senate Bill S4395

Amended

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

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 26 / Mar / 2013
    • REFERRED TO INFRASTRUCTURE AND CAPITAL INVESTMENT
  • 30 / Apr / 2013
    • 1ST REPORT CAL.474
  • 01 / May / 2013
    • 2ND REPORT CAL.
  • 06 / May / 2013
    • ADVANCED TO THIRD READING
  • 12 / Jun / 2013
    • AMENDED ON THIRD READING 4395A
  • 21 / Jun / 2013
    • COMMITTED TO RULES
  • 08 / Jan / 2014
    • REFERRED TO INFRASTRUCTURE AND CAPITAL INVESTMENT

Summary

Authorizes telephone and telegraph corporations to issue stocks, bonds or other forms of indebtedness for the purposes of expanding broadband services when such corporation is receiving a federal grant or loan therefor.

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Bill Details

Versions:
S4395
S4395A
Legislative Cycle:
2013-2014
Current Committee:
Senate Infrastructure And Capital Investment
Law Section:
Public Service Law
Laws Affected:
Amd ยง101, Pub Serv L

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Sponsor Memo

BILL NUMBER:S4395

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 provide
a technical remedy to allow Incumbent Local Exchange Carriers to
access federal grant or loan money for the expansion of broadband
services by making federal grants or loans for broadband expansion a
permissible purpose for requesting authority to issue stocks, bonds or
other forms of indebtedness. Further, federal grants and loans for
broadband expansion services are exempted from the requirement that
all proceeds/issue be applied to the purposes specified under the
ILEC's 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 8O 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 would address these concerns by designating federal loan or
grant funds for broadband expansion as a permissible purpose for issue
stocks, bonds, notes or other evidences of indebtedness and that those
funds are not subject to the required PSC certification that the loan
proceeds axe 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.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4395

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             March 26, 2013
                               ___________

Introduced by Sen. YOUNG -- (at request of the Legislative Commission on
  Rural  Resources)  -- read twice and ordered printed, and when printed
  to be committed to the Committee on Infrastructure and Capital Invest-
  ment

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

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Section 101 of the public service law, as amended by chap-
ter 443 of the laws of 2000, is amended to read as follows:
  S 101.  Authority to issue stock, bonds and  other  forms  of  indebt-
edness.    A  telegraph or telephone corporation may, when authorized by
the commission, issue stock, bonds, notes or other evidences of  indebt-
edness  payable  at  periods  of  more than twelve months after the date
thereof, or a receiver of such a corporation, if duly authorized by law,
may issue receiver's certificates, when necessary for the acquisition of
property, the construction, completion, extension or improvement of  its
facilities  or  the improvement or maintenance of its service within the
state, or for the discharge or lawful refunding of its  obligations,  or
reimbursement  of  moneys  actually  expended  from  the income from any
source, within five years next prior to the filing  of  the  application
therefor,  or  for  any  of  such  purposes,  provided, however, that no
authority shall be granted authorizing such issue for  reimbursement  of
moneys  expended  from income for betterments or replacements unless the
applicant shall have kept its accounts and vouchers of such expenditures
in such manner as to enable the commission to ascertain  the  amount  of
moneys  so  expended  and  the purposes for which such expenditures were
made. Stock may be issued to stockholders as a stock  dividend  provided
that  there  shall  have  been secured from the commission authority for
such issuance and for a transfer of surplus  to  capital  in  an  amount

