BILL ANALYSIS
AB 140
Page 1
ASSEMBLY THIRD READING
AB 140 (Strom Martin)
As Amended May 31, 2001
Majority vote
UTILITIES AND COMMERCE 15-0 APPROPRIATIONS 21-0
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|Ayes:|Wright, Pescetti, John |Ayes:|Migden, Bates, Alquist, |
| |Campbell, Canciamilla, | |Aroner, Ashburn, Cedillo, |
| |Cardenas, Diaz, Jackson, | |Corbett, Correa, Daucher, |
| |Kelley, La Suer, Leonard, | |Goldberg, Maldonado, |
| |Maddox, Nation, Papan, | |Robert Pacheco, Papan, |
| |Simitian, Wesson | |Pavley, Runner, Simitian, |
| | | |Thomson, Wesson, Wiggins, |
| | | |Wright, Zettel |
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SUMMARY : Establishes a grant program for the construction of
telecommunications infrastructure, under the Public Utilities
Act. The program would be in effect until January 1, 2006. The
grant program will be:
1)Funded through the existing California High Cost Fund-A
(CHCF-A) and California High Cost Fund-B (CHCF-B) in the
respective Administrative Committee Funds
2)Subject to specified annual funding limits from each of the
funds, and to the requirement that all claims be paid prior to
any transfer from the CHCF-B for the rural program.
3)Authorized through the California Public Utilities Commission
(CPUC), which will award the grants and establish a working
group to develop technical criteria for evaluating the grants.
EXISTING LAW creates CHCF-A Administration Committee and CHCF-B
Administration Committee to advise CPUC regarding programs to
provide for transfer payments to telephone corporations
providing services in high cost areas and to carry out programs
under the commission's authority.
FISCAL EFFECT : Up to $10 million special fund costs for four
years.
COMMENTS : There are two High Cost Funds provide subsidy for the
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provisioning of high cost local telephone service in California.
CHCF-A provides for transfer payments to the small, independent
telephone companies in California providing telephone service in
high-cost areas. The fund allows for fair and equitable rate
structures throughout the state by providing payment as subsidy
to the telephone companies whose basic exchange access line
rates may be set below their average cost to serve these mostly
rural areas.
CHCF-B, established in 1996, provides for the same sort of
equitable statewide rate structure for the larger carriers. The
difference is that the CHCF-B surcharge monies are flowed back
to ratepayers through either a bill surcredit or through direct
rate reductions for other than basic exchange access line
services. CHCF-B is a much larger fund, and the rate reductions
it funds can be targeted to competitive services, like local
toll service.
This bill seeks to modify existing Public Utilities Code Section
270 by allowing moneys in the CHCF-A and CHCF-B to be diverted
to the specified grant programs until January 1, 2006, when
existing Section 260 language becomes operative again. All
claims on the CHCF-B must be paid before funds go to the rural
infrastructure grant program specified in this bill.
The grants fund the establishment of telecommunications service
in areas not currently served by existing local exchange
carriers. The purpose of this bill is to try to bridge the
divide between communities in California that have no basic
telephone service at all, and those with access to a broad array
of wired and wireless services. The cost of infrastructure to
many of these areas and their remoteness from other communities
have been the obstacles to getting basic telephone service.
This bill specifies that grants for rural infrastructure can be
applied for by community-based groups representing a qualifying
community. Among the criteria specified are population, with
consideration given to communities with schools, hospitals and
health clinics. This bill also requires that a local agency
must act as fiscal agent for any community-based group applying
for and obtaining such a grant. Finally, median household
incomes of qualifying communities shall be no greater than the
top income level of the Universal Lifeline Telephone Service
(ULTS) index.
Technology criteria for infrastructure proposals shall be
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determined by a government-industry working group established by
CPUC. Engineering feasibility studies, topographical maps,
recommendations or justifications for the preferred
technologies, network compatibility statements from one or more
interconnecting carriers and cost projections for
interconnection and recurring service and letters of commitment
from at least 75 percent of the unserved population are among
the required materials to be included in grant proposals. Grant
applicants shall also seek federal sources of funding in
conjunction with the local subsidies for construction of
infrastructure.
Among the criteria CPUC shall consider in evaluating grant
applications are cost-effectiveness, number of people served,
level of local support, ability of the community served to pay
for the delivered services and the effect on public health and
safety. Any telecommunications provider under CPUC's
jurisdiction that is capable of providing service to a grant
funded area shall be afforded the opportunity to provide
interconnection to the public switched network.
Analysis Prepared by : Kelly Boyd / U. & C. / (916) 319-2083
FN: 0001385