Authorizes telephone and telegraph corporations to issue stocks, bonds or other forms of indebtedness for the purposes of expanding broadband services

2 Co-sponsors

• Patty Ritchie
• David J. Valesky

BILL NUMBER:S4395A

Title of bill

An act to amend the public service law, in relation to the issuance of stocks, bonds and other forms of indebtedness for the purpose of expanding broadband services

Purpose

This legislation would authorize telephone and telegraph corporations to issue stocks, bonds or other forms of indebtedness for the purposes of expanding broadband services.

Summary of specific provisions

Section 1 would amend section 101 of the public service law to require Incumbent Local Exchange Carriers give notice to the public service commission of receipt of federal grant or loan money. Further, federal grants and loans for the expansion of broadband services are exempted from the requirement that all proceeds/issue be applied to the purposes specified under an Incumbent Local Exchange Carriers' application for authority.

Justification

NY has been ranked fifth nationwide for internet speeds. However, as many as 6.4 million people cannot access or do not subscribe to broadband in our state. Further, a lack of broadband access is an immense impediment to healthcare, economic development/recovery, education, technological advancement and job growth in rural New York.

Unfortunately, due to an inconsistency in the Public Service law, many of the 80 broadband providers in NY are unable to access federal funding from the Federal Communications Commission. These companies were originally known as Incumbent Local Exchange Carriers (ILECs). These ILECs were telephone companies that did not add broadband services to their customer offerings until long after they had done their original application for authority. Because these companies are ILECs, the Public Service Commission has the authority to regulate them based on their original designation as "telegraph and telephone corporations".

These companies must seek PSC approval before accepting any loans, including federal grants/loans. Due to the current language in the Public Service law, the PSC is unable to approve any loans incurred by ILECs with a time period longer than 12 months unless it is specifically allowed under the Public Service law. In addition, the PSC must certify that the proceeds of the loan are being used for purposes which are specified in the corporation's original application for authority which was created before broadband was an available service.

In last mile access situations, federal funding has been the primary source of capital, with over $176 million given to date. The USDA offers several different grant and loan programs, with over $600 million available for low interest telecommunications loans.

Because broadband was not originally provided/offered by ILECs, the PSC cannot certify that loan proceeds used for alleviating last mile broadband access issues are being used for an ILEC's original purpose under their application for authority which was limited to "telephone

and telegraph."Therefore, the PSC can't approve the loans, and the broadband providers cannot get the funds.

This bill permits ILECs to provide notice of receipt of federal loan or grant funds to the Public Service Commission and provides that the federal loan or grant funds for broadband expansion are not subject to the required PSC certification that the loan proceeds were used for the ILEC's original purpose under their application for authority.

Prior legislative history

New bill

Fiscal implications

None.

Effective date

This act shall take effect immediately.