Tag Archives: casf

California broadband subsidy program heads for the deep freeze

With the stroke of a pen, governor Jerry Brown transformed the California Advanced Services Fund (CASF) into a piggy bank for AT&T and Frontier Communications. Carve outs for federally subsidised service areas and the right of first refusal on unserved areas give them an opportunity to claim CASF money for the projects they want to do, and block independent projects virtually everywhere else in their service areas.

Going forward, two questions need to be answered: what will happen to pending CASF infrastructure grant applications and how will the California Public Utilities Commission implement the new rules?

Earlier this year, the CPUC went through a preliminary information gathering exercise, in anticipation of assembly bill 1665 becoming law. No conclusions were reached, but one can hope that action will come faster than the 14 months it took to get from the last legislative rework of the CASF program to the first applications accepted under it. Technically, that application window is still open and a project proposal could still be submitted but, given that AB 1665 took effect immediately, there’s no clear path for review and approval.

The same is true for the four pending CASF grant applications. One, in the Kennedy Meadows area in the southern Sierra was submitted by the Ducor Telephone Company is on reasonably firm ground, at least from a statutory perspective. Ducor is a small rural incumbent telco, and has the same rights as Frontier and AT&T in its very limited service area.

But the other three – Surfnet in Santa Cruz County, Renegade in Santa Barbara County and the second phase of the Connect Anza project in Riverside County – are less certain. Past practice indicates that those applications should be evaluated under the rules in effect when submitted. But all three are, to one extent or another, in Frontier’s newly protected service area. Frontier tried to stop a San Bernardino County project by falsely claiming 1. they would have the entire area upgraded by August (they didn’t) and 2. that protecting federally funded areas was already California policy (it wasn’t); it is safe to assume that opposition to the pending projects will be just as fierce and disingenuous.

The only certainty is that nothing will happen quickly. Two of those projects – Surfnet and Ducor – have been stuck in the evaluation process for more than two years, despite a CPUC time limit of three and a half months for such reviews.

The days of big, state-subsidised independent broadband projects are over in California.

California broadband subsidies are now a rigged game

The era of state-subsidised independent broadband projects is over in California. It ended Sunday night when governor Brown signed assembly bill 1665 into law, with immediate effect.

AB 1665 added $300 million to the California Advanced Services Fund (CASF) specifically for infrastructure subsidies, but drastically changed the way the money can be spent. It’s messy and meandering, like most pork laden bills, but the key elements are:

  • The money has to be spent in areas where broadband service is available at less than 6 Mbps download and 1 Mbps upload speeds. A small fraction of the money might go to areas with 10 Mbps down/1 Mbps up in the future, but the critical number is the 1 Mbps up. That’s the limit for AT&T’s and Frontier’s ageing 1990s DSL systems in rural communities.
  • Even then, telcos, cable companies and wireless operators will be able to exercise an annual right of first refusal and block projects in areas that would otherwise qualify for funding. There’s a nominal requirement that whoever blocks projects has to upgrade service, with the help of CASF money of course, but loopholes allow delays that are long enough to kill any independent project that’s on the drawing board.
  • AT&T and Frontier will have the exclusive right to CASF money in areas where they’ve accepted federal subsidies under the Connect America Fund program, at least until mid–2020. The census blocks that have been awarded those federal subsidies are scattered in checkerboard fashion across rural California, effectively killing the business case for independents to expand in whatever CASF-eligible areas might be left.
  • Individual homeowners may apply for means-tested grants to pay some of the cost of building line extensions to their property. As a practical matter, it means cable companies, like Comcast, that have line extension charges built into their business models will be able to tap up to $5 million from CASF to get to homes that are just outside of their existing service areas.
  • By the California Public Utilities Commission’s estimate, the number of CASF-eligible households will plunge from 300,000 to 20,000. I’ve run the numbers too, with similar results: regardless of which assumptions you use, eligibility will drop from hundreds of thousands of homes to tens of thousands.

Most, if not effectively all, of those homes will be reserved for AT&T and Frontier. The game is egregiously rigged in their favor. Such hope as might be left rural California can be found in the words of Robert A. Heinlein:

Certainly the game is rigged. Don’t let that stop you; if you don’t bet you can’t win.

