Tag Archives: rdof

CPUC commissioners to decide if Digital Path’s sharp dealing deserves taxpayers’ money

by Steve Blum • , , , ,

Three card monte

Not every project proposed for a broadband infrastructure grant from the California Advanced Services Fund that could have been waved through and approved administratively was. Nine grant requests from Charter Communications received a “ministerial” blessing, but a proposal from Digital Path was bucked to the five CPUC commissioners for a decision.

Digital Path wants $415,000 from CASF for fixed wireless facilities to cover 279 homes, mostly in Sutter County, with a few in Placer County. Cover, not necessarily serve. According to the draft resolution prepared by staff for consideration by commissioners, only 97 households are expected to sign up.

Service level is an issue. The best Digital Path says it can deliver is 50 Mbps download/10 Mbps upload speeds with a 500 GB monthly data cap for $103 a month. Its cheapest market rate offering is $78 a month, for 25 Mbps down/5 Mbps up with a 250 GB cap. Its concession to low income customers is to offer qualifying households 10 Mbps down/2 Mbps up with a 190 GB cap for $39, more than twice the CPUC’s $15 benchmark rate for low income homes.

The draft resolution calls out pricing as a barrier to availability, as well as Digital Path’s disingenuous attempt to wall off vast swaths of California from federal broadband subsidies

DigitalPath’s pricing plans do not provide reasonable accommodation for the rural, typically low-income communities it primarily serves. The Sutter Placer Project would contribute to the CASF program goal to serve 98 percent of households per consortia region; however, the goal is not consequential if affordability is a barrier to adoption.

Additionally, DigitalPath challenged the highest number of [Rural Digital Opportunity Fund] locations in the United States. While the Federal Communications Commission (FCC) disqualified a significant number of those, DigitalPath still had a high number of challenges sustained by the FCC, and those areas were subsequently removed from RDOF eligibility. Although the Sutter Placer Project has no RDOF overlap, DigitalPath submitted ten other CASF Infrastructure applications proposing projects that had RDOF overlapping census blocks, of which six projects no longer have RDOF overlap because of DigitalPath’s challenges. Removing RDOF-eligible blocks from a CASF project means the provider claims it already offers at least 25/3 Mbps service to the census block, which calls into question the need for CASF funding. It also means state CASF funds would be used in lieu of potential federal RDOF funds. For these reasons, Staff recommends Commission consideration by Resolution.

Translation: Digital Path is gaming the system.

And, it appears, misleading the CPUC or, perhaps, the FCC, about the level of service currently available in the census blocks where it’s seeking CASF subsidies. To apply for a CASF infrastructure grant, an Internet service provider has to make the case that broadband service in a given census block is either non-existent or slower than 6 Mbps download/1 Mbps upload speeds. When it first tried to block federal subsidies in its turf, Digital Path claimed that it was offering speeds of at least 25 Mbps down/3 Mbps up in 40,000 census blocks, including 419 of the 492 census blocks where it applied for CASF money.

CPUC commissioners should take the hint from staff, and reject Digital Path’s grant application. Taxpayer dollars shouldn’t be used to subsidise expensive, substandard service for the fraction of homes that can afford it or reward playing Three Card Monte with census blocks and service reports.

The Connected Capital Area Broadband Consortium (CCABC) assisted DigitalPath and I assisted CCABC. I also kibitzed on other projects. I have opinions about what the CASF program should be about (in case you haven’t noticed). I’m not a disinterested commentator. Take it for what it’s worth.

Breaking: CPUC ups proposed RDOF kicker to as much as 30%, for all federally eligible areas in California

by Steve Blum • , , , ,

Front line dispatch 625

Updated 10:01 a.m.

New rules for the California Public Utilities Commission’s proposed contribution – aka “kicker” – to the federal Rural Digital Opportunity Fund (RDOF) were published this morning.

Click here to see the letter.

Changes include an offer of “up to 30%” of the Federal Communications Commission’s ten year “reserve price” for “all RDOF census block groups”, with a guarantee that 10% of the FCC reserve price will be available to Internet service providers that win subsidies for census block groups that are on the previously published list of particularly disadvantaged communities.

