BILL ANALYSIS                                                                                                                                                                                                              1
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                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
                                                                        
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                                      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