BILL ANALYSIS                                                                                                                                                                                                                   1
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             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

                                                                       
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                                   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