BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 1364
Author: Fuller (R), et al.
Amended: 7/1/14
Vote: 27 - Urgency
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 9-0, 4/1/14
AYES: Padilla, Fuller, Cannella, Corbett, DeSaulnier, Hill,
Knight, Pavley, Wolk
NO VOTE RECORDED: Block, De Le�n
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SENATE FLOOR : 37-0, 5/28/14
AYES: Anderson, Beall, Berryhill, Block, Cannella, Corbett,
Correa, De Le�n, DeSaulnier, Evans, Fuller, Gaines, Galgiani,
Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Knight, Lara,
Leno, Lieu, Liu, Mitchell, Monning, Morrell, Nielsen, Padilla,
Pavley, Roth, Steinberg, Torres, Vidak, Walters, Wolk, Wyland
NO VOTE RECORDED: Calderon, Wright, Yee
ASSEMBLY FLOOR : 78-0, 8/25/14 - See last page for vote
SUBJECT : Telecommunications universal service programs:
California High-Cost Fund-A program
SOURCE : California's Independent Telecommunications
Companies
DIGEST : This bill extends the repeal date of the California
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High-Cost Fund-A program (CHCF-A) and California High-Cost
Fund-B (CHCF-B) program until January 1, 2019.
Assembly Amendments add a coauthor and make technical changes.
ANALYSIS :
Existing law:
1.Requires the Public Utilities Commission (PUC) to establish
and maintain universal service programs to ensure statewide
affordable telephone service and access to broadband and
advanced communications services, funded by customer
surcharges on landline, wireless, and Voice over Internet
Protocol (VoIP) service.
2.Requires the PUC to establish and maintain a CHCF-A program to
support small independent telephone companies' provision of
basic service in rural, high-cost areas of the state.
3.Requires the PUC, in administering the CHCF-A program, to
promote customer access to advanced services in rural areas
and to include in small company rate calculations the cost of
all reasonable investments necessary to provide voice services
and deployment of broadband-capable facilities.
4.Requires the PUC to establish and maintain the CHCF-B program
to provide support to large providers that are Carriers of
Last Resort for provision of basic service in the high-cost
portions of their service areas.
Existing federal law and decisions of the Federal Communications
Commission (FCC) provide federal universal service funding to
providers serving rural, high-cost areas to help pay for
facilities that provide customers both voice and broadband
service, and condition receipt of those federal funds on meeting
broadband deployment milestones and minimum network speeds.
This bill
1.Extends the repeal date of the CHCF-A program and CHCF-B
program requirements, as specified, until January 1, 2019.
2.Encourages the PUC, in administering universal service
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programs, and in administering state participation in federal
universal service programs, to prioritize policies and
practices that maximize the amount of federal funding to
California.
3.Makes conforming changes as it pertains to federal funding of
universal service programs.
Background
Existing law requires the PUC to oversee a variety of programs
to ensure universal access to telecommunications services by
California residents. These programs are supported by customer
surcharges on landline, wireless, and VoIP intrastate service.
Specifically, the state has two programs to promote universal
service in rural, high-costs areas. The CHCF-A program supports
small rural telephone companies by covering the company's
revenue requirement (as determined by the PUC) and less
collected rate revenue and federal support. There are currently
ten telephone companies receiving support under the CHCF-A
program (13 companies are eligible).
The CHCF-B supports large carriers that are Carriers of Last
Resort by covering costs of providing service in high-costs
exceeding a set baseline (currently $36 per month). Recipients
of support in the CHCF-B program are AT&T California, Verizon of
California, Frontier Telecommunications Company of California,
and Cox California Telecom.
The PUC adjusts the customer surcharge for the CHCF-A and CHCF-B
programs, typically on an annual basis, to ensure adequate
funding to cover carrier claims and administrative costs.
The FCC also provides universal service funding to providers
serving rural, high-cost areas to pay for facilities that can
provide both voice and broadband service. Funding for the
federal program comes from customer surcharges on interstate
services.
Comments
According to the author's office, rural residents and businesses
have a critical need to be connected through both the telephone
and the Internet for public safety, economic, educational and
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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 program. This
bill will help to maintain lower rates for rural customers and
provide access to telecommunications services than would be
otherwise available without state and federal high cost support.
All California telephone users - whether they use landline,
VoIP, or wireless technologies, and whether they live in rural
or urban areas - pay a surcharge on their intrastate usage to
support the availability of affordable telephone service in
rural, high-cost areas of the state, ensure universal service in
virtually every area of the state, and thereby enhance the value
of the state's telecommunications network for all Californians.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
For the CHCF-A program:
o Annual revenues of approximately $35 million to the
CHCF-A Administrative Committee Fund (special) until 2019
from customer surcharges.
o Annual expenditures of approximately $40 million from
the CHCF-A Fund until 2019 to support small rural telephone
companies.
For the CHCF-B program:
o Annual revenues in the low to mid-tens millions of
dollars to the CHCF-B Administrative Committee Fund
(special) until 2019 from customer surcharges.
o Annual expenditures of approximately $25 million from
the CHCF-B Fund until 2019 to support large telephone
companies providing service in high cost areas.
SUPPORT : (Verified 8/25/14)
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California's Independent Telecommunications Companies (source)
AT&T
California Communications Association
Frontier Communications
Office of Ratepayer Advocates
Rural County Representatives of California
Small School Districts' Association
OPPOSITION : (Verified 8/25/14)
The Utility Reform Network
ASSEMBLY FLOOR : 78-0, 8/25/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Mansoor, Vacancy
JG:e 8/26/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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