Senate Standing Committee on Energy, Utilities and Communications

The Senate Committee on Energy, Utilities and Communications will come to order. Good morning to all. The Senate continues to welcome the public and has provided access to both in-person and teleconference participation for public comment in today's hearing. For individuals wishing to provide public comment via the teleconference service, the participant toll-free number is 877-226-8163 that's 877-226-8163 and the access code is 4398318 that's 4398318 we also have representatives who are participating remotely for our remote participants, please mute your phones or computers.

Please select to unmute before you begin your speaking. It will allow our personnel to put you, sorry. Or our IT personnel will put you back on mute when you are done. Once recognized to speak, please make sure you can be seen on the screen. State your name and then you are ready to address the Committee. For today's hearing, we'll be hearing from all of our panel witnesses on the agenda prior to taking any public comments.

Once we have heard all the witnesses, we'll have public comment period. For those who wish to comment on the topics of today's agendas. Today's agenda is on broadband and while broadband has always been an essential tool for work, education, and economic participation, the COVID-19 pandemic showed how the digital divide prevented some Californians from accessing necessary services. The inability to access broadband services particularly impacted low-income communities and rural Californians who have historically faced more barriers to accessing broadband services.

In some communities, families who lack connectivity at home had to gather for hours in parking lots of schools and of restaurants to help their children participate in remote learning and complete homework assignments. In 2021, the Legislature passed a historic package of bills aimed at improving Californian's broadband access. These bills included budget measures providing 6 billion in state and federal funding for broadband deployment, making it the largest investment in broadband in the state's history.

SB 156 provided over 3 billion of that money to the California Department of Technology to create a state-owned middle-mile network to help better connect last-mile networks and unserved parts of the state. The legislation allocated the remaining funds to the California Public Utilities Commission to help fund the last-mile broadband infrastructure that would help connect to unserved Californians' homes and businesses.

Today's hearing is an important opportunity for this Committee and for the public to hear the agencies with the responsibility of implementing these historic investments, including how these funds will connect all of California. It is also an opportunity for Senators to ask how these investments and future broadband fundings can better address the needs of low-income Californians who are far too long have had to struggle to get high-speed Internet access, whether you're in rural areas or in urban areas as well.

Now let's hear from our first presenter from the Legislative Analyst Office. We welcome Brian Metzker, Principal Fiscal and Policy Analyst for the Legislative Analyst Office. When you're ready, Mr. Metzker, you may begin your testimony.

Thank you Chair and Members of the Committee, Brian Metzker from the Legislative Analyst Office. Our office was asked to present an overview of the major federal and state broadband programs and projects. And so, in preparation for the hearing, we provided a handout to you all that we'll be using to guide our remarks today. On page one of the hearing, as the chair mentioned, there was a $6 billion agreement in July of 2021 for broadband infrastructure.

Of that, 4.3 billion was American Rescue Plan federal fiscal relief funds, and 1.7 billion came from the General Fund. We're going to have some tables in the handout that will help provide some more context for how all this funding spreads out across the three projects and programs. The first project was a statewide open-access middle-mile network. Middle-mile infrastructure is typically fiber optic cables laid over hundreds of miles that allow Internet service providers to connect and provide Internet service to communities and households.

That was about 3.25 billion of the 6 billion total, and that was all federal funds. The second component of the agreement was last-mile projects. That was a $2 billion investment, of which 1.1 billion was federal funds and 900 million was General Fund. And again, last-mile projects are those components that allow for a connection to a middle-mile infrastructure or network that can deliver Internet service. The last component was the Broadband Loan Loss Reserve Fund.

This Fund is intended to help local governments, nonprofit organizations to finance broadband infrastructure projects by doing things such as paying the cost of debt issuance. This was $750,000,000 General Fund spread over three fiscal years since the 2021 agreement and spending plan, there have been two major changes in the way the funding has been allocated across these programs and projects while maintaining the 6 billion in the original agreement.

The first change was a $1.4 billion shift in the funding source from federal ARP fiscal relief funds to the General Fund. 887,000,000 of which was middle-mile network funding and 522,000,000 of which was last-mile project funding. The reason for this was the revisions in the calculation of lost state tax revenues that allowed the state to deposit ARP fiscal relief funds into the state's General Fund and then reallocate them back into these projects and programs.

So no net shift in the amount of funding, but a change in the funding sources. Second, there was an agreement, a legislative goal, to provide an additional $550,000,000 General Fund for middle-mile network costs in 2023-24 and 2024-25. And again, I'll show you that on the table in just a couple of pages. The Governor's 2023-24 budget proposes to delay about $1.1 billion in General Fund spending on broadband infrastructure across several fiscal years.

Of this 1.1 billion, 575,000,000 is from the Broadband Loan Loss Reserve Fund and 550,000,000 is for last-mile projects. So on page four, you'll see a table that outlines the original spending plan.

Again, you'll see the amounts that I mentioned before, 3.25 billion in federal funds for The Middle-Mile Network, all in 21-22. About an equal split for last-mile projects across the three fiscal years, 1.1 billion in federal, 900 in General Fund, and then all General Fund for the broadband Loan loss Reserve Fund, about 750,000,000.

And this is important to just set context for when we see the next page, which will provide both the changes and fund sources that I mentioned in 21-22 as well as the proposed deferrals in future fiscal years. So going to the next page, this is the updated spending plan, and I'll walk you through it to make sure, if there are any questions, I can address those. The first project is The Middle-Mile Network. You'll see in fiscal year 21-22.

Of the 3.25 billion that was all federal funds originally, it is now 887,000,000 of General Fund and 2.4 billion of federal funds. You'll also see in 2023-24 and 24-25 that $550,000,000 of additional General Fund. And so the total now is 3.8 million or billion General Fund as opposed to 3.25, 1.4 billion of which is General Fund and 2.4 billion of which is federal funding. For the last-mile projects, there's a similar Fund shift in 21-22.

Now you have 522,000,000 General Fund in 21-22 whereas there was none before, and 550,000,000 federal funds that remain. The Governor's Budget proposed deferrals you'll start to see in 2023-24 whereas the original appropriation was 803,000,000, now it's 253,000,000. And the balance is across the three future fiscal years that totals the same amount, but again does not allocate those funds all in 2023-24. And again, that funding mix changes. You have now 1.45 billion in General Fund, whereas before it was about 900.

The Broadband Loan Loss Reserve Fund remains all General Fund. However, the amounts in 21-22 and 22-23 are no longer there and are placed in 23-24 and the balance is then placed across two future fiscal years, whereas all of the funding previously had been in those first three years. So just for context, again for all programs and projects, now, instead of having 1.7 billion in General Fund, you now have 3.6 billion in General Fund.

Instead of having 4.3 billion in federal funding, now you have 2.9 billion in federal funding. And again, this is important because there are certain deadlines by which the state must spend federal ARP fiscal relief funds. They must be encumbered, obligated in contracts by December 31, 2024, and expended by December 31, 2026. Going to page six to provide a status update on The Middle-Mile Network, and the Administration will provide even more information in the following panels.

The total length of The Middle-Mile Network is estimated to be 10,000 miles at a total construction cost of more than $4.5 billion. That total construction cost, if you notice, is higher than the appropriate amounts for The Middle Mile Network at $3.8 billion. It's our understanding from the Administration that decisions to finalize the final makeup of the network will bring the total cost of the network within the appropriated amounts.

And so to do that, there will be additional leases, joint build opportunities, other ways to reduce costs within the $3.8 billion appropriation. The decisions around how to kind of finalize the architecture of the network are expected by the end of March, although the timeline that CDT provides in its one-pager anticipates maybe additional time thereafter. And finally, the signed contracts to build out and lease the network are expected by the end of 2023.

And again, just want to highlight that now that there have been these funding changes, the ARP fiscal relief funds, more than 80% of them, are in The Middle-Mile Network. Moving to page seven, the last mile projects, the CPUC rulemaking procedure for the federal funding account, which is the recipient of these funds, is complete. The rural and urban county allocations have been calculated, and according to CPUC, the first round of grant applications is expected to open in June.

Applications will be reviewed through August or will be received through August, excuse me, reviewed from August to December, and first awards will go out in January of 2024. A second round is expected thereafter, and awards will happen in December of 2024, there are at least two rounds expected. The first round is expected to be $1.0 billion, and the 550,000,000 of federal funds that remain will be a part of that first round to get them out the door.

The second round was stated to be $1 billion. However, the Governor's Budget proposes deferrals that would put at least $350,000,000 outside of that timeline, so there's still some uncertainty there. On page eight, the Broadband Loan Loss Reserve Fund, the rulemaking procedure remains active. Not a lot of updates here, but there is expected to be a proposed decision by the end of June. The grant application round is supposed to open in 2023-24.

There's about 175,000,000 General Fund for this purpose, but we don't have the exact amount that will be available through that round. Moving on to the federal broadband programs, in November of 2021, the Infrastructure Investment and Jobs Act was passed and signed into law. It included $65 billion total. There were several programs, either existing or new, that received funding.

We'll focus our remarks on the broadband equity access and deployment program, or BEAD Program, and the Digital Equity Act programs, as those are the programs that could provide the state with substantial resources for broadband infrastructure. The remaining funding is for the affordable connectivity program, overseen by the FCC, that provides monthly and one-time subsidies for Internet service and connected devices. On page 10 of the handout, we talk about how the allocation for the BEAD Program is calculated.

This will be the largest source of potential funding for the state. It's 42.45 billion of the 65 billion that was appropriated primarily for last-mile broadband infrastructure project grants. And there are three separate amounts that need to be taken into account. The first of which is an initial allocation to the State of $100 million, 5 million of which is available initially for planning purposes.

Then, there is an additional allocation to states based on its proportion of unserved locations in high-cost areas, and that definition is to be determined, but in high-cost areas relative to the country. And so that's about again 10% of total funding. And then the remaining 32 or so $1.0 billion will be based again on the unserved households, not necessarily in high-cost areas of the state, but in the state as a percentage of the overall locations nationwide.

On page 11, we note that the initial planning funds, that 5 million I mentioned that's available, has been awarded in November of last year, and that will support the state's effort to produce a five-year action plan, which is the next deliverable from the state for this program it's expected to be submitted no later than August 28th and will include things like goals, outcomes, needs assessment to inform our broadband programs. Going forward, the state will know its program funding allocation.

So what amount from that 42.45 billion we'll be potentially receiving by the end of June. Thereafter, the state will submit an initial proposal within 180 days of that release to then receive the initial 20% of whatever our allocation is. We can then use those funds, provide grants, and then evaluate how that grant process worked, and submit a final proposal that will release the remaining 80%. There's more information forthcoming on the state's administration of BEAD Program funding.

There was an order instituting rulemaking a couple of weeks ago, but there's just a lot more information coming and mostly questions to be asked at this point. And finally, on page 12, the Digital Equity Act programs. I'll make this quick as they're a substantially less amount of money still important, of course, $2.75 billion available nationwide. There are three programs, the first of which is a planning grant program.

The state's already received its initial $4 million from that to develop a state digital equity plan, and that'll be due no later than November 30th. And there will be more information forthcoming on the capacity and competitive grant programs. The capacity ones are a certain amount of money for the state to implement its state digital equity plan, and the competitive grant program will be available not only to states but others trying to improve digital equity efforts across the country.

And I know that was a lot of information, so I'm happy to take questions.

Vice Chair Dahle.

Thank you, Mr. Mezker. I appreciate your presentation. So I went through this information last night, and I was trying to get my mind around the fact that there is a hell of a lot of money and there are deadlines to meet on the federal side to get it done. Can you give me an idea of like?

So what you said was that we're going to try to get all this work done in two years, we're going to get the grants out the door, and then the work actually has to be, we are not at this point doing anything like actual physical putting in line right? Today.

So there are limited projects underway, but the bulk of the work, the construction work, has not begun yet. A lot of what has happened, at least with The Middle-Mile Network, is pre-construction work, and none of the last-mile project grants have gone out the door except for technical assistance grants.

So has anybody done an estimate of actually how long it's going to take to physically get the work done?

I do not have that information. The expectation is that for The Middle-Mile Network and last-mile projects, for at least the first round of projects, the timeline will be approximately three calendar years, January 2024 through December of 2026. But again, we don't have the final map, the network kind of architecture for The Middle-Mile Network, with all the projects. There's still a lot of preconstruction work there. And for the last-mile projects, we don't have any grants that are awarded quite yet.

