Assembly Budget Subcommittee No. 7 on Accountability and Oversight

Buenos Dias, and welcome to the first hearing of the Assembly Budget Subcommitee seven on accountability and oversight. To ensure members of the media and public have access to our proceedings today, this hearing will be streamed on the assembly's website and members of the public can provide testimony in person here in room 1100. To preserve the safety of everyone here and to ensure the public's access to the discussion, please follow the directions of our sergeants.

If any member of the public in the room would like to testify during public comment, I will ask you to approach the microphone at the appropriate time. All witness testimony and public comment will be in person. There will be no phone testimony option for this hearing. I want to acknowledge that the assembly has experienced several disruptions to this committee and floor proceedings in the past few years. We would like to ensure that all voices are heard.

However, conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of this hearing will be prohibited. Thank you for your cooperation. And before we get into the substance of today's hearing, I want to thank Speaker Robert Reevis for his leadership to bring a renowned focus on accountability to the assembly and the budget process. Today is the first hearing of the new budget Subcommitee seven on accountability and oversight.

Legislative oversight is always a critical part of our jobs as legislators, but is especially important to conduct prudent oversight within the context of the state budget. And more than ever when we face a budget challenge, as we do this year. This new Committee will hold a series of hearings to comprehensively evaluate the state's biggest investments aimed at improving the quality of life for all Californians.

I look forward to the work ahead as we develop a budget that delivers for the state through a pragmatic and responsible allocation of public resources. California is in year three of a historic $6 billion broadband for all infrastructure investment to connect all Californians to high speed internet. On top of this 6 billion, California is expected to receive an additional 1.8 billion in federal funds for last-mile broadband projects under the Bead Program.

We cannot wait until the end of this historic investment to determine if we got it right. We must have ongoing, rigorous oversight to ensure that we are on track and to make course corrections if necessary. Thus, today we welcome testimony from the PUC and the CDT to report on how many Californians have unserved locations have become connected to broadband services so far through the $6 billion investment and by what date we will achieve the goal of connecting all unserved Californians.

Finally, before we hear from witnesses, I want to acknowledge that achieving broadband for all requires programs to address broadband adoption, including affordability of service, digital literacy, and access to a device. Separate programs and funding streams address broadband adoption. Today's hearing, however, is focused on broadband infrastructure: the physical facilities that provide access to service in the first place, the broadband infrastructure that is being built with a $6 billion investment.

I look forward to today's conversation to promote accountability and ensure that California is on track to achieve broadband for all. By design, the witness opening testimony for this hearing will be minimal so that Committee Members can immediately jump into asking questions about any concerns with the implementation of the statewide broadband network. Thank you. I'd like to introduce and welcome our witness for today's hearing. They have been asked to keep their presentations brief so that we can ask questions.

Making presentations this morning, we have Brian Metzker with the Legislative Analyst Office, who will be presenting first and will provide an overview of California's broadband investments. Following the LAO presentation, from the California Public Utilities Commission, will be Rachel Peterson, Executive Director, and Maria Ellis, Deputy Director for broadband. They will discuss the last mile broadband infrastructure program.

From the California Department of Technology to discuss the statewide Middle-Mile network, we will have Leanne Bailey Cummins, State Chief Information Officer and Director, and Mark Monroe, Deputy Director for the Middle-Mile Broadband Initiative. Welcome to you all and thank you for joining us today. So let's get started. Mr. Metzker, we look forward to your overview of California's broadband investment.

Good morning Chair Valencia and subcommitee members. Brian Metzker with the Legislative Analyst Office. Our office was asked by the subcommitee staff to provide a brief overview and status update on the major federal and state broadband programs and projects. We were also asked to review the current broadband spending plan as of the 2023-24 Budget Act, as well as the proposed spending plan in the governor's 24-25 budget.

We have prepared a handout in advance of the hearing that was provided to members of the subcommitee and will be used to guide our remarks today. On pages two and three of the handout, we describe the three key state broadband programs and projects funded by the spending plan.

The first is a statewide open access middle mile network that is deployed primarily along the state's highways and other rights of way through construction projects as well as leases and purchases of existing middle mile infrastructure. Second, last mile project grants through the California Advanced Services Fund program accounts and the federal funding account program that was created as part of the initial agreement in 2021. And third, the Loan Loss Reserve Fund that helps local government entities, nonprofit organizations, and tribes obtain financing for last mile projects through, for example, credit enhancement.

On page four of the handout we provide the current spending plan by program or project, as well as by fiscal year and funding source. As you can see, the total funding amount for the current spending plan is $6.6 billion, of which 3.9 billion is appropriated for the middle mile network, 2 billion for last mile project grants, and 750,000,000 for the Loan Loss Reserve Fund. The remainder is federal funds that are either provided by the American Rescue Plan or the Infrastructure Investment and Jobs act.

On page five of the handout, we summarize the proposed changes to the current spending plan that are in the governor's budget. These changes include 1.5 billion in additional General Fund for the middle mile network, a delay of 100 million General Fund in last mile project grants from 24-25 to 26-27 and a reduction of 250,000,000 General Fund from the Loan Loss Reserve Fund, of which 150,000,000 would be reduced in the budget year and 100 million in 25-26.

There is also proposed budget bill language that would allow the administration to increase the amount appropriated for the middle mile network by an additional 500 million General Fund in 24-25. On page six of the handout, we provide the spending plan by program or project as of the governor's budget. Just to be brief, it's about 7.9 billion. 5.4 billion for the middle mile network, 2 billion for last mile projects, and 500 million for the Loan Loss Reserve Fund.

On pages seven and eight of the handout, we provide a brief status update on each of the broadband programs and projects in the state. For the middle mile network, the current estimated length of the network is 10,513 miles. More than three quarters of that length is expected to be leases or standalone Cal Trans construction projects. Funding has been encumbered for at least 6500 miles of the network, and we say at least because about 500 million in federal funds has been encumbered for these construction projects.

But we do not have enough information about these projects other than the agreement types to be able to say how many miles that represents.

Furthermore, the number and length of these projects could change as CDT and CPUC review last mile project grant applications and proposals are submitted in response to CDT's request for innovative idea solicitation. For the last mile project grants, CPUC is in the process of reviewing nearly 500 FFA grant applications requesting about 4.5 billion in funding, along with any objections filed against those applications.

And for the Loan Loss Reserve Fund, the first application round is expected to open in March, with first awards sometime in the first half of 24-25. On pages nine and ten of the handout, we provide an overview of the three federal Infrastructure Investment and Jobs act programs that are key to the state's own projects and programs. The first of these is the broadband equity access and deployment, or BEAD, program. We were asked by Subcommitee staff to provide some additional information about this program.

The first point is that there are a series of documents that are required by the Federal Government to submit that the state has to submit to access its allocation of these funds. This includes a five year action plan, an initial proposal, and a final proposal. The state must also conduct a challenge process in which a number of entities can challenge the current determination as to whether a household or other location is unserved or underserved.

And finally, the state must administer a competitive grant process in which applicants can request BEAD program funding for primarily last mile project grants. The second point is there are Digital Equity Act programs, at least two of which are expected to help the state implement its digital equity plan. These are the Digital Equity Planning grant program, from which the state has already received some funds, and the Digital Equity Capacity grant program.

And finally, there is a third program, the Enabling Middle mile broadband infrastructure program, that provides states with additional middle mile infrastructure funding. On pages 11 and 12, we provide a brief status update on these programs for the Bead program. The state received notification in June of last year that it would receive 1.86 billion in Bead program funds. The state then submitted its five year action plan and its initial proposal by the end of 2023.

The state is waiting for the Federal Government to approve its initial proposal, which was submitted as two volumes pursuant to federal guidance. The approval of the first volume, expected soon, will allow the state to conduct the challenge process that's required, and the approval of the second volume that is expected in May or so, will make available to the state at least 20% of that 1.86 billion, which is about 375,000,000.

The state did request up to 100%, however, of its allocation as part of the initial proposal, so there could be even more funding than that initial 20%. Some of that funding would be conditioned, however, on the submission of a final proposal for the Digital Equity act programs. The state's finalizing its digital equity plan and the grant program rules and timelines are still in development, so not much to say there.

And on the enabling middle mile broadband infrastructure program, the state was awarded $73 million, which is reflected in the spending plans that were provided in the handout on pages 13 and 14. We provide updated timelines for each of the programs. I won't go over these in detail, but key dates to remember are the encumbrance deadline for the American Rescue Plan funding, which is at the end of 2024, and the expenditure deadline that is at the end of 2026. Happy to take questions now or after cdts and CPUC's presentations.

Thank you for your efficiency in presenting the information. We're going to move on to the CPUC's presentation. Ms. Peterson and Ms. Ellis, good morning. Please begin.

Good morning. Chair Valencia and honorable Members of the Committee. My name is Rachel Peterson. I am the Executive Director of the California Public Utilities Commission. Thank you very much for the opportunity to be here with you this morning to give an update on California's signature and historic broadband for all initiative. I'm very pleased to be here with our partner, Director Bailey Crimmons of the California Department of Technology, whose middle mile Broadband initiative is a crucial component of California's broadband efforts.

I'm going to give an overview of the CPUC's portion of the broadband for all portfolio. I believe you have our slides as a handout, and if you look at slide two, thank you. We'll cover our last mile initiatives California Advanced Services Fund and the Broadband Equity and Access I always get this title incorrect broadband equity access and deployment program, as well as discuss the unserved populations as defined by those programs at your request.

And I'm joined by my colleague Maria Ellis, Deputy Director for broadman at the CPUC, who's going to provide more detail after my opening remarks. With the adoption of SB 156 in 2021, California bolstered its commitment to providing access to high quality, affordable, high speed Internet for all of our communities. California combined state and onetime federal funding in order to invest about 2 billion in last mile networks in every county throughout the state.

In addition, California expanded last mile program eligibility to include local government entities and tribal governments and special districts in order to enable a new diversity of broadband providers statewide. Today, we are two and a half years into that journey, and I am very pleased to give a report on our progress. Between October 2021 and February 2024, the CPUC distributed 50 million in local technical assistance grants to cities, counties, and tribes across the state.

The recipients used those grants to prepare the technical and engineering groundwork for last mile project applications. Our technical assistance grants were awarded in the amounts of about 500,000 to places like Fort Bragg and Oakland, Fresno, and the Gateway cities. Grants of about 150,000 were provided to tribal nations like the Eurok tribe and the Santa Enez Band of Chumash Indians. These grants are putting these jurisdictions in a position to apply for further state and federal funding.

That was a very important first technical piece of the broadband initiative rollout. In June 2023, the CPUC opened our federal funding account grants portal for applications. By October 2023, we received 484 applications seeking over 4.6 billion in grants. The applications are from every county in the state and include both traditional service providers as well as new service providers in the form of local governments, tribes, and new special districts.

About three quarters of the technical assistance grant recipients, including all those applications I just mentioned, have now applied for federal funding account grants. We're handling the due process portion of the grant applications now. This allows for objections by providers or others who assert that an area is already served and it allows for a rebuttal by the applicant. We're on track to begin awarding funds later this year, which is consistent with the timeline set out in SB 156.

We've also been leveraging our other signature grant program, the California Advanced Services Fund, which within SB 156 was both expanded and extended. The program provides grants to bring high quality, accessible, affordable Internet access to unserved communities across the state. For example, on February 15 at the Commission's business meeting, the commissioners approved over 6.5 million for two high speed broadband projects under CASF.

