Report — May 30

2014-15 STATE BUDGET

Both the Senate and Assembly held legislative budget subcommittee hearings to review the Governor’s proposed revisions to his proposed January state budget (“May Revise”). As previously reported, the May Revise includes a $26.7 million augmentation for a Broadband Infrastructure account to be managed by the “K-12 High Speed Network to help schools secure Internet connectivity and infrastructure.” Specifically, these funds are to be used to conduct a statewide report of school’s Internet connectivity needs by March 1, 2015 and create a grant program to improve Internet connectivity in K-12 schools.” The May Revise proposal includes “budget bill language” (“BBL”) which provides minimal guidance on how to distribute grants to local school districts.
The Office of the Legislative Analyst, the non-partisan fiscal and policy office of the Legislature, is recommending approval of the funding to support the statewide assessment, but recommends that funding of the infrastructure grant program be delayed until the completion of the statewide assessment.

During the past couple of weeks, CCTA has been working with leadership and budget and policy staff, to stress the need for a comprehensive assessment of available broadband infrastructure to support schools. CCTA testified before the Senate and Assembly Budget Subcommittees and the Senate Budget full Committee on the importance of ensuring that the final BBL be clear that the statewide assessment include the availability of all broadband options.

The Senate and Assembly budget committees will now begin the process of consolidating their versions of the state budget over the next few weeks. Pursuant to the State Constitution, the final budget must be adopted by the Legislature by June 15th each year. CCTA will continue to engage on issue.

CALIFORNIA STATE LEGISLATURE

School Finance; Broadband Infrastructure Fund. Assembly Bill 2319 (Bonilla) would create the Broadband Infrastructure Fund to provide K-12 school districts with the financial resources to install, lease, or purchase “last mile” fiber connectivity to their schools. The California Department of Education would allocate the funding to areas with limited broadband capacity.

CCTA discussed its concern with the Assembly Member Bonilla related to funding being provided for infrastructure in areas where private companies have already made investment. The Assembly Member was receptive to our arguments and willing to work with CCTA on appropriate language for her measure. However, AB 2319, was held in the Assembly Appropriations Committee appears and is no longer eligible for consideration. As noted above, the issue related to funding for broadband infrastructure continues to be an item included in the proposed 2014-2015 state budget.

Labor Contracting; client liability. Assembly Bill 1897 would hold a contracting business liable for any wage, workers’ compensation coverage and work safety violations committed by a contractor for any contract work performed for the contracting business, even though the contracting business did not have direct control over the working conditions of the contractor’s employees.

The bill is Co-Sponsored by the California Labor Federation (Labor FED) and the Teamsters and is labor’s latest attempt at limiting or restricting businesses’ ability to use contract labor. This proposal is heavily supported by labor but is equally opposed to by the business community, including the California Cable & Telecommunications Association.

AB 1897 was amended in the Assembly Appropriations committee and moved to the Assembly Floor for consideration. The amendments did nothing to address the concerns raised by the many businesses that utilize the services of contractors.

AB 1897 was also approved by the Assembly Floor and sent to the Senate for consideration. CCTA continues to oppose the measure.

California Energy Commission; Energy Efficiency Standards. Assembly Bill 2581 (Bradford) would improve the regulatory processes of the California Energy Commission (CEC) by requiring the use of current data in energy efficiency proceedings and allowing the elimination of regulations that are duplicative or inconsistent with federal or state law. The bill also instructs the CEC to adopt by regulation or standards voluntary agreements that promote energy efficiency.

The California Cable & Telecommunications Association (CCTA) is supportive of the measure, but is seeking an amendment that would result in the CEC recognizing the value and the energy efficiency savings resulting from a voluntary agreement by industry stakeholders, but would eliminate the requirement that the CEC adopt the agreement as regulations or operating standards. Voluntary agreements allow industries to recognize and develop opportunities for reducing energy while protecting product development and innovation and should not be locked into a regulatory framework. CCTA has been working with the author and sponsors on this proposed amendment.

AB 2581 was approved by the Assembly Appropriations Committee and received unanimous support on the Assembly Floor.

Recycling; Household Batteries. Assembly Bill 2284 (Williams), as introduced,would have required a producer of a household battery and other entities involved in the distribution chain to develop and implement a plan to collect and recycle household batteries. This requirement would have applied to many businesses, including those that provide electronic devices to control network equipment, such as set top box remote controls, who do not actually produce batteries and who have no control over how these batteries are disposed.
AB 2284 was amended in the Assembly Appropriations Committee, to authorize the state to develop and fund up to three local battery recycling pilot projects. The bill provides up to $1.5 million for these three projects. Upon the completion of the pilots (no date certain), the state would “develop informational guidelines” to assist local governments with their solid waste diversion programs. AB 2234, as amended, was approved by the Assembly Appropriations Committee and the Assembly Floor.

