Assembly Standing Committee on Communications and Conveyance

Hello. We're going to start the Committee meeting in a few minutes. We're going to start the Committee meeting in a few minutes. So if you could take your seats, that would be helpful. Thank you.

Okay.

Thank you everyone who is joining. Who are. Thank you, everyone who is joining us for today's Communications and Conveyance Committee hearing on the state of broadband affordability. My name is Tasha Boerner and I chair the Committee on Communications and Conveyance. Joining me at the diocese is our vice chair, Leticia Castillo.

And we're gonna be joined by a few other Members as they can come in, as well as my. Emilio Perez, the Chief Consultant for the Committee, and Daniel Balloon Balin.

You'd think after four years, I figured out Balin, the Republican policy consultant who it's always my goal to make laugh one time and I already did it before the Committee started. So 2026 goals are achieved. And joining us today is also Assemblymember Rogers.

Before we begin the presentation, I'd like to take care of some logistical housekeeping as we proceed with the witnesses and public comment. I want to make sure that everyone understands the Assembly has rules to ensure we maintain order and run an efficient and fair hearing.

We apply these rules consistently to all people who participate in our proceedings, regardless of the viewpoints they express. We seek to protect the rights of all who participate in the legislative process so that we can have effective deliberation and decisions on critical issues facing California.

You can exit the hearing room once you're done testifying or return to your seat. Now, let's cover the ground rules for appropriate conduct. The Assembly has experienced a number of disruptions to Committee and floor proceedings in the last few years.

As you came into the hearing room today, the sergeants directed your attention to the rules for public attendance and participation which were posted on the door in order to facilitate the goal of hearing as much from the public. Within the limited limits of our time. We will not permit or conduct.

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Public comment may be provided only at the designated time and place as permitted by the Chair, me. Public comment must be related what must relate to the subject being discussed today. No engaging in conduct that disrupts, disturbs or otherwise impedes the orderly conduct of this hearing.

Please be aware that violations of these rules may subject you to removal or other enforcement actions and thank you all for your cooperation on the housekeeping items. Now we can transition to the substantive substantive part of today's informational hearing on the state of broadband affordability.

The rising cost of living and paying for basic goods and services like groceries, utilities and housing continues to be a top concern for Californian households. Accordingly, this Committee in recent years has maintained a particular focus on addressing the cost of communication services for Californians, with a particular focus on broadband Internet service.

Today's hearing will be an opportunity to focus specifically on the affordability of broadband services. During the hearing, we will hear from two separate panels to discuss industry and consumer perspectives on broadband affordability. The outcomes for Members I'm hoping to develop.

A better understanding is what's happening in the broadband market as it relates to prices and where some Californians may be struggling to afford service. From my experience as chair, I've heard firsthand from committees, communities that are struggling to afford even basic home Internet service. Their price sensitivity.

Price sensitivity prevents their full participation in education, health care and employment, which is increasing increasingly moved online. With the end of the Affordable Connectivity Program, the ACP, which I was in full support of, we are facing a scenario with limited federal support.

Additionally, the Trump Administration has taken a defensive approach to state regulation of broadband services by vowing to withhold billions of dollars of broadband funding from states like California. You might recall that last year I introduced AB353, which would have required ISPs in California to provide affordable home Internet as a condition of doing business in California.

Unfortunately, because of new policies coming directly from the Trump Administration in reaction to bills like mine, we had to make the difficult decision to hold that bill.

Nonetheless, I remain committed to continue working with my colleagues on this in on this Committee and stakeholders to explore what other options for policies to support broadband affordability we have and we should implement. I look forward to hearing from our panelists today and the public comment at the end of this hearing.

With that said, I'd like to turn over the Vice Chair for any introductory comments. We're now joined by Assemblymember Caloza and we can open it up for any other Assemblymembers after the Vice Chair for comments. No. Any other comments, Caloza, Rogers? Nope, we're good. Okay, thank you, Members.

At this point, I'd like to invite up our first panelists. There we go. We'll start with panel one, Industry Perspectives on Broadband Affordability. We have two panelists joining us. We have Lynn Fansby? Follansbee? Follansbee from USTelecom and Jeremy Crandall from CT.

The presenter supplemental material will be available on our website and were provided to Member staff in advance. You may begin.

Thank you, Chairwoman Boerner and other distinguished Members of the Committee. Thank you for the opportunity to testify today.

As the Chair said, my name is Lynn Follansbee and I'm Vice President of Strategic Initiatives and Partnerships for US Telecom, which is a national trade association representing network providers, technology innovators and suppliers committed to connecting the world through the power of broadband.

Our diverse membership includes a range of the largest and smallest local regional providers throughout the urban and rural communities of California. As a collection of the leading broadband providers across the country, USTelecom members are experts in the area of broadband deployment and therefore we have a deep understanding of business practices and trends in the industry.

As we are here today to talk about affordability, how much broadband actually costs consumers and and the trend in pricing is an important piece of that puzzle. Fortunately, we have been publishing an annual report on pricing trends since 2020 called the Broadband Pricing Index, and I would like to share some of that data here today.

The 2025 Broadband Pricing Index looked at data from March 2024 to March 2025, and during this time frame, overall inflation rose 2.4%. But broadband prices moved in the opposite direction. Real prices for the most popular broadband plans, Those delivering between 100 and 940Mbps, fell 8.7% in just one year. Even gigabit broadband prices declined 6.2% in real terms.

That distinction matters greatly in California, where affordability pressures are among the highest in the nation and where broadband access is essential for mobility, economic participation, and public safety. Broadband also stands out when compared to other household costs overseen or affected by state policy.

Over the same one year period, car insurance rose more than 7%, rent increased 4%, food prices nearly 3%. Broadband, by contrast, got cheaper, making it one of the few essential services providing real relief to California households. This long term trend reinforces this point. Over the past decade, overall consumer prices rose nearly 36%.

But during that same period, broadband prices for the most widely chosen service tiers fell by 43% in nominal terms and more than 63% when adjusted for inflation. While most essential services became more expensive, broadband became dramatically more affordable. At the same time, Californians are receiving far more capability for what they pay.

Since 2015, average broadband download speeds have doubled and upload speeds have increased more than 80%. When falling prices are combined with those speed gains, the real price per megabit has dropped more than 80% for popular broadband services. For a Committee charged with the communications infrastructure. This is a critical result.

The state the service provider is not just cheaper, but the networks they are provided on are significantly more capable and resilient. Gigabit service underscores the same pattern. Since 2017, gigabit prices have declined 22.5% nominally and nearly 47% in real terms, even as overall consumer prices went up more than 30%.

Today, more than one in four households subscribes to gigabit service, reflecting growing affordability and demand for high capacity connectivity.

On Monday, the Benton Foundation put out its analysis of our report which says the trend is that broadband prices are actually going up because of the addition of the faster service plans such as the 2 gig speed tier in the last year. Their premise is that is that the addition of those plans mean our analysis is inaccurate.

Our study annually tracked and thoughtfully considers what the speed tiers that the households are actually buying. To include outlier plans that are far and away above the needs of the average household is like comparing apples and oranges with continued innovation.

We will always be chasing higher and higher speeds and at some point the two gig speed plans will become the norm. But that's not where we are today. In fact, Benton acknowledges that those plans are only 16% of the marketplace with the implementation of all the COVID era infrastructure programs.

In the BEAD program, ideally all consumers will have 100 over 20 which not only supports voice but provides efficient bandwidths for all types of services, including notorious bandwidth hogs such as streaming and gaming.

So if the focus is on affordability for the current day consumers, our focus should be on those plans that consumers want and need, which is what's reflected in our study. So what explains these outcomes? It's pretty simple. Competition and sustained infrastructure investment.

In 2024 alone, broadband providers invested nearly 90 billion nationwide for network upgrades, fiber deployment and capac expansion. That investment not only reflects broadband providers determination to help achieve the national objective of affordable, reliable, high speed connectivity for all, but along with competition across multiple technologies, it's driving faster speeds, lower prices and more choices for consumers.

It is true however that whether the whether the rates are urban or rural, Californians do pay higher rates than other states. As the PAO states in its recent report, compared to subscribers in Idaho, Californians paid about 47% more for the over over 100 and over 500 tiers and 23% more for the fastest tiers.