The first will Fund the deployment of a fixed wireless network to bring high speed Internet service to unserved households in four mobile home parks in Los Angeles, Orange, Riverside, and San Diego counties. The second will construct a fixed wireless hybrid, middle mile and last mile broadband network to bring service to unserved households in San Mateo, Santa Clara, Santa Cruz, and Monterey counties. Our team has been highly active in securing even more federal dollars for California as well.

When the Federal Communication Commission's map was first issued that was proposed to be used to allocate bead funding, California was projected to receive as little as 900 million. Our team used data and analysis to demonstrate to the FCC the extent of the needs in California's underserved communities, and as a result, we brought more than double that home to California, for a total of 1.86 billion in Bead that will be provided to our state later this year.

We've also seen that our technical assistance grant making has had a multiplier effect with respect to federal dollars. The technical assistance to California tribes from our tribal technical Assistance program has led directly to them securing approximately 250,000,000 in broadband funding from federal programs such as those run by the Department of Agriculture. I am very proud of the progress that the CPUC has made on broadband for all and last mile networks that are poised to serve the unserved and the underserved.

In California, our grant making is already acting as an economic catalyst in rural, tribal, and urban communities across the state. The new networks that are being run by small providers, midsized providers, local governments, tribes, and new special districts are connecting kids and young people to education. The new networks are delivering, are connecting and delivering senior citizens, connecting them to their healthcare systems and their doctors.

They're bringing improved services to rural communities that will unlock their entrepreneurialism, provide a platform for economic development, and provide that crucial connectivity during emergencies and natural disasters. We do have a lot more work to do. Speaking for the CPUC, I am proud that our agency has a leading role within California's transformative broadband for all initiative. Thank you very much for the opportunity to be here this morning, and I'll pass to my colleague Maria Ellis.

Wonderful. I would appreciate just brief comments so we can move on to the next presentation. Thank you.

Great. I will endeavor to cut this down here and there as we go through. Thank you, chair Valencia and Members of the Subcommitee. Again, my name is Maria Ellis and I'm the Deputy Director at the California Public Utilities Commission.

In the communications division. Thank you for having us.

Can you please bring the mic a little bit closer so we can hear?

Absolutely. Is that better? Great. I will try to shorten these. I'll start with the local agency technical assistance. As Executive Director Peterson mentioned, we had $50 million that was allocated from the federal funding account to fund technical, since 5 million of that was set aside for tribal entities and tribal nations to also participate in the program.

The incredible demand for this program, coupled with the fact that roughly, as Rachel mentioned, 34 of ladder recipients also submitted participating in applications, validates the intentions of SB 156 to provide potential new entrants in local government the tools and resources needed to meet the needs of their communities. We awarded 106 grants that was to nine tribes and 97 local agencies, including 42 cities, 45 counties, and several joint power authorities, public utilities and utilities, and school districts for the federal funding account.

As you know, the federal funding account really implements part of what the final rule for treasury in terms of how it's defining what is reliable wireline service and what we're trying to accomplish with that program. The decision from the commission set out a nuanced allocation for how the $2 billion account would be invested across the state and that is maintained even with the proposed delaying of funding.

We will maintain that allocation formula, which is that each county will be starting with $5 million, and then the remainder of the allocation will be divided by each county's proportionate number of unserved locations. As mentioned, we had nearly 500 applications that were submitted by December by, pardon me, late September last year, and then we opened up the required objection period. For these applications, we received nearly 1000 objections and almost as many rebuttals.

These are an important part of the evaluation process because it allows us to understand an application holistically and also validate and ensure that we are investing our monies in the most effective way possible by not investing in areas that are already served at the required speeds. We will continue to review those applications on a county by county basis and score them according to the potential program rules.

One of the things that I want to highlight is that the applications will receive priority based on the affordability commitments, equity considerations, matching funds provided, local support, and connection to the statewide middle mile. These are all factors that will be considered in how to prioritize applications. The first tranche of recommendations on these applications will start coming out in par with the decision in June. Moving on to the loan loss Reserve program.

This program aims to, as Rachel mentioned, to help certain kinds of entities, including local governments, tribes and nonprofits finance the expensive costs of deploying these kinds of networks. And we are on track, we're ever happy to report we're on track to open that next month. More details are to come about that, but that window will be open for about a month for financing, and then we will have decisions on those awards in Q2 or Q3 of this year.

And then one of the things I also want to highlight. So I just talked very briefly about those three programs. The other thing I want to mention is that part of what we've created under SB 156 is a case worker unit, a broadband case worker unit.

And because this is such an important investment and one of the goals of this program and this package was to facilitate new entrants into this market, such as tribes and local governments and others, this case worker team has been really invaluable. And they have been helping these kinds of entities understand how to enter this market, helping them understand how to develop their applications. They've had over 400 meetings to date just with different kinds of entities, and helping them and providing that technical assistance.

I won't go too much into the California Advanced Services Fund just to say that this is a surcharge-funded program. That's one of six programs that is funded our public purpose programs at the commission. There are six programs underneath the California Advanced Services Fund doing a variety of things, including public housing to infrastructure, to adoption accounts to consortia.

The one thing I do want to mention is that since the inception, the CPUC authorized the CASF program in 2007 and adopted rules for the first program in 2008.

Ms. Ellis, I do apologize for interrupting. Would love to just stick to the substance of the hearing, which is the infrastructure component. Really appreciate the background on the programs and differing funding sources, but let's just focus on infrastructure, and if you have anything to add regarding the infrastructure and how we're doing on that, that would be appreciated. Thank you.

Absolutely. What I was going to mention is that we've invested about $400 million in different kinds of programs from that account since 2008. Let's see. Moving on, would you like me to cover the BEAD program, Chair? The Broadband Equity and Access Deployment program, or would you like me to move on?

Let's do that, please.

The BEAD program is funded from the IIJA. I'm going to move on, skip on to the timeline. I think that's probably more relevant. So we've recently submitted, as provided, three important documents that are very important to continuing the progress in this program. First, the five-year action plan, and then the initial proposal, which is set into two volumes, and that is important for a couple of reasons. It is volume two.

We submitted those in December on time, and it is the approval of volume two that starts the clock with the federal government that says you have 365 days as a state to both run the challenge process, open a solicitation, select sub-grantees, propose sub-grantees, and roll all that up into a final proposal that must be submitted to the federal government within 365 days. The proposed awardees that are included in that plan are only provisional.

The NTIA must approve the final proposal before those funds can actually be transmitted to applicants. We would love to be able to provide a more concrete timeline for when this will happen, but this is a federally driven timeline and we don't know much in terms of when. We haven't yet received approval of volume one and we believe that these are happening sequentially. Volume one and then volume two will be approved.

So we're not there yet, but we anticipate, we feel very certain that approval for final proposal is not going to happen until 2025. With that, I think I'm going to continue on to unserved and unserved communities Members.

Yes, please.

So I know you don't have a slide in front of you on screen, but there are slides at the very end of our presentation that kind of have a bit of a distinction between our programs. It reflects the distinctions between these programs, including how they define unserved. Each program is governed by distinct statutory requirements with specific goals and eligibility and program requirements.

For example, the federal funding account, which uses American Rescue Act funds, is based on rules implemented by the commission, based on the final treasury rule, and that defined what reliable wireline technology broadband would be. This narrow definition of what an unserved location is leads to a larger number of unserved, as reflected in our numbers in that slide.

CASF statutorily has two kinds of definitions for unserved, one being a priority unserved which is at speeds less than 10-1, or at maximum speeds of 10-1 or less, or in just standard unserved, which is 253. And that was a change that happened through SB 156. The NTIA defines unserved using different connection and latency speeds and uses also a range of technologies that are eligible for funding.

Each of those things really contribute to the difference in numbers of the programs, but each program sets a specific ecosystem, or a sphere, if you will, of locations that it seeks to target. Additionally, CSF, FFA, and BEA Deach have challenge or objection processes. They could be slightly different for both FFA and CASF. Those processes happen. You can challenge or object to an application, whereas with the NTIA, you first challenge the geography of the map before you take applications.

In implementing these programs, we are working to optimize funding to ensure that resources are effectively used to provide the best possible infrastructure to the remaining unserved locations. And that's part of that challenge process and objection process is to make sure that we are not double funding and we're maximizing the amount of funding that we have available to the state. With that, I am going to turn it back to Rachel.

Thank you, chair. That's our conclusion on the CPUC's portion of the last mile networks that are being funded through the broadband for all. I'm very happy to either take questions at your pleasure, Chair or pass straight to our colleague, Director Bailey-Crimmins at the California Department of Technology.

Thank you. If we can move on to the next presentation and director, I would really appreciate just a concise presentation so we can get into questions. Thank you. Just the numbers.

Thank you.

Two-minute opening remark and then I'll go through some of the information you guys are requesting. So good morning, Mr. Chair and honorable members of the committee. Thank you for the opportunity. Speaking with you today specifically about the broadband Middle Mile Initiative, I'm Liana Bailey-Crimmins, state chief information officer and director of Department of Technology. I also have the honor of being the chair for the Middle-Mile Advisory Committee and the chair for the California Broadband Council. Co-presenting with me today is Mr. Mark Monroe.

He's the Deputy Director of the Broadband Middle Mile Initiative. As you are keenly aware, one in five Californians lack affordable access to Internet, and the need for broadband for all painfully became obvious with a pandemic that brought major disruptions to our society. Across California, thousands of schools closed, and millions of children, including 600,000 in the LA Unified School District alone, had only one option, remote learning. The pandemic made us very aware of this digital inequality.

Educators experienced firsthand how the lack of broadband impacted their students and how they struggle with distance learning. And as you remember, two girls sitting in a Taco Bell parking lot trying to remote learn because they had no Internet at home. We also have seen seniors that are unable to drive to doctors appointments and struggle because they don't have broadband access or affordable access to devices which doesn't allow them to participate in telehealth sessions.

The large digital divide is something we are keenly all aware of. In July 2021, thanks to the leadership of Governor Gavin Newsom and the legislature, Senate Bill 156 directed the California Department of Technology to create a statewide open-access Middle Mile network, which is an equitable, high-speed broadband service for all Californians. CDT is responsible for a key element of the broadband for all initiative. We oversee and develop and operate the statewide open-access middle-mile1 broadband network.

People sometimes ask what the difference between Middle Mile and last mile? My response is when building an end to end network, it's a three step iterative process. Not sequential, but iterative. First is you have to build the middle mile, which is a digital highway which has on ramps about every 2400 to 2500 connection points. The second step is to take that middle mile, that digital infrastructure, and operationalize it. So taking electronics and connecting it to broadband services, also known as the Internet.

And the third step is connecting last mile communities to community and broadband providers who are the ones that directly provide services to businesses, anchor institutions and households. As we progress towards the network's planned December 2026 completion date, we are pleased to report significant accomplishments, including signing contracts to construct, lease and purchase approximately 83 percent of the planned network in partnership with Caltrans and Golden State. Net CDT has made significant progress in planning and constructing this network, including securing partnerships with tribal entities, local governments.

We just recently did a letter of intent with LA County Bureau of Street Lighting, Fort Bragg, Vacaville, and there's many more in the pipeline at the local government level and also private providers. In addition, in California, we lead the way, especially when it comes to reducing permitting timelines, which seems to be sometimes trying to bureaucracy and red tape. We were able to partner with federal and state partners and actually reduce it from 30 months to 11 months, which is unseen when it comes to permitting.

