Tag Archives: casf

$300 million taxpayer gift to cable, telcos teed up in California assembly

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California’s primary broadband infrastructure program – the California Advanced Services Fund (CASF) – is about to get a makeover that’s custom tailored for the state’s two major incumbent telephone companies, with goodies for cable operators, so they don’t feel left out.

Assembly bill 1665, carried by Eduardo Garcia (D – Riverside County), is set to be rewritten by the assembly communications and conveyance committee this afternoon. Up until now it’s just been a placeholder bill, waiting for deals to be cut so the details could be filled in. Late last night, the committee’s analysis was published, with proposed new language that:

  • Lowers California’s minimum broadband speeds to 6 Mbps download/1 Mbps upload, making 1990s legacy DSL technology the new 21st century standard.
  • Gives AT&T and Frontier Communications exclusive CASF rights in areas where they get money under a federal program, effectively blocking competitive upgrades in many, if not most, rural communities.
  • Allows CASF money to be spent on operating costs – up until now it’s been strictly for infrastructure construction – and suggests the elimination of a requirement that grant recipients put some of their own money into projects, typically 30% to 40% of the total.
  • Allow individual homeowners to apply for grants, a change pushed by cable companies so they could launder the money through their customers and avoid the CASF program’s regulatory obligations.

There’s more, but those are the highlights. In total, the bill would add $330 million to CASF by reinstating a tax on telephone bills that ended last year. Of that, $300 million would go toward infrastructure projects that meet the new, incumbent-friendly grant rules, $10 million would go to regional broadband consortia and $20 million to schools, libraries and non-profit groups to promote broadband use, but only if they actually get subscribers to sign up for service. No more money would be allocated for broadband facilities in public housing, another aspect of the CASF program that was particularly upsetting to cable companies.

At this point, the language is not final but putting suggestions into committee analyses is a common way of amending bills, particularly those still being negotiated. So more changes could come during this afternoon’s hearing.

Last surviving California broadband subsidy bill goes wobbly

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Broadband infrastructure subsidies are due for a vote on Wednesday at a California assembly committee hearing, but there’s no final text yet. What started out as four placeholder bills targeting the California Advanced Services Fund (CASF) – the state’s primary broadband subsidy program – has dwindled down to one, assembly bill 1665, carried by assemblyman Eduardo Garcia (D – Riverside County).

As of this morning, no updated bill language has been posted. Over the past few months, AB 1665 has been the subject of many meetings between legislators, telephone and cable company lobbyists, and other interests, notably the California Emerging Technology Fund (CETF), which has taken the lead on this bill.

This is the third year in a row that CASF has been on the table – or the chopping block, depending on your point of view – in Sacramento. In 2015 and 2016, cable and telco lobbyists killed proposals to raise California’s broadband speed standard and put more money into CASF.

Toward the end of last year, the tax on telephone bills that pays for CASF was scrapped, after the fund hit its $315 million limit. Of that, $270 million is set aside for broadband infrastructure construction grants. If Race Telecommunications’ $29 million fiber-to-the-home project in Phelan is approved next month, there will be something like $25 million to $30 million left.

Deal points circulated by CETF last week suggest that there’s some level of agreement to add a similar amount of infrastructure subsidy money to the kitty, but details about how it can be spent were lacking.

Frontier Communications and AT&T want their federally-subsidised rural territories, where they have an effective monopoly, protected from competition even though their promised upgrades will not meet California’s current minimum standard of 6 Mbps download and 1.5 Mbps upload speeds, let alone the federal advanced services standard of 25 Mbps down/3 Mbps up. And telco and cable lobbyists alike have pushed back against funding independent middle mile systems, like the recently approved Digital 299 project in northern California.

Incumbent telephone and cable companies have had an effective veto over CASF legislation for the past few years, and AB 1665 appears to be no different. If they are successful in forcing through language that gives them first call on hundreds of millions of tax dollars to pay for substandard infrastructure that they plan to build anyway, and blocks independent middle and last mile projects even when they refuse the money, the result will be worse than no bill at all.

Broadband service subsidies not popular in rural areas

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“Local governments should be able to build their own high-speed networks if the service in their area is too expensive or not good enough”, say 70% of people in the U.S.. According to a survey done by Pew Research, the concept of municipal broadband gets overwhelming bipartisan support: 74% of people identifying themselves as democrats and 67% as republicans agreed with that statement.

