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AB-1758 Telecommunications: California Advanced Services Fund.(2015-2016)

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AB1758:v98#DOCUMENT

Amended  IN  Assembly  March 17, 2016

CALIFORNIA LEGISLATURE— 2015–2016 REGULAR SESSION

Assembly Bill
No. 1758


Introduced by Assembly Member Mark Stone
(Coauthors: Assembly Members Eduardo Garcia and Levine)
(Coauthor: Senator McGuire)

February 02, 2016


An act to amend Section 281 of, and to add Section 281.1 to, the Public Utilities Code, relating to telecommunications.


LEGISLATIVE COUNSEL'S DIGEST


AB 1758, as amended, Mark Stone. Telecommunications: California Advanced Services Fund.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. Existing law establishes, among other funds related to telecommunications, the California Advanced Services Fund (CASF) in the State Treasury. Existing law requires the commission to develop, implement, and administer the CASF to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies, as provided in specified decisions of the commission and in the CASF statute. Existing law requires the commission to give priority to projects that provide last-mile broadband access to households that are unserved by an existing facilities-based broadband provider. Existing law establishes that the goal of the program is, no later than December 31, 2015, to approve funding for infrastructure projects that will provide broadband access to no less than 98% of California households. Existing law authorizes the commission to collect a surcharge for deposit into the CASF not to exceed $315,000,000 in total and authorizes the surcharge until 2020.
This bill would extend to December 31, 2023, the time period for meeting the program goal and would specify the threshold speeds to be met in achieving the goal. The bill would also specify as a program goal the achievement of a statewide 90% adoption rate of high-speed Internet access by December 31, 2023. The bill would require the commission to give priority to projects that provide advanced communication services at those threshold speeds to unserved and underserved households until the goal is achieved. The bill would authorize the commission, once that goal is achieved, to prioritize funding for other specified projects. The bill would require the commission and the California Broadband Council, in consultation with relevant state agencies, to develop a plan to implement these provisions in a manner that fosters public-private collaboration. The bill would authorize the commission to allocate up to $10 million from the Broadband Infrastructure Grant Account in the CASF to a specified nonprofit organization for specified purposes. The bill would make various legislative findings, including findings regarding deployment of broadband speeds of at least 25 megabits per second (Mbps) downstream and 3 Mbps upstream. The bill would establish the High-Speed Internet Access Adoption Account within the CASF and would authorize the commission to award grants to eligible community-based organizations for education and outreach to low-income households to facilitate the adoption of high-speed Internet access by these households. The bill would authorize the commission to collect an additional $350,000,000, would specify the distribution of the additional moneys among the accounts in the CASF, and would authorize the collection through 2026. By increasing the collection for deposit in the CASF, the bill would constitute a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.
Existing law requires a certain amount of moneys from the Broadband Infrastructure Grant Account and the Broadband Revolving Loan Account to be transferred to the Broadband Public Housing Account and requires the commission to award grants and loans from the Broadband Public Housing Account to eligible publicly supported communities. Existing law requires any moneys in the Broadband Public Housing Account not awarded by December 31, 2016, to be transferred back to the other 2 accounts.
This bill would repeal the requirement to transfer back the moneys in the Broadband Public Housing Account that are not awarded.
Because the provisions of this bill are within the Public Utilities Act, a violation of which is a crime, this bill would impose a state-mandated local program by extending a crime.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the Internet For All Now Act of 2016.

SEC. 2.

 (a) The Legislature finds and declares all of the following:
(1) The availability of high-speed Internet access, referred to generically as “broadband” and including both wired and wireless technologies, is essential 21st century infrastructure for economic competitiveness and quality of life. Economic studies confirm that the use of broadband technologies increases economic productivity as a foundation for increased efficiency in organizational operations and enhanced profitability in business.
(2) Broadband infrastructure is also vital to the operation and management of other critical infrastructure, such as energy generation systems and the power grid, water supply systems, and public safety and emergency response networks. There is a need for world-class broadband infrastructure throughout California to support these major infrastructure investments to protect lives, property, and the environment.
(3) The California Advanced Services Fund (CASF) is a vital resource for California to be a national leader and globally competitive in broadband infrastructure.
(b) It is the intent of the Legislature that the Public Utilities Commission, after ensuring the development of last-mile infrastructure to provide at least 6 megabits per second (Mbps) downstream and 1.5 Mbps upstream service for 98 percent of unserved or underserved households in each region of the state, do all of the following:
(1) Establish the goal for threshold broadband speeds in future plans and programs of not less than 25 Mbps downstream and 3 Mbps upstream. In establishing the threshold broadband speeds, the commission should ensure California remains a national leader and globally competitive on broadband infrastructure while taking into account all cost-effective strategies.
(2) Analyze and publish public data regarding the availability of broadband service at speeds specified in paragraph (1) throughout the state.
(3) Prepare and submit to the Legislature a plan for achieving broadband service at speeds specified in paragraph (1) that includes the following:
(A) An analysis of the availability of those threshold speeds for all consumers.
(B) An assessment of the implications of the implementation of paragraph (1) for the CASF and the required funding needed to achieve that goal in unserved and underserved areas.
(C) A delineation of the strategies and policies that would achieve that goal in the most cost-effective manner possible, including whether or not it should be the policy of the state to encourage fiber deployment for middle-mile projects.

