California lawmakers vote to raise broadband construction costs

by Steve Blum • , , , ,

One more way to stop broadband competition.

It’s becoming likelier that subsidised broadband projects will be more expensive, if not impossible, following a vote by a California assembly committee this afternoon. The labor and employment committee approved assembly bill 2272, which would put projects paid for by the California Advanced Services Fund (CASF) under the jurisdiction of the state’s prevailing wage law.

That means that union scale pay and work rules would apply to CASF projects, regardless of whether the companies that build and operate the systems are union shops. Effectively, even small independent Internet service providers would be stuck with the same kind of cost burdens as incumbents, making it difficult at best to develop competitive, economically feasible business plans or offer consumers lower prices, given that CASF only pays 60% to 70% of project budgets.

The primary argument in favor of the bill, sponsored by assemblyman Adam Gray (D – Merced), was that state department of industrial relations has already decided that CASF projects come under prevailing wage rules, so the new law is no big deal. That determination was made in December, regarding a 1,400 mile fiber optic project in the central valley, mostly funded by the federal broadband stimulus program but partly paid for by CASF. The impact on previously approved projects, which have fixed budgets, is still to be reckoned.

However, that decision is not final, as reluctantly admitted by one of the five union lobbyists speaking on behalf of the bill, in response to a question by assemblyman Mike Morrell (R – Rancho Cucamonga). The proposed law would effectively short circuit the appeals process and bake the initial decision into law. Morrell’s question aside, no one spoke against it.

All five of the democrats on the committee voted in favor, the two republicans didn’t immediately cast a vote. The next stop for the bill is the assembly appropriations committee.

Update, 4 April 2014: the official vote tally:

Aye: Roger Hernández, chair (D- West Covina), Luis Alejo (D – Salinas), Ed Chau (D – Monterey Park), Chris Holden (D – Pasadena), Sebastian Ridley-Thomas (D – Culver City).

No: Mike Morrell (R – Rancho Cucamonga).

Absent: Jeff Gorell (R – Camarillo).