Amended in Assembly January 4, 2016

Amended in Assembly April 6, 2015

Amended in Assembly February 24, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 238

Introduced by Assembly Member Mark Stone

February 5, 2015

An act to amend Section 281 begin delete of end delete begin insert of, and to add Section 281.1 to, end insert the Public Utilities Code, relating to telecommunications.

LEGISLATIVE COUNSEL’S DIGEST

AB 238, as amended, Mark Stone. Telecommunications: California Advanced Services begin delete Fund end delete begin insert Fund. end insert

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. Existing law establishes, among other funds related to telecommunications, the California Advanced Services Fund (CASF) in the State Treasury. 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 the commission to give priority to projects that provide last-mile broadband access to households that are unserved by an existing facilities-based broadband provider. begin insert Existing law establishes that 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% of California households. Existing law authorizes the commission to collect a surcharge for deposit into the CASF not to exceed $315,000,000 in total and authorizes the surcharge until 2020. end insert

begin delete

This bill would define “broadband” for purposes of these provisions as advanced telecommunication services with specified advertised speeds and would authorize the commission to revise the definition, as specified. The bill would state the intent of the Legislature that the commission give additional priority to projects providing broadband access to unserved or underserved households.

end delete begin delete

Existing law provides that entities that are not telephone corporations are eligible to apply for funding from the CASF for projects to provide last-mile broadband access to households that are unserved. Existing law provides that local government entities may be eligible for infrastructure grants only if the infrastructure projects are for unserved households or businesses.

end delete begin delete

This bill would make projects that provide last-mile broadband access solely to households that are underserved also eligible for funding. For entities that are local governments, the bill would eliminate the requirement that the infrastructure projects be for unserved households or businesses.

end delete begin insert

This bill would extend to December 31, 2020, the time period for meeting the program goal and would specify the threshold speeds to be met in achieving the goal. The bill would require the commission to give priority to projects that provide advanced communication services at those threshold speeds to unserved and underserved households until the goal is achieved. The bill would authorize the commission, once that goal is achieved, to prioritize funding for other specified projects. The bill would require the commission and the California Broadband Council, in consultation with relevant state agencies, to develop a plan to implement these provisions in a manner that fosters public-private collaboration. The bill would authorize the commission to allocate up to $10 million from the Broadband Infrastructure Grant Account in the CASF to a specified nonprofit organization for specified purposes. The bill would make various legislative findings, including findings regarding deployment of broadband speeds of at least 25 megabits per second (Mbps) downstream and 3 Mbps upstream. The bill would remove the restrictions on the surcharge for the CASF. By removing those restrictions, the bill would constitute a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2⁄3 of the membership of each house of the Legislature.

end insert begin insert

Because the provisions of this bill are within the Public Utilities Act, a violation of which is a crime, this bill would impose a state-mandated local program by extending a crime.

end insert begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert

Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert (a) end insert begin insert   end insert begin insert The Legislature finds and declares all of the
following: end insert

begin insert

(1) The availability of high-speed Internet access, referred to
generically as “broadband” and including both wired and wireless
technologies, is essential 21st century infrastructure for economic
competitiveness and quality of life. Economic studies confirm that
the use of broadband technologies increases economic productivity
as a foundation for increased efficiency in organizational
operations and enhanced profitability in business.

end insert begin insert

(2) Broadband infrastructure is also vital to the operation and
management of other critical infrastructure, such as energy
generation systems and the power grid, water supply systems, and
public safety and emergency response networks. There is a need
for world-class broadband infrastructure throughout California
to support these major infrastructure investments to protect lives,
property, and the environment.

end insert begin insert

(3) The California Advanced Services Fund (CASF) is a vital
resource for California to be a national leader and globally
competitive in broadband infrastructure.

