BILL ANALYSIS 1 1 SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE MARTHA M. ESCUTIA, CHAIRWOMAN SB 850 - Escutia Hearing Date: April 5, 2005 S As Amended: March 30, 2005 FISCAL B 8 5 0 DESCRIPTION Current law declares that it is state policy to: Encourage the development and deployment of new technologies and the ubiquitous availability of state-of-the-art services; Assist in the bridging of the digital divide by encouraging expanded access to state-of-the-art technologies for rural, inner-city, low-income and disabled Californians; Promote economic growth, job creation, and the substantial social benefits that result from the rapid implementation of advanced information and communications technologies. This bill finds that the President of the United States has declared that the country should have universal, affordable broadband access by 2007. This bill requires the California Public Utilities Commission (CPUC) to determine the availability, and level of competition in the provision, of two-way broadband access by census track by July 1, 2006. This bill requires California's Chief Information Officer to develop a broadband deployment strategy for the state. BACKGROUND California has a long-standing policy of encouraging the deployment and use of advanced telecommunications services, including high-speed, or broadband, services. Examples of broadband service include DSL service as offered by SBC and Verizon, and cable modem services. SB 1563 (Polanco: Chapter 674, Statutes of 2002) required the CPUC to look at ways of encouraging the widespread availability of broadband infrastructure. In response the CPUC has issued a draft report on broadband deployment in California.<1> Among the recommendations are making broadband deployment and accessibility a priority, in the form of an Executive Order or statute, creating a Broadband Task Force, and integrating broadband capabilities into the way the state performs its functions. Unsurprisingly California leads the nation in broadband lines with 4.7 million such lines in use, almost double the next leading state, New York. Broadband use in California has grown rapidly, over 500% from 2000 to 2004. There is good reason for this growth. From surfing the internet to downloading music to improving access to health care, broadband access is useful. Many studies conclude that more broadband accessibility will increase economic growth and job creation.<2> Broadband access is necessary for communities to compete for jobs.<3> Even the President has noted that broadband technology will enhance our nation's economic competitiveness and help improve education and health-care for all Americans. The Digital Divide refers to the widely varying use of computers and the internet by different segments of society. African Americans and Latinos consistently use these technologies less than Whites and Asians, even accounting for income differences. Bridging the Digital Divide has two components. The first is making broadband service available for those who wish to use it. The second is encouraging use. This bill deals with the first of those components. --------------------------- <1> California Public Utilities Commission, Draft Report: Broadband Deployment in California , February 1, 2005. <2> See, for example, Corporation for Education Network Initiatives in California (CENIC), One Gigabit or Bust Initiative: A Broadband Vision for California , May 2003. CENIC commissioned a study by the Gartner Group which forecast an almost $400 billion increase in gross state product and 2 million additional jobs if CENIC's broadband initiative were implemented. <3> Great Valley Center, Public Policy Roadmap for Improving Broadband Access , December 2003. COMMENTS 1) Developing a Strategy -- Encouraging the deployment of broadband services will require leadership at the state level. The Legislature initially tasked the CPUC with this role, the result of which is the CPUC's broadband report. But however useful the CPUC's effort, it is limited by the CPUC's jurisdiction. The CPUC has regular dealings and daily contact with regulated telecommunications companies. This informs and influences, but also limits, the CPUC's world view. Moreover, because the CPUC is a regulatory agency, many companies actively avoid contact with the CPUC for fear, justifiable or not, that the CPUC will regulate them. And because the CPUC's responsibilities focus them on suppliers of broadband, the CPUC has little understanding of the demand for broadband. For these reasons the state may obtain a deeper, more comprehensive and creative broadband analysis if a state official, such as the Chief Information Officer, that does not have any regulatory authority, is tasked with developing a broadband strategy. This analysis is enhanced because the CIO would have a full grasp of the various state communications networks that could be offered up in public/private partnerships. Moreover, the CIO would have full knowledge of the state demand for broadband services which could be used to provide the initial demand necessary to justify private-sector investment in broadband infrastructure. 2) Where Do We Stand? -- The requirement to map the availability of broadband service is necessary to understand where the problem of the lack of broadband access or broadband competition exists, according to the author. Understanding where broadband capability is lacking will help sharpen the formulation of policy solutions, and will help individual regions or cities with their planning. This bill requires the CPUC to map the availability of broadband service. It does not require broadband service providers to disclose their future plans for broadband deployment. The CPUC's broadband report maps broadband availability by zip code. The shortcoming of the CPUC's approach is that it is too broad. It assumes an entire zip code has broadband access even if there is only one customer in the zip code with such access. It also does not distinguish between one-way (i.e. receive) and two-way (i.e. send and receive) broadband availability. And, zipcodes are perhaps too big an area to be useful. POSITIONS Sponsor: Author Support: California Community Technology Policy Group Oppose: None on file Randy Chinn SB 850 Analysis Hearing Date: April 5, 2005