Our mission is to create a network that will provide vital services to all Californians, and we have heard loud and clear from constituents from urban centers to rural communities, there is no equity without digital equity. That concludes my open remarks. I'd like to turn it over to Mr. Mark Monroe, who will talk about the infrastructure accomplishments and the BCP.

All right, good morning chair and members, Mark Monroe, Deputy Director for the Middle Mile Broadband Initiative here at CDT. Happy to provide a brief update on the progress of the MMBI project and to answer any questions the committee members have. We were asked to quickly run through some slides to summarize the project status. I believe the Members have been provided with that.

First, we have a timeline for the project that reflects the fact that the SFRF funding, the ARPA funding, must be under contract by December of 2024 and must be liquidated by December of 2026. CDT is ahead of schedule due to early state and federal permit streamlining efforts, materials purchases and simultaneous bid solicitations for both construction and partnerships.

This will allow the potential early activation of some segments of the network as early as 2025 and 2026, and this also shows that the funding requested in the budget CDT anticipates meeting with that funding. The CDT anticipates meeting the December 2026 deadline, if you want to jump to the next one.

In terms of the partnerships, the early solicitations, as I mentioned, allowed Caltrans to sign master agreements for construction of approximately 1800 miles of the network, and Caltrans is currently moving to construction in more than a dozen locations across the state on a total of 150 miles.

Similarly, the partnership solicitations also allowed CDT to secure 10 partnerships for approximately 6500 miles of leases, joint builds and purchases for faster or more cost-effective delivery of the network and construction on these segments began this past December. This includes almost 3500 miles of leases, 2600 miles of joint build deals and 435 miles of purchases. And these partners are currently under construction in five locations totaling 106 miles across the state.

In the next slide we have just references in terms of our progress relative to the funding of the $3.5 billion appropriated to CDT to date for the MMBI, 2.9 billion is already under contract for joint build and lease partnerships, equipment purchases and Caltrans construction. Caltrans plans to have begun construction on as much as 464 miles of the network by the end of this quarter from the 1800 miles of master agreements and expects to have preconstruction completed on virtually all constructed segments by the end of 2024.

The next slide references our BCP CDT has requested $1.5 billion over two years to fund construction or development of the final 2200 miles of the network. CDT's current plan is to continue moving to construction as segments become ready per Caltran's rollout schedule for the full 4000 miles, including both the 1800 miles that are funded and the 2200 miles that are being funded with the BCP.

To maximize every dollar spent, CDT issued a second RFI squared partnership solicitation in late 2023 with the goal of contracting for additional public-private partnerships, since these opportunities reduce state expenses by splitting the cost of construction with private parties and CDT is currently in the process of evaluating these proposals. And the final slide here just reflects the map of the full MMBI network. You can see in light blue it's reflected the areas for which FFA grant applications have been submitted to the PUC.

The administration's priority remains completion of the entire network, and CDT is continuing to continue its analysis of the network to determine which segments are developed based on the amount of funding ultimately provided by the legislature, as well as closure of any network gaps, potential inclusion of RFI squared proposals received, and the location of areas receiving FFA grants. And with that, we're happy to answer any questions the committee members might have.

Wonderful. Thank you, Mr. Monroe. I'd like to ask two quick accountability questions, then I will open up the floor to Members. First question for the PUC. How many of California's unserved locations have become connected to broadband service thus far with a $6 billion investment to date today?

Thank you, chair, for that question. So, via SB 156, we are on the timeline to start distributing those grants in June of this year. So strictly through that program? None yet. But that's because we have been in the process of issuing the technical assistance grants, opening the grants portal, allowing for the due process of objections and rebuttals to objections, and in approximately June of this year, the first grants will go out the door.

At the same time, the California Advanced Services Fund has been active in distributing grants. It's not SB 156, but it's been active in distributing grants, as I mentioned in my opening statement.

Wonderful. So, the answer is zero as of today.

Strictly through the SB 156 program. Correct, chair.

Wonderful. Thank you. And by what date will we achieve the goal of connecting all unserved locations in California?

So we already know that even with the incredible federal and state investments, we are not going to be able to serve all unserved in California. The need is simply too great. However, we are on track through the programs that we've been discussing to serve a good number of those. Here's a way that I think about SB 156 alone. Under the definitions from the federal funding account, there are about almost 1 million unserved locations in California.

From the 484 applications that we have in the door from the grants, the FFA grant applications, in some, those are looking to serve about 500,000 unserved locations, and that's already an oversubscribed program. And so we will be making progress towards those 1 million unserved locations. But the truth is, this is going to require an ongoing investment by California.

Great. Thank you. I'd like to open up the floor to committee members. Mr. Patterson, please.

Appreciate this. I want to get directly to some specific questions with respect to the PUC in reviewing your initial proposal, volume two. There's some language that says your modeling suggests funds available through BEAD could possibly provide fiber to the premises to a substantial portion. That's concerning to me because BEAD was intended to provide universal service. So first of all, do you have enough money to achieve universal service? Secondly, will you use fixed wireless and other technologies rather than just fiber to make sure that happens?

And can you commit that rural residents, particularly in districts like mine, which is a huge district, will not be left behind if you run out of money?

Thank you, Assemblymember Patterson, for those questions. The first is, as I noted to the chair, currently California does need to continue looking at making future investments in order to make sure that we deliver on universal service. We have a historic investment now, and we need to continue that commitment and bring more dollars to the table. That's for future discussion. Second, to your question-

Is that an answer? Maybe we have enough money. We don't now.

At present, we do not have enough money right now.

So the answer to my first question is no, you don't have enough to make it universal.

A present, given the level of need in, we don't. California has yet to make a full investment in delivering universal service.

And then the next question, with respect to fixed wireless and other technology that can achieve the same up and down and all of that. There's going to be lots of places in California you're not going to be able to get broadband fiber. It's just going to be cost-prohibitive. You even suggest that in your proposal, volume two. So you are, I want to just ask directly, you will be looking for alternatives like fixed wireless to complete that last mile.

Yes. Assemblymember, yes. Ther I have a good answer for you. Fixed wireless and a number of technologies are already eligible under BEAD. Yes.

I'd like to address LAO quickly. It appears we're going to have what amounts to a state-owned middle mile. Has the LAO seen an operations and maintenance plan for that infrastructure, and has the LAO seen a business plan?

No, we have not seen a maintenance and operations plan for the network. We're aware that CDT is doing market sounding to try to understand what maintenance and operations of that network would look like. And the third party administrator for the network, Golden State NEt, is also trying to forecast customer revenues to understand how much could be used to maintain and operate the network. But that work is, as they said, extremely challenging.

I understand that, without that kind of information, how do we know that this is going to be self sustaining without the business plan or without knowing estimates of operations, costs? And if it is not self-sustaining, doesn't that mean we're going to start seeing pressure on the general fund?

It's too early to say whether we'll see pressure to the general fund. The stated goal of CDT is to make it a self sustaining network, but we're awaiting more information on that.

And finally, PUC has stated that ensuring access to unserved household populations is, I think, a $9 billion problem. I'm just going to ask LAO straight out question. Given the funding that we have, the reporting that we're getting, the admission that there will be, in fact, shortfalls.

Do you think that there is any way that we will deliver on the promise of broadband for all? Because it sounds like there will be broadband for some, but not broadband for all, not enough money and difficulty in deployment.

And I think that that's part of the Legislature's role, is to get that information and to use it to make these decisions.

Back to the PUC. Do we have a commitment that you're not going to leave these rural areas behind if you run out of money?

So, Assemblymember, we have a commitment to deliver last mile networks under the terms of the three programs that exist now equally, equitably throughout the State of California. And so rural communities are just as prioritized as any other community. Now, you are bringing up a very good point, which is that overall, the state still needs to see continued investment in the future into making sure that broadband is truly achieved or universal service is truly achieved across the state.

At the moment, under the programs that we have today, where we're looking at investing the billions that we have today, there is an equitable attention being paid on rural communities just as much as on urban communities.

I follow that the California Advanced Service Fund originally had a 50/50 split between urban and rural. Does the PUC have a commitment that there will still be that 50/50? That the rurals will have a place at the table just as important and significant as the high density, populated areas?

Yes, Assemblymember.

Thank you. Thank you, Chair.

Thank you. On to Mr. Bryant.

Thank you, Mr. Chair. And it's good to join you here this morning. Thinking about the Chair's question and Mr. Patterson's as well, not being able to cover the whole state. It seems like the materials that we were given today show that about 84% of the state will be covered with the current investment and 16% of the state's underserved communities left behind. Any demographics or characteristics of that 16% that are striking to you?

It sounds like you are slicing and dicing using the materials, Assemblymember.

I did read them.

It's hard to answer that question on the fly because I'm not exactly certain what you're referring to, but looks like my colleague has a response.

So again, if you are slicing and dicing and making it about the numbers, I think I would go back to a couple of things. One, the federal funding account, which is the approximately $2 billion account, has an emphasis on how we're going to prioritize and evaluate those grant applications, specifically around whether they're aiming to reach what are defined as underserved disadvantaged communities or low income communities, whether on affordability, on general viability of the application as well.

And so we're really trying to target the federal funding account towards areas that tend to be left behind generally, or have a harder time getting attention from general industry. For the BEAD program and NTIA, one of the goals of the NTIA is that the state has to aim to reach 100% coverage with the allocation.

So that means all of the areas that are going to be identified by NTIA and go through the challenge process after the map, after we go through that, NTIA is asking states to aim to reach 100% coverage of all of those locations which are scattered throughout the state, in both urban and rural communities.

I think that brings me to similar thoughts as my colleague from Fresno. That if existing funding isn't enough to cover the state and meet that 100% goal, then certain communities are going to get left behind. And the communities that have been left behind, it appears from the current maps and design, have striking characteristics of being underserved in other capacities by state investments. They are communities of color. They are Black communities in both northern and Southern California. And that's just deeply concerning to me.

So I guess my second question and last question is that there have been claims from a lot of advocates and organizers that they just can't get in touch with the PUC or CDT, that they don't feel heard, that they find it very difficult to play a role in this process, if not impossible, despite being as well organized as a community that doesn't have Internet access can be.

And I also think that that is an interesting point, given that the opening statements from CDT included LAUSD, 600,000 students and the struggles that they had, the disproportionate share of those students came from communities that have been left out of the current process.

And so how do we make sure that with additional investment, if we were to allow this to happen, that equity and coverage reaches that 100% goal in a way that is community driven and informed by folks who want to have a role in this process?

Thank you for that, for the question, Assemblymember. So I, as Executive Director, have an open door policy, and I ask my team to have an open door policy as well. I can actually tell you that our team has met with advocates from groups and organizations across the state multiple times during the FFA grant setup and distribution process. Always happy. I do direct my team to have that open door, so we're always happy to meet further.

The other good thing about having a utility commission deliver on part of the broadband initiative is that we ourselves are a public agency. We ourselves have open proceedings, and a number of the advocacy groups are parties to our BEAD and FFA proceeding. And there they have the chance to put their comments in in a formal manner. Those are then considered by the commissioners when they're reaching proposed decisions as we roll out these programs.

So there are multiple ways, both the informal staff conversations that we've already had and will continue to have, and then the formal process by which public comments can be made. Thank you.

Thank you. Moving on to Ms. Boerner.