Care should be taken not to read too much into this ringing endorsement, though. People’s opinions changed radically when asked about spending government money on broadband service and whether it, in fact, costs too much or runs too slowly…

Fewer than half of Americans (44%) think the government should provide subsidies to help lower-income Americans pay for high-speed internet at home. A larger share (54%) says high-speed home internet service is affordable enough that nearly every household should be able to buy service on its own…

Americans have different levels of support for broadband subsidies based on political affiliation. Six-in-ten Democrats and independents who lean Democratic say the government should help lower-income Americans purchase high-speed internet service, but that figure falls to just 24% among Republicans and Republican-leaning independents. These partisan differences stand in stark contrast to attitudes toward municipal broadband networks.

The divide is almost as stark between rural and urban residents. Half of people in urban areas think subsidising broadband service is okay and more than half think it’s not affordable for everyone. On the other hand, in rural areas, where broadband service tends to be slower and dearer than in cities, only 36% thought it should be subsidised and 63% think it’s fast and affordable enough for everyone.

Philosophically, Americans are comfortable with the idea of adding broadband to the list of services a city might or might not providing. In that respect, they seem to put it into the same bucket as water or electricity, which are delivered by both municipalities and private companies, depending on local circumstances and history. But the Pew study also indicates that it’s likely to be an uphill battle to convince them that their tax money should be spent on cheaper or faster Internet service. Particularly in communities most likely to lack it.

Subsidise what we’re already doing, telecoms companies tell CPUC

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Give me the money!

Big telecoms companies don’t want California broadband infrastructure subsidies to go to potential competitors, and they don’t want to be pushed into spending any more capital on upgrades than they’ve already budgeted. AT&T, Frontier Communications and the cable industry’s California lobbying front took a defensive posture in comments regarding broadband development priorities drafted by the California Public Utilities Commission. It was in response to a staff white paper that took a first shot at a quantitative analysis of how to get the greatest benefit out of the roughly $60 million still available for infrastructure grants in the California Advanced Services Fund.

AT&T wants the CPUC to put middle mile projects at the bottom of the list and to turn a blind eye to last mile technology. The former is not surprising, since last mile competition flows from middle mile projects, and competition is the last thing that AT&T wants in rural and inner city markets where it has monopoly control. With that kind of dominance in rural and inner city areas, AT&T plans to rip out copper networks and replace them with wireless systems, which is why it wants the CPUC to look kindly upon that kind of technology. If it loses its monopoly grip, though, competition would severely dent, if not kill, its wireless local loop business model.

Both Frontier and the cable industry’s Sacramento lobbyists also want the CPUC to back away from funding potentially competitive projects, although they express it in terms of avoiding areas where promises have been made to eventually upgrade service or where federal programs will subsidise broadband infrastructure. Substandard broadband service, it should be noted. The 10 Mbps download/1 Mbps upload speeds allowed under the Federal Communication Commission’s program are below the CPUC’s current minimum, and far less than the FCC’s own 25 Mbps down/3 Mbps up standard for advanced service. Which is what the, um, California Advanced Services Fund is supposed to be about.

Rural telephone companies, aka small LECs (local exchange carriers), take a warmer approach to the CASF program overall, and had generally good things to say about the criteria and methodology used in the white paper. Echoing others’ comments, including the response I wrote on behalf of the Central Coast Broadband Consortium, the small LECs asked the CPUC to apply any new criteria to future projects, and not toss out the current batch of proposals, most of which have been languishing for more than a year. They urged a more qualitative approach – not surprising since the quantitative, bang-for-the-buck analysis in the draft largely leaves out their sparsely populated service territories.

California broadband subsidies should build, not follow, business case

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More than twenty companies and organisations offered their critiques of the first draft of a bang for the buck analysis of where the California Public Utilities Commission might focus its dwindling broadband infrastructure subsidy money. Many of the comments can be summed up as give me the money, with incumbent telcos and cable companies laying down defensive fire aimed at heading off potential competition – more about that on Monday.

Three of the commenters – the Karuk Tribe, and the CPUC’s office of ratepayer advocates and the consumer group TURN in a joint submission – made a fair point about the overall approach: by prioritising communities with bigger, denser populations, the analysis paralleled the sort of market evaluation done by Internet service providers when they decide whether or not to serve a particular area. As the ORA/TURN comments put it…

Taking a “think like an ISP” approach may duplicate efforts by ISPs that are already pursuing areas with their own capital expenditures. For example, at the [workshop held by the CPUC to discuss the draft], AT&T commented that it already deploys in areas where it sees population growth. Taking this approach may neglect areas which ISPs would not target and therefore are areas most in need of the CASF program’s funds.

A major reason CPUC analysts took that approach was to try to reach as many Californians as possible, partly because more people will benefit, but also because the California Advanced Services Fund – the source of the money – has a legislative mandate to bring sufficient broadband service to 98% of the state. You need to reach lots of people to do that.

Another reason to “think like an ISP” is to increase the likelihood that private sector companies will bear the financial and opportunity costs of applying for CASF money and, ultimately, build successful systems. The economic realities of building both broadband infrastructure and a sustainable business have to be considered.