end insert begin insert

(b) It is the intent of the Legislature that the Public Utilities
Commission, after ensuring the development of last-mile
infrastructure to provide at least 6 megabits per second (Mbps)
downstream and 1.5 Mbps upstream service for 98 percent of
unserved or underserved households in each region of the state,
do all of the following:

end insert begin insert

(1) Establish the goal for threshold broadband speeds in future
plans and programs of not less than 25 Mbps downstream and 3
Mbps upstream. In establishing the threshold broadband speeds,
the commission should ensure California remains a national leader
and globally competitive on broadband infrastructure while taking
into account all cost-effective strategies.

end insert begin insert

(2) Analyze and publish public data regarding the availability
of broadband service at speeds specified in paragraph (1)
throughout the state.

end insert begin insert

(3) Prepare and submit to the Legislature a plan for achieving
broadband service at speeds specified in paragraph (1) that
includes the following:

end insert begin insert

(A) An analysis of the availability of those threshold speeds for
all consumers.

end insert begin insert

(B) An assessment of the implications of the implementation of
paragraph (1) for the CASF and the required funding needed to
achieve that goal in unserved and underserved areas.

end insert begin insert

(C) A delineation of the strategies and policies that would
achieve that goal in the most cost-effective manner possible,
including whether or not it should be the policy of the state to
encourage fiber deployment for middle-mile projects.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

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

281.  

(a)  begin insert (1) end insert begin insert   end insert The commission shall develop, implement, and
administer the California Advanced Services Fund program 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, consistent with
this begin delete section. end delete begin insert section and Section 281.1. end insert

begin insert

(2) Recognizing that in addition to residential households, there
are other types of consumers, including anchor institutions, such
as schools, libraries, community centers, and health and medical
facilities; small businesses and large employers; and research
organizations all with a range of needs for broadband access
threshold speeds in exceed of those specified in Section 281.1, the
commission, in administering the program, shall consider approve
funding for last-mile infrastructure projects to reach unserved and
underserved households that exceed those threshold speeds, that
also provide improvements to those other types of consumers, and
that the commission deems to be in the public interest and a
cost-effective use of the moneys in the California Advanced
Services Fund.

end insert

(b) (1)  begin delete The end delete begin insert A end insert goal of the program is, no later than December
31, begin delete 2015, end delete begin insert 2020, end insert to approve funding for infrastructure projects that
will provide broadband access begin insert at advertised speeds of 6 megabit end insert begin insert s
per second (Mbps) downstream and 1.5 Mbps upstream end insert to no less
than 98 percent of California households.

(2) In approving infrastructure projects, the commission shall
give priority to projects begin delete that provide last-mile broadband access
to households that are unserved by an existing facilities-based
broadband provider. end delete begin insert pursuant to Section 281.1. end insert The commission
shall provide each applicant, and any party challenging an
application, the opportunity to demonstrate actual levels of
broadband service in the project area, which the commission shall
consider in reviewing the application.

(c) The 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.

(4) The Broadband Public Housing Account.

(d) (1) All moneys collected by the surcharge authorized by
the commission pursuant to Decision 07-12-054 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. begin delete Moneys end delete begin insert The first two hundred fifteen million dollars
($215,000,000) of the moneys end insert collected on and after January 1,
2011, shall be deposited in the following amounts in the following
accounts:

(A) One hundred ninety million dollars ($190,000,000) into the
Broadband Infrastructure Grant Account.

(B) Fifteen million dollars ($15,000,000) into the Rural and
Urban Regional Broadband Consortia Grant Account.

(C) Ten million dollars ($10,000,000) into the Broadband
Infrastructure Revolving Loan Account.

begin insert

(2) Of the moneys collected above the first two hundred fifteen
million dollars ($215,000,000), the Controller shall deposit those
moneys into the three accounts specified in paragraph (1) in
amounts the commission deems appropriate.

end insert begin delete

(2)

end delete

begin insert (3) end insert  All interest earned on moneys in the fund shall be deposited
in the fund.

begin delete

(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. On and after January 1, 2011, the
commission may collect an additional sum not to exceed two
hundred fifteen million dollars ($215,000,000), for a sum total of
moneys collected by imposing the surcharge described in paragraph
(1) not to exceed three hundred fifteen million dollars
($315,000,000). 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.