The reason this is true has a lot to do with how much it costs to build, deploy and operate networks.

In California, costs are considerably higher due to factors, some of which include taxes, permitting inefficiency, the high rates of copper theft and vandalism in the state, and COLA requirements that require providers to maintain outdated copper networks, which are not only expensive to operate but are also environmentally inefficient.

USTelecom members are forced to spend over a billion dollars every year maintaining outdated copper technology in California alone. The PAO report also quite correctly points out that DSL plans cost more than fiber plants. Why? Because DSL is an outdated technology that most providers are attempting to move on from.

Regulations that discourage investment in modern technologies thwart efforts to provide consumers with not only the best service but also the most cost effective. In the competitive marketplace in which they operate, providers have every incentive to gain and retain customers by making their services as inexpensive and as possible for those consumers.

They do this by being diligent about the cost effectiveness of their builds and by protecting their infrastructure assets and utilizing the most advanced technologies to improve customer experience. But costs are just simply higher in California.

To help combat this problem, USTelecom members across California offer low cost plans with speeds up to 100 megabits, and many are leading other efforts to address affordability challenges and advance digital equity. As California debates broadband affordability, the evidence shows that policies supporting investment and competitive, competitive markets deliver real results.

Consumers are benefiting not just through lower bills, but through better performance, greater reliability and broader access to advanced services. Broadband today is one of the rare essential services that consistently delivers more value for less money, even in high cost states like California.

So as you continue your work on communications policy, the data suggests a straightforward takeaway build on what's working preserve incentives for investment, relieve providers of burdens and regulations that only serve to increase costs and allow competition to continue delivering results for California consumers.

Thank you for holding this informational hearing today and for the opportunity to share some thoughts with you. USTelecom and our members stand ready to work with the Committee and the State of California to connect all communities and once and for all, close the digital divide.

Thank you. And I want to recognize Assemblymember Rubio has joined us and I accidentally demoted Assemblymember Hoover. So our Vice Chair, our real Vice Chair has joined us. Thank you, Leticia, for joining in as a temporary Vice Chair. And with that I'll go ahead and move on to the Speaker.

Good afternoon, excuse me, My name is Jeremy Crandall. I'm here today on behalf of CTIA. We are the Wireless Industry Trade Association.

I do want to start at the top in saying thank you for including us in this important conversation about affordability I think that we can all agree that it is a critically important piece of the overall puzzle when it comes to ensuring universal access to broadband connectivity.

As we dive into this topic, I do think it's important and a lot of what I'm going to touch on is similar to what Lyn shared to stay focused on the data and specifically the cost trends that exist both globally outside of telecom telecommunications, but also specifically to wireless for consumers here in California.

So I am going to talk a little bit about prices to begin and try not to repeat some of the data points that Lynn shared.

But I do think it's important that we focus on the fact that at a time when the cost of nearly everything that California businesses and residents are paying for is going up, specific to wireless, prices continue to go down. Lynn shared some of these. I'm going to share some other data points.

If you look at the last 10 year snapshot of various consumer service rates between 2012 and 2022, electricity in California is up 69% electricity 92%. Now if you look at nationally over the last five years, our data says gas prices are up 46%, food 27%. Now let's focus just on wireless.

That same year 10 same 10 year price analysis shows that wireless is down 44%. Now let's look at just the last five years when you adjust for inflation, wireless is down 24%, the cost of a smartphone 70%. And if you go back just 18 months to September of 2024, wireless is down 5%, cost of a smartphone 17%.

Now much of this data comes directly from the U.S. Bureau of Labor Statistics, which has emphasized that wireless has weathered inflation that we all know began during COVID and continues to this day, far better than the cost of other consumer essentials like gasoline and groceries.

And as an industry, I have to say we are proud of what can be labeled an affordability success story. But this didn't happen by accident and it doesn't happen in a vacuum. And it is a result of several driving factors, some of which Lynn already touched on.

Again, specific to wireless, there is fierce competition among our members that drives down prices for every consumer. There is and there has to be constant innovation. Again, specific to wireless, I'm talking about the introduction of fixed wireless access for home Internet options and I'm going to expand upon that in a moment.

And then number three, extensive capital investment. Again, just speaking about the wireless industry, 29 billion in 2024 and approximately 220 billion since 2018. I also think it's really important to keep in mind these data points do not exist in a vacuum. The wireless environment is not a static environment.

If you look at the growth in data usage that we all use on our wireless devices every single year, the last year that we have data, 132 trillion megabytes of data go back one year. Before that it was 100. And if you keep looking back and back, the graph keeps getting lower and lower.

We can guarantee that that graph is going to continue to grow into the future. So let's combine all those elements that I just talked about. Demand for more devices and stronger connectivity is higher than ever. Wireless usage higher than ever will continue to go up. And private capital spending is at record levels.

Through all of that, prices for wireless continue to fall 40% over 10 years, 5% over those 18 months. Recent 18 months. Now, directly tied to this conversation, and I just briefly talked about it, is the competitive broadband option that our members in the wireless industry offer to consumers here in California.

That's fixed wireless access that you're probably familiar with. It's offering consumers in California a choice of more choice for their home. Broad broadband service right now at affordable rates and at competitive service value as well, including in those hardest to reach communities that I know that we are all familiar with that struggle the most with connectivity.

I want to share a little bit more, though, about exactly what I'm talking about when we talk about fixed wireless and what it's doing for those communities. There was an FCC report in 2024.

It found that fixed wireless had closed the digital divide for 3 million households and also said that it created actual broadband options, more choice for one quarter of rural households. And that additional choice is also going to have a direct impact on prices. So let's bring this back to consumers.

That's what we are here talking about, prices and affordability. The Wall Street Journal found that this type of competition was with other providers, with cable providers, led to a 3% reduction in broadband prices as a whole.

And then finally, if I haven't thrown enough numbers at you, the pricing competition that we're talking about is estimated to save approximately $8 billion in the coming years for consumers. So without a doubt, again, I want to emphasize we recognize why this conversation about affordability is so important here in California and across the country.

But we are at a moment when other industries are struggling to meet this affordability challenge, and wireless is standing apart from that. Wireless providers are delivering more value every single year due to what is a fiercely competitive marketplace.

And I want to emphasize also the policies that foster that competitive market marketplace and they're working exactly as they should. But I also want to urge caution in in this conversation about pursuing policies that could take us in the in the wrong direction.

As this Committee knows, there does continue to be a persistent desire to use existing surcharge mechanisms that are in place here in California to ultimately subsidize broadband access.

Of course, while well intentioned, the fact does remain that specific mandates and fees on wireless services, both directly but also very importantly disproportionately impact wireless consumers, especially in including low income consumers and families that we're talking about. And I'll use a specific number in terms of this conversation about surcharges.

The flat rate surcharge that was put in place in 2023 led to a 300% increase in what wireless consumers pay, $21 for an individual consumer, $84 for a family of four. And we would argue that simply, you know, is moving California in the wrong direction when it comes to affordability. So I'll stop there.

I just want to close with saying very much thank you for including the wireless industry in this conversation about affordability. We are very proud of our efforts to deliver real value for your constituents while also working to continue to improve connectivity in all communities. So, so thank you very much.

Thank you. And before I begin with my litany of questions, I'll open it up to my Committee Members. Assemblymembers [inaudible] has joined us. Thank you so much. Beautiful tie. And so does anybody have any questions before I begin? Assemblymember Rogers.

Yeah, thank you so much Lynn. You mentioned specifically that one of the comparisons to California that was impacting the differential and how other states are seeing the cost for capital in particular was some of our regulations that are in place. Can you give me some examples of what you're talking about?

Well, one of the things I mentioned that was specific to the, you know, this is the wireline community, the tell old telephone companies is the Kohler obligations for the companies who have been here for forever and they are stuck with maintaining copper networks and trying to build fiber at the same time.

So they're running two networks because of the Kohler obligation that they have. And there's significant competition across the state. I mean I think the state's nearly 99% covered. So we think that policies and we know there were some opportunities last year to try to move a piece of legislation.

