Expanded CASF eligibility receives support, opposition, skepticism and suggestions

by Steve Blum • , , , , ,

At last count, thirty-five [updated] organizations filed opening comments regarding the California Public Utility Commission’s (CPUC) review of eligibility rules for grants and loans from the California Advanced Services Fund (CASF).

The pro/con split was reasonably even, with 19 organizations generally supporting the idea of opening up CASF eligibility to all comers and 16 more or less opposed to it.

The CPUC’s own Division of Ratepayer Advocates is voicing the strongest opposition:

DRA commentsThere is no guarantee that non-licensed entities will build more cost-effective projects, more last mile projects, and better middle mile projects, especially since such entities likely have no demonstrated expertise in telecommunications or in building broadband facilities.

Frontier Communications, a rural telephone company, thinks it would be better to increase grant subsidies from 60% or 70% of construction costs to 80%, and maintain the current restrictions on eligibility. A joint filing by thirteen other small telephone companies expresses skepticism and asks the commission to look to them before subsidizing unregulated competitors. So far, it appears that AT&T and Verizon didn’t file comments.

The California Cable & Telecommunications Association represents most California cable companies, including Comcast, Charter, Time Warner and Cox. It wants any expanded eligibility to be limited to areas with no broadband service at all and put heavy restrictions on municipal projects:

CCTA commentsRecognizing that the Commission would have little authority over a local government entity applying for CASF funds, the Commission, and the Legislature should consider legislation that includes certain, specific requirements for local governments requesting CASF funding for infrastructure projects in unserved areas, so that public funds are not used to embark upon an ill‐advised, or unsupported project. These requirements should include at a minimum, that projects be subject to a public hearing, be approved by the voters, and that use of any locally‐owned utility not be assumed in the financial assumptions for operating the network. In addition, a local government must be able to demonstrate that it can operate its project without subsidy once the CASF grant is expended for infrastructure.

On the other hand, The Utility Reform Network (TURN) was joined by six non-profit groups in supporting expanded CASF eligibility, albeit with strict oversight:

TURN commentsWhile TURN has supported expanding CASF eligibility to non-certificated entities, we have also consistently argued that such entities must be able to demonstrate the financial, technical and operational capability to successfully construct, operate and maintain a local or regional broadband system. TURN shares the Commission’s concerns…that ratepayer money used to fund the CASF program must be protected from waste, fraud and abuse. Thus, the Commission should clarify how it will determine that an applicant possesses the necessary capabilities to successfully construct and operate a broadband system.

Two wireless Internet service providers – Fire2Wire and Cal.net – and several regional broadband consortia, schools and local governments also support the expansion of CASF eligibility. All the filings received so far can be downloaded here.

Reply comments must be filed with CPUC by 18 December 2012.

Update: two more organizations – Winters Broadband and Access Humboldt – filed, and were in line with other supporting comments.