Governor Brown urged not to lower California’s broadband speed standard

Governor Jerry Brown has two weeks to decide if California’s broadband speed standard should be slower than it is now, and if the California Advanced Services Fund should be turned into a piggy bank for AT&T, Frontier Communications and the cable industry. That’s what assembly bill 1665 would do, if Brown allows it to become law.

He’s getting plenty of encouragement to sign it, from the California Emerging Technology Fund and, one might safely assume, the platoon of lobbyists that telephone and cable companies maintain in Sacramento and back with generous cash contributions to politicians of both parties. Of course, the payments these companies make – which the chief counsel for the state’s ethics agency once described as “kind of legalised bribery” – would be dwarfed by the $300 million that AB 1665 sets aside for them.

There are groups asking the governor to veto the bill, too. The Central Coast Broadband Consortium sent an opposition letter (full disclosure: I drafted it). The North Bay North Coast Consortium sent one too, signed by Mendocino County supervisor Dan Hamburg…

AB 1665 was to re-authorize this vital and popular state broadband program, and we worked hard this year to find a sponsor and bring this bill forward after 2 failed prior attempts. A large coalition of groups came to support the “Internet For All Now” act and momentum was gained. Unfortunately, when the incumbents saw that they could not stop this bill, they were able to insert one damaging amendment after another, each worse than the last, so that eventually the original intent of the bill was lost and now our state broadband program is a give-away to the large incumbent carriers and makes it virtually impossible for the independent providers to get funded. The loss of competition that will result from this bill will be extremely damaging to California’s future.

The California Public Utilities Commission hasn’t taken a public stance on AB 1665, but a strong indicator of where commissioners might lean on it can be found in a Federal Communications Commission filing they unanimously approved on Thursday. They recommended that the FCC keep its current 25 Mbps download/3 Mbps upload speed standard in place.

That’s quite different from lowering California’s minimum speed standard to 6 Mbps down/1 Mbps up standard, as AB 1665 would do.

Political heat rising over California broadband giveaway bill

A so far successful attempt to funnel $300 million of taxpayer money to AT&T and Frontier Communications in exchange for substandard, monopoly broadband service is generating some unpleasant blowback for assemblyman Jim Wood (D – Healdsburg), one of its chief backers. Assembly bill 1665 was overwhelmingly approved by the California lawmakers in the closing hours of the legislative 2017 session.

It reinstates a tax on phone bills that would be earmarked for broadband infrastructure grants, made under new rules that 1. lower California’s minimum broadband standard to 6 Mbps download and 1 Mbps upload speeds, 2. allow AT&T and Frontier to fence off vast swathes of rural California, whether or not they upgrade service to even this pitiful level, and 3. restrict eligibility to the point that independent projects will be all but impossible.

Wood represents the northern California coast, which has benefited from several projects subsidised by the current California Advanced Services Fund program. Opposition from local elected officials and broadband advocates blossomed after the bill’s authors – notably including Wood – refused to work on language with anyone other than lobbyists and surrogates from big telecoms companies notorious for pumping cash into political pockets. The wave is now crashing over him, as local reporters, such as the Lost Coast Outpost’s Ryan Burns, pick up on the story

AT&T and Frontier lobbied Wood and the other co-authors, urging them to accept this lower standard for broadband speeds. And, indeed, in its final form the bill defines broadband speeds as just 10 Mbps down and 1 Mbps up. Its threshold for deeming a household “unserved” by broadband is even lower — 6 Mbps down and 1 Mbps up.

Wood’s response to the Outpost was puzzling: “I continue to lack a clear understanding of some of the concerns I have heard and read about AB 1665”, he wrote to them, going to on to claim that the tight circle he consulted, comprised exclusively of deep pocketed telecoms carriers and organisations with company representatives on their boards, was somehow representative of wider concerns.

AB 1665 is on governor Brown’s desk, awaiting his approval. Or veto.

War for California’s broadband future isn’t (quite) over

The politics of broadband in California are largely driven by the campaign cash that incumbent telephone and cable companies – and sometimes the unions representing their employees – stuff into the pockets of senators and assembly members. That influence is moderated by the energetic, but often futile efforts of broadband activists across the state. So it was with assembly bill 1665, which is on its way to governor Brown’s desk.

If he signs it, AB 1665 will transform the California Advanced Services Fund (CASF) from a useful source of capital for broadband companies that aim to inject at least a little competition into California’s highly concentrated, sclerotic broadband market into a $300 million slush fund, mostly for telcos with rural monopolies, like AT&T and Frontier, but also allowing a taste for cable companies, like Comcast and Charter.

