Tag Archives: casf

Four ISPs claim California right of first refusal for broadband subsidies, but big telcos sit it out

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Four Internet service providers exercised their jus primae noctis right of first refusal for California broadband subsidy priority by Tuesday’s deadline. That’s assuming all four got it right, which is doubtful.

When the California Advanced Services Fund (CASF) program was turned into a piggy bank for AT&T and Frontier rewritten last year, one of the benefits lawmakers slipped into the bill was an annual opportunity for incumbent providers to claim unserved areas, in exchange for a promise to upgrade broadband service within six months. They could apply for CASF money in those areas, but no one else could.

It was one of many giveaways to big incumbents, but only one of the four falls into that category. Of the major Californian ISPs, only Charter Communications filed, and it didn’t exactly claim a right of first refusal. Rather than explicitly promising any upgrades, Charter simply pointed out that it’s under CPUC orders to convert its remaining analog cable systems in California to full digital capability, and then asked to CPUC to deny any subsidy requests in its territory “in the spirit of the [right of first refusal] process”.

Charter got one thing wrong, though. It said it had until May 2019 to finish those upgrades. That’s only true in Monterey County, where a separate agreement governs. For the other communities in Tulare, Kings and Modoc counties where it has build out obligations the deadline is November 2018, per the CPUC resolution that granted Charter permission to buy Time Warner and Bright House cable systems in California (page 71, item g if anyone is curious).

The other three include Anza Electric Cooperative, which has one CASF grant in the bag and another pending for a fiber to the home build in its Riverside County electric service area and Conifer Communications, a wireless ISP that’s claiming territory that’s arguably in, or at least in the general neighborhood of, its existing service area in Amador, Calaveras, Mariposa, Stanislaus and Tuolumne counties.

The fourth is Geolinks, also a wireless ISP, with plans to apply for a CASF grant and expand into the same Monterey County communities that Charter is claiming. The new CASF law limits right of first refusal eligibility to “existing facility-based broadband provider[s]”, which is a term the CPUC has defined as providers that intend to “upgrade service in their existing underserved territories”. Geolinks has no facilities in Monterey County, although it does offer service further south on the central coast. Whether they’re close enough is something for the lawyers to argue over. As is the competing “notice” from Charter.

Anza Electric Cooperative, Inc., “CASF Right of First Refusal Annual Demonstration Letter”, 15 January 2018.

Charter Communications, “Notice of Planned Deployment of Broadband Passings”, 16 January 2018.

Conifer Communications, “Right of First Refusal Letter”, 16 January 2018.

Geolinks, “Right of First Refusal Letter”, 15 January 2018.

Blame game won’t stop California broadband subsidy giveaway

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The California legislature intended to protect AT&T’s and Frontier Communications’ rural broadband monopolies and subsidise their low speed service, when it passed assembly bill 1665 earlier this year. In effect, that’s what the California Public Utilities Commission said last week as it approved a resolution that allows the two biggest incumbents to claim exclusive rights to broadband infrastructure subsidies in the rural communities they serve (or not).

Telephone and cable industry lobbyists re-rigged the California Advanced Services Fund program and found enough friends in the legislature – democrat and republican – to approve it by more than a two-thirds majority. They tagged it urgent, which means the CPUC has to implement it now. So it is.

As it’s writing new rules to implement AB 1665, the CPUC is paying attention to the plain text of the bill, and not to its smoke screen of straight-faced deception and phony fact sheets. As it should.

The California Emerging Technology Fund (CETF), which sponsored AB 1665 and allowed it to be turned into a cable and telco wish list filed an objection to the CPUC’s resolution, saying that “it could be interpreted to be rolling protectionism for large incumbents that locks in old technology and blocks the opportunity for fair participation by smaller companies”. Yes. Because it does.

CETF claims that lawmakers didn’t intend to block small companies and that it asked its legislative champions to put that in a letter. But darn it, the bill’s authors “have not yet provided a written position”.

Guess what. It doesn’t matter how many letters politicians write or what promises CETF made while the bill was moving through the legislature. The CPUC’s reply last week was blunt and proper: “Staff implements AB 1665 as written”.

AB 1665 is a bad bill. The people behind it knew what it said and knew it would favor monopoly providers over rural Californians. Deflecting blame onto legislative pen pals or the CPUC serves no legitimate purpose. The first step toward fixing the damage it does is to acknowledge it as the failure it is.