So my concern is that the Administration is very good at talking about how much money we're going to spend. And then at the end of the day, the deliverables, whether it's water, infrastructure, we don't deliver anything. We spend a lot of money around here, homelessness, we can go down the list. We have all these programs, and I sit on these committees. I'm on the budget. So somebody needs to make sure that we have a plan.

And I haven't seen that yet, that actually how we're going to deliver the project. And at the end of the project, it's going to actually serve somebody. There's federal money, we talk about, there's state money, and now we're rolling that back. We're taking some of that money back, and we're pushing those times out because of budget constraints. And every day that we do that, the cost of delivering a project with inflation is skyrocketing. And I'm going to be asking all the panelists today the same question.

It's like, where is the actual plan? Or, yeah, when are we going to put a shovel in the ground, and when are we expected to actually see something happen? Senator or Assembly Member Wood and I did a project for Digital 299 in 2000, I think it was 14, couple hundred million dollars and we haven't put a shovel in the ground yet. And that money was allocated. And so I'm not here to beat you up.

I'm asking you, is there somebody, whether it's the CPUC, whether it's who that is going to say, here's the plan, and here's how we're going to actually achieve this, other than just saying we're awarding grants, we're studying and we're talking about it. But I used to do construction, and there was a construction management plan, and there's a deadline when you're going to get the project done, and I don't see that in here.

Thank you. Senator Min.

Thank you, Chair Bradford, and thank you for your testimony Mr. Metzker. I had a couple of questions. I guess right now as we're talking, there's another hearing going on in judiciary around potentially moving court proceedings to online. So I think the importance of broadband for all it becoming very clear. I think Covid really accelerated this trend, and it's clear that we need to have high-speed internet for every community in this state. That's just an important priority for accessing basic government services for our economy.

But as I'm looking at some of the different documents before us, I see a lot of variance between CDT and CPUC, both on where middle mile implementation should go first as well as last mile. I was wondering if you could comment on what you thought the right criteria should be both for middle mile and where we deploy first, where we deploy our resources first as well as last mile implementation.

Sure. I think a very key place to start is with the ARP fiscal relief funds given we have the encumbrance and expenditure deadlines and the need to get that money out the door in order to avoid potential loss of federal funding, I think that is a priority. Beyond that, I think trying to meet the statutory goals of SB 156 is certainly a priority.

And the legislature stated its intent and stated specific projects and programs that it wanted to undertake in order to provide improved broadband infrastructure to Californians. In terms of how to prioritize the projects. Middle mile versus last mile and connecting the two, I can't speak to that specifically. I think there is a lot of information that still needs to come about how they're going to construct the network, what exactly the final projects will look like, what that preconstruction work will reveal about the middle mile network.

And again, there is a lot of guidance about the last mile projects, but not a lot of information about what the applications look like or what those final projects will entail.

Let me rephrase my question, because maybe it wasn't clear. I guess what I'm really asking is, okay, we've got last mile projects and we have a priority area map. You do think that that map accurately reflects where we should be deploying first? And if not, I think you comment here that the criteria, there were some discrepancies in your report between where we're deploying and I think, again, between where CDT and CPUC are recommending that we, for example, in the middle mile projects.

I think CDT and CPUC disagreed on their list of where middle mile implementation should go. So obviously there's some variance in the criteria they're using to evaluate this. And so I guess what I'm asking is, if you were in charge, what should be the criteria we use when we think about where middle mile funding should go first? What should be the criteria for when we talk about where last mile projects should go first?

Because obviously there's a big debate right now over should we emphasize rural areas or urban areas. I don't know the right answers. I'm just asking for your general thoughts here.

And I certainly appreciate the question. I think absent an analysis from our office that would actually address those questions, it's hard for me to answer them off the top of my head. I think I can say that again, the SB 156 prioritized the deployment of middle-mile infrastructure in locations that do not have access to broadband internet speed. Last-mile projects were supposed to be funded equally in rural and urban counties.

There were a variety of different criteria that were a part of SB 156 that I think are still relevant to this conversation, but I don't have my own set of criteria right now.

Thank you.

Any other questions for members? Well, thank you, Ms. Metzker, but I don't want to belabor the point. I have the same concerns that my colleagues have raised, especially Vice Chair Dahle, as to a real plan for implementation. It's a lot of good intentions here, and as my great-grandmother used to say, the road to hell is paved with good intentions. So I just need to see a little bit more specific projects.

And I guess my real concern is when you look at the maps and when you talk about the federal funding, especially the BEAD money, that's supposed to be going to underserved and minority communities, none of our projects are really focused on any of those communities. So how do you justify that? I know that's pretty much. But haven't you seen the same thing? What have you seen in that?

We've seen the priority areas map that I think. Are you alluding to the priority areas map? I mean, we've seen the priority areas map, and we've seen the same discrepancies that have been highlighted both in this committee and in the Assembly. We've noted the intention behind the map, which was to provide business opportunities to deliver internet service that then necessitate maybe a different network coverage area than would be specific to just serving unserved households. Again, we don't have our own independent analysis of that right now.

We note the same concerns that you have, but don't have anything to share at this time.

I'm hoping that's being voiced and shared and also along the lines of this federal fund, and it has an expiration date. Are there any concerns that we will not expend this money or not due to projects before losing these funds?

I think the main concern is, at least for the last mile project funding, that 550,000,000 being a part of the initial round, will be helpful in getting those funds out the door, and it is a smaller amount of money. The bigger concern is around the middle mile network and making sure that those funds are prioritized in whatever projects are selected for the ultimate middle mile network.

Again, we're going to have decisions about the final architecture of the network forthcoming very shortly, and we'll be reviewing those to see if those federal funds are prioritized. But, yeah, I think that is the main concern is for the middle mile network. Are we prioritizing federal funds? Could it get tied up in trying to wait to encumber and expend all of the money at once versus just prioritizing the federal funding to make sure that we use it before we lose it?

Okay. Do you think we run the risk of losing some of this money?

I think by, again, increasing oversight through this committee and through the legislature's active role in monitoring the distribution of those funds, I think that we can avoid the potential loss of federal funding. It requires monitoring on a quarterly basis. And so the latest report showed that about 1.75 billion has been encumbered, but only 42 million has been spent. It's our expectation that that will ramp up over time as projects are constructed. But it's an important thing for the legislature to monitor and to ask questions about.

Okay, thank you. Senator Dahle.

Just one follow-up question. I looked at the permitting timeline, which is, I don't know if you have this, but it's 30 months, and that's assuming that you don't get sued or you don't get hung up in court. So I wanted to just, we have a timeline here, which is, that's to get the permit, and then we have to actually build the projects. I have a follow-up question. Many of my neighbors, so I live in a very rural area.

To give you an example of how rural it is, the closest Walmart to my home is 75 miles away. And many of my neighbors, we have a water tower in town, and we actually get our Internet from off the water tower to our house, but many of them are using Starlink. And it's great. It's fast. You can watch five movies at one time. In your home and it works. Has anybody thought about maybe looking at some of those options?

I mean, we're talking about billions and billions of dollars here and maybe looking at some other types of technology to get it out to those rural areas where I could have it at my school or I could have it at the Rural Health Clinic or the library so that people could use it. Has there been any thought about maybe looking at different technology than trying to do all this actual digging up the dirt and putting lines in the roads and those type of things?

Yes, there have been discussions about using things like fixed wireless or satellite connectivity instead of using fiber optic cables. There is in the treasury guidance as well as in the guidance on bead program funds, there is a preference for projects that use fiber optic cable as opposed to using another type of technology. However, there could be merit in trying to think about whether to take more of a neutral stance on the technology that's used for the broadband infrastructure funding.

Again, I think the programs that have been established are trying to align with that federal guidance and make use of those federal dollars. And so again, I think that that would be a topic of conversation with the administration.

Thank you again, Mr. Metzker, for your presentation.

Thank you.

Much appreciated. Our second panel will be from the California Department of Technology. We'll have two witnesses, and we're going to ask that you limit your testimony to 12 minutes. We'll hear from Ms. Bailey-Crimmins, Director of Department of Technology, and we'll hear from Mark Monroe, Deputy Director, Broadband Middle Mile Initiative, Department of Technology. So whenever you're ready, you may begin your testimony.

Well, good morning, Mr. Chair, and members of the committee. Thank you for the opportunity for the invitation to appear before you today. My name is Liana Bailey-Crimmins. I'm the Director of the Department of Technology. I'm also the Chair for the Middle Mile Advisory Committee. Today, the California Department of Technology looks forward to providing you an update on the Broadband Middle Mile Initiative and provide you three focus areas.

The first is how the State of California is leading the way in reducing federal and state permitting timelines, sharing, how approaching construction and pre-planning through a statewide lens will put all job order contracts into a contract this year, and lastly, how we are building and leasing, which will allow that strategy to expedite service delivery.

As you are aware, 2.5 million Californians do not have adequate internet service today, and high-speed broadband is key to digital equity, access, inclusion, and it has become an essential part of all of our lives. People depend on it to work, to go to school, to be able to participate in their communities and also get vital health care. And as we've all learned through the COVID pandemic, when that internet is spotty, it can quickly become a major crisis personally, through a business and for government.

SB 156 launched the Middle Mile Broadband Initiative and created a partnership between the Department of Technology, Caltrans, CPUC, and also our third-party administrator, Golden State Net. We receive input from the community organizations, tribes, and industry leaders to construct the physical infrastructure needed to ensure unserved and underserved communities have affordable access to high-speed connectivity. The open-access middle mile will be primarily along the state highways.

When completed, the middle mile network will provide an open access backbone which connects communities and creates competition to reduce price. A strong and affordable internet connection, low-cost devices. The training to use the internet will allow us to help address the digital equity gap. As pointed out, Department of Technology just has 41 months to get all the federal funding under contract and 65 months to complete this 10,000-mile network. These timelines drive our cadence and represent the urgency to create the network across California.

CDT has continued to update both the legislature and the members and the public through regular public meetings at the Middle Mile Advisory Committee, and we are honored to have two ex-official members of the Senate, two ex-offical members of the Assembly, and as of January, we have two local representatives that have joined the committee. Since July 2021, CDT has conducted and held 17 middle mile advisory committees, and we look forward to continuing stakeholder and tribal outreach as we develop this project.

In front of you, you have a chart. That chart outlines the 10,000 miles network, the timeliness of the permitting of, as we're taking it from 30 months and actually driving efficiencies and getting it down to 17 months and hopefully very soon, 11 months. In addition, you also see our overall timeline. With me today is Deputy Director of Broadband Middle Mile Initiative, Mr. Mark Monroe, who'll provide the details about how CDT is working to accomplish each of these goals and meet the legislature's intention of SB 156.

With that, I'd like to turn it over to Mark Monroe.

All right, good morning, Chair and members Mark Monroe, California Department of Technology. In terms of really what CDT hears to talk about is the $3.8 billion that was provided primarily in ARPA funding to develop what is now a 10,000 miles statewide network, open access middle mile network, alongside, largely alongside the state highway system to really connect the state's unserved and underserved communities, as identified by the Public Utilities Commission.

In terms of kind of the difference there, I think it's always important to remind everyone, when we think about the middle mile, that's kind of your freeway system for the network, for broadband. And when you think of the last mile, that's really kind of your local road system, if you will. So really trying to, what CDT is tasked with is building this backbone that's going to be able to connect the state's unserved and underserved communities. As the LAO and others have noted, the funding is primarily from the ARPA funding.

And so these funds have to be encumbered, they have to be under contract by the end of next year, and they have to be liquidated by the end of 2026. So that's really creating a lot of the framework for the timing and for what last mile providers will be able to benefit from in terms of having the system developed. Some of the basic framework that we're using for the MMBI we have, as I mentioned, the standard basis, I think, was the Caltrans owns the state highway system.

They have experience doing projects. They have experience doing a lot of the things that we need to have done here. And so one of the key tools we have in developing this is to have Caltrans build. It is really standalone construction. And so this is where Caltrans goes through the permitting process. They have a pre-construction process that would normally take, I think, two to four years to get done for a project this size.