end delete

(e) (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 begin delete section, end delete begin insert section and Section 281.1, end insert 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 begin delete section, end delete begin insert section and Section 281.1, end insert 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 begin delete section end delete begin insert section and Section 281.1 end insert to provide access to
broadband to an unserved or underserved household, as defined
in commission Decision 12-02-015, if the entity otherwise meets
the eligibility requirements and complies with program
requirements established by the commission. These requirements
shall include all of the following:

(A) That projects under this paragraph provide last-mile
broadband access to households that are unserved by an existing
facilities-based broadband provider and only receive funding to
provide broadband access to households that are unserved or
underserved, as defined in commission Decision 12-02-015.

(B) That funding for a project providing broadband access to
an underserved household shall not be approved until after any
existing facilities-based provider has an opportunity to demonstrate
to the commission that it will, within a reasonable timeframe,
upgrade existing service. An existing facilities-based provider
may, but is not required to, apply for funding under this section to
make that upgrade.

(C) That the commission shall provide each applicant, and any
party challenging an application, the opportunity to demonstrate
actual levels of broadband service in the project area, which the
commission shall consider in reviewing the application.

(D) That a local governmental agency may be eligible for an
infrastructure grant only if the infrastructure project is for an
unserved household or business, the commission has conducted
an open application process, and no other eligible entity applied.

(E) That the commission shall establish a service list of
interested parties to be notified of California Advanced Services
Fund applications.

begin insert

(4) Notwithstanding subdivision (b) of Section 270, up to ten
million dollars ($10,000,000) from the Broadband Infrastructure
Grant Account shall be available for allocation to the California
Telehealth Network, a 501(c)(3) nonprofit organization, for
purposes of leveraging that organization’s utilization of the Federal
Communications Commission’s Healthcare Connect Fund for
California’s medically underserved communities.

end insert

(f) 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, elementary
and secondary education, health care, libraries, postsecondary
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.

(g) 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.

(h) (1) For purposes of this subdivision, the following terms
have the following meanings:

(A) “Publicly subsidized” means either that the housing
development receives financial assistance from the United States
Department of Housing and Urban Development 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.

(B) “Publicly supported community” means a publicly
subsidized multifamily housing development that is wholly owned
by either of the following:

(i) A public housing agency that has been chartered by the state,
or by any city or county in the state, and has been determined to
be an eligible public housing agency by the United States
Department of Housing and Urban Development.

(ii) An incorporated nonprofit organization as described in
Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec.
501(c)(3)) that is exempt from taxation under Section 501(a) of
that code (16 U.S.C. Sec. 501(a)), and that has received public
funding to subsidize the construction or maintenance of housing
occupied by residents whose annual income qualifies as “low” or
“very low” income according to federal poverty guidelines.

(2) Notwithstanding subdivision (b) of Section 270, moneys in
the Broadband Public Housing Account shall be available for the
commission to award grants and loans pursuant to this subdivision
to an eligible publicly supported community if that entity otherwise
meets eligibility requirements and complies with program
requirements established by the commission.

(3) Not more than twenty million dollars ($20,000,000) shall
be available for grants and loans to a publicly supported community
to finance a project to connect a broadband network to that publicly
supported community. A publicly supported community may be
an eligible applicant only if the publicly supported community can
verify to the commission that the publicly supported community
has not denied a right of access to any broadband provider that is
willing to connect a broadband network to the facility for which
the grant or loan is sought.

(4) (A) Not more than five million dollars ($5,000,000) shall
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. A publicly supported community may be eligible for
funding for a broadband adoption program only if the residential
units in the facility to be served have access to broadband services
or will have access to broadband services at the time the funding
for adoption is implemented.

(B) A publicly supported community may contract with other
nonprofit or public agencies to assist in implementation of a
broadband adoption program.