SEC. 3.

 Section 281 of the Public Utilities Code is amended to read:

281.
 (a) (1) The commission shall develop, implement, and administer the California Advanced Services Fund program to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies, consistent with this section and Section 281.1.
(2) Recognizing that, in addition to residential households, there are other types of consumers, including anchor institutions, such as schools, libraries, community centers, and health and medical facilities, small businesses and large employers, and research organizations, all with a range of needs for broadband access threshold speeds in excess of those specified in Section 281.1, the commission, in administering the program, shall consider approving funding for last-mile infrastructure projects to reach unserved and underserved households that exceed those threshold speeds, that also provide improvements to those other types of consumers, and that the commission deems deemed by the commission to be in the public interest and a cost-effective use of the moneys in the California Advanced Services Fund. Fund that will reach unserved and underserved households and that will do both of the following:
(A) Provide broadband access at speeds that exceed those thresholds.
(B) Provide improvements to those other types of consumers.
(b) (1) The goals of the program are both of the following:
(A) No later than December 31, 2023, to approve funding for infrastructure projects that will provide broadband access at advertised speeds of 6 megabits per second (Mbps) downstream and 1.5 Mbps upstream to no less than 98 percent of California households.
(B) No later than December 31, 2023, to approve funding for education and outreach projects that would facilitate the achievement of a statewide 90 percent household adoption rate of high-speed Internet access with no significant population segment with less than 80 percent adoption. For purposes of this subparagraph, high-speed Internet access means access to the Internet at speeds faster than dialup.
(2) In approving infrastructure projects, the commission shall give priority to projects pursuant to Section 281.1. The commission shall provide each applicant, and any party challenging an application, the opportunity to demonstrate actual levels of broadband service in the project area, which the commission shall consider in reviewing the application.
(c) The commission shall establish the following accounts within the fund:
(1) The Broadband Infrastructure Grant Account.
(2) The Rural and Urban Regional Broadband Consortia Grant Account.
(3) The Broadband Infrastructure Revolving Loan Account.
(4) The Broadband Public Housing Account.
(5) The High-Speed Internet Access Adoption Account.
(d) (1) All moneys collected by the surcharge authorized by the commission pursuant to Decision 07-12-054 shall be transmitted to the commission pursuant to a schedule established by the commission. The commission shall transfer the moneys received to the Controller for deposit in the California Advanced Services Fund. Moneys collected on and after January 1, 2011, shall be deposited in the following amounts in the following accounts:
(A) Three hundred fifty million dollars ($350,000,000) into the Broadband Infrastructure Grant Account.
(B) Thirty million dollars ($30,000,000) into the Rural and Urban Regional Broadband Consortia Grant Account.
(C) Ten million dollars ($10,000,000) into the Broadband Infrastructure Revolving Loan Account.
(D) In addition to the amount transferred pursuant to subparagraph (A) of paragraph (7) of subdivision (h), seventy-five million dollars ($75,000,000) into the Broadband Public Housing Account.
(E) One hundred million dollars ($100,000,000) into the High-Speed Internet Access Adoption Account.
(2) All interest earned on moneys in the fund shall be deposited in the fund.
(3) The commission shall not collect moneys, by imposing the surcharge described in paragraph (1) for deposit in the fund, in an amount that exceeds one hundred million dollars ($100,000,000) before January 1, 2011. On and after January 1, 2011, the commission may collect an additional sum not to exceed five hundred sixty-five million dollars ($565,000,000), for a sum total of moneys collected by imposing the surcharge described in paragraph (1) not to exceed six hundred sixty-five million dollars ($665,000,000). The commission may collect the remaining balance of the additional sum beginning with the calendar year starting on January 1, 2017, and continuing through the 2026 calendar year, in an amount not to exceed fifty million dollars ($50,000,000) per year, unless the commission determines that collecting a higher amount in any year will not result in an increase in the total amount of all surcharges collected from telephone customers that year.
(e) (1) (A) All moneys in the California Advanced Services Fund shall be available, upon appropriation by the Legislature, to the commission for the program administered by the commission pursuant to this section and Section 281.1, including the costs incurred by the commission in developing, implementing, and administering the program and the fund.
(B) To ensure the most cost effective and timely achievement of the goals specified in paragraph (1) of subdivision (b), the commission may award contracts through an open and competitive process for any of the following services:
(i) Project oversight and management of grants awarded from the Broadband Infrastructure Grant Account to accelerate the completion of projects without cost increase or overruns.
(ii) Engineering review of proposals for grants from the Broadband Infrastructure Grant Account.
(iii) Overall management, distribution of funds from the Broadband Infrastructure Grant Account to sub-awardees, and verification of performance by the sub-awardees receiving funds.
(C) To avoid delays in cash flow, cashflow, contracts entered into pursuant to subparagraph (B) shall include terms for reasonable and prudent advance payment schedules reconciled to actual expenditures by contractors, as verified by independent audits.