Thank you. And I want to thank Chair Valencia for pulling us all together today. I think you can see you have a bunch of very passionate legislators here who represent various parts of the state, and I think most of these people, we have the chair of JLAC, we have most of the movers and shakers that are in the broadband space. So thank you for pulling us together for today.

I want to point out that, unlike CDT, where the final decision maker is the Governor, for the CPUC, the final decision makers are the commissioners. And it's unfortunate that none of the commissioners could join us today because they are the ones that make the decision. So it's fine that you have open door policies, but the commissioners don't, and they're the decision makers, and we all have an open door policy for making those decisions.

And so when we look at what it's going to take to serve the underserved and unserved in California with the 6 billion that we have in front of us, I also want to point out that we're one of the few states who divide up between the CPUC and the CDT. The middle and the last mile. The last mile is not a goal in and of itself.

It serves no purpose if it doesn't connect the last mile, because our measure of success for all of us up here is that our people are served. So the middle mile, it's great that you've gone forward with your planning, but the CPUC, originally, when Assemblymember Quirk-Silva was chair of CNC, you guys said you're going to be opening applications and they would be allocated by the end of 2022. It is now 2024. And you're saying maybe we're going to know.

So we've gone forward and we've built this. We're planning the middle mile. You're allocating leases, you're allocating this $1.5 billion. And we don't know how many last mile households are served. I asked in the last middle mile advisory council, I asked how many of the FFA applications. I think there were over 500 if I'm correct. Right? Over 500. How many are proposing to connect to that middle mile?

Because if we're spending $1.5 billion for 20 projects that connect 20,000 people, that middle mile money is better used to connect the portion of our populations in all of our communities who are unserved. So I'd like to ask again: how many of the FFA last mile applications are proposing to connect to any part of the middle mile?

Good morning, Assemblymember. Thank you for the question. Right now, 340 have said they either will or may connect to the statewide middle mile network.

Okay, so that's a different number. When I asked in the last middle mile advisory council, I got the answer several. And I said, does that mean five? So 340 is very different than several.

I appreciate that. I wasn't at that particular meeting, so I can't speak to the number given at that time. We are in, as you know, we're in the midst of the due process portion of all this. And so on occasion it can be hard for us to give information. But I asked the team to prep for us for today and 340 is the current count.

They will or they may?

It's both.

And what does that mean for you, the will and the may?

Well, there are a number of the new entrants to this marketplace, the special districts, the local governments, the tribes, who have said they will because they need that connection to the statewide middle mile network. And then there are other providers who are not the same, new entrants who have possibly more experience in this area who said that they may. It might depend on the final design of their network. We're not sure why they say may, but that's what their public statements are.

And at the risk of going back to old terminology, we had a whole discussion at the end of session last year, championed by Assemblymember Bonta and Wilson, around what we used to call phase one, phase two, middle mile. Of those 340 applications, do you know how many are planning to connect to any of the construct, build parts of the middle mile which are in historically disadvantaged communities?

So that question as of today? Assemblymember, I can't answer, but that's a subject of ongoing discussion and partnership between us and CDT. We absolutely recognize the importance of connecting those who are connecting the disadvantaged communities to the middle-mile network. What I can say is that among the new entrants, the special districts, the local governments, there is a 1.8. If you sum all of their applications together, it sums to 1.8 billion.

So they are presenting $1.8 billion in proposals that would leverage the middle mile network.

That's fine. I think what's important is for you to get to back to all of us on what part of the middle-mile network. Because CDT has the lease build and they have construct build. The lease build is in historically served areas, and the construction part is in historically underserved areas or unserved areas. And I think it's very important that when we use this, we're investing.

And if a lot of those applications in our unserved populations are in historically underserved or unserved areas, and they're construct build, that is a good investment for California. But if there's one application, then that's not a great investment. So when we're looking at a really difficult budget year and we're looking at how we're allocating these monies, we have to know, are we correcting the wrongs of the past and are we doing the right thing for California? And I have lots of more questions, but I'm going to let other people speak for a while.

Thank you. We will now move on to Ms. Bonta.

Thank you. I'll just start with some initial questions. I might have some others as well. Thank you to chair of our CNC Committee for elucidating some of the challenges that I have. I want to focus specifically on the last-mile broadband initiatives and the flow of the funding through the local agency technical assistance grants and the federal funding accounts.

So stated that 106 grants were awarded, 9 to tribes, 42 to cities, 45 to counties, and that 75% of the people who applied for LATA funding ended up receiving FFA funding. Of those who received FFA funding, the 9 tribes who applied for technical assistance funding were all 9 tribes funded with FFA funding.

So, Assemblymember, thank you for the question. I'll just start by clarifying. They have applied our first grant rollout. As Assemblymember Warner was asking, the first grant rollout is anticipated in June of this year, so there hasn't been any actual funding yet. But to the detail of your question, as far as the tribes that have applied, let me turn to Maria.

We received eight applications from tribal nations for the federal funding account.

Okay. And of the 42 cities that applied for Local Agency Technical Assistance grants, how many qualify as low income cities or urban cities?

I'd have to do that analysis, and we can certainly follow up with you. I don't have all of the grant applications in front of me, but we can certainly follow up with that analysis.

So then, kind of, given that response, you also don't have a sense of how many of the 42 cities ended up applying for FFA funding that would qualify as low income.

We have 106 awards that we made in the latter program. We know that roughly three-fourths of those were able to participate in FFA applications.

You already gave me that information. I'm specifically asking about low income communities within the 42 that applied for LATA and what the representation of that was within the FFA funding.

Certainly, and we could follow up with that analysis with you.

Okay, so the answer is that we actually don't have that information available to us to know the extent to which there is actual targeting from an equity based perspective around the technical assistance grants that were provided and then the conversion of those to applications for particularly low income communities.You don't have information for us available right now.

Not today, but we certainly can get that information. And I would add, too, that we do see that a lot of the public agencies that have put forth applications are really trying to have a focus on equity. And so I think that is something that certainly will show up in the scoring, probably as well in the scoring rubric.

Okay, I'm going to move on to some questions around the middle-mile, and specifically, not all middle-mile is the same between construction and leasing. We know that leasing- I want to get a little bit into the weeds on this, because my understanding is that there are very specific differences in terms of the quality and long term access between leasing versus constructing. And I wanted to get a sense right now from middle-mile funding, given the fact that leases, they last. It's a lease.

It's not owned by the state. We're making a huge investment right now. The majority of the investments that you shared indicated that they were primarily leased. Do you have a sense of the overall portfolio of lease versus build and where those leases are happening? And I'm particularly interested on whether there is an overrepresentation of leases within our urban corridors, places like Inglewood and Oakland, specifically.

Yes, I will try to answer that question. As noted, we have a total of 3484 miles of leases that we've signed. In terms of the term, the standard is 20 years. The way we've done it is we can extend them for another 20 years. So total of 40 years. But I also note that 2500 miles is just from one lease and we have basically 120 years. We can extend it five times for a total of 120 years.

So we think in terms of the time, in terms of the technology we're talking about, I think we're confident that that's going to give us what we need. In terms of what we're actually doing with those leases, I know there has been some concern that if we're leasing equipment, if we're leasing a segment, that perhaps there would be not the same quality. And so what we've done with all of our leases is to have our partners pull new fiber for us.

So everybody who's getting a leased segment will be getting the same new fiber that we will be putting in, same new electronics. So qualitatively it's going to be the same thing. The one advantage for a lot of those leases is, for the majority of those leases, is that the conduit is already in the ground. And so you might have noted in my presentation the discussion of some segments being able to start to light up in 25 or 26, earlier than the federal deadline.

And that's due primarily because, for those leases, we're going to have actual lit fiber. We'll have the infrastructure in the ground and functional earlier than the December 2026 deadline.

What happens after the 20 years? Where does the capital investment come for renewal of those leases?

That will have to come from the revenues on the network. That would be the expectation.

Do you have any projections at all whether the revenues from the network are actually going to be able to cover the investments that are made in order to be able to support that over time?

That's part of what we're trying to achieve with the current market sounding effort. I think, broadly speaking, given the infrastructure that we're building, the fact that it is statewide, the fact that it connects every county of the state and runs statewide. I think over time there's a high level of confidence that there will be sufficient revenues to be able to pay for or extend those leases in the out years. But we're doing more work on that.

So the answer is maybe with a high level of confidence. I just have a deep concern that we are relying on a strategy right now to have leases purchased. And we know, I know where those leases are purchased. They're primarily in urban corridors where there is existing fiber, where we have to had to really fight for a guarantee that the quality of that connectivity would be commensurate with what that would which would be built.

And we don't have a plan for ensuring that there is funding for that initial investment for leases over time. We are highly confident. I make a decision to buy a house. I have a sense of what that house costs. I know the difference between what the house costs and what I own versus renting. And I know that when I rent something, I have it for a little while and I have not a lot of control around whether or not I get to occupy that rental space. When I own something, I know that it's in my hands to be able to understand the quality of the place I'm now living.

I think that I have a grave concern with the fact that we are building an entire infrastructure in the communities that are most invested on a system that we can only project confidence- that's not a number- around our overall ability to continue funding. With that, I'll stop my questions now, but I'm sure I will have others.

May I make one additional comment? Is that when we did these leases and these joint build deals, the average cost per mile is less than half of construction.

So that is also the fact that we're able to provide service to these areas sooner is also we want to make sure everybody understands that it's also a lower cost alternative in terms of being able to get all of the same benefits sooner, but with less pressure in terms of the overall budget.

Yes. So it's cheaper to invest less in poor communities for a shorter period of time right now.

Thank you, Ms. Bonta. We will now move on to Dr. Wood.

Thank you, Mr. Chair. And thank you to everyone who's here. SB 186 was passed in 2021, a while ago, and as part of that, there was established a Middle-Mile Advisory Committee that composed of four legislators in addition to all of the staff. So I've attended all but two of those meetings in the last two and a half years. So I feel like I've kind of been a one-person, at times, actually, most of the time, quite frankly, a one-person oversight committee on this.

And I know over the time, I've asked you all some really hard questions and really pressed you. None of the questions here today surprise me because they've come up at these hearings in the past. I do have some questions. But I do want to say, just in general, for the scope of this project and the kind of cooperation required between agencies that don't work well together typically or have never worked together, in some cases, I have to say I am impressed with the progress.

And I know that might come as a surprise because I'm hypercritical of things because my expectations are really high. But I have to say that I am impressed with the progress, and it seems to be getting better over time. This is a very complicated project with multiple funding sources, a huge number of stakeholders, and the expectation that we get this perfect out of the gate is pretty tough. And there are things that have happened that I haven't been thrilled with.

There has been a fair amount of course correction throughout the process, and there's more. And I will say that all the stakeholders have been responsive when I've asked questions and there is real progress. Obviously, the goal is broadband for all. My district has the least adoption of broadband of any place in the state. So you think I have an interest? I have had an interest in this since before I was elected to the legislature a decade ago.

I have been dogging this issue for a long, long time. I also represent some of the poorest communities in the state. Two of the poorest counties in the state by per capita income are in my district. So I have a vested interest in underserved and unserved communities. We hear a lot about underserved and unserved. My focus is on underserved because of the number of underserved people.

In some wealthier communities, they feel underserved because they're not getting the bandwidth that they want, where my communities are historically not getting any bandwidth at all. And so I have been dogged in my determination to get as much coverage for as many people to have an opportunity as possible. In the last meeting we had--I think it was the last meeting, they all kind of blur together after a while--but in one of their recent meetings, I brought up the issue of maintenance and asked a question, because we had somebody from another state there.