(5) To the extent feasible, the commission shall approve projects
for funding from the Broadband Public Housing Account in a
manner that reflects the statewide distribution of publicly supported
communities.

(6) In reviewing a project application under this subdivision,
the commission shall 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. The commission may require an applicant to
provide match funding, and shall not deny funding for a project
solely because the applicant is receiving funding from another
source.

(7)  begin delete (A) end delete begin delete   end delete To provide funding for the purposes of this subdivision,
the commission shall transfer to the Broadband Public Housing
Account twenty million dollars ($20,000,000) from the Broadband
Infrastructure Grant Account and five million dollars ($5,000,000)
from the Broadband Revolving Loan Account. Any moneys in the
Broadband Public Housing Account that have not been awarded
pursuant to this subdivision by December 31, 2016, shall be
transferred back to the Broadband Infrastructure Grant Account
and Broadband Infrastructure Revolving Loan Account in
proportion to the amount transferred from the respective accounts.

begin delete

(B) The commission shall transfer funds pursuant to
subparagraph (A) only if the commission is otherwise authorized
to collect funds for purposes of this section in excess of the total
amount authorized pursuant to paragraph (3) of subdivision (d).

end delete

(i) (1) The commission shall conduct two interim financial
audits and a final financial audit and two interim performance
audits and a 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 begin delete agreements and this section. end delete
begin insert agreements, this section, and Section 281.1. end insert The commission shall
report its interim findings to the Legislature by April 1, 2011, and
April 1, 2017. The commission shall report its final findings to the
Legislature by April 1, 2021. 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 begin delete section. end delete begin insert section and Section 281.1. end insert

(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2022, 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.

(j) (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 households and areas of
the state.

(H) The status of the California Advanced Services Fund balance
and the projected amount to be collected in each year begin delete through 2020 end delete
to fund approved projects.

(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2021, 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 insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 281.1 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 281.1. end insert   

(a) For the purposes of this section, the following terms
mean the following:

(1) “Last-mile infrastructure” means the segment of the Internet
infrastructure that provides Internet connectivity to end users,
such as residential households, anchor institutions, and local
businesses.

(2) “Middle-mile backhaul infrastructure” means the segment
of the Internet infrastructure that connects the last-mile
infrastructure to the backbone infrastructure of the Internet.

(3) “Program” means the California Advanced Services Fund
program.

(4) “Unserved households” and “underserved households”
have the same meanings as in commission Decision 12-02-015.

(b) (1) Until the goal specified in paragraph (1) of subdivision
(b) of Section 281 is achieved, the commission, in administering
the program, shall give priority to last-mile infrastructure projects
that provide advanced communication services at or above the
advertised speeds required under the goal to unserved or
underserved households if the projects have access to cost-effective
and affordable middle-mile backhaul infrastructure.

(2) The commission shall give additional priority to applicants
that are incumbents with existing middle-mile backhaul
infrastructure proposing to deploy last-mile infrastructure to
provide services to unserved and underserved households.

(3) In applying for funding for the program, an applicant shall
demonstrate the cost-effectiveness of the last-mile infrastructure
at the threshold speeds specified in paragraph (1) of subdivision
(b) of Section 281.

(c) Once the goal specified in paragraph (1) of subdivision (b)
of Section 281 is reached, the commission may prioritize funding
pursuant to the program for any of the following:

(1) Last-mile infrastructure projects providing advanced
communication services at advertised speeds of at least 25 Mbps
downstream and 3 Mbps upstream to unserved and underserved
households and at appropriate speeds to anchor institutions and
other customers in the vicinity of those households.

(2) Upgrades to broadband connectivity for other critical
infrastructure systems not in the vicinity of residences.

(3) Last-mile infrastructure projects of statewide public
significance, including projects related to public safety and
emergency response, such as providing broadband connectivity
to and among county fairgrounds as staging areas for emergency
responses, wildfire fighting, and disaster evacuations.

(d) It is the intent of the Legislature to enact legislation to
establish a transparent public process to analyze and designate a
project as having statewide significance for purposes of paragraph
(3) of subdivision (c).

