BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
                                              AB 1825 (Strom-Martin)
          Hearing Date:  8/23/00                      Amended: 8/8/00
          Consultant:  Bob Franzoia      Policy Vote: E,U&C  7-1
          ____________________________________________________________ 
          ___
          BILL SUMMARY: AB 1825 would require the Public Utilities  
          Commission (PUC), until 1/1/06, to establish a grant  
          program for the construction of telecommunications  
          infrastructure as follows:
          1)provide that corporations receiving transfer payments  
            shall continue to be fully reimbursed for the costs they  
            are entitled to recover.
          2)Fund the grant program from the California High-Cost  
            Fund-A Administrative Committee Fund (CHCF-A) or the  
            California High-Cost Fund-B Administrative Committee Fund  
            (CHCF-B) up to a specified annual limit, as determined by  
            the PUC.
          3)Require the PUC to award grants.
          4)Require the PUC to establish a working group to develop  
            technical criteria for evaluating the grants.
          The provisions of the bill would sunset on 1/1/06.
                              Fiscal Impact (in thousands)
           
          Major Provisions                     2000-01       2001-02   2002-03         
               Fund  
          
          Telecommunications $10,000 annually until 1/1/06  Special
          infrastructure grants                                         
          STAFF COMMENTS: SUSPENSE FILE.

          The bill would provide that any community-based group  
          representing a qualifying community may apply for a grant  
          to build an original telecommunications infrastructure  
          service that can provide basic telecommunications services.  
           Grants are need-based in that the median income of the  
          community to be served cannot exceed the level used to  
          determine Universal Lifeline Telephone Service eligibility,  
          which is 150 percent of the federal poverty level.  The  
          bill provides that the funding must come from existing  
          monies in the funds and may not result in an increase in  
          the surcharge rate.

          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.