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

26 April 2017 by Steve Blum
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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.