(e) The commission and the California Broadband Council
shall, in consultation with relevant state agencies, develop a plan
to implement this section in a manner that fosters public-private
partnership collaboration in an open and transparent process.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert

begin delete

SECTION 1.  

(a) The Legislature finds and declares all of the
following:

(1) In the Broadband Availability in America report, released
on January 30, 2015, the Federal Communications Commission
(FCC) found that the rate of deployment of advanced
telecommunications services is failing to keep up with today’s
advanced, high-quality voice, data, graphics, and video offerings.

(2) After evaluating advances in technology, market offerings
by broadband providers, and consumer demand, the FCC updated
the definition of broadband to mean 25 megabits per second (Mbps)
downstream and three Mbps upstream speed.

(3) In California, home to the development of much of the
world’s most advanced telecommunications technology, 2.6 million
people do not have access to any services offering wireline 25
Mbps/3 Mbps broadband speeds. The lack of access especially
affects people living in rural counties.

(4) In today’s digital landscape, access to proper broadband
service is a necessity for the workplace, education, civic
engagement, and economic competitiveness. California cannot fall
behind in securing access to robust broadband for all of its
residents, and it must continue to be a leader in developing
advanced telecommunications infrastructure for all.

(b) It is the intent of the Legislature to enact legislation to pursue
the deployment of advanced telecommunications services with
broadband speeds of at least 25 Mbps downstream and 3 Mbps
upstream in all areas of the state.

(c) It is the intent of the Legislature that the Public Utilities
Commission encourage the deployment of broadband access
pursuant to Section 706(a) of the Telecommunications Act of 1996
(47 U.S.C. Sec. 1302(a)).

SEC. 2.  

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 program 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, consistent with
this section.

(b) (1) The goal of the program is to approve funding for
infrastructure projects that will provide broadband access to no
less than 98 percent of California households.

(2) (A) In approving infrastructure projects, the commission
shall give priority to projects that provide last-mile broadband
access to households that are unserved by an existing
facilities-based broadband provider. The commission shall provide
each applicant, and any party challenging an application, the
opportunity to demonstrate actual levels of broadband service in
the project area, which the commission shall consider in reviewing
the application.

(B) It is the intent of the Legislature that the commission give
additional priority to projects providing broadband access to
unserved or underserved households, as defined in commission
Decision 12-02-015.

(3) (A) For purposes of this section, “broadband” means
advanced communication services at advertised speeds of at least
25 megabits per second (Mbps) downstream and three Mbps
upstream.

(B) If the Federal Communications Commission adopts a
definition for “advanced telecommunication capability” that
provides for a faster speed than that specified in subparagraph (A),
the commission may revise the definition of “broadband” to be
consistent with that federal definition.

(c) The 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.

(4) The Broadband Public Housing Account.

(d) (1) All moneys collected by the surcharge authorized by
the commission pursuant to commission Decision 07-12-054 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 on and after January 1, 2011,
shall be deposited in the following amounts in the following
accounts:

(A) One hundred ninety million dollars ($190,000,000) 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. On and after January 1, 2011, the
commission may collect an additional sum not to exceed two
hundred fifteen million dollars ($215,000,000), for a sum total of
moneys collected by imposing the surcharge described in paragraph
(1) not to exceed three hundred fifteen million dollars
($315,000,000). 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.

(e) (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. This section does not
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 to provide access to broadband to an unserved or
underserved household, if the entity otherwise meets the eligibility
requirements and complies with program requirements established
by the commission. These requirements shall include all of the
following:

(A) That projects under this paragraph provide last-mile
broadband access to households that are unserved or underserved
by an existing facilities-based broadband provider and only receive
funding to provide broadband access to those households.

(B) That funding for a project providing broadband access to
an underserved household shall not be approved until after any
existing facilities-based provider has an opportunity to demonstrate
to the commission that it will, within a reasonable timeframe,
upgrade existing service. An existing facilities-based provider
may, but is not required to, apply for funding under this section to
make that upgrade.

