Californian broadband subsidy rules go from bad to worse

by Steve Blum • , , ,

A revised set of proposed new rules for getting broadband construction subsidies from the California Advanced Services Fund has been posted. It’s great news for incumbent telephone and cable companies, but it makes it harder – maybe impossible – for independent competitors to get in the game.

The first draft was floated last month, and generated a firestorm of comments, followed by counter-arguments, from incumbent service providers, regional broadband consortia and others. The result is a second draft that gives incumbents pretty much everything they wanted

  • Existing service providers would have until 1 November 2014 (instead of 26 September) to make a “commitment” to upgrade substandard service in a given area.
  • As a practical matter, they’d have a year, until 1 November 2015 to complete those upgrades. The initial deadline is 1 May 2015, but if they can claim that permit or CEQA problems caused delays, they get an extra six months. Permit and CEQA delays are the rule, not the exception, in California. Consider that a done deal.
  • While the clock is ticking, no one else, not even certified telephone companies or other existing providers, can get CASF grants or loans for that area.
  • There’s no penalty for failing to fulfill a commitment or any substantial hurdle to clear in order to make it. Existing providers only have to fill out a form letter, which is thoughtfully provided.
  • If incumbents don’t claim an under or unserved area, others can submit proposed projects for funding starting on 1 December 2014 (instead of 1 October), and the application window stays open after that.
  • Once a proposal is publicly posted and while it’s being reviewed, “the Commission reserves its right to consider other applications in that same project area”. That effectively gives existing providers a de facto project-by-project right of first refusal on any proposal.

There are other changes, but just those, taken together, make it possible for big cable and telephone companies to protect sub-standard service territories by wreaking havoc on CASF applications from potential competitors.

The commission is scheduled to consider the proposed changes tomorrow morning (Thursday, 26 June). They could approve it as is, or send it back for more work and take it up next month.