BILL ANALYSIS                                                                                                                                                                                                    






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          |SENATE RULES COMMITTEE            |                        SB 745|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  SB 745
          Author:   Hueso (D) 
          Amended:  1/4/16  
          Vote:     21  

           SENATE ENERGY, U. & C. COMMITTEE:  9-0, 1/13/16
           AYES:  Hueso, Cannella, Hertzberg, Hill, Lara, McGuire,  
            Morrell, Pavley, Wolk
           NO VOTE RECORDED:  Fuller, Leyva

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 1/19/16
           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           SUBJECT:   Telecommunications:  universal service:  California  
                     Advanced Services Fund


          SOURCE:    Author

          DIGEST:   This bill requires the California Public Utilities  
          Commission (CPUC) to provide additional information in its  
          annual report to the Legislature of the California Advanced  
          Services Fund (CASF), including county-level data and efforts to  
          leverage other resources.  This bill also provides for the  
          explicit inclusion of workforce organization representatives in  
          regional consortia.
          
          ANALYSIS: 

          Existing law:

          1)Establishes the CASF as one of several California universal  
            service program funds established in the State Treasury.  








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            (Public Utilities Code 270)

          2)Requires the 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.  (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 monies collected in the Rural and Urban Regional  
            Broadband Consortia Grant Account are available to eligible  
            consortia to fund the costs of broadband deployment activities  
            other than capital costs of the facilities and identifies  
            eligible members and representatives who can participate in  
            the consortium. (Public Utilities Code 281)

          6)Requires the CPUC to submit a report to the Legislature by  
            January 1 of each year with specified information about CASF  
            activities and efforts. (Public Utilities Code 914.7)

          This bill:

          1)Requires the CPUC to include additional information in its  
            annual report to the Legislature on the status of the CASF,  
            specifically detailed information by county and efforts to  
            leverage funds from non-CASF funding. 

          2)Explicitly includes representatives from workforce  
            organizations and air quality agencies as eligible members of  
            regional broadband consortium.

          Background







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          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 areas  
          that are unserved and underserved by broadband service 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  
          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. 

          California statute requires the CPUC to provide an annual report  
          to the Legislature on the status of CASF activities and efforts.  
          The statute requires the report to include information about the  
          amount of funds expended in the previous year, to list the  
          recipients of the funds, the geographic regions of the state  
          affected/benefitted by the funds, actual broadband adoption  
          levels and other information. 

          This bill requires the CPUC to include more detailed information  







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          to understand broadband deployment by county.  While some  
          county-level information is included in the report, including  
          some information about projects funded, the information is not  
          uniformly displayed at the county level.  The most recent annual  
          report by the CPUC, published in April 2015, noted the  
          importance of leveraging non-CASF resources. According to the  
          report: "regional consortia leaders have identified a strong  
          need for CASF project development and grant preparation  
          assistance, including technical consultation and partnership  
          facilitation between regional stakeholders."  This bill requires  
          the CPUC to include in the annual report to the Legislature  
          specific efforts of the CASF Program to leverage non-CASF  
          resources as it embarks on exploring expanded roles and analysis  
          to leverage resources and support projects where broadband gaps  
          exist.  While these efforts have only recently begun, it will be  
          important for the Legislature to understand what is being  
          explored and any resulting challenges and opportunities.  

          Related/Prior Legislation
          
          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).

          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.
          
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee, workload  
          increases likely in the tens of thousands of dollars from the  
          CASF for additional reporting requirements.

          The CPUC notes that there are currently 17 consortia, most of  
          which contain multiple counties. To report on expenditures and  
          impacts by county instead of region will take coordination with  







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          the consortia to provide additional information and data  
          tracking. The CPUC estimates that this additional work load  
          would be approximately $90,000 annually for one PY. Senate  
          Appropriations Committee staff believes that these costs are  
          likely to be an upper limit and should decrease with time once  
          new data collection processes are established.

          SUPPORT:   (Verified  1/19/16)


          None received

          OPPOSITION:   (Verified1/19/16)

          None received

          ARGUMENTS IN SUPPORT:  According to the author, addressing the  
          digital divide is imperative to ensuring all Californians have  
          full and equal access to the economic, educational, social, and  
          health opportunities available on the Internet, now a primary  
          mechanism for many of society's activities.  Improved broadband  
          access and availability is an important strategy in the state's  
          efforts to bridge the divide, and the CASF program is key  
          component of the strategy. More detailed information at the  
          county-level and information about efforts to leverage non-CASF  
          resources will be beneficial to inform our efforts to better  
          address the existing challenges and opportunities.   
          

          Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
          1/20/16 15:40:03


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