California broadband decisions hide in D.C.’s shadow today

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The big broadband news will be coming from the FCC later this morning (although there won’t be much, if anything, that’s actually new). But the California Public Utilities Commission is also meeting today, with a handful of broadband-related issues to decide.

One of the resolutions up for a vote would slap down a request from the CPUC’s office of ratepayer advocates to take another look at how cable companies are (not) held accountable under California’s statewide franchising law. A cable company’s statewide franchise comes up for review every ten years, but it’s done behind closed doors and renewal is effectively automatic. ORA wanted the CPUC to reconsider that gift, but did not convince the commissioner who wrote the draft – Clifford Rechtschaffen – that there was good reason to do so.

Another draft resolution begins the process of bringing the California Advanced Services Fund (CASF) broadband subsidy program into line with changes dictated by assembly bill 1665, which was signed into law earlier this year. AB 1665 gave AT&T and Frontier Communications a privileged place at the head of the subsidy line, and the resolution that’s likely to be approved today fills in some of the details, but leaves hard questions for later. Like whether Frontier or AT&T should be held accountable for making false promises about where and how they’ll upgrade broadband infrastructure.

There are also three housekeeping items, involving the technicalities of the California Advanced Services Fund (CASF). One reinstates a tax on phone bills – also authorised by AB 1665 – to collect the money that’ll be funnelled to Frontier and AT&T. The other two are about due diligence – financial reporting rules for regional broadband consortia and waiving a performance bond requirement for a grant recipient that gained CPUC certification instead.

There’s not much suspense about the outcome today, either in Washington, D.C. or in San Francisco. All five broadband items are on the CPUC’s consent agenda and, absent objection from a commissioner, will slide through without discussion.

Frontier orders a California broadband subsidy sandwich

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The first application for construction (and maybe operations) subsidies from the California Advanced Services Fund (CASF) since the program was gutted by the California legislature landed in the hopper at the California Public Utilities Commission.

Frontier Communications is asking for a $1.8 million grant, without specifying how much, if anything, it’s willing to pay out of its own pocket. It wants the money to pay for a fiber to the home system in and around the remote San Bernardino County town of Lytle Creek…

Frontier’s proposed project will cover about 4.4 square miles and is a combination of middle-mile and last-mile infrastructure using Frontier’s existing poles and rights of way to deploy fiber-to-the-home (“FTTH”) facilities capable of providing High Speed Internet, Ethernet, and VoIP service with speeds of up to 1 Gbps download and 1 Gbps upload.

“Capable of” and “up to” are weasel words that incumbent telcos, like Frontier, put in ads and other marketing material with the intent of pulling the rug out from under consumers when they have the gall to ask for it. In its project summary, Frontier makes no promises about the service it will actually offer, or the price it will charge.

Frontier says it plans to serve 339 homes with the subsidy, which comes out to $5,300 each. But what Frontier doesn’t mention is that Lytle Creek is one of the blank spaces on its federally subsidised checkerboard. It’s sandwiched between areas where the Federal Communications Commission is paying for service at 10 Mbps down/1 Mbps up, which is below the otherwise federal standard of 25 Mbps down/3 Mbps up. The middle mile infrastructure that Frontier wants all Californians to pay for will support the promise, if not necessarily the reality, of modern service for some while condemning the rest to speeds consistent with 1990s DSL infrastructure.

The purpose of CASF is to extend the benefits of 21st century broadband service to all Californians. Frontier’s Lytle Creek proposal might do that for some. Before writing the check, the CPUC needs to make sure it will deliver it to all.

Incumbents get first grab at California broadband subsidies and subs in January

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Yesterday, California’s broadband infrastructure subsidy fund began its transition from a bottom-up program focused on independent, locally developed projects, to a top down one that’s gamed for the benefit of incumbents. The first post-assembly bill 1665 rules for the California Advanced Services Fund (CASF) were put on the table by the California Public Utilities Commission.

The draft lays out the process for facilities-based incumbents – broadband service providers that own and operate their own equipment, wired or wireless – to exercise their right of first refusal for unserved areas. If they claim an unserved area by 15 January 2018, they’ll effectively have at least year to build out. No one else will be eligible for CASF subsidies.

No one else.

