BILL ANALYSIS Ó
SB 745
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Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
SB
745 (Hueso) - As Amended June 20, 2016
SENATE VOTE: 36-1
SUBJECT: Telecommunications: universal service: California
Advanced Services Fund
SUMMARY: Makes various changes to the California Advanced
Services Fund (CASF). Specifically, this bill:
1)Requires the California Public Utilities Commission (CPUC), in
its review of applications for funds from the CASF Broadband
Public Housing Account (Public Housing Account), to prioritize
unwired housing developments.
2)Expands eligibility to wired housing developments for Public
Housing Account funds, if the CPUC determines that the
projects would provide broadband Internet service at no
greater cost for comparable speed and quality than is
commercially available before the project.
3)Specifies that a housing development is wired when it is
possible to subscribe to a commercially available broadband
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Internet service, such as Digital Subscriber Line, cable
modem, or another protocol, utilizing existing wired
facilities.
4)Specifies that a housing development is unwired when at least
one housing unit within the housing development is not wired.
5)Extends the date remaining funds from the Public Housing
Account are transferred back to other CASF Accounts from
December 31, 2016 to December 31, 2020.
6)Extends the due date on the CPUC annual report to the
Legislature from January 1 of each year to April 1 of each
year.
7)Requires the CPUC to provide additional information in its
annual report, including county information and specified
details on the status of each CASF funded project.
8)Authorizes representatives of workforce organizations and air
pollution control or air quality management districts to be
included as an eligible consortium for funds in the CASF Rural
and Urban Regional Broadband Consortia Grant Account
(Consortia 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
trust for the benefit of ratepayers, and to compensate
telephone corporations for their costs of providing universal
service, and expended only to accomplish specified
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telecommunications universal service programs, upon
appropriation in the annual Budget Act or upon supplemental
appropriation. (Public Utilities Code Section 270)
2)Requires the 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 Section 281)
3)Requires that $190 million, collected by a surcharge
authorized by the CPUC, after January 1, 2011, to be deposited
into the Broadband Infrastructure Grant Account
(Infrastructure Account). (Public Utilities Code Section 281)
4)Requires that $15 million, collected by a surcharge authorized
by the CPUC, after January 1, 2011, is to be deposited into
the Consortia Account. (Public Utilities Code Section 281)
5)Require that $10 million, collected by a surcharge authorized
by the CPUC, after January 1, 2011, to be deposited into the
Broadband Infrastructure Revolving Loan Account (Revolving
Loan Account). (Public Utilities Code Section 281)
6)Requires the CPUC to transfer to the Public Housing Account
$20 million from the Infrastructure Account and $5 million
from the Revolving Loan Account. Any moneys in the Public
Housing Account that have not been awarded by December 31,
2016, shall be transferred back to the Infrastructure Account
and the Revolving Loan Account in proportion to the amount
transferred from the respective accounts. (Public Utilities
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Code Section 281)
7)Authorizes the CPUC to collect an additional sum not to exceed
$315 million through the 2020 calendar year, but not to exceed
$25 million per year, unless the CPUC 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. (Public Utilities Code Section
281)
8)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 Section 281)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "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 a key component of the strategy. Improving the information
available to policymakers about the efforts and activities of
the CASF program will help to further our efforts to improve
access for more Californians. More detailed information at the
county-level and information about efforts to leverage
non-CASF resources will be beneficial to inform policymakers
as to the existing challenges and opportunities. The funds in
the Public Housing program are beneficial to low-income
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residents who would otherwise be without broadband service -
and therefore, opportunities for employment, economic
development, health improvements, services, etc."
2)Background: The CASF was created by the CPUC and statutorily
established by the Legislature through SB 1193 (Padilla),
Chapter 393, Statutes of 2008, to help promote the deployment
of broadband infrastructure in unserved and underserved areas
of the state.
The goal of the program was to reach areas of the state that
had dial-up internet connectivity. Recognizing that
consumers, including schools, libraries, health and medical
facilities, etc. have a range of broadband access needs, the
CPUC adopted a 6Mbps/1.5Mbps speed standard as a benchmark for
evaluating proposals. The CPUC believed that such benchmark
speeds provided a minimum necessary to effectively work from
home. According to the Federal Communications Commission, for
most activities, including HD-quality streaming, a download
speed of 4Mbps is adequate.
In 2010, SB 1040 (Padilla), Chapter 317, Statutes of 2010,
expanded the program by authorizing telecommunications
carriers to collect an additional $125 million from its
initial $100 million allocation. 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. The CASF is funded through a surcharge collected on all
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telecommunications end-users. As of June 2016, the CASF
surcharge rate is at 0.464%.
3)CASF Accounts: CASF funding is allocated into four accounts,
the Infrastructure Account, the Consortia Account, the
Revolving Loan Account, and the Public Housing Account. The
Infrastructure Account funds the capital costs of broadband
infrastructure projects in unserved and underserved areas in
California. The Consortia Account provides funding for the
cost of broadband deployment activities, other than the
capital cost of facilities. The Revolving Loan Account
supplements financing for projects also receiving CASF grant
funding. The Public Housing Account supports projects to
deploy local area networks and to increase adoption rates in
publicly supported housing communities.
4)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 6 megabits per
second (Mbps)/1.5Mbps. 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.
5)Current Status of the CASF: Currently, the CPUC is authorized
to collect $315 million for the CASF through 2020, but not to
exceed $25 million per year, unless the CPUC 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. As of December 2015 the status
of each CASF account is as follows:
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Infrastructure Account: Authorized to collect $270 million
for funding for the capital costs of broadband infrastructure
projects. Fifty-two projects have been approved and 20
projects are still pending/under review. Approximately
$121,293,776 has been awarded from the account.
