Tag Archives: rural broadband

CPUC considers topping up broadband subsidy fund, but money will still fall short

by Steve Blum • , , , ,

Sick piggy bank

California’s primary broadband infrastructure subsidy fund will grow by about $70 million, if the California Public Utilities Commission approves a proposal to nearly double the tax that pays for it.

The California Advanced Services Fund (CASF) gets its money from a tax on phone calls made within California. That’s source of revenue is on the decline. The CPUC can collect up to $66 million a year for the fund (more, under certain circumstances), and sets the tax rate accordingly. During the first three years of the commission’s current five year authorisation, the CASF tax rate was set at about half a cent on the dollar – 0.56%. Because of the decline in intrastate telephone revenue, that rate would have led to a five year deficit of more than $100 million in money available for broadband infrastructure subsidies.

The deal on the table would raise the rate to 1.019% for the final two years the CPUC is allowed by law to assess the CASF tax on phone bills. CPUC staff estimates that would bring the annual take up to the annual $66 million limit, and hold the five year deficit at $53 million.

Most of the money in CASF goes towards building networks, but not all of it. Some of it pays for broadband promotion and other programs. The table below shows my calculations. Bottom line, there would be about $216 million available for new broadband infrastructure grants, instead of about $145 million, as I estimated in June.

That’s a help. More Californians will get the broadband service they need. But CASF will soon run dry, likely this year. More than $500 million was requested in the last round of infrastructure grant applications in May. And the CPUC has authorised – but not yet implemented – an extra round of applications to backfill bids for federal broadband subsidies in October. With the California legislature’s failure to address the state’s broadband and broadband funding deficits in its recently concluded session, what we see (or not) is all we’re going to get.

CASF Infrastructure Account, assuming surcharge increase to 1.019%

Authorised – total$575,000,000
Infrastructure shortfall (est.)($47,248,062)
Infrastructure Account net of shortfall$527,751,938
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$215,718,553

Broadband and other hot, unfinished business might send the California legislature into overtime. But don’t bet on it

by Steve Blum • , , , ,

Chp horses capitol 3feb2016

The California legislature might not be done with broadband for the year. Or with other major issues it failed to address as the regular session collapsed into inter-house and partisan acrimony last week. Governor Gavin Newson is being asked to call the legislature back into topic-focused special sessions and broadband is on the list, along with housing, policing and other disputes. It’s also possible that the legislature will come back on its own. They can do that for particular kinds of bills, mostly ones that need a two-thirds majority such as “urgency” legislature or tax measures.

It’s typical talk in Sacramento, when hard fought, important bills stall as times runs out. Or, as with a key broadband deployment and access bill, particularly powerful lawmakers – in this case assembly speaker Anthony Rendon (D – Los Angeles) and democratic floor leader Ian Calderon (D – Los Angeles) – worry more about the money AT&T, Charter Communications, Comcast and other big telecoms companies pay them than with doing their job.

I hope Newsom does call the legislature back to deal with California’s broadband divide. History doesn’t make me optimistic, though. Special session talk follows legislative meltdowns, but it’s just talk.

The first time I heard it was in 1977 when I was an intern working for a Sacramento radio news bureau, during Jerry Brown’s first term as governor. Negotiations on a bill to tax commercial and residential property separately – split the tax rolls – died on the table. It was a dire problem for many Californians at the time, as skyrocketing real estate values were sending residential property tax bills into the stratosphere. There were constant rumors of a special session, but Brown never called it.

The following spring, voters took matters into their own hands and passed Proposition 13, rolling back and all but freezing property tax rates. The first attempt to amend Prop 13 in a big way – again, by splitting the tax rolls – is on this November’s ballot, 42 years later.

The safe bet in Sacramento is on inaction.

Taco Bell cares more about disconnected Californians than California’s leaders do

by Steve Blum • , , , ,

Salinas taco bell broadband

Kids sitting on curb in front of a fast food restaurant in order to get the broadband connection they need to go to schools that only operate online now is the best we can do now. The California legislature was diverted by pork barrel schemes from friends of AT&T, Comcast and other monopoly model incumbents, and finally bought into submission by the millions of dollars that those big telecoms companies pay them. Lawmakers took no action on bringing California’s broadband standard up to 21st century levels and did nothing to make it available to the millions of Californians who lack access to to it.

