BILL ANALYSIS 1 1 SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE DEBRA BOWEN, CHAIRWOMAN SB 1863 - Bowen Hearing Date: April 9, 2002 S As Amended: April 1, 2002 Non-FISCAL B 1 8 6 3 DESCRIPTION Current law establishes the policy of "universal telephone service." Current regulations provide for the California Teleconnect Fund, which provides discounted telephone service to schools, libraries, health care institutions, and community-based organizations. This bill establishes state policy to focus efforts on providing educational institutions, health care institutions, community based organizations, and governmental institutions with access to advanced telecommunications services. BACKGROUND California has a long history of encouraging the widespread deployment of telecommunications service. A number of programs exist to subsidize telephone service in rural areas, for the deaf and handicapped, and for the poor. Eight years ago, the Legislature passed and the Governor signed AB 3643 (Moore & Polanco), Chapter 278, Statutes of 1994, an uncodified measure which recognized that state action was necessary to prevent society from splitting into two different "information worlds," one that was information rich, and the other that was information poor. That dichotomy has come to be known as the digital divide. AB 3643 addressed the issue by requiring the California Public Utilities Commission (CPUC) to look at universal service in the context of changes in technology and information availability. The bill declared that "Universal service must be defined in a way that ensures all segments of California society have access to the technology that will allow them to enjoy the benefits of the Information Age and the Information Superhighway." Among the principles in the bill was that "health care, community, and government institutions be early recipients of the benefits of the Information Age." The CPUC responded to the AB 3643 mandate in part by creating the California Teleconnect Fund (CTF). This fund, currently budgeted at $57.125 million annually and funded by a 0.31% surcharge on telephone bills, provides funding for telephone service discounts of 50% to schools, libraries, and 25% to community-based organizations. Since its inception, more than 99% of the program funds have gone to discounts for schools and libraries. This bill buttresses the basis for the CTF program by codifying the uncodified language from AB 3643 upon which the CTF is based. In 1996, Congress enacted legislation similar to AB 3643, requiring that schools, health care providers, and libraries have access to advanced communications services. The resulting program, known as the e-rate program, provides $2.25 billion in telecommunication service discounts nationwide. COMMENTS Who can receive grants? As noted above, virtually 100% of the money in the CTF has been awarded to schools and libraries. Community-based organizations (CBOs) believe they've grown exponentially in terms of providing, through their community technology centers, people with an important channel for bridging the digital divide. However, they contend they receive a miniscule amount of money from the CTF and it's not fair to provide them with a lower discount rate than schools and libraries. This bill is designed to open the discussion on who should be allowed to apply to the CTF for grants and what types of grants (and discounts) those applicants should be allowed to receive. POSITIONS Sponsor: Author Support: California Community Technology Policy Group Office of Ratepayer Advocates The Children's Partnership Oppose: None on file Randy Chinn SB 1863 Analysis Hearing Date: April 9, 2002