We've found some ways to really make this go a whole lot faster. They would then move to construction, and then they would oversee those construction contracts. Similarly, as an alternative, as has been mentioned, the $3.8 billion is not expected to be enough to construct the entire 10,000-mile network. And so we have gone out to explore other alternatives, other development alternatives. These include joint builds. Some of you may have recognized the Arcadian contract that was signed a few weeks ago for 306 miles of construction.

There's some real opportunities there where we have private sector partners who have been planning and developing their middle mile projects for years leading up till now. And so the construction cost, the cost of actually putting this infrastructure in the ground is really, that's what drives most of the cost. It's not the materials. And so anywhere we can share those costs, it's going to be something that's going to be beneficial both for the private sector partner and for the state.

Similarly, we're looking for partners for purchases, right? Looking for where there might be existing infrastructure that somebody in the industry would be willing to sell to us. And then similarly, when we get to leases, right, these are indefeasible rights of use. IRUs, they are normally about 20 years. They're considered capital costs for purposes of federal expenditures.

And so really, this combination of standalone Caltrans construction, as well as these joint build opportunities purchases and these IRU leases, these are the tools we expect to use to be able to develop the 10,000-mile network within the federal time frame. In terms of kind of what we've done so far, as I think has been noted, the CDT worked with the Public Utilities Commission and the third-party administrator, Golden State Net, to develop what is now this 10,000 miles map that was released last May.

We have also gone out for a procurement contract for fiber conduit and related materials. We did that last May as well. And really trying to get ahead of any supply chain constraints and get in the front of the line as we get these material, as we need these materials, so that as we move forward, we don't experience a shortage. We started a permitting process. We started about a year ago February.

We held a permitting summit and did a lot of work to go from the standard permitting process that I think has been mentioned so far. When you look at the permitting timeframe table that was mentioned, that chart there, it shows that the standard, the average would have been 30 months. Now, SB 156 included some CEQA improvements. And for this project, it took that 30 months down to 17, which is obviously 30 months is outside, would take us out of, outside of the federal time frame.

So that right there was a huge step in working with CALTRANS and the state permitting agencies. We have further shortened that to the 10-11 month time frame. And so the way we're doing that is a combination of things. We're funding resources, certainly at the state permitting agencies positions and contract funding. This is something that Caltrans normally does when it gets a spike in transportation funding. It would assign IAAs with the state permitting agencies.

And so we've kind of modeled it based on that, and that's going to help them keep up with the additional workload that's associated with that. And then similarly, when we look at this, it's kind of this idea of how many projects are there. We really see this as one big project. This is a 10,000-mile network, and anybody who sees a net, a net doesn't work if there are pieces missing from it. And so we're really approaching this as one large project.

And so from that standpoint, we have worked with the state permitting agencies to develop plans for a programmatic permit. And what that does is takes the full 10,000-mile map, takes the full system, and really treats the whole project as one large project when it comes to those state permitting processes. And we expect those two steps to be really important for being able to drive that time frame down from the 17 months further to the 10 or 11 months.

As has been noted in November of 2021, based on initial feedback from the Public Utilities Commission, we had identified 18 initial locations on which we started preconstruction work. This is really where we have Caltrans go out and start that permitting and design work. And they had done a little bit of this sort of work in the past in terms of constructing broadband, but this is really to, they hadn't done it on this scale before. So we went out with those initial projects.

Since then, those projects, as we've come out with a full 10,000 miles, they're really subsumed in that process. And as we start talking about what we're going to be doing here in terms of going out to construction and leases, those 18 will be part of the rest. I think one of the questions I've been asked is, okay, you had the first 18. When's the next list? The next list is the 10,000 miles, and that's the entire thing.

We don't have time to roll out kind of sections of this project month by month or year by year and still meet the federal time frame. So I think we see that as a positive challenge because the sooner we get a middle-mile network, the sooner Californians have a backbone to connect last-mile service to. I'll just mention a few more things here, that one of the approaches we had taken was Dig Smart.

I think anybody who's been tracking broadband in the past, they've had a question about, well, why don't we add fiber or conduit or these components to other transportation projects? And there were some limitations for how the transportation funding could be used for that. We have identified several opportunities for that where the cost made sense. And last October we started pulling the first 18 miles down in Poway, down in San Diego to get started on those, and we're continuing to look at some other alternatives there.

And then I think as mentioned, we signed an Arcadian deal for 306 miles a few weeks ago that's going to provide for construction of a segment from LA out to Barstow Needles, kind of crossing the state down there. And for substantial savings, I think, of more than 30% of what it would cost just if Caltrans were to build it. In terms of where we are currently at, we've got the map. That's really the map for those last-mile providers to connect to.

And it's a public map. We want to map it. We want everybody to understand that is where you need to plan on connecting to in terms of the time frames. It's the federal time frames we're targeting that we're going to have the funds under contract. Most of them will be under contract within this fiscal year. And then in terms of we'll get the project done by 2026.

And then we're going through an optimization process right now where we will, as Cynthia has been mentioned, we're going through the bid evaluations. We've gone out to construction bids for almost 7000 miles of the network, as well as looking at other alternatives for what other infrastructure is available to lease. And so that's kind of where we're at at this point.

And we expect in the months to come here to really be able to roll out with what that full architecture looks like and the time frames associated with some of those pieces. And with that, we're happy to answer your questions.

Thank you for your presentation. Any questions from members? Vice Chair.

Thank you, Mr. Chairman. So thank you for your presentation. I was intrigued by your comment about leasing and partnering. One of the frustrations with the legislature has been the fact that in many of these middle mile areas there's already private companies that have infrastructure, but we can't tap into it. And that's been something that the legislature has been grappling with for some time. Obviously, these are private companies and if there's not an ability to make a profit, they won't go to these underserved areas.

Can you talk a little bit about, and one of the reasons we passed some of our legislation to put middle mile in is to allow access for the person who can't afford it or a company wouldn't go there.

And so can you touch a little bit on availability of what infrastructure's out there that we know about and then the ability to either lease or get on that without having to go in and trench a line right next to an existing private line or a line that's already in setting there?

Yeah, absolutely. That's something that we began looking at early on. We have worked with the Public Utilities Commission and a third-party administrator to identify roughly 4000 miles of overlap between what was perceived to be existing infrastructure that might be leasable. That doesn't mean they will lease it to us or lease it at an affordable rate, but it is something that existed. And so that's something we've looked at. We did a couple of things.

I think the biggest piece is in trying to identify what that is. We went out with something. We used a tool called RFI squared. It's a way of going out for a contract. We went out last October with this contract and really went out to all of industry. And the point was to do a catch-all, right.

Any industry members out there who have existing infrastructure that you would like to lease to us, sell to us, build with us, whatever you have, we want to know about it and submit your bids. And so we went through that process. We received the responses in December and January. And so we're going through those right now. And so that's part of what we want to do. In my mind, we have this $3.8 billion.

When I talk about this optimization process, really the idea is how do we get the full 10,000 miles within that funding level, within the time frame that we have? So we're certainly considering those and we're trying to look at what alternatives there might be and trying to work on prices. But the reality is, as noted, sometimes I always say businesses are really good at math, right? And sometimes they're not willing to lease to us at the right price.

And so, okay, we understand that we're going to have to do some overbuild there to the extent that we can't lease what's there for within the 33.8 billion.

They're good at math and they're also good at understanding the fact that when there is no competition, they can take advantage of a situation. And we passed CASA funds through this legislature and they never tapped into those funds. And they said, well, we just can't get. There's always a reason. So when we did the middle mile, this is true competition. It opens it up for another company to come in and buy up space on that middle mile and go after that profitable area.

And at the same time being having to serve the underserved areas, this legislature is focused on the underserved areas and people who don't have access, and that's where the funds are being spent. But the big dogs, AT&T, Comcast, those folks say, well, we can't do now. And they have lines going through my communities that I can't tap into because it's supposedly not profitable. And at the same time, we put CASA of funds forward and they didn't tap into the CASA funds.

So now we're going to put another line right next to their line. And now we have true competition because now somebody can come in and take those CASA funds up and serve those underserved folks that we are trying to desperately get served at a really high cost to the taxpayer, quite frankly.

And so now when we actually have a plan, maybe they will come to the table realizing that there's going to be true competition out there and maybe they'll lose that profitable area to somebody who wants to come in and jump on your middle mile line. So I'd be interested to see how those conversations go because that's something I think that the legislature is truly trying to get to is to serve the underserved area, and we're willing to pay for that.

And the utilities have really not stepped up to the plate in my mind because I know they have lines going through those communities and they haven't tapped into them. So I would love to follow up with you at some point and see how those negotiations go because we have a short time to get this done. And we really are focused on trying to serve those truly underserved areas, which is not just my district and the rural areas.

It's also Senator Bradford's areas where there's people who are on islands and even in places because it's not profitable. At the end of the day, they're here to make a profit and they have truly a monopoly because they take all the good places to make money and they don't take care of the underserved. So I commend you for that.

I'm interested in seeing how those leases look and to make sure that we don't get hooked in and then not be able to renew our lease at some point and our underserved areas get kicked off the line.

Thank you, Senator Caballero.

Thank you, Mr. Chair. I apologize. I'm doing duty in two committees. So you may have talked about this, but I want to really underscore what my good friend from Bieber said. For me, it's really very simple. I'm looking for broadband access for underserved communities, a robust middle mile infrastructure so that, he's absolutely right, we don't get kicked off once we've expended our resources and those middle mile leases are not long enough to provide access.

I want to make sure that we can use all of the federal funds and you have to commit them to the project and then use them by a certain date. And I want to make sure we're using all of that. But I'm also concerned about the CPUC maps, because the Internet companies give their data to the FCC. So they have provided data to a public entity about where they're providing access with some degree of fidelity.

Be the maps that they give to the CPUC are cable companies. It's not the internet companies. And those maps we know to be an error because they claim the entire census track, even if they're only meeting.

The needs of one business or one house within that census track, which means that you have huge areas that they say they're providing access when they really don't. And so if we use that inaccurate data, we're going to end up with maps that do not include all the disadvantaged communities. So I'm concerned about that.

I guess the question I have is at one point, we were talking about 1,400 miles, give or take a mile, and all of a sudden the Middle-Mile Broadband Initiative jumped to 10,000 miles. And can you talk about how that relates to the work that you were doing early on? And here's the deal.

It's really frustrating as a Legislator to kind of understand where the work is going and then to come back six months later and go, 'oh yeah, well, we just decided we're going to do it a little bit differently.' And a little bit differently is hard to understand exactly how we ended up with 10,000 miles, and in particular with a priority that goes out to Barstow and Needles from Los Angeles as opposed to the Central Valley, which is where I've been doing so much work.

And it's just like--Internet access there is very slow, if at all, and missing in huge areas. So as we're setting these priorities, how we hook into the last mile is going to be really important because we may create two absolute different systems and then they don't match up with each other. So I'm concerned about where we're at right now and how we ended up going from 1,500 miles of Middle-Mile Broadband access to 10,000 and who are we leaving out?

Great. Thank you very much for the question. So as we look at this, as we were saying, as one single project is single ecosystem, so the middle-mile is one part of it, last mile, but also digital equity because people need to know after they get the connectivity and it's affordable, how to utilize it. It's always been 10,000 miles.

The 1,400 miles that we were talking about was the initial 18 projects that we were taking on because we thought through the 18 projects that were already either Dig Smart or other already in process--had already been permitted that we could leverage that. And so that's still a part of the overarching 10,000 miles, but it was a means for us to be able to learn.

We did in fall be able to implement Poway in San Diego County, which was our first set of fiber optic that we installed, and we are in the process of doing joint builds with individuals that have already got their permits and funding and we're--joint funding--to be able to leverage maximizing both private and public funds in order to get connectivity. So just the difference between the 1,400 and the 10,400, 1,400 was a part of the larger 10,000. It was just the initial set of our priorities. And I don't know if you have any additional comments on that.

So let me ask you on that. I don't mean to interrupt, but what's the timeline for the other projects that are part of the original group of projects that were set up?

So all 10,000 miles, all joint--well, specifically, the construction piece of it will be under contract by the end of this year. So this calendar year, all contracts will be in. Basically all the monies will be encumbered for those job order contracts we're building.

The pieces that we're still working on is the leasing, and we're working with GoldenStateNet, which is our third party administrator, to determine those opportunities where it makes more sense, where it's more timely, it's more cost-effective to lease the line, and it's actually leasing back to the state, not necessarily to the third party. So if the third party--we always want to have partnerships with private, but for some reason that something happens, the contract is with the State of California.