The California Advanced Services Fund (CASF) will run out of money this year. Or come close enough to doing so that next year’s action will be negligible. Either way, the end of California’s primary broadband infrastructure subsidy program will be upon us as we begin 2021.

The total of pending infrastructure grant applications is three times more than available funds, and there’s still the possibility of a brief opening for new projects that leverage state money for the federal Rural Digital Opportunity Fund (RDOF) auction in October.

The legislature passed a bill in June that allows the CPUC to top up RDOF bids. The commission voted in August to “assign to and authorise staff to set additional infrastructure application windows”. So far, nothing has happened.

The money for CASF comes from a tax – euphemistically called a surcharge or fee – on in-state telephone calls, which is a diminishing source of revenue. The authorisation to collect it ends in 2022. Currently, it’s about half a penny on the dollar. To collect the full amount authorised, the CPUC would have to increase the rate to a full penny or more.

If the CPUC does that, then most of the pending applications could be approved and some money set aside for RDOF bids, if the largest and most speculative of the bunch are taken out. But the well will still run dry next year.

Keeping CASF going requires action from the California legislature. That didn’t happen in 2020, despite an all out push to raise CASF standards to meet 21st century broadband needs, and the start of a campaign to raise a meaningful amount of money to pay for it.

California lawmakers need to start caring as much as Taco Bell does about the public they both serve.

I’ve advocated for SB 1130, and for other useful changes to CASF. I am involved and proud of it. I am not a disinterested commentator. Take it for what it’s worth.

AT&T not on FCC’s list of potential RDOF bidders, but 505 others are

by Steve Blum • , , , ,

Paicines pole route

AT&T is not on the list of 505 would-be rural broadband subsidy bidders released by the Federal Communications Commission on Tuesday. It’s also not listed as a member of any of the 38 consortia – bidding groups – and none of the other 467 contenders are obviously AT&T subsidiaries. None of the FCC registration numbers directly held by AT&T match up to any of the listed bidders either.

It’s difficult to prove a negative, but so far it appears that absence of evidence is also evidence of absence. AT&T does not appear to be interested in going after the $16 billion in ten year operating subsidies that the FCC will be awarding in the Rural Digital Opportunity Fund reverse auction next month.

The list is a bit of a tease. The FCC isn’t telling us which states these companies intend to bid in – California might or might not be in their dreams.

Other major California Internet service providers are also missing from the list, or have been tagged as having “incomplete” applications. Only one of California’s incumbent telcos filed complete paperwork the first time around. Consolidated Communications, which operates in a small area east of Sacramento, is ready to go. There were no other obviously Californian ISPs among the 121 organisations on the “complete” list.

Frontier is one of the 384 ISPs on the “incomplete” list, sailing under its bankruptcy-induced “debtor in possession” flag. So is Cox Communications, Altice (aka Suddenlink) and a couple of smaller cable operators, Horizon and Mediacom. But not Charter, despite signalling earlier this year that it would chase RDOF money, or Comcast, which comes as no surprise. Also in the incomplete category are Californian wireless Internet service providers and independent wireline ISPs.

The auction is scheduled to begin on 29 October 2020. Bidders that need to clean up their paperwork have until 6:00 p.m. eastern time on 23 September 2020 to do so. The FCC doesn’t seem likely to grant any extra time. At the same time that it published the lists, the FCC also published a sharply worded order denying five requests for extension of an earlier deadline. Pleas for waivers of eligibility or due diligence requirements usually get the same treatment.

The list will only get shorter as auction time nears.

Killing broadband upgrade bill is good business for California assembly leaders

by Steve Blum • , , , ,

Printing money us treasury image

Money matters in Sacramento, and the more ambitious the politician, the more it matters. The two men primarily responsible for killing senate bill 1130, which would have raised California’s broadband speed standard – assemblymen Anthony Rendon (D – Los Angeles) and Ian Calderon (D – Los Angeles) – hold high office, assembly speaker and democratic floor leader respectively. It comes at a high price.

In his eight years in and running for the assembly, Rendon has been paid a total of $9 million by a wide range of special interests, according to the FollowTheMoney.org website and the California secretary of state’s office. Calderon has raked in $4.6 million. That includes contributions to side hustles like ballot measure and statewide office committees. Much of it comes from labor, particularly public sector unions, and other reliably democratic cash cows, but the telecommunications and electronics industry sector is also a ready source of cash.

