Electric utilities’ fiber business gets harder look in California

by Steve Blum • , , , ,

Electric companies are often also in the telecommunications business. In California, the two biggest electric investor owned utilities – PG&E, in northern California, and Southern California Edison – both have extensive dark fiber networks that they lease out to telecoms companies. SCE became a certified telephone company and began actively marketing dark fiber nearly twenty years ago, while PG&E has moved more slowly. But their business models are converging and the California Public Utilities Commission is taking a harder look at how they might be regulated.

When PG&E applied for official telephone company status earlier this year, it proposed splitting after tax fiber profits 50/50 between shareholders and customers. SCE’s original deal with the CPUC was to give 10% of gross fiber revenue back to customers. On the face of it, the actual dollar amounts might well be in the same ballpark, a question the CPUC wants both companies to address.

Commissioner Clifford Rechtschaffen is handling a request that SCE made earlier this year for pre-approval of a fiber leasing deal with Verizon. Originally, he laid out a perfunctory process for the review. But PG&E’s application, as well as a broader enquiry the CPUC is conducting into utility pole access, “require us to take a closer look at the over-arching issue of whether the proposed Master Lease Agreement here is consistent with the revenue sharing mechanism [that SCE is currently using] and in the public interest”, according to Rechtschaffen.

If the result is a clear and uncomplicated path for privately-owned electric utilities to energetically compete in the telecoms market, everyone will benefit. Fast and fair competitive access to utility poles is a problem that has to be solved anyway, so that shouldn’t be a barrier. The biggest hurdle will be intellectual. Regulators, and old school consumer advocacy groups like TURN, which has jumped in on the proceeding, have to grasp the fact that electric ratepayers and broadband subscribers are the same people. Extending the dead hand of legacy micromanagement to broadband will benefit no one.