(2) Notwithstanding any other law and for the sole purpose of providing matching funds pursuant to the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5), any entity eligible for funding pursuant to that act shall be eligible to apply to participate in the program administered by the commission pursuant to this section and Section 281.1, if that entity otherwise satisfies the eligibility requirements under that program. Nothing in this section shall impede the ability of an incumbent local exchange carrier, as defined by subsection (h) of Section 251 of Title 47 of the United States Code, that is regulated under a rate of return regulatory structure, to recover, in rate base, California infrastructure investment not provided through federal or state grant funds for facilities that provide broadband service and California intrastate voice service.
(3) Notwithstanding subdivision (b) of Section 270, an entity that is not a telephone corporation shall be eligible to apply to participate in the program administered by the commission pursuant to this section and Section 281.1 to provide access to broadband to an unserved or underserved household, as defined in commission Decision 12-02-015, if the entity otherwise meets the eligibility requirements and complies with program requirements established by the commission. These requirements shall include all of the following:
(A) That projects under this paragraph provide last-mile broadband access to households that are unserved by an existing facilities-based broadband provider and only receive funding to provide broadband access to households that are unserved or underserved, as defined in commission Decision 12-02-015.
(B) That funding for a project providing broadband access to an underserved household shall not be approved until after any existing facilities-based provider has an opportunity to demonstrate to the commission that it will, within a reasonable timeframe, upgrade existing service. An existing facilities-based provider may, but is not required to, apply for funding under this section to make that upgrade.
(C) That the commission shall provide each applicant, and any party challenging an application, the opportunity to demonstrate actual levels of broadband service in the project area, which the commission shall consider in reviewing the application.
(D) That a local governmental agency may be eligible for an infrastructure grant only if the infrastructure project is for an unserved household or business, the commission has conducted an open application process, and no other eligible entity applied.
(E) That the commission shall establish a service list of interested parties to be notified of California Advanced Services Fund applications.
(4) Notwithstanding subdivision (b) of Section 270, up to ten million dollars ($10,000,000) from the Broadband Infrastructure Grant Account shall be available for allocation to the California Telehealth Network, a 501(c)(3) nonprofit organization, for purposes of leveraging that organization’s utilization of the Federal Communications Commission’s Healthcare Connect Fund for California’s medically underserved communities.
(f) Moneys in the Rural and Urban Regional Broadband Consortia Grant Account shall be available for grants to eligible consortia to fund the cost of broadband deployment activities other than the capital cost of facilities, as specified by the commission. An eligible consortium may include, as specified by the commission, representatives of organizations, including, but not limited to, local and regional government, public safety, elementary and secondary education, health care, libraries, postsecondary education, community-based organizations, tourism, parks and recreation, agricultural, and business, and is not required to have as its lead fiscal agent an entity with a certificate of public convenience and necessity.
(g) Moneys in the Broadband Infrastructure Revolving Loan Account shall be available to finance capital costs of broadband facilities not funded by a grant from the Broadband Infrastructure Grant Account. The commission shall periodically set interest rates on the loans based on surveys of existing financial markets.
(h) (1) For purposes of this subdivision, the following terms have the following meanings:
(A) “Publicly subsidized” means either that the housing development receives financial assistance from the United States Department of Housing and Urban Development pursuant to an annual contribution contract or is financed with low-income housing tax credits, tax-exempt mortgage revenue bonds, general obligation bonds, or local, state, or federal loans or grants and the rents of the occupants, who are lower income households, do not exceed those prescribed by deed restrictions or regulatory agreements pursuant to the terms of the financing or financial assistance.
(B) “Publicly supported community” means a publicly subsidized multifamily housing development that is wholly owned by either of the following:
(i) A public housing agency that has been chartered by the state, or by any city or county in the state, and has been determined to be an eligible public housing agency by the United States Department of Housing and Urban Development.
(ii) An incorporated nonprofit organization as described in Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec. 501(c)(3)) that is exempt from taxation under Section 501(a) of that code (16 U.S.C. Sec. 501(a)), and that has received public funding to subsidize the construction or maintenance of housing occupied by residents whose annual income qualifies as “low” or “very low” income according to federal poverty guidelines.
(2) Notwithstanding subdivision (b) of Section 270, moneys in the Broadband Public Housing Account shall be available for the commission to award grants and loans pursuant to this subdivision to an eligible publicly supported community if that entity otherwise meets eligibility requirements and complies with program requirements established by the commission.