Rendon has collected $415,000 from the sector. AT&T is at the top of list, putting $53,000 in the speaker’s pocket since 2012. Verizon and Charter Communications come next, both with about $28,000 in payments. He’s taken a total of $83,000 in payoff from the cable industry, including $17,000 from Comcast.

Although Calderon doesn’t match Rendon’s total, he does even better on a percentage basis with the telecommunications and electronics sector, taking $328,000 in payments – 7% of his revenue. AT&T is still at the top of the list, with $54,000 in payments to Calderon, more than they paid Rendon. The cable industry as a whole paid Calderon $53,000.

Republicans get some love too. But not as much. The republican’s assembly floor leader, Marie Waldron (R – San Diego), also entered the assembly in the class of 2012. She’s only managed to score $2.8 million from all sources, with $129,000 coming from the telecommunications and electronics sector. But AT&T still leads the pack, paying Waldron $36,000. The cable industry gave her $31,000.

Or at least that’s what been reported so far. 2020 is an election year. When the dust settles in November, expect to see more payoffs from AT&T, Comcast, Charter and other telecoms companies reported.

I’ve advocated for SB 1130, and for other useful changes to CASF. I am involved and proud of it. I am not a disinterested commentator. Take it for what it’s worth.

AT&T, cable company money buys obedience from California assembly, and slow broadband for everyone else

by Steve Blum • , , , ,

Liberty whip 625

A last minute push to convince democratic leaders in the California assembly to allow a vote on raising the state’s minimum broadband speed standard failed last night in the final, chaotic hours of the regular 2020 legislative session. If you can get – well, are offered – broadband service at 6 Mbps download/1 Mbps upload speeds, you are still considered adequately served under California law. Which adequately serves the monopoly business model needs of AT&T, Comcast, Charter Communications and the other big, incumbent broadband providers who blocked the vote.

Senate bill 1130, authored by senator Lena Gonzalez (D – Los Angeles), would have raised the bar to symmetrical 25 Mbps down/25 Mbps up speeds. The California senate approved it in June, but it died in the assembly as democratic leaders refused to allow a full floor vote on it.

Had they done so, SB 1130 would have easily won the majority needed to pass. That wasn’t acceptable to assembly speaker Anthony Rendon (D- Los Angeles). Backed up by majority floor leader Ian Calderon (D- Los Angeles), Rendon pulled the bill, caving in to pressure – and loads of money – from AT&T and a solid line of cable companies, including Comcast and Charter Communications. Frontier Communications was against it too, but the relative pittance it directly puts in legislative pockets – $61,000 over the years versus $7.4 million from AT&T alone – doesn’t buy much influence. AT&T’s indirect payoffs to Californian democrats and republicans are more than five times that.

AT&T and Frontier like slow, 1990s DSL speeds because that’s what they offer to many poor and/or rural Californians. If independent competitors can get subsidies from the California Advanced Services Fund to build fully modern and future proof fiber systems in those communities, AT&T and Frontier would either have to spend their own money to upgrade or lose their monopoly strangleholds. Cable companies – at least those that maintain their technology at current levels – aren’t directly threatened by a higher speed standard, but the indirect threat of competitive Internet service providers and increased attention from anti-trust enforcers keeps them in the opposition column too.

I’ve advocated for SB 1130, and for other useful changes to CASF. I am involved and proud of it. I am not a disinterested commentator. Take it for what it’s worth.

Kids don’t need fast broadband if they have fast food, California assembly says

by Steve Blum • , , , ,

Salinas taco bell broadband

Gratitude to the Taco Bell workers in Salinas who cared, and props to Monterey County supervisor and former assemblyman Luis Alejo for the photo.

Democratic party leaders in the California assembly iced a bill yesterday that would have raised the state’s broadband standard to modern speed levels. Speaker Anthony Rendon (D – Los Angeles) bowed to pressure – and bags of cash – from AT&T, Comcast, Charter Communications and other monopoly model incumbents, and blocked senate bill 1130 from a floor vote in the California assembly. Democratic floor leader Ian Calderon (D – Los Angeles) took the hand off and moved SB 1130 to the assembly’s inactive file. Conventional wisdom says it’s dead.

