BILL ANALYSIS
SB 720
Page A
Date of Hearing: July 7, 2003
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
SB 720 (Bowen) - As Amended: July 1, 2003
SENATE VOTE : 34-1
SUBJECT : Telecommunications services.
SUMMARY : Provides for payment of installation costs and
discounts for use of high speed Internet services for schools,
libraries, community-based organizations (CBOs), and hospitals
owned by cities or counties. Specifically, this bill :
1)Clarifies that advanced telecommunications services eligible
for discounted rates through the California Teleconnect Fund
(CTF) include high-speed communications services such as
digital subscriber line (DSL)<1> and T1<2> services.
2)Specifies that if the money expended from CTF is less than
what is appropriated for the 2003-04 and 2004-05 fiscal years,
that the California Public Utilities Commission (PUC) may make
a one-time expenditure to cover up to 90 percent of the costs
of installing advanced telecommunications services at schools,
libraries and CBOs.
3)Specifies that the incremental cost of the one-time
expenditure may not exceed $3,000,000 over the discounts
available under existing programs of PUC.
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<1> DSL is a high-speed connection to the Internet that can
provide from 6 times to up to 30 times the speed of current
56k-modem technology. The DSL line connects using the existing
copper telephone lines. A person can talk on the same phone
line while connected by DSL to the Internet.
<2> T1 is a high-speed digital network (1.544 mbps) started by
AT&T in the early 1960's to support long haul digitized voice
transmission. Phone companies move nearly all voice traffic as
digital rather than analog signals. A T1 line is either a
fiber optic or copper line that can carry 24 digital voice or
data channels at high speeds. A T1 line can carry about 192,000
bytes per second -- roughly 60 times more data than a normal
residential modem.
SB 720
Page B
EXISTING LAW :
1)Declares the policies for telecommunications in California,
which include:
a) A commitment to universal service.
b) Encouraging development and deployment of new
technologies in a way that encourages availability of a
wide choice of state-of-the-art services.
c) Promoting economic growth, job creation, and the like by
adequate long-term investment in the necessary
infrastructure.
d) Promoting lower prices, broader consumer choice, and
avoiding anti-competitive conduct.
e) Promoting competition to encourage efficiency, lower
prices and consumer choice.
2)Declares legislative intent that PUC should provide nonprofit
community technology programs with discounts comparable to
those that are provided to schools and libraries to address
the inequality of access to advanced telecommunication
services
FISCAL EFFECT : Unknown.
COMMENTS :
Nine years ago, the Legislature passed AB 3643 (Moore),<3> which
declared 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.
AB 3643 directed PUC to examine this "digital divide" issue and
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
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<3> Chapter 278, Statutes 1994.
SB 720
Page C
the bill was that "health care, community, and government
institutions be early recipients of the benefits of the
Information Age."
PUC later created CTF. This fund, currently budgeted at $57.125
million annually and funded by a 0.31 percent surcharge on
telephone bills, provides funding for telephone service
discounts of 50 percent to schools and libraries, and 25 percent
to community-based organizations. Since its inception, more
than 99 percent of the program funds have gone to discounts for
schools and libraries.
CTF is intended to provide discount access to advanced
communications services. This bill clarifies that advanced
communications services include DSL. DSL provides a fast
connection that is useful when accessing the Internet. There
are approximately 1.4 million DSL lines in California, with
approximately one in ten homes and businesses having DSL.
In 1996, Congress enacted legislation similar to AB 3643,
requiring schools, health care providers, and libraries to be
provided access to advanced communications services. The
resulting program, known as the e-rate program, provides $2.25
billion in telecommunication service discounts nationwide.
SB 1863 (Bowen), Chapter 308, Statutes of 2002, codified the
language upon which CTF is based.
Until earlier this year, entities seeking discounted rates
submitted applications to telecommunications carriers, which in
turn were responsible for forwarding completed applications to
PUC. PUC changed this process in May 2003 such that applicants
are no longer required to submit applications to
telecommunications carriers. The telephone carriers are no
longer involved in the application process. All applications
are filed with PUC.
Budget and Fiscal Issues
Legislation enacted in 1999<4> requires money in CTF and five
other funds may only be expended upon appropriation in the
annual Budget Act, whereas these funds were formerly managed by
PUC outside the annual budget process.
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<4> SB 669 (Polanco) [Chapter 677, Stats. 1999].
SB 720
Page D
There is a current surplus in CTF that exceeds $200 million.
The Budget Conference Committee working on the 2003-04 budget
bill recently transferred $150 million from CTF to the General
Fund as a loan, leaving PUC with a reduced pool of money from
which to draw upon (~ $50 million) to help finance the
installation of advanced telecommunications services.
REGISTERED SUPPORT / OPPOSITION :
Support
California Community Technology Policy Group
California County Superintendents Educational Services
Association
Cisco System's
Digital California Project (of the Corporation for Network
Education Initiatives in California)
Monterey Peninsula College's
Pomona Unified School District
SBC
Ventura County Superintendent of Schools Office (Information
Technology Services)
Opposition
None on File.
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083