California broadband subsidy fund is maxed out

by Steve Blum • , , ,

The California Advanced Services Fund (CASF) is just about topped up. The fund is used to subsidise new infrastructure in areas that lack broadband service that meets the California Public Utilities Commission’s minimum standard of 6 Mbps download and 1.5 Mbps upload speeds. It’s also used to pay for broadband facilities and marketing programs in public housing and to fund regional broadband consortia.

The money for it comes from a tax that’s assessed on telephone bills – right now, it’s about one-half of one percent of the charges for in-state telecommunications services. (And yes, you can call it a surcharge. Or a fee. Many people do. But face it, it’s indistinguishable from a common sales tax).

By the end of November, the CPUC will have collected all the money – $315 million – that the California legislature has allowed. So the plan is to reduce the rate to zero percent, as of 30 November 2016.

Depending on assumptions made, particularly regarding administrative costs, there’s something like $120 million left in the infrastructure kitty, and a few million each in the public housing and consortia accounts. That’s against a total of $144 million of infrastructure grant applications in the hopper. However, when competing projects with overlapping service areas are factored out, the fund is about at breakeven. Maybe $3 million in the red, maybe $10 million to $20 million in the black, either way it’s circling the drain. Of course, some of those pending projects could end up being denied or, more likely, dying of old age due to year-long delays in processing.

An attempt earlier this year by assemblyman Mark Stone (D – Santa Cruz) to raise the ceiling on CASF collections failed in the face of opposition AT&T and the cable television industry’s lobbying front. The issue will be back on the table when a new legislative session begins next year.