So the original, was it 17, 18 projects will be either--a lease will be negotiated or they'll be under construction by the end of the year?

Well, actually, why don't you go ahead and clarify.

Yeah, so in terms of those initial 18 projects, those were just locations. SB 156 really required us to work with the Public Utilities Commission to identify the full map. That's where we get the 10,000 miles. And so when they were able to finalize that map, that's how we got to the 10,000 miles. They were able to identify those first 18 projects early, and so that's why we were able to start on pre-construction on those. In terms of what we're doing right now, we're evaluating bids.

As the directors noted, we're evaluating bids on more than 5,000 miles of construction, combined with some other bids, a couple thousand that Caltrans is doing. We've got 7,000 miles of construction bids being evaluated right now. And so when we took the original 18 projects, that was to get started, get Caltrans started on learning how to permit, learning how to design these, but we folded those into the 10,000 miles.

So I think we're trying to focus everybody on the fact that we're going out for construction contracts for 10,000 miles. The intent is by the end of this calendar year for the full 10,000 whether it's construction or leases or purchases or joint builds, whatever those components are. But by doing that, by not treating smaller projects, using smaller projects, we lose some real economies of scale. And so one of our approaches was to--we worked with a third party administrator.

They developed a kind of five--broke the state into five major regions, and we have large regional contracts for each of those regions that really are going to help us get some economies of scale when it comes to construction costs. But all of that, we're evaluating bids on 5,200 miles of that right now. And so as we move forward here, we'll be signing construction contracts for those, as well as several thousand other miles that Caltrans is evaluating as well.

So those are all things that are going on in the current year, and by the end of this fiscal year we should have a really much clearer picture. And I also wanted to address the question you had had about the Arcadian deals. Why would we sign a deal going from Los Angeles to Needles when there's other areas? And the answer to that is when we look at these joint build opportunities, this is where private industry has had projects in the work for years, right?

They've done the permitting work. All the things that we're doing, they've been doing it for years, and so they have something scheduled. And so that was really why it really depends on as we look for partners, wherever they are, if it overlaps with our 10,000 miles and it's cheaper than it costs us to build, we're interested. And that's what we're looking for. And that's why it was there. It wasn't like a priority. They were ready to go with or without us. And so we've been able to save, I think, I want to say, roughly 55 million dollars in that deal over just building it ourselves.

That's excellent. Mr. Chair, if I could, one quick--thank you for the explanations about all of that. The only thing I ask is that as we progress throughout the year, those 18 projects were really important to Senators that worked really hard on passing the whole host of bills and supporting the budget. From my point, I had one of the projects in the Central Valley, and I like the explanation for economies of scale. I think that makes a lot of sense.

But if it ends up that that project is not going to happen quickly, I just need to know because I've been out there beating the drum that we're going to get access. It's going to take a while because we got to build the system and then get the last mile in.

But if any of those 18 projects that got subsumed into the bigger effort, just let us know so that we can be able to explain it to people why it is that it's not happening in our area.

We appreciate it and we can actually bring that back. As all the job orders are being negotiated, we can lay the 18 projects over that and maybe be able to give you a timeframe.

That would be great. That would be really great. Thank you so much. I appreciate it.

Thank you. Senator Rubio.

Good morning. Thank you, Mr. Chair, and thank you for the information. I want to address two things. Well, first, there's a lot riding on this plan, a lot of money, a lot of projects and a lot of jobs, I'm sure. But I know that traditionally permitting has been an issue as it pertains to building these projects and also, of course, making sure that we tackle the number one issue, which is access and affordability to our underserved and unserved communities.

Earlier today as you were presenting, I heard you say that you're different to Caltrans to take care of the permitting process and take care of the project. And you mentioned that they found ways, creative ways to get through the permitting process a lot faster. Would you expand on what that creativity is? Because for me, my concern is that it's creative, but if this doesn't happen again, there's a lot riding on this. Can you expand on that? Thank you.

Certainly. Certainly. So kind of going to Caltrans' standard process, I think one of the initial--as we look at the way they would normally do this when we first started out, it's not unreasonable that you would look at a project like this and break it into hundreds of little projects. That's hundreds of small permits. And as you get each segment ready, each project ready, you would submit a permitting application. And then that starts a time clock.

And so looking at that, I hope you have in front of you a timeline for permitting where it shows 30 months and then 17 months and then down to 10 or 11 months. The way we've done that is to, rather than looking at it, this is hundreds of small projects and hundreds of small permits. We reached out proactively to the state permitting agencies in Caltrans and worked up a plan to do what they call a programmatic permit.

And the reality is, I call it a 10,000, it's one 10,000 mile project, but it's a program of projects. It's a 10,000 miles program. So from the terminology that the programming folks or the permitting folks use, we were trying to break this, trying to get this as large as possible. And so what we've done to them, done with them, is to be able to present the full 10,000 miles map to say, 'this is where the project goes.'

And so we're in a process where Caltrans is working with those state permitting agencies. It's expected to take, as I think the sheet indicates there, approximately six months to go through. That's, I think, the outside. I think it's between four and six months for each of those state permitting agencies to be able to approve the full programmatic approach. And so the way that works is once Caltrans has the statewide permit for, say, the California Coastal Commission, they've looked at the map, they've gone through it, they come back to when Caltrans has those segments ready, it's able to submit to the Coastal Commission.

'Okay, we're ready to move forward to this segment. We're ready to issue work authorization to construct this segment.' The permitting agency is able to look at that and say, 'okay, yeah, that ties to what you've given us already.' And it takes that approval process down from potentially six months to a matter of weeks.

So that's really, I would say, the innovative approach we've tried to use, and it's going to really help us to meet the federal timelines and really move us from planning to construction sooner.

Thank you. One more question, if I may. I'm also really, really concerned right now. As a former teacher, I can attest to the fact that we are currently leaving an entire generation of elementary school children behind, and that's just going to create a gap for their future deficiencies. And so I want to also underscore what Senator Caballero stated, and that is our concern about the inaccurate data just leaving an entire gaps in our communities, especially those that we want to serve, those that are underserved and unserved.

And so really honing in on that information and making sure that we review that data is going to be key. So I'm just going to again plead that we make sure that we look at those maps and that no one's left behind. Thank you.

Thank you. Senator Seyarto.

Well, thank you. Senator Rubio beat me to it on the permitting timeline because I think that's one thing that a lot of different housing people, everybody can agree on is our permitting timeline is pretty long. And so being able to get through that by doing whatever means you can, when does that permit timeline start for us? Is it already started or we have to wait until a certain point because it's very tenuous for people to get through it?

And there's a lot of obstacles that pop up along the way. And this project with the timelines that are built in and the loss of federal funding that's on the horizon if we don't, has the potential for being delayed and then we lose funding and then we're scrambling for funding and we don't get these projects done. Once again, we're left at the mercy of our state processes to try and figure out how to do this. And we're back to what Senator Dahle's concern is.

We spend a lot of money, we don't have a plan, and then we don't have a project. So where are we on this? Have they already put in applications for these things or are we at zero?

So the pre-planning permitting is already in process by district. And so as we were talking about the large plan that's already in process with Caltrans. And so obviously, and then anything we're doing joint build, a lot of those private companies already have in some cases already done some of their permitting. So it is obviously underway.

And then as Mr. Monroe was talking about, since a lot of these state and federal will see the overarching plan as these projects come in, it's easy to align it, not start from scratch every single time there's a new construction or project. It's a part of a larger effort.

So I don't know exactly when, if you have a higher update, but I know the pre-planning is pretty much done and we are monitoring it by district to make sure if one district is falling behind or having more struggles that we can lean in and help them and basically take some of the red tape out to make sure that they're all being treated equally across the state. And so it's more of a statewide lens versus project by project. Is there anything you want to add to that, Mark?

Yeah, correct. We came out with our interagency agreements with the state permitting agencies last August, and there was some back and forth with those. They've all been signed since, and so certainly in terms of keeping up with the work, the state permitting agencies are beginning to recruit staff up and contract up for that work.

And then when it comes to the programmatic permit applications, I noted that, I want to say the Coastal Commission has either six or nine districts. I'm not certain, but they've started that process with those. So in terms of that clock, depending on which segment they're on and which entity they're in, they're all in various stages right now of submission, evaluation, and getting approvals.

So I have low confidence in that. I'm sorry. I've seen too many projects derailed because of our state agencies and their abilities to process permitting, the tasks that go with the permitting process. So we'll keep our fingers crossed. I guess that's all we can do. Caltrans--they're going to be doing this project and moving from being a transportation corridor builder to communications guys. Have they ramped up?

Do they have the ability to do this now or are they going to have to ramp up to be able to do this? We have to invest more money into Caltrans to be able to enable them to complete a project like this. And are they the only resource we have out there to be able to build out a project like this?

So part of the answer is the funds that were actually given to Department of Technology to build is specifically our ability to basically transfer that money to Caltrans to do the building and the construction of the primary network. They are looking at, obviously their engineers, they have dedicated permitting czars and so they are obviously ramping up on their end.

And where they don't have the engineering resources, there is money within the project to be able to get the consulting that they need to make sure they stay on track.

Great. I appreciate your answers. Thank you.

You're welcome.

Thank you. I have a question as it relates to your RFPs. You've laid out all these RFPs and we've constantly talked about the unserved areas, underserved areas. But how is it no requirement or no directive to make sure that those areas are prioritized in RFP?

In terms of the RFP, so RFPs have gone out basically for the full 10,000 miles. When you look at construction, it's 7,000 miles. It's really what we're ready for. When we talk about prioritization, the federal timeframe doesn't allow us to delay any of it. And so, really when we look at it, this is a network to connect all of the state's unserved and underserved communities. That's what the map does at its core.

It looks at those communities identified by the Public Utilities Commission and connects them up along the state highway system. So I think we are targeting all of those unserved and underserved communities and we're choosing a timeframe. We're moving forward with it as quickly as possible because we just don't have time to kind of roll out subsequent plans that are targeted for this community versus that. There's just not enough time with the federal funds.

All right. Well, looking at these 18 targeted areas, I'm somewhat dismayed that nothing's in LA County, and with the big digital desert that does exist in the LA urban area, there's not one project directed there. It's not a single project that happened in my district based on what we have right here.

Yeah. So on that initial project list--and I apologize. I thought project--I want to say one of the projects was in LA County, one or two of them--

It says this is you--you guys revised the list and--

I'm certainly happy to follow up with your office to kind of help out with that, but really, to your point, that's a valid point. When we looked at the need, we were really using what information does the Public Utilities Commission have?

So, to put it differently, if I were to go out and try to come up with a map outside of the Public Utilities Commission process, CDT doesn't necessarily have that authority. With SB 156, we really lean on Public Utilities Commission to do that. So when the Public Utilities Commission did their initial assessment--they did a public proceeding August and September of 2021--they were still going through the evaluation.

So this was really the selection criteria for this initial 18 were 'where is the Public Utilities Commission certain that we need a solution?' They were still taking in a lot of information to identify the need and to make sure that the final map reached all of the areas that it needed to. Those initial 18 were really identified by a: where is the Public Utilities Commission identified where we certainly do need to solve? We need a solution.

Where is--does Caltrans potentially have a transportation project we could piggyback on? Where are some places where we know there's a need and we could move forward early with some of the pre-construction work? It wasn't necessarily intended and we didn't have the information at the time to be able to target one area over another.

Can I just also--so one of the things that when the projects first launch, we use the 18 projects as a way to learn, but in the meantime, what has happened is we now have the 10,000 miles broadband map. The 18 projects are not prioritized over other projects. They're all simultaneously being bid on, and then as based on availability of fiber and construction, they'll all be built at the same time.

So I just want to make sure that that's clear that the 18 projects haven't been brought in ahead of the others. We just thought that we were going to be able to leverage them sooner than we did, and unfortunately or fortunately, we're faster on the 10,000 miles than we thought we were going to, so everything is going out to construction at the same time.

All right. Thank you. Senator Becker.

Thank you. Just wanted to bring up, I know there's been a lot of conversation this morning about the maps. One part that is on there right now, and I just wanted just to reemphasize, the priority is the coastal part of San Mateo County has always had extremely unreliable connection, but there's actually only one line into the entire coast. So when it gets cut, as it did in the recent storm, there's nothing, not even 911 capability. So no emergency services, anything, out to the coast side.

