BILL ANALYSIS
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THIRD READING
Bill No: AB 2758
Author: Berg (D)
Amended: 6/30/04 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMM. COMMITTEE : 8-1, 6/22/04
AYES: Bowen, Morrow, Alarcon, Battin, Dunn, Murray, Sher,
Vasconcellos
NOES: McClintock
SENATE APPROPRIATIONS COMMITTEE : 11-0, 8/12/04
AYES: Alpert, Battin, Aanestad, Bowen, Burton, Escutia,
Johnson, Karnette, Machado, Poochigian, Speier
NO VOTE RECORDED: Ashburn, Murray
ASSEMBLY FLOOR : 78-0, 5/24/04 - See last page for vote
SUBJECT : Telecommunications
SOURCE : Author
DIGEST : This bill extends the sunset date from 2006 to
2009 for the Rural Telecommunication Infrastructure Grant
Program, administered by the State Public Utilities
Commission, funded out of an existing surcharge on
telephone services, to extend telecommunications services
to specified low-income communities.
ANALYSIS : Current law establishes that it is the policy
of the state to assure the continued affordability and
widespread availability of high quality telecommunications
CONTINUED
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service to all Californians.
Current law establishes the California High Cost Fund-A
Administrative Committee Fund (CHCF-A) and the California
High Cost Fund-B Administrative Committee Fund (CHCF-B).
These funds, which are funded by surcharges on telephone
bills, subsidize the cost of providing telephone service to
high cost, mostly rural areas. These programs sunset on
January 1, 2005.
Current law establishes a grant program of up to $10
million annually to subsidize the cost of providing
telephone service to areas where it does not currently
exist. The money comes from the CHCF-A or CHCF-B funds, as
determined by the State Public Utilities Commission (PUC).
This program sunsets on January 1, 2006.
This bill extends the sunset until January 1, 2009.
This bill is contingent upon enactment of SB 1276 (Bowen),
which extends the sunset, from January 1, 2005 to January
1, 2009, on the California High-Cost Fund-A and Fund-B
programs, and makes related changes.
Background
California has long embraced a policy of universal
telephone service. That policy has resulted in rate
subsidies for low-income and rural telephone users, as well
as subsidies to extend telephone wiring to people who are
not located near an existing telephone plant. However,
some communities are so far away from an existing telephone
plant that the cost of extending telephone service to them
will never be recouped, even with the existing subsidies.
To compensate for that economic reality, AB 140
(Strom-Martin), Chapter 903, Statutes of 2001, was enacted
to create the grant program extended by this bill. The
program subsidizes the facilities to serve those remote,
unserved communities. A report by the State Auditor
estimated 112,000 people live in areas where telephone
service is not offered. The program established by AB 140
provides service to communities which do not have service,
in contrast to the existing CHCF-A and CHCF-B programs,
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which subsidize customers who already have service.
The grant program is needs based in that the median income
of the community to be served cannot exceed the level used
in the Universal Lifeline Telephone Service Index. Grant
applicants must also seek federal resources. Applications
must have the support of local government and law
enforcement, as well as commitment letters from 75 percent
of the potential local customers. The program is
technology neutral in that any technology providing
telephone service, from wireline to wireless, may be used.
Grants are awarded by the PUC.
Comments
Program turmoil drives desire to extend sunset early . The
2001-02 budget crisis resulted in elimination of funding
for this program and a reallocation of staff resources in
March 2002, but program funding was reinstated in the
2003-04 fiscal year. Earlier this year, the PUC staff
conducted meetings in Coachella, Independence, Lakeport,
Susanville, and Eureka to let interested parties know about
this program. Grants were awarded this month to programs
in Humboldt, Trinity, and Placer counties where citizens
have never received telephone service. As these are the
first grant awards, the 2006 sunset date on the program
will not provide for an adequate amount of time to evaluate
the effectiveness of the program. By extending the sunset
date for three years, the author's office believes the
program will be able to establish a track record upon which
any subsequent decision to extend or eliminate the program
can be made.
Related legislation . SB 1276 (Bowen) changes the sunset
dates of the CHCF-A and the CHCF-B programs from January 1,
2005 to January 1, 2009. Absent the continuation of the
subsidy to pay for these programs, there will not be any
money available to pay for the program extended by this
bill. Enactment of this bill is contingent on the
enactment of SB 1276.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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Fiscal Impact (in thousands)
Major Provisions 2004-05 2005-06
2006-07 Fund
RTIG* Program -- Up to $10,000
annuallySpecial**
PUC administration -- Unknown,
potentially Special**
$200 annually
* Rural Telecommunications Infrastructure Grant
Program
** California High-Cost
Administrative Committee Fund-A and/or Fund-B
SUPPORT : (Verified 8/5/04)
California State Rural Health Association
SBC
ASSEMBLY FLOOR :
AYES: Aghazarian, Bates, Benoit, Berg, Bermudez, Bogh,
Calderon, Campbell, Canciamilla, Chan, Chavez, Chu,
Cogdill, Cohn, Corbett, Correa, Cox, Daucher, Diaz,
Dutra, Dutton, Dymally, Firebaugh, Frommer, Garcia,
Goldberg, Hancock, Harman, Haynes, Jerome Horton, Shirley
Horton, Houston, Jackson, Keene, Kehoe, Koretz, La Malfa,
La Suer, Laird, Leno, Leslie, Levine, Lieber, Liu,
Longville, Lowenthal, Maldonado, Matthews, Maze,
McCarthy, Montanez, Mountjoy, Mullin, Nakanishi, Nakano,
Negrete McLeod, Oropeza, Pacheco, Parra, Pavley, Plescia,
Reyes, Richman, Ridley-Thomas, Runner, Salinas,
Samuelian, Simitian, Spitzer, Steinberg, Strickland,
Vargas, Wesson, Wiggins, Wolk, Wyland, Yee, Nunez
NO VOTE RECORDED: Maddox, Nation
NC:mel 8/13/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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