2. Background
2.1. Beginning of the California Advanced Services Fund (CASF)
The Commission created the CASF in Decision (D.) 07-12-054. The specific purpose of the CASF is to increase availability of high-speed communications service (what is commonly called "broadband") in areas of California that are currently unserved or underserved. The CASF accomplishes this purpose through financial assistance to qualifying projects.
To be eligible for a CASF grant, a project sponsor had to be a "telephone corporation" under the Public Utilities Code. In effect, this requirement limited eligibility to carriers holding a certificate of public convenience and necessity (CPCN) from the Commission and to wireless carriers registered with the Commission. Also, a CASF grant was limited to cover non-recurring or construction costs of a project, and was capped at 40% of such costs. The Commission initially limited CASF funding to $100 million and set January 1, 2013 as the CASF sunset date.
Top priority in awarding CASF grants is given to projects in unserved areas or areas where no facilities-based provider offers broadband service. To the extent money is still available, CASF grants are also awarded to projects in "underserved areas," that is, areas where no facilities-based provider offers service at a download transmission speed of at best three megabits per second (mbps) and an upload speed of at least one mbps. By Resolution T-17143
(June 12, 2008), the Commission adopted filing requirements and scoring criteria for applications seeking CASF grants.
2.2. Interaction with the ARRA
The American Recovery and Reinvestment Act (ARRA) provided an opportunity to dovetail California and federal efforts to encourage broadband deployment.1 Among many other programs, the ARRA appropriates over $7 billion for loans and grants to support broadband deployment on a national level.
The federal funds are channeled through two agencies. The Rural Utility Service (RUS) is responsible for $2.5 billion for loans, loan guarantees, and grants. The National Telecommunications Information Administration (NTIA) is responsible for $4.15 billion for broadband deployment, adoption, and mapping and another $650 million related to the digital television transition. The bulk of this money is targeted to broadband construction and deployment in areas that are either without service or lack sufficient high-speed broadband access to facilitate economic development. For a qualifying project, the ARRA would provide up to 80% of the total cost, with the remaining 20% to be covered by the project sponsor.
California responded swiftly to coordinate the CASF with the federal broadband efforts. First, Assembly Bill (AB) 1555 (Perez) amended Public Utilities Code Section 281, effective July 29, 2009.2 For the sole purpose of providing matching funds pursuant to the ARRA, AB 1555 provided that any entity eligible for ARRA funding would also be eligible to apply to participate in the CASF program. (See Pub. Util. Code § 281(c)(2).) In effect, AB 1555 enabled an entity that was neither a CPCN holder nor a registered wireless carrier to seek a CASF grant in conjunction with an ARRA grant, provided that the entity otherwise met the other eligibility requirements of the CASF program.
Second, in D.09-07-020, the Commission modified the CASF eligibility criteria to accommodate applicants also seeking ARRA funding. For such applicants, D.09-07-020 provides for a grant of 10% of the project's capital costs, which presumes funding of 80% of these costs through an ARRA grant and applicant responsibility for the remaining 10%. Also in D.09-07-020, the Commission adopted a new schedule for filing, service, and approval of applications as an "overlay" to the ARRA process.
2.3. Extension and Expansion of the CASF
Prior to enactment of Senate Bill (SB) 1040, Public Utilities Code Section 281(e) provided, in essence, that the CASF program would "sunset," and Section 281 would be repealed, as of January 1, 2013. However, SB 1040 repealed the sunset provision and expanded the program significantly.
In principal part, SB 1040 increased the size of the CASF from $100 million to $225 million. The additional $125 million, to be collected in annual $25 million increments from calendar year 2011 through calendar year 2015, is allocated to three accounts: the Broadband Infrastructure Grant Account ($100 million); the Rural and Urban Regional Broadband Consortia Grant Account ($10 million); and the Broadband Infrastructure Revolving Loan Account ($15 million). Besides the additional sums to be collected, the latter two accounts are intended to address needs that are unmet under the current CASF program. Specifically, the Consortia Grant Account is "to fund the cost of broadband deployment activities other than the capital cost of facilities, as specified by the commission." (Pub. Util. Code § 281(d).) The Revolving Loan Account is "to finance capital costs of broadband facilities not funded by a grant from the Broadband Infrastructure Grant Account." (Pub. Util. Code § 281(e).)
1 The ARRA (Pub. Law No. 111-5) is a far-reaching economic stimulus plan; it was signed by President Obama on February 17, 2009.
2 Section 281 was amended in 2008, following and complementing the Commission's establishment of the CASF in D.07-12-054. This statute, among other things, provides for the handling of moneys for purposes of the CASF.