But in one of their recent meetings, I brought up the issue of maintenance and asked a question, because we had somebody from another state there. So we asked the question, how are you doing it? What is the cost? And the answer we got from that person, and I think the state was. It was either Maryland or Massachusetts. Was Maryland. Okay. Is about 1% annually of the value of the network.

So if you fast forward that we're looking at a $9 billion network, it's going to be about $90 million a year to maintain that. So just so you keep that in the back of your mind. So a couple of questions here. One for the LAO. So, as we look at the budget about shifting, delaying some of the resources here, do any of those delays affect federal funding? By doing these delays, are we leaving any federal funding on the table?

The delay of the Last Mile project grants, the $100 million. I do not believe that would result in any reduction of federal funds from the Infrastructure Investment and Jobs Act.

Okay. All right. That's important. And what's important here is that there is a deadline of 2026 to actually complete these projects, or we will leave huge amounts of federal money on the table.

So the fact that the networks and the timelines have continued to evolve, I have confidence that this will get done, and I don't believe I'm alone in that. And I understand that there are concerns in different parts of the state. I don't know how many hours I've spent invested in this over the years, but I understand from the beginning that, and I understand the questions and concerns about leasing people lease cars, and lease all sorts of equipment and all sorts of things over the years.

So one of the questions I have, which I can't believe I didn't ask over time. But in a lease arrangement, and recognize that one of the reasons for the lease part is to not overbuild, why would we build a network right next to an existing network if we could actually lease components of that to make the overall cost less costly, faster to implement over time? But one of the things I never asked was, in that lease, who maintains the least portion of that? Because you're piggybacking on existing networks. So maybe it's AT&T or Verizon or whoever else has it there, but who maintains the network in that lease agreement?

Yeah, that's a great question. That's included in our lease agreements. So when we lease, for example, CVIN is the one where we're getting approximately 2,500 miles, they provide the maintenance and operation and we pay them for that.

So the concern that we're getting a potentially substandard network by leasing, it would be covered by the fact that we actually have someone who's going to maintain that network for us?

Yes, that is correct.

Okay. All right. Thank you. I appreciate that. Look, I have been one of the biggest skeptics and harshest critics at time of this program. And I have to say that the responsiveness that I've seen from the agencies involved has been really remarkable. Are there issues and concerns? Yes. And one of the issues that I have concerns about is that how are you continuing to engage with communities along the way?

Because there's a lot of programs and for example, there are consortiums of people in my district who have these last mile projects they're trying to implement. And so one of the criticisms and concerns I've had is how are we communicating with them? Because they're sitting there. They've been sitting there for years with projects and they're trying to get grants through CASIF and other places to be able to build these.

And when we had this hiccup where we had a phase one, phase two, and suddenly a bunch of things disappeared, that's no longer the case. But you can imagine the horror that went through people's minds when suddenly on the maps they were in a different phase and no certainty that that phase was ever going to get built. So what are we doing to communicate? Because you cannot get broadband adoption if you don't have the last mile projects.

And there's a lot of people that have been waiting for years and years and years, and they need the middle mile, but they also need to know when it's coming so they can coordinate their applications and be sure so we get the hookup as quickly as possible.

Yes, Assemblymember, thank you very much for that question. We are using every channel that we have to communicate with both the applicants. So there are 484 applications pending. We're communicating with the stakeholders to those applications through webinars. And then, as Maria mentioned, we have hired a team of caseworkers.

They are literally midfielders between us, the CPUC, and all of our different programs and the local communities, the local governments who are trying to sort all of this out and understand it and understand where and when and how they should apply. So we're using every channel that we have been able to think of to communicate and be as transparent as possible.

Well, I know that certainly in some of the smaller communities, the lack of technical expertise is a real challenge. But that isn't just in smaller communities that can be in other underserved communities as well. And so if there are networks available and communities don't have the technical expertise to be able to access that, then that's going to dramatically reduce the adoption. It's imperative that all communities that want to be able to have access to Internet, to broadband can have it.

And I've learned through healthcare, it's not just a rural and urban issue. The issues are really about unserved and underserved people, regardless of what communities you live in. And I focus on rural because that's my district. But the adoption is critical. And without that technical assistance for every community, not everybody is as sophisticated as an LA County or whatever. So it's really critical to get, if we're going to maximize this opportunity, that that technical assistance happens across a broad range of communities.

Assemblymember Wood, I'd like to actually add on to Executive Director Patterson's comment. So as we were just talking about CDT, not only on the Middle-Mile, but we're also doing the Digital Equity Plan. And as we were talking about, we talk about unserved and underserved, and that is about connectivity. And that is all around our state. We have under connectivity, but we also have affordability as an issue. We also have literacy. We also have devices.

And so in partnership, as CPUC was going out on the road and doing the bead efforts, we actually joined them as we were doing the Digital Equity Plan. So this was, instead of them coming to the communities, we think we did 2021 together, instead of them doing it, we actually partnered.

So we could talk about infrastructure, we could talk about barriers, what's going on, what can we do for digital navigators so that when people are struggling and they need an Apple store geek squad to be able to help them figure out how to do their technology, I always say my dad still has a know. I end up being his IT support. How do we make sure that people can get to the services that they need? And so it's about the connection. That's what we're here for.

It's also making sure that through our maintenance and operation contracts, either lease, purchase or buy, that we're requiring anybody that connects to pride of affordability to the last mile households and businesses, and then making sure that people have the devices. I know you have a lot of last mile opportunities for people to get discounted devices and making sure that they know how to use the technology. One of the things we've also been doing is just between October and January, we've had 40 engagements.

And outside of Middle-Mile and the California Band Councils, we've been committed to making sure that we're going out and having two way conversations with the advocacy groups. And we're also putting more transparency on our websites. So if there is any changes to miles that they could actually see what it is, where it's at, and then be able to compare it to other prior maps. So we're committed across both of our organizations to be as transparent as possible.

Yeah. And thank you. And I know we've had those in our community, and that's helpful. And also, we've had, and thank you again for this engagement with our tribal communities in my district, including a workshop that we attended. And we learned a lot. And so some of the most unserved people in the entire state, where you have challenges, some people still don't have electricity or running water. And so I want to thank you for your efforts in that regard. And this will be life changing. Thank you.

Thank you, Dr. Wood. We will now move on to Mr. Ramos.

Thank you, Mr. Chair. And thank you to my colleague for bringing up the tribal impact and the ruralness and the true need of infrastructure. When we seen during the COVID crisis, we've seen that a lot of tribes that had to switch to learning, distance learning, had no capabilities of Internet. And the way that tribal governments brought a solution to that was putting the books into a van and drove those books to each house and collected the assignments from it.

And so I want to thank you for being here today and highlighting some of those grants that have been approved for tribal governments. I believe eight in those areas. And I believe there's a contract working with Hupa on some issues moving forward. One of the questions that we want to pose is, have we looked at the grants from tribes, the request of grants from tribes coming in on a regional area, meaning north, central, southern, as far as where that greatest need is at?

Certainly we could attest to some areas of tribal communities still in the State of California, 110 FA recognized tribes and tribal communities in the state that still don't have adequate roads, right? Electricity service and those areas that are there. And now, as the state moves to the broadband and to the capabilities of Internet and those types of things, we're leaving California's first people far behind again. And so I know there was some money that was approved. Right? Some grants that were approved close to that $5 million mark. But the question is, could there be more demand that's out there that we're not even seeing, just based on the dollars that were actually approved this time around?

Assemblymember, thank you very much for the question. I believe that all of the members of this committee are raising the same point, which is, we know how historic this investment is, and at the same time, we know that the need outstrips that investment. And so, to answer your question, we are providing this technical assistance to tribes.

As I mentioned in my opening, the tribes themselves are leveraging that technical assistance to apply for federal tribal dollars, and they've already brought in 250,000,000 from the Department of Agriculture to serve their communities. So they are themselves using it as a leverage tool to bring in other sources of funds. The other thing I want to mention is that I know all of you are aware of the affordable connectivity program, which provides a discount to Internet service for needy people.

And we have 2.5 million Californians who depend on that ACP subsidy, which is presently not slated for renewal at the federal level. So President Alice Reynolds and Director Bailey-Crimmins have been active in Washington seeking the reauthorization of that program. But to be honest, it's not looking very bright for it. But it's just to note that there are numerous different sources and building blocks that we are all using to ensure that Californians get that connection and stay connected. Overall, I do think we are going to need to examine how California makes a future investment in ensuring that tribes and others really obtain the universal service we all want.

The question as far as the regional approach, certainly Yuroks up in the areas that my colleague represents, has a drastic need. And there still is misconceptions that every tribe is doing well with gaming when we know that's not the case. The majority of the tribes, the 110 FA-recognized tribes, still need basic service, infrastructural service, and certainly broadband. And so by awarding the grants, are we giving false hope that things could be completed down the road?

Or are we looking to make sure that we're continuing to outreach to the tribes that are out there to leverage, to make sure that in helping with the assistance, expertise, to ensure that an infrastructural system is something that's going to be there for a time to rely on?

So, Assemblymember, I say the latter. The latter is what we at the CPUC are committed to doing. And over time, as our programs continue and evolve, as we see some of these last mile networks develop, and then we continue to assess the need ongoing. We'll still have the California Advanced Services Fund as a program that can continue to invest in these communities. Let me see if Maria has anything to add. Thank you.

Thank you, Assemblymember, for that question. In addition to what Rachel just mentioned about the nine tribes that received a lot of funding, I do also want to mention that there is a program called Tribal Technical Assistance under the California Advanced Services Fund. There is a proposed change out for public comment.

The commission will consider voting on next month that would expand that program and really allow for more, a higher dollar threshold for additional services, partially that could be covered under that technical assistance for the very reason that you mentioned, which is a lot of tribes, a lot of communities, but tribes also, in particular, have a lot of capacity issues in terms of how they can apply for these grants.

And so those additional technical assistance dollars that will continue now that even ladder has been exhausted, we hope will be very helpful to the tribes. And we know that there is a lot of demand. And then lastly, to your question on regions, the tricky part is that these are all application-driven processes, and certainly there are, we don't want to be in a position to tell tribes- We want to support tribal sovereignty and allow them to approach these processes and these programs as they see best fit for their communities and their nations.

It definitely is interesting to see where that need is at. We know that areas in Southern California, Anza area, that there's still areas that still need infrastructure that's there throughout the state. And the reason for the regional approach, that is we could start to pinpoint where the greatest need is at within the different areas of Southern California, central and northern, because we know there's a need that's there. Also making sure that the outreach to tribes continue. We do know that eight grants were awarded. There's an agreement with Hupa to move forward, but there's far more tribes that are out there. So have more tribes asked for assistance or for grant capabilities than the eight that were awarded?

And just to also point out on the Middle-Mile, we have the agreements with Hupa and the other tribes and something maybe not sure if the Oversight Committee is aware of, but we have unique relationships where they're actually helping build jobs, bringing jobs to those communities as we're building, and they're actually helping construct and helping maintain those leases and build opportunities in their own communities. So in addition to providing connectivity, we are actually investing in their economic abilities to be a part of this whole one-time investment. And so wasn't sure if you were aware of that.

Deeply appreciate all the work that's being done in attention to the tribal governments, the eight that were awarded, how many actually came in and might not have been awarded? And is there some barriers to the tribal government aspect and to what's needed on the application itself?

