BILL ANALYSIS �
SB 1364
Page 1
SENATE THIRD READING
SB 1364 (Fuller)
As Amended July 1, 2014
Majority vote
SENATE VOTE :37-0
UTILITIES & COMMERCE 14-0
APPROPRIATIONS 17-0
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|Ayes:|Patterson, Bonilla, |Ayes:|Gatto, Bigelow, |
| |Buchanan, Ch�vez, Dahle, | |Bocanegra, Bradford, Ian |
| |Fong, Beth Gaines, | |Calderon, Campos, |
| |Garcia, Roger Hern�ndez, | |Donnelly, Eggman, Gomez, |
| |Jones, Mullin, Quirk, | |Holden, Jones, Linder, |
| |Rendon, Skinner | |Pan, Quirk, |
| | | |Ridley-Thomas, Wagner, |
| | | |Weber |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Extends the sunset date of the California High Cost
Fund-A (CHCF-A) and High Cost Fund-B (CHCF-B) universal
telecommunications service programs to January 1, 2019.
Specifically, this bill :
1)Extends the sunset date of CHCF-A and CHCF-B from January 1,
2015, to January 1, 2019.
2)Encourages the California Public Utilities Commission (PUC),
in administering the universal service programs and state
participation in federal universal service programs, to
prioritize policies that maximize the amount of federal
funding to California.
3)Revises a provision of law related to the definition of
universal service program funds.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, annual revenues from customer surcharges of
approximately $35 million to the CHCF-A Fund (special fund)
until 2019. Annual expenditures of approximately $40 million
from the CHCF-A Fund until 2019 to support small rural telephone
SB 1364
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companies. Currently, the CHCF-A surcharge is 0.18% resulting
in 2013-14 revenues of approximately $34 million. Annual
expenditures for this program exceed revenues in order to reduce
fund reserves.
COMMENTS :
1)Purpose. According to the author, "SB 1364 will help to
maintain lower rates for rural customers and provide access to
telecommunications services that would be otherwise
unavailable without state and federal high cost support.
Rural residents and businesses have a critical need to be
connected through both the telephone and the Internet for
public safety, economic, educational and other reasons.
Building, operating and maintaining telecommunications
networks in rural areas is extremely expensive on a per
customer basis due to tough terrain, greater distances between
customers, and sparse populations. Due to these factors,
there's generally no business case for providing affordable
communications services in rural areas without cost support
from federal and state universal service programs. Many
technologies, such as wireless and Voice over Internet
Protocol (VoIP), would not be available in rural areas if not
for the existing networks built by the telecommunications
companies receiving cost support from universal service
programs."
2)Universal telephone service. Universal telephone service is
the principle that all Americans should have access to
high-quality, affordable telecommunications services. Both
federal and state programs provide subsidies to carriers that
help pay for the costs associated with providing service in
rural, remote, and sparsely populated areas (i.e., where
service would otherwise be of high cost). The programs are
funded by bill surcharges paid by most landline, wireless, and
VoIP customers. The goal is to keep everyone connected
through affordable rates, as many argue the value of the
network increases when everyone is connected to the
telecommunications network.
3)Federal universal service: the Connect America Fund (CAF). In
2011, the Federal Communications Commission (FCC) reformed its
universal voice service programs to accelerate broadband (and
voice) build-out to rural, high-cost areas. CAF is funded by
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customer surcharges on interstate services, and carriers that
accept funding must meet minimum network (i.e., broadband
speed) requirements. If carriers do not meet these
requirements, millions in annual federal funding to California
is at risk.
4)Universal service in California. California has established
various public programs to promote universal service. The
California High Cost Fund-A (CHCF-A) and High Cost Fund-B
(CHCF-B) support universal telephone service in rural,
high-cost areas. In conjunction with federal funding, these
programs ensure rates for Californians in rural areas remain
reasonable and comparable to rates in urban areas. CHCF-A and
CHCF-B are administered by the PUC and funded by a customer
surcharge on all telecommunications customers' intrastate
services. The PUC adjusts the surcharge, typically on an
annual basis, to ensure sufficient funding for carrier claims
and administrative costs.
Please see the policy committee analysis for a full discussion.
Analysis Prepared by : Brandon Gaytan / U. & C. / (916)
319-2083
FN: 0004917