CPUC approves FTTH grants, but says Frontier needs skin in the game

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Frontier Communications will get $2.7 million from the California Advanced Services Fund (CASF) for two fiber to the home projects. One is in the Imperial County towns of Desert Shores and Salton Sea Beach, and the other in Lytle Creek, in the mountains of San Bernardino County. The California Public Utilities Commission unanimously approved the subsidies at its meeting yesterday, and declined to add another $600,000 as demanded by Frontier.

At least for now.

The commission is in the middle of rebooting the CASF program, following the California legislature’s rewrite of the law that governs it. Lawmakers effectively transformed CASF from a source of independent and, to a degree, competitive broadband infrastructure financing, into a piggy bank for Frontier and AT&T. The language in the new law allows for 100% funding of broadband projects, but doesn’t require it. Commissioner Martha Guzman Aceves is in charge of making the changes, and she held out hope that Frontier could come back later and get the rest of the money. Commissioner Liane Randolph said that would be something to consider, but companies should share at least some of the costs…

I am supportive of both of these projects at the level currently recommended by staff. I’m open to – if there’s an opportunity in the future, if the criteria changes and there’s a procedural way that they can apply for more funds, but we would be approving these projects with the understanding that we would be approving them at 80 and 90 [percent] at this time. I think it’s important for the companies to have a financial participation in the project. They will eventually be able to earn a profit on this infrastructure.

As it stands, taxpayers will pick up the tab for 80% of the Lytle Creek project and 90% of the Desert Shores project. At that level, both projects will be turning a profit for Frontier within a handful of years, according to CPUC staff estimates. On the other hand, Frontier has threatened to not build anything at all if it has to invest its own money.