I know the CPUC has a proceeding to figure out how to relieve the Kohler obligation. And it's really quite, I think competitively necessary and also would significantly, you know, free up capital for our Members to be able to further deploy fiber and more advanced technologies.

And there are a lot of areas, like I said, that have a lot of competition.

So if you have three or four different types of providers, whether it's the fixed wireless Jeremy was talking about or a fiber provider or the cable companies and wireless, other types of wireless services, and even satellite now, why are we still making one type of company hold on to a Kohler obligation that costs.

Cost them a lot of money.

Okay. Did you have anything that you wanted to add as well?

Yeah, thank you for that question, Assemblymember. I would just, an important piece of this conversation, and Lynn referenced it in her remarks, is let's just not forget about infrastructure. There is a direct through line between our ability in the wire, and I can't speak for Lynn's side of telecommunications, but there's a direct through line.

When I was talking about that explosion in data, 132 trillion megabytes of data. And really what, you know, I encourage you all, we're happy to follow up on this. You know, we have a chart that shows that growth every single year over the approximate last 10 years. That chart will continue to grow every single year.

And the amount of infrastructure that our members need to meet that demand that continues to grow is staggering. And it will continue to grow as well. And so whether it's small cell siting policies, general, you know, relationships between local, state and state government and our providers. Lynn mentioned copper theft. That's an important piece as well.

I would just really emphasize the, you know, siting policy and infrastructure policy is directly tied to this conversation about affordability now, but also in the future.

Can you just dig in a little bit on that? Because I served on a city council, our utility polls, you could already do the small cell by right on any of the public infrastructure.

My understanding is that that's pretty much the same across the state, that federal law has preempted local governments from being able to prevent small cell or other types of wireless infrastructure and usually it's actually the PG and E utility poles or the city's utility poles that you go on. So what specifically are you talking about for holdups on the siting of small cell?

Yeah, so first, all, first of all, I will say at this point, there are approximately 30, I think nearly 35 states that have taken different actions to align state law with federal law when it comes to, as many of you are probably familiar, there's a litany of FCC regulations related to deployment of wireless infrastructure.

And those approximately 35 states have taken action to ensure as best as possible that their state policies align with those FCC regulations. I'd be more than happy to follow up in more specificity. But I do know that, you know, there have been initiatives recently in California related to small cells.

And happy to follow up about how those could be further advanced.

Yeah, I look forward to that because I think in my eight years on a city council, I think we had 14 different public hearings specifically about cell infrastructure and the answer always from the attorneys was well, the Federal Government has already preempted.

You can't actually even have limited ability on what the infrastructure looks like in your community, let alone where it's placed. So if there's something that's, that's not sinking, I'd be interested in more information. That'd be great.

Assemblymember I just also like to piggyback a little bit on what Jeremy said because outside of the small cell issue, when you have, you're trying to put fiber in the ground, we have permitting issues and rights of way issues.

I wasn't taking any issue. My district, you know, we'll have conversations with Caltrans at some point. I get the fiber and the in-ground. The small cell was where I was curious because I have not heard that issue before.

I think my first four years we only had small cell bills. Yeah, we had a lot of them. So there's a lot of history there. Anybody else? Questions for the panelists? Oh yeah. Ahrens.

Hi. Thank you so much for joining us and I would want to thank the chair for convening this hearing. I represent Silicon Valley, quite an urban suburban community in Cupertino, Sunnyvale, Santa Clara, and San Jose, and would like to sort of see if we can drill down a little bit further.

I appreciate the comments about how expensive the infrastructure can be. It's any seems like anything we do in California, infrastructure wise is near impossible or extremely costly. And so that's, that's not without saying that it affects your industry as well. You mentioned the Kohler Bill, which was a very non controversial thing that happened last year.

But I'm wondering if you can drill down a little bit more specifics. How much capital is sort of needed if a Bill like that were to, to be released and that Kohler obligation released and access to those funds to reinvest them back into infrastructure. Are we talking about all of that Kohler obligation? Are we talking about

I haven't quite heard based on the testimony today that was used as an example of something that's hindering California. But I'm not really hearing how much of the Kohler obligation would actually be dedicated to reinvesting back into the infrastructure piece.

Thank you for that question, Assemblymember. I think I mentioned in my remarks that it costs, US Telecom Members spend about a billion dollars a year maintaining a separate network essentially. So that frees up a lot of capital. I know, I think it was last year our investment report we said for California

we already invest 10 billion in California alone out of the 90 that's spent nationwide. So that's another billion that potentially goes back in the pot for the companies to, to be able to spend on fiber and other much more modern networks.

And how much was the telecom profits last year?

That I don't know the answer to.

I think they're doing quite well, I would guess.

Well, you know, there's companies of all different sizes and I will say that I also represent some of the small guys up in rural parts of California that are barely getting by.

Well, certainly the major ones would love to maybe have a, a sit down conversation to kind of talk about these things more broadly. But I just wanted to kind of drill in on that specific question and kind of talk about there are definitely solutions identified, but the devil's in the details

and it's going to take more than that one issue to sort of come up with the capital that is needed to really reach the most hard to reach areas that we've been talking about in this Committee for many years, and under the chair's leadership But I just, you know, I'm new, I'm still learning a lot of these things.

But what I can say is, you know, if we're, if we're going to get real and get serious in Sacramento about these capital funding solutions in this economic and budget environment, then we need to get more creative and more specific commitments from the industry.

Yep. And I will also just add that, you know, we do have the BEAD program there. That is that the, the goal of the BEAD program is to cover every single American across the United States.

That's the Federal Government program stemming from the Infrastructure act and that is meant to get every single American up to 100 over 20. California sent their plan in a little bit late. I think it was probably the end of November, but 42 states have now been approved.

So it's real, it's coming and that is, so that is in the offing as well. And that money, that federal money should certainly help.

Anybody else? Okay, so I'm going to change around the order of my questions. So because you mentioned BEAD, the Trump Administration has expressly prohibited states from opposing rate regulation as part of the B program. What do you think it would mean for California to lose BE funding?

Because there have been concrete threats of, if we do this, they'll do that. You know, the beat up, the B money hasn't been transferred to California and It's I think 1.86 billion that we were expecting. Right. So what would happen if we lost that?

Thank you for that question. I think that all states, all companies and all states have used their state funds to try to get to the hardest to reach areas. What we're dealing with now, most of the, most of the state served, most of the country served with something.

It's getting this sort of equity to get everybody up to 120, right. But just, just 23 years ago, the speed limit for broadband was like 25 or 3. So now we're like raising the bar, right?

So I do think it's a critical piece of the puzzle here to get that additional funding from the Federal Government because it will make sure that you have that sort of equitable type of service in those really hardest to reach,

we're talking about the hardest to reach, most expensive to serve parts of the state where there's granite and you have to drill through that to be able to get to those areas.

So I do think that that is, I think that our, I know that our companies will work as hard as they can to close the digital divide, but having that additional funding from the Federal Government certainly will bring all that to fruition a lot faster.

Okay, and to both panelists, what do you think should be on our 2026 broadband affordability agenda? You've both said that the market is driving down prices. We're doing better than inflation, we're doing better than everybody else. There are still Californians that can't afford it. So what should be on our broadband affordability agenda for your perspectives?

Thank you for the question, Madam Chair. There's three pieces that I would emphasize. First and foremost, it was not a platitude when I said it. Number one, preserving and protecting a marketplace that is driving costs down. You know, we, as I said, we threw a lot of data points at you and a lot of numbers,

but it's really important to keep in mind those data points don't only apply to high income earners in California or medium income earners. They apply to low income consumers as well. And I hear you that there's progress still to be made,

but the marketplace, speaking for wireless that exists has driven those costs down at a pretty substantial level over the last decade. And so as you all are considering both broadband affordability policies, but other elements we touched on, the permitting and siting piece, tax and fee issues.

All of those pieces, all of those issues are pieces of the overall puzzle. And so, number one, you know, preserving and protecting that marketplace.

Number two, I alluded to it Just now and in my testimony, the surcharge element, the fees that I touched on, again, specific to wireless, it's really important to keep in mind, you know, it's unique for our industry that, you know, the, the surcharge elements that exist right now do disproportionately impact our consumers.

