BILL ANALYSIS
AB 1825
Page 1
ASSEMBLY THIRD READING
AB 1825 (Strom Martin)
As Amended: May 17, 2000
Majority vote
UTILITIES AND COMMERCE 9-0 APPROPRIATIONS 14-7
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|Ayes:|Wright, Pescetti, |Ayes:|Migden, Alquist, Aroner, |
| |Calderon, Campbell, | |Cedillo, Corbett, Davis, |
| |Cardenas, Maddox, | |Kuehl, Papan, Romero, |
| |Mazzoni, Papan, Reyes | |Shelley, Thomson, Wesson, |
| | | |Wiggins, Wright |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Campbell, Ackerman, |
| | | |Ashburn, Brewer, |
| | | |Maldonado, Runner, Zettel |
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SUMMARY : Establishes the Rural Telecommunications
Infrastructure Task Force (Task Force) to facilitate community
efforts to deploy telecommunications infrastructure and
administer a grant program to provide community based groups
with resources to build telecommunications infrastructure.
Specifically, this bill :
1)Establishes the Task Force as part of California Public
Utilities Commission (CPUC) to be composed of one member from
the California Teleconnect Fund (CTF) Administrative
Committee, the Rural Development Council, and the
telecommunications industry. The executive director of CPUC
will appoint members.
2)Authorizes the Task Force to administer a needs-based grant
program allowing qualifying community groups lacking basic
telecommunications services, as defined, to apply for grants
after July 1, 2001, to be utilized for building original
telecommunications infrastructure.
3)Specifies that in order to qualify for the program,
communities must have a median income no greater than the top
income level for Universal Lifeline Telephone Service (ULTS).
4)Stipulates that grant proposals must include preliminary
engineering feasibility studies, conducted in cooperation with
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the local exchange providers, cost projections,
recommendations and letters of support from local government
bodies, letters of commitment from 75% of the unserved
population, a plan assuring proper use of the funds, documents
showing the formation of a locally controlled entity that can
insure delivery of telecommunications services, and a project
schedule that includes timeline and budget. Grants will be
approved and awarded by CPUC based on recommendation of the
Task Force and will be advanced directly to the grant
recipient. This bill stipulates that grant applicants who are
rejected by the Task Force will be reimbursed for the cost of
their preliminary engineering feasibility studies by the grant
program.
5)Limits the number of grants awarded per year to no more than
five and limits the total amount appropriated per year for the
program to $10 million. This bill also limits the amount
awarded per applicant to no more than 25% of the total money
appropriated per year, and specifies that only one grant will
be awarded to a community under this program. Caps the
surcharge for money appropriated for use by the grant program
from CTF at 0.06%. Requires the CTF Administrative Committee
to provide support for the Task Force and the grant program.
6)Establishes a working group to develop technical criteria used
in evaluating grant awards to consist of representatives of
CPUC, the incumbent local exchange carrier industry, the
competitive local exchange carrier industry, and the wireless
carrier industry. This bill sunsets the program on January 1,
2006.
EXISTING LAW :
1)Establishes the CTF Administrative Committee to provide
discounted rates for qualifying schools, libraries, health
clinics, and community organizations and is paid for in the
utility rates authorized by CPUC.
2)Provides for an advisory board that advises CPUC regarding the
CTF program and creates a fund for the advisory board in the
State Treasury in which funds generated by the CTF program are
deposited.
3)Limits the expenditure of money in the fund to specified
programs and upon appropriation in the annual Budget Act.
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FISCAL EFFECT: According to the Assembly Appropriations
Committee analysis, annual special fund cost of $10 million for
five years.
COMMENTS : In California, a 1999 report by the California State
Auditor estimates that 112,000 people live in areas that do not
offer traditional wire line telephone service. Many of these
people reside in mountainous or isolated areas that do not have
the necessary infrastructure such as telephone poles and wire
that support access to advanced telecommunications services such
as high speed data and voice communications. People in these
areas must either go without telephone service entirely, or
utilize wireless technologies such as radio, cellular, or
satellite telephones. While these technologies can provide
adequate voice service to many people throughout the state,
people who reside in mountainous terrain can experience "dead
spots" with cellular service when they are not within "line of
sight" of cellular towers, and inclement weather can reduce the
effectiveness of radiotelephones. In addition, current wireless
technology offers limited access to the Internet.
Satellite telephones can offer voice communication for
mountainous or otherwise isolated communities by routing the
signal through satellites in orbit and back to ground stations
and is often used as an addition to cellular telephone services.
However, satellite services include minimal data transmission
and the cost can be high compared to cellular services. One
satellite company estimates that by the end of 2000 it will
offer a transmission rate of 9600 bytes per second, which is
sufficient for faxes and Internet mail but limits access to
high-graphic content web sites.
The main obstacle to establishing wire line transmission
services is the cost of installing infrastructure such as
telephone line extensions to communities that live in rural and
isolated areas. Because communities must bear the cost of
installation themselves, this level of cost imposes a difficult
barrier for poor and rural communities to overcome to establish
telephone service.
The CTF program is funded by a surcharge on intrastate billings.
The Universal Service Order (Decision 96-10-066) established a
0.41% surcharge, which was intended to raise $50 million per
year to fund CTF discounts. At present, the surcharge is 0.05%,
and the fund has a surplus of $30.7 million. The CTF programs
provide discounted basic telecommunications services to
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qualifying schools, libraries, hospitals, and community based
organizations. Basic telecommunications services is defined as
"a certain defined minimum level of telecommunications service
which each carrier of local exchange service is required to
provide to all of its residential customers who request local
exchange service." It goes on to list 17 service elements that
are included under basic service.
This bill expands CTF's programs to include funding a grant
program for the construction of telecommunications
infrastructure and appropriates $10 million per year for the
program. This bill caps the amount that can be charged against
CTF's billing base at 0.06% that raises approximately $9.6
million annually.
This bill restricts applicants to communities that have a median
income no greater than the top income level used to qualify for
ULTS. According to CPUC, the top income level under ULTS is
$25,090 per year collectively for a household with four members.
CPUC regulations require adjustment of ULTS income brackets
annually by May 1, which then become effective June 1 each year.
Thus, qualifying income brackets under this bill will adjust on
an annual basis to correspond to the rate of inflation for
future grant recipients.
This bill requires the grant proposal to include documents
confirming the formation of a locally controlled entity that
will be able to insure delivery of telecommunications services
to the community. This provision requires communities to own
and maintain the newly constructed telephone infrastructure,
rather than having ownership transfer to the local exchange
carrier once the construction is finished as is normally the
case. In effect, the entity the community forms becomes a
carrier of last resort, subject to full regulatory authority by
CPUC as a telephone company. Forming this entity will result in
added regulatory and cost burdens to communities that are
already unable to afford telephone service due to the costs
involved in constructing infrastructure.
Under this bill, the grant program will reimburse rejected
communities for the cost of the preliminary engineering study.
Because this program requires communities to advance monies to
pay for the preliminary engineering study, reimbursement ensures
that poor communities are able to apply for a grant without
concerns about expending money for the study.
AB 1825
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Analysis Prepared by : Jonathan Buttle / U. & C. / (916)
319-2083
FN:
0004923