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08868-01-3

S. 4395                             2

equal to the par or stated value of the stock so authorized and that the
applicant  has  certified  in  the  application for authority that a sum
equal to the amount to be so transferred was expended for  the  purposes
enumerated in this section. Stock may be issued to an employee or direc-
tor  of  a  telegraph or telephone corporation under a stock option plan
pursuant to which such corporation grants options to  its  employees  or
directors  to  purchase  shares of stock, such options to be exercisable
for a stated period of time to purchase shares of stock  at  the  market
value  of the stock at the time of issuance of the option, provided that
there shall have been secured from the  commission  authority  for  such
issuance  and  that  the  applicant has certified in the application for
authority that the proceeds from the exercise of the stock  options  are
needed  for one of the purposes enumerated in this section. The issue of
stocks, bonds or other evidences of indebtedness, within the meaning  of
this section, shall include the sale by any such corporation of any such
securities  previously  issued in compliance with the provisions of this
section and  subsequently  reacquired  by  such  corporation,  provided,
however,  for  good  cause  shown  the  commission  may  exempt from the
restriction hereof stocks, bonds or other evidences of indebtedness. The
application for authority shall state the amount of any such  issue  and
the  purposes  to  which  it or its proceeds are to be applied and shall
certify that the money, property or labor procured or to be procured  or
paid  for  by  such  issue  or  its  proceeds  has been or is reasonably
required for the purposes specified in the application for authority, OR
ARE THE PROCEEDS FROM A FEDERAL GRANT  OR  LOAN  FOR  THE  EXPANSION  OF
BROADBAND  SERVICES,  and  that  such purposes are in no part reasonably
chargeable to operating expenses or to income  except  in  the  case  of
bonds,  notes  or other evidences of indebtedness as may be specifically
identified in the application for authority. For the purpose of enabling
the commission to determine whether it should authorize  such  issuance,
the  commission  shall  have  the power to make such inquiry or investi-
gation, hold such hearings and examine such  witnesses,  books,  papers,
documents  or contracts as it may determine of importance in enabling it
to reach a determination.  [No] EXCEPT IN INSTANCES WHERE A TELEGRAPH OR
TELEPHONE CORPORATION IS ENGAGED IN SECURING A FEDERAL LOAN OR GRANT FOR
THE EXPANSION OF BROADBAND SERVICES, NO such corporation shall,  without
the  consent  of the commission, apply any such issue or its proceeds to
any purpose not specified in the application for authority.  Such  tele-
graph  corporation  or  telephone corporation may issue notes for proper
corporate purposes and not in violation of any provision of this chapter
or of any other act, payable at periods of not more than  twelve  months
without  the consent of the commission; but no such note shall, in whole
or in part, directly or indirectly, be refunded by any issue of stock or
bonds, or by any evidences of indebtedness running for more than  twelve
months,  without the consent of the commission. No telegraph corporation
or telephone corporation shall be required, however,  to  apply  to  the
commission for authority to issue stocks, bonds, notes or other evidence
of   indebtedness   except   for   the   acquisition  of  property,  the
construction, completion, extension or improvement of its facilities, or
the improvement or maintenance of its service within the state,  or  the
discharge  or refunding of obligations, or reimbursement of moneys actu-
ally expended for such purposes. The  commission  shall  have  power  to
require  every  such  corporation  to file with the commission after the
issuance of stocks, bonds, notes  or  other  evidences  of  indebtedness
issued  with  or  without  the approval of the commission as provided in
this section, a notice of such transaction in such form as  the  commis-

S. 4395                             3

sion  may prescribe. The commission shall have no power to authorize the
capitalization of any franchise or right to be  a  corporation,  nor  to
authorize the capitalization of any franchise or the right to own, oper-
ate or enjoy any franchise whatsoever in excess of the amount (exclusive
of any tax or annual charge) actually paid to the state or any political
subdivision thereof, as the consideration of the grant of such franchise
or  right,  nor to authorize the issuance of any stocks or other securi-
ties for any purposes other than those enumerated in this  section.  Nor
shall  the  corporate  stock  of the corporation formed by the merger or
consolidation of two or more other corporations exceed the  sum  of  the
capital  stock  of  the  corporations  so consolidated, at the par value
thereof, or such sum and any additional sum actually paid in  cash;  nor
shall  any  contract  for  consolidation  or lease be capitalized in the
stock of any corporation whatever; nor shall any  corporation  hereafter
issue any bonds against or as a lien upon any contract for consolidation
or merger. Notwithstanding the foregoing provisions of this section, any
application  for  approval under this section shall be deemed granted by
the commission forty-five days  after  such  application  is  filed  for
approval, unless the commission, or its designee, determines and informs
the  applicant  in  writing  within  such forty-five day period that the
public interest requires the commission's review and its written order.
  S 2. This act shall take effect immediately.

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