BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1262|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  AB 1262
          Author:   Wood (D)
          Introduced:2/27/15  
          Vote:     27  - Urgency

           SENATE ENERGY, U. & C. COMMITTEE:  10-0, 6/16/15
           AYES:  Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, Leyva,  
            McGuire, Morrell, Wolk
           NO VOTE RECORDED:  Pavley

           SENATE APPROPRIATIONS COMMITTEE:  6-0, 6/29/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza, Nielsen
           NO VOTE RECORDED:  Bates

           ASSEMBLY FLOOR:  77-0, 5/7/15 - See last page for vote

           SUBJECT:   Telecommunications:  universal service:  California  
                     Advanced Services Fund


          SOURCE:    California Center for Rural Policy


          DIGEST:  This bill reallocates funding among two accounts within  
          the California Advanced Services Fund (CASF) for purposes of  
          encouraging broadband deployment in the state.  Specifically,  
          this bill results in a reduction of $5 million from the  
          Broadband Infrastructure Revolving Loan Account and a  
          corresponding increase to the Rural and Urban Regional Broadband  
          Consortia Grant Account.


          ANALYSIS: 








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          Existing law:

          1)Establishes the CASF as one of several California universal  
            service program funds established in the State Treasury.   
            (Public Utilities Code §270)

          2)Requires the California Public Utilities Commission (CPUC) to  
            develop, implement, and administer the CASF program 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.  (Public  
            Utilities Code §281)

          3)Establishes the goal of the CASF program to approve funding  
            for infrastructure projects that will provide broadband access  
            to no less than 98% of Californians by December 31, 2015.   
            (Public Utilities Code §281)

          4)Requires the CPUC to establish four accounts within CASF  
            program, including the Broadband Infrastructure Grant Account,  
            the Rural and Urban Regional Broadband Consortia Grant  
            Account, the Broadband Infrastructure Revolving Loan Account,  
            and the Broadband Public Housing Account.  (Public Utilities  
            Code §281)

          5)Requires that of the monies collected for CASF on and after  
            January 1, 2011, $190,000,000 is deposited into the Broadband  
            Infrastructure Grant Account, $10,000,000 is deposited in the  
            Rural and Urban Regional Broadband Consortia Grant Account,  
            and $15,000,000 is deposited into the Broadband Infrastructure  
            Revolving Loan Account.  (Public Utilities Code §281)

          6)Requires that of the monies deposited into the CASF program  
            $20 million shall be transferred from the Broadband  
            Infrastructure Grant Account and another $5 million shall be  
            transferred from the Broadband Infrastructure Revolving Loan  
            Account for a total of $25 million to the Broadband Public  
            Housing Account.  Requires that any funds not awarded as of  
            December 31, 2016, shall be transferred back in proportion to  
            the amount transferred.  (Public Utilities Code §281)

          This bill:







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          1)Requires that of the monies collected for CASF on and after  
            January 1, 2011, $15,000,000 is to be deposited into the Rural  
            and Urban Regional Broadband Consortia Grant Account and used  
            for specified purposes, and $10,000,000 is to be deposited  
            into the Broadband Infrastructure Revolving Loan Account and  
            used for specified purposes.

          2)Takes effect immediately as an urgency statute.

          Background


          In 2007, the CPUC established the CASF which was subsequently  
          codified in law by SB 1193 (Padilla, Chapter 393, Statutes of  
          2008) as a new universal service program to encourage deployment  
          of broadband services to all Californians that will promote  
          economic growth, job creation, and substantial social benefits  
          of advanced information and communications technologies.  The  
          CASF provides grants to bridge the "digital divide" in unserved  
          and underserved areas in the state.  



          CASF is funded by a surcharge rate on revenues collected by  
          telecommunications carriers from end-users of intrastate  
          services.  With initial authorized funding of $100 million, the  
          CASF supports projects that will 1) provide broadband services  
          to "unserved" areas that are currently without broadband access  
          and 2) build out facilities in "underserved" areas.  An  
          "unserved" area is an area that is not served by any form of  
          wireline or wireless facilities-based broadband, such that  
          internet connectivity is available only through dial-up service.  
           An "underserved" area is an area where broadband is available,  
          but no wireline or wireless facilities-based provider offers  
          service at advertised data transfer speeds of at least six  
          megabits per second download and 1.5 megabits per second upload.  
           Statute requires the CPUC to prioritize CASF investments to  
          unserved areas, followed by underserved areas. 