(3) Not more than twenty million dollars ($20,000,000) shall be available for grants and loans to a publicly supported community to finance a project to connect a broadband network to that publicly supported community. A publicly supported community may be an eligible applicant only if the publicly supported community can verify to the commission that the publicly supported community has not denied a right of access to any broadband provider that is willing to connect a broadband network to the facility for which the grant or loan is sought.
(4) (A) Not more than five million dollars ($5,000,000) shall be available for grants and loans to a publicly supported community to support programs designed to increase adoption rates for broadband services for residents of that publicly supported community. A publicly supported community may be eligible for funding for a broadband adoption program only if the residential units in the facility to be served have access to broadband services or will have access to broadband services at the time the funding for adoption is implemented.
(B) A publicly supported community may contract with other nonprofit or public agencies to assist in implementation of a high-speed Internet access adoption program.
(5) To the extent feasible, the commission shall approve projects for funding from the Broadband Public Housing Account in a manner that reflects the statewide distribution of publicly supported communities.
(6) In reviewing a project application under this subdivision, the commission shall consider the availability of other funding sources for that project, any financial contribution from the broadband service provider to the project, the availability of any other public or private broadband adoption or deployment program, including tax credits and other incentives, and whether the applicant has sought funding from, or participated in, any reasonably available program. The commission may require an applicant to provide match funding, and shall not deny funding for a project solely because the applicant is receiving funding from another source.
(7) To provide funding for the purposes of this subdivision, the commission shall transfer to the Broadband Public Housing Account twenty million dollars ($20,000,000) from the Broadband Infrastructure Grant Account and five million dollars ($5,000,000) from the Broadband Revolving Loan Account.
(i) (1) (A) Notwithstanding subdivision (b) of Section 270, moneys in the High-Speed Internet Access Adoption Account shall be available for the commission to award performance-based grants to eligible not-for-profit, community-based organizations, schools, and libraries to increase high-speed Internet adoption by low-income households by providing public education and outreach programs that are culturally appropriate and in relevant languages on digital literacy training, assistance with selecting a high-speed Internet provider, and subscription to high-speed Internet access.
(B) The commission shall develop criteria for awarding grants and determine the process and methodology for verifying high-speed Internet access based on new subscriptions by low-income households.
(C) The commission may award one or more contracts for the overall management of grants to eligible not-for-profit community-based organizations, schools, and libraries to increase high-speed Internet adoption among low-income households at a cost not to exceed 10 percent of the amount of grants awarded.
(2) To avoid delays in cash flow, cashflow, contracts entered into pursuant to paragraph (1) shall include terms for reasonable and prudent advance payment schedules reconciled to actual expenditures by contractors, as verified by independent audits.
(j) (1) The commission shall conduct two interim financial audits and a final financial audit and two interim performance audits and a final performance audit of the implementation and effectiveness of the California Advanced Services Fund to ensure that funds have been expended in accordance with the approved terms of the grant awards and loan agreements, this section, and Section 281.1. The commission shall report its interim findings to the Legislature by April 1, 2020, and April 1, 2022. The commission shall report its final findings to the Legislature by April 1, 2024. The reports shall also include an update to the maps in the final report of the California Broadband Task Force and data on the types and numbers of jobs created as a result of the program administered by the commission pursuant to this section and Section 281.1.
(2) (A) The requirement for submitting a report imposed under paragraph (1) is inoperative on January 1, 2022, pursuant to Section 10231.5 of the Government Code.
(B) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
(k) (1)   Beginning on January 1, 2018, and annually thereafter, until January 1, 2027, the commission shall provide a report to the Legislature that includes all of the following information:
(A) The amount of funds expended from the California Advanced Services Fund in the prior year.
(B) The recipients of funds expended from the California Advanced Services Fund in the prior year.
(C) The geographic regions of the state affected by funds expended from the California Advanced Services Fund in the prior year.
(D) The expected benefits to be derived from the funds expended from the California Advanced Services Fund in the prior year.
(E) The amount of actual high-speed Internet access adoption due to the funds expended from the California Advanced Services Fund in the prior year.
(F) The amount of funds expended from the California Advanced Services Fund used to match federal funds.
(G) An update on the expenditures from California Advanced Services Fund and broadband adoption levels, and an accounting of remaining unserved and underserved households and areas of the state.
(H) The status of the California Advanced Services Fund balance and the projected amount to be collected in each year to fund approved projects.
(2) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.

