California line extension subsidy program sends money to cable companies via low income homes

by Steve Blum • , , , ,

When lobbyists for big telcos and cable companies rewrote California’s primary broadband infrastructure subsidy program – the California Advanced Services Fund (CASF) – last year, they carefully maximised the money they’d get while minimising, even eliminating, independent competition and inconvenient rules.

One of the perks approved by lawmakers is particularly pleasing to the cable lobbyists who asked for it: a money laundering scheme that allows them to get broadband construction subsidies without the need for any annoying oversight or other regulatory entanglement with the California Public Utilities Commission, which gives out the grants.

Assembly bill 1665 allows an “individual household or property owner” to apply for a grant to pay for the cost of connecting to an “existing or proposed facility-based broadband provider”. It refers to this sort of connection as a “line extension”, which is a term commonly used in the cable industry, where homeowners and businesses are routinely charged for the full cost of extending service to their property, regardless of whether or not the new line passes other potential customers.

It was possible to get grants for line extensions under the old CASF program, but cable companies refused to take part because it meant subjecting themselves to the CPUC’s service obligations and due diligence requirements.

Both Comcast and Charter Communications have promised service to prospective new business or residents, and then once they’ve moved in told them it would cost tens of thousands of dollars. Surprise!

CPUC staff drafted an outline of what the program might ultimately look like. Per the legislature’s urging, grants would be limited to low income households – those eligible for lifeline telephone service or making less than $49,200 a year – and properties that are used for “farming, for low-income housing, for educational purposes” and potentially other purposes, if commissioners so choose.

Grants would cover 95% of the construction cost of the line extension, with the remainder possibly coming from the service provider. That’s not unreasonable. You might even call it generous. The legislature made it clear that the new facilities would belong to the lucky service provider, while the burden of complying with CPUC rules and oversight would fall on the household getting the grant.

There are other details to be determined, including a tighter definition of “line extension”. As drafted, the rules would allow wireless and satellite providers to also get the money, after it’s been thoroughly laundered through residents or property owners. Exactly what that means and what limits will be placed on wired connections still have to be decided.

Written comments can be submitted to the CPUC through 16 April 2018.

Scoping memo and ruling of assigned commissioner, Martha Guzman Aceves, CASF program changes, 14 February 2018

Appendix C, CPUC staff proposed changes for broadband infrastructure grant, line extension and regional broadband consortia programs