A rumored deal between senate democrats and Gavin Newsom that would have endorsed the governor’s 100 Mbps download target is likewise RIP.

It’s a victory for big telecoms companies and their fellow travellers in Sacramento. California’s broadband standard remains at 6 Mbps download/1 Mbps upload speeds, a service level supported by the decaying 1990s DSL infrastructure that AT&T and Frontier Communications refuse to upgrade rural California. Urban and suburban Californians enjoy faster speeds, but at a price: thanks to their cozy duopoly, cable and phone companies can charge half again as much for broadband service in the U.S. as they do in Europe.

SB 1130 would have raised that standard to symmetrical 25 Mbps download and upload speeds, and allowed the California Advanced Services Fund (CASF) to pay for infrastructure upgrades in communities that lack it. Those subsidies could have seeded competition that neither telcos or cable companies want.

To stop that from happening, they induced a friendly assemblywoman, Cecilia Aguiar Curry (D – Yolo) to introduce assembly bill 570, which was ghostwritten by an allied non-profit, the California Emerging Technology Fund. It would have reaffirmed the 6 Mbps down/1 Mbps standard, and further weakened CASF by diverting cash into porkbarrel giveaways.

AB 570 was also pushed aside over the weekend, after it became clear that a majority of legislators in the assembly and the senate would vote in favor of SB 1130 if given the chance. Nearly all of that majority were democrats – with one exception, republicans have been opposed all along.

The clock doesn’t run out until midnight, and there’s talk of sending the legislature into overtime in September. In any other year, it would be crazy to say there’s any hope left for sound broadband policy at the California capitol. But 2020 is a crazy year.

I’ve advocated for SB 1130, and for other useful changes to CASF. I am involved and proud of it. I am not a disinterested commentator. Take it for what it’s worth.

“Virtual separation” of Frontier’s fiber systems could mean actual abandonment of rural Californians

by Steve Blum • , , , ,

San benito pole route 13apr2019

The gap between urban fiber haves and rural have nots could grow wider in California as a result of Frontier Communications’ bankruptcy settlement. Its reorganisation plan was filed with the California Public Utilities Commission yesterday, after receiving approval from the federal judge in New York overseeing the bankruptcy proceeding.

The plan turns ownership over to banks and financiers who hold billions of dollars of Frontier’s now worthless debt. A cryptic paragraph buried deep in the plan calls for Frontier to develop a “detailed” proposal for a “virtual separation” of “select state operations” where the new owners “will conduct fiber deployments” from other operations in those states which will be blessed with vague “broadband upgrades and operational improvements”.

Translation: if there’s a fast track to profits, we’ll install fiber, otherwise we’ll let the copper rot.

Verizon hung onto most of its long haul fiber when it sold its Californian telephone business to Frontier in 2016. Frontier got Verizon’s fiber-to-the-premise “FiOS” systems in southern California, mostly in relatively affluent communities. Since then, Frontier has applied for California Advanced Services Fund grants to deploy fiber in a handful of communities, while doing limited DSL upgrades in others.

This “virtual separation” of fiber worthy communities from those less fortunate was floated earlier in Frontier’s bankruptcy proceeding, provoking a sharp response from the union representing its employees in California and elsewhere and a Californian advocacy organisation. The Communications Workers of American and TURN asked the Federal Communications Commission to take a hard look at the deal…

The virtual separation appears to set up a structure through which Frontier could seek to capture the revenues from fiber deployments for investors, potentially depriving retail operations of necessary cash flows, personnel, and other resources…

The [FCC] must ensure that an entire class of customers does not remain on the wrong side of the digital divide based on Frontier’s strategic decision to limit its investment in certain communities where it remains as the only source of broadband Internet access.

As the plan approved by the federal judge reaffirms, Frontier and its creditors need CPUC permission to close the deal. That review is underway and remains on track to conclude early next year.

Showdown time for California’s broadband future

by Steve Blum • , , , ,

Tombstone 625

Like a gut shot gunfighter with nothing to lose, assembly bill 570 is both doomed and dangerous. Amendments made by the California senate’s appropriations committee were posted late on Friday: all new money for broadband infrastructure subsidies was stripped out. What remain are the monopoly protection privileges inserted by lobbyists for big telecoms companies, and the slabs of pork they’re tossing to their faithful followers.