CCTA was previously opposed to the measure but, will remove to a neutral position based on the bill amendments.

Telecommunications; Universal Service Fund. Senate Bill 1364 (Fuller) would extend the repeal date of the California High-Cost Fund-A (CHCF-A) program and the California High-Cost Fund-B (CHCF-B) program requirements until January 1, 2019.The CHCF-A program financially supports small independent telephone companies’ provision of basic service in rural, high-cost areas of the state and provide customer access to advanced services in rural areas. The CHCF-B program provides financial support to large telecommunication providers that are Carriers of Last Resort for the provision of basic service in the high-cost portions of their service areas. SB 1364 would extend the sunset date of the program for four additional years.

However, the Senate Energy Committee has amended the bill in an attempt to eliminate the presumption that only telephone corporations are eligible for reimbursement for participation in the state’s universal service programs. CCTA is currently working with the Author’s office, proponents of the measure, and the Senate Energy Committee staff to ensure that the amendments do not unnecessarily expand eligibility for participation in universal service programs.

SB 1364 was approved, as amended, by the Senate Appropriations Committee and the Senate Floor.

Privacy; Personal Information; Use of Credit Cards and Debit Cards. Assembly Bill 1710 (Dickinson) would extend the current personal information data security obligations for businesses that own or license personal information about California residents to businesses that “maintain” but do not own or license personal information. It would also provide that the existing exemption from data breech notification requirements for encrypted data would require that the data be encrypted in conformance with the National Institute of Standards and Technology, Federal Information Processing Standards Publication 197, “as amended from time to time.”

Although recent amendments to AB 1710 have significantly improved this measure, the California Chamber of Commerce has identified several outstanding issues that continue to be a problem with the bill, including (1) the reference to a specific encryption standard which could become outdated as technology and standards improve; (2) the requirement to notify “major state wide media” of a breach; and the requirement to provide identity theft mitigation services for two years to persons affected when a security breech has occurred if such services are already provided. In addition, although most security breaches occur with government agencies, this bill would only apply to private businesses.
AB 1710 was heard and approved by the Assembly Floor for consideration. The measure now moves to the Senate for consideration. CCTA is currently opposed to the measure but working with the opposition on additional amendments to address the remaining concerns.

For CCTA Tracked Legislation by Subject use this link CCTA Legislative Report *

*These links are not for public distribution and are real-time. If you have any questions about these links or the information located at the links, don’t hesitate to contact Richelle Orlando .

CALIFORNIA REGULATORY UPDATE
Draft Resolution T-17443, Implementing New Timelines for the California Advanced Services Fund.
The Communications Division and Broadband Policy and Analysis Branch (CD) has issued a Draft Resolution (T-17443) to implement new rules for applicants to the CASF (Advanced Services Fund), including how and when local government agencies and non-telephone corporations may apply for funds pursuant to SB 740, and how existing providers may exercise their “right of first refusal” as provided in SB 740. SB 740 requires the Commission to give existing providers the opportunity to upgrade their networks in areas serving underserved households before funds are awarded to a new provider, and would allow local governments to apply for funds only if its project provides a connection to an unserved household or business and no other eligible entity has applied. Rules related to AB 1299, which provides for CASF grants to publicly supported housing communities, will be developed in a separate rule making.

In the Draft Resolution, the CD has interpreted the right of first refusal as requiring existing broadband providers to signify their intent to upgrade their broadband networks in their existing service territory if it is in an area which is identified as encompassing underserved households according to the California Broadband Availability Map no later than September 26, 2014. Further, an existing provider will have only 6 months, from October 1 to April 2015, to complete the project to upgrade its network. During that 6 month period, the Commission will not award a CASF grant to fund a broadband project in that same project area. Thereafter, grants will presumably be made based on the information in the Broadband Availability maps and the September 26 filings.

