CPUC knows how to end taxpayer-funded middle mile fiber grabs. As it should

11 June 2020 by Steve Blum
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Connected central coast 625

It can be done right. As it has.

One of the challenges to broadband subsidy proposals submitted to the California Public Utilities Commission this week shows why open access middle mile fiber is a necessity for closing rural broadband gaps, and how the lack of it is a major barrier to improving Internet service in California.

Plumas Sierra Telecommunications, which is the telecoms arm of the Plumas Sierra Electric Cooperative, objects to Frontier’s request for money to pay for a building a middle mile fiber route to reach the towns of Herlong and Janesville in Lassen County. Plumas Sierra doesn’t object to spending California Advanced Services Fund (CASF) subsidies on middle mile fiber. It wants Frontier to make use of the CASF-funded middle mile