The debate over California’s primary broadband infrastructure subsidy program continues. Another round of comments landed at the California Public Utilities Commission Friday, with ideas – some good, some not – for changing the way the California Advanced Services Fund (CASF) is run.
I drafted and submitted the Central Coast Broadband Consortium’s (CCBC) contribution. There are many administrative, practical and, yes, political details to be worked out. Which is a large part of the problem with the program: the grant application and review process is complicated, time consuming and capricious. Improving it requires fewer details, more predictability and rapid decision making.
Time is the most precious commodity…
The CCBC has developed and assisted in the development of CASF-funded projects since 2009. It is an increasingly difficult challenge to recruit qualified infrastructure grant applicants. The delays, uncertainty and litigation involved in the review and approval process are the primary reasons qualified companies refuse to participate. Subsidy levels can be a consideration too, but other funds can often be identified to backfill project budgets when CASF eligibility is assured and schedules are short.
Money can be made. Time cannot.
The more complicated the process is and the more opportunities for incumbents to game the system, either by exploiting an overly intricate scoring system or by endless litigation of independent proposals, the less the likelihood is of meaningful service and infrastructure upgrades in deserving communities.
Since the California legislature voted to turn CASF into a piggy bank for big incumbents last year, the pipeline of independent broadband projects has run dry. Naturally, it has not stopped Frontier Communications from gaming the system to maximise the taxpayer dollars it rakes in, while minimising its service obligations.
In theory, the draft overhaul of the program should be complete by the end of the year, although it might take a month or two (or three…) for CPUC commissioners to come to a decision. In the meantime, the debate continues.
You can download Friday’s filings, and all (I think) the other documents from the CASF reboot here
AT&T doesn’t want to be bothered with any performance requirements or public disclosures. It just wants the California Public Utilities Commission to write it a monthly check, drawn on the California Advanced Services Fund (CASF). Boiled down, that’s its idea for rebooting CASF, following its success at convincing California lawmakers to turn the program into its own private piggy bank.
In that respect, AT&T is being consistent. But there is one, big whopper in the recommendations it submitted last month: AT&T claims the “communications environment” is “hypercompetitive”.
California’s broadband market is concentrated in the hands of just a few players. Places where there are more than two wireline providers are rare. When broadband subsidies are on the table, that duopoly turns into a monopoly. Both California and federal infrastructure subsidies are effectively limited to communities bypassed by cable companies. In its service territory, AT&T will only get taxpayer money where it’s the only game in town.
That’s not hypercompetitive. That’s not competitive. That’s a monopoly.
Frontier Communications, Comcast and Charter Communications also want to fence off service areas where their service is substandard or nonexistent. Frontier and the California Cable and Telecommunications Association – Comcast’s and Charter’s joint lobbying front organisation – are both urging the CPUC to allow them to challenge proposed infrastructure projects at any time, for any reason. Frontier, in particular, abuses the challenge process – sometimes successfully, sometimes not – by submitting late and often unsupportable service claims.
Most of the comments from other organisations, including those that I drafted for the Central Coast Broadband Consortium, urge the CPUC to set reasonable limits on challenges. The endless attacks on independent projects by incumbents is a major reason that reviews of proposed projects can stretch out for more than two years.
The CASF program’s purpose is to improve California’s broadband infrastructure, not to protect monopoly businesses at taxpayers’ expense. It’s time to end the delays and make incumbents accountable, for both the service they provide and the claims they make about it.
The reboot of the California Advanced Services Fund (CASF) broadband infrastructure subsidy program continues, with a new round of comments and suggestions landing at the California Public Utilities Commission.
I drafted the Central Coast Broadband Consortium’s filing. One issue that the CPUC should consider very carefully is what qualifies as a bona fide service offer.
When the California legislature allowed lobbyists for AT&T, Frontier Communications, Comcast and Charter Communications to rewrite the law and turn CASF into their own, private piggy bank, the minimum broadband standard was lowered to 6 Mbps download and 1 Mbps upload speeds. If an incumbent “offers” such service, then the area in question isn’t eligible for an infrastructure grant.
