BILL ANALYSIS �
AB 876
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Date of Hearing: January 13, 2014
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 876 (Bonta) - As Amended: January 6, 2014
SUBJECT : Telecommunications: California Teleconnect Fund
Administrative Committee Fund
SUMMARY : Modifies the existing California Teleconnect Fund
(CTF). Specifically, this bill :
1)Clarifies that qualifying schools maintaining preschools and
transitional kindergartens are eligible for the CTF discount.
2)Requires the California Public Utilities Commission (PUC) to
develop and implement an outreach plan to eligible preschools
and transitional kindergartens to increase awareness about the
CTF.
3)Requires the PUC to revise the CTF to give priority for
advanced telecommunication services as the PUC deems
appropriate.
4)States the PUC must ensure the CTF remains technology neutral.
5)Requires the PUC to establish and maintain a database of
communication services purchased by CTF recipients among other
things.
6)Requires the PUC to open a new proceeding or amend an existing
proceeding to revise the definition of the advanced
telecommunication services to include the needs of
personalized digital learning in schools and libraries.
EXISTING LAW :
1)Authorizes the PUC to use ratepayer funds collected for
universal service programs to compensate regulated telephone
corporations for their costs of providing universal service
(Public Utilities Code Section 270).
2)Requires the PUC to develop, implement and administer a
program to advance universal service by providing discounted
rates to qualifying schools, community colleges, libraries,
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hospitals, health clinics, and community organizations, known
as the CTF (Public Utilities Code Section 280).
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "AB 876 establishes a
database of discounted services and prices paid by all CTF
discounted schools and libraries. The bill updates outdated
definitions of "advanced telecommunications services" to schools
and libraries. AB 876 also clarifies availability of CTF for
preschool and transitional kindergarten programs, requires the
PUC to conduct outreach to such programs, and asks the PUC to
include the needs of personalized digital learning in "advanced
telecommunications services".
1)Background : The Commission opened a proceeding (R.95-01-020
and I.95-01-021) in
January 1995 and issued new universal service rules in light of
the opening of monopoly markets to competition. (D.95-07-050.)
In response to the federal Telecommunications Act of
1996, which intended to promote competition and reduce
telecommunications regulation, and the principles expressed in
AB 3643 Polanco (Chapter 278, Statutes of 1994), the Commission
later issued D.96-10-066 finalizing the new universal service
rules. That decision created a discount program for qualifying
schools, libraries, hospitals, health clinics, and
community-based organizations through CTF. The program provides
a 50% discount on select communications services and broadband
Internet access services.
The goals of CTF are innovation in the delivery and use of
advanced communications; diversity of choices among services and
providers; and affordable, widespread access to California's
public networks and to the resources tied to those networks.
The subsidy is funded through a surcharge on customers' bills
from their communication service provider, currently set at
0.59% of intrastate telephone charges.
CTF currently has more than 9,000 participating entities,
including more than 5,000 community organizations. For fiscal
year 2013-14, program expenditures are projected at
approximately $92.4 million.
CTF works in conjunction with the FCC's E-Rate Program.
Established in 1996, the E-rate program is the federal
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government's program for connecting the nation's schools and
libraries to broadband. For these schools and libraries, the
CTF discount applies to only the balance remaining after an
actual or statewide average E-Rate discount is applied.
On January 31, 2013, the PUC opened Rulemaking 13-01-010 to
conduct a comprehensive examination of CTF. The Rulemaking will
assess program goals and eligibility requirements for
participants, service providers and services. The PUC will seek
comment on: 1) CTF goals; 2) entities applying for and receiving
the CTF discount; 3) services eligible for the CTF discount; 4)
conditions placed on providers desiring to offer those services;
and 5) CTF budget, administration, and internal controls.
Interested parties are presently filing comments in the
proceeding, however it unclear when the PUC will issue a final
ruling.
2)What problem does this bill solve ? It is not clear if this
bill is seeking to address a problem
that has occurred, but the author wishes to ensure the necessary
safeguards are in place to protect schools from incurring
exorbitant charges for investments in communication services.
