2. Background

The California Advanced Services Fund (CASF) was established in D.07-12-054 whereby $100 million was allocated for purposes of awarding financial assistance to qualifying broadband deployment projects. The Commission subsequently approved a significant number of qualifying broadband projects for funding under the CASF program.

Prior to SB 1040, the CASF was scheduled to sunset as of January 1, 2013. Senate Bill (SB) 1040 repealed the CASF sunset provision, however, and expanded the program significantly, increasing the CASF fund capacity from $100 million to $225 million. The additional funds are to be collected in annual $25 million increments from 2011 through 2015. SB 1040 also created two new accounts, the Rural and Urban Regional Broadband Consortia Grant and the Broadband Infrastructure Revolving Loan accounts. Both of these accounts are entirely new and created to address unmet needs under the current CASF program. SB 1040 allocated funds as follows to these three accounts now established under the CASF:

· 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).

The Commission instituted this proceeding to implement new funding provisions resulting from SB 1040 and to address other possible changes to the existing CASF program, including those suggested in a pending petition by the Commission's Division of Ratepayer Advocates (DRA) to modify D.07-12-054. Opening comments on the Order Instituting Rulemaking (OIR) were filed on January 21, 2011, with reply comments filed on February 14, 2011.

This interim decision is limited to the implementation of the Consortia program which 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).) Accordingly, we focus herein only on the comments relating to the Consortia Grant Account. The assigned Commissioner issued a scoping memo on April 19, 2011. A draft proposed plan to implement the administration of the Consortia Grant Account program was issued for comment on April 26, 2011. Comments were filed on May 9, 2011. Parties filing comments included telephone companies, cable companies, consumer groups, the California Emerging Technology Fund (CETF) regional partners, and other regional and community groups focused on broadband adoption and deployment.⁴ These comments presented a spectrum of perspectives on how Consortia funds should be administered and distributed. We have reviewed the comments as appropriate in preparing the instant decision.

⁴ Telephone companies offering comments included: AT&T California and its affiliates, Verizon California Inc., Frontier Communications of California and its affiliates, DTS of CA, Inc. (DTS), and the Small LECs. DTS is a satellite-based provider that has sought authority to be a Small ILEC in all of the unserved areas of California.

The cable companies offering comments included: Cox Communications and Comcast Phone of California, LLC.

The consumer groups offering comments included: DRA, The Utility Reform Network (TURN), and Greenlining Institute.

Several significant comments were filed by regional groups associated with the CETF, including: the California Partnership for the San Joaquin Valley, the Sierra Economic Development Corporation, the Amador-Tuolumne Community Action Agency, Shepherds Crook Enterprises, the Contra Costa Council, CSU-Monterey Bay, Valley Vision, and the California Center for Rural Policy.

Other regional and community groups offering comments included: the Corporation for Education Network Initiatives in California, the Regional Council of Rural Counties, Spiral Internet/Nevada County Connected, and Camino Fiber Network Cooperative, Inc.