BILL ANALYSIS Ó
AB 1262
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
AB 1262
(Wood) - As Introduced February 27, 2015
SUBJECT: Telecommunications: universal service: California
Advanced Services Fund
SUMMARY: This bill would modifies existing limits on funds
allocated into from the California Advanced Services Fund
(CASF) to the Rural and Urban Regional Broadband Consortia Grant
Account and the Broadband Infrastructure Revolving Loan Account,
as specified. Specifically, this bill:
a)Increases an existing $10 million limit to $15 million for
monies collected for the CASF for and allocated to the Rural
and Urban Regional Broadband Consortia Grant Account.
b)Decreases and existing $15 million limit to $10 million for
monies collected for the CASF and allocated to the Broadband
Infrastructure Revolving Loan Account.
EXISTING LAW:
1)Establishes the CASF in the State Treasury, and requires that
monies in those funds are the proceeds of rates and held in
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trust for the benefit of ratepayers, and to compensate
telephone corporations for their costs of providing universal
service, and expended only to accomplish specified
telecommunications universal service programs, upon
appropriation in the annual Budget Act or upon supplemental
appropriation. (Public Utilities Code §270)
2)Requires the California Public Utilities Commission (CPUC) 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
specific decisions of the CPUC and in the CASF statute.
(Public Utilities Code §281)
3)Requires that $190 million, collected by a surcharge
authorized by the CPUC, after
January 1, 2011, is to be deposited into the Broadband
Infrastructure Account. (Public Utilities Code §281)
4)Requires that $10 million, collected by a surcharge authorized
by the CPUC, after January 1, 2011, is to be deposited into
the Rural and Urban Regional Broadband Consortia Grant
Account. (Public Utilities Code §281)
5)Require that $15 million, collected by a surcharge authorized
by the CPUC, after January 1, 2011, to be deposited into the
Broadband Infrastructure Revolving Loan Account. (Public
Utilities Code §281)
6)Requires the CPUC to transfer to the Broadband Public Housing
Account $20 million from the Broadband Infrastructure Grant
Account and $5 million from the Broadband Revolving Loan
Account. Any moneys in the Broadband Public Housing Account
that have not been awarded 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
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accounts. (Public Utilities Code §281)
7)Authorizes the CPUC to collect an additional sum not to exceed
$215 million after January 1, 2011, for a sum of total moneys
collected through the surcharge not to exceed $315 million.
(Public Utilities Code §281)
8)Authorizes the CPUC to collect the additional sum through the
2020 calendar year. (Public Utilities Code §281)
9)Requires the CPUC to give priority to projects that provide
last-mile broadband access to households that are unserved by
an existing facilities based broadband provider. (Public
Utilities Code §281)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "The [CASF] was created 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 work
continues to progress in achieving greater broadband
expansion, it is imperative to continue the state's commitment
to help ensure universal access to basic telecommunications
services, such as broadband. Unfortunately, [the Rural and
Urban Regional Broadband Consortia Grant Account] is about to
be exhausted. Therefore, if further monies are not available,
many rural consortia will no longer be able to provide the
appropriate broadband educational service nor assist in
preparing applications for CASF grants."
2)Background: In 2007, the CPUC created the CASF to help
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promote the deployment of broadband infrastructure in unserved
areas of the state. SB 1193 (Padilla) Chapter 393, Statutes
of 2008, statutorily established the CASF and gave the CPUC
authority to assess a surcharge on communication service
ratepayers (wireline, wireless, and voice over internet
protocol customers) receiving intrastate telecommunication
services to fund the program. Beginning in April 1, 2014,
the CPUC increased the surcharge from 0.164% to 0.464%.
In 2009, the CPUC revised the CASF program to allow more
California companies to use CASF grants as a match to receive
federal funds through broadband grants offered through the
American Reinvestment and Recovery Act of 2009. In 2010, SB
1040 (Padilla) Chapter 317, Statutes of 2010, expanded the
program by authorizing telecommunications carriers to collect
an additional $125 million. Furthermore, SB 740 (Padilla)
Chapter 522, Statutes of 2013, further expanded CASF
eligibility to any commercial provider of broadband access, or
any nonprofit entity, including government entities or
community anchor institutions that elect to provide facilities
based broadband service, prioritized projects that provide
last-mile broadband access to households that are unserved by
an existing facilities based broadband provider, and specified
a goal for the CASF to approve funding for infrastructure
projects that will provide broadband access to no less than
98% of California households by December 31, 2015.
