CPUC floats phone company-grade scrutiny for all broadband subsidy applicants

18 March 2013 by Steve Blum
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AT&T gets a thorough examination. Why shouldn’t you?

More questions today from the California Public Utilities Commission (CPUC) about the financial and oversight requirements unregulated Internet service providers would need to meet, should eligibility for California Advanced Services Fund (CASF) subsidies be extended to them.

CASF currently provides grants and loans that could total as much as 90% of the cost of building broadband infrastructure in eligible areas. But only to companies that qualify as a telephone company (the definition is broad), go through a rigorous certification process and are subject to the CPUC’s regulatory power. There’s a way for mobile phone companies to qualify too.

Independent Internet service providers, for example wireless ISPs and municipal broadband systems, aren’t eligible. Yet.

The administrative law judge assigned to the process wants comments, from anyone interested, on three specific ideas for managing infrastructure construction grants made to non-traditional service providers:

  1. Impose tougher performance bond requirements on non-traditional applicants than on regulated companies, at least until infrastructure projects are built and running. And maybe even then.
  2. Make non-traditional applicants meet the same financial fitness standards as regulated companies, but reduce the amount of cash on hand required for smaller projects. The minimum would be $25,000 for projects costing $250,000 or less, rising to a maximum of $100,000 for projects costing $1 million or more.
  3. Require non-traditional applicants to agree to comply with CPUC rules, which includes the power to impose sanctions and fines on companies that miss “stated deployment and operational milestones”.

The full version of the proposals and the request for comments is here. Initial comments are due in three weeks, with another two weeks allowed for replies. A final decision isn’t expected for a year or more, assuming the California legislature agrees.