California broadband subsidy reboot draft posted, and it’s mostly good

by Steve Blum • , , , ,

The long awaited revisions to the California Advanced Service Fund’s (CASF) infrastructure grant program are finally on the table, more than a year after it was signed into law by governor Jerry Brown. A draft of the new rules was published late Friday afternoon, with the goal of putting it to a vote of the California Public Utilities Commission next month. There’s a lot of good news in the draft, but also some bad news. Some of the bad is unavoidable. The California legislature voted to turn CASF into a taxpayer-funded piggybank for AT&T and Frontier Communications. Friday’s draft, issued by Martha Guzman Aceves, the commissioner assigned to the rewrite, plays the poor hand dealt by lawmakers reasonably well.

One bit of bad news could have been avoided. If the draft is approved, the CPUC will only accept applications for CASF infrastructure grants once a year, in April. That’s a victory for big, monopoly model cable and telephone companies over sound broadband development policy. Independent projects, proposed by competitive broadband providers and backed by local communities, don’t run on a timetable. Corporate planning departments and capital budgets can and do. It’s convenient for AT&T and Frontier to spend a year drawing up a wish list and submitting it all at once. Not so for a one off project designed to fill a gap in a community that isn’t affluent enough generate a sufficient return on investment for those incumbents, with or without a subsidy.

On the plus side, the proposed changes to the program offer hope for local projects – if you don’t bet you can’t win – that can slow dance to the CPUC’s beat:

  • The review and approval process would be streamlined. Projects requesting a grant of $5 million or less, and that meet other cost and regulatory criteria could be approved by staff, instead of having to go to a formal vote by commissioners.
  • A seemingly hard three week deadline is set for incumbents that try to block competitors by claiming they already provide service that meets the California legislature’s pitiful minimum 6 Mbps download and 1 Mbps upload speeds. In the past, the CPUC has allowed incumbents to disrupt application reviews through perpetual challenges – Frontier is a particular abuser of the process – leading to delays of more than two years and, in some cases, killing projects altogether.
  • Challengers will also have to submit hard, complete information about current service upfront, including information about actual customers who subscribe to it. But only one qualifying sub per census block could be enough to kill an infrastructure upgrade for everyone else.
  • Projects “in low income areas” or where the only terrestrial option is dial up service can be fully funded; projects elsewhere that meet certain criteria can get up to 80%.
  • Projects can include middle mile facilities if the applicant demonstrates “it requested specific data and/or transport services from a provider and that provider was not able to meet that request and offered no other alternative”. There’s good and bad in this particular language. It opens the door to meaningful middle mile upgrades, which are indispensable to broadband development. On the other hand, it calls out transport and data services – Layers 2 and 3+, in geek speak – but ignores dark fiber, i.e. Layer 1, which is the true choke point that monopoly model telcos like AT&T, Frontier and CenturyLink use to block competition.
  • Rules for the so-called right of first refusal – Jus Primae Noctis is a better description – have been tightened. It’s a legislative present to incumbents which allows them to block projects in an area by promising to upgrade service.
  • AT&T and Frontier will have to disclose plans for building out in federally subsidised areas, if they want to keep the gift of exclusivity lawmakers gave them after cashing their generous checks out of a profound commitment to public service.
  • Formal requirements would be established for 1. latency (max of 100 milliseconds), 2. monthly data caps (at least 190 gigabytes) and 3. an “affordable broadband plan for low-income customers”.

Technical changes to the current rules are also proposed. A few requirements have been streamlined, others tightened up.

One can was kicked down the road. The “line extension” program approved by lawmakers, which was first proposed by Comcast as a way of laundering subsidies through customers in order to escape CPUC oversight, will be left to “a future commission decision”. Lawmakers set aside $5 million for grants to residents to pay for extending service to their homes.

The draft was released in time for a vote by commissioners at their final meeting of the year, on 13 December 2018. A delay until next year is possible, though.

Proposed decision of commissioner Guzman Aceves, implementing the California Advanced Services Fund infrastructure account revised rules, 9 November 2018

Links to other documents – decisions on other issues, drafts, comments and more – are here.