The fight against the pork barrel that AB 1665 became was led by a loose coalition of regional broadband consortia representing largely rural, coastal areas, beginning at Del Norte County on the Oregon border and running south through Monterey County, skipping San Francisco and San Mateo counties, which have stayed out of the fray. Independent Internet service providers and the umbrella organisation which represents many of them – CISPA – were also on the front line.

Their reaction was swift to the lopsided votes that put AB 1665 on track to become California law. You can read a running compilation here, but Sean McLaughlin, the executive director of Access Humboldt put it well…

Sadly, in AB 1665 public interests have been subverted to benefit private interests. We know that the broadband provider industry, rooted in a history of monopoly dominance over the telecommunications marketplace, has captured our legislature when a thoughtful proposal for public support to bridge the digital divide is perverted into a thoughtless gift to private interests.

The official vote tallies notwithstanding – politics is a complicated sport – several lawmakers stood against the tide of lobbyist cash and love. First among them was senator Mike McGuire (D – Healdsburg), who challenged the conventional, campaign contribution-centric wisdom at the California capitol and openly opposed AB 1665.

Senate majority leader Bill Monning (D – Monterey) refused to vote in favor of the bill. Assemblymen Mark Stone (D – Santa Cruz) and Marc Levine (D – San Rafael) signed on as co-authors months ago in the hope of reaching a sane result, and then conspicuously withdrew their names when the pork turned rancid. They all deserve thanks.

Several – but not all – republicans opposed AB 1665. Assemblyman Randy Voepel (R – Santee), who previously endorsed an independent CASF proposal in his district, voted no and was joined by seven of his assembly colleagues, most from southern California’s Axis of Anita Bryant, but also including Jordan Cunningham from San Luis Obispo.

The war isn’t quite over. Broadband advocates will make their case to Brown, and then wait. He has until 15 October 2017 to decide.

I’m part of that loose coalition. I’m involved and not making any apologies. Take it for what it’s worth.

California senate votes to pay $300 million for slower broadband

Assembly bill 1665 was approved by the California senate this afternoon on a lopsided vote. The initial count was 32 in favor and 2 against, but the roll was left open for a while, so the final numbers could be different. The no votes came from Mike McGuire (D – Healdsburg) and Janet Nguyen (R – Garden Grove).

The bill will drop California’s minimum speed standard to 6 Mbps down/1 Mbps up, and allocate $300 million in construction subsidies under rules that all but guarantee the money will go to AT&T and Frontier Communications. It also imperils pending projects. AB 1665 now goes back to the assembly for a concurrence vote.

More telco perks added to $300 million broadband subsidy bill as California senate vote nears

Incumbent telephone and cable companies convinced their friends in the California legislature to add another slab of pork to a broadband subsidy bill, as the senate prepares to vote on it. Assembly bill 1665 started out as a telco-centric bill, and subsequent amendments, including the the ones added on Friday, have made it even more one-sided – in most areas of the state, it will be impossible for independent broadband projects to qualify for support from the California Advanced Services Fund (CASF).

Two assembly members have taken their names off of the bill. Mark Stone (D – Santa Cruz) and Marc Levine (D – San Rafael) were co-authors, but they both withdrew their support as the gifts to telephone and cable companies became more blatant and local opposition grew in their districts.

AB 1665 reinstates a tax on telephone bills, and pumps $300 million into CASF for infrastructure grants. But it re-writes the rules of the program, lowering the minimum acceptable broadband speed to 6 Mbps download and 1 Mbps upload. If you have service available at that level, then your community isn’t eligible for broadband upgrade grants. But even if you don’t, the money won’t be coming to your town, except by way of your incumbent telephone company.

The bill also allows AT&T and Frontier Communications to reserve areas based on 1. promises of future upgrades and 2. acceptance of federal subsidy money. They would be able to apply for CASF grants in those otherwise eligible areas, but independent projects would be out of luck. AT&T and Frontier will be free to game the system and pocket most of the $300 million in return for providing service that doesn’t meet California’s current minimum standard of 6 Mbps down/1.5 Mbps up, if they so choose.

The amendments added to AB 1665 on Friday reinforce those privileges, among other things explicitly excluding areas where AT&T and Frontier are receiving federal subsidies.

