senate Bill S5863A

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

  • 18 / Jun / 2013
    • REFERRED TO RULES
  • 08 / Jan / 2014
    • REFERRED TO ENERGY AND TELECOMMUNICATIONS
  • 21 / Feb / 2014
    • AMEND AND RECOMMIT TO ENERGY AND TELECOMMUNICATIONS
  • 21 / Feb / 2014
    • PRINT NUMBER 5863A
  • 28 / May / 2014
    • 1ST REPORT CAL.920
  • 29 / May / 2014
    • 2ND REPORT CAL.
  • 02 / Jun / 2014
    • ADVANCED TO THIRD READING
  • 17 / Jun / 2014
    • SUBSTITUTED BY A7167E

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

See Assembly Version of this Bill:
A7167E
Versions:
S5863
S5863A
Legislative Cycle:
2013-2014
Law Section:
Public Service Law
Laws Affected:
Amd ยง101, Pub Serv L

Votes

11
0
11
Aye
0
Nay
0
aye with reservations
0
absent
0
excused
0
abstained
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Sponsor Memo

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.

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

                                 5863--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              June 18, 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  Rules  --  recommitted  to  the
  Committee  on  Energy and Telecommunications in accordance with Senate
  Rule  6,  sec.  8  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11588-02-4

S. 5863--A                          2

that there shall have been secured from  the  commission  authority  for
such  issuance  and  for  a  transfer of surplus to capital in an amount
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,
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 PROCEEDS FROM A FEDERAL LOAN, A TELE-
GRAPH  OR  TELEPHONE  CORPORATION  SHALL  PROVIDE  NOTICE  TO THE PUBLIC
SERVICE COMMISSION OF RECEIPT OF SUCH ISSUE BUT SHALL NOT BE REQUIRED TO
FILE AN 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  investigation,
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  HAS  NOTIFIED  THE  COMMISSION  IT IS ENGAGED IN SECURING A
FEDERAL LOAN FOR THE EXPANSION OF BROADBAND  SERVICES,  NO  such  corpo-
ration  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 telegraph 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 indebt-
edness 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  actually  expended for such purposes. The

S. 5863--A                          3

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 commission 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, operate 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 securities 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,  deter-
mines  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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