But there’s more to the calculus than economic viability. As TURN, ORA and the Karuk Tribe correctly point out, broadband infrastructure subsidies should also be spent in a way that make bad business cases into good ones. That doesn’t mean ignoring more densely populated areas, but rather recognising that those are the cherries – if you want them, take the whole tree.

Download the comments…

AT&T
Bolinas Fire
Bolinas Utilities
Caltel
CCBC
CCTA
CETF
Charter
Frontier
Greenfield Communications – sorry, secret
Humboldt County
Karuk Tribe
Las Cumbres
Marin County
Mendocino County
Office of Ratepayer Advocates/Toward Utility Rate Normalization
Race
Sierra Business Council
Small LECs
Surfnet

Gigabit fiber in San Bernardino County heads for CPUC vote

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A fiber to the premise project for San Bernardino County – largest yet – is scheduled to go in front of the California Public Utilities Commission in May. A draft resolution was published on Friday, which proposes to award $29 million to Race Telecommunications from the California Advanced Services Fund (CASF) to build an FTTP system in and around the San Bernardino County communities of Phelan, Piñon Hills, Oak Hills and Hesperia.

As designed, it would pass 8,400 homes, which is “the most households ever given access by a CASF-subsidized last-mile project”, according to the draft. Race is projecting a 68% take rate, which amounts to 5,700 subscribers. Another 85 potential business and institutional customers will also be reachable via the system. The subsidy comes out to $3,400 per premise, which is in line with past CASF-funded FTTP projects. In the past two years, the CPUC has approved $48 million for eleven FTTP proposals totalling 12,400 homes, a $3,900 average all up. On a project basis, the median subsidy $7,000.

As with its past CASF-subsidised projects – Race has received eight CASF grants and completed work on four – its plan calls for offering symmetrical gigabit service for $60 a month to residences. Businesses would pay $200 for 100 Mbps service. There’s no mention of data caps for either.

The Phelan project also marked another first for the CASF project. After Race submitted its initial application for a $48 million subsidy, Ultimate Internet Access – another ISP with a CASF track record – submitted a competing proposal, which would have cost less than half that. During the ensuing months of back and forth discussions, the project area was adjusted and costs were trimmed. Race came back initially with a $23 million subsidy request, but after further changes to project plans and service area the final tab ended up at $29 million.

Californian broadband subsidies create rural competition, of a sort

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The Digital 299 middle mile fiber project approved by the California Public Utilities Commission on Thursday is a big step toward levelling the competitive playing field for broadband in the Klamath Mountains. It’s a rugged and sparsely populated region, with very little wireline or mobile broadband access, and fixed wireless service that seems to rely on expansive coverage claims backed up by lawyerly disclaimers rather than recognised and verifiable technical standards.

That’s why the region qualified for a $47 million broadband infrastructure grant from the California Advanced Services Fund. That money will mostly go toward building a 300 mile long fiber network, generally along State Route 299, but $1.5 million will be spent on last mile, gigabit service for the town of Lewiston in Trinity County and $3.1 million will pay for up to 15 wireless towers along the line. The result will be three big, competitive kicks…

  1. Cheap (relatively) Internet bandwidth. Assuming the system is run on an open access basis with reasonably transparent pricing – likely, at least at first, but not guaranteed by the CPUC – any ISP will be able to bring in gigabits of capacity at prices that match or beat what’s available to mainstream communities in the Sacramento Valley.
  2. Ready made towers, with backhaul included. If the price is right, mobile carriers will come, as Frontier Communications, the only wireline company along the route, seems to know. It vociferously objected to this common sense add-on to the project. Given that it has no qualms about accepting federal subsidies for service that fails to meet Californian standards, it’s a safe bet that Frontier’s motivation isn’t concern for taxpayer dollars.
  3. A shining testament that a better world awaits. People living in the 300 homes in Lewiston – a town that makes Boron look like an LA suburb – will get a symmetrical gigabit for $60 a month. Their neighbors along SR 299, and particularly in the communities that the CPUC unjustly chopped from the project), will know what’s possible and will not have to accept poor mouthing from incumbent providers.

Don’t get too carried away by the competitive prospects. Internet access along the Digital 299 route will be greatly improved and core broadband infrastructure will be much better than similarly remote areas of California, but the economics of broadband along the Digital 299 route will, absent additional subsidies, keep service levels low and/or prices high by urban standards.

Push back on public funding will only increase. Attempts to put more money in the CASF kitty are stalled in Sacramento and CPUC president Michael Picker, who echoed incumbent talking points before voting *no* on the Digital 299 grant, is embracing the monopoly first model of FCC chair Ajit Pai.

