundred million dollars ($100,000,000)
before January 1, 2011. After January 1, 2011, the commission
may collect an additional sum not to exceed begin delete two end delete begin insert one end insert hundred
twenty-five million dollars begin delete ($225,000,000) end delete begin insert ($125,000,000) end insert , for a
sum total of moneys collected by imposing the surcharge described
in paragraph (1) not to exceed begin delete three end delete begin insert two end insert hundred twenty-five
million dollars begin delete ($325,000,000) end delete begin insert ($225,000,000) end insert . The commission
may collect the additional sum beginning with the calendar year
starting on January 1, 2011, and continuing through the 2020
calendar year, in an amount not to exceed twenty-five million
dollars ($25,000,000) per year, unless the commission determines
that collecting a higher amount in any year will not result in an
increase in the total amount of all surcharges collected from
telephone customers that year.

begin insert

(4) It is the intent of the Legislature to authorize collection of
additional surcharge amounts necessary to achieve the program
goal described in subdivision (b).

end insert begin delete

(c)

end delete

begin insert ( end insert begin insert e) end insert  (1) All moneys in the California Advanced Services Fund
shall be available, upon appropriation by the Legislature, to the
commission for the program administered by the commission
pursuant to this section, including the costs incurred by the
commission in developing, implementing, and administering the
program and the fund.

(2) Notwithstanding any other law and for the sole purpose of
providing matching funds pursuant to the federal American
Recovery and Reinvestment Act of 2009 (Public Law 111-5), any
entity eligible for funding pursuant to that act shall be eligible to
apply to participate in the program administered by the commission
pursuant to this section, if that entity otherwise satisfies the
eligibility requirements under that program. Nothing in this section
shall impede the ability of an incumbent local exchange carrier,
as defined by subsection (h) of Section 251 of Title 47 of the
United States Code, that is regulated under a rate of return
regulatory structure, to recover, in rate base, California
infrastructure investment not provided through federal or state
grant funds for facilities that provide broadband service and
California intrastate voice service.

(3) Notwithstanding subdivision (b) of Section 270, an entity
that is not a telephone corporation shall be eligible to apply to
participate in the program administered by the commission pursuant
to this section if the entity otherwise meets the eligibility
requirements and complies with program requirements established
by the commission. begin insert A local governmental agency may be eligible
for an infrastructure grant only if the infrastructure project is for
an unserved area, the commission has conducted an open
application process and no other eligible entity applied, and the
commission determines that within the region of the local agency’s
jurisdiction there is less than 98 percent broadband deployment. end insert

begin delete

(d)

end delete

begin insert ( end insert begin insert f) end insert  Moneys in the Rural and Urban Regional Broadband
Consortia Grant Account shall be available for grants to eligible
consortia to fund the cost of broadband deployment activities other
than the capital cost of facilities, as specified by the commission.
An eligible consortium may include, as specified by the
commission, representatives of organizations, including, but not
limited to, local and regional government, public safety, K-12
education, health care, libraries, higher education,
community-based organizations, tourism, parks and recreation,
agricultural, and business, and is not required to have as its lead
fiscal agent an entity with a certificate of public convenience and
necessity.

begin delete

(e)

end delete

begin insert ( end insert begin insert g) end insert  Moneys in the Broadband Infrastructure Revolving Loan
Account shall be available to finance capital costs of broadband
facilities not funded by a grant from the Broadband Infrastructure
Grant Account. The commission shall periodically set interest rates
on the loans based on surveys of existing financial markets.

begin delete

(f)

end delete

begin insert ( end insert begin insert h) end insert  (1) The commission shall conduct an interim and final
financial audit and an interim and final performance audit of the
implementation and effectiveness of the California Advanced
Services Fund to ensure that funds have been expended in
accordance with the approved terms of the grant awards and loan
agreements and this section. The commission shall report its interim
findings to the Legislature by April 1, 2011. The commission shall
report its final findings to the Legislature by April 1, 2017. The
reports shall also include an update to the maps in the final report
of the California Broadband Task Force and data on the types and
numbers of jobs created as a result of the program administered
by the commission pursuant to this section.

(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2018, pursuant to Section
10231.5 of the Government Code.

(B) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code.

begin delete

(g)

end delete

begin insert ( end insert begin insert i) end insert  (1) Beginning on January 1, 2012, and annually thereafter,
the commission shall provide a report to the Legislature that
includes all of the following information:

(A) The amount of funds expended from the California
Advanced Services Fund in the prior year.

(B) The recipients of funds expended from the California
Advanced Services Fund in the prior year.

(C) The geographic regions of the state affected by funds
expended from the California Advanced Services Fund in the prior
year.

(D) The expected benefits to be derived from the funds expended
from the California Advanced Services Fund in the prior year.

(E) Actual broadband adoption levels from the funds expended
from the California Advanced Services Fund in the prior year.

(F) The amount of funds expended from the California
Advanced Services Fund used to match federal funds.

(G) An update on the expenditures from California Advanced
Services Fund and broadband adoption levels, and an accounting
of remaining unserved and underserved areas of the state.

(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2016, pursuant to Section
10231.5 of the Government Code.

(B) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code.

SEC. 2.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to authorize the award of funds for the expansion of
broadband deployment to unserved and underserved areas of
California, to stimulate investments in infrastructure critical to
increasing the state’s productivity, and to improve the quality of
information available to all of the state’s citizens, as needed for
the health and safety of those citizens, it is necessary that this act
take effect immediately.