There are also more specifics on the strings the CPUC will attach to the kicker money, including last mile open access requirements, requirements for lifeline and low income rate plans and “gigabit capable infrastructure”.

To get the full 30% kicker, an ISP will have to be an “eligible publicly entity, including a joint powers authority or affiliated non-profit” and have outside, non-CASF, non RDOF financing “equal to at least twice the requested kicker amount”.

As before, first priority for kicker money will go to projects that were proposed last May for California Advanced Services Fund (CASF) subsidies, if the applicants win RDOF funding. Second priority is other RDOF winners, and the left overs go to CASF applicants that don’t receive RDOF subsidies.

As with all CPUC statements regarding the proposed RDOF kicker, this one comes with the caveat that the commission hasn’t formally approved the plan. “We are planning to release [a formal draft of kicker program rules] in early December for a Commission vote not sooner than January 14, 2021”, the letter says.

Round 14 of the RDOF auction is in progress and will end at 11:00 a.m. California time. The pace of the auction will pick up next week, with two rounds scheduled for Monday and for Tuesday. The length of each round will be cut from four hours to two and a half hours. In the past, the FCC has accelerated the pace as auctions approach the end. Which could mean RDOF bidding might be over sometime next week.

Might.

CPUC fast tracks nine broadband infrastructure grants in southern California

by Steve Blum • , , , ,
Mobile home park

Broadband infrastructure subsidies from the California Advanced Services Fund (CASF) were approved on a fast track basis earlier this month for nine projects submitted by Charter Communications. The letter informing Charter of its good fortune is dated on 3 November 2020, but wasn’t released by the California Public Utilities Commission until yesterday.

Combined with the tentative approval of six projects announced on Friday, that means that $32 million has been earmarked for 15 CASF grant applications submitted this year, leaving 39 projects totalling $364 million to chase the $163 million that I roughly estimate is remaining in the fund.

Charter’s approved grants total $8.7 million for 1,833 homes in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. All will be hybrid fiber-coax systems – no full fiber to the home builds are proposed. The company submitted 16 CASF grant applications in May, so seven are still pending. Assuming no further surprises, Charter’s seven remaining grant applications and the 32 others won’t be acted on until well into next year.

The approval of Charter’s nine projects is a welcome a milestone in the CASF program. It’s the first time that the “ministerial” approval process for CASF broadband infrastructure grant was used. It’s a fast track for projects that meet particular specs

The Commission delegates to Communications Division Staff the authority to approve applications, including the determination of funding, that meet the following criteria:

  • Applicant meets the program eligibility requirements.
  • The application is not challenged, or Staff has determined the project area is unserved.
  • The grant does not exceed $10,000,000.
  • The project is California Environmental Quality Act (CEQA) exempt.
  • There must be no competing applications for the same project area.
  • Cost per household for projects building wireline connections are $9,300 per household or less.

Charter’s special rate for low income households doesn’t meet the CPUC’s standard of $15 per month. According to the approval letter, Charter offers low income customers 30 Mbps download/4 Mbps upload speeds for $18 a month. That’s true as far as it goes, but there’s a gotcha that isn’t mentioned: WiFi capability costs another $5 a month. Which means that Charter’s low income plan costs $23 a month if it’s going to be useful for the vast majority of users. Most people don’t have ethernet routers or WiFi bridges of their own.

$23 million in California subsidies for six broadband infrastructure projects ready for CPUC vote

by Steve Blum • , , ,
Fiber patch panel sab photo 625

Six broadband infrastructure projects asking for $23 million in grants from the California Advanced Services Fund (CASF) are queued up and ready to go at the California Public Utilities Commission. Assuming all six are blessed by commissioners, that’ll leave $172 million, by my estimate, in the CASF broadband infrastructure grant account. The 48 remaining grant requests total $374 million.

A breakdown of the remaining CASF infrastructure budget and pending projects is here. I’ll update those tables as things change.