But even if it’s not a free market paradise the Klamath region has a fighting chance, where before it had none. That’s a win.

Middle mile fiber link to California’s north coast gets $47 million

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The Digital 299 middle mile fiber project will receive a $47 million subsidy from the California Advanced Services Fund. The line begins in Shasta County, just south of Redding where it will connect to long haul fiber on the I-5 corridor, and runs along State Route 299 through Trinity County, ending on the coast in Humboldt County at Eureka, with laterals to a potential submarine cable landing site on Arcata Bay and Humboldt State’s marine lab in Trinidad. It also includes a spur up to Hoopa tribal lands along State Route 96. It’ll be built and operated by Inyo Networks/Praxis Associates, the commonly owned companies responsible for the similar Digital 395 project in eastern California.

The California Public Utilities Commission voted 4 to 1 to approve the grant yesterday, with president Michael Picker voting no. It pays for 70% of middle mile construction costs – $45 million of $65 million total – and 60% of a small last mile build for 300 homes in the Trinity County community of Lewiston, $1.5 million of $2.4 million total. People living in Lewiston will be able to get symmetrical gigabit Internet service for $60 per month.

Originally, Inyo Networks proposed offering this fast and cheap package to a total of 1,000 homes, in Douglas City, Hayfork and Burnt Ranch as well as Lewiston, but it had to slash 700 homes from the last mile component of the project. That was because Frontier Communications protested, promising instead to upgrade broadband speeds to 1,200 homes in the area to 10 Mbps download and 1 Mbps upload speeds. That’s something Frontier has to do anyway, to meet requirements attached to federal broadband subsidies it’s accepted. It’s also below the CPUC’s minimum 6 Mbps download and 1.5 Mbps upload standard, but Frontier dodged around that requirement by telling the CPUC that it “estimates that approximately 70 percent of these households will receive speeds greater than the minimum speed (12 mbps down and 2 mbps up, or higher)”.

The project budget also includes construction of up to 15 towers that would be attached to the network and provide a platform for mobile carriers, public safety radio systems and other wireless services: potential middle mile fiber customers, in other words.

CPUC approves Digital 299 fiber project, Webpass transfer, pole access enquiry

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In a 4 to 1 vote, the California Public Utilities Commission voted to spend $47 million on the Digital 299 middle mile fiber project this morning. It’s a 300 mile network connecting Trinity and Humboldt counties to long haul routes in Shasta County. The no vote came from president Michael Picker.

The CPUC also unanimously approved Google’s purchase of Webpass, a mostly wireless broadband provider that is also licensed as a wireline telephone company – hence the need for commission review – and granted a request to begin consideration of new access rules that would allow licensed telephone companies to hang wireless equipment on utility poles.

All or nothing for Digital 299 tomorrow

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Update, 23 March 2017: the CPUC voted 4 to 1 to approve the Digital 299 grant this morning.

The Digital 299 middle mile fiber system will either get all of the $47 million that its backers are requesting from the California Advanced Services Fund, or it won’t be subsidised at all. The California Public Utilities Commission will make that choice tomorrow, assuming the current schedule holds, when it considers whether or not to fund a 300-mile fiber route that would begin near Redding, where it would connect to existing fiber lines along the I-5 corridor, and run through Trinity County and terminate on the Humboldt County coast, at Eureka and Trinidad.

When it was proposed in August 2015, the applicant – Inyo Networks – asked for a $51 million grant, based on the assessment that the project area was unserved, in other words, there was no broadband service available at all. That would have made the project eligible for 70% funding from CASF. However, after it had been under review for a year and a half – despite the fact that commission rules call for that work to be completed in three and a half months – that figure was trimmed back to $41 million. CPUC staff rated most of the territory as underserved – eligible for only 60% funding – and accepted late objections from Frontier Communications and Charter Communications which resulted in the majority of the included last mile service area being taken out and a reduction in the middle mile subsidy, respectively.

When the Commission first considered the project last month, Inyo Networks and supporters from the Humboldt area asked for $6 million more for the project, as well as easier completion bond requirements. At the time, commissioner Carla Peterman said she’d draft an alternate resolution that would do that. Instead, the original resolution was rewritten – it was published last week, but I missed it – to raise the grant amount and relax bonding specs. That means that there will only be one resolution on the table – the lower cost option is gone, absent a move by commissioners to revive it.

The big question now is whether it can muster three votes. At last month’s meeting, president Michael Picker said he’s “likely to vote against this under any circumstances”, and rookie commissioner Martha Guzman Aceves expressed similar skepticism. That means fellow rookie Clifford Rechtschaffen, Liane Randolph and Peterman will all have to vote yes. Otherwise, Digital 299 dies.