          SB 1040 (Padilla, Chapter 317, Statutes of 2010) extended CASF  
          indefinitely, established subaccounts within CASF, and increased  
          CASF funding to $225 million.  SB 740 (Padilla, Chapter 522,  
          Statutes of 2013) authorized an additional $90 million funding  







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          for a CASF grant subaccount.  Currently, the CASF program has a  
          total authorized funding of $315 million to be collected in  
          surcharges through the year 2020. 

          The current authorized funding limits for each CASF subaccount  
          is as follows:

          Broadband Infrastructure Grant Account                 $270  
          million
          Broadband Infrastructure Revolving Loan Account $10 million
          Rural and Urban Regional Broadband Consortia Grant Account$10  
          million
          Broadband Public Housing Account                       $25  
          million
          
          The Broadband Infrastructure Grant Account.  Provides grants to  
          cover the capital costs of expanding broadband infrastructure.   
          The CASF grant awards 70% of project costs for unserved areas  
          and 60% for underserved areas.  Eligible entities include both  
          telephone corporations and non-telephone corporations with  
          certain conditions, such as conditioning funding for local  
          governments to projects that only serve unserved households or  
          businesses.

          The Broadband Infrastructure Revolving Loan Account.  Intended  
          to provide supplemental financing for projects also applying for  
          CASF grant funding.  The loan program would cover 20% of  
          projects costs, with a maximum of $500,000.  

          The Rural and Urban Regional Broadband Consortia Grant Account.   
          Provides grants to eligible voluntary regional consortia to fund  
          the cost of broadband deployment activities other than capital  
          costs of facilities.  Eligible consortia include diverse  
          stakeholders from their respective communities, and work to  
          inform the public about broadband, gather data about Internet  
          availability and speeds for CPUC broadband maps, mobilize local  
          governments and employers to aggregate demand to assist the  
          private sector, and ensure local broadband providers know about  
          CASF.  There are currently over a dozen regional consortia  
          representing every area of the state.  While the members of each  
          regional consortia vary, many consortia include representatives  
          from local businesses, community colleges, school districts,  
          community-based organizations and local governments. 








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          The Broadband Public Housing Account.  Supports deployment of  
          broadband infrastructure and adoption programs in eligible  
          publicly supported housing communities.  The program was  
          established by AB 1299 (Bradford, Chapter 507, Statutes of 2013)  
          and transfers a total of $25 million from CASF accounts,  
          specifically $20 million from the grant account and $5 million  
          from the loan account.  Per the statute, any remaining funds as  
          of December 31, 2016, will be transferred back in proportion to  
          the two accounts.  On December 18, 2014, the CPUC approved the  
          rules implementing the new Broadband Public Housing Account (D.  
          14-12-039).

          Consortia Grant Account vs. Revolving Loan Account.  The funds  
          within the Regional Consortia Account have been well-subscribed.  
           The CPUC has awarded a total of $9.26 million in grant funding  
          for 16 consortia groups, leaving only $250,000 remaining in the  
          account.  Furthermore, most regional consortia (13 of 16) will  
          have exhausted their funding this year, with the remaining  
          scheduled to exhaust their funding next year.  On the other  
          hand, according to the CPUC, "the CASF Revolving Loan program is  
          either undersubscribed or of little necessity, given the number  
          of grant applications vs. loan applications received on the  
          February 1, 2013 deadline."  The CPUC has approved only three  
          loans to date totaling $126,654 to two applicants, for three  
          separate infrastructure projects.  The CPUC in its budget  
          documents had already flagged the need to evaluate whether the  
          loan program is worth continuing to pursue.

          Prior/Related Legislation
          
          SB 1193 (Padilla, Chapter 393, Statutes of 2008) codified CASF  
          as a new universal service program in the Public Utilities Code  
          to encourage the deployment of broadband.

          SB 1040 (Padilla, Chapter 317, Statutes of 2010) extended CASF  
          indefinitely and expanded it to include three accounts: 1)  
          Broadband Infrastructure Grant Account, 2) Broadband  
          Infrastructure Revolving Loan Account, and 3) Rural and Urban  
          Regional Broadband Consortia Grant Account.  The bill also  
          increased CASF funding to $225 million ($100 million additional  
          for the Infrastructure Grant Account, $15 million to the  
          Revolving Loan Account, and $10 million to the Consortia Grant  
          Account). 