Wireless consumers, you know, approximately 80%, I believe the number is, of the surcharge that exists right now is assessed on wireless consumers.

And so at the end of the day, I think we all share the goal of talking about and addressing affordability, but that's looking at a fee structure that's ultimately going to impact those consumers that we're talking about helping.

And then number three, I will emphasize again, infrastructure, really, I mean, our ability to build out our networks every single year, and this goes to Assemblymember Aaron's question as well.

Our ability to build out infrastructure and invest that $30 billion every single year is directly tied to, to a lot of the elements of the infrastructure policy as a whole.

We want to continue to invest, we want to keep doing that, but ultimately, the more those policies can go together to help us do that, the better off I think we're going to be.

Yeah, I think Jeremy put it quite well, as I mentioned. Absolutely. We have to do things to create incentives and real cost savings. As I said, our Members do everything they can to try to keep their costs low and to charge the most, the lowest rate they can to consumers.

Let's face it, when you're in a market with three or four different competitors, you have to do that, Right? So that's what they're doing. They're trying to keep their builds as efficient as possible.

But when there are issues where you have to go to multiple different agencies to get permitted and that slows down the progress and it costs more money and you have to jump through a lot of regulatory hoops, those are the things that should be focused on.

Let's clear up that underbrush, make it easier, and then that will just continue to drive competition and drive rates down.

Thank you. Going back to the lifeline funding and USF reform in California, we have grappled with the question of how to replace the acp, which costs hundreds of millions of dollars per year.

Do you have any recommendations or perspectives to share of what you think is going on in Congress, especially with the base of support for the Universal Service Fund? And do you think some of those proposals at the federal level are worth considering in California?

Thank you for that question. I can speak to the USF. What's happening in D.C. is there is a congressional working group on universal service reform. They are working on both contribution reform to make it more equitable.

Who puts into the Fund which would broaden the base bringing costs down for consumers, ultimately for the individual consumer because right now there are mostly landline customers that are paying a huge fee. That's another thing that's on their Bill. Right. Because that's a USF mandated fee.

It's also wireless providers also contribute but there are others in our Internet world, in our tech community that do not pay in. And it's, you know, we think that they should be at the table as well because they are driving usage and bandwidth and riding the networks for free.

That would be our tech friends, the apps and all of that. So we've been frustrated with the lack of progress that that working group has made. I have been told just in the last day that they are actually meeting now again. So congratulations. Yes, hopefully they're getting somewhere.

I do know also that the FCC chair is working on something respect to distribution reform on the usf. So we will likely see something this year I think.

But those are the pieces of the puzzle that are there and they would be critical to helping improve the USF situation and maybe reform the Lifeline program to make it more robust at the federal level. California has one of the most generous Lifeline plans, state plans in the country. So you know, that's congratulations for that.

I don't know. I don't know any other state that gives that much to their consumers. So I think that's well, well spent. As far as the acp, we've always advocated for something like that to be reinvigorated.

It was supposed to run alongside of the BEAD program but unfortunately they just have not made any, any progress in that regard.

Yeah, and I'll just add, I think it's. It's also important to keep in mind there are good models that exist as it relates to this conversation about affordability. I think we are all familiar with the Affordable Connectivity Program. That's something that our Members were strongly supportive of, strongly supportive of its reauthorization. We know how that ultimately evolved.

But the ACP liheap, the Low Income Home Heating Oil Program that some may be familiar with. There are options out there in terms of support programs for broadband access.

What's just really important again from a wireless perspective is obviously, and you know, I get it, I worked in the state Legislature myself for a legislator who was on the budget Committee. I understand the pressures very much.

So you all are under as legislators, the challenge is from a wireless perspective that that surcharge really does directly impact our consumers.

And so if there are pathways that take into account and really understand that impact of that surcharge and instead look at ideas like what the ACP was, the LIHEAP program that I mentioned, we do think there are some other pathways.

Thank you. And I want to go back to Lynn, to what you said about tech companies and the apps running the network for free. Why do you think that makes sense at the federal level to change who's contributing to that program? Can you go delve into that a little bit more?

Yes. Thank you for that. So the Universal Service Fund was intended to be supported by those who benefit from the network. That is the language that is in the statute.

At that time in 1996 when it was created, those who benefited from the network were the technologies that were then in the world, which were mostly the telephone companies. Right. We were a voice world back then. We have now evolved into a mostly non voice world.

Let's face it, people don't talk on the phone as much as they used to and they text and they use the Internet for a variety of things, including movies, gaming, streaming, all of it.

So if those companies are using these networks that are built by the $90 billion that I talked about to invest and make that investment in the network, where's the investment in the infrastructure from those companies? So they are just basically using the Internet to provide their service, making a great deal of money.

We think that it would be time for them to come to the table and be part of the process to actually close the digital divide because of their nexus to benefiting from the network itself.

Thank you. That was very accurate. Any other questions from the Committee before we move on to the next panel? Okay. Thank you both for your participation and testimony today and answering the questions and being very straightforward and honest. I now like to call up panel two, consumer perspective on Broadband Affordability.

Joining us, joining us today are Sunny Wright McPeek, California Emerging Technology Fund and Ernesto Falcon, Public Advocates Office at the cpuc. Thank you for being here and you. May begin when ready.

Thank you. Madam Chair, Vice President Hoover, Vice Chair and Members of the Committee. I am Sunny McPEAK, President and CEO of the California Emerging Technology Fund, which was directed to be established by the California Public Utilities Commission now 20 years ago as a public benefit out of corporate consolidations.

I have provided testimony with a lot more background about cetf. But the thing I want to underscore to all of you today is by state law, we report to you every year. AB 1338 has this report through the California Public Utilities Commission and we would welcome you asking for a briefing or asking questions.

We want to share all of the experience of 19 years of operation with you. I have three topics I want to talk about three facets of affordability and awareness today. One is what is the nature of the challenge. The second is how difficult it is to reach those low income customers who today are not online.

And the third is to talk about your options for action in 2026. So let's just talk about those who are online and not online. California has made huge strides in the last couple decades. It is because of leadership and focus by the state, by the Legislature and all of the stakeholders.

The California Emerging Technology Fund started a statewide survey on broadband adoption digital equity in 2008. And we used the most rigorous methodology available. That's also expensive. It is the most statistically reliable. In 2008, only 55% of all California households were online. Today it's 93%.

And of that 93%, only 3% are what we call under connected have a cell phone only. There were three demographic groups in 2008 that were wildly apart from the statewide average. One was low income customers, low income households where they were only 33% online. Today it's 87%.

And importantly of that 6% of that total or the 6% adding up to 87% are under connected. Just five years ago that number was 20 was 15%. Now I want to say for a moment, we at CETF are technology neutral. It is all about the experience of the customer.

Broadband is actually defined in state law as high speed Internet networks, wireline and wireless. Just look at the consumer experience. So being able to have a mobile phone, a marvelous device. I have three with me today. I have two laptops and I have a landline at home.

So I'm one of those consumers with multiple access lines contributing to the pot of money that supports the six universal service programs here in California. But if a household has a smartphone only when that subscriber leaves the house, the house is unconnected.

If the household is one person and they don't want anything but that mobile device, that's great.

But if a household is a family with kids in school and the adult leaves to go to work now that those children cannot get online to do their homework, that's a challenge we're trying to meet and address at a very tailored level to each household. The other very important segments of the population that have increased their adoption.

Latino households were 34% connected. Today they're more than 87% connected. Still not the statewide average. And people with disabilities, 36% were connected. Today it's 91% equal to the rest of the population. That just didn't happen because industry had competition. It happened because of your leadership.

It happened because of focus and community based organizations throughout the state who actually have focused in and gotten our partners. More than 100 of those CBOs and public agencies, 1.1 million households directly we have enrolled in affordable offers. Most of those are from the Internet service providers that I personally negotiated out of corporate consolidations.

And we've gotten trained and collectively more than a million households with digital literacy. What remains literally to reach who are not online today is about 500,000 households. That's it. And of that three fifths are the unconnected. Two fifths are under connected. Now trying to find those 500,000 households has become increasingly more challenging.

