Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2130

Introduced by Assembly Member Quirk

February 17, 2016

An act to amend Section 281 of the Public Utilities Code, relating to telecommunications.

LEGISLATIVE COUNSEL’S DIGEST

AB 2130, as amended, Quirk. Telecommunications: universal service: California Advanced Services Fund.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. Existing law establishes the California Advanced Services Fund, referred to as the CASF, in the State begin delete Treasury. end delete begin insert Treasury, with 4 accounts. Existing law requires that a surcharge imposed by the commission pursuant to a specified decision of the commission be deposited in the fund. Existing law prohibits the commission from collecting more than $100,000,000 before January 1, 2011, and authorizes the commission to collect an additional sum not to exceed $215,000,000, through the surcharge for the period beginning January 1, 2011, and continuing through the 2020 calendar year, for a total cost limitation of $315,000,000. end insert Existing law requires the commission to develop, implement, and administer the CASF 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 begin delete technologies, as provided in certain decisions of the commission and in statute. end delete begin insert technologies. Existing law states that the goal of the California Advanced Services Fund 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 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 and requires the commission to provide each applicant, and any party challenging an application, the opportunity to demonstrate actual levels of broadband service in the project area, as prescribed. end insert

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This bill would make nonsubstantive changes to the CASF statute.

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This bill would establish the Broadband Build-Out Completion Account within the CASF and would authorize the commission to collect an additional sum not to exceed $100,000,000, on or after January 1, 2017, for deposit in the Broadband Build-Out Completion Account. The bill would require that moneys in the account be disbursed pursuant to a multiple-round, fair and open competitive bidding process for infrastructure projects to provide broadband access to unserved areas of California consistent with specified requirements and objectives.

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Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

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Because the program that is extended under the provisions of this bill are within the act and a decision or order of the commission implements the program requirements, a violation of these provisions would impose a state-mandated local program by expanding the definition of a crime.

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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.

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

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By authorizing the charge to fund the new account, this bill would include 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.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . 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:

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 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, no later than December 31,
2015, to approve funding for infrastructure projects that will
provide broadband access to no less than 98 percent of the state’s
households.

(2) 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.

(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.

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(5) The Broadband Build-Out Completion Account.

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(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. 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) 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.

(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.

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(e) Notwithstanding subdivision (d), on or after January 1, 2017,
the commission may collect an additional sum not to exceed one
hundred million dollars ($100,000,000), for deposit in the
Broadband Build-Out Completion Account. The commission may
collect the additional sum beginning with the calendar year 2017
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.

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(e)

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begin insert (f) 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) 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, 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.

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(f)

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begin insert (g) 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, 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.

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(g)

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begin insert (h) 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.

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(h)

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begin insert (i) end insert  (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) 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).

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(j) (1) Moneys in the Broadband Build-Out Completion Account
shall be disbursed pursuant to a multiple-round, fair and open
competitive bidding process for infrastructure projects to provide
broadband access to unserved areas of California. The bidding
process shall include all of the following:

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(A) Criteria for determining eligible areas for Broadband
Build-Out Completion Account funding by utilizing available
information as to those areas that are unserved and that are not
eligible for funding pursuant to Phase II of the Connect America
Fund, because of the limitations in Section 54.310 of Title 47 of
the Code of Federal Regulations, or similar programs distributing
federal Connect America Fund support.

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(B) Publicizing and making publicly available material program
requirements in advance of the deadline for bid submission,
including terms for the service commitments described in
paragraph (2). Program requirements shall be technologically
neutral.

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(C) Establishing a reserve price for each eligible area after
considering the model used for the distribution of Phase II of the
Connect America Fund or similar programs for distributing federal
Connect America Fund support.

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(D) Awarding funds with the objective of serving the maximum
number of unserved households. Bidders shall be allowed to
determine the amount of capital and operating expenses to include
in the bid and shall not be required to share this information with
the commission.

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(2) Recipients of Broadband Build-Out Completion Account
support shall offer access to the Internet at speeds of at least 10
megabits per second (Mbps) downstream and 1 Mbps upstream
and shall offer a voice service that meets all of the following
requirements for the term specified by the commission:

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(A) It provides voice grade access to the public switched
telephone network or its replacement voice communications
network.

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(B) It enables real time, two-way voice communications.

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(C) It provides the ability to call and connect to the local
emergency telephone systems described in the
Warren-911-Emergency Assistance Act (Article 6 (commencing
with Section 53100) of Chapter 1 of Part 1 of Division 2 of Title
5 of the Government Code).

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(3) The commission shall conduct a fair and open competitive
bidding process and shall award funds from the Broadband
Build-Out Completion Account no later than January 1, 2020.

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(4) If funds remain in the Broadband Build-Out Completion
Account after the first award of funds, the commission shall
promptly conduct additional competitive bidding rounds to
distribute the balance of available funds in the account.

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begin insert SEC. 2. end insert   

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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.

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