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          SB 740 (Padilla, Chapter 522, Statutes of 2013) expanded  
          eligibility in the CASF, established a program goal, and  
          increased the program funding.

          AB 1299 (Bradford, Chapter 507, Statutes of 2013) required the  
          CPUC to transfer a total of $25 million from the Broadband  
          Infrastructure Grant Account and the Broadband Revolving Loan  
          Account in order to fund the Broadband Public Housing Account.   
          Required that any funds not awarded by December 31, 2016, are  
          transferred back.

          AB 238 (Stone, 2015) defines "broadband" services based on  
          specified speeds for purposes of CASF.  The bill is in Assembly  
          Utilities & Commerce Committee.
          
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee, annual costs  
          of approximately $130,000 beginning in January 2018 for two or  
          three years to the CASF (special fund) to the CPUC for  
          additional grant administration.


          SUPPORT:   (Verified6/29/15)


          California Center for Rural Policy (source)
          211 San Bernardino County
          Access Humboldt
          Anza Electric Cooperative, Inc.
          Broadband Consortium of the Pacific Coast
          California Emerging Technology Fund
          California Primary Care Association
          California Public Utilities Commission
          California State Association of Counties
          California State University, San Bernardino
          Central Coast Broadband Consortium
          Central Sierra Connect Broadband Consortia
          City of Bishop
          City of California City
          City of Ridgecrest
          City of Riverside
          City of Tehachapi







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          Connected Capital Area Broadband Consortium
          Contra Costa Economic Partnership
          Corporation for Education Network Initiatives in California
          County of Alpine
          County of Amador
          County of Del Norte
          County of El Dorado
          County of Humboldt
          County of Kern
          County of Mariposa
          County of Modoc
          County of Mono
          County of Nevada
          County of Riverside
          County of Sacramento
          County of San Bernardino
          County of San Diego
          County of Shasta
          County of Sierra
          County of Sutter
          County of Tehama
          County of Trinity
          County of Tuolumne
          County of Ventura
          County of Yolo
          East Bay Broadband Consortium
          Eastern Sierra Connect Regional Broadband Consortium
          Economic Vitality Corporation
          Edgewood Companies
          Feldman McLaughlin Thiel LLP
          Gold Country Broadband Consortium
          High Desert Community Foundation
          Inland Empire Economic Partnership
          Inland Empire Regional Broadband Consortium
          Inyo Networks, Inc.
          Kern Community College District
          Lake Tahoe South Shore Chamber of Commerce
          Los Angeles County Regional Broadband Consortia
          North Bay/North Coast Broadband Consortium
          North Lake Tahoe Chamber/CVB/Resort Association
          Northeastern California Connect Consortium
          Plumas-Sierra Rural Electric Cooperative
          Plumas-Sierra Telecommunications
          Praxis Associates, Inc.







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          Redwood Coast Connect
          Riverside County Innovation Center
          Rural County Representatives of California
          San Bernardino Community College District
          San Diego Imperial Regional Broadband Consortium
          San Joaquin Valley Regional Broadband Consortium
          Sierra Economic Development Corporation
          Sierra Ecosystems Associates
          SmartRiverside
          Southeast Community Development Corporation
          Tahoe Prosperity Center
          The Utility Reform Network
          Town of Mammoth Lakes
          Tuolumne County Economic Development Authority
          Upstate California Connect Consortium
          Volcano Communications Group
          West Kern Community College District
          Yuba Community College District


          OPPOSITION:   (Verified6/29/15)


          None received

          ARGUMENTS IN SUPPORT:  The author's office expresses concern  
          that the CASF Rural and Urban Regional Broadband Consortia Grant  
          Account is about to be exhausted and that if further funds are  
          not available, many rural consortia will no longer be able to  
          provide the appropriate broadband educational service nor assist  
          in preparing applications for grants.  

          The members of the Broadband Regional Consortia state:  "AB 1262  
          would allow consortia to continue working with telecommunication  
          providers and key community stakeholders to promote CASF for  
          years to come.  We believe AB 1262 is essential to achieving the  
          state's broadband goal of reaching 98% broadband deployment and  
          80% adoption for California by 2015, goals acknowledged by the  
          California Broadband Council; CPUC; and California Emerging  
          Technology Fund."

          ASSEMBLY FLOOR:  77-0, 5/7/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,  







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            Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,  
            Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark  
            Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,  
            Wood, Atkins
          NO VOTE RECORDED:  Campos, Roger Hernández, Steinorth

          Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
          7/1/15 16:37:22


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