I'd have to double check. I do know that we recently just exhausted the last bits of tribal governance. So I do believe at least one application was denied because of the exhaustion of funding.

However, that is why one of the reasons that this new proposal for the expanded technical assistance program is really important, and one of the things that is different about one of the proposed changes to that program is that it would allow tribes to use funding for grant writing related to broadband, which is in itself, grant writing in itself is a really big hurdle and a challenge, and so being able to wrap that into the new program, grant writing specifically for broadband deployment, allows them to continue to expand their capacity in that sense. So it just goes beyond just the feasibility studies that are normally in the market analysis that are normally done.

Well, thank you for that. As a former chairman of a tribal government, the grant writer is the first step moving forward, and many times the grant writer is part of the grant itself because that's where some of the infrastructure is needed within some of the tribal governments here in the State of California. I want to thank you. Even having this discussion and centering around tribal governments is something that this Legislature is now moving forward in, and including in a lot of the dialogue. So thank you for all your comments and thank you for your hard work.

Thank you, Mr. Ramos. Now we will move on to my colleague from Orange County, Ms. Quirk-Silva.

Good morning and pleased to be here to hear not only your testimony, but the questions from my colleagues. Some of you might remember me from a few years back being not only the chair of CNC, but also on the Middle-Mile. So some of the questions, I have had some background. I do have a few questions myself, but I would make a few macro comments on the budget as a whole.

As you know, many of our subcommittees are going to be tasked with really making some major cuts to important programs to California related to housing, related to some of our infrastructure just for living in California, whether it's through CalWORKS, whether it's under homelessness.

So when I look at the budget request in the broadband spectrum of a $1.5 billion ask to complete or to move forward with this project, it is certainly something that we're going to look at closely in budget sub five. Does not mean that I do not understand that not moving forward with that 1.5 could slow down some of the progress.

My colleague, Assemblymember Jim Wood, who has been part of this discussion, as he said, I know the meetings he's talking about, as I participated in them. I know he's been a sole advocate, but also with Assemblymember Jim Patterson, one of the questions that he asked that I want to go back to is the business plan for maintenance.

As I remember asking that question quite a handful of years ago, which is the initial vision is to have broadband access for all, or if you want to call it the Golden State Network, which I always thought was very clever. But the truth is, we need a business plan for what this will look like in the future to maintain this.

And it needs to get to us as budget sub chairs sooner than later, because it's one thing to lay the foundation, it's another thing to pay for the maintenance. How will that look? So that would be one question. The second question I would have would go back to looking at funding this. And one of the areas that doesn't seem to be addressed is wireless.

As we know technology, even in the short amount of time since I've left the committee to now we're seeing new ways that technology can be moved forward. Of course, we're talking about underground with fiber, but there's also wireless. I had a presentation, I'm going to say not too long ago, about a new way to move forward on wireless that could go through very, just say they showed us how it would go through the Capitol building. That's how powerful it can be.

So are we going to look at adding that in as part of our network, knowing that this continues to change? So I'm not sure who I know Mark is looking at me maybe on the maintenance, that question, but on adding wireless and why we're not moving forward with that is something that I'd like address. Thank you.

Yes, thank you. As we've been focused so much on development thus far, and we are making progress, we have, as the Lao noted, we are moving forward with the market sounding. And so in terms of timing, I think we're expecting to be able to present something, I would say no later than the April Millimile Advisory Committee in terms of our findings on that. So I think that kind of fits within the broader time frame there.

Thank you.

And Assemblymember, thanks for the question on technology. Fixed wireless and other technologies are eligible under two of the three programs, broadband equity access and deployment, and California Advanced Services Fund. And as I noted, the commission is regularly voting on grant proposals through the CASF, as recently as February 15, they just approved more than 6 million to two fixed wireless projects that will deliver to presently unserved households. So the technology options are we're putting everything on the table under those two programs.

I would just make the final comment that I would ask you to very seriously consider what this might look like with the delay of funding, as we know that there is a budget ask here that the governor has put in with 1.5. But what is this going to look like without that funding, as all of our subcommittees are going to be asked to make some very serious cuts in many areas? So really mapping that out would be important. You don't need to answer that now. I think we will be having our own broadband hearing under sub five, but what would that look like with that reduced funding or investment? Thank you.

Wonderful. Thank you. Now, our distinguished member, Mr. Bennett.

Thank you very much, Chair Valencia. My first question deals with the federal encumbrance deadlines that are coming up. So we have an encumbrance deadline coming up at the end of this year. And I just want to be clear that I think I heard in your presentation that you're going to have approved all the proposed projects by June. Is that correct?

Thanks, Assembly member, and nice to see you. At least the initial tranche of awards, yes, by June. We can't say at this point whether it will be for the entire federal funding account because we're navigating all of the challenges and rebuttals.

So what's the risk that we're going to lose some federal funding because we don't meet the encumbrance deadline?

Presently we're none because we are aiming to issue all of the awards with plenty of time to hit the encumbrance and the liquidation deadlines.

So June is the first tranche. What's your deadline to actually make sure that you have all of the proposals?

Well, let's see. There is definitely a chance that we will go ahead and issue awards that total $2 billion because we're oversubscribed already. I just can't say whether or not we'll hit that target or because of challenges and objections. We might not issue all of those, but then we'll immediately do a next round of grant applications, and then we.

Have a completion deadline also, where we risk losing federal funding if we don't have the completions done. And I'm concerned with the supply chain challenges that we've seen out there. It's been significant, particularly in some electrical equipment regarding our ports et cetera. What kind of safeguards are we putting in to make sure that we meet the actual construction deadlines, the completion deadlines that we have so that we don't lose that federal funding? Can you help me with that, please?

That's an excellent question. And given that we are responsible for distributing to a few hundred different applicants, each one of those applicants will need to be managing their supply chain appropriately. Do you have any detail on that, Maria?

And could you lower your microphone? You're much easier to hear when you don't. Yeah, there you go. That helps a lot.

Thank you. I'm always just afraid I'm going to. To follow up on your question. One thing I agree with Rachel in regards of each applicant having to manage their supply chain, I would add that there's currently four of the in the federal funding account funding. There's really 540 in federal funding in that account still remaining, and the rest is general fund. And so our intent is to ensure that we are getting that federal funding out the door as quickly as possible so that we are first and quickly so that we can meet those deadlines. And then the general fund doesn't have those same strings attached.

So if people run into supply chain problems, et cetera, they'll be funded with the general fund side of it. And we will do the federal funds for, we'll get the federal funds out.

So that we're going to get the federal funds out the door first.

And are we putting anything into the contracts that help us guarantee that these people are going to do it, penalties if they don't meet the deadlines, et cetera?

I think that you're probably talking about a bit of oversight and monitoring, and the program certainly does have a lot of mechanisms in there related to monitoring. Each applicant will have to do regular reporting on progress, and they are only eligible for payments at intervals of progress based on those reports that we will verify.

My third question is, we've heard about the $100 million delay, and I know Assemblymember Woods asked about that, et cetera, but the justification for cutting 250,000,000 from the Loan Loss Reserve Fund, I know you may not be able to offer the administration's justification, but if you have any explanation from the administration, but what will the impact be of that change of $250,000,000, of cutting $250,000,000 from the Loan Loss Reserve Fund? Can you help us with the impacts?

Yes, I appreciate the question. I mean, the impact is that simply less funding will be available as a credit enhancement for these new entrants to the marketplace.

Do you have any information on the justification? Just normal budget challenge. And this is one more.

I think everyone is trying to address the budget challenge.

Great. Thank you. And then two more quick questions. One, could you just briefly summarize how you do the coordination between the CPUC and the CDT on Middle Mile and Last Mile? Does CDT make sure they take into consideration where we're doing the last mile? Certainly, Last Mile has to take into consideration. Could you just summarize how that coordination is taking place for all of us?

Absolutely. So the CDT team and the PUC teams, we meet at least once a week, if not more. And in fact, if you ever had a chance to go in and look at the Public Utilities Commission's website, they show the MMBI map on it. And as noted, we've been working with the CPUC team on the FFA grant applications. That's why we were able to put the map in your slide. We work, it's very important.

I think, as has been said repeatedly, you need a Middle Mile and you need a last mile. And that Last Mile connection is really important. So we're working together regularly. And as we kind of move forward with that Middle Mile, we definitely are looking at where those FFA grant applications will be.

Thank you. And one just final overall suggestion, and that is that when you have PowerPoint presentations, if they are up on the screen, then we can follow with you, but you have to submit them in advance for that to happen. If that doesn't happen, though, if when you're going through your PowerPoint, you'll be clear what page you're on. You've got 16 people up here trying to figure out now what page are you on, et cetera. So I just suggest that that would be helpful for presentations. Thank you very much.

Wonderful. Thank you, Mr. Bennett. Now we will move on to Mr. Greg Hart.

Thank you, Mr. Chair. Most of the questions that I have have been asked, but I just want to start off by saying how much I appreciate and want to thank you for the work that you did. Getting additional federal funding to the state, that is really critical. We would not be able to achieve what we are going to be achieving without that work and appreciate it. The question I have is about the future and current year investments that are proposed by the state. If we are not able to make those commitments because of the budget issues that we're dealing with, does that put any of the federal funding at risk?

Presently for the Last Mile network portion of broadband for all, no Assemblymember.

Same with the Middle Mile too.

Yes, that is correct.

Thank you.

Wonderful. And now back to Ms. Bonta.

I'll just pick up on the question that Assembly Member Hart just asked, but more from a perspective of what the impact of not being able to complete the middle mile infrastructure build out would be. So you have a BCP for $1.5 billion to be able to follow through with the completion of the entirety of the 10,000 miles that were identified that needed construction in order to be able to complete the state network.

If the 2200 miles are not able to be fully constructed, leased or whatever, however we might get them purchased, what is the impact on our overall investment in infrastructure and assurance that everybody will actually have a possibility of broadband for all and connecting to the last mile?

We're still in the process of analyzing what that would look like. I think the way we've approached the network and rolling it out is as CalTrans gets given segments ready for pre construction, we move forward with construction. But I'll note that we also have, as I had mentioned, we call it the RFI squared, but the solicitation for other lease and joint build partners that we're currently reviewing. And that might factor in as well.

And we want to make sure there's no gaps in the network to make sure there's no stranded assets. And then again, looking at where the FFA grant applications are. So without the additional funding, we would have to go back. And we're already doing a lot of this analysis now, but we would have to be more strategic about where we do and don't move forward.

Is the case that there have been organizations since 2021 that were focused on the commitment or the objective of having the full 10,000 miles, middle miles, fully covered? People have based their last mile applications on the existence of the full 10,000 miles. There was a move last year by the PUC to focus in on just funding or moving forward with the projects for the 80. Sorry, just a little over 8000 miles and we have a remaining 2000 miles ish that are not attended to right now.

And I'm just going to harp on this again because it's very important to particularly black communities, Latino communities throughout the state. If we do not have the full funding and completion of the Middle Mile, we will be leaving redlined communities, historically disinvested in communities, without full access. I'm searching your faces because I didn't offer a question in there, but in terms of confirmation of that reality, that is what we would be doing.

We prioritized following the CPUC maps for the initial investment in the middle miles of the 8000 middle mile projects that we were able to do, we left on the table and deferred completion or funding for the completion of those 2000 miles. And in that category of 2000 miles are the communities that Mr. Patterson is talking about that I've been talking about that Chair Wilson has been talking about that Mr. Bryan has been talking about that the California Legislative Black Caucus has been talking about wholly. I'm just seeking confirmation about the reality of that choice.

