Amended in Assembly August 1, 2016

Amended in Assembly June 20, 2016

Amended in Senate January 4, 2016

Senate Bill No. 745

Introduced by Senator Hueso

February 27, 2015

An act to amend Sections 281 and 914.7 of the Public Utilities Code, relating to telecommunications, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 745, as amended, Hueso. Telecommunications: universal service: California Advanced Services Fund.

Existing law, the federal Telecommunications Act of 1996, establishes a program of cooperative federalism for the regulation of telecommunications to attain the goal of local competition, while implementing specific, predictable, and sufficient federal and state mechanisms to preserve and advance universal service, consistent with certain universal service principles. The universal service principles include the principle that consumers in all regions of the nation, including low-income consumers and those in rural, insular, and high-cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas. The act authorizes each state to adopt regulations to provide for additional definitions and standards to preserve and advance universal service within the state, only to the extent that they adopt additional specific, predictable, and sufficient mechanisms that do not rely on or burden federal universal service support mechanisms.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations, as defined. Existing law establishes the California Advanced Services Fund, referred to as the 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 establishes the Rural and Urban Regional Broadband Consortia Grant Account within the CASF. Existing law provides that moneys in the Rural and Urban Regional Broadband Consortia Grant Account are 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, and provides that an eligible consortium may include representatives of organizations, including 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.

This bill would specifically include representatives of workforce organizations and air pollution control or air quality management districts amongst the persons that can be included in an eligible consortium.

Existing law establishes the Broadband Public Housing Account within the CASF. Existing law provides that moneys in that account are available for, among other things, grants and loans to publicly supported communities to finance projects to connect to broadband networks.

This bill would require the commission, in its review of applications for grants and loans for this purpose, to prioritize begin delete unwired housing developments and provide that a wired housing development would be an eligible applicant only if the commission determines that the project would provide broadband Internet service at no greater cost for comparable speed and quality than is commercially available before the project. end delete begin insert unserved housing developments, as defined. end insert

Existing law transferred moneys from other accounts within the CASF to the Broadband Public Housing Account for various specified purposes and provided those transferred moneys not awarded by December 31, 2016, would be returned to the accounts from which they were transferred.

This bill would extend that date until December 31, 2020. By authorizing the granting of moneys remaining in the Broadband Public Housing Account until that date, this bill would make an appropriation.

Existing law requires the commission to annually report to the Legislature on the expenditures of CASF funds, as specified, including the geographic regions of the state affected by those expenditures in the prior year.

This bill would require the commission’s report to the Legislature to include that information by county and details on efforts to leverage non-CASF funds, the status of each project funded through the CASF, whether the project has been completed, and, if applicable, the expected completion date of the project.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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 California
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.

(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.

(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. 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 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.

(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, business, workforce organizations, and air
pollution control or air quality management districts, 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 (26 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) (A) 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.

(B) (i) In its review of applications received pursuant to
subparagraph (A), the commission shall prioritize begin delete unwired end delete begin insert unserved end insert
housing developments. begin delete A wired housing development shall be an
eligible applicant only if the commission determines that the project
would provide broadband Internet service at no greater cost for
comparable speed and quality than is commercially available before
the project. end delete

(ii) For purposes of this subparagraph, a housing development
is begin delete wired when it is possible to subscribe to a commercially available
broadband Internet service, such as Digital Subscriber Line (DSL),
cable modem, or another protocol, utilizing existing wired facilities.
A housing development is unwired end delete begin insert unserved end insert when at least one
housing unit within the housing development is not begin delete wired. end delete begin insert offered
broadband Internet service. end insert

(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 Infrastructure Revolving Loan Account. Any
moneys in the Broadband Public Housing Account that have not
been awarded pursuant to this subdivision by December 31, 2020,
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).

SEC. 2.  

Section 914.7 of the Public Utilities Code is amended
to read:

914.7.  

(a) By April 1 of each year, the commission shall
provide a report to the Legislature that includes all of the following
information:

(1) The amount of funds expended from the California Advanced
Services Fund in the prior year.

(2) The recipients of funds expended from the California
Advanced Services Fund in the prior year.

(3) The geographic regions of the state affected by funds
expended from the California Advanced Services Fund in the prior
year, including information by county.

(4) The expected benefits to be derived from the funds expended
from the California Advanced Services Fund in the prior year.

(5) Details on the status of each project funded through the
California Advanced Services Fund, whether the project has been
completed, and, if applicable, the expected completion date of the
project.

(6) Actual broadband adoption levels from the funds expended
from the California Advanced Services Fund in the prior year.

(7) The amount of funds expended from the California Advanced
Services Fund used to match federal funds.

(8) Additional details on efforts to leverage non-California
Advanced Services Fund funds.

(9) An update on the expenditures from the California Advanced
Services Fund and broadband adoption levels, and an accounting
of remaining unserved and underserved households and areas of
the state.

(10) 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.

(b) Pursuant to Section 10231.5 of the Government Code, this
section is repealed on January 1, 2022.