(C) That the commission shall provide each applicant, and any
party challenging an application, the opportunity to demonstrate
actual levels of broadband service in the project area, which the
commission shall consider in reviewing the application.

(D) That a local governmental agency may be eligible for an
infrastructure grant only if the commission has conducted an open
application process, and no other eligible entity applied.

(E) That the commission shall establish a service list of
interested parties to be notified of California Advanced Services
Fund applications.

(f) 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, elementary
and secondary education, health care, libraries, postsecondary
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.

(g) 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.

(h) (1) For purposes of this subdivision, the following terms
have the following meanings:

(A) “Publicly subsidized” means either that the housing
development receives financial assistance from the United States
Department of Housing and Urban Development 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.

(B) “Publicly supported community” means a publicly
subsidized multifamily housing development that is wholly owned
by either of the following:

(i) A public housing agency that has been chartered by the state,
or by any city or county in the state, and has been determined to
be an eligible public housing agency by the United States
Department of Housing and Urban Development.

(ii) An incorporated nonprofit organization as described in
Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec.
501(c)(3)) that is exempt from taxation under Section 501(a) of
that code (16 U.S.C. Sec. 501(a)), and that has received public
funding to subsidize the construction or maintenance of housing
occupied by residents whose annual income qualifies as “low” or
“very low” income according to federal poverty guidelines.

(2) Notwithstanding subdivision (b) of Section 270, moneys in
the Broadband Public Housing Account shall be available for the
commission to award grants and loans pursuant to this subdivision
to an eligible publicly supported community if that entity otherwise
meets eligibility requirements and complies with program
requirements established by the commission.

(3) Not more than twenty million dollars ($20,000,000) shall
be available for grants and loans to a publicly supported community
to finance a project to connect a broadband network to that publicly
supported community. A publicly supported community may be
an eligible applicant only if the publicly supported community can
verify to the commission that the publicly supported community
has not denied a right of access to any broadband provider that is
willing to connect a broadband network to the facility for which
the grant or loan is sought.

(4) (A) Not more than five million dollars ($5,000,000) shall
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. A publicly supported community may be eligible for
funding for a broadband adoption program only if the residential
units in the facility to be served have access to broadband services
or will have access to broadband services at the time the funding
for adoption is implemented.

(B) A publicly supported community may contract with other
nonprofit or public agencies to assist in implementation of a
broadband adoption program.

(5) To the extent feasible, the commission shall approve projects
for funding from the Broadband Public Housing Account in a
manner that reflects the statewide distribution of publicly supported
communities.

(6) In reviewing a project application under this subdivision,
the commission shall 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. The commission may require an applicant to
provide match funding, and shall not deny funding for a project
solely because the applicant is receiving funding from another
source.

(7) (A) To provide funding for the purposes of this subdivision,
the commission shall transfer to the Broadband Public Housing
Account twenty million dollars ($20,000,000) from the Broadband
Infrastructure Grant Account and five million dollars ($5,000,000)
from the Broadband Revolving Loan Account. Any moneys in the
Broadband Public Housing Account that have not been awarded
pursuant to this subdivision by December 31, 2016, shall be
transferred back to the Broadband Infrastructure Grant Account
and Broadband Infrastructure Revolving Loan Account in
proportion to the amount transferred from the respective accounts.

(B) The commission shall transfer funds pursuant to
subparagraph (A) only if the commission is otherwise authorized
to collect funds for purposes of this section in excess of the total
amount authorized pursuant to paragraph (3) of subdivision (d).

(i) (1) The commission shall conduct two interim financial
audits and a final financial audit and two interim performance
audits and a 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, and April 1, 2017. The commission shall report
its final findings to the Legislature by April 1, 2021. 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, 2022, 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.

(j) (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 households and areas of
the state.

(H) The status of the California Advanced Services Fund balance
and the projected amount to be collected in each year through 2020
to fund approved projects.

(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2021, 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.

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