A proposed California supplement – “kicker”, as it’s called – to the federal Rural Digital Opportunity Fund (RDOF) subsidy program could, in theory, take as much as $146 million from CASF, but the actual outlay is likely to be a tiny fraction of that. The RDOF kicker program isn’t approved yet, and if it is the draft rules might radically change. But the working assumption is that the 48 pending projects seeking CASF broadband infrastructure grants will have first dibs on whatever money is available.

On the other hand, decisions on those grant applications might wait until 31 March 2021. The CPUC won’t make a final decision on whether and how to offer the RDOF kicker until January, perhaps around the same time that the Federal Communications Commission announces the winners of its reverse auction for its subsidies.

Five of the lucky CASF projects that move ahead now do not include any areas that are eligible for RDOF money.

A sixth project, located on tribal land in Humboldt County, includes RDOF territory. The draft resolution for Hunter Communications’ Hoopa Valley Broadband Initiative project cites “the historical lack of federal broadband money going to tribal areas” as the reason for making an exception to the notional wait until the dust clears rule.

The six projects and grant requests are:

CPUC’s RDOF kicker goes from incentive to afterthought with yet another delay

by Steve Blum • , , , ,

Road closed 2

In an email sent late on Friday, the acting executive director of the California Public Utilities Commission, Rachel Peterson, said most broadband subsidy decisions will be delayed to as late as 31 March 2021, including a proposal to top up bids for federal broadband dollars with money from the California Advanced Services Fund (CASF).

If it happens at all. She said the “kicker” intended to incentivise bidders for Rural Digital Opportunity Fund (RDOF) will “possibly combine state and federal funding” to “secure broadband deployment for more California residents”.

Possibly. Not certainly.

But certainly not before the Federal Communication Commission’s RDOF auction closes, and $16 billion goes to states and territories where ISPs bid the most aggressively.

The supplemental CASF money was intended to give a shot of financial testosterone to Californian Internet service providers and motivate them to go hard after federal subsidies to serve Californians stuck in the deepest digital divides. Instead, the kicker program is stuck in a bottomless bureaucratic hole.

RDOF contenders must either risk the FCC’s swingeing default penalties if the money doesn’t materialise as hoped, or bid within the limits of their own resources. The prudent ones will play it safe, which means disadvantaged Californians – disadvantaged not only by personal circumstance but by the high cost of doing business in this state – are out of luck.

It didn’t have to be this way. The kicker was authorised by the California legislature in June and CPUC commissioners delegated the job of implementing the program to staff in August. Which should have left plenty of time to get it done before the RDOF reverse auction began on 29 October 2020, let alone before it closes, either later this month or in December.

That would have been enough time, except the initiative descended into the CPUC’s pseudo-judicial mire instead of being implemented administratively, as other state agencies would do. Peterson’s email came a day after the CPUC administrative law judge managing the excruciatingly bureaucratic and unnecessarily litigious “proceeding” delayed publishing a draft plan until December, which means a final plan won’t be approved until mid-January. Or “possibly” not at all.

There are some rays of sunshine, though. Most CASF infrastructure grant decisions will be pushed deep into the new year, but six projects are heading to a vote by commissioners in December. Draft resolutions which would approve a total of $23 million in grants were also published on Friday. More about those tomorrow, but here’s the list with links to the draft resolutions:

Digital Path, Sutter and Placer counties
Frontier Communications, Crescent City
Frontier Communications, Smith River
Hunter Communications, Hoopa Valley
Plumas Sierra Telecommunications, Scott Road
Race Communications, Williams

CPUC kicks RDOF kicker decision into January and out of the hunt

by Steve Blum • , , , ,

Zonk

Hope is dead that bidders for federal broadband money in the ongoing Rural Digital Opportunity Fund (RDOF) auction would have certainty or, perhaps, even a clue regarding the California Public Utilities Commission’s supplemental subsidy plan before the auction ends. That means that the incentive value of California’s money is zero for most, if not all, Internet service providers in the reverse auction that’ll determine which communities and states divvy up $16 billion earmarked by the Federal Communications Commission for rural broadband service upgrades.