CCTA will file responsive comments to the Draft Resolution. The Comments are due June 11, and the Draft Resolution is scheduled for a vote by the Commission at the Commission’s June 26th agenda meeting. A copy of the Draft Resolution is here: http://docs.cpuc.ca.gov/SearchRes.aspx?docformat=ALL&DocID=91761697

Proposed Decision in the DIVCA Franchise Renewal Proceeding (R. 13-05-007). The Commission has issued a Proposed Decision in the proceeding to determine the rules to govern state video franchise renewals (R. 13-05-007). The proposed rules closely track the recommendations of the Joint Staff Report issued earlier in the proceeding. CCTA will file Comments, due June 16. The Commission’s vote is scheduled for June 26. A copy of the Proposed Decision is here: http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=All&DocID=91582624

California Teleconnect Fund: R. 13-01-010. A Revised Staff Report was issued May 30 recommending changes to the California Teleconnect Program. A copy of the Revised Staff Report is here: http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M091/K582/91582624.PDF. The Staff recommends that the Teleconnect program eliminate voice services, including Interconnected VoIP services, except where voice services are the only vehicle for access to the Internet; to expand the program to allow local governments and non-profits to provide service to CTF-eligible participants; to provide a fixed dollar discount based on the lowest historical price paid by a CTF participant, and require all CTF providers, including their affiliated unregulated entities, to comply with consumer protection, customer service and consumer safety requirements. In addition, providers must maintain a list of all CTF-eligible products, with prices, on a separate page of the company website. Staff also recommends that eligibility to receive Teleconnect discounts be restricted to schools, libraries and specific health organizations, and significantly reduces eligibility for CBOs. A Ruling setting dates for comments is expected to be issued shortly.

Commission Issues OIR to Expand Natural Gas Safety Citation Program to Electric Utilities. Last week the CPUC issued an Order Instituting Rulemaking R.14-05-013 to expand its natural gas safety citation program to electric utilities in compliance with SB 291. SB 291 (Hill) directed the Commission to develop and implement a safety enforcement program that includes procedures for issuance of citations by commission staff, under the direction of the executive director of the commission, to gas corporations and electrical corporations for correction and punishment of safety violations. The bill required the Commission to implement the safety enforcement program for electrical safety by January 1, 2015. No such requirement was imposed by SB 291 on communications carriers. However, the original Draft Resolution (ESRB-4) would have empowered SED with the authority to fine communications infrastructure providers up to $50,000 per day, per incident, for GO 95 and other safety infractions. The final OIR did include any reference to cable companies, communications facilities or related corporations. The OIR states communications infrastructure provider issues are outside of the scope of the proceeding. The Rulemaking is welcomed news as CCTA and its members filed in strong opposition to the original draft. Here is a link to the OIR: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M091/K638/91638006.PDF

Review of the High Cost Fund A Program: R. 11-11-007. The Commission held a workshop in the CHCF-A Rulemaking in order to consider issues and proposals regarding the inclusion of broadband revenues in the Independent Small LECs’ rate cases. Issues related to existing federal separation accounting rules, affiliate transaction rules, and proposals for imputing revenues were explored. No report is expected from the workshop. Hearings will be held in early September.

Application 14-04-013, Joint Application to transfer control of TWC Information Services, etc., to Comcast. The Greenlining Coalition filed a protest to the Joint Application of Comcast, TWCable, TWC Information Services and Brighthouse Networks to transfer control of TWC and Brighthouse Networks CLEC networks to Comcast. Greenlining urges the Commission to make a public interest assessment of the benefits of the merger, issue a report to the FCC, and, if the merger is approved, impose mitigation measure to protect the public interest. A copy of the protest is here: http://greenlining.org/wp-content/uploads/2014/05/Time-Warner-Comcast-Protest.pdf

AT&T Hosts Workshop To Extend the Commission’s ROW Decision to CMRS. This week AT&T hosted an all-party workshop to address R. 14-05-001, a Rulemaking to consider extending those pole attachment rights and obligations applicable to wireline providers to Commercial Mobile Radio Service (CMRS) or popularly called “cellular phone” service providers. Those rights and obligations are set forth in the Commission’s Rights Of Way (ROW) Decision (D.)98-10058. The workshop participants generally agreed that the proceeding should remain narrowly focused on issues specifically related to CMRS and rejected a proposal by SCE to expand the Rulemaking in order to consider an increase to the $500 penalty for unauthorized wireline attachments. CMRS-related safety issues were also raised by investor owned utilities but not resolved.

AT&T also proposed changes to the ROW Decision’s pricing formula, recommending that the annual recurring fee be based on “each foot actually used in the pole’s usable space.” Comcast and TWC raised questions and concerns regarding the proposal’s applicability to Cable. AT&T agreed to work with Cable to address those concerns.

The Administrative Law Judge has set a prehearing conference for August 6, on this matter with PHC statements due July 7, 2014. CCTA will meet with its members to consider next steps in this proceeding.

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