I will hasten to add of those low income households who are online today, 68%, almost 70% are paying more than what the FCC says should be the yardstick for affordability, which is 2% of disposable income. That is why Chair Berner says we have an affordability problem. Amen. We do.

Further, the California Emerging Technology Fund actually sits on the California Broadband Council. Why? Because State Senator Alex Badia, now our US Senator, when he wrote the law establishing the California Broadband Council, insisted on putting us on. It was not my idea. His vision was we need to have a consumer partner or consumer advocate partner to the state.

So we report actually quarterly every time the Broadband Council meets on how are we doing on broadband adoption Pursuant to Governor Newsom's Broadband for All Executive order. CETF is charged with actually called out in that Executive order and in the subsequent action plan to help state agencies get everybody online. We led the mobilization. Get connected California.

Under the umbrella of the California Broadband Council for the Affordable Connectivity Program. In less than two years, we were able to get half, a little bit more than half of all of the households eligible for ACP. It was more than 5.8 million households. California enrolled 2.9 million households. It was a million more households than any other state.

An unbelievable achievement. Again, that was out of focused leadership. Yes, involvement of the Internet service providers. But I also want to call out public agencies who did what we call direct notification.

Primarily the California Department of Healthcare Services and the California Department of Social Services reached out directly to everyone on Medi cal, everyone on CalFresh and said, by the way, do you know you're also eligible for ACP? The FCC actually had a very, very good website.

80% of the folks who were told they're eligible and they had their qualification to a public assistance program, they could enroll themselves. On February 72024 when ACP went away, we were right back to enrolling people just in the ISP affordable offers. We made a pivot in less than 24 hours.

And when I say we, I mean all of the CBOs that staff a call center that in the last 24 months has taken more than 290,000 calls. Those folks who stay on the line, people who call in, they screen themselves if they're eligible.

It was 180,000 people helped in person, immediately, in language, in culture, and then those community based organization folks, and some will testify today, the American GI form is the super performer in all of this. They actually stay on the telephone line with an ISP to make sure there's no upselling.

So we actually, those folks in the last 24 months enrolled about 35,000 households themselves. 20,000 of that was supported by a California Advanced Services Fund PUC grant. Now let me tell you how hard it is to get to those folks. We had to go to 21.2 million households. Household contacts as you do repeated outreach.

Fortunately, the Department of Health Care Services and Social Services continue to remind their customers that they can get online. We went to 21.2 million households to enroll 20,000 households. You have to go to 1,124 households today to get one enrollment. Now why is that people are not aware that there is the affordable offers.

And it came through in spades in not only the 2023 statewide survey, but the follow up we did with all low income households the next year. In 2023, only 23% of eligible households for affordable offers by ISPs knew about them.

May I respectfully suggest that having information on an ISP website is not sufficient for people who are not online to find out about affordable offers. They're simply never going to know. So you have to have affordable, you have to have much more outreach. Let me cut to the chase in terms of what do we do today?

So you have before you in the Assembly. It's been put out by this Committee, Senate Bill 716, you, Madam Chair or a principal co author with Senator Durazzo. May I really urge you not to allow 2026 to go by without using that vehic to actually get to a workable affordable program.

We CETF have suggested in our testimony there are many ways to get to affordability to broaden the base of contributors. The transfer or transition to the access line fee broadened tremendously the base of contributors in 2023. It was just mostly our landline customers. I'm one of them with five years of bills.

For years I was paying into the lifeline program alone two to three dollars a month. April of 2024, when the access line fee kicked in, my charges for the universal programs in California dropped by 2/3. Yes, I then paid that access line fee as a voiceover Internet protocol user, as a mobile user.

But if you are so concerned about who's contributing today, let me just put in context. 53.3 million. 52.5 million. Excuse me. Customers paying in as a fee to that pot of money that we use for universal service programs is much broader than the less than 20 million households who pay their personal income tax into the General Fund.

Okay, I will stop and I'll answer other questions. But may I suggest let's talk about how now to take what is the PUC pilot program that already you've approved a much higher expenditure as a subsidy than what was in Senate Bill 716. It was in last year's budget Bill. It's before you again this year.

Extend it from three years to five years and bring in industry to help actually get folks enrolled. The good news is Comcast submitted their letter to participate this past week. I'm told there are. You'll hear from Ernesto.

Verizon is on the hook to participate for a decade in that program should the PUC approve their transaction to acquire Frontier. Today, all of the wireless industry gets 94% of all of the dollars that are Lifeline. So they're getting more out of Lifeline than their customers are paying in.

And it is time that we see that we have all low income customers online.

Thank you. We'll have definitely opportunities for questions. Thank you. Sunny. Ernesto.

Thank you. Jerry and I have slides to present. Just give it a quick Sec there. Thank you. Chair Boerner, Vice Chair Hoover and Members of the Committee, thank you for the opportunity to testify before you again. My name is Ernesto Falcon. I'm the program manager for the Communications Department Policy branch with the Public Advocates office.

While we're part of the Public Utilities Commission, we're statutorily independent to represent the public in our advocacy work. Our mission in the communications sector is to represent the customer in our work inside the commission proceedings and in other forums. And improving affordability of communications, including broadband has been a central mission of my team.

We advanced this work primarily in two ways, research and analysis and seeking informed regulatory solutions through the Commission, with the goal of bringing prices down and improving quality. Next slide please. zero, never mind. That slide's fine.

In our third annual Broadband Pricing Report, which you see on the on the slide deck there we that we recently published, we're finding that California's market is losing its edge in competition. Since our first report was published in 2021, the net result is prices in California are higher than they are in other states.

And while we've analyzed every speed tier as part of our analysis, our recently published Competitive Pricing report, which we just published this morning, which we've assembled in partnership of our academic partners at UC Santa Barbara, has vastly improved our understanding of market trends and price competition.

Most notably, it is not purely the number of options Californians have that have the biggest impact on prices coming down, but rather the quality of those options at the highest tier, the gigabit tier.

This is primarily happening from the competitive entry from fiber providers such as from Companies such as AT&T or Sonic entering into cable gigabit monopoly markets with their own gigabit service. And while fixed wireless broadband and low Earth orbit satellite play a role, we were unable to detect any meaningful movement in prices from those sub gigabit offerings.

Next slide please. This recent finding coupled with our broadband pricing report makes sense when we look at the status of fiber penetration in our state.

According to a state by state comparison analysis by the Fiber Broadband Association, California is currently placed at 39th amongst the 50 states, meaning a lot of Californians are not receiving at least two gigabit tier options when compared to other states. And that is directly implicating the overall price customers are paying. Next slide please.

In our recent competitive Broadband Pricing report, we study four major urban markets, San Mateo, Los Angeles, San Diego and Oakland. We use UCSB's broadband query tool, which is an automation technology they developed that allowed us to scan thousands of addresses to establish statistically significant sampling data and we present this information to you today.

We had to use these tools because industry regularly asserts that they charge one set of prices and in reality they vary their prices based on local competitive elements, even at the address level, and they make it very difficult to ascertain that information.

Our data here shows what happens when a competitive gigabit fiber service enters a gigabit monopoly market such as AT&T. When they enter, they enter with an aggressive bid to win the customer over, and cable companies in response drop their prices dramatically to Retain the customers. We're emphasizing the Gigabit tier for three reasons.

One, our own data confirms that service at or above 300 megabits remains the most popular and most in demand amongst subscribers in California. Secondly, the price set for the gigabit tier serves as an anchor point that all of the remaining lower service tiers follow.

Meaning whatever price the gigabit tier is set at, the lower tiers are going to match that with lower prices in sequence. Consumers. Lastly, consumers need greater amounts of data with each passing year and eventually the gigabit tier will become a standard instead of a high end need.

So we know, and we know that need for speed will only increase. On average it is around 21% per year. Next slide please. And the number of Californians you see on this map here. Approximately 4.8 million residents in our state are currently restricted to one choice when it comes to gigabit access.

That is a significant part of why California is losing its competitive edge with prices. Our recommendation is broadband policy in California needs to improve the competitive structure along with its focus on availability. Much of our efforts about increasing access to those who lack access.

But in order to really address competition and prices, we have to look at the competitive structure. Next slide please.