Joanna Gubman, the CPUC administrative law judge managing the lengthy – and unnecessary – bureaucratic process leading up to a decision, sent out an email yesterday saying there would be month delay in publishing a draft decision laying out how California’s RDOF “kicker” will be offered, if it’s offered at all…

The Scoping Memo in this proceeding stated that the Phase I-A Proposed Decision would be issued by November 13, 2020, subject to modification by the Administrative Law Judge if required to promote the efficient and fair resolution of the Rulemaking. Accordingly, the Phase I-A Proposed Decision will now be issued by December 11, 2020. The schedules for future phases of this proceeding remain unchanged.

A preliminary plan, a list of eligible census block groups – areas in California where the digital divide is widest – and nominal “kicker” amounts are posted. But before Internet service providers can take that to the bank, a formal proposed decision has to be published, and at least 30 days has to elapse before CPUC commissioners vote on it.

Until and unless they approve it, nothing is certain. The $16 billion is being distributed via a reverse auction that began on 29 October 2020 and has gone through nine rounds so far. Round 10 is today. The idea was that if the CPUC offered bidders a bonus from the California Advanced Services Fund (CASF), then they would add it to their own project budgets and bid more aggressively for the targeted census block groups.

But to do that despite the FCC’s stringent default penalties, ISPs will have to take the preliminary plan and the conditions that go with it, such as offering open access to subsidised infrastructure, on faith.

Some bidders might risk it. Most, though, will conclude that faith is a bad basis for capital investment.

CPUC (sorta) offers $73 million subsidy kicker to RDOF bidders

by Steve Blum • , , , ,

Cpuc rdof kicker map 28oct2020

Internet service providers that win federal subsidies in the Rural Digital Opportunity Fund (RDOF) auction for particular census block groups (CBGs) may be eligible for at least $73 million in supplemental subsidies from the California Advanced Services Fund. And maybe twice that much.

Probably.

Yesterday, the California Public Utilities Commission defined – at least to a useful extent – how much money will be offered as an incentive for ISPs to bid aggressively for RDOF money in Californian CBGs where the digital divide is the widest. It also updated the list of eligible areas and its online map, increasing the total from 279 CBGs to 331 CBGs, and boosting the number of eligible “locations” – FCC-speak for homes and businesses – from 95,000 to 110,000.

That means there’s less uncertainty about the CPUC’s intentions as the RDOF reverse auction begins today. The CPUC’s bureaucracy, which is mired in a hundred years of pseudo-judicial accretion, is stalling a final decision on whether or not the “kicker” will be formally and officially offered until mid-December, which might be after the RDOF auction is over. There’s always a chance that commissioners could vote to renege on the offer, but with the publication of dollar amounts the risk is significantly lower. The CPUC is putting its credibility on the line.

The deal on the table says that if an ISP prevails in the RDOF auction and wins a subsidy for an eligible CBG, then the CPUC will kick in at least an amount equal to 10% of the FCC’s ten year total “reserve price” for that CBG. That’s easily calculated – it’s equal to the FCC’s annual reserve price for a CBG, which helpfully is listed in the CPUC’s spreadsheet and its online map.

The “at least” caveat is there because the CPUC is proposing a two-level subsidy plan. The “Level 1” subsidy would be the above mentioned 10% of the total reserve price, which could total $73 million. The “Level 2” subsidy could be an additional 10%, for a total of 20% of the total reserve price. The final Level 2 amount will depend on the money available and, unfortunately, on the self interested wrangling amongst ISPs, various other parties (including your Humble Blogger) and CPUC staff.

Also in dispute are the conditions and requirements that would be attached to the CPUC’s money. The current proposal from CPUC staff would, among other things, require ISPs to deliver a gigabit-class network and offer it on an open access basis in order to qualify for Level 1 money, and offer dark fiber to tribes for Level 2 support. Those conditions were the primary topics addressed by the many commentators on the staff’s proposal, most of whom were angling to extract rents for themselves.