The point we made is that…
In order for such an offer to be valid, an incumbent provider must be capable of actually delivering service at 6 Mbps download and 1 Mbps upload speeds (hereinafter, “6/1 service”) consistently to any household that subscribes to it. Although it is common industry practice to advertise service at a certain level and then condition it with a long and difficult to parse list of exceptions, there are no such exceptions in the statute. An incumbent is either capable of delivering 6/1 service to every household that subscribes to at least that level of service at all times, or it is not. If an incumbent is not capable of fulfilling an offer of 6/1 service, or better, at all times in any given census block or to any given household, then that census block or household is unserved.
An offer that can’t be fulfilled is not a offer at all. Incumbents should not be allowed to block independent projects on the basis of marketing claims or service that meets the minimum standard only some of the time. The 6/1 standard is ridiculously low to begin with. The least the CPUC can do is require incumbents to actually meet it.
The California Public Utilities Commission has decided that broadband subsidy proposals can be challenged almost forever, instead of right up until the moment commissioners vote, as it has allowed in the past. It rejected an appeal of a 2017 grant by a wireless Internet service provider in Trinity County, Velocity Communications, ruling that once a draft decision is issued, ISPs can’t submit speed test data that purports to show that the area in question is “served” and thus ineligible for a California Advanced Services Fund (CASF) grant. That’s good news.
The bad news is that until the draft decision is issued – typically a month before the commission votes – incumbents can take all the pot shots at grant applications they want. By rejecting the appeal, commissioners put their stamp of approval on the routine practice of ignoring the deadlines they set. It’s OK, they said, for Frontier Communications to persistently lobby staff after the formal challenge period closes…
Velocity is correct that Commission staff accepted a late filed challenge from Frontier…the deadline for submitting letter challenges to a CASF application is 14 days after web posting of the CASF application by Commission staff. Historically, Commission staff has been lenient with this requirement and accepted late-filed challenges after the 14-day period out of an abundance of caution…
What Velocity fails to acknowledge, however, is the significant difference between Commission staff accepting a late filed challenge while the evidentiary record is still open compared to accepting new evidence after the proposed resolution has been issued and the evidentiary record has been closed. There is no statute, Commission decision, resolution, or rule prohibiting Commission staff from accepting a late filed challenge while the evidentiary record is still open (prior to the issuance of the draft resolution), which is what staff did in regard to Frontier’s challenge.
Allowing ISPs to file perpetual challenges to broadband infrastructure projects wouldn’t be a huge barrier if the CPUC otherwise stuck to its schedule, which calls for a final decision on proposals within three and a half months. But abuse of its open door policy – Frontier is a major offender – creates delays that can drag on for years and effectively kill independent projects that incumbents find inconvenient.
Slow decisions lead to slow broadband service, and that suits Frontier’s and ATT’s business model perfectly.
It’s been a bad few weeks for so called broadband adoption programs in California. First, the shotgun marriage between Frontier Communications and the California Emerging Technology Fund (CETF) turned into a messy divorce, having only reached a tiny fraction of its “aspirational” target of 200,000 new broadband subscribers.
Then the California Public Utilities Commission launched an effort to recover $244,000 from a Los Angeles County adoption program, that was funded by a regional broadband consortia grant from the California Advanced Services Fund. That program had an even loftier goal: it was called California’s One Million New Internet User Coalition (NIU Coalition). A CPUC investigation resulted in allegations of “false reports” submitted by the group, regarding time spent – and billed – training residents of low income communities in the mysteries of the digital world.
These programs are intended to get more people to use Internet-delivered services and subscribe to broadband service. In theory, that’s what “adoption” means. It’s a marketing metric that’s expressed as the percentage of potential customers who buy a particular category of product or service. To increase the adoption rate, you need to close more sales. Period.