3)Unserved vs. underserved: The CPUC authorizes CASF grants for
projects in both unserved and underserved areas, with priority
going to unserved areas. An unserved area is an area where no
broadband service is available, (except through dial-up or
satellite service). The CPUC defines an underserved area as
an area where broadband service is slower than 6Mbps/1.5Mbps.
The Federal Communication Commission (FCC) defines underserved
as slower than 4Mbps/1Mbps. The CPUC prioritized CASF
expenditures to unserved areas where no facilities based
provider offered broadband service, followed by underserved
areas where no facilities based providers offered broadband
service at specific speeds.
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4)CASF accounts: The CASF has a total authorized funding of
$315 million to be collected in surcharges through 2020. CASF
grantees can receive a grant and loan simultaneously for a
proposed project. The maximum grant is limited to 60% of the
total project cost in unserved and 70% in underserved areas.
Financing is limited to 20% of the project cost. The
remaining funds are to be provided by the local broadband
service provider, provided the CPUC has determined
eligibility. As of December 31, 2014, the CASF has collected
approximately $199 million of which approximately $85 million
is still remaining in the fund. Funding is allocated to four
CASF accounts.
Broadband Infrastructure Grant Account (Infrastructure
Account) funds the capital costs of broadband
infrastructure projects in unserved and underserved areas
in California. Local government projects are limited to
unserved households or businesses. Carriers eligible to
apply for a grant award must hold a certificate of public
convenience and necessity or Wireless Identification
Registration from the CPUC. CASF funding is also available
to non-telephone corporations which are facilities based
broadband service providers.
Rural and Urban Regional Broadband Consortia Grant
Account (Consortia Grant Account) provides funding for the
cost of broadband deployment activities, other than the
capital cost of facilities. Eligible recipients include,
but is not limited to local and regional governments,
public safety, K-12 education, health care, and
community-based organizations.
Broadband Infrastructure Loan Account (Revolving Loan
Account) supplements financing for projects also receiving
CASF grant funding. Up to 20% of total project cost is
eligible for financing. Applicant and project eligibility
is the same as the Infrastructure Grant Account.
Broadband Public Housing Account (Housing Account)
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supports projects to deploy local area networks and to
increase adoption rates in publicly supported housing
communities.
1)Senate Bill 1040 (Padilla) Chapter 317, Statue of 2010: SB
1040 (Padilla), authorized additional funds for the CASF and
designated separate accounts within the CASF. The bill
established the Consortia Grant Account and the Revolving Loan
Account. These two accounts are intended to address the needs
unmet under the originally established CASF program. The
Consortia Grant Account is designed to authorize the CASF to
award a small amount of total CASF moneys to eligible
consortia for costs other than broadband infrastructure, such
as the collection and analysis of market data, regional demand
aggregation, and engaging civic leaders and stakeholders to
submit cost-effective applications for CASF and other grants.
Furthermore, the Revolving Loan Account was created to provide
supplemental financing for projects also applying for CASF
grant funding so that projects are more likely to be
financially feasible and move forwards. CASF applicants may
obtain loans of up to 20% of a project's cost, with a maximum
of $500,000.
2)Creation of the Broadband Public Housing Account: In 2013,
the legislature passed
AB 1299 (Bradford) Chapter 507, Statutes of 2013, which
created the Housing Account, within the CASF, and required the
CPUC to fund grants for the deployment and adoption of
broadband services in publicly supported housing communities.
The bill provided $25 million in CASF funding for the Housing
Account by transferring $5 million from the Revolving Loan
Account and $20 million from the Infrastructure Account. The
CPUC has until December 31, 2016 to award the moneys available
for Public Housing grants. Any remaining funds after December
31, 2016, is to be transferred back in proportion to the two
accounts. Hence, the current funding for each CASF account is
as follows:
Broadband Infrastructure Grant Account:
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$270 million,
Broadband Infrastructure Revolving Loan Account
$10 million,
Rural and Urban Regional Broadband Consortia Grant
Account $10 million, and
Broadband Public Housing Account
$25 million.
1)Revolving Loan Account vs. Consortia Grant Account: Since its
inception in 2012, the Revolving Loan Account has been
undersubscribed to. To date, the CPUC has awarded $126,624 in
loans for three infrastructure projects submitted on the
February 1, 2013 application deadline. With new applications
being accepted starting in December 1, 2014, as of April 9,
2015, the CPUC has received 12 applications all applying for
infrastructure grants only . In contrast, the CPUC has awarded
a total of $9.26 million in grant funding for 16 consortia
groups with only around $250,000 remaining in the Consortia
Account for new consortia projects or grants around the state.
