Tag Archives: casf

Charter moves fast where fiber competition looms

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But is it fast enough?

If you want to steer telco and cable company capital investment toward your community, apply competitive pressure, preferably with a full scale fiber to the home project. Once again, that lesson has been learned as the simple and reliable mechanics of microeconomic theory have pushed a major cable company to accelerate spending in an area it has long ignored.

Charter Communications is required to upgrade the antique analog cable systems it has long maintained in redlined communities. That’s one of the conditions attached to the California Public Utilities Commission’s approval of its purchase of Time Warner and Bright House cable systems in the state. Charter’s deadlines for doing so range from two to three years, with most of its territory in California due for digital service within two and half years of the merger’s approval. That happened nearly a year ago, so the time remaining is more like one to two years.

So who goes to the top of Charter’s priority list? According to claims it has filed with the CPUC regarding where broadband subsidy dollars should be spent, the community on Charter’s fast track is one in San Bernardino County that’s been targeted by a competitor…

Charter agreed to rebuild its broadband footprint in both Phelan and Prunedale/Aromas/Salinas—two of the priority areas identified in the White Paper. In Phelan, Charter completed its rebuild in December 2016, revitalizing its plant and improving broadband services available in 250 census blocks identified in the White Paper as high impact. Similarly, Charter is scheduled to complete the rebuild of its plant in Prunedale/Aromas/Salinas no later than May 2019.

Phelan, where Race Communications is in the hunt for a California Advanced Services Fund subsidy for an FTTH system, was upgraded within months of the CPUC’s order taking effect. In the northern Monterey County neighborhoods around Prunedale and Aromas, Charter is happy to wait the full three years.

It’s uncertain whether Charter’s plans are enough to knock Monterey County off of the CPUC’s bang for the buck list. But it is crystal clear that the faster build happened in the community where Charter faces the bigger competitor.

FTTH expansion proposed for Riverside County desert communities

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Anza Electric Cooperative wants to expand its fiber-to-the-home system in southwestern Riverside County. After being awarded a $2.7 million FTTH infrastructure grant from the California Advanced Services Fund in 2015, Anza used its existing electric plant as the backbone for a fiber network aimed at reaching 3,800 homes in its service territory.

Now, it’s asking the California Public Utilities Commission for another $2.2 million, to reach 1,200 more homes and "several businesses", and provide free service to fire stations and the Ronald McDonald camp for kids with cancer According to the public version of its grant application summary

Connect Anza will deploy a fiber optic cable on existing poles and rights of way and establish a network of sufficient capacity to establish high speed, quality internet service for Anza Electric Cooperatives (AEC’s) existing service territory covering over 500 square miles, located wholly within western Riverside County. The area encompasses the communities of Mountain Center, Pinyon Pines, and Garner Valley which totals approximately 200 square miles of our service territory…

Connect Anza, as an integral part of AEC, will provide reliable, affordable broadband high speed, Fiber-ToThe-Home (FTTH) internet service to its member-owners at the lowest possible cost. Connect Anza will offer speeds of 50Mb/s both down and up to residents at a price point of $49.00 per month with no cap or limits. AEC will also offer VoIP service including CASF e911 requirements at a monthly rate of $20.

There’s one big difference between this project and Anza’s previous one: the first time around, it was going head to head with Verizon, which paid virtually no attention to its own wireline telephone systems, let alone potential competitors.

Since then, Frontier Communications has taken over those systems, including the ones that don’t offer even 1990’s legacy DSL in most of Anza Electric’s territory. The relatively few areas where broadband service is offered, speeds don’t reach the CPUC’s minimum of 6 Mbps download and 1.5 Mbps upload speeds. In contrast to Verizon, Frontier aggressively, and increasingly beligerently, challenges CASF grant proposals that pose a competitive threat to its monopoly control of, at best, poorly served areas of rural California. It won’t be so pleasant this time around.

