BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1825
                                                                  Page  1

          Date of Hearing:   March 10, 2000

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS 
                              Carole Migden, Chairwoman

                  AB 1825 (Strom-Martin) - As Amended:  May 1, 2000 

          Policy Committee:                              Utilities and  
          Commerce     Vote:                            9-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill:

          1)Establishes a grant program within the California Teleconnect  
            Fund (CTF) to build telecommunications infrastructure in areas  
            currently without such service.  

          2)Requires a Rural Telecommunications Infrastructure Task Force,  
            in conjunction with the Public Utilities Commission (PUC), to  
            develop procedures for submitting grant proposals.

          3)Requires the PUC to establish a government-industry work group  
            to develop technical criteria for evaluating grant proposals.

          4)Limits the number of grants to five annually and sunsets the  
            program in January 2006. 

          5)Limits total grant funding to $10 million annually and caps  
            the portion of an authorized telephone surcharge that can be  
            used to fund the grant program.

           FISCAL EFFECT  

          Annual $10 million special fund cost for five years.

           COMMENTS  

           1)Background and Purpose  . The CTF program is designed to provide  
            discounted basic telecommunications services to qualifying  
            schools, libraries, hospitals, and community-based  
            organizations. The CTF is funded by a surcharge on intrastate  








                                                                  AB 1825
                                                                  Page  2

            billings established by the PUC.  The cap on this surcharge is  
            0.41%.  The current surcharge has been reduced to only 0.05%,  
            however, because the fund has amassed a large reserve pending  
            PUC resolution of disputed payment requests.  

            A 1999 State Auditor report estimated that 112,000 people in  
            California (three percent of the state's rural population)  
            live in areas where traditional telephone service is not  
            available.  The main obstacle to telephone service in these  
            areas is the high cost of installing telephone lines and poles  
            that must in part be borne by households.  This bill is  
            intended to provide a funding mechanism to help defer some of  
            these high costs by allowing up to 0.06% of the authorized  
            0.41% CTF surcharge for a grant program to community-based  
            organizations in rural areas.   

           1)Related Legislation  .  AB 994 (Wright), which is in the Senate  
            Energy, Utilities and Commerce Committee, requires the Public  
            Utilities Commission to study the feasibility of establishing  
            rural telephone cooperatives in California

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081