The problem is that the non-profit corporations and community based organisations that chase “adoption” grants are not well equipped to meet Internet subscriber sales quotas. Instead, they tend to focus on advocacy or education – digital literacy, as it’s sometimes called. Or they simply give computers and Internet access away. That might be worthy thing, but at best it’s an indirect way to drive broadband subscriptions.
Computer giveaways, free Internet access and digital literacy classes are not sales tools. Those sorts of programs play a role in connecting more people to Internet-delivered services and closing the digital divide. But you can’t measure their success by the number of new subscriptions they generate. Trying to do that just leads to acrimony when ridiculous targets aren’t met. There are better ways to hold educational and social services organisations accountable than by pretending they are the sales department for Internet service providers.
The California Public Utilities Commission began funding regional broadband development groups, AKA broadband consortia, in 2011. In rural areas, and some urban areas, the groups primarily worked on expanding broadband infrastructure. But in Los Angeles County, the focus was on broadband promotion – AKA broadband “adoption” – programs that aimed at getting more people to use – and subscribe to – Internet service.
One of those groups styled itself “California’s One Million New Internet User Coalition”. It received conditional approval for a $450,000 grant from the CPUC and paid for by the California Advanced Services Fund (CASF), to run digital literacy training, primarily in low income communities in LA County. An organisation called Korean Churches for Community Development was in charge of the money – AKA, the fiscal agent – and, according to CPUC records, the consortium’s leader was Larry Ortega, CEO of Community Union Inc.
The CPUC doesn’t simply write checks, however. The CASF program generally reimburses grant recipients, including consortia, for money that is spent on approved activities, and properly documented. The NIU Coalition, as it’s sometimes called, made claims about millions of people reached that might have true – one news story on an LA television station gets a lot of eyeballs. But the training programs that the CPUC was paying for were a different matter. According to a report by CPUC enforcement staff, what the consortium actually did, didn’t match the reimbursement claims that it submitted…
The Coalition repeatedly made false claims to the Commission by reporting
that they provided 40 hours of instruction despite reducing instructions to 20
hours…the Coalition “gave the impression that the Consortium has been offering the 40-hour in-class training in all its quarterly reports and in its requests for Year 2 and Year 3 budgets.” The Coalition’s application and subsequent annual work plan submissions to the Commission all falsely claimed that they were still providing 40-hour training programs. The Coalition misled the Commission by making false reports.
The CPUC will vote next month whether to begin the formal process of clawing back $244,000 from KCCD, and possibly assessing fines and other penalties on it and Ortega. According to the CPUC, Ortega and KCCD have stonewalled them, and largely refused to respond to questions or demands to return the money.
I do a lot of work for regional consortia, some of it paid, some of it not. I’m proud of what I do, but not of some of the other crap that goes on. I’m not a disinterested commentator. Take it for what it’s worth.
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.
Frontier Communications isn’t getting any sympathy yet from the California Public Utilities Commission. Commissioners are scheduled to vote this morning on grants for two southern California fiber to the home projects, in Lytle Creek, in the mountains of San Bernardino County, and Desert Shores and Salton Sea Beach in Imperial County. The subsidies would come from the California Advanced Services Fund (CASF).
You might think that Frontier would be happy with a gift of $2.7 million of taxpayer money, but it isn’t. It wants $3.3 million, which is the full tab for building the systems. Including the cost of buying customer premise equipment for customers who don’t exist – there are about 200 empty homes in the Desert Shores project area. Frontier claimed its household count was based on its own “its well tested methodology used extensively in broadband deployment”. Turns out Frontier’s “well tested methodology” involves using 2016 population figures, instead of the newer but, um, inconvenient data generated by the California finance department in 2017.
CPUC staff rejected Frontier’s arguments that the CPUC should pay for 100% of both projects, instead of the 80% and 90%, respectively, that’s currently proposed, saying…
Frontier has offered an interpretation of AB 1665 whereby every project is evaluated according to the unique set of criteria, chosen by the applicant, that will justify full funding for that project.
