Tag Archives: casf

$20 million still available for California broadband subsidies

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There’s about $20 million, plus or minus, left for broadband infrastructure grants in the California Advanced Services Fund (CASF), against pending proposals totalling $5.7 million. That’s without taking into account a possible top-up that’s under consideration in the California legislature, but which might also make spending it on anything other than minimal upgrades by Frontier Communications or AT&T virtually impossible.

Over the years, the California legislature has pumped $315 million into the kitty, with $270 million of that allocated to construction subsidies for broadband systems – middle and last mile – in areas that are either completely unserved or lack service at a minimum of 6 Mbps download and 1.5 Mbps upload speeds. The balance is budgeted for broadband facilities and programs in public housing, regional broadband consortia operations and a lightly used infrastructure loan account.

From the time the CASF program began in 2008 until today, the California Public Utilities Commission has approved grants totalling $225 million for broadband projects. That’s a net figure – it doesn’t include the $4.5 million for grants that were approved but later rescinded, primarily because the projects didn’t happen.

The CPUC also pays for its own overhead out of the infrastructure grant fund, with $15 million either spent or budgeted through the middle of next year. Currently, the annual overhead hit is just north of $3 million. There’s at least four or five more years of administrative oversight required, but as the work shifts from reviewing applications to managing project grants, that yearly figure will probably come down. So to keep the numbers round and on the conservative side, let’s say another $10 million will be needed for CPUC overhead, for a total of $25 million.

That leaves $20 million still available for broadband construction grants. There are four project proposals currently under review – Kennedy Meadows in Tulare County ($2.3 million), Connect Anza Phase 2 in Riverside County ($2.2 million), Las Cumbres in Santa Cruz County ($730,000) and Vandyland in Santa Barbara County ($460,000) – that total $5.7 million.

I’m not betting all of them will be approved as proposed, but any way you look at it, there’s somewhere between $15 million and $20 million in the CASF broadband infrastructure grant program that hasn’t been spoken for. That’s enough for a couple of mid-sized, middle mile projects, one big new fiber to the home build, or maybe even a dozen or so smaller upgrade proposals. But only if California lawmakers don’t turn CASF into a private piggy bank for AT&T and Frontier.

Cable tightens the screws on California public housing broadband

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The California cable industry continues to gain ground in its perverse, and oxymoronic, fight to fence off public housing communities from government subsidies. Last year, cable industry lobbyists convinced a biddable senator to slip a big perk into a bill extending the life of a program that pays for broadband facilities – mostly equipment that’s used to provide free (and slow) WiFi access – in public housing. It was language that limited grants to only “unserved” properties, where residents aren’t offered market rate broadband service at all.

The problem with that is cost. People who are eligible to live in public housing have very low incomes and, in theory, can’t afford to pay the going rate for a lot of the basic services most of us take for granted. In practice, however, cable companies have been successful at upselling residents from basic service to pricey bundles of television and, sometimes, Internet service, which can represent a huge chunk of their monthly disposable income. Since they’re not able, often, to put up antennas or satellite dishes, they have little choice. Which is a monopoly trap cable companies ruthlessly exploit and zealously guard – even from the mild threat posed by free WiFi access.

The California Public Utilities Commission, which runs the program, has just published proposed new rules for public housing broadband grants. At the request of the cable industry’s lobbying front organisation – the California Cable and Telecommunications Association – it tightened up earlier draft language that would have left a window of opportunity open to take income levels into account when deciding whether a public housing community was “unserved”.

Originally, the standard would have been that “a housing unit is ‘not offered broadband Internet service’ if the occupant of the unit cannot access a commercially available broadband Internet service…utilizing the facilities at the premises”. Access is a term of art that can take in a number of factors, including service affordability.

Cable lobbyists objected, saying that shifted “consideration to residents”, rather than just assessing the physical ability to connect. CPUC staff agreed and changed it to read that eligibility depends on Internet service simply being available at a housing unit, regardless of whether a resident can access it.

The commission is scheduled to vote on the new rules at its 24 August 2017 meeting, and they’re taking public comments until 14 August 2017.

Hostile takeover of California broadband subsidies on ice, for now

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The attempt by telephone and cable companies to hijack the California Advanced Services Fund – the state’s primary broadband infrastructure subsidy program – is derailed, for at least a few weeks and probably forever. Keeping in mind that forever in Sacramento’s dictionary means until the next legislative session, which begins in January.

