Charter is first major cable company to apply for California broadband subsidies, but on its own terms

by Steve Blum • , , ,

Silver wheel ranch

Four more broadband infrastructure grant proposals, filed by Charter Communications, surfaced yesterday. That brings the number of pending applications for California Advanced Services Fund (CASF) construction subsidies to 13, which total out to $27.6 million. Cruzio and Frontier Communications also submitted applications on Wednesday, and the Plumas-Sierra Rural Electric Cooperative filed last Saturday.

Charter is asking for $1.7 million to build out to the 467 homes in the four project areas. Per household costs range from a $1,500 to $14,000. Two of the projects are for mobile home parks, one in Oxnard in Ventura County and the other in Moreno Valley in Riverside County. Another project would extend Charter’s existing system to a street in the San Bernardino County community of Highland, and the fourth is for twelve miles of “new fiber and coax plant” in Perris, in Riverside County. The publicly released project summaries don’t specify what kind of equipment Charter would be using, but the claimed maximum speed level – 940 Mbps download/35 Mbps upload – is consistent with DOCSIS 3.1 technology.

This is the first time that a major cable company has applied for CASF subsidies. A small cable company, CalNeva, received a $511,000 grant in 2017, but up until now the big Californian players – Charter, Comcast, Cox and Suddenlink – have refused to participate. They’ve been reluctant to expose themselves to the regulatory oversight and public benefit requirements that California Public Utilities Commission programs entail.

Those requirements are still too much for Charter, though. It’s asking the CPUC to waive a two year price cap and ban on installation fees that’s standard for service offered via CASF-funded facilities. It doesn’t offer any public policy justification for the exemption, saying only it would have to establish “a separate billing operation” for the subsidised homes and offering the counterintuitive argument that “consumers will be protected from rate increases and benefit from promotions by having the same rates as those available to all of Charter’s California customers”.

That logic is, well, let’s say odd for several reasons. There’s nothing preventing Charter, or any other CASF recipient, from offering customers lower prices. And exposing subsidised customers to the same price hikes that “all of Charter’s California customers” face would hardly be protection from rate increases.

It’s also not obvious that Charter would have to build a new billing system. It’s common practice in the cable and satellite industry to sign contracts with, say, apartment complexes and homeowners associations that include special pricing for particular services. It’s not exactly the same thing – such services are usually billed on a bulk basis – but typically customers also have individual accounts for market rate options.

I’ve never worked with Charter on that kind of arrangement, but I have with others, including Comcast. Billing systems are flexible enough to handle those kinds of exceptions, not to mention the complex and frequently changing mix of promotional rates, incentives to prevent disconnects and other special offers. The technical solutions aren’t necessarily elegant, but it’s not rocket science either. In my experience, the bigger problem is clueless or commission-hungry customer service reps who don’t, or won’t, pay attention to what the billing system is telling them.

Charter deserves credit for at least trying to work with CASF and the CPUC, even if a price protection waiver is “a precondition of its participation in the program”. It’s not easy finding service providers willing to take on the job of building out infrastructure in unserved and often remote communities, with or without taxpayer subsidies. But it’s also reasonable for taxpayer money to come with some strings attached.

Charter Communications – CASF grant proposals, 1 May 2019
Country Squire Mobile Estates, Moreno Valley (Riverside County)
Orchid Drive, Highland (San Bernardino County)
Perris Plant Extension, Perris (Riverside County)
Silver Wheel Ranch Mobile Home Park, Oxnard (Ventura County)

I’m collecting the 2019 CASF infrastructure grant proposals here. Information about the program is here.