California telcos, cable double down on greedy with broadband subsidy grab

29 June 2017 by Steve Blum
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If you’re going to scam taxpayer money, why not go all the way? That seems to be the rationale of telephone and cable company lobbyists as they, once again, rewrite a proposed law that would effectively funnel $300 million to incumbent cable and telcos, for little or nothing in return.

Assembly bill 1665 began as an attempt to put more money into the California Advanced Services Fund (CASF), which provides partial grants – usually 60% to 70% of capital costs – for broadband infrastructure projects in areas where service is either completely lacking or doesn’t meet the California Public Utilities Commission’s minimum 6 Mbps download and 1.5 Mbps upload standard. Over the years, it’s been used to pay for last mile systems built by incumbent telcos (and, in one case, a cable company) and independent Internet service providers, and for major regional middle mile projects.

That first draft didn’t work so well for AT&T, Frontier Communications and the California Cable and Telecommunications Association, a lobbying front that represents Charter, Comcast, Cox and a few small players. So they went to work on friendly assembly members, who were happy to freeze out independent projects and dumb down California’s broadband standard so the money could go towards minimal upgrades of ageing 1990s-era DSL systems. That’s the version that was passed by the California assembly last month.

Now, the bill is sitting in the senate’s energy, utilities and communications committee, where those same lobbyists were allowed to add even more perks, including

  • A short list of communities eligible for broadband subsidies will be determined once a year, with help from AT&T, Frontier and cable lobbyists, among others.
  • The incumbent telcos in those communities get first shot at any available CASF money, and even if they don’t take it, they can block independent projects merely by promising future upgrades.
  • Incumbents will be able to use CASF grants to pay for some of their ongoing operating costs, instead of just for construction costs.
  • Middle mile projects, of the kind that up until now have had the greatest impact on broadband availability in California, will be all but impossible.
  • Cable companies can launder CASF funds through local residents, and get capital and operating subsidies without having to meet CPUC standards of service and conduct.

As passed by the assembly, AB 1665 was a disaster for local communities and independent providers – it makes no sense to lower California’s broadband speed standard, unless you’re an incumbent looking to pocket some quick cash. Now, it’s gone one step beyond and turned into pure pork for Frontier, AT&T and cable companies.

Legislative counsel’s draft of amendments to AB 1665