Assembly bill 1665 was pulled off of this morning’s agenda in the senate’s energy, utilities and communications committee, which means that it can’t be considered again (in the normal course of business) until lawmakers return from their summer break on 21 August 2017. After that, there’s nothing preventing the committee from taking it up, but it would be unusual. With only three weeks left in the session at that point, legislative triage begins to kick in. If it looks too badly damaged to save or there’s no appetite for doing so, it’ll be allowed to die peacefully.

No guarantees, though. The bill was amended last week to make it an “urgency” measure, which is a parliamentary maneuver that allows it to dodge most of the deadlines that the legislature sets for itself. Otherwise, it would already be in the dead file due to a similar delay last week. The chairman of the committee, senator Ben Hueso, has been an extremely good friend to telecoms industry lobbyists so far this year and could go to bat for them again. Even if it means going outside the boundaries of the normal course of business.

Telecoms companies and their lobbyists have higher priorities this year, including getting unfettered access to publicly owned poles and stopping an attempt to put the Internet privacy rules they convinced the federal government to kill into California law. So it’s more likely than not that AB 1665 will lie in its coffin until next year, when the bill’s backers will decide if its worth resurrecting. But it’s not certain. And certainly not a safe assumption.

AT&T, Frontier want right of the first night in rural California

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One of the perks that telco and cable lobbyists slipped into a broadband infrastructure subsidy bill pending in the California senate is the right to take the first look at proposed projects in unserved rural areas, so they can decide whether or not they want to be the ones to consummate the deal. In medieval times (or at least in the movie Braveheart) something very similar was called jus primae noctis, the right of the first night, where a feudal lord claimed the privilege of taking a newly wedded bride to bed.

Whether a student of history or a Mel Gibson fan, Michael Ort, the CEO of Inyo Networks made the connection to the privileged status granted AT&T and Frontier Communications by assembly bill 1665, in a letter withdrawing his support for it

The “Right of First Refusal” is AB1665’s version of the ancient practice of jus primae noctis. In this case, it is not the betrothed who is violated, but any of California’s underserved communities. The proposed legislature would grant incumbent providers the ability to select which markets they want to keep potential competitors out. Does it really make sense that dominant players can secretly dictate what markets they can hold under their control by claiming they will commit public funds to – which they alone have access – to a future market when another company publicly seeks funds? And this is not once, but in AB1665, it becomes a “rolling” practice just in case they don’t get it right the first round. Even jus primae noctis was not that embolden.

Inyo Networks and Praxis Associates, its corporate sibling, completed Digital 395, a 500 mile open access fiber network along the eastern side of the Sierra Nevada, and are poised to do the same on the northern coast. AB 1665 would lock out this kind of high speed, independent fiber project and effectively give $300 million directly to Frontier and AT&T for little more than maintenance work on systems with low speed, 1990s style technology.

Systems that are as inadequate and inappropriate to the standards of the twenty first century as jus primae noctis.

CPUC debunks Frontier’s service claims, approves FTTH grant in Phelan

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The high desert community of Phelan, in San Bernardino County, will get gigabit class fiber to the home service. The California Public Utilities Commission voted four to one yesterday to approve a $28 million grant to Race Telecommunications, which will cover 60% of the cost of building the project. The single no came from commission president Michael Picker.

The decision had been delayed two weeks, while Race and Frontier Communications explored ways they might work together. That discussion came at the request of commissioners, who were trying to avoid spending state money in an area that was also getting federal subsidies, albeit for relatively minor upgrades to ageing DSL systems that will not meet the CPUC’s minimum standards.

The CPUC also did some ground truthing and discovered Frontier’s service claims did not line up with reality, according to commissioner Clifford Rechtschaffen…

Since our last meeting [CPUC staff] has gone down to Phelan’s central business district and established that they are in fact going forward with their upgrades to some households and businesses. They also though, and this I think is quite significant, they determined based on the engineering constraints of the project, that Frontier’s upgrade would not reach nearly 100% of the community not even the 85% that we thought before, but more like 60%. So 40% of the community would not be served. And that’s very significant. That means that we have a significant portion of the community would not be served in an area that we have identified as our highest priority.

But Rechtschaffen also warned that the Phelan project shouldn’t set a precedent, and other pending projects should be looked at differently.

The backlog of proposals for California Advanced Services Fund subsidies is being whittled down. Four grant applications are still pending, and only one of those – a middle mile project proposed by Ducor Telephone in the Tulare County mountain community of Kennedy Meadows – is completely outside of the current phase of the federal Connect America Fund subsidy program. Although, as a small rural telephone company, Ducor has access to money from related federal programs.

