AT&T, Frontier, Charter carve out exclusive California subsidy territory

by Steve Blum • , , , ,

As expected, AT&T and Frontier Communications blocked broadband infrastructure grants in vast swaths of rural California yesterday, at least for anyone but themselves. The companies filed reports with the California Public Utilities Commission stating they weren’t giving up federal Connect America Fund subsidies in any of the census blocks they claimed in 2015.

Charter Communications tried a similar trick, submitting a letter telling the CPUC where it will be upgrading video-only analog systems to digital capability later this year. There are a couple of problems with Charter’s promises, though. First, it’s admitting it hasn’t complied with the CPUC decision that allowed it to buy Time Warner’s cable systems in California. In that decision, Charter was ordered to upgrade all of its analog territory to digital capability by November, 2018. That deadline has already passed.

Second, Charter is invoking “the spirit” of the right of the first night first refusal granted by the California legislature, but not accepting any of the hard responsibilities that go along with it. As a practical matter though, if Charter delivers on its most recent promise, it could be enough to preempt any California Advanced Services Fund (CASF) grants to independent Internet service providers in its remaining analog service areas.

This right of first refusal for incumbents, and the additional privileges granted on top of it to Frontier and AT&T, were included in assembly bill 1665, which was passed by the legislature in 2017. The bill set aside $300 million for CASF infrastructure grants, and gamed the rules to make it easier for AT&T, Frontier and other incumbents to get their hands on it, but harder for potential competitors to qualify.

No other right of first refusal claims were distributed yesterday. Others might have been filed, but there’s no indication at this point that any were.

Last month, the CPUC restarted the program. The first batch of CASF infrastructure grant applications are due on 1 April 2019. We’ll find out then whether incumbents have left enough room for meaningful independent broadband upgrades anywhere in California.


AT&T CAF–2 report, 15 January 2019
AT&T census block list, 15 January 2019
Charter Communications upgrade notice, 15 January 2019
Frontier Communications CAF–2 report, 15 January 2019
Frontier Communications census block list, 15 January 2019