What is gray and what is orange?

Go back one.

What is gray and what is orange? There's no legend.

So each of the each they're both representing the same median. Either 0 or 1 option for gigabit access. The darker ones are the single options and the lighter orange ones are kind of just out there without any axis. So it's a much smaller population in terms of that number.

But the 4.5 million a site is the darker shaded color throughout the state. There.

The gray tobish color is zero to one offers and the orange is no offers.

Yes, the darker shade because the the remaining would have at least two options or greater. Okay, okay, next slide please.

From our study, if policy. If policy changes were made that achieved giving people at least two options at the gigabit tier across the state, the collective estimation of consumer savings will exceed $1 billion per year in price competition.

Those savings will be even larger if a third option was available, which we discovered throughout much of the Bay Area region. We arrive at that number by establishing a benchmark at $51 based on the pricing behavior of the four largest carriers when they're in competition with each other.

The reason we take into consideration the lower tier speeds is because it's the same infrastructure delivering all of those service tiers at virtually the same cost of the carrier.

When we apply that benchmark that it drives from competition across the prices consumers face in areas that are a gigabit monopoly, that is how we calculate the total potential savings from aggressive price behavior. Next slide, please.

And while even achieving that significant milestone of making broadband more will obviously make broadband more affordable for millions of Californians, we must recognize that there is a low income population that does not operate in the market in the same way.

Even if the average prices were brought down to $51, it would still remain unaffordable for large segments of this population across the state. And as indicated in the regions highlighted there. Next slide, please. And Even in the CPUC's affordability ratio calculator, which is a tool the PUC developed to assess utility costs against income and resulting affordability.

Our team's analysis of broadband in isolation found that even in these areas, there is a population of residents where their income is so limited that anything more than zero would be unaffordable to them.

These are folks who are solely surviving on Social Security, for example, folks who are unemployed because of disabilities, folks who are really at the edge of the low income side.

If we believe everyone deserves access regardless of their income constraints, the only way we're going to get there is to have broadband plans that are paired with a state subsidy, effectively bringing the price to zero.

Chair Boerner, you deserve credit for leading that conversation here in California with your legislation to control the price of broadband for those of us that lack the financial means to participate in the traditional free market. Next slide, please.

Recognizing what the data shows us, my team entered into a settlement with Verizon and its merger frontier to bring into California 75,000 more fiber lines into cable gigabit monopoly households, which, based on our new data that we've published, will bring the price down on an average of 15 to $40 a month. Next slide, please.

In addition, the lowest price and highest quality broadband options at 100 megabits for wireless, fixed wireless broadband and 300 megabits over fiber will be brought down to $20 over Verizon Ford, which is their low income offering program.

Verizon is committed to California under its merger conditions to keep the price at $20 for the next 10 years as well as obligate themselves to participate in the California Lifeline broadband program. These are incremental steps in progress that stem from one single merger. And we believe more could be done to achieve these outcomes at a statewide level.

Specifically, policies should examine how to facilitate the entry of overlapping public or private gigabit networks in more areas given the current pace that exists in California. And I want to mention that collecting this data to provide these insights took an enormous amount of time and resources of UCSB and, and it should not be that difficult.

Carriers have the ability to make their dynamic pricing information available in a machine readable format that would make regulatory oversight substantially more nimble and effective. Lastly, we also need to ensure that special attention is paid towards the low income population to effectively achieve the delivery of free access for the most impoverished amongst us.

We believe the Verizon merger conditions provides a useful model for the state to build on and we will oversee its implementation in the years to come. Thank you for the opportunity to speak with you. I look forward to your questions.

Thank you. And I am a sucker for a very good PowerPoint and that was a very good PowerPoint. So you get an A plus Ernesto and I'll open it up to my colleagues first for questions before I start mine. Anybody else have? No. Okay, I'm going to actually start with the last question first.

You said, because I agree we have data transparency issues in lots of areas in the state and especially with this pricing. Could you expand a little bit on your last point about how it was so difficult to put together this data?

Because when we were doing AB 353, we had an intern and we tried to put together data and it was like mind boggling to figure out just from websites and what everybody's from. And that's not even a zip code level to map anything in the state. What do you think could be done, legislatively, to create that transparency? Do you have some ideas?

Yeah, I mean I think the. So I'll walk you through how we have to do it now and, and why that's, that's overly complicated in terms of like that doesn't seem logical in a technologically advanced industry.

The broadband query tool that UCSB developed is essentially kind of a kind of an AI automated scanning tool that will just look up one address at a time and put in the information and kind of collect the advertised information that's given to us. So kind of repeating what we would do manually but at scale with the computer technology multiplied over thousands of times

The challenges will be the, each carrier makes it particularly difficult and a computer, you know, a computer science student and a couple professors have to kind of look at each page one at a time and modify the tool to adjust for each page. This data is not complicated once you see it.

And you know, we believe if the carriers were simply just offering it in a, you know, machine readable format, meaning a tool can interface with their, their, you know, their advertising website to be able to look at it, you know, more efficiently, we wouldn't be able to have, we wouldn't need to have, you know, academics working around the clock to try and pull together the data at a, and modify the tool each time they run into some sort of weird roadblock or a blocked IP address inadvertently, things of that nature.

And this to both panelists and sunne, you touched on it in your closing, so maybe you can briefly, succinctly walk us through what they were again. But for each of you, do you have recommendations for the Legislature to address broadband affordability? What would be your 1, 2, 3 for 2026?

Senate Bill 716 is a very valuable opportunity to refine the pilot and expand the pilot that the Public Utilities Commission has adopted. It actually is not that expensive when we talk about even using the continued access line fee basis

To be able to cover those households, that would be another million back to the 2.9 million that had been rolled in ACP, would mean for the entire universal services going from today it's 90. It started at 90 cents. Today it started $1.11.

If you go to $1.27 16 cents over what it was originally, that covers 2.9 million households. That's a million more, which is sort of the informal target that the PUC has to get to all 5.8 million that were eligible for ACP, it would go to $1.86 a month.

Remember, I used to pay for years and years and years, two to three dollars for the Lifeline program alone. We are paying and investing $8 billion in infrastructure. What we're talking about for affordability is in the millions.

So the numbers I gave you in terms of the increase in that access line fee would be five years out phasing in getting to 5.8 million households. I would hasten to add that the folks who are the most in need are those that are the poorest. It's up to the 150% of federal poverty level.

ACP went to 200%. Three fifths of everybody who was eligible for ACP was between 150 and 200%. So what they can afford is actually the $30 a month that was the benchmark for ACP. Remember, most of them are paying a lot more already. 70, almost 70%.

So what happened in ACP is a lot of those who were on affordable offer actually were just given higher speeds and they still were charged the, the amount that had been their, their service. And the industry got the $30 a month subsidy for ACP.

So take advantage of having SB716 for which you are a principal co author, convene all of the leadership, the leadership of both houses and the industry with the consumer advocates and work out a plan that actually is going to target particularly those who are under 150%.

There are some other tools you could use if you chose to to broaden the base procurement requiring contributions for getting an infrastructure grant. And the statewide franchise fee or franchise for cable should also carry a responsibility for affordable offers and also a contribution into the fund. I'm sure you can figure out a way to do that legally.

Ernesto.

Thank you for that question. I think so there. I would probably do two main, main tracks and then. And there's some. There's a lot of complexities so bear with me. On Kohler, which was brought up, the PUC is undergoing a process to reform the carry of lost resort obligations.

It is our position that it should be an opportunity to have a regulated transition towards broadband. And there is a, there is a legitimate argument about overhang from the current rules.

Our belief is simply if they are going to receive a benefit from a transition from one regulatory structure to another, we need to ensure that there is a deliverable benefit to the California residents.

And a key reason for that, and this was brought up from the previous witnesses if they were simply just to be released from Kohler without some sort of control to ensure California residents receive a benefit from that transition. Likely, the likelihood is those capital dollars would simply be invested in other states, not necessarily here.

And that comes due the cost per household and the sensitivity of network deployment. So to pivot to that, I think the cost per household has a lot of different factors that play into what. What generates the average and where it is in California.