So, as you can imagine, this has been a topic of conversation for very many, many years. Even before I was running, there was a big event with my predecessor and Kevin Mullin, who's now in Congress, and all the providers and everyone came. And nothing really has changed in the four years since then. So I know that this area is on the current maps, which is great. And if anything, we're looking to try to speed this up because it's really a situation.

There was a situation where a car went off the road. We just had a big meeting last Friday, and they told the story about a year or two ago when a car had gone off the road and had no connectivity and no way to reach anyone and was stuck. Someone just happened to be doing a U-turn, saw it, scrambled down, identified the person, and was able to get emergency services there. But the kind of situation happens when there's just no connectivity. So I just want to raise that as an area of need when we're looking at these maps and appreciate attention to this area.

Thank you. So I want to thank Director Bailey-Crimmins for your presentation and Deputy Director Monroe. So appreciate you being here this morning.

Thank you.

Thank you.

Thank you.

Our next panel will consist of representatives from the PUC Commission. That'll be Rachel Peterson and Robert Osborn. Rachel Peterson is the Executive Director, and Mr. Osborn is Director of Communications Division.

Good morning, Chair Bradford, Vice Chair Dahle, honorable members of the committee. Thank you for the opportunity to be here this morning. My name is Rachel Peterson. I'm the executive director of the California Public Utilities Commission. I'm joined by my colleagues, Director Rob Osborn of Communications division and Selena Huang, program manager in Communications division. We've heard your questions this morning, and so I brought the experts with me to help answer as well.

I'm going to provide an overview of our progress towards implementing the state's broadband for all initiative, and then we'll turn it over to Director Osborne to give you a more detailed description of our actions. I first want to thank every member of this committee for your commitment to closing the digital divide. We'll be updating you on a range of programs and actions today that are consistent with the Legislature's direction to take a multi-pronged approach to this societal issue. We have distributed millions in technical assistance.

We're setting up criteria for receiving state and federal dollars that will result in serving the unserved. We have people on the ground actively helping local governments and tribes, and we're creating a credit enhancement program that will leverage local government investment even further. This is an all of the above approach because we know that all of these strategies are needed to truly make progress.

As you know, we're actively implementing several new broadband grant programs pursuant to the Legislature's historic package enacted in 2021. That included billions of dollars for last-mile broadband infrastructure grants, funding for technical assistance for tribes and local governments, a new program to support local government financing, and transformational revisions to the CPUC's existing broadband access and affordability programs. In February last year, we adopted final program rules for the Local Agency Technical Assistance grant program and started accepting applications in August.

To date, we've received 119 applications from local governments totaling 53.7 million. That shows there's tremendous interest from local governments in this program. We believe these funds are meeting the intent, which is to improve the quality of future broadband infrastructure grant applications, ultimately delivering more effective, reliable, and affordable broadband service. Because applications have outstripped the initial 50 million allocation, we're working to identify additional program funds. For the federal funding account, the CPUC adopted program rules, application guidelines, and funding allocations in April 2022.

We published an initial draft of the program's standalone project areas map in January, we've heard significant feedback from stakeholders and the public, and we're working on revisions. We'll update you on some of those revisions today. In particular, we're updating data centering on disadvantaged communities, and we're working toward opening the first application window for these funds in June. We manage four other broadband programs that have been and will continue to be important vehicles for closing the digital divide.

We've got new rules and funding allocations consistent with SB 4 and AB 14 for the Broadband Infrastructure grant account, public housing account, adoption account, and consortia account. And we're moving forward with implementing the 750,000,000 Broadband Loan Loss Reserve program to provide the best possible credit enhancement mechanism for local governments and nonprofits to finance construction of broadband networks. Our staff have partnered with GO-Biz, the Governor's Office of Business and Economic Development, and IBank, the California Infrastructure Bank, to leverage their expertise.

We're working towards adopting final program rules in the coming months. And last the new BEAD program, Broadband Equity Access and Deployment, was passed as part of the federal infrastructure law. The CPUC is working closely with the Federal Government and the California Department of Technology to prepare for the acceptance and distribution of bead funding, which will build on the state's investments in broadband infrastructure to unserved and underserved communities. We know that California's broadband needs are enormous and will require all of these investments and more.

We're also looking at additional policy measures to address current broadband affordability concerns. These are generational investments in California and its future. We at the CPUC are working every day with purpose to ensure the funds are used as effectively and as equitably as possible. We want to build sustainable broadband networks that will offer future-proof, reliable, and affordable service to all unserved and underserved regions throughout California. Thank you again, Chair Bradford. I will turn to Director Osborn for more detail on our effort.

Thank you, Rachel. Good morning. Chairman Bradford and Vice Chair Dahle and committee members. I'm Robert Osborn, director of the communications division at the California Public Utilities Commission. I'm going to provide an update on the last-mile broadband programs enacted with Senate Bill 156. The CPUC is working closely with the Department of Technology on Middle-Mile Broadband Initiative, as well as the new Infrastructure Investment and Jobs Act programs, and I will touch upon that later as Executive Director Peterson already provided an overview of these programs shown on the slide. I'll go on directly to the program updates, so there's a slide presentation, and please move on to the third slide. Thank you. So the local agency technical assistance as Executive Director Peterson already stated, the CPUC began awarding ladder grants.

We call this program the LATA, Local Agency Technical Assistance, back in October and has received 119 applications totaling 52.5 million. 48 of the 58 counties have applied. Staff have posted on the CPC website, a grantee administrative manual describing how to apply the grant application, the required supporting materials and documentation, a list of grantee reporting requirements, how-to videos, a list of frequently asked questions, and a list and tableau dashboard of grant applications that is updated every Friday.

The image on the right shows a snapshot of the tableau dashboard that's available through the CPUC website. Currently, staff are reviewing the first set of quarterly progress reports from 57 of the latter grantees, which we received at the end of January. Next slide, please. So the Loan Loss Reserve Program provides 750,000,000 to enable local governments and nonprofits to secure financing for broadband infrastructure. The CPUC published a staff proposal last year and received comments and reply comments in the month of October.

In November, the CPUC and the California Infrastructure and an economic development bank, otherwise known as IBank, signed an interagency agreement to work together to develop the Loan Loss Reserve Fund. The CPC held a public participation workshop on November 8 last year to provide an opportunity for community organizations to provide feedback on the staff proposal.

The CPUC is evaluating whether to include modified versions of a bond guarantee or a state revolving loan fund as options for the staff proposal, and the CPUC will be developing a revised staff proposal for publishing bond July 1 of this year. Next slide, please. So, through the broadband for all proceeding, the CPC adopted program rules for the federal funding account and has been hiring staff developing a grant application interface system, an eligibility map, and federal and state funding report formats.

Staff published a broadband factors for last mile connectivity report that describes the best practices and industry standards for regarding network design and technical criteria for last mile providers interconnecting with middle mile networks. The CPUC published a first version of the eligibility map, which showed the location of and data about potential last-mile broadband infrastructure grant projects.

After publishing a first version of the map, the CPUC began soliciting feedback and input from stakeholders, and in response to this feedback and input, the CPUC is updating and redoing the map. Specifically, we heard from stakeholders that unserved locations were not appearing on the map. We also heard that equity needed to be more deeply incorporated into the process and applicants need to be able to draw their own projects and leverage existing metrics for disadvantaged communities, and the CPUC should provide more data to enable applicants to evaluate areas. So in response, the CPUC is removing the predefined priority areas from the map, updating the underlying data to better reflect the number of unserved locations.

These are specific unserved locations, not census blocks as we had used in previous years. And also awarding up to 20 points from the existing broadband service need category based on disadvantaged communities, which is included in the decision. Already, we're still working out the metrics to use for measuring disadvantaged communities, and when we do, we'll be sharing that with the public and with stakeholders through meetings, email notifications, and posting it on our website.

Next slide, please so this graphic shows where we are in the process of development for the federal funding account eligibility map. As I said earlier, we released version one, we've been taking feedback and input, and we're beginning to implement the updates, which I'll explain in a moment. This will lead to version two of the map, which will provide the basis for the applicant tool.

And following the first grant application cycle, we'll be updating the map as we collect more broadband data from the public and from providers. Next slide, please. So this graphic shows the updates and modifications for the public map, which we plan to have ready by the end of March. So working from left to right, we're updating the underlying broadband data with the most current data set and relying on the data that we collected from providers over the last calendar year, we'll be adding socioeconomic indicators for disadvantaged communities to all unserved locations on the map and removing predefined priority areas. Version two will show unserved locations and socioeconomic indicators without predefined priority areas.

Next slide, please. So, as shown on the timeline, we plan to have version two of the map available at the end of March, followed by the applicant tool at the end of April, and then we'll be launching the grant application portal to begin training applicants on how to submit applications at the end of May and open the first round of applications for the federal funding account in June. Next slide, please.

So something we did not communicate clearly with the release of version one of the map was how the scoring of applications works in the context of the county allocations stipulated in Senate Bill 156. Senate Bill 156 divided the $2 billion equally among urban and rural counties, with 5 million going to each county and the remaining amount allocated based on each county's proportionate number of unserved locations based on the data as of July 2021. The unserved locations on the map are presumed eligible and can be part of an application. If the funding requests in a county exceed the allocation for that county, the Commission's scoring rubric would prioritize projects based on proposing to serve areas within a county where the funds are most needed due to socioeconomic conditions or a lack of market-based incentives to serve customers in that county. Next slide, please.

Moving on to CASF, the California Advanced Services Fund, the CPUC adopted new rules for the Broadband Adoption account and the Regional Broadband Consortium account. We revised rules for the broadband public housing account for publicly supported housing developments and farmworker housing, and we updated the California Advanced Services Fund Infrastructure account to implement legislation regarding project eligibility and performance criteria. Eligibility rules for other low-income housing developments and mobile home parks with low-income residents will continue in the current rulemaking.

The CPUC also made a significant number of awards. In the adoption account, we awarded 75 projects totaling 6 million, public housing account, we approved 19 projects totaling 1.4 million and in the consortium account we approved 15 applications totaling 10.3 million. Next slide, please. So upcoming dates, April 3 CPUC plans to submit the or staff plan to submit the CASF annual report, which contains detailed information on the program as well as performance metrics.

The planning stage for the CASF annual workshop we're tentatively planning to have the workshop on April 10. July 1 is the application due date for the adoption and public housing accounts for the next cycle. April 1, July 1, and October 1 are the application due dates for the upcoming technical assistance tribal technical assistance grants and then the infrastructure account applications. We're considering an extension based on the publishing of the CASF eligibility map, which is scheduled for mid March. Next slide please.

Finally switching to the broadband Equity Access and Deployment program. In addition, so the PUC was awarded 4.9 million in federal funding from the IIJA, Infrastructure Investment and Jobs Act of 2021, through the Broadband Equity Access and Deployment program to do planning activities leading up to a five-year action plan and launching the BEAD last-mile sub grantee program.

The CPUC is coordinating with Department of Technology and Planning outreach activities and aligning digital equity planning with BEAD as the Department of Technology is the designated entity for the state Digital Equity plan. Last month, the CPUC opened an order instituting rulemaking to develop rules determining grant funding eligibility and compliance for BEAD funds distributed to California. More information on the rulemaking is available on the CPUC's BEAD website and people interested in receiving notification on the BEAD can sign up there. Next steps, the five-year action plan we're working on now is due in mid-August, and thank you for the opportunity to present this update and we'll be happy to answer any questions.

Thank you. Do you have a presentation as well? No? Any questions by members? Senator Caballero.

Thank you for the presentation. I'm just trying to get straight in my own head what we're talking about with these different funds. Because the CASA Fund has been over well, it's been there, it's been a great fund, but it hasn't done what we all, I think, expected it would do. So the federal funding account is the account that's funding the urban and the rural sections. And as I understand it.

Well, first of all, let me just say that I'm really happy that you went back and redid the maps because there was significant concern raised about them. And as I said in the previous session, I think that there is better data that we could have used because this has to move fast. We can't get our fingers on it because we don't get cooperation from our partners. Well, for obvious reasons why.

But in any case, I'm looking at the timelines and when we're rolling out opportunities for access to funds, and my understanding is that it always is frustrating to me when we say you've got to do it by this date, and then you can't because it's impossible to do it. So my understanding is that the federal funding account grants are going to, you showed the timeline where they're going to roll out by July, right? Is that this new July of this year? Correct?