California FTTH grant approved under current subsidy program rules

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California’s primary broadband subsidy program will stay on its present course, at least until the legislature changes it or the California Public Utilities Commission resets priorities and rules going forward. That’s the takeaway from a CPUC vote to approve a $1.1 million grant from the California Advanced Services Fund (CASF) for a fiber to the home project in southern Santa Clara County.

It’s an important message to independent Internet service providers who might be considering CASF-funded projects in the future: it’s expensive to prepare and submit applications – more than $100,000 in some cases – and the prospect of having one rejected a year or two later because the rules changed increases the risk beyond the point most are willing to go.

By a 3-to-2 vote, the commission approved the Light Saber Project grant, which will pay about 60% of the cost of building out an FTTH system to 150 homes in the Paradise Valley community, in the hills east of Morgan Hill. It was the second time commissioners considered the grant. The first time, they kicked it back for more work.

This time around, the debate wasn’t really about the project itself. Rather, the debate centered on whether CASF grants should be put on hold until the commission sets new priorities for the program and/or the California legislature rewrites the rules completely.

Broadband subsidy priorities shouldn’t be set retroactively, commissioner Liane Randolph told her colleagues…

The applicant put together a project under our current system, proposed it to us and as we’ve discussed there are changes and kind of systemic modification we can make to the program, or we’re happy to take further legislative direction on how to prioritise projects, but I’m hesitant to not let a particular project move forward when they’ve presented it with the program we currently have in the effect and are administering it right now.

Commissioner Martha Guzman Aceves didn’t agree, saying that as it stands, the CASF program lacks focus…

The bigger driver for me is the lack of prioritisation of the program and that’s really the context. I think the legislation will inform that. Now, the bigger issue for me is that we do have a structure that I don’t currently agree with, but I appreciate that these are the rules that are in place today.

Randolph was joined by commissioners Carla Peterman and Clifford Rechtschaffen in voting to approve the project. Along with Guzman Aceves, commission president Michael Picker also voted no.

$900K chopped from San Bernardino FTTH subsidy plan, but it’s moving again

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A [fiber to the home project in San Bernardino County is back on track, sorta](http://www.tellusventure.com/blog/frontier-makes-the-case-californias-ab-1665-is-double-disaster/). California Public Utilities Commission staff cut $900,000 from a proposed $29 million grant to Race Telecommunications for the Gigafy Phelan project, and [sent it all back into a 30 day comment, reply and commission consideration cycle](
http://www.tellusventure.com/downloads/casf/2017/cpuc_draft_resolution_casf_phelan_revised_30may2017.pdf).

Gigafy Phelan is an ambitious attempt to extend FTTH service to 8,400 homes in California’s high desert region, in and around the town of Phelan. Or maybe it’s 7,600 homes. It depends on how *homes* is defined, and in this case it’s more than academic. It makes a $900,000 difference.

The federal census bureau tracks *housing units* and *households*. A housing unit is a discrete structure where people might live: “a house, an apartment, a mobile home or trailer, a group of rooms, or a single room that is occupied, or, if vacant, is intended for occupancy as separate living quarters”, as the census bureau, [as quoted by CPUC staff](
http://www.tellusventure.com/downloads/casf/2017/cpuc_draft_resolution_casf_phelan_revised_30may2017.pdf
), puts it. A *household* is an occupied housing unit, regardless of the number of occupants or the relationships between them.

The California Advanced Service Fund – the broadband subsidy program that would pick up the tab – uses *households* as its primary metric. *Housing units* is a better measure, since a home that’s unoccupied today is as likely to be occupied tomorrow as any other, and everyone needs broadband service. But it’s just a way of keeping score and, so long as it’s done consistently, one way works pretty much as well as another.

It’s also a poor excuse for whittling down an FTTH project at the 11th hour, particularly one that delivers a gigabit for $60 a month and is the second “highest-scoring pending project application on the CASF’s project evaluation scoring matrix”.

