California senate committee better prepped to consider bill raising broadband construction costs

16 June 2014 by Steve Blum
, , , ,

A new barrier to better broadband in California?

There’s finally some push back to the idea that the cost of building ratepayer-subsidised broadband infrastructure should nearly double in California. An analysis prepared for the state senate’s energy, communications and utilities committee lists two industry lobbying groups – CalTel and CalCom – and one company – Consolidated Communications, formerly SureWest – as opposing assembly bill 2272, which would bring all projects funded by the California Advanced Services Fund under what is euphemistically called the state’s prevailing wage law.

As interpreted by the state, that law requires companies building public works projects in California to pay union rates and enforce union work rules. For big, unionised incumbents such as AT&T (who are largely exempt anyway) or those, such as Comcast, who’ve chosen to ignore CASF, it’s no problem. In fact, it’s a benefit because it reduces the likelihood of facing effective competition.

Unlike the analyses prepared by assembly staff, the senate committee report (gently) points out that the bill would take a contested decision by a state agency to apply the prevailing wage standard to only a single project, and bake it into law for every project, forever and ever. It also questions the blanket language used in the version approved by the assembly, and discusses less draconian alternatives. It’s worth reading.

Even so, AB 2272 is a bad idea. Last year, senate bill 740 opened the door for non-union, independent ISPs to apply for CASF subsidies in order to fill broadband gaps that bigger incumbents have ignored. Applying union rules to those companies will raise their construction costs by something like 80%, which amounts to the same thing as reducing the current 60% limit on subsidies for underserved areas to 28%.

State senator Alex Padilla (D – Los Angeles) authored SB 740 and he chairs the energy, communications and utilities committee, which is scheduled to take up the bill tomorrow. AB 2272 would undo much of the work he did last year. On the other hand, he’s running for secretary of state and the labor unions that back AB 2272 control huge amounts of campaign cash. He will need to walk a fine and subtle line if he wants to protect his legacy as a senator and maintain alliances that serve his future ambitions.