AB 570 is authored by assemblywoman Cecilia Aguiar-Curry (D – Yolo), but ghostwritten by the California Emerging Technology Fund, an incumbent-funded and advised non-profit. It was introduced to block senate bill 1130, a broadband subsidy bill with the mission of extending 21st century broadband service to all Californians, which is carried by senator Lena Gonzalez (D – Los Angeles).

SB 1130 threatens the monopoly business models of the likes of AT&T, Comcast, Charter Communications and Frontier Communications. So AB 570’s backers tried instead to cement 1990s DSL speeds – 6 Mbps download/1 Mbps upload – into law. They then grudgingly moved to a 25 Mbps down/3 Mbps up standard, which pairs well with the past decade’s DSL vintage. They also extended and expanded tax authorisation for the California Advanced Service Fund, as justification and camouflage for its obstructive intent.

That pretext is gone. With bipartisan opposition evident – democrats oppose slow speeds, republicans don’t like taxes – it wouldn’t have been able to muster the two-thirds legislative supermajority it originally needed to pass. But with the tax language removed, the votes needed could be dialled back to a simple majority.

The only reason to vote it into law now is to please telco and cable lobbyists. That isn’t sufficient motivation for a two-thirds vote, but the millions of dollars they stuff into legislators’ pockets might be enough to buy a simple majority. Even against that cash fuelled opposition, SB 1130 also appears likely to gain the votes it needs. Which could set the two bills on a parliamentary collision course.

With the California legislature’s regular session heading into its final, wild week, the pressure to do something will be intense. Deals will be made quickly and behind closed doors. Stay tuned.

I’ve advocated for SB 1130, and for other useful changes to CASF. I am involved and proud of it. I am not a disinterested commentator. Take it for what it’s worth.

California legislators lean toward faster broadband standard, as committees wrap up work

by Steve Blum • , , , ,

Cvin fiber marker sr49

Two competing broadband infrastructure bills faced final committee votes yesterday in the California legislature. Both passed on party line votes – democrats yes, republicans no – with changes on the way that might bridge the gap between them. Maybe for the good of all. Maybe.

Funding restrictions imposed on senate bill 1130 by the senate’s appropriations committee in June were removed by the assembly’s appropriations committee, apparently by mutual consent. SB 1130, carried by senator Lena Gonzalez (D – Los Angeles), would raise California’s broadband standard to fiber-ish 25 Mbps download and upload speeds.

Assembly bill 570 was given a green light by the senate appropriations committee, but with what could be significant changes. Committee chair Anthony Portantino (D – Los Angeles) said that the author, assemblywoman Cecilia Aguiar-Curry (D- Yolo), had agreed to new language “to clarify that all funding projects must provide future ready infrastructure”. Language syncing up with the restoration of funding authority for the next two years in SB 1130 will also be added.

We don’t know yet what the actual changes in either bill will say. As is common practice in the California legislature, details come after committee votes and not before. The indication is that AB 570’s slow 25 Mbps download/3 Mbps upload speeds will give way to SB 1130’s higher standard.

But wait until the new language is published before starting the party.

What wasn’t mentioned was the incumbent protection clause – the right of the first night in AB 570. Presumably, the bill still allows an incumbent – like AT&T, Frontier, Comcast or Charter – to take a look at any project submitted by an independent provider and grab ownership of it. Incumbents can block an independent’s grant application, while taking the money that goes with it, just by promising to upgrade the project area sometime in the future.

Even if AB 570 no longer sets a pitifully slow broadband speed standard for California, it still would render most of the benefits of SB 1130 meaningless: a fiber upgrade would only happen where monopoly model incumbents allowed it.

There are ten days to go until the end of the California legislature regular 2020 session. Bill language still has to be finalised, and negotiations between the well paid loyal supporters of telephone and cable companies in the legislature, and those who want something better for the future, including, perhaps, governor Gavin Newsom, will likely continue right up to the bitter end.

I’ve advocated for SB 1130, and for other useful changes to CASF. I am involved and proud of it. I am not a disinterested commentator. Take it for what it’s worth.