And then we have requirements that, so we have requirements that counties do something by. They have to take their $5 million and then they have to 5 million, plus the other resources that go based on disadvantaged communities. But if they don't use it by June 30, then it can be clawed back. And it's June 30 of this year, 2023, it can be clawed back.

And so to not have those grants available, but then they can be clawed back by a date before they are going to roll out just seems inconsistent to me. So there's something that we need to change so that we can make it very clear to the 58 counties or the jurisdictions that can access this resource that the dates, they don't match up, but that we're going to change them in a way that allays their fears that it's a game that's being played as a way to trick them into something. So do you understand what I'm talking about in terms of the timelines?

Because we've been dealing with these timelines for quite a while now, and the clock is kind of ticking. And my concern is, number one, that there's clarity at the local level, how they access resources. Number two, that rural and urban equally have opportunities to access the fund. Number three, that the dates line up so that they know when they have to activate their resources to be able to apply for the grants. And four, that they actually can spend the money or commit it and don't lose out on federal resources, because it just took us too long to get here. So my question is, that particular date concerns me, and I'm wondering if you have an answer for that, and it may be that we put it in legislation. I just don't remember.

Thank you for your question, Senator. So, just to clarify, the plan is to open the application window in June, so it wouldn't close in June. That would be an opening. So the application window would be open for quite a while. We'd begin accepting applications. We plan to honor the allocation that's in the decision beyond the June 30 deadline. So that 5 million that goes, that's allocated to each county would be preserved, as would the additional allocation that's based on unserved locations.

Okay, so what we probably need to do is SB 156 sets a date of June 30, 2023. We probably need to change that in the budget. So it's very clear that that date is not a trigger for the CPUC to do something. It basically instructs the CPUC that you can take back any resources that may be unspent or uncommitted at that time, and we may need to change that. I'm just looking. Technically, we need to make sure that we're being clear, because you can't post, we have the right to claw back this money, but we haven't given you the grant yet, so how can that happen?

Thank you. Senator Rubio.

Thank you, Mr. Chair. Thank you for that information. I know that. Forgive the expression, but it felt like you rattled off a lot of information. So I just want to dig a little further on one issue. And I'm sorry, I do want to go back to what you stated about the maps, and I believe you stated that you had pulled back, removed the predefined priority areas, and that you're holding stakeholder meetings, taking input.

But I don't know, it feels like on one hand, I'm already hearing you have made a determination of what those maps are going to be, but at the same time, you're taking input and just going, based on what the chair stated earlier, it just seems they may appear right now that equity still has not been achieved. Tell me about the stakeholder meetings, like, who's giving you input? What's happening to that information? Where is the input? Who are the stakeholders? I just want to make sure that I hear that it's equitable across the state. So can you give me a little bit more information on that?

Certainly. Thank you for your question, Senator. So when I said we're removing the predefined priority areas, the priority areas map had all the unserved locations with some areas that were marked off that we called priority areas. So those will be removed. The unserved locations were updating the data set so that it's more accurate for the urban areas as well as the rural areas. So we'll see an increase in the number of unserved locations because it's a newer data set.

With regard to the equity question, we're incorporating the equity into that decision matrix. So there's 20 points awarded, we had previously said, for priority areas that's now going to be based on disadvantaged communities. And the metrics that we're using for that will be a combination of factors that we're discussing with stakeholders. So should it be the socioeconomic vulnerability index? Should it be calendar virus screen? Should it be Senate Bill 535? Should it be median household income?

We're looking at what basket of indicators should be indicated, and then that would be based on each county. So the determination is at the county level, it's not at the state level. So that's how applications would be prioritized in the event that you have more applications than you do for the county allocation. I'm sorry if that's a little bit complicated.

No, it's okay. Just one more question, if I may. When do you expect that these maps are going to be completed? I must have missed it. Do you mind sharing?

Yes. So we're planning to get the version two map out at the end of March.

Thank you. That's all. Thank you, Mr. Chair.

Thank you. Senator Dahle.

Thank you, Mr. Chairman. So my first question is you're focused on the last mile, and obviously there's areas. So I'm a little bit confused on are you communicating with the middle-mile people to figure out, obviously, if there's infrastructure there, you can do last-mile. If there's no infrastructure there on the middle-mile, you can't do last-mile until you have middle-mile. So are you communicating with the folks who are putting together the middle-mile? That's question number. You are.

Yes. And in fact, we have it built into our program rules. For instance, in CASF, we require that any applicant that's asking for money to build middle-mile, that they also first consult with CDT, the Department of Technology, to ensure that if there is middle-mile there already, they leverage that middle-mile. And if there's not, can we leverage that middle-mile that they're building for state purposes?

So just to make sure that we don't have the cart before the horse, that you can't build last mile until you have secured middle-mile. So many of the, I look at the map we had earlier of where all the middle-mile is going to go, and the majority of those unserved, I say not served at all, communities can't do last mile until they have middle-mile. So you're coordinating that to make sure so they apply for. I looked at some of the counties I have.

They didn't even apply, or I learned there, didn't show an area dot on there where there was a county doing something because they have no ability to do last mile if they can't get to the backhaul. So that's the question. I want to make sure that we're coordinating thatt because those counties are really at a loss if they can't get on the web.

Number two, on the consortiums, I've been very frustrated with the accountability of the consortiums to be able to actually take the resources and then implement something. And there's no way for us as legislators to really see how they're spending their money because they're nonprofits. What is your process to hold them accountable to actually deliver something?

So I'm going to defer to Selena Huang.

Senator, thanks for the question. So for the consortium, we actually require the annual audit. So the consortium are required to submit the annual audit to the CPUC. And in our annual report that Director Osborn just mentioned, we will include performance measures, including outcome that we gathered from the consortium. So we actually gather information in our annual data request to the consortia about applications that they've assisted, permitting activities that they've assisted. So the annual report that we will publish in April will include all those performance measures and outcome.

So performance measures are one thing, but I mean, the cost actually, per hookup, I looked at some of those, and it's astronomical. It's tens of thousands of dollars for maybe one hookup. And also the ability to be able to see what the folks who run the nonprofit are actually getting paid and the amount of money that we are dumping in these resources without the oversight to be able to actually dig in.

I would like to see more detail on how much they're receiving for their job positions, number one. And number two, what the cost is per unserved area that they're hooking up. So that would be something I would request that the Legislature have available to them because I think we're paying a lot and we're not getting a lot, and there's a lot of high salaries in those consortiums. So that's just something I would like for you to look at. The last question I have is technology. Since I've been on this committee for a long time, we have a lot of people coming through our offices talking about new technologies and the ability to be able to give service without actually putting a wire out to a home. And in our areas, where we have our communities very spread out, where you may have a community that has to put them to a line out 5 miles, out to somebody's home or 2 miles, there's some line of sight ability to be able to transmit and then bring that in and hook up to the middle-mile or to the hub. Are you looking at those technologies as well to actually drive the cost down and actually get services out to those people that are unserved?

Turn to.

I can take that, yeah. Thank you for your question. Yes, indeed we are. And, in fact, the BEAD program requires that we establish an extremely high-cost threshold for the grantee program, at which point, if a cost per location exceeds a certain amount, then it no longer is feasible for fiber deployment. And we look at other technologies, such as fixed wireless, such as satellite, as the other option.

Thank you.

Thank you. Senator Seyarto.

Thank you very much. So in 2021, we were right in the midst of the disaster that was trying to do education online, and the Legislature recognized it, and pretty much everybody, I don't think anybody opposed getting broadband funded so that we could get this project underway. So we appropriated the money in SB 156 in 2021, and obviously, some of the timelines built into that anticipated that the process would be kind of done by now. What has been the delay in getting it done?

Because the application window has been moved a couple of times, and I think we anticipated this would be ready to roll out and those applications would be out there. And I know people have been kind of chomping at the bit for it to finish. What's the delay in getting that?

Because it was a huge priority by the Legislature a year and a half ago when it got funded, and I realized there's a lot of intricate stuff that happens in between, but somehow I think we need to figure out what we can do better and quicker.

So I'll start with that, and then I'll turn to Director Osborn. So we thoroughly agree. We feel the same urgency that you do, Senator. So thank you for that question. And we actually have a different slide that we thought was too busy to share today, but we have a slide with all of the intricacy that you just spoke about that we've been at work on since these important laws and investments got passed.

And I wouldn't call it delay as much as complexity in rolling out what you all know to be a complex infrastructure implementation program. And we are on the cusp right now of receiving the first applications. I'd also point out that back in October, a number of counties applied for and received the first LATA grants. And so they have already been hard at work on the pre-engineering design and consideration phase. So there is work already underway getting ready for the June rollout.

Rob, do you have any detail you want to add?

Just to add that we were also working very closely with Department of Technology and getting the middle-mile initiative off the ground, as well as hiring 25 staff and getting materials together. So there was a lot of activity.

Okay, thank you.

Thank you. Senator Becker.

Thank you. I guess this builds on the last question, but as you know, really since 2009, through the CASF program, it's the only thing I've been about 255,000,000 gone out and we have about 2 billion to get out here. So I guess building on the last question, you talked a little bit about what you've done recently, staffing up and such, but can you just make tilts again a little more? But what is the PUC strategy to meet the federal deadlines and make sure that we're going to meet those?

Well, our first. Thank you for the question, Senator. Our first and foremost goal is to open the application starting in June this year. And we have, as Director Osborn described, several milestones that start this month and lead up every month to that opening. Once the grant application portal is open, then we can start receiving those grants from counties and providers around the state and start working with them on what their applications look like and looking at how durable and future-proof their proposed networks are. So really, for us, that June time frame is hugely important because that's when we'll start to interact directly with the tribes, local governments, others who want to provide these, build these networks.

Well, thanks. That's helpful. We've obviously had a lot of discussion on mapping, and I should say just two things for our area. One, make sure that when you have lower income areas within wealthier general geographies, make sure those don't get left out. So in our areas, you say East Menlo Park has had, and parts of East Palo Alto has had poor access to broadband connectivity and were left out of the last maps. I do appreciate the coastal part of San Mateo County.

As mentioned, the last panel are part of it because it's really a critical situation where it's been an issue for many, many years now. We've had in the recent disasters, a couple of times we've been cut off and even 911 communication can't even get out to the coast side. So we'll be certainly approaching your office in CDT about how to speed some of that up. But can you just comment again just specifically on some of the changes being made and how can we ensure that the mapping changes are not going to slow down the process of meeting the federal deadlines?

Well, we heard that exact feedback, Senator, from others that the unserved locations were not surfaced sufficiently in the original map that was published in January. And so that's exactly the data we've gone back and updated in order to ensure that the unserved locations in both urban and rural counties is fully surfaced and so that applicants can see where the unserved locations are and start to construct their own projects around those locations by publishing that version two by March 31, then opening the applicant tool in April, and starting to work with the future applicants in May to get them ready for the availability of the applications. I think that's how we're going to meet those federal deadlines.

Okay, well, a lot to do. I appreciate all your efforts.

120 days. Yes.

Yeah. Thank you for being here today.

Thank you.

And yes, Senator Caballero.

That did bring up an issue that I was concerned about. My understanding is that the CASA broadband application or infrastructure account has a requirement that there are low-income protections in terms of the deployment of the last-mile expenditure of resources. And that gives them extra points in their application as long as they're making sure that those protections are in place, but that the new funding from the Federal Government does not include that kind of a protection. Can you respond to that? I think you're hearing that we're concerned about people that really have a hard time. The Internet service started off fairly reasonable and it's gotten over time, has just as it's become faster, obviously with more infrastructure, it's become less affordable for disadvantaged communities.

Thank you for your question, Senator. So first off, we have the affordable connectivity program. I believe there's about 1.7 million participants in California. We're still working CDT, also working on trying to increase that number. But specifically on the federal funding account, there are points awarded for a commitment, pricing commitment. There's 10 points awarded for that and that's a 10 year pricing commitment and then offering a Low cost broadband plan. There's 20 points awarded.

Right. So that is part of the new system as well.

Yes.

Okay, great. I really appreciate that. Thank you.