The revisions open up a window for another round of protests, and you can expect Frontier Communications will continue to object, claiming that [its substandard, 10 Mbps down/1 Mbps up, federally subsidised service](http://www.tellusventure.com/blog/cpuc-california-lawmakers-need-to-be-as-rational-as-telecoms-monopolists/) – at no particular price point – is enough for people who live in Phelan. The *A* in CASF stands for *Advanced* services. It’s time to get on with it.

CPUC takes another look at a Santa Clara County FTTH subsidy

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A stalled Santa Clara County fiber to the home project might get back on track this week. A proposed $1.1 million grant for the Light Saber Project is scheduled to go in front of the California Public Utilities Commission next Thursday.

It’ll be the second time that commissioners have taken a look at it. LCB Communications/South Valley Internet, an independent Internet service provider in southern Santa Clara County, applied for a $2.8 million grant from the California Advanced Services Fund (CASF) in 2015 for a plan to build out fiber to more than 500 homes in the San Martin and Paradise Valley communities, south and east of Morgan Hill, respectively. A wireless ISP challenged the application, claiming it provided service at or above the CASF minimum of 6 Mbps download and 1.5 Mbps upload speeds. The result was that San Martin, where most of the homes and lower income households were located, was removed from the project.

That left 150 homes in Paradise Valley. The grant request was trimmed to $1.1 million and sent on to the commission for consideration in February. It ran into headwinds at the meeting: the idea of subsidising FTTH service to a relatively affluent community was not well received. The median household income in Paradise Valley is $102,000 per year, which is quite a bit higher than many other communities in California. On the other hand, it’s in Santa Clara County, where the California housing and community development department sets a low income threshold of $85,000 for a four-person household.

No vote was taken and Light Saber was sent back for more work. Some of the details were adjusted, the budget was trimmed a bit, and now it’s being resubmitted to commissioners. But as the new draft of the grant resolution points out, it "is substantially the same as the prior draft resolution". What might have changed, though, is how the project is viewed in the context of the CASF program rules and project grant standards. The CPUC is considering whether to change those rules, in a process that was initiated, in part, because of the push back on Light Saber as well as the Digital 299 project, which was likewise put on hold at the same meeting. When Digital 299 came back for a vote and was approved in March, there was an acknowledgement that it had been submitted with good faith reliance on the rules as written. That reasoning applies equally well to Light Saber.

California assembly votes to throw broadband speeds into reverse

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The California assembly voted to lower the state’s minimum Internet standard to 6 Mbps download and 1 Mbps upload speeds. By a vote of 67 to 5, and with eight members abstaining, assembly bill 1665 was approved and sent onto the senate last week. It only needed 54 yes votes to pass. All five noes and eight abstentions came from republicans, but a dozen others joined with democrats to vote in favor.

AB 1665 reinstates a tax on phone bills that’ll pay for adding $330 million to the California Advanced Services Fund (CASF), the state’s primary broadband infrastructure subsidy program. It also makes amendments to the rules that govern how the $300 million specifically earmarked for infrastructure will be spent; all are changes designed to protect incumbents – primarily AT&T and Frontier Communications, but also cable companies – from competition.

The big change is to the minimum speed standard. Right now, a community is eligible for a CASF infrastructure grant if there’s no service available at the 6 Mbps down/1.5 Mbps up level. Dropping the upload standard to 1 Mbps has two main effects: Frontier and AT&T can continue to use older generation DSL technology and areas where the federal Connect America Fund subsidises Internet services at 10 Mbps down/1 Mbps – most of rural California – will be out of bounds. The bill also has language that further restricts spending in federally subsidised, low speed areas, allows reimbursement of some operating expenses, and makes it possible for cable companies to avoid regulatory oversight by funneling money through property owners.

The net effect would be to knock independent, competitive ISPs and middle mile fiber operators out of the running in rural areas of California. Projects like the middle mile fiber routes through the Salinas Valley or along the eastern side of the Sierra Nevada will no longer be possible. Whether or not that happens is now in the hands of the California senate.

