The existing federal Telecommunications Act of 1996 establishes a program for the regulation of telecommunications to attain the goal of local competition, while implementing specific, predictable, and sufficient federal and state mechanisms to preserve and advance universal service, consistent with certain universal service principles. The universal service principles include the principle that consumers in all regions of the nation, including low-income consumers and those in rural, insular, and high-cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations. Existing law authorizes the commission to supervise and regulate every public utility and to do all things necessary and convenient in the exercise of its power and jurisdiction. Existing law establishes the California High-Cost Fund-A Administrative Committee Fund (CHCF-A Fund), the California High-Cost Fund-B Administrative Committee Fund, the Universal Lifeline Telephone Service Trust Administrative Committee Fund, the Deaf and Disabled Telecommunications Program Administrative Committee Fund, the Payphone Service Providers Committee Fund, and the California Teleconnect Fund Administrative Committee Fund in the State Treasury, and requires that moneys in the funds are the proceeds of rates and are held in trust for the benefit of ratepayers and to compensate telephone corporations for their costs of providing universal service and may be expended only to accomplish specified telecommunications universal service programs, upon appropriation in the annual Budget Act or upon supplemental appropriation.

In Decision 07-12-054, pursuant to its authority to do all things necessary and convenient in the exercise of its power and jurisdiction, the commission imposed a surcharge beginning January 1, 2008, collected through retail telecommunications customers’ bills, to fund the California Advanced Services Fund (CASF), for the purpose of encouraging deployment of broadband facilities for use in provisioning advanced telecommunications and voice service in unserved and underserved areas. Decision 07-12-054 further ordered that prior to any CASF disbursements, the commission would seek statutory authority to add the CASF as one of the funds authorized for handling by the State Treasury and to seek statutory authority for specific direction to telephone corporations for remitting CASF collections and for use of the funds by the commission.

This bill would, until January 1, 2013, establish the CASF in the State Treasury, subject to the conditions and restrictions applicable to the 6 existing universal service funds described above. The bill would require that moneys collected by the surcharge authorized by the commission to fund the CASF, whether collected before or after the operative date of the bill, be transmitted to the commission pursuant to a schedule established by the commission. The bill would require the commission to transfer the moneys received to the Controller for deposit in the fund. The bill would prohibit the commission from collecting those moneys in an amount that exceeds a total amount of $100,000,000. The bill would specify that any moneys appropriated from the CASF to the commission may only be expended for limited purposes.

The bill would require the commission to develop, implement, and administer the CASF to provide for transfer payments to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and substantial social benefits of advanced information and communications technologies, as provided in commission Decision 07-12-054. The bill would require the commission to conduct both a financial audit and a performance audit of the implementation and effectiveness of the CASF to ensure that moneys have been expended in accordance with (a) the approved terms of the winning bids, and (b) the requirements of the bill. The bill would require the commission to report its findings to the Legislature by December 31, 2010. The bill would appropriate $25,000,000 to the commission from the fund, to be expended in the 2008–09 fiscal year, and would require the commission to report on its expenditures pursuant to this appropriation, as provided.