Both Southern California Edison and TURN, a consumer advocacy group, are lobbying the California Public Utilities Commission in the hope of pressing home their respective arguments about how much money generated from telecoms services, such as dark fiber leasing, privately owned electric companies can keep. The narrow issue that’s on the table is a master fiber lease agreement between SCE and Verizon that needs to be approved by the CPUC, but it could have far reaching effects on how, or even if, electric companies pursue telecoms opportunities and ultimately on the availability of independent long haul dark fiber in California.
SCE met with commissioner Clifford Rechtschaffen last month, before he pulled his proposed decision off the commission’s agenda last week. As drafted, it would require SCE to give 75% of gross fiber leasing income to its electric customers, rather than the 10% that’s currently required. SCE told Rechtschaffen that “the proposed 25/75 shareholder/ratepayer revenue sharing mechanism would cause SCE to not pursue any opportunities under the [Verizon master lease agreement] because they would not be economically feasible”.
TURN made its case in a conference call with Rechtschaffen’s staff, saying that there’s no support for the claim that reducing SCE’s cut from 90% of gross revenue to 25% will discourage future investment. That’s an odd point to argue. When you take expenses into account – which all have to come out of that remaining 25% – there’s not much left over to generate a return on investment for shareholders. No return means no investment. No investment means no more competitive dark fiber will be built. Which perfectly suits the monopoly-centric business models of California’s major long haul fiber owners – AT&T, CenturyLink and, yes, Verizon.
There’s no way of knowing at this point if Rechtschaffen plans to make any changes to his draft, or if at least two other commissioner will go along with it at their next meeting on 22 March 2018.
My clients include Californian cities that have municipal electric utilities with fiber interests, and cities that just want better broadband. I am not a disinterested commentator. Take it for what it’s worth.