To date, no evidence has been produced by the PUC or any other
entity that communication carriers are price gauging or taking
advantage of eligible CTF schools or other entities for
communication services.
3)Program eligibility clarification : According to the author,
the law regarding eligibility for
preschools and transitional kindergarten is ambiguous, as they
apply as community based organizations for access to discounted
telecommunications services provided by CTF. This bill clarifies
eligibility of preschools and transitional kindergarten for the
CTF discount and requires the PUC to conduct outreach to such
programs to increase awareness.
4)Transparency of information : AB 876 requires the PUC to
establish and maintain a database
communication services purchased by CTF recipients to assist
schools and libraries with determining fair pricing as they
solicit bids from communication providers. The database would
exclude communication services purchased by qualifying entities
that are residential customers and any information prohibited
from being publicly disclosed by law. Currently, the PUC's CTF
website lists all approved CTF entities. This information,
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however, does not include the services used by each participant
nor does the PUC collect this information on a routine basis.
According the PUC last year, to implement this provision,
development of new protocols on how multiple CTF-eligible
entities can share resources may be warranted. Moreover, it may
be challenging to make an accurate comparison of prices paid for
communication services and infrastructure costs as any given
school or library will have varying levels of need such as
number of telephone lines, bundled packaging, geographic
location, upgrading of infrastructure, etc. Placing an
additional burden on communication providers to report unique
information about their products may discourage providers from
participating in the program.
In addition to the potential cost of establishing and
maintaining a database, it is unknown if the PUC has the
expertise and resources to develop such a complex tool. The
author may wish to amend the bill to address this by instead
investigating the feasibility of the database, as follows:
280.2 (a) The commission shall open or amend and existing
proceeding to develop a plan for reporting to the State on the
feasibility and expense associated with establishing and
maintaining a database of communication services purchased by
qualifying entities receiving financial support from the program
developed pursuant to Section 280 and the prices paid for those
communication services. The commission shall include, but not
limit, in the plan a report on how to allow qualifying entities
to access the database in order to collaborate and allow for the
use of common infrastructure to reduce costs. The commission
shall include in the plan a report on how to make only
aggregated and anonymized price information from the database
available to the public on the commission's Internet Web Site.
The commission shall report the plan findings or progress on the
plan no later than March 1, 2016.
The commission shall be authorized to work with third parties,
such as non-profits, if at the determination of the commission;
such third parties can provide assistance in developing the plan
while maintaining the privacy and security of all data through a
suitable legally-binding agreement.
5)CTF program reforms : This bill seeks to revise the CTF program
to give priority to using
funding for advanced high-quality communications services over
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legacy communications services. It is not clear how the author
defines "advanced high-quality communications services" and if
the author intends to prioritize one technology over another.
Moreover, the PUC has a long-standing policy of administering
the CTF program on a technology neutral basis. The current
practice at the PUC would be not to limit participation in the
program or prioritize discounts among customers or providers.
Thus, the author and this committee may wish to amend Section
280.2 (b) of the bill as follows:
The commission shall revise the program developed pursuant to
Section 280 to give priority to using moneys in the California
Teleconnect Fund Administrative Committee Fund for advanced
high-quality communications services over legacy communications
services , as the commission deems appropriate .
The bill also attempts to require the PUC to revise the
definition of advanced telecommunications services to include
the needs of personalized digital learning in schools and
libraries. The Federal Communications Commission (FCC) began
updating the E-Rate Program in 2010 and is now initiating a
comprehensive review to modernize the program. In July 2013,
the FCC announced that the revitalization is centered on three
proposed goals: 1) increased connectivity to high-capacity
broadband; 2) efficient purchasing through bulk buying,
consortia, and competitive bidding improvements, and 3) cutting
red tape to speed, streamline, and increase transparency in
application reviews. This provision is premature in light of
FCC's recent attention to this matter and the PUC's current
proceeding on CTF. Therefore, the author and this committee may
wish to strike Section 280.2 (c) until both proceedings are
complete .
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
AB 876
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Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083