In 2015, 13 of the 16 consortia will have exhausted their
funding and will cease to continue broadband deployment
activities under the original CASF grant. Only three
consortia groups have approved CASF grant funding through June
2016.
This bill would allot an additional $5 million to be used for
the Consortia Account, increasing its total allotment to $15
million, and decrease the allotment for the Revolving Loan
Account by $5 million, therefore reducing the Revolving Loan
Account total allotment to $5 million. Instead of viewing
each account as a pot of money that sits in the account until
it is spent, the maximum funding for each account should be
viewed as the maximum amount of funds that the CPUC can use
for the specific purpose designated by each account. Hence,
this is not a transfer from one account to another. Instead,
this bill authorizes the CPUC to spend an additional $5
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million for Consortia Grant projects and $5 million less for
revolving loans. By also decreasing the total allotment that
can be used for the Revolving Loan Account, the total amount
the CPUC is allowed to collect for the CASF remains unchanged
at $315 million to be collected by 2020, but not to exceed $25
million per year.
2)Arguments in support: According to the Kern, West Kern, and
Yuba community college districts, "community colleges
districts often form part of the consortia, are valuable
resources in reaching out to local communities, and are best
situated to comment on the needs of the area. [?] Without the
$5 million transfer that this bill provides the Grant Account
would no longer be able to provide any funds to important
infrastructure projects and consortia. This would mean that
there would be limited improvements in broadband access that
would leave these rural areas, as well as community colleges,
a step behind as this type of access becomes a more critical
part of our digital era."
3)Related Legislation:
AB 238 (Stone) 2015: This bill would define "broadband" for
purposes of the California Advanced Services Fund and expand
funding eligibility to specific projects.
4)Prior Legislation:
SB 740 (Padilla) 2013: Expands eligibility in the CASF,
establishes a program goal, and increases the program funding.
Chaptered by the Secretary of State - Chapter 522, Statutes
of 2013.
AB 1299 (Bradford) 2013: Requires the CPUC to find grants for
the deployment and adoption of broadband services in publicly
supported housing communities using the CASF. Chaptered by the
Secretary of State - Chapter 507, Statutes of 2013.
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SB 1040 (Padilla) 2010: Authorizes telecommunication carriers
to collect an additional $125 million for the CASF to
encourage deployment of advanced communication services in
California. Chaptered by the Secretary of State - Chapter
317, Statutes of 2010.
SB 1193 (Padilla) 2008: Creates the CASF to fund the cost of
deploying broadband Internet facilities to unserved and
underserved areas of the state. Chaptered by the Secretary of
State - Chapter 393, Statutes of 2008.
REGISTERED SUPPORT / OPPOSITION:
Support
Anza Electric Cooperative, Inc.
California Center for Rural Policy at Humboldt State University
California State Association of Counties (CSAC)
California State University, San Bernardino
Central Coast Broadband Consortium
Central Sierra Connect Broadband Consortia
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City of Bishop
City of California City
City of Ridgecrest
City of Riverside
City of Tehachapi
Connect Capital Area Broadband Consortium
Contra Costa Economic Partnership
Corporation for Education Network Initiatives in California
(CENIC)
County of Alpine
County of Del Norte
County of El Dorado
County of Humboldt
County of Mariposa
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County of Modoc
County of Mono
County of Nevada
County of Sacramento
County of Sierra
County of Tehama
County of Trinity
County of Tuolumne
County of Ventura
County of Yolo
Eastern Sierra Connect Regional Broadband Consortium
Gold Country Broadband Consortium
Inyo Networks, Inc.
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Kern Community College Districts
Lake Tahoe South Shore Chamber of Commerce
North Bay/North Coast Broadband Consortium
North Lake Tahoe Chamber/CVB/Resort Association
Northeastern CA Connect Consortium
Praxis Associates, Inc.
Riverside County Innovation Center
Rural County Representatives of California
San Bernardino Community College District
San Bernardino County 211
San Diego Imperial Regional Broadband Consortium
San Joaquin Valley Regional Broadband Consortium
Sierra Economic Development Corporation
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Sierra Ecosystems Associates
SmartRiverside
Tahoe Prosperity Center
Town of Mammoth Lakes
Tuolumne County Economic Development Authority
Upstate CA Connect Consortium
Volcano Communications Group
West Kern Community College Districts
Yuba Community College Districts
Opposition
None on file.
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Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083