I like to think I’m not one of the rent seekers in the proceeding. I also like to think I know what I’m talking about. Judge for yourself.

With California’s supplemental subsidy proposed but not yet offered, ISPs must risk RDOF subsidy bets tomorrow

by Steve Blum • , , , ,

Update 28 October 2020: The CPUC published a new list of targeted census block groups (CBGs), and clarified its proposed plan to offer additional subsidies to ISPs that successfully bid for RDOF subsidies in those CBGs. The list is here. The updated info about the money is here. The short version is that if the plan is approved by commissioners in December, then the CPUC will offer an amount equal to 10% of the ten year “reserve price” set by the FCC for each CBG – a total of $73 million from CASF – to ISPs that meet the CPUC’s Level 1 service requirements and other qualifications. Additional money – i.e. Level 2 – could be available as well to ISPs that meet more stringent CPUC requirements.

The Federal Communications Commission’s Rural Digital Opportunity Fund (RDOF) auction begins tomorrow. The complex, reverse auction process might or might not take several weeks to complete. At the end, $16 billion will be awarded to the Internet service providers who commit, under pain of severe penalties, to take the lowest subsidy and deliver the best service in a given area.

The competition isn’t just between ISPs, though. It’s also between states and communities. Almost certainly, $16 billion isn’t enough to pay for broadband infrastructure and service upgrades in every eligible area – census block group – in the U.S. So some states and communities will win, and some will lose. States where the cost of building and operating broadband networks is relatively high, such as California, will be at a disadvantage.

At the direction of the California legislature, the California Public Utilities Commission is trying to tilt the playing field in our direction by offering successful RDOF bidders a “kicker”, paid for by the California Advanced Services Fund (CASF). It would be something like an extra subsidy of 10% or 20%, if certain conditions are met and the area is on the CPUC’s list of 279 census block groups that it’s determined have the greatest need.

The problem today is that while the CPUC has published the list of 279 census block groups, it hasn’t said how exactly how much money it’s offering as a kicker in each – the proposed percentages are approximate and not completely defined – or finalised the conditions that must be met to qualify. Or indeed, said whether anything will be offered at all. Although there’s a good faith effort underway to implement the kicker program, it will be mid-November before a formal draft of the rules is published and mid-December before the commission will vote on it. However unlikely, it’s possible that commissioners will reject or significantly amend the draft.

The delay and uncertainty will severely reduce the kicker program’s effectiveness. The goal is to attract federal broadband dollars to California’s neediest communities and not only help bidders be more competitive, but also to provide “an incentive to participate in the auction in the one gigabit tier”.

To factor that incentive into bids, ISPs will have to risk making decisions tomorrow that could force them to drop out of the auction early or make promises they can’t afford to keep on their own. Once the auction begins, the process will gradually reduce bidders’ flexibility, to the point that they won’t be able to jump in on an eligible area that they aren’t already competing for, and they won’t be able to change their proposed service level, i.e. speed and latency.

How many ISPs will start bidding tomorrow for census block groups they can’t profitably serve without the CPUC’s kicker, or offer gigabit-class systems they can’t build on their own? I don’t know, but I am certain the answer could be zero and even if it’s greater than zero it will be less than what it would have been if the CPUC had put its money on the table today.

Broadband needs grow as California’s subsidy fund runs dry

by Steve Blum • , , , ,

Salinas taco bell broadband

There’s about $194 million left for broadband infrastructure upgrades in the California Advanced Services Fund (CASF). That’s less than half of pending grant requests, even before possible “kickers” for Internet service providers bidding for federal Rural Digital Opportunity Fund (RDOF) subsidies are factored in.

It might not be even that much. My estimate includes an optimistic allowance for the cost of running the program, which has increased over time and will likely continue to grow. A new program that offers broadband planning grants to tribes will be added to general overhead as well. The higher those expenses climb, the less money will be available for infrastructure upgrades.