California broadband subsidy grab tagged a tax bill, heads to assembly vote

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It was too much to hide.

Slower Internet speed standards and rules designed to funnel broadband subsidy money to AT&T and Frontier Communications are queued up to be decided by the California assembly. The appropriations committee released assembly bill 1665 from the "suspense file" last week and sent it on to a full floor vote, which could happen as early as today. Only one committee member dissented – William Brough (R – Orange County) voted no.

There could be more republicans joining him. After the bill cleared the appropriations committee, a small, but very significant, change was made: instead of needing just a simple majority to pass, AB 1665 will need a two-thirds vote by both the assembly and senate, as tax bills do.

It’s always been assumed that a two-thirds vote would be necessary, but up until Friday the bill wasn’t written that way. I don’t have any inside information on why that might have been, but it’s worth noting that so long as it only required a simple majority vote, nominally anti-tax republicans could pretend it didn’t impose (or in this case, re-impose) a tax. With that fig leaf gone, though, it’ll be harder for them to look the other way.

AB 1665 reinstates a tax on telephone bills and allows it to be collected at about double the previous rate. The money goes into the California Advanced Services Fund, which up until now has been primarily used to pay for construction costs of broadband infrastructure in communities that lacked Internet access at a minimum of 6 Mbps download and 1.5 Mbps upload speeds.

As currently written, AB 1665 lowers the benchmark to 6 Mbps down and 1 Mbps up. By doing that, it allows Frontier and AT&T to use the new, $300 million infrastructure kitty to either pay for minimal upgrades (although it would be wrong to assume the price they extract from taxpayers will be minimal) or fence off areas – most of rural California – that would otherwise be substandard and a prime target for subsidised competition.

More voices join California broadband subsidy policy debate

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A potential overhaul of the California Advanced Services Fund (CASF) – the state’s primary broadband infrastructure subsidy program – was mooted at a California Public Utilities Commission workshop yesterday. The alternative scenarios that were presented were, to a large extent, wish lists from incumbents and, particularly, heavily weighted toward supplementing AT&T’s and Frontier’s business models – carving out federally funded areas, extending existing copper networks or focusing just on their territories for example.

Incumbents had good words for that approach – not surprising – but for the most part participants vocally opposed dropping the CASF performance threshold to 6 Mbps download and 1 Mbps upload speeds, from its current 6 Mbps down/15 Mbps up level. They also blasted the idea of allowing Frontier and AT&T to block competition in areas where they are getting federal subsidies, which amounts to most of rural California. Representatives from independent Internet service providers, regional broadband consortia and the CPUC’s office of ratepayer advocates participated, pushing for higher service standards, greater accountability and less bureaucratic overhead in the program.

A Frontier representative argued that the company should get special consideration for bringing more than $200 million in federal Connect America Fund subsidies to California. The problem with that is that Frontier didn’t bring the money, the FCC allocated those dollars to California and gave Frontier a right of first refusal, which it exercised. Had Frontier passed on the money, the FCC might have given it to the state – the CPUC in particular – as it did in New York, where Verizon declined to participate.

There are limits – perhaps a complete ban – on the CPUC’s ability to change minimum CASF speed levels on its own. Senate bill 740, passed in 2013, effectively baked the 6 Mbps down/1.5 Mbps standard into law. So if the upload standard is reduced to 1 Mbps and/or the download standard is raised to 10 Mbps, it’s going to require action by the California legislature. That’s what the proposed assembly bill 1665 is about – it would reduce the broadband standard to 6 Mbps down/1 Mbps up, in order to accomodate the ageing infrastructure that AT&T and Frontier Communications operate in most of rural California.

So lawmakers will decide. They are weighing AB 1665’s lower broadband standards and new rules that are gamed to funnel $300 million of taxpayer money to Frontier and AT&T. Yesterday’s workshop was the first genuine opportunity they’ve had to hear both sides of the debate.