The other pending projects – Connect Anza in Riverside County, Vandyland in Santa Barbara County and Las Cumbres in Santa Cruz County – are, like Phelan, in the former Verizon territories acquired by Frontier and share some overlap with federally funded areas.

California bill magically improves broadband service to 280,000 homes

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If too many Californians have substandard broadband, the best way to fix it is to lower the standards. That’s the perverse logic that’s captured the thinking, such as it is, of a senate committee that’s considering a rewrite of California’s primary broadband infrastructure subsidy program. It would let AT&T and Frontier Communications fence off poorly served rural communities from competition, and get taxpayer money as a reward.

As the senate energy, utilities and communications (EU&C) committee’s analysis of assembly bill 1665 explains…

This bill would alter the current CASF goal by reducing the eligibility speed to 6 Mbps/1 Mbps from the current 6 Mbps/1.5Mbps and exclude CAF II areas, as well as, areas where incumbent providers claim they plan to deploy service. Based on the analysis by the CPUC, the eligible households for this program may be reduced from just over 300,000 to about 20,000.

A quick look at the numbers confirms that the CPUC’s analysis is in the right ballpark. Both Frontier and AT&T maintain antiquated DSL systems that serve millions of Californians who live in communities that don’t have sufficient revenue potential. Low income and low density communities in other words.

That divide was a concern for one assembly member yesterday. During a hearing on senate bill 649 – another slice of telco heaven that would preempt local ownership of light poles and control of cell site placement – Sabrina Cervantes (D – Riverside) was worried that people living in low income areas wouldn’t see the benefits of the 5G wireless bonanza promised by the bill’s author (and EU&C chair), senator Ben Hueso (D – San Diego).

His reply was to promise AB 1665 would fix that problem – a promise that’s blatantly false, as the CPUC’s numbers show. But it was good enough to grease the skids for SB 649, which slid through without a single no vote.

AB 1665, on the other hand, hit headwinds this week. Whether that’s enough to overcome the pressure from AT&T, Frontier, cable lobbyists and their amen corner in the legislature is still an open question. The answer might come next week, when it’s due to be heard in the senate’s EU&C committee.

Opposition wave stuns California broadband subsidy grab

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An effort to turn California’s broadband infrastructure subsidy fund into a monopoly preservation program is stalled, at least for a week. The chair of the California senate’s energy, utilities and communications committee, Ben Hueso (D – San Diego), opened yesterday’s meeting with the announcement that consideration of assembly bill 1665 was postponed until next Tuesday, 18 July 2017. He gave no reason for the delay, but it’s worth noting that dozens of organisations – counties, broadband consortia, independent Internet service providers and others – withdrew their support last week after AT&T and Frontier Communications turned it into a blatant pork barrel bill, instead of the thinly disguised one that was approved by the California assembly.

The analysis of AB 1665 prepared by the committee’s staff was published early Monday morning, a few hours before the hearing. It proposed a number of new changes, including chopping the $300 million infrastructure subsidy account in half, but did nothing to fix the major problems with the bill: California’s minimum broadband speed would still be reduced to 6 Mbps download/1 Mbps upload speeds, AT&T and Frontier would still be able to carve out most of their territory and get first call on the money, and they’d be able to spend it on antiquated systems that won’t – can’t – meet current standards.

The big question now is whether or not AB 1665 is dead, at least for this year. Normally, Friday would be the deadline for Hueso’s committee to approve it, which isn’t going to happen. That leaves two options: put it on ice and bring it back in 2018, or raise the bill’s profile and finesse the rules. The former is the safe route, the latter risks hiking a tax and funnelling it to two politically connected corporations in a year when the legislature has already significantly increased the burden on California taxpayers.

The smart move would be to wait.

California broadband subsidy vote postponed, perhaps until 2018

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A California senate committee delayed consideration of a bill to rewrite broadband subsidy rules until next week. Assembly bill 1665 was on the agenda for the energy, utilities and communications committee this morning. As the hearing began, the chair, Ben Hueso (D – San Diego) announced that it had been postponed until next Tuesday, 18 July 2017. No reason was given, but it appears that the flurry of opposition that followed last week’s amendments were a factor. One major question to answer is whether or not the delay means that the bill will actually be bumped until next year – there’s a key legislative deadline this Friday, and AB 1665 will miss it. No one is certain right now what that means – the California legislature’s rules can be elastic at times – but it’s very possible the bill will be put on hold until 2018.