My estimate of the money remaining in CASF has bounced around this year. In June, it looked like there was only $145 million available, versus the $533 million in infrastructure grant proposals filed in May. Then last month, the California Public Utilities Commission proposed doubling the tax that funds it for the final two years it’s authorised to collect it. At the time, it was thought that the ultimate shortfall – the result of declining in-state telephone revenue over the past three years – would be $53 million, which calculates out to $216 million left to spend, versus $400 million in grant requests – some of the proposed projects were trimmed.

Tuesday of last week, two days before commissioners voted, a new estimate was published and showed the deficit climbing to $77 million. No explanation was given, but the likeliest culprit is the covid–19 pandemic. The latest figures are based on actual money collected, rather than estimates. People changed the way they communicate this year, and a shift from old school telephone calls to online methods is already evident.

One thing seems certain: without action by the legislature, California will no longer have a functioning broadband infrastructure development program or a meaningful subsidy fund. We can only hope that lawmakers do better in 2021 than they did this year.

CASF Infrastructure Account, with new surcharge increase to 1.019%

Authorised – total $575,000,000
Infrastructure shortfall (est.) ($68,643,411)
Infrastructure Account net of shortfall $506,356,589
Infrastructure awards as of 31 Dec 2019 $271,333,358
Infrastructure grants awarded in 2020 $10,825,350
Cumulative admin overhead as of 30 Jun 2019 $16,732,595
Estimated admin overhead FY 2019-25 $13,142,082
Total Infrastructure Account spent/encumbered $312,033,385
Funds remaining for new CASF infrastructure grants $194,323,204

CPUC updates tentative RDOF incentive plan, as its broadband fund falls short by $77 million

by Steve Blum • , , , ,

Sick piggy bank

The California Public Utilities Commission will put $150 million on the table for Internet service providers to add to their budgets as they bid in a reverse auction for federal Rural Digital Opportunity Fund (RDOF) subsidies, if a plan proposed by staff is eventually approved by commissioners. Some of the details of that plan were released earlier this month, and a list of census block groups that will be eligible for “kickers” from the California Advanced Services Fund (CASF) was posted late on Friday. More details, including how much CASF money will be available in each of those census block groups, is expected soon, perhaps later today.

A more important question, though, is how much money is left in CASF? Shortfalls over the past three years mean the loss of $77 million that might have gone towards broadband upgrades for unserved Californians. The problem is that the broadband penny is being collected on the in-state voice telephone service dollar, which is a dying business.

The tax that pays for CASF will double for the next two years, from about half a cent on the dollar, to a little more than a penny on the dollar. The CPUC voted unanimously on Thursday to raise the rate and, it hopes, collect the maximum amount for CASF that was authorised by the California legislature for 2021 and 2022. But that won’t make up for past deficits.

CPUC commission Martha Guzman Aceves told her fellow commissioners the way California pays for broadband infrastructure subsides and similar programs must change…

Over the past few years we’ve really acknowledged that the commission has been seeing negative repercussions from having the type of surcharge structure that we have, which is a voice-based surcharge collection, to fund our public purpose programs…Not only has it been declining rapidly for legitimate reasons on why – people are using more data, or texting, or using applications like the one we’re on today, social media, etcetera. But in addition to the revenue being voice based, the determination of how much of it is voice versus data is determined by the carriers themselves. So it’s a declining source of revenue, and it’s a volatile source…

Even with this resolution, to adjust the revenue, to…adjust the formula, we’re going to end up being – at minimum – over $77 million of under collection for the California Advanced Services Fund. That means that even though the legislature authorised us to collect over $330 million…we will only attain, at the most, $252 [million]. This is a huge problem…

I just wanted to really reiterate this need for surcharge reform and we need to really stabilise the revenue for these public purpose programs so we don’t fall short of the goals that the legislature has actually set forth for us to meet. So I really look forward to working with the legislature this year to attain those reforms.

There’s still a chance that governor Gavin Newsom will call the legislature back into session to specifically address California’s broadband gap, but hope is fading as the election nears. But the newly elected legislature will begin its work in December. Broadband advocates intend to pick up where they left off in August, after monopoly model incumbents and their lavishly compensated friends in the legislature beat down an attempt to raise California’s broadband standard to modern levels.