Revolving Loan Account: Authorized to collect $5 million to
provide supplemental financing for projects that are also
applying for funds from the Infrastructure Grant Account.
Approximately $626,654 has been awarded from the account.
Consortia Account: Authorizes $15 million to fund the cost of
broadband deployment activities other than the capital cost of
facilities. Approximately $9,263,476 has been awarded from
the account.
Public Housing Account: Authorizes $25 million to provide
grants and loans dedicated to broadband access and adoption in
publicly supported housing communities. Ninety-nine projects
have been approved and 271 projects are still pending/under
review. Approximately $2,506,628 awarded.
6)CASF Broadband Public Housing Account: In 2013, the
Legislature passed AB 1299 (Bradford), Chapter 507, Statutes
of 2013, which established the Public Housing Account within
the CASF. The Public Housing Account was created to award
grants and loans to finance projects to connect broadband
networks to publicly support communities. The Public Housing
Account grew out of the need to fund publicly subsided housing
units in California that lacked broadband connections. The
Legislature held hearings in which representatives citied the
lack of reliable broadband connectivity due to the cost of
building or upgrading the infrastructure and maintaining the
network and inside wiring, along with cable providers being
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denied access to public housing to install services, as
primary causes for the lack of broadband connection in
publicly subsided housing units.
AB 1299 transferred $20 million from the Infrastructure
Account and $5 million from the Revolving Loan Account to the
Public Housing Account. Twenty million dollars from the Public
Housing Account is to be used to finance projects to connect
broadband networks to publicly supported communities, and $5
million is to be awarded to support programs designed to
increase adoption rates for broadband services. As of
December 2015, there remains approximately $22 million
remaining in the Public Housing Account. Any remaining funds
in the Public Housing Account that hasn't been awarded by
December 31, 2016, is to be transferred back to Infrastructure
Account and Revolving Loan Account.
7)Resolution T-17515: In 2015, the Housing Authority of the
County of San Bernardino (HACSB), Community Housing Works
(CHW), and Eden Housing, Inc. (Eden), submitted applications
for CASF funding. The 12 project application was to provide
broadband services for 548 living units in the publicly
supported communities. The 12 projects were challenged by two
Internet Service Providers (ISP), Charter and Comcast, on the
grounds that an ISP was already providing service to those
publically supported communities. The subsequent review of
the challenge concluded that nearly all of the public housing
application locations were wired. HACSB, CHW, and Eden
responded to the challengers by asserting that "although the
units may have wiring to support broadband Internet service,
residents do not subscribe to that service because they cannot
afford the service." In June 2016, the CPUC approved $239,793
for the HACSB, CHW, and Eden projects.
This bill requires the CPUC to prioritize unwired housing
developments for funds from the Public Housing Account. This
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bill also authorizes wired housing developments to be eligible
for Public Housing Account funds, if the CPUC determines that
the projects would provide broadband Internet service at no
greater cost for comparable speed and quality than is
commercially available before the project. Furthermore, this
bill extends the date in which money is transferred from the
Public Housing Account back to the Infrastructure Account and
Revolving Loan Account from December 31, 2016, to December 31,
2020.
By authorizing wired housing developments to be eligible for
Public Housing Account funds, this bill would potentially
greatly expand the number of eligible projects for CASF grant
monies. Such expansion could promote overbuilding and reduce
funds available to support unserved communities and unwired
housing development.
The author may wish to consider an amendment to ensure that
CASF funds from the Public Housing Account are prioritized for
unserved housing development, to be consistent with current
CPUC priorities and to ensure that funds are not used to
overbuilt existing housing developments with broadband
services.
8)CASF Annual Report: Under current law, the CPUC is required
to provide an annual report to the Legislature on January 1 of
each year on the status of the CASF, including information on
the amount of funds expended, the recipients of the funds, the
geographic regions affected by the funds, the expected
benefits of the funds, actual broadband adoption levels from
the funds, and the amount of funds expended used to match
federal funds.
This bill extends the due date on the CPUC annual report to
the Legislature from January 1 of each year to April 1 of each
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year. In addition, this bill requires the CPUC to include more
information in its annual report, including the geographic
regions of the state affected by funds including, information
by county, details on the status of each project, whether the
project has been completed, and/or the expected the completion
date, and additional details on efforts to leverage non-CASF
funds.
9)Regional Consortia: Under current law, moneys from the
Consortia Account are available only to eligible consortia's
to fund the cost of broadband deployment activities other than
the capital cost of facilities. An eligible consortium may
include, as specified by the CPUC, representatives of
organizations, including, local and regional government,
public safety, elementary and secondary education, health
care, libraries, post-secondary education, community-based
organizations, tourism, parks and recreation, agricultural and
business.
This bill would add representatives of workforce organizations
and air pollution control or air quality management districts
as eligible consortia that may apply for Consortia Account
funds. According to the author, workforce organizations
include one-stop career centers that provide opportunities and
access to employment and training. In addition, air quality
agencies are developing new information resources via
broadband connections which provide residents with improved
access to air quality, including real time air monitoring.
These agencies can contribute to the efforts of local
consortium to help bridge the digital divide.
10)Suggested Amendment:
281 (h) (3) (B) (i) In its review of applications received
pursuant to subparagraph (A), the commission shall prioritize
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unwired unserved housing developments. 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.
(ii) For purposes of this subparagraph, a housing development
is 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 unserved when at least one housing unit within the
housing development is not wired offered broadband Internet
service .
11)Prior Legislation:
AB 1299 (Bradford), Chapter 507, Statutes of 2013: Establishes
the Public Housing Account within the CASF to fund grants for
the deployment and adoption of broadband services in publicly
supported communities.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
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Opposition
None on file.
Analysis Prepared by:Edmond Cheung / U. & C. / (916)
319-2083