High priced, low performing broadband service hits rural Californians hard

by Steve Blum • , , , ,

A California Public Utility Commission analysis of utility service affordability in California used household income, local cost of living and utility cost figures for far northern California – Siskiyou, Modoc and Lassen counties – to illustrate a proposed method for determining whether people can actually afford the utility service that they need. The example also illustrates a serious problem in rural California: the high cost and low quality of broadband service.

For the most part, the CPUC has no role in regulating, setting or monitoring the cost of broadband subscriptions, or the level of service provided. One exception comes when an Internet service provider asks for a grant from the California Advanced Services Fund (CASF), the state’s primary broadband infrastructure subsidy program. So the authors of the CPUC’s white paper looked at a grant given to the Siskiyou Telephone Company, an independent rural telco that serves customers in Siskiyou County.

The price that grant’s conditions allow for subsidised service that meets the 20 Mbps download/3 Mbps upload standard that the study identified as the “essential” minimum for 21st century households is $150 a month. For low income residents, that’s somewhere between 8% and 9% of remaining household income after housing costs are paid, and represent 12.5 hours of work at minimum wage.

That’s a significant burden, according to the study…

Even when receiving a CASF grant, the rates offered by this provider still make up a sizeable portion of the household’s utility budget. While these bills are not necessarily onerous for customers in the middle of the income distribution, customers at the 20th percentile spend around 3 times as much of their income after housing costs on telecommunications service.

In addition, contrary to other affordability studies allocating a minimal amount of expenses for telecommunications services, this analysis illustrates that telecommunications services are the highest utility expense incurred by a household in this [area].

That high cost, low performance paradox is common in rural California, particularly in areas that have to rely on wireless Internet service providers, who often charge even more than Siskiyou Telephone for service that’s even slower and less reliable.

Hancock, Ho, Sieren-Smith, Tome, Enriquez, Lai, Staff Proposal on Essential Service and Affordability Metrics, California Public Utilities Commission, 20 August 2019.