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

by Steve Blum • , , ,

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.