Support crumbles for California broadband subsidy grab

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UPDATE: the hearing on AB 1665 was delayed until next week. More info here.

Last week’s amendments to assembly bill 1665 went too far for many of the organisations that were supporting it, particularly those with an interest in developing broadband infrastructure and countering incumbent monopolies. The changes allowed AT&T and Frontier to fence off most of their rural California systems from potential competitors, while getting privileged access to the $300 million in construction subsidies contained in the bill. Other perks that were snaked in included tough – likely fatal – restrictions on independent middle mile projects, and a byzantine planning and review process that would make it virtually impossible for competitive last mile proposals to succeed.

Of course, AB 1665 would still lower California’s minimum broadband speed standard to 6 Mbps download and 1 Mbps upload speeds and allow Frontier and AT&T to protect 1990s-style legacy DSL systems from competitors with modern technology.

The bill’s sponsor, the California Emerging Technology Fund (CETF), has backed off a bit and taken the position of “support if amended”, although it’s not clear if it will simply accept cosmetic changes. CETF also has its eye on the $20 million that AB 1665 would allocate for digital literacy and broadband promotion programs run by non-profit organisations.

Several counties, along with the regional consortia representing them, have turned completely around and taken a full-on oppose position, and spelled out substantive changes that would be needed in order for them to get back on board. Some of the opposition letters are linked below. As the California Center for Rural Policy put it

As it was passed in the Assembly, the bill would have continued the progress of closing the Digital Divide in California. Amendments have changed this progress to legislation that provides rolling protectionism and blocks fair opportunities for small businesses to participate in the California Advanced Services Fund (CASF). Furthermore, it codifies that rural communities will receive heavily subsidized old technology limiting educational and economic opportunities to a large geographic area of the state.

AB 1665 is scheduled for a hearing this morning in the senate’s energy, utilities and communications committee. I don’t know exactly how many erstwhile supporters have flipped, but by some estimates it’s more than 30, including all the coastal counties north of San Francisco. The nominally neutral bill analysis done by committee staff, which was only made public this morning, removed a number of organisations from its support list, but only included one on the oppose list – the Central Coast Broadband Consortium, which sent in its initial opposition letter earlier.

Assembly bill 1665 opposition letters:

California Center for Rural Policy
Central Coast Broadband Consortium
Marin County
Sonoma County

Full disclosure: I’m on the Central Coast Broadband Consortium’s executive team and wrote the letter, then sent it with the consortium’s blessing. I am not a disinterested commentator, take it for what it’s worth.

California broadband subsidy amendments protect telcos’ bad rural service

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Get used to it.

AT&T, Frontier Communications and cable companies would be able to freeze broadband development in unserved areas of California and get priority access to broadband subsidy money, under the terms of a newly amended bill to reinstate a tax on phone bills and use the money to top up the California Advanced Services Fund (CASF). The latest version of assembly bill 1665 tracks with a draft circulated last week and is designed to freeze out independent broadband infrastructure projects.

It would create a top down planning process that would first identify communities that are eligible for broadband infrastructure grants, and then give the incumbent telephone and/or cable companies a chance to claim those areas simply by saying they’ll upgrade it in the future. There’s nothing in the legislation that would require incumbents to actually complete the builds, nor any kind of deadline for doing so. All the latest draft of AB 1665 calls for is a willingness to do so within a “reasonable timeframe”, which could be several years in the future, as allowed by the bill.

In the meantime, only incumbents would be eligible to apply for CASF infrastructure subsidies in those areas.

And AB 1665 would still lower California’s standard for acceptable Internet speeds from 6 Mbps down/1.5 Mbps up to 6 Mbps down/1 Mbps up. That might look like a minor change, but it makes a big difference in terms of technology. Dropping the upload minimum by half a meg protects the legacy, 1990s DSL systems and service levels that AT&T and Frontier maintain in much of rural California.

Other perks that cable and telco lobbyists snaked into the bill include language that would effectively kill independent middle mile projects and the ability to tap CASF money to pay for operating costs.

This latest version of the bill is due for a hearing in front of the senate energy, utilities and communication committee on Monday. Any additional gifts to incumbents that the senate adds would have to go back to the assembly for concurrence, but given the lopsided vote to approve the first version of AB 1665, that’s not looking like much of a hurdle.