SEC. 4.

 Section 281.1 is added to the Public Utilities Code, to read:

281.1.
 (a) For the purposes of this section, the following terms mean the following:
(1) “Last-mile infrastructure” means the segment of the Internet infrastructure that provides Internet connectivity to end users, such as residential households, anchor institutions, and local businesses.
(2) “Middle-mile backhaul infrastructure” means the segment of the Internet infrastructure that connects the last-mile infrastructure to the backbone infrastructure of the Internet.
(3) “Program” means the California Advanced Services Fund program.
(4) “Unserved households” and “underserved households” have the same meanings as in commission Decision 12-02-015.
(b) (1) Until the goal specified in subparagraph (A) of paragraph (1) of subdivision (b) of Section 281 is achieved, the commission, in administering the program, shall give priority to last-mile infrastructure projects that provide advanced communication services at or above the advertised speeds required under the goal to unserved or underserved households. Recognizing that cost-effective, last-mile infrastructure projects are dependent upon affordable middle-mile backhaul infrastructure that may be deployed through underserved or unserved areas either by incumbents providing access to existing middle-mile backhaul infrastructure at reasonable prices as determined by the commission or by the project applicant constructing essential middle-mile infrastructure as part of the project, the commission shall consider applications for projects that provide for the development of last-mile infrastructure serving unserved and underserved households that include the development of middle-mile backhaul infrastructure to which the last-mile infrastructure connects.
(2) (A) The commission shall give additional priority to applicants that are incumbents with existing middle-mile backhaul infrastructure proposing to deploy last-mile infrastructure to provide services to unserved and underserved households, if the incumbent submits an application no later than March 31, 2017, and the proposal is deemed cost effective by the commission
(B) The commission shall require the incumbent to complete, no later than December 31, 2018, the construction of the project given priority pursuant to this paragraph.
(3) In applying for funding for the program, an applicant shall demonstrate the cost-effectiveness of the last-mile infrastructure at the threshold speeds specified in subparagraph (A) of paragraph (1) of subdivision (b) of Section 281.
(c) Once the goal specified in subparagraph (A) of paragraph (1) of subdivision (b) of Section 281 is reached, the commission may prioritize funding pursuant to the program for any of the following:
(1) Last-mile infrastructure projects providing advanced communication services at advertised speeds of at least 25 Mbps downstream and 3 Mbps upstream to unserved and underserved households and at appropriate speeds to anchor institutions and other customers in the vicinity of those households.
(2) Upgrades to broadband connectivity for other critical infrastructure systems not in the vicinity of residences.
(3) Last-mile infrastructure projects of statewide public significance, including projects related to public safety and emergency response, such as providing broadband connectivity to and among county fairgrounds as staging areas for emergency responses, wildfire fighting, and disaster evacuations.
(d) It is the intent of the Legislature to enact legislation to establish a transparent public process to analyze and designate a project as having statewide significance for purposes of paragraph (3) of subdivision (c).
(e) The commission and the California Broadband Council shall, in consultation with relevant state agencies, develop a plan to implement this section in a manner that fosters public-private partnership collaboration in an open and transparent process.

SEC. 5.

  No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.