I like to make just a quick comment. Assembly Member Bonta, as you are aware, the Administration is fully committed, so CalTrans is not going to stop. They rehab funding to look at all 4000 miles of construction, all pre planning. When we look at what we have monies for today is about 1800 miles. And then we're asking for 1.5 billion for the 2200 additional to make up the 4000.

The Administration, if we don't get the funding, obviously FFA will be a big priority, making sure that the network doesn't have any lost segments and making sure that wherever there's a commitment and federal funding that we're meeting that. And so the commitment is to make sure that the priorities meet with administration and the legislature. But I wanted to let you know that all of the construction pre planning is continuing with the anticipation that we're going to build the entire network.

And if I can add, Assembly Member, the CPUC set up structural incentives in order to bring applications to the fore that serve disadvantaged communities. And so, within our grant application process, we provided a structure in which points are given for an ongoing affordability commitment, a commitment to serve presently disadvantaged communities, and a connection to the Middle Mile network, the state's middle mile network.

So we built all that into the FFA grant application process so that those applications which we're reviewing now that meet those criteria earn more points in the process, are thereby float higher in the prioritization scheme altogether. And so I wholeheartedly agree with you. This is our opportunity to not leave those communities behind again. And the work that SB 156, the work plan that it set out for California is working. That's what I believe we're reporting to you today.

Of those 484 applications, about 90 are from these new entrants to the marketplace, the local governments, the tribes, and the new special districts that are going to serve the presently unserved portions of California. That is what we are at work prioritizing and looking to Fund first in order to deliver the last mile connectivity. There is a crucial dependency on the state's middle mile network because that is what those new entrants have told us in their applications, that they depend on that middle mile network in order to make their last mile network fuunction.

Just, I want to clarify. You said unserved is unserved and underserved. I've sat through many hours of conversation about this in hearings through our chair of CNC, Ms. Boerner, and you just said unserved.

So within the federal funding account, there is a broad, expansive definition of unserved. It's locations where there is no reliable fixed service. So that's a broad definition that does encompass communities that presently don't have very reliable fiber service.

So unserved and underserved.

Yes. And I just need to distinguish between a technical definition being used in the grant program and then the way that we all speak about underserved and unserved. Yes.

Thank you.

Thank you. Now back to Dr. Wood.

Thank you for a second bite at the apple here. I just want to kind of go back to the big picture for a minute. If we don't approve the funding and what that means for communities that have been historically underserved and underserved as well. The digital divide is very, very real in a lot of our districts.

And the impacts on everyday lives for people who live in these communities is really, really significant. In healthcare, the ability to have reliable broadband service so that we can have more telemedicine and communications between existing providers that are robust and ensure that we get the right care at the right time for people. In education. And I applaud the ability.

When we handed out chromebooks to people in the state here, and I sat there and at the time said, well, that's great if you've got a network, but those Chromebooks don't help the people that I represent in some of these communities and help some, but it certainly didn't help a lot of us. And so I'm glad that some people got some help and especially around the education piece of it.

Alarm bells went off for me when we went to this phase one and phase two because one of the most historically unserved and underserved, because there are components of it that are underserved. Parts of my district was dealt, relegated to a second phase, and that was pretty shocking to me.

And the best broad coverage that that community has had in the last, in forever probably was when we had flooding and at&t brought in what they call a cow, which is cellular on wheels, and set it up for a couple of weeks. And people for the first time had access to Wi Fi in their community. This is a place where kids go and sit in the parking lot of the library to do their college applications. These are poor communities.

I'm happy that the phasing part has been changed, but if we don't provide the funding, communities like this, like the communities Assembly Member Bonta is talking about, will continue to be unserved or underserved. And it's a huge disservice to will, I will advocate, until I run out of voice, to continue the funding for these programs so that we can continue to get it there because it's so important. I think it was, Mr. Bennett brought the question, what happens if some of these contracts don't meet the deadlines for construction? And so we're talking about private entities in particular, but some of these are being built by our own state agencies. And so what happens if CalTrans doesn't meet a deadline, at least federal funding on the table? How do we get that rectified, and where do the resources come from if our own state agency is not successful in completing a project?

Yes, thank you for that question. So the good news is, given the way all of the permitting work that we've been able to do, CalTrans is in historically good shape for meeting those deadlines. But as the budget has been, several budgets have passed since SB 156, CDT now has about $2.4 billion in those federal funds, with the remainder being General Fund. And so the General Fund doesn't have that same time frame. So we'll be monitoring that as we move forward in terms of progress as we approach the 2024 deadline. And we can swap out funding there if there were any issues. But we don't anticipate that there's already a substantial amount of General Fund in there that will help us mitigate.

Thank you. For me, when I look at that broadband access, I look at it in kind of three legs, and everybody has their own vision of that. But I think of around healthcare, I think around education, but I also think around business and commerce. And the ability to have broadband access can be really beneficial.

In agriculture, the ability to have a Wifi network to help decide how much water tied into a system for irrigation is appropriate based on current technologies, rather than just, well, I don't know, it looks kind of dry, so I'm going to put water on it because there are some incredible technologies out there that will allow us to be smarter with our water and other resources. But you can't do that unless you have broadband. And so the ramifications of this in communities is really dramatic in a state where we historically struggle with things like water. So, anyway, so, thank you.

Thank you, Dr. Wood. And then Mr. Patterson.

Yeah. Just a quick little note. First of all, with Mr. Wood, with respect to the water and agriculture, my district is the heart and soul of agriculture in California. That would be absolutely essential. I've gotten into pickup trucks with our farmers that are beat up and dirty on the outside. But you go in and it looks like they're lunching rocket ships.

I mean, they can actually go and have technology that can go and take a look at an open field, and actually it will design the furrowing as well as the water. I'm just going to end with this. First of all, I appreciate you being here. This is my 12th and final year in this Legislature. From the day I was sworn in, this was something that was being looked at, promised, talked about. Got one thing to say, let's get this done. Right. No excuses. Get it done.

And you've detected a lot of interest up here and support from other members to get it done. We have lots of money if we can design the networks with affordability in mind, not just for the end user, but for the construction as well. So making a choice between really expensive fiber or affordable wireless, if we're running out of money and you can replace a very expensive underground system cheaper and quicker then maybe adjusting just how much wireless we use, I think that has an opportunity as well. So let's get it done. I think we have the resources to do it. Managing it is going to be a challenge, but I think we need to be having all of the options on the table and then making a decision.

If we can get into areas that are very expensive to get into with one technology, then let's go into that technology in the first place, knowing that less expensive, but with the ups and downs that they have, that's an affordable way of stretching the money as well. It can be done by the way, that's from Ronald Reagan. I have it in my office. It's a little leather plaque that you get at the Reagan library, and it says it can't and can is in big capital letters. It can be done. Let's do it. Thank you.

Thank you, Ms. Boerner.

Yes. So I have a mixture of questions, from very detailed stuff to kind of bigger or broader questions. On the handout we got from the CPUC, the CASF infrastructure account says the total unserved is 362,517. The total priority unserved is larger at 543,349. How is it possible that if you have the total population of unserved, then you would normally say the priority unserved is a subset of that, and yet your numbers are bigger. So I hope that's a typo and it's not related to definitions, because that makes no sense to me. Can somebody please explain that?

Assembly Member, thank you for the question. I looked at that last night in the airport as well and had the same question. So I look forward to Maria's response.

Certainly, priority unserved is in the statute for the CSF, and it defines that scope as anybody who does not have any service up to 10-1. And so that's that sphere. And then SB 156 modified in addition to that and created an additional category of unserved, which is between 10-1 and 25-3.

So those are additive numbers. We're supposed to add them together.

Yes.

You might want to have a footnote in the future.

Thank you.

The rest of us look at that because we're like, can they do math?

Thank you, will do.

So that's the first thing, my understanding is the FFA account for the FFA funding that's allocated by counties. Correct. So when we look at the Middle Mile, I think it's really important to note if we don't do the construct build portion, which for ease of understanding, is the phase two right of the Middle Mile, those counties will have less last miles because they're going to have to spend more money connecting to a farther away middle mile if they're proposing to connect to the Middle Mile.

And so is it possible to allocate middle mile funding to counties who have to do this in the case that for whatever reason, the construct build portion of phase two doesn't happen? Because as Assembly Member Bonta and Assembly Member Bryan pointed out, these are historically redlined areas.

And I'm really concerned that when we look at a budget deficit, and I suspect it's going to, every month we get updated numbers that are larger and it's not going down, that if that ends up happening, what's going to happen is you're going to actually, of the total population, you can serve, with the $6 billion investment, we're actually going to serve even less than what we think we can serve. We can't serve them. All right.

I thought if we had a $9 billion need and we have $6 billion, then we basically can serve two thirds of the need in California. That was my math, but I don't know if that's accurate. So can middle mile funding be used for last mile? Can the 1.5 billion for the middle mile, could some portion of that be used for last mile funding? If they have to connect farther, the FFA doesn't go. If we don't do the construct build in the historically disadvantaged, especially urban areas, then they're going to have to spend more of their FFA last mile funding to connect to the farther away middle mile. That's going to be more costly.

Right. No, I understand where you're coming from in that. So if I could step back real quick. Real quick, to be clear, I understand there's been. Last year there was a presentation of a phased approach, and the idea was to get within 5 miles of all of the unserved communities. When we look at how we're going to be approaching the rest of the network, we are not using that approach. And so I want to be clear on that.

We would be looking at targeting exactly what you're talking about in terms of targeting middle mile development to reach where those FFA grant applications are. And so I think that's largely what you're talking about in terms of we would be building the middle mile as much as we can to actually reach where those last mile applications are.

But you're asking for more money to do that in the budget.

We're asking for more money to complete the full 10,000 miles network. If we don't get all of that funding, we're going to have to decide, make tough decisions about where we go. And one of our primary focuses would be where are the FFA grant applications? And so I think an answer to your question is, yes, we are talking about building, using whatever funding we have available for the middle mile to develop the middle mile that reaches those last mile applicants.

Thank you. So I know we got rid of the phased approach, but getting rid of the phased approach requires more money. And we all know we're going to have to make cuts. Right. And I don't know if this is going to be one of the things we cut or know. I'm not on the budget Subcommitee, but we have to think about where we're doing it.

And I would say, to be fair, I think somebody answered that the coordination between CDT and CPUC is working, and I don't think it is. I think the fact that the CPUC originally told us, told Quirk-Silva when she was chair of CNC that you would submit applications would be open in June of 2022, then you could have had coordination. But you're now progressing and leasing and creating maps for the middle mile where you don't know where the FFA applications are, and bead funding hasn't even opened.

You don't even know where those fundings, where that funding is going to be or where those applications are going to be. So to be fair, I don't think the coordination is working, and I don't think it should be represented to us and our constituents that it is working. I think you try to make it work. I think that there is a problem having two different agencies, one doing middle mile and one doing last mile, and there will always be inefficiencies in that construct.

Other states who don't have that are already digging up roads and they're already laiding fiber, and we're not doing that. Going back to FFA around 1 and 2, the fact that we had the delays and they had this kind of kerfuffle with the phase one, phase two of the Middle Mile in the fall, there was always supposed to be two rounds of FFA funding that was in every representation.

