Californian broadband subsidies create rural competition, of a sort

by Steve Blum • , , , ,

The Digital 299 middle mile fiber project approved by the California Public Utilities Commission on Thursday is a big step toward levelling the competitive playing field for broadband in the Klamath Mountains. It’s a rugged and sparsely populated region, with very little wireline or mobile broadband access, and fixed wireless service that seems to rely on expansive coverage claims backed up by lawyerly disclaimers rather than recognised and verifiable technical standards.

That’s why the region qualified for a $47 million broadband infrastructure grant from the California Advanced Services Fund. That money will mostly go toward building a 300 mile long fiber network, generally along State Route 299, but $1.5 million will be spent on last mile, gigabit service for the town of Lewiston in Trinity County and $3.1 million will pay for up to 15 wireless towers along the line. The result will be three big, competitive kicks…

  1. Cheap (relatively) Internet bandwidth. Assuming the system is run on an open access basis with reasonably transparent pricing – likely, at least at first, but not guaranteed by the CPUC – any ISP will be able to bring in gigabits of capacity at prices that match or beat what’s available to mainstream communities in the Sacramento Valley.
  2. Ready made towers, with backhaul included. If the price is right, mobile carriers will come, as Frontier Communications, the only wireline company along the route, seems to know. It vociferously objected to this common sense add-on to the project. Given that it has no qualms about accepting federal subsidies for service that fails to meet Californian standards, it’s a safe bet that Frontier’s motivation isn’t concern for taxpayer dollars.
  3. A shining testament that a better world awaits. People living in the 300 homes in Lewiston – a town that makes Boron look like an LA suburb – will get a symmetrical gigabit for $60 a month. Their neighbors along SR 299, and particularly in the communities that the CPUC unjustly chopped from the project), will know what’s possible and will not have to accept poor mouthing from incumbent providers.

Don’t get too carried away by the competitive prospects. Internet access along the Digital 299 route will be greatly improved and core broadband infrastructure will be much better than similarly remote areas of California, but the economics of broadband along the Digital 299 route will, absent additional subsidies, keep service levels low and/or prices high by urban standards.

Push back on public funding will only increase. Attempts to put more money in the CASF kitty are stalled in Sacramento and CPUC president Michael Picker, who echoed incumbent talking points before voting *no* on the Digital 299 grant, is embracing the monopoly first model of FCC chair Ajit Pai.

But even if it’s not a free market paradise the Klamath region has a fighting chance, where before it had none. That’s a win.