What the draft rules imply but don’t explicitly say, and AB 1665 clearly states anyway, is that an incumbent who takes a right of first refusal on an area will be eligible to apply for CASF grants to pay for at least a part of the work needed to upgrade it. In other words, they go straight to the head of the line.

The process will be more or less run the same way that a much more restrictive right of first refusal offer was three years ago. At the time, only Frontier Communications, in its pre-Verizon acquisition days, held back a handful of small territories. At the time, incumbents couldn’t tap into CASF money and had to pay for the promised upgrades themselves.

This time around, with Frontier hemorrhaging subscribers and shareholder equity and AT&T bent on fencing off its decaying rural copper systems so it can replace them with low performing wireless systems, it might be different. Frontier lobbied hard for AB 1665, in the apparent hope it could turn CASF into its private piggy back. AT&T will be less interested in the money than in protecting its rural monopolies. But both will have an incentive to jump in on the right of first refusal.

What they won’t have a particular incentive to do, though, is to fulfil any of the promises they make. There is no particular penalty for claiming an area for a year, stalling beyond that however they long they can, and then doing nothing at all. There’s a general rule that could be used to penalise false statements, but AT&T and Frontier employ plenty of lawyers and lobbyists who know how to bend and break the truth legally.

The CPUC is scheduled to vote on the right of first refusal scheme next month. Public comments can be submitted for the next two weeks.

Draft resolution – California Advanced Services Fund interim “right of first refusal” processes and timelines, 14 November 2017
Final resolution – implementation of new timelines for California Advanced Services Fund applicants, 26 June 2014
Chaptered version, assembly bill 1665, 15 October 2017

California broadband subsidies will be top down, incumbent focused

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The California Public Utilities Commission plans to take a more active role in deciding where and how broadband infrastructure will be subsidised, and to work more closely with incumbents in the process. Yesterday, commissioners discussed how they will run the California Advanced Services Fund (CASF) program under new rules adopted by the California legislature. Assembly bill 1665 was signed into law by governor Jerry Brown last month. It requires the commission to periodically designate which communities in California can receive CASF money, based on a slower minimum broadband speed standard – 6 Mbps download and 1 Mbps upload – that will slash the number of eligible households from 300,000 to just 20,000, according to one CPUC estimate.

Commissioner Martha Guzman Aceves, who is taking the lead on redesigning the CASF program, said she wants to set specific goals for broadband deployment and work with incumbent providers to achieve them…

The key one I really want to focus on is…the overarching program goals. It can really help us work on how we have this regional focus that is goal driven and certainly one of the things I’ll be mentioning that I want us to consider as one of those goals is to be driven in the areas of highest economic need…

With the federal CAF program and other dynamics there is going to be provider engagement. Again, as I mentioned, the example of Oroville, where you could actually work with Comcast and AT&T to expand to the unserved areas. So this is a new area, it’s one where I think we have a responsibility to really be engaged to ensure that that engagement is balanced.

Up until now, infrastructure projects were created at the local level, usually by independent broadband providers, and then proposed to the CPUC for CASF funding. Incumbents are equally eligible, but a couple of small Frontier Communications grants aside, preferred to either ignore the program, or complain bitterly with varying degrees of truth whenever an independent project was proposed.

AB 1665 flipped that process completely around, giving the CPUC responsibility for making the first-cut decisions on where projects should be built and putting incumbents at the head of the line for getting the money to do it.

That’s really not a reversal for the CPUC itself, though. As president Michael Picker noted, commissioners have wanted, to varying degrees, to proactively manage the CASF program rather than simply responding to proposals as they came in.

Guzman Aceves and communications division director Cynthia Walker outlined a timetable for completing the overhaul by next September. Until then, the plan is to continue funding projects from the $30 million that’s leftover from the old program. No details were given about that process would work though. In the past, the CPUC has tended to take the position that grant proposals are assessed on the basis of the rules in effect as of the application date, but there’s been no indication whether that’s the case now.

CPUC presentation, California Advanced Services Fund, 8 November 2017

Broadband redlining in rural California, a tale of two mayors

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Internet access in rural California is fantastic, and it’s awful. Those two messages were delivered to the California Public Utilities Commission last week by, respectively, the mayors of Mammoth Lakes and Oroville.

The reason for the difference? A big, fat open access middle mile fiber route, paid for by state and federal subsidies. The same type of project that the California legislature and governor Brown banned from future funding by the California Advanced Services Fund (CASF).