Formal opposition to California broadband subsidy grab filed

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Although objections have been raised, legislative staff analyses have skated around the question of opposition to assembly bill 1665, which would effectively turn California’s broadband infrastructure subsidy program into a drawing account for AT&T and Frontier Communications.

No longer. The Central Coast Broadband Consortium (CCBC) submitted a letter, formally going on record opposing AB 1665. It highlighted the top three reasons it is bad public policy and bad for Californians…

  • Setting California’s minimum broadband standard at 6 Mbps download and 1 Mbps upload speeds is a step backwards, at a time when we must all move forward together. Reducing the minimum upload speed from the current 1.5 Mbps standard to 1 Mbps may seem like a minor issue, but its effect will be to lock rural and inner city communities into broadband infrastructure that is already one or two generations out of date. With high technology, small changes can result in great harm. Instead, California should look to the federal standard for advanced broadband service of 25 Mbps download and 3 Mbps upload speeds.
  • AT&T and Frontier Communications should not be allowed to fence off most of rural California simply because they have accepted federal subsidies to provide service that doesn’t even meet the CPUC’s current standard. Because of the way the federal Connect America Fund program works, the money is often distributed in a checkerboard fashion. As a result, people are left stranded without acceptable service – a strategy Frontier has admittedly employed1 – because it is not economically feasible for a competitive provider to reach them.
  • The public housing broadband facilities program provides basic connectivity to some of California’s poorest residents, and should not be eliminated, as the current version of AB 1665 proposes to do. Its elimination is the result of demands by the California Cable and Telecommunications Association and its member cable companies. They fear that even simple WiFi service in public housing communities will damage a business model that depends on selling expensive television service bundles to people that cannot afford it.

Suggested remedies include raising California’s minimum broadband standard to 25 Mbps download and 3 Mbps upload speeds, eliminating any carve out for areas with substandard, but federally subsidised service and expand, instead of scrapping, the public housing broadband program.

AB 1665 is sitting in legislative limbo right now, awaiting action on the state budget.

CCBC opposition letter, AB 1665, 18 May 2017

Full disclosure: I’m on the CCBC’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.

Telcos’ California cash grab gets a nod at the CPUC

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Three parallel efforts are underway to rewrite the rules for California broadband infrastructure subsidies and use the money to support substandard service and technology deployed by AT&T and Frontier Communications. The legislature is considering assembly bill 1665, which would, among other things, add $300 million to the California Advanced Services Fund for broadband construction and operating costs, and effectively give it to AT&T and Frontier. The lower service standards and eligibility restrictions in the bill would keep independent Internet service providers out of most of rural California.

While that’s being decided, the California Public Utilities Commission is 1. tinkering with the program to bring it into compliance with a law passed last year and 2. considering what might end up being a complete overhaul of the way infrastructure grant requests are processed and prioritised.

As they’ve done so far with AB 1665, Frontier and AT&T are trying to game the system and rewrite the rules so they can lock out competitors and use CASF money as a private piggy bank to back fill their budgets and claim reimbursement for work they’d be doing anyway. They made the same self serving claims in their objections to an initial CASF priority exercise and Frontier is trying to use what should be a minor rewrite of the rules as an opportunity to grab control of the cash.

They seem to have found a willing ear at the commission. A first draft of what could become a reboot of the CASF program includes at least three gifts on big incumbents’ wish lists:

  • A lower performance standard, in particular slower upload speeds that better match the outdated first and second generation DSL systems that Frontier and AT&T maintain in rural areas.
  • Eliminating or greatly scaling back requirements that grant recipients put some of their own money into projects.
  • More opportunities to challenge applications and drag out what is already a never ending review process, including allowing annual carve outs based on promises rather than performance.

For the most part, the only regulation broadband providers face in California comes from the market, at least where it might be found. It would be a perverse outcome indeed if the CPUC – California’s utility regulator – works against the market by using taxpayer money to strengthen existing monopolies and protect them from the threat of competition.