And if I were somebody who maybe I'm a small entity and I don't have a lot of capacity, right. Some places have a lot of capacity. They have advocacy groups. But I can tell you, I don't know of one organization in my district that has capacity to do any of this. So if I were them, I'd be looking at this, and I said, well, I'm going to apply for round two. I'm going to wait for the dust to settle. And so if you do allocate FFA all in one round, which is, I think, what was an option that was given, if I understood correctly. Is that correct, that I understood that.

Looking, because we simply don't know the outcome of all the objections and rebuttals. I just can't say right now whether we're going to allocate everything in the first round or whether there will be some remaining for around two.

But there was always supposed to be around two. Correct. Everything I've ever seen has two rounds of FFA funding. I'm seeing. Mr. Metzker is nodding.

Yes, that's correct. When this was presented a couple of years back, there were two rounds of the FFA grants that were supposed to be administered. Whether or not that's going to happen now because of the total amount that's being requested is a question.

It's a question, and I want us to think who's being left out if we only do. There's an advantage and disadvantage to both approaches. Yes. You allocate it all at one time. We're probably going to meet our federal deadlines if you allocate it around two. I've always been concerned that that round two doesn't have enough time to construct and expend and finish all the projects in time. So there's advantages and disadvantages to both options.

I would just say the public has an expectation of around two, and I think that there's a problem that you're going to encounter. If you allocate all the funds in round one. You have an advantage that we probably spend the money and we don't forego any federal dollars, which should take priority. But you have a problem with that.

And I just want to point out. And the other thing is, when we looked at the timelines of FFA has a deadline by which the money has to be expended, Bead has a deadline by the time the money has to be expended, middle mile has a deadline by the funding would have to be expended. I see absolutely no reason for ongoing allocations for staff positions. Ongoing when all these things have a deadline.

And I don't know if you can justify why you think they need to be ongoing when all these programs at some point will be built. And if they're not, especially with the CPUC, if they're not publicly owned, why would we be allocating money in a time of a budget deficit for ongoing positions where there's a deadline to all the programs?

So, Assembly Member, thank you for the comments. I agree with you that we're facing this tension between getting the money out the door and meeting deadlines versus seeing where the next round of applications would come from. So I probably misspoke a little bit earlier in the program where Maria corrected me. Our point is to definitely get the first tranche of federal dollars out the door with this first round one, because those are under the most serious deadlines.

So we will see what happens once we look at are able to assess all 484 applications and get through the due process portion that we're in right now. As far as the ongoing commitment of staff positions to this effort, I do feel that as we've noted here, California won't be finished with its broadband for all initiative, even with this historic investment. Our California Advanced Services Fund program is going to be ongoing, and we will be looking to make sure that every community in California gets served in the future. That is the justification for us having a staff that continues to work on these programs in the future.

It might just be my opinion, but I think the investment should be in infrastructure and not in future staffing. Because the metric we should all use for success is how many unserved and underserved Californians are being served per dollar by the last mile. Again, the middle mile is a means to an end. It's not the goal. The goal is to connect people at a rate at which they can functionally do telehealth. We can support businesses, we can support schools. That's the metric.

And sometimes I think we forget the metric is the people and how served they are. The metric isn't how many miles we build, how much this, it's do we serve them? And that's the problem with the coordination between the two agencies that middle mile, they're on track, they're going forward. And if we had gotten out those grant applications in 2022 like it was originally promised to my predecessor as chair of CNC, this would have been coordinated.

And now we're not going to even know who's going to get those allocations until June 2024. That's a year and a half later. So I think we should realize there's a lot of things that lessons that we should learn and ways that we can be better and smarter in using our monies. So we are looking at that metric of how many people we are connecting.

Thank you. Ms. Boerner, just one final question for me. The equity component is of significant importance to all of us and we also have to be mindful of the State of our finances. So a question that I have, and I'd appreciate the PUC confirming this, is whether or not there are three last mile grant programs, which are the CASF infrastructure grant account, the federal funding account, and the bead program will allow funding for the middle mile facilities to connect last mile underserved locations.

You're asking whether those three programs do build last mile networks? Yes, they do.

And could be potentially used to connect the underserved communities that we're all referencing today.

Yes.

Wonderful. Thank you. With that, I would like to ask my colleagues if they have any brief closing remarks. Okay, perfect. Thank you. We will now move on to public comment. At this time, we invite anyone here in the hearing room to make public comment about the topic of this hearing. Please step up to the microphone. We have had a robust discussion this morning, so it would be greatly appreciated if we could keep our comments to 1 minute each. Thank you.

Good morning. Tracy Ryan, the royal county representatives of California and also on behalf of the California State associations of counties. SB 156 was an unprecedented investment in broadband, something that we haven't seen in the state before, and it is a heavy lift for CDT and the CPUC. And it has been a challenging process, especially with the Middle Mile. And I will say that CDT has moved to try to be more transparent and inclusionary with local governments in particular.

However, they're still putting us after notification of change. So instead of collaborating with local governments and community organizations on what is needed in their communities, we're being notified after the fact that the Middle Mile has changed. So that continues to be a problem. But we do appreciate that they are working with us and they have opened up a line of communication.

As far as the FFA and the loan loss Reserve, I agree, it has been very frustrating to be so far down the road and not have this money go out yet. However, I will say that their process has been very transparent. There has been a lot of outreach and there's been a lot of public participation, and that does slow things down, but that means that it's done right. So lastly, we do want to support the 1.5 billion for the middle mile. I think that will ensure that we're able to leverage all this other money that we've put into for the last mile. Funding. Thank you.

Thank you.

Good morning. Nicole Wordelman, on behalf of the Children's partnership, urging the committee to fully fund the broadband funding in the Governor's Budget proposal, I have two quick points to make today. First, when you think about digital access, I want to encourage you to think of it as a core children's health equity issue. I say this because broadband access has a profound and compounding effect on health that starts in childhood.

We consider digital equity to be a super social determinant of health because digital inequity, in fact, compounds inequities in other systems from impeding education, interrupting health care, limiting access to resources that could address adverse social conditions, such as applications for housing and income assistance programs. These social drivers of health affect individuals at all stages of life, but the effects are particularly significant to the health and development of children.

Thank you.

Good morning, chair, honorable Members and state partners. My name is Patrick Messick, and I am here today on behalf of the urban, rural and tribal communities that have been bypassed by public and private infrastructure investments for generations. Safeguarding the governor's $1.5 billion proposal to complete the MMBI is the only way this once in a generation infrastructure investment reaches many of California's highest poverty, most poorly connected communities. Chair Valencia, the programs that you named have specific prohibitions against middle mile funding in them.

These communities include tribal communities, Santa Isabel and Los Calidas Reservation urban communities like south central LA and East Oakland some of the highest concentrations of unserved and unconnected in the State of California rural communities like Butte, Plumas, Sierra and Central Valley and coastal communities like Humboldt and Del Norte. If you are not compelled by this moral imperative to abruptly halt development of this network when it's only 80% complete is akin to cutting off a bridge before it reaches the end of the river.

It's just bad policy. Completing this network is more important now than ever. In 2028, the FCC will no longer require incumbent local exchange carriers to sell access to their middle mile networks as unbundled network elements at reasonable rates, further exacerbating consolidation and disparate access absent completion of the MMBI. The CPUC's own pricing report concluded that California's monopolistic markets entraps your constituents in the highest broadband prices in the country.

Ms. Brandy, a single mother of two in West Oakland, affordable housing paying $150 a month to keep her kids online, can testify to that fact. Affordable and accessible minimile enables competitive, functioning markets, or in some cases, markets at all. Please work with us. We implore CDT to work alongside advocates, municipalities, and small and regional providers in market sounding to develop pricing structures in terms of use that incentivize utilization of this network in low revenue density communities that incumbents have deemed uneconomic for decades. Thank you.

Thank you.

Good morning everyone. My name is Georgia Savage and I'm the Deputy Director of Oakland Undivided. In only a few days, the California Alliance for Digital Equity, or CADE, was able to gather signatures from over 80 organizations, including mayors of Oakland, Compton, West Hollywood and Lindwood. This letter has a wide array of support from various sectors, including leaders in the field of education, health, youth development, social justice, local government, digital equity, and more.

The wide range of support for this is because leaders in our community recognize the lack of infrastructure present in the highest poverty, most poorly connected communities, as well as the incredibly high costs in our state. As mentioned by Patrick. Let us be clear, the communities we have been talking about in this hearing historically redline, tribal and rural, will not receive the vital infrastructure they need without the proposed $1.5 billion in additional funding.

It is important we view this as a critical investment in California's fair share of the billions of federal dollars that have already been contributed, as touched on by Assembly Member Patterson and Wood. The benefits are wide ranging, including individual benefits such as allowing individuals to work, study, communicate, apply for government services, operate businesses, ETCA, and powering the state's critical systems, including its electrical grid, water supply systems, public safety, and emergency response networks in addition to enabling thriving businesses and supporting with higher education. The Oakland Undivided and CADE coalition strongly urge you to safeguard and support the $1.5 billion for the MMBI and the governor's proposed budget. Thank you.

Thank you.

Good morning. Ignacio Hernandez, on behalf of the Utility Reform Network TURN, I want to echo the comments that were just made. We're part of the coalition as well, so we advocate for the 1.5 billion and for full funding. Even the money that's allocated now really may not be enough to get to all of the needs that we have throughout California and throughout your districts.

TURN has been involved in this process throughout, as you know, trying to make it as effective as possible and reach as many people who need it as possible. So we need to continue the funding, expand the funding if we can, and protect the funding going forward. So we'll participate in those hearings going forward. Also want to make a quick statement on behalf of the Communication Workers of America, district nine. We have tried diligently to amplify the discussion about labor standards and training for workers.

It has been challenging at worst and clumsy at best, and trying to have discussions with various agencies and entities. It's gotten better over the last few months. So I do want to appreciate the Administration of the different entities, but there's no formal process. We did provide statements to the CPUC as they're developing their plans, but more needs to be done to ensure that the workers are one available. But they're trained, they have safety training.

They're going to do the best work possible to get the best outcome and make sure that we have safety. We need to formalize that much better than we have. We think there's still opportunities to do that going forward, and we have to ensure that we're hiring folks from California and from your districts, the ones that need to be part of this, bring them into this workforce, because we're going to need it both for build out but also for maintenance. Going forward, we're going to need a strong workforce. And so we're working in various avenues to do that. We look forward to working with all of you on that.

Wonderful. Thank you.

Good morning, Members. Oracle Gonzalez, on behalf of NextGen California, we are Members of the CADE coalition. We certainly agree that the process to date has not been perfect and should and can be improved. But that does not negate the fundamental question before this legislature that the existing funding that has been appropriated to date does not meet the demand.

And if we are going to basically ask communities that have historically had to wait, that have historically lacked investment to wait longer, or are we going to provide the state with the resources to get the job done, we urge you to please safeguard the $1.5 billion proposed by the Governor. Thank you.

I believe that concludes all public comment. Thank you to all our witnesses, to all the members in the public, and then also to my colleagues for participating in today's hearing. We've learned a lot today about the status of our current broadband investments. This will be continuing conversation to ensure California is on track to connect all Californians to high speed Internet service and to ensure that the state middle mile network is economically viable.

As mentioned at the beginning this hearing, we will be working with our Budget Subcommittees and our policy Committee to determine what, if any, legislative action should be taken to ensure that all Californians have access to broadband. With that, please stay tuned. Gracias. And this hearing is adjourned.