BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 740 (Padilla) - Telecommunications: universal service
programs
Amended: May 7, 2013 Policy Vote: EU&C 10-0
Urgency: Yes Mandate: No
Hearing Date: May 23, 2013 Consultant: Marie Liu
SUSPENSE FILE.
Bill Summary: SB 740 would extend the California Public
Utilities Commission's (CPUC) authority to collect a surcharge
on intrastate communication services from 2015 to 2020 to fund
the California Advanced Services Fund (CASF) and would allow
entities that are not telephone corporations to receive funds
from the CASF.
Fiscal Impact: Unknown cost pressures, possibly in the hundreds
of thousands of dollars from the CASF (special fund) for
expanded grantee eligibility.
Background: The CASF, administered by the CPUC, was established
to help fund deployment of broadband infrastructure and bring
high-speed Internet access to all areas of the state. The CPUC
is authorized until 2015 to collect a surcharge on intrastate
communication services, not to exceed $25 million a year or a
total of $225 million over the life of the program.
Proposed Law: This bill would extend the period of time that the
commission may charge a surcharge to fund the CASF, not to
exceed $25 million in on year or $225 million collectively from
January 1, 2015 to January 1, 2020 and express Legislative
intent to authorize collection of additional surcharge to
achieve broadband access to at least 98% of California
households.
This bill would allow entities that are not a telephone
corporation to be eligible for receiving CASF funding.
Related Legislation: 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
SB 740 (Padilla)
Page 1
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: In November 2012, the CPUC opened a rulemaking
to allow entities which are not telephone corporations to be
eligible for CASF funding, contingent on Legislative action to
statutorily allow such an expansion. In this rulemaking
(R.12-10-012), the CPUC notes that it has received numerous
comments that broadband services will not be made available
throughout the state without changes to the CASF's eligibility
requirements and that there are a number of commercial and
non-commercial entities that would seek CASF support if
eligibility for funds was expanded. The CPUC further notes in
its rulemaking, "?to the extent that some of these entities use
technologies that may be more cost effective than technologies
generally used by certified providers to provide service in high
cost rural areas, changing the CASF eligibility requirements may
also promote the deployment of more cost effective broadband
infrastructure in unserved and underserved areas." Staff
believes that widening the eligibility for funds will create a
cost pressure on the CASF, likely in the hundreds of thousands
of dollars. However, this cost pressure will at least partially
be offset by more cost-efficient projects being funded to
achieve the state's goal of establishing broadband access
throughout the state.
A previous version of the bill would have authorized the CPUC to
raise additional collections for CASF. The author has removed
those provisions while the CPUC is reviewing the current
estimated costs of reaching the state broadband goals. While the
author believes that additional funding will be needed, the
author does not intend to influence the outcome of the CPUC
review. Staff notes that it is the author's intention to amend
the bill at a later date to allow the collection of additional
funding. Authorizing additional funding will help offset any
cost pressures created by expanding eligibility for the program.