In the most broad sense ensuring that Network deployment can be predictable, consistent, and quick. Predictable as in once they set out network plan, they know they have a clear path to get to the end of that completion. Consistent in that they can replicate that that predictable plan in various parts of the state.

And quick in that once they begin hiring labor to start deploying delays increased costs, which then messes with the averages, which then makes us as a state less competitive to other states where they may not be running to these same challenges.

One program I would highlight from a, from the public infrastructure standpoint is increasing the funding to the Loan Loss Reserve Fund.

So this is, we are the only state in the country that has a pure infrastructure program that's a loan program designed around enabling tribes, school districts, counties, city governments, kind of a whole range of alternative nonprofit or public options to deploy their own infrastructure.

Particularly in areas where perhaps it doesn't make sense for the private sector to do it is already fully obligated, meaning the demand is fairly sky high. All 50 million has already been spoken for at this point. I think increasing that will increase more construction from these alternative options out there.

And secondly to pivot to the low income population, which I really do want to distinguish from the general middle, upper middle income population. Low income population can't participate in the market in the same way without some sort of increase in their buying power. Which is where the, which is how you should think about the lifeline subsidies.

And that increases their buying power actually makes network deployment cheaper because it increases the number of customers. Any network, whether it's a public option or private option, can access and plan out their revenues. At the same time, the experience from ACP which my co witness Sunne identified.

If you increase the buying power, you need a means of controlling the price of the services offered to that population. Because what we saw initially at ACP was an upsell. So if you added $30 in everyone's pocketbook, suddenly all the prices went up by $30, right.

So you have to ensure that they are, the prices are controlled in a way to ensure a quality service is available to them for this distinct population.

And the reality is, while industry may complain about using the controls with the subsidy and kind of pairing them, the reality is they're a net beneficiary at the end because you are converting a number of of people, hundreds of thousands, actually well over 2 million potential customers who don't pay into these networks, they can't afford to.

You are converting them from people who pay $0 into the revenues into some modicum amount of money. And as I mentioned our Verizon Frontier Merger Commitment that Verizon will offer a $20 plan, subsidize at $20.

We will see the customer behavior and learn a lot from that exercise that I think will be informative to think about how do we increase adoption and bring more people into the networks. Thank you for the question.

Thank you. Both of your organizations have been very successful in winning public benefits as part of merger agreements for recent mergers. Are you concerned at all about what further consolidation in the market can mean for prices, especially at the lower end?

Yes. So that is. Yes, you wanted me to be succinct, Madam Chair. Yes. Which is why we negotiate all these other conditions that you just heard Ernesto talk about. You know, Charter Cox is coming right behind. Those companies are so different in their cultures. It is a real concern that we have expressed.

We are a party in that proceeding before the PUC, so we'll see how it unfolds. These mergers are not happening out of the corporate welfare there because of the fierce competition in the industry.

And it is really important that we recognize most of the affordable offers that exist today came out of negotiations for voluntary public benefit agreements because of the consolidations that are going on. It is actually really interesting to note that all of those companies that negotiated those offers are not going broke.

The only one that's on the ropes is Frontier for a variety of reasons, including they actually invested in fiber, so they do need to have some more cash infusion. So the most efficient way to administer these affordable offers is actually by the companies.

The problem is that there is no central place for a consumer to go, which is why we have this huge volume of calls that now come through our call center.

I defy anyone to go onto any one of the websites that says, here is all the offers in your area, and then sort out who to call and how to not get upsold. So it really does require, particularly for those who are unconnected today in person, assistance. Yes, we are concerned.

Now, I do say that you've got so many tools. A good example is I was quite fascinated and glad to see UCSB, my alma mater, that gave me my first degree and the scholarship to get an education, I might add. So to be so involved in this topic, if in fact the competition actually makes a difference, which it does, competition works, why not?

If a company is getting a grant for infrastructure deployment, they should be required in return to have an affordable offer in their entire service areas throughout the state, not just in the area of the project, which is essentially.

There is a couple different ways in which the PUC has incentives for an affordable offer within the project area, but not statewide. We've got all these companies who do business with the state, yes, internet service providers, but also the high tech companies.

If there was a little bit of an incentive in procurement for a public private partnership for all of those geniuses who've made billions of dollars in high tech to enter into a public private partnership with the state to close the digital divide, including contributing to getting those low income customers, those low income households online, I think we could do it pretty quickly.

And lastly today, because of the access line fee, the cable industry has 15% of all the access line fees they've been getting zero, of course, out of Lifeline. Which is why I commended Comcast for stepping forward and now participating because they need to be a part of this solution.

So to the question of the consolidation, these mergers, it is worth distinguishing Verizon Frontier with Charter Cox in some key ways. Verizon doesn't offer any wireline service in California and they offer wireline service in a number of other states.

And our primary concern when the merger came up was okay, if you're going to switch the leadership of the company, right Frontiers, the deck chairs of who's running Frontiers switched to this new company. What is their vision for the expansion of fiber networks of the new chiefs.

And much of our initial concerns raised to the commission was clearly Verizon is emphasizing most of its wireless play. Frontier was a very aggressive fiber deployer. In fact, their survival from bankruptcy was contingent on replacing as much of the copper network of fiber. And were a leading industry player in the nation by leaps and bounds.

I mean by in comparison to Verizon and AT&T. So we were worried about the motivation of the new company coming in and how that would change. But in terms of the competitive landscape of broadband access, there wasn't going to be an actual change of concentration.

There was because it's simply just 1 chief switching out with another. Simply just by the nature of it, Verizon is not a wireline player in this state. So by our conditions, what we negotiate with the company, we wanted a solution for low income population.

We saw that Verizon had a fairly good offering that had a range of prices. And we wanted to make sure that California had two things. One, the lowest price, which is at $20, but they offer for $100 and $300.

And if Verizon were to offer that in a lower, any lower price in any other state, California would immediately gain that exact same price. So we essentially have a most favored nations clause in Verizon's Ford low income offerings.

That and they're mandating their participation in Lifeline, which then allowed the subsidy to connect with the control of the overall price. So that took care of the low income concerns of affordability for us in that respect.

And their commitment to go even further on building out an additional 75,000 fiber lines resolved a lot of our concerns with kind of slowing the pace where Frontier was at this point.

The other piece of that change with that merger, or what's going to change that merger if it's approved tomorrow at the commission is to the extent that Verizon is not deploying fiber in the difficult to serve rural areas.

They are on the hook to work with tribes, work with local governments, anyone who is applying for bid or our federal funding account funding or our California Advanced Services funding.

All of these other entities who are deploying their own fiber in these areas kind of networks in those in their backyard, they're obligated to work with them to ensure that they're able to share poll access, access to their middle mile. Basically things that bring down the overall cost for these applicants.

Essentially, if they're not going to build it, you got to make it real easy for someone else to get in there. With Charter Cox. The biggest difference is in that scenario, we're talking about the largest broadband company in California merging with the fourth largest broadband company in California. And we only have five large companies.

So the amount of concentration consolidation there is substantial by the numbers. I believe it is the largest consolidation of broadband access points, particularly the gigabit tier, which our data shows is very important from the overall pricing of affordability. The largest consolidation of broadband points in the state of California in any merger we've done.

So it deserves a very special set of scrutiny, a very different level of scrutiny and particularly the nearly, I believe it's 3, a little over 3 million Californians who are effectively, if the merger went through would be subject to being a single choice for gigabit access.

And if our data is as our data is reflected, they're facing higher prices and no competition. So we need solutions and remedies to address that if we're forced to approve.

Thank you. Any other questions from my Committee Members? Okay, thank you to all of our panelists for your presentations and to members for your question. To close out the hearing, we'll move to public comment. You may approach the mic with name affiliation and concerns. Please limit your comments to 2 minutes. Emilio Perez is going to time you and I'll make weird faces when your time's up.

Ready? All right. Thank you. Madam Chair and Members. Amanda Gualdarma for the California Broadband and Video Association. We are the leading cable broadband providers here in California. So here are the facts. As you've heard, 91% of California households utilize high speed Internet access at home.

Nearly nine out of ten are using a computer or tablet, not just a phone in their home. Our Members offer low cost broadband options designed for low income consumers with affordable and reliable high speeds. These plans are historically $10, $20, $30 per month, something really important that hasn't been brought up as much.