Cable companies get some perks too. They’ll be able to launder grant money through their customers, and avoid oversight by the California Public Utilities Commission. Cable lobbyists also tightened the screws on public housing communities, who will no longer be able to use CASF money to install WiFi equipment and offer free access if someone is selling broadband service at 6 Mbps down/1 Mbps up or better. Even if that service costs more than residents are supposed to be able to afford.

A vote could come as early as tomorrow in the senate. If it gets the necessary two-thirds majority, it’ll go back to the assembly for a concurrence vote on amendments.

California senate committee votes to give telcos $300 million for slower broadband

The California legislature continued its love affair with telecommunications companies on Wednesday. The senate’s energy, utilities and communications committee, chaired by Ben Hueso (D – San Diego), voted 8 to zero to approve assembly bill 1665 in its current form and send it on to the senate appropriations committee for further review.

It wasn’t exactly unanimous. One senator, Mike McGuire (D – Healdsburg), who had opposed the bill, abstained when the vote was taken, as did two republicans, Anthony Cannella (R – Merced) and Mike Morrell (R – Rancho Cucamonga).

The version that was approved by the senate EU&C committee was the one that was put on the table in July, when telco and cable lobbyists convinced the author, Eduardo Garcia (D – Imperial County), to add more perks for them and more barriers for would-be competitors. However, it’s not clear whether a third helping of pork proposed by the EU&C committee staff would get slathered on as it winds through the legislative process.

AB 1665 would lower California’s broadband standard from a minimum of 6 Mbps download/1.5 Mbps upload speeds, to 6 Mbps down/1 Mbps up. That’s despite a move by the federal agriculture department to set the minimum acceptable speed for rural areas at 25 Mbps down/3 Mbps up.

The bill would also re-write the rules for the state’s primary broadband construction subsidy program – the California Advanced Services Fund (CASF) – in such a way that it will be difficult, if not impossible, for anyone other than AT&T or Frontier Communications to tap into the $300 million allocated for infrastructure grants. It adds further sweeteners for incumbents, such as letting them use CASF grant money to pay for operating costs and, in a nod to the cable industry, allowing them to launder it through individual property owners in order to avoid any direct oversight by the California Public Utilities Commission, which oversees the fund.

Next stop for AB 1665 is the senate appropriations committee. If it gets a green light there, it’ll go to a floor vote by the full senate, and then back to the assembly to reconcile the different versions passed by the two houses.

Charter’s broadband is not the help poor people need, CPUC says

But check out what’s on pay per view.

Charter Communications lost its latest battle to keep free WiFi service out of public housing in California, but the defeat came long after the war ended in victory for cable companies and their lobbying front organisation in Sacramento. It means that 47 publicly subsidised communities, scattered across the state, get to keep grant money they received from the California Advanced Services Fund to install broadband facilities. Most of them had opted for WiFi systems that would offer slow connections at no cost to residents.

In its order denying the appeal, the CPUC pointed out that there’s “evidence that Charter’s service is not affordable”…

In an appeal to Charter’s challenge to Eden Housing’s…grant applications, Eden stated, among other things, that (1) its housing sites are occupied by 100% low income residents, with an average household income of $35,000 and much lower at its senior housing sites. “A large majority of our residents – currently an average 73% — have no access to broadband services because they cannot afford to pay the monthly service fees offered by Comcast and Charter. . . . [T]he monthly fees could cause a severe hardship to a family and, in some cases, a basic need could go unmet to pay the bill…A monthly fee is an obstacle for this group”.

The California Public Utilities Commission denied appeals of two decisions giving the grants – typically less than $50,000 and many much less – to public housing complexes where Charter and its cable brethren offer service at prices beyond what residents are supposed to be able to pay, particularly when bundled with even more costly television packages. It’s a sweet deal for cable companies, which is why Cox Communications chimed in with an amen filing.

It’s also why California Cable and Telecommunications Association prevailed on a simpatico state senator, Ben Hueso (D – San Diego), to slip language into a reauthorisation bill last year that outlawed grants to public housing that’s been blessed with such attention. As a result, the CPUC is scheduled to vote Thursday on new rules that will make its public housing broadband subsidy program equally friendly to California cable companies.

Order denying rehearing of decision T-17515
Order denying rehearing of decision T-17514
Modified resolution T-17515