CPUC won’t kill SCE’s dark fiber business. Yet

by Steve Blum • , , ,

Southern California Edison fought its dark fiber battle to a draw, but all out war looms on the horizon. That’s my reading of a proposed decision by a California Public Utilties Commission administrative law judge that would end SCE’s quest for approval of a bulk fiber lease deal with Verizon, if the commission votes to approve it next month.

SCE, like other electric utilities in California, installed fiber optic cables on its pole routes, initially to monitor and operate its infrastructure. But one cable has dozens of fiber strands, and over the past 20 years SCE has leased out some of that surplus capacity, under terms approved by the CPUC that require it to rebate 10% of the gross revenue generated to electric customers.

Usually, the CPUC reviews SCE’s fiber leases one by one. But last year, SCE asked permission to sign a master lease with Verizon, and then add individual fiber routes to it over time.

That rational and reasonable approach was first accepted, then rejected after rookie commissioner Clifford Rechtschaffen stepped in. So-called consumer advocates, who don’t seem to understand that consumers need fast, affordable and competitive broadband service too, jumped in as well. The ultimate result was a proposed decision that would have split the gross revenue 50/50. SCE said that would kill its dark fiber business model – which is probably true – and that, in any event, the Verizon deal was dead because of the CPUC’s delays.

With the SCE decision looming, Pacific Gas and Electric also asked to cancel its request for CPUC permission to get into the telecoms business.

The proposed decision published yesterday would allow SCE to withdraw its application for approval of the now moot Verizon deal, but opens the door to a comprehensive, and potentially far more damaging, review of electric companies’ dark fiber leases…

The scope of the proceeding has raised broad policy issues that include identifying what policy frameworks promote the most effective utilization of ratepayer-funded dark fiber throughout California’s regulated electric utility infrastructure and assure safety, universal access to utility services, and non-discriminatory access to this infrastructure, especially amidst policy changes at the federal level. The Commission may consider opening a rulemaking to consider these and other broad policy issues and, in that broader context, reconsider the appropriate revenue sharing allocation for dark fiber route leases.

Electric companies are one of the few sources of independent dark fiber left in California. Killing their fiber business would harm consumers, both as electric customers, who would have no revenue to split at all, and as broadband customers, who pay high monopoly prices for low levels of service.

For now, we can only hope that “universal access to utility services” means all utilities, including broadband.