BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1825|
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THIRD READING
Bill No: AB 1825
Author: Strom-Martin (D)
Amended: 8/8/00 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 7-1, 6/27/00
AYES: Bowen, Alarcon, Hughes, Kelley, Murray, Solis,
Vasconcellos
NOES: Mountjoy
SENATE APPROPRIATIONS COMMITTEE : 13-0, 8/23/00
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Johnson,
Karnette, Kelley, Leslie, McPherson, Mountjoy, Perata,
Vasconcellos
ASSEMBLY FLOOR : 60-18, 5/30/00 - See last page for vote
SUBJECT : Rural telecommunications infrastructure:
grants
SOURCE : Author
DIGEST : This bill requires the Public Utilities
Commission to establish a grant program to provide
community-based groups with resources to build
telecommunications infrastructure in areas of the state not
currently served by existing local exchange services.
ANALYSIS : California has long embraced a policy of
universal telephone service. That policy has resulted in
rate subsidies for low-income and rural consumers, as well
CONTINUED
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as subsidies to extend telephone wiring to people who
aren't located adjacent to existing telephone plant.
However, some communities are so far away from an existing
telephone plant that the cost of extending telephone
service to them will never be recouped, even with the
existing subsidies.
This bill creates a grant program, of up to $10 million
annually, funded out of an existing surcharge on telephone
service, to pay for the capital expenditures to build a
network to serve those remote, unserved communities. A
recent report by the State Auditor estimated that 112,000
people live in areas where telephone service isn't offered.
The existing surcharge program, which this bill taps into:
The CHCF-A collects a 0.27 percent surcharge to provide
universal service subsidy support in small and rural areas
served by 17 small local exchange telephone companies.
Costs for 2000 will be funded from reserves.
The CHCF-B, which was funded in 1999 with a 3.8 percent
surcharge on all intrastate telephone service provides $500
million annually to subsidize local telephone service rates
for roughly four million customers at an average of $125
per customer, per year. The CHCF-B collects the surcharge
to provide universal service subsidy support in the high
cost areas of the service territories of Pacific Bell and
other large telephone companies. The PUC is considering
reducing the surcharge to 2.6 percent for 2000. The fund
has reserves of $154.5 million.
The bill diverts $10 million from the CHCF-A or the CHCF-B
program each year to pay for the program it creates. The
funding must come from existing monies in the fund and may
not increase the current 2.6% surcharge on all intrastate
telephone service that funds the program. (CHCF-B deals
with the largest telephone companies while CHCF-A deals
with the smallest.)
The bill provides that the PUC will review the grant
proposals and make recommendations for final action. Grant
proposals must contain engineering feasibility studies,
local letters of recommendation, letters of commitment from
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75% of the unserved population, a project schedule, and a
management plan.
The PUC shall establish a working group to develop
technical criteria for evaluating the grants.
The grant program is need-based in that the median income
of the community to be served cannot exceed the level used
to determine Lifeline Service eligibility, which is 150% of
the federal poverty level. Grant applicants must also seek
federal funding.
The bill sunsets on January 1, 2006.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
$10,000,000 annually until 1/1/06.
SUPPORT : (Unable to verify due to time constraints)
California Telephone Association
Kern County Superintendent of Schools
OPPOSITION : (Unable to verify due to time constraints)
Office of Ratepayer Advocates
ASSEMBLY FLOOR :
AYES: Aanestad, Alquist, Aroner, Battin, Bock, Calderon,
Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox,
Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh,
Florez, Floyd, Frusetta, Gallegos, Havice, Honda,
Jackson, Keeley, Knox, Kuehl, Leach, Lempert, Longville,
Lowenthal, Machado, Maddox, Maldonado, Mazzoni, Migden,
Nakano, Olberg, Robert Pacheco, Papan, Pescetti, Reyes,
Romero, Scott, Shelley, Steinberg, Strom-Martin, Thomson,
Torlakson, Villaraigosa, Vincent, Washington, Wayne,
Wesson, Wiggins, Wildman, Wright, Zettel, Hertzberg
NOES: Ackerman, Ashburn, Baldwin, Bates, Baugh, Brewer,
Briggs, Campbell, House, Kaloogian, Leonard, Margett,
McClintock, Oller, Rod Pacheco, Runner, Strickland,
Thompson
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NC:sl 8/26/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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