BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 745|
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                                UNFINISHED BUSINESS 


          Bill No:  SB 745
          Author:   Hueso (D) 
          Amended:  8/19/16  
          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

           SENATE FLOOR:  36-1, 1/25/16
           AYES:  Allen, Beall, Berryhill, Block, Cannella, De León,  
            Fuller, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg,  
            Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire,  
            Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen,  
            Nielsen, Pan, Pavley, Roth, Runner, Vidak, Wieckowski, Wolk
           NOES:  Anderson
           NO VOTE RECORDED:  Bates, Gaines, Stone

           ASSEMBLY FLOOR:  54-26, 8/23/16 - See last page for vote

           SUBJECT:   Telecommunications:  universal service:  California  
                     Advanced Services Fund


          SOURCE:    Author
          
          DIGEST:   This bill makes changes to the California Advanced  
          Services Fund (CASF) program for broadband service.  
          Specifically, this bill extends the date remaining funds from  
          the Public Housing Account are transferred back to other   
          Accounts from December 31, 2016, to December 31, 2020, and  








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          limits eligibility to unserved public housing developments.   
          This bill makes additional changes, including information  
          required in the California Public Utilities Commission (CPUC)  
          annual report to the Legislature, and others.


          Assembly Amendments extend the date by four years (from 2016 to  
          2020) by when remaining funds must be transferred from the CASF  
          Public Housing Account to the CASF Infrastructure Grant Fund  
          Account and limits the eligible entities to unserved public  
          housing developments, as defined.


          ANALYSIS: 

          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 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 percent 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  








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            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 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  
            Code §281) 

          7)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)Extends the date remaining funds from the CASF Public Housing  
            Account are transferred back to other CASF Accounts from  
            December 31, 2016, to December 31, 2020.


          2)Requires the CPUC, in its review of applications for funds  
            from the CASF Public Housing Account, to award grants only to  
            unserved housing developments.


          3)Extends the due date on the CPUC annual report to the  
            Legislature from January 1 of each year to April 1 of each  
            year, and requires the CPUC to provide additional information  
            including county information and specified details on the  
            status of each CASF funded project.


          4)Authorizes representatives of workforce organizations and air  
            pollution control or air quality management districts to be  
            included as an eligible participant within a regional  
            consortium in the CASF Rural and Urban Regional Broadband  
            Consortia Grant Account (Consortia Account). 








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          5)Requires the CPUC, in its review of applications for funds  
            from the CASF Broadband Public Housing Account (Public Housing  
            Account), to provide awards to unserved housing developments,  
            defined as when at least one housing unit within the  
            development is not offered broadband internet service.

          Background

          Addressing the digital divide. 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.  In 2013, AB 1299 (Bradford, Chapter 507,  
          Statutes of 2013) required the CPUC to fund grants for the  








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          deployment and adoption of broadband services in publicly  
          supported communities using the Broadband Public Housing Account  
          (Housing Account) established within the California Advanced  
          Services Fund (CASF), utilizing $25 million mostly from the CASF  
          Infrastructure Grant Account. 

          SB 745. This bill requires remaining funds as of December 31,  
          2020 - instead of December 31, 2016 - in the CASF Public Housing  
          Account to be transferred back to CASF Infrastructure Account.   
          As such, the CPUC would be able to continue to award grants and  
          financing to projects for public housing entities that are  
          currently unserved with broadband for an additional four years.  
          The CPUC has awarded approximately 100 projects from the Public  
          Housing Account.  However, they are currently reviewing nearly  
          300 project proposals.  By extending the date by four years,  
          these projects and others can be assessed and awarded with the  
          funding, should their applications meet the program's criteria.  
          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 to understand broadband  
          deployment by county.  While some county-level information is  
          included in the CPUC 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  
          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.  








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          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.

          AB 1299 (Bradford, Chapter 507, Statutes of 2013) required the  
          CPUC to fund grants for the deployment and adoption of broadband  
          services in publicly supported communities using the Broadband  
          Public Housing Account (Housing Account) established within  
          CASF, as specified.

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

          According to the Assembly Appropriations Committee, increased  
          costs of approximately $260,000 (CASF) to present county-by  
          county-data on project progress and provide detailed information  
          of efforts to leverage non-CASF funds in annual reports.   Staff  
          would also be required to process the additional applications  
          and conduct administrative tasks related to grant oversight and  
          reimbursement for applications from workforce organizations and  
          air quality districts.




          SUPPORT:   (Verified8/23/16)


          California Cable and Telecommunication Association








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          OPPOSITION:   (Verified8/23/16)


          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 a key component of the strategy. Extending the date by when  
          funds from the Public Housing Account are reverted to the other  
          accounts provides residents of eligible public housing  
          developments the opportunity to benefit from the state's efforts  
          to address the digital divide. Additionally, 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 to help California residents connect to broadband  
          services.

           ASSEMBLY FLOOR:  54-26, 8/23/16
           AYES:  Achadjian, Alejo, Arambula, Atkins, Bloom, Bonilla,  
            Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu,  
            Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier,  
            Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,  
            Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden,  
            Irwin, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina,  
            Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams,  
            Wood, Rendon
           NOES:  Travis Allen, Baker, Bigelow, Brough, Chang, Chávez,  
            Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones, Kim,  
            Lackey, Linder, Maienschein, Mathis, Mayes, Melendez,  
            Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk










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          Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
          8/23/16 19:58:23


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