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

BILL NUMBER:S5863A

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 clarify that federal loans for the expansion of broadband services can be used by telephone and telegraph companies under their application for authority. Further, the public service commission must provide a determination on an application for authority with respect to federal loan money for broadband expansion within sixty calendar days. Additionally, proceeds from federal 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 if the Public Service Commission does not provide a determination within 6O calendar days.

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 so 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 no: 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 giants/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 ILECs 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 provides for an expedited review of the application for authority, to include the proceeds of federal loans for the expansion of broadband services by the Public Service Commission to ensure that ILECs are able to access available federal funds. In addition, it clarifies that any application deemed approved after 60 days can apply the issue or proceeds of a federal loan to broadband expansion.

Prior legislative history

New bill

Fiscal implications

None.

Effective date

This act shall take effect immediately.