Assembly bill 1665 was passed by the California legislature and signed into law by governor Jerry Brown last year. The bill rewrote the rules for the CASF program, turning it into a private piggy bank for Frontier and AT&T, with some spiffs on the side for cable companies. It’s not surprising that Frontier thinks it can whack CASF with a hammer any time it’s running a little low on cash, but that’s the product of a seemingly limitless sense of entitlement, rather than a rational interpretation of the law.
So far, the give and take has been with staff. Commissioners will have the final say later this morning.
Frontier Communications isn’t happy with the bonus that California Public Utilities Commission staff wants to bestow on it. Instead, Frontier is demanding the CPUC pay the entire cost of two fiber to the home projects in outlying areas of California.
Frontier applied for two grants from the California Advanced Services Fund (CASF), one for $1.8 million in the San Bernardino County mountain community of Lytle Creek, and the other for $1.5 million in two towns – Desert Shores and Salton Sea Beach – in Imperial County. The applications asked the CPUC to pay 100% of the cost of the projects. The CPUC has always had the discretion to do that, but up until now has typically limited last mile infrastructure subsidies to 60% to 70% of construction costs.
When the California legislature rewrote the rules for CASF subsidies last year, it bowed to
cash pressure from lobbyists for Frontier – as well as AT&T, Comcast, Charter and other big monopoly model incumbents – and turned the program into their private piggy bank. One change specifically – and unnecessarily – authorised the CPUC to pay for “all or a portion” of a project, based on an assessment of its worthiness.
So that’s what CPUC staff did when they evaluated Frontier’s applications, and drafted two resolutions for commissioners to consider at their meeting tomorrow. They recommend giving Frontier grants for 90% of the Desert Shores project cost and 80% in Lytle Creek.
That’s more than any other last mile project subsidised by CASF, but it still isn’t enough for Frontier. It filed objections to the staff proposal, essentially arguing that the CPUC is obligated to give them all the money.
The CPUC’s job is to try to untangle the mess that lawmakers made last year when the CASF program was rewritten. That means developing a rational process for identifying and funding broadband projects in unserved and otherwise eligible areas of California, Frontier’s overwhelming sense of entitlement notwithstanding.
The California Public Utilities Commission approved a new broadband promotion program at its meeting in San Francisco yesterday. Via the California Advanced Services Fund (CASF), the program will award grants for digital literacy training and community broadband access projects. Non-profit groups, schools, local governments and other not-for-profit organisations can compete for the $5 million initially available, with the first round of applications due on 31 August 2018.
There’s a fast lane – expedited review – for applications requesting grants of $100,000 or less, and that meet other specific requirements, such as serving a low income community and offering technical support. In addition, preference will also be given to projects that serve rural areas and/or people with “limited English proficiency” and “limited educational attainment”. Grants can pay for up to 85% of eligible project costs.
One knotty problem is evaluating the effectiveness of “broadband adoption” projects. Strictly speaking, adoption is a marketing metric, typically expressed as the percentage of people who buy a particular category of services or products. The obvious solution is to get subscriber data from Internet service providers, but that’s something that big ISPs, and particularly AT&T, do not want to do. They treat it as proprietary information. One possible work around is to sign non-disclosure agreements, and the CPUC will work on creating a standard one for grantees to use. But the CPUC isn’t requiring ISPs to participate, so it might not get very far.
The commission also made relatively minor changes to its existing grant program for public housing communities. It didn’t change its standards, though. Unlike other CASF-funded infrastructure projects, which have to offer at least 10 Mbps download and 1 Mbps upload speeds, facilities in public housing only have to deliver 1.5 Mbps down, with no particular upload requirement.
The new adoption program – $20 million total – was created by the state legislature last year, when it turned the lion’s share of CASF – more than $300 million – into a piggy bank for AT&T and Frontier Communications. Those new rules are still under development at the CPUC, with a final version expected by the end of the year.