Mammoth Lakes mayor John Wentworth invited CPUC commissioners to “come over the eastern Sierra and visit the great telecommunications and broadband capacity we have over there”. He called out the Digital 395 project, an open access fiber network that runs from Reno to Barstow, going through Mammoth Lakes and most other communities on the eastern slope of the Sierra. It was built with grants from CASF and the federal government and, according to Wentworth, is providing the raw material for a high tech economy.

He was followed by Oroville mayor Linda Dahlmeier, who told commissioners about her struggle to convince AT&T and Comcast to upgrade their infrastructure to meet minimal performance standards…

One of the first thing that happens anytime it rains in my community is our services go out, because the infrastructure from AT&T…is so inefficient that it can’t supply the needs just on a regular basis. Especially if there’s any moisture in the air…

I’ve worked in the banking industry for many years…this is what banking used to call redlining. When I asked Comcast to do development on the other side, because the infrastructure is so poor on AT&T’s [side] and they will not improve it…for them to come and even cross my Oro Dam Boulevard is $2.5 million. And that’s $2.5 million that our community doesn’t have. Nor do we have access to last or middle mile because AT&T and Comcast have defined that they serve our area adequately, which is not a true statement…

You can actually drive down [highway] 162 and see on one side of the street where Comcast is a provider, which does a significantly better job, and you can see the development. On the other side where you have AT&T…it looks like a slum. It’s that big of a difference. And it’s that side of my community that is where my industrial development would happen.

Oroville, like many other rural California communities, has triple trouble. The telco – AT&T – won’t upgrade its decaying copper plant, preferring instead to milk its existing investment as long as it can and then back fill with less reliable and more expensive wireless service. The cable company – Comcast – only builds where the revenue stream from a given neighborhood meets its revenue requirements.

Finally, there’s no incentive for incumbents to change and no hope of competition.

Unlike Mammoth Lakes and the rest of the eastern Sierra, where publicly subsidised fiber is improving incumbents’ service, supporting competitive providers and driving economic development.

Santa Cruz fights fire with fiber

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As a wild fire burned in the Santa Cruz mountains, a key AT&T fiber line was cut nearby, reportedly by a road maintenance crew doing previously scheduled work just before 5:00 a.m. on Tuesday of last week.

In 2009, a break in a different AT&T cable effectively knocked Santa Cruz, Watsonville and most of the rest of the county off of the Internet for most of a day. Since then, AT&T, Comcast and independent broadband companies have upgraded and diversified cable routes running north and south. A few thousand customers were affected by last week’s break, but it went unnoticed by most people in Santa Cruz County.

But not all. The County of Santa Cruz’s IT infrastructure was connected directly to the severed AT&T cable, and there was no failover capacity in place. So the county’s website went down, just as residents in and near the evacuation area would have been waking up and going on line, looking for information about the Bear Fire.

Fortunately, Cruzio, a local Internet service provider of 30 years standing, had a solution ready to go. As a result of an earlier swap with the county, Cruzio installed a 100 Mbps auxiliary circuit in the county’s main building on Ocean Street in Santa Cruz. It was connected to Cruzio’s high capacity links that rely on newly installed, redundant fiber routes, one going north to Sunnyvale and the other, subsidised by the California Advanced Services Fund, heading south through Watsonville to the Internet backbone along the U.S. 101 corridor.

With Cruzio’s assistance, county staff routed their traffic through this connection, and got back on line “a little after noon”, according to a county spokesman.

But it wasn’t enough. The combination of external web traffic and internal county business quickly overloaded the connection – the AT&T service it replaced was specced at 250 Mbps – and county staff asked that the connection be bumped higher. Cruzio replied by opening up a gigabit port. “No charge for any of this of course” said James Hackett, director of business operations and development at Cruzio.

Had there been a repeat of the outage caused by the 2009 AT&T fiber cut, on top of a growing fire threatening lives and homes in the Santa Cruz Mountains, the result could have been a major, and dangerous, disruption. Instead, the work that’s been done over the past eight years to build independently-owned fiber optic lines in the region, led primarily by U.C. Santa Cruz, kept the focus where it needed to be: on fighting the fire.

This post is taken from an article I wrote last week for Santa Cruz TechBeat, and has been updated with information provided by the County of Santa Cruz..

California broadband subsidy program heads for the deep freeze

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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

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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.