But the CPUC's Home Broadband Pilot represents a critical step in making broadband more affordable for Californians. By testing targeted tools direct to consumer subsidies, streamlined enrollment, and coordinated agency partnerships, the state is generating real world data to identify what models most effectively drive adoption and reduce household cost burden.

So this pilot not only fills the gaps left by the federal ACP, but also positions California to design those longer term solutions that ensure that every resident can access high speed connectivity. But price is only one piece of the adoption puzzle. Digital readiness, digital skills, devices, confidence is increasingly a barrier.

In the 2023 statewide Digital Equity Survey final report, it stated clearly that nearly one in three unconnected household site limited digital skills as a key reason for them not being online. This is particularly true as adoption levels rise and cost barriers are addressed through things like the CPUC subsidy. That is why building skills and trust matter and why the work underway of the industry partners like CETF and state agencies is critical.

That last 9% for adoption will be reached through digital equity programs like the CPUC's Home Broadband Pilot and their CASF adoption account and the Department of Technology's Digital Equity program and their everyone on a program that helps find those low cost options. Thank you, Madam Chair.

You have two minutes.

Thank you. Good afternoon Chair and Members, Patrick Messick from the East Bay Broadband Consortium. Let's not overcomplicate the affordability crisis in broadband. About 1 in 5 California households lack access to reliable high speed home Internet. And the number one reason is cost, cited at three times more likely than the next barrier.

What's missing from today's industry testimony is the number that matters most, what your constituents actually pay for broadband. Percent changes relative to inflation over time don't pay rent, bills do. On average, Californians pay $83 per month for broadband and the most common service tier can reach as high as $116 per month.

Industry has said a lot, but let's address three problematic claims. First, competition. Competition from wireless alone won't save us. 97% of home broadband subscribers are served by one of California's big five ISPs. Secondly, regulation is not driving price gouging. The C in color doesn't stand for copper.

The PUC explicitly stated the duty to serve can be met with any technology that meets the service standards, fiber included. Finally, the means tested plans.

I simply recommend that you sit next to one of your constituents and try to enroll in one of these programs with them and you'll immediately understand why these programs are woefully underutilized, including the requirement to take a selfie holding your ID and submitting it to the same company that just paid for Trump's ballroom.

So my ask is simple. Legislators increase transparency, require reporting of the prices consumers actually pay after the shiny promotion ends, and industry please sign up for the Lifeline broadband subsidy and ease off those misleading pricing practices and junk fees. It'll take all of us. Thank you.

Hello Chair Boerner, Members of the Committee, My name is Ulises Zatarain and I'm the Executive Director of Tech Exchange. We are a Bay Area based nonprofit that has worked for more than 30 years to close the digital divide across California's most impacted communities.

Tech Exchange serves students, seniors, immigrants, and workers across the Bay Area, a region defined by innovation and opportunity, yet marked by some of the highest cost of living and deepest digital inequities in the state. We work every day with community members who cannot afford reliable home broadband despite living in the heart of the global tech economy.

Tech Exchange strongly supports SB 716, authored by Senator Maria Durazo, and urges the Committee to advance a permanent solution for broadband affordability through the Lifeline program. As originally introduced, SB 716 reflects the realities we see on the ground and the lessons learned through extensive stakeholder engagement.

We also urge the Committee to remove the amendment that instituted a cap on the Lifeline program. A cap program does not reflect the scale of need in California and actively limits access for families who are already struggling to stay connected.

When Tech Exchange helped enroll thousands of residents into the Affordable Connectivity Program, we saw firsthand how transformative affordable broadband can be for low income households. The end of ACP has only deepened this crisis.

In addition, we encourage the Chair to work closely with Senator Durazo to extend the CPUC broadband Lifeline pilot for five years and require robust reporting to the Legislature on its outcomes. California needs data driven long term solutions, not temporary fixes to truly close the digital dividend.

In closing, I'd like to say that digital equity is indeed the great equalizer of our lifeline, of our lifetime, and certainly of this generation. The communities we serve are counting on you to ensure that access to the Internet is not a privilege, but a pathway to opportunity for all. Thank you for your leadership and your service.

Good afternoon, Chair Boerner and Members, thank you very much. My name is Trish Kelly. I'm with Valley Vision here in Sacramento which manages the conducted Capital Area Broadband Consortium, the Capital Region Coalition for Digital Inclusion.

We work closely with many community partners and we know on the ground that there is a major gap in access and adoption in our most under resourced communities. We're currently working, for example, on funding through AB 6 to support AB 617 disadvantaged communities in South Sacramento and Stockton.

And we've worked closely with Sacramento State to help our CBOs become digital navigators because that's a critical bridge to help our community members with all the issues that you've heard. But more support is needed. We're careening from federal to state programs and a lot of the cuts.

We need a permanent solution for this Lifeline access and the services that can be offered through the Lifeline program. So we're urging, as has been stated, the Chair and the Members to remove the amendment also introduced last year by the Committee which instituted a cap on the Lifeline program. We really need resources in our community.

Our adoption levels are only at 60% across this region. We're the capital of the fifth largest economy in the world and so we really want to make sure that everybody has the opportunities. And we're paralleling also our support for the state with the economic strategy that the state is investing in. California Jobs first.

And so for all these reasons too, we need access and adoption for our digital skills and our future economy and well being. So thank you for your support.

Thank you.

Hello Chair, Members. My name is Rigo Hernandez. I represent Nube Educational Foundation in partnership with the American GI Forum. We work closely with our community and we underscore the urgency to close the digital divide. We have been champions at helping families to connect to low cost Internet.

We work with the Get Connected Call center run by the California Emerging Technology Fund. And we were main contributors to the enrollments of 20,000 households. In our experience, most callers need affordable Internet, but the CPUC CASF Adoptions Account Grants only pay for unconnected households. Nube Educational Foundation supports SB 716, authored by Senator Maria Elena Durazo.

Our call center still receives calls from families asking for ACP. Our families are still debating versus pay their Internet services or pay for food. It's very, there's a lot of need. So thank you very much.

Good afternoon, Madam Chair and Members. My name is Daphnie and I'm here to represent digitalLIFT. We are a nonprofit organization, work closely with communities to close the digital divide by providing digital skills trainings and technology support to senior adults, to people with disabilities, and also with low income.

Every day we see how lack of affordable broadband limits access to the healthcare, education, employment, and essential services. Affordability is one of the greatest barriers of our learners. Many of them we serve must choose between paying for the Internet service or paying for their basic essential services such as food, rent, and utilities.

Even when the infrastructure is available, the cost of monthly broadband remains out of reach for many households. DigitalLIFT strongly support the SB 716. So we urge the Chair and the members to ensure there is a permanent solution for broadband affordability. We appreciate your leadership in addressing this critical issue. Thank you for your time.

Thank you. You can line up so we can get through public comment faster if you're going to be speaking.

So good afternoon, Chair Boerner and Members. My name is Julio Tamayo and I'm the program specialist with the American GI Forum. And I have worked very closely with our community and the Central Coast, Santa Barbara, San Luis Obispo ,and Ventura County.

And I've also been a member of the Get Connected Call Center providing portability to the 20,000 households. The American GI Forum supports SB 716 introduced by Senator Durazo. And we've also assisted community enrollings, the entire community of California enrolling people through the ACP program.

And we saw the direct benefit for the low income households, the hard to reach population, and the elderly. After the ACP program. We were also, we also, I was blessed to witness the, I mean I also witnessed the crisis that the ACP caused a lot of families.

We were able to see that they disconnected direct from their services because we've also worked directly with a lot of school based organizations and schools and almost every sector of California communities, both in the south, the Tribals and in the north part of California.

So we, I feel that broadband affordability is a must, you know, and the underrepresented communities, the elderly, and the Latino low income households. Thank you.

Thank you. Going once, going twice. Okay, thank you again to all the Members who participated in the hearing today and the members of the public who tuned in.

Thank you to our witnesses for sharing their knowledge with this Committee who shared a wide variety and range of perspectives and the members of the public who made comment with that. This meeting's adjourned. Thank you.