Thank you. And I don't want to belabor this point because I appreciate your update in regards to the maps. But I guess the real question I have is how do we get there? I mean, if the purpose of this project and broadband expansion was for the underserved and communities of color, how was that missed the first time? How were those communities just totally ignored the first time that you would have to redo the maps?

I'll start. Chair, we appreciate the question.

I would say that the data has always been there. We've definitely been working with new vintages of data along the way. And so this new refresh that we're doing is going to draw on the latest data available. I would say that we made some technical missteps that became clear when we published the map and began interacting with stakeholders about it. But the intention was always there to ensure that as many unserved Californians in California would become served by this new investment and program. And so how we got there was some technical missteps that we made, which we own, and we're working to revise. Rob, anything to add?

No.

All right. Thank you.

Okay. And in 2000, I think 13, I passed legislation when I was in the Assembly to help wire our public housing facilities that were woefully, the majority of them not wired. Many of them that were built prior to 1960 have no infrastructure whatsoever. Two years ago, we expanded the public housing account fund. How are we in addressing those individuals in public housing, especially in our farm communities and areas like that? Are we making any progress there as well?

Selena Wong has been in charge of that program for some time, so I'll turn to her. Thank you.

Thank you. And thanks for the question. So currently, as Director Osborn mentioned, the public supported communities and farm workers are eligible to apply for the public housing account. And so we actually have made a lot of progress. We actually had some slides which were not included. But for the public housing account, we approved 341 projects connecting over 22,000 housing units across 31 counties. And we also, as you may recall, Senator Bradford, there was also the adoption component of the public housing account.

So for those grant funding, we approved digital literacy training to 128 projects with locations serving over 28,600 residents. So that was a lot of progress that we've made since the legislation. And right now, the Commission is looking at creative and innovative ways to expand the program to include other low income communities and residents. So we're planning to engage with stakeholders as well.

And not to get into the weeds. But, I mean, how do you plan on engaging? Is it going to be like public information, PSAs, whatever? How are you reaching these communities that don't have the Internet to begin with? How are you reaching them to make sure they're aware of these services that are going to be provided?

Yes. Thanks for the question. So we actually have webinars and fact sheets and information, and we do have a lot of meetings with stakeholders as well. And Director Osborn also mentioned, we are going to have a workshop in April, and we're also going to be engaged with stakeholders to talk about strategies to serve those low income residents in the public housing communities and farm workers and mobile home parks.

I'm sorry. It's all I can do to not just lose my mind. The Senator and I, both in the Assembly and in the Senate have, if you're going to have a webinar and you don't have Internet, how the hell are you going to get on it? I'm sorry. It's like if you come from these communities, Senator Caballero, Senator Bradford, he did a bill specifically to target those areas.

And the frustration as a Legislator, it's beyond belief that we're here years later trying to figure out how to communicate with these people. You can't communicate. That's the problem. We're trying to get to that, fix that problem. And it's very frustrating. And we continue to run bill after bill and we continue to put money towards those programs and we miss the mark. And we can't continue to miss the mark.

We have to actually go out to these communities and physically go out there, send somebody out to talk to them because they're not on the Internet. That's the reason they're not engaged is because we're trying to get them the service so they can engage. And whether you come from a housing project or you come from a farm community or you come from a rural area that literally does not have cell service, those are the core things that the Legislature has focused on.

For the 10 years I've been working on these issues, my goal was to get broadband in my communities. And as Senator Caballero pointed out, we've been going out and saying, hey, we've championed these bills, we've put the money forth and we continue to come back and not have a result. And what we get is we missed the mark or we're going to do a webinar. I'm sorry, that's just really not acceptable.

And the level of frustration for many of the legislators who represent those areas, whether it's the inner city housing project or it's the farm community or a community that just doesn't have anything. And we experienced through Covid such a disconnect and what the students and the rural health clinics and what it costs Californians when we paid for it, we put the projects forward early, is really hard to digest today. So I just want to, for the record, to show that somehow we have to do better than what we're getting. And it's really frustrating.

We take your point Senator, I appreciate it. I do think per what Selena reported on the public housing account, has delivered real connectivity to communities and people across will in order to continue ensuring that the program does reach more and more people. We'll definitely take your point about outreach in the community working on the ground. Thank you.

And I would just like to see where those public housing services have been connected because I have four public housing developments in my district and they're still not wired. I mean, you're talking about communities like San Pedro, who's not in a rural area, harbor gateway and the watch community, and you still have public housing there. You see it when you drive by all the buildings and you see the satellite dishes on the side of all the units, clearly let you know they're not wired.

We would be happy to work with your office to provide information.

Okay. Well, first, thank you again, Director Peterson and Director Osborn, I should say Executive Director Peterson and Director Osborn for your presentation as well. Thank you.

Thank you.

Thank you.

Now we're going to move to our final group, and it's going to be some of our individuals who work in the community to make sure that connectivity, I should say, can't talk this morning and infrastructure is planned in the areas that are needed. We have Kome Ajise, the Executive Director of Southern California Association of Governments, SGAC. And we have Stephen Cheung, the CEO and President of LA County Economic Development Corporation. Are they not here? They're going to probably be online. Okay, we got it.

And then we'll have Tracy Rhine, who's here, our Senior Legislative Advocate for the Rural County Representatives of California. So when you're ready, you may begin. Thank you.

Thank you. Good morning. Chair Bradford and honorably Senators. Thank you for having us this morning and to be part of this conversation on what I believe is one of the more important ventures of our time. My name is Kome Ajise. I am the Executive Director of the Southern California Association of Government SCAG. At SCAG, we are a transportation planning agency first and foremost, and we have a traditional role of focusing on broadband as a congestion relief or congestion mitigation tool.

But during the pandemic, specifically April of 2020, we were asked by stakeholders to expand that broadband effort to assist in bridging the digital divide. Because of obvious reasons, in February of 2021, the SCAG's 86 member board adopted a broadband resolution.

And since then, we have initiated a permit streamlining project that seeks to develop a streamlined permit approach, a model permit process, and model ordinance and fee structures that would allow our local jurisdictions to replicate and implement those in an effort to help streamline the process of delivering projects in their communities with the private sector.

We've also initiated a campaign to assist our local jurisdictions in promoting the affordability connectivity program, the ACP, which is a low hanging fruit that's available for folks to have access to, equipment to be able to connect where possible. And we've also developed a digital action plan which provides an in depth overview of the digital device solutions and provides solutions to close the gap. This is due for adoption at our board in April.

We've also applied for the local agency technical assistance grant, and our primary reason for doing that is to help our smaller jurisdictions expand connectivity in their community. And it's really gratifying to see the focus that the Committee has had on getting to those unserved and underserved communities, especially the under resourced communities. SCAG's 86 Member board represents a broad spectrum of communities across Southern California. It includes six counties, 191 cities, six county commissions, the air districts, and as well as the Native American tribes.

In our experience, smaller cities do not have the bandwidth to keep as they keep the fight, just keep the light on coming out of Covid-19 pandemic. All of their efforts so far has been to just continue to run basic municipal services. They don't have the bandwidth to deal with issues of broadband as much as they would want to.

So SCAG has made tremendous effort in establishing relationships with the California Public Utilities Commission as well as the California Department of Technology in an effort to bridge that gap with our under resources. We have participated in working groups as it relates to middle mile, last mile and state equity plans and grant funding.

While the state's been a great partner, there's still a void that's created for the smaller cities, especially those with large, moderate to low income populations who, as I mentioned, do not have the capacity to participate in the statewide working groups. So since the passage of our broadband resolution, I can tell you that we're actively having conversations which involves us taking this issue as seriously as we can.

As an example, many local jurisdictions that we have been in conversations with are not aware of what's happening at the state level with the CDT and Caltrans in developing a middle mile network within proximity of their cities. And this is not unusual. This is just the nature of how under resourced they are.

Additionally, if we look at the list of those who are funded for ladder grants, you'll notice that most of these applications are funded from larger jurisdictions that typically have access to grant writing and opportunities for more resources. So SCAG would like to see a more equitable distribution of funding and is working to inform local jurisdictions on what's available. We're also lifting up our concerns, the concerns of these communities and issues that's critical to these programs that have been developed.

SCAG would ask that any funding program ensure an equitable distribution of funds with regards to how the funds are distributed, what the criteria would be, and also how the program is structured. In our conversations with our smaller cities, we found that several are not applying because they do not have the staff, the capacity or technical knowledge to do so. Some just cannot afford to take on a grant because it would require them to have to float the payments before they are reimbursed.

They just don't have the capacity for that. And others have expressed difficulty in accessing information as far as what's available and what they might be able to do. So in situations like this. What we do at SCAG is to apply for grants on behalf of our local jurisdictions that don't have the capacity and assume the burden of project management.

In a latter grant that we have in front of the state, we propose identifying three opportunity zones that will capture the essence of those underserved and unserved communities and develop some preliminary specifications for the last mile projects that will make sense to serve those communities.

Thank you.

In closing, I would just say that SCAG is a council of governments and in partnership with our colleagues at SANDAG in San Diego, we have advanced the work of closing the digital divide, especially on behalf of our small communities. And we have a strong role in ensuring equity, as has been spoken to by the Committee this morning. And we have this ability that we've worked and honed in our work on the transportation and housing side with both federal and state agencies. And we think we can bring that same capacity to the conversation on broadband. Thank you and be glad to take any questions.

Thank you. Next we have Stephen Cheung.

Thank you Chair Bradford and honorable Members of the Committee. Thank you for this opportunity to address you again. My name is Stephen Cheung. I'm the CEO and President of the Los Angeles County Economic Development Corporation. I'll be also speaking on behalf of the LA DEAL, the Los Angeles Digital Equity Action League, which is collaboration between Unite LA and LA County Economic Development Corporation.

The LA DEAL actually currently serves as a regional broadband consortium for the Los Angeles County and a few highlights regarding the work and impact over the last year.

We coordinate a bi weekly action team meeting with the Golden State net to provide relevant regional updates and inform the state's proposed middle mile route in Los Angeles County and through regular conversations with representation from the community and the strong infrastructure of civic leaders representing business, education, nonprofits, and government, LA DEAL was able to develop initial list of 20 potential cast of infrastructure and other last mile projects in the region.

This list was passed along to Golden State net team to help them prioritize early action projects for the middle mile routes in Los Angeles County and to ensure that our regional partners are aware of the various grant opportunities and resources available.

LA DEAL cohosted lot of grant informational briefings for 31 San Gabriel Valley Congress of Government cities as well as 27 Gateway Cities COGs and we also serve the Antelope Valley cities and incorporated communities to inform municipal stakeholders of upcoming CPUC ladder funding opportunities supported nine application proposals as well, and in August of last year, La DEAL held a summit to elevate the innovative efforts of local leaders launched to leverage municipal assets to build new relationships and collaborative opportunities across local and state agencies, and to support and inform the state's digital equity plan.

This summit was attended by local government agencies, Council of Governments, LA USD, LA County Office of Education, CDT, CPUC and State Department of Education, as well as the State Librarian. And this summit helped us identify opportunities for public private partnership opportunities to share best practices as well. And we also hosted our annual 88 city summit in April of 2022 to convene leaders of LA County local government to discuss the economic challenges and opportunities our communities face.

With over 200 guests in attendance in over 40 unique cities represented, LAEDC hosted a broadband deployment panel to discuss the significant roles each city and councils of governments can play to ensure that every resident and small businesses will be connected. With the extensive engagement throughout Los Angeles County over the last year, it's clear to us that there are two major concerns for our region. First, I want to echo the issues raised on page seven of the Committee background documents.

Our communities are extremely alarmed that much of Los Angeles Basin is excluded from the map of prioritized areas for the FFA grants, especially the communities with higher rates of low income residential households that are not included in any priority areas. The lack of prioritization for lower income communities and communities of color will only further the digital divide issue that we're fighting to end. And second, I want to bring back Senator Bradford's question earlier about the lack of focus in LA County.

With 10 million residents spread over 88 different cities and over 100 unincorporated regions, LA County has urban and rural areas that range from south LA to Lancaster to Palmdale, where they face different types of digital divide issues. There needs to be more resources dedicated to ensure that our local communities, our governments, nonprofits, potential applicants are ready for the various grant programs.

I also want to highlight that LADC conducted a research report looking at the impact of COVID In the first two months of COVID LA County alone lost 780,000 jobs in two months. It took us over two years to get most of those jobs back. But as we're recovering, we're seeing that the digital divide has long term impact on the ability for our economy to revitalize.

So we ask for this opportunity to continue to work with you and your Committee, as well as CPUC, to make sure that the digital divide issues are addressed. But most importantly, to make sure that as we're looking at the poverty map areas, that many of our communities of color and low income communities are not left behind. I want to thank you for this opportunity to address the Committee.

Thank you. Now, Ms. Ryan, good morning. Good morning.

Good morning. Chair. Vice Chair and Members. Tracy Rhine with the Rural County Representatives of California. We represent 40 rural counties here in California. As you know, the investments in SB 156 were monumentous, especially for local governments, but also for the state. As you've heard, it's been a very heavy lift for the state implementing agencies, but it's also been a significant lift for local governments. There are two programs under SB 156 that I want to discuss today, and that is the LEDA and the FFA.

The local agency technical assistance program, which we've heard a lot about just now, is something that's really important for local governments to get the resources they need to prepare for applying for the FFA and the BEAD program. RCRC ourselves, we created Golden State Connect Authority. Not to be confused with Golden State net, but Golden State connect authority. It's a JPA that includes 40 counties.

And the point of GSCA is to help our jurisdictions connect and draw down the funding to finally get reliable broadband in their areas. Currently, we are assisting through LATA with 40 entities. So that's cities and counties. It's not just the counties. And to implement their program plans. So either broadband plans, but also high level network design and low level network design. The CPC has been really helpful in communicating through this program.

They had a really quick turnaround with the award of the grants, a one month turnaround, which is really quite unheard of in state government. It is oversubscribed. And as you've heard here today from my other panelists, there are many urban jurisdictions and travel jurisdictions that are still in queue to get this money to help with their process. And get it connected. So I think it's something to look at as we move forward through the budget cycle.

The second program is the FFA, and I want to discuss the priority maps, which is something that we've talked a lot about today. We identified the same issues that are in your Committee background document. Very high cost areas and very low cost areas were not included. That was very difficult for our rural counties. Additionally, there were priority areas that would be included on one side of a county line, but not in the other, even though that whole community was not served.

The priority areas included a lot of served locations and not as many unserved locations, which goes to the business case methodology that the PUC was looking at when their first rendition of the maps came out. The cost estimates that were attached to those priority areas also didn't take into consideration fire hardening in high fire prone areas, and also large parcel size when you have to have extended line going out to those large parcel sizes.

However, the PUC, again, has been very open to hearing our concerns, and I think that you've heard that from the panel with the PUC today, that as of Friday, they have revamped their process. It does look like the new methodology for the maps has the potential to address most of the digital equity issues that we have seen, both in urban and rural jurisdictions.

But in particular, I think that we need to look at the disadvantaged communities designation and make sure that that takes into consideration not just CalEnviroScreen, but maybe move away from that and look at the socioeconomic factors and how that ties to being unserved. Additionally, the timing of the FFA awards. I know there's been a lot of discussion about the concern about getting the ARPA funding out and the time constraints.

We do want to make sure that the local governments that are using those LATA funds to prepare to draw down that money have time to use that for their designing broadband plans. So we need a little bit of space, and I think that the PUC is on the way to making that work.

I think we all agree here today that having reliable broadband is a shared goal, and we need to continue the funding as what was intended in SB 156 in the budget of 2021, and to also maintain that rural and urban dedication of funding. In closing, I want to just express my appreciation to this Committee, the Legislature, and the PUC, and their partnership in making this program come to life and hope that we can finally serve our underserved and unserved people. Thank you.

Thank you. I want to thank all three presenters. But before we go to Members questions or comments. Let's first reach out and let anybody wishing to participate telephonically to dial in now at 877-226-8163 that's 877-226-8163 and the access code is 439-8318 again, 439-8318. Now we'll bring it back to the Committee Members or the Senator Dahle.

Just an overview comment. Mr. Chairman, we talk about unserved or the ability to actually have service. So there's two factors. The one factor is, is there a private company in the area that is available now? You may not be able to afford to get on it, which is some of the things that we talk about where there is actually infrastructure. And then there's those who are unserved that don't have the ability, even if they could afford it, to get it to use the service.

So those are, I think, two distinctions that we should look at. And we've had those debates in this Committee and other committees about how we should go about that. So we, as legislators have said, look, if there's infrastructure available, let's figure out how the communities of color and disadvantaged can actually connect because they can't afford to connect. And those communities that don't have any infrastructure at all getting that infrastructure.

And then we'll figure out how the cost, availability, and we put the money to those communities, both not only the communities of color and underserved that have infrastructure available to them. We put money available to assist them to be able to get on the web. But those communities that don't have it, we've also put money for. So somewhere now we have to prioritize where the areas are that we are not served and areas that we can't afford to get on what is available.

And so just as an overall, I want to point that out as legislators who have been grappling with this for some time to try to figure out how we get the communities of color that are where there's service, the money to actually get on and those underserved.

So that's just an overall for all the panelists that are still here to try to figure that out and actually then prioritize the unserved or the communities that are disadvantaged and people of color who just can't afford to get on. So I want to just make that comment because it is really the driving factor of where we're trying to go. If there's already infrastructure there, we need to just get people hooked up to it. If there's no infrastructure we need to get infrastructure there. Thank you.

Thank you. Senator Becker, do you okay, my question just to any of the three what steps would you suggest to state agencies to make sure that these programs are meaningful and get to the communities that they need? Pretty much what Senator Dahle was stating. Is there some suggestions that you see that could improve the process?

So I'll start just because I'm here and looking at you. Yeah, I do think that having on the ground engagement, I think to your point, Senator Dahle, you kind of laugh at webinars for people that don't have Internet. I'm one of those. I live in a rural area. But I will say that the CPUC has been making an effort to get on the ground, to have the conversations as well as NTIA. They are in charge of the BEAD program.

They are getting out in front of this. We're still a long way away from seeing that money and they are actually going out. There are some of them that are web based, but they are making an effort.

It's kind of hard right now with the weather, but making effort to go to some of those rural areas and talk to the consortia, talk to residents in the area, the local governments, the public works departments, those that actually understand infrastructure and how to do it in some of these areas. So from our perspective, that's what you need to do is you actually need to go into the ground because those are the folks that know where stuff is, especially in rural areas.

You know, where those lines are and where there's infrastructure and where the needs are.

Yeah, I would add that I think similarly we need to grow capacity at the local level, like in the SCAG region, for example. I know Steve is focused on LA County, but we have six counties in SCAG region and a lot of rural area and tribal lands that are underserved or even unserved.

We feel like the best thing that we could do as a regional agency that deals with these communities is to help grow capacity and bring to the same level of conversation communities that just don't have the resources. And one way we've done that effectively in other areas is to bring community based organizations to the table that are trusted voices for these various communities.

And we feel like, I think the state agencies, the PUC and Department of Technology are aware of this and we're offering ourselves to be that conduit, to be a force multiplier in getting this done, especially given the timing that's in front of us that's crucial in getting things done.

I would add to what Kome and Tracy was mentioning as well in terms of community based organization capacity. The other thing to also think about and also address is that especially for regions like Los Angeles, where we have 140 nationalities represented in 224 languages spoken here, the cultural and linguistic capacity to provide that support will be very important as well in order for us to basically get the lived experience and also the community engagement in a way that we haven't seen.

And also, the other part is maybe leveraging additional resources through other programs that are already in existence. For example, the California Community Economic Resilience Fund. The surf process is moving forward to establish those relationship with local communities across the 13 regions throughout California, perhaps partnering with some of the surf conveners so that they can reach those community partners, so that you're able to double down on some of the resources that are available and not wasted.

Thank you. Senator Dahle.

I brought the question up earlier about the consortiums, and when we did the CASA funds, we reauthorized it for the second time. The consortias were here, and they said, we are the nonprofits that are going to go out and we're going to be able to talk to these communities because we're in the community. So are you working at the SCAGs? Are you working with these consortias or the rural counties?

Yes, we, in fact are. And I think Steve is one of those consortia. We're working with them, in fact, in the SCAG SANDAG region, we have a regular schedule meeting that we refer to as reinventing SoCal that deals specifically with broadband issues. And we've brought state agencies to have conversations with us to be sure that we're getting the latest information. And so we're working with them as needed.

Thank you. Maybe one of the panelists get back with how many we have out there, how many consortias are developed? I know they're nonprofits. I think most of them are. But I'd like to know how many we have and what their coordination is with all these people that are trying to provide the services.

Thank you. Okay, if there's no further questions, I want to thank Ms. Rhine for your presentation. Mr. Cheung and Mr. Ajise for your presentation. And now we're going to move to public comments. We're moving now to individuals here in room 112 who wish to make public comments. We would ask that you limit your comments to 1 minute.

Good morning, Mr. Chair. Vice Chair and Members, Amanda Gualderama with Cal Broadband, the California Broadband and Video Association. We appreciate the opportunity to speak as a partner in the goal of securing broadband for all Californians. We wanted to take a moment to thank the California Department of Technology for including us and our members to take part in their working groups on broadband. And we'd also like to thank the California Public Utilities Commission for recent discussions regarding last mile broadband deployment.

We look forward to continuing discussions with the CPUC on the barriers to broadband deployment, such as time consuming permitting requirements, and working collaboratively to find statewide solutions. Cal Broadband and our members are looking forward to partnering with the Legislature, the CPUC, and the Department of Technology to close the digital divide. Thank you.

Thank you.

Mr. Chair Members. Ignacio Hernandez, on behalf of TURN, prior to the hearing, TURN submitted a letter specifically on the maps and how we can fix the maps that CostQuest put out. We're concerned that the way the maps were put together, it just kind of continued the digital divide and digital discrimination that we've seen over the years. Our alternative proposal would simply be to create maps that focus on two factors, the underserved and disadvantaged communities.

And we think if we overlay those, we can create maps that really get to the communities of need. We've submitted those comments also to the CPUC and are in discussions with staff and commissioners over there about our map, and that is also included in our letter. So we look forward to what happens with the CPUC when they come up with the new maps going forward.

Thank you. Anyone else here? Go ahead.

Ignacio Hernandez on behalf of the Communication Workers of America District nine, if that's okay. Different client, really. The messaging as we're trying to get these broadband deployment out there and projects on the go is we want to make sure that we have not only a diverse workforce, but we also have a workforce that has substantial training.

We want to make sure that grantees, sub grantees and contractors, subcontractors are adopting high labor standards, high road labor standards in their practices, and there should be some priority to accept proposals and approve proposals that ensure that high labor standards are in fact being used. We also want to mention that we know that there is a need to increase the workforce to ensure that these projects get done and get done quickly.

CWA district nine has created an online database of workers who have specifically broadband experience over the years and are available to be hired for projects that can be accessed by private companies, grantees and organizations. We are spreading that word. Happy to share that information with the Committee to make sure that that information gets out there and we can help ensure that those projects go forward. Thank you.

Thank you. Anyone else wishing to provide comments here? Seeing none now. We're going to move to those wishing to participate via the teleconference service moderator, please. How many callers do we currently have queued who wish to provide comments?

Thank you. If you'd like to have public comment, you may press one and then zero.

Again. That is one and then zero for any public comment.

Mr. Chair, we have no one queuing up at this time.

Surprising. All right, well, we'll bring back Senator Dahle. Come on back. All right. That's a first. Well, if we don't have anyone wishing to participate telephonically, and we've heard from everybody here in the room, I just want to say we appreciate everybody's valuable testimony today.

I want to take this opportunity to say that more must be done to ensure that our historically disadvantaged communities do not continue to suffer for the lack of investment and being excluded from services, especially broadband, which is so critically needed, as we've heard from all our witnesses today, for the essential needs from economics to social participation, even to our education in today's society, we'll continue to monitor the efforts of the Department of Technology as well as the public utilities to ensure that our historic broadband investments are meaningful in addressing the needs of our underserved communities.

Again, I want to thank all of those who participated and called in or was here in person, and please submit your comments if you have any other suggestions in writing to the Senate Committee on Energy, Utilities and Communications or visit our website. Your comments and suggestions are important to us, and we want to include your testimony in the official hearing records. And again, thank you, and we appreciate your participation. Thank you for everyone for your patience and cooperation. And this will conclude today's agenda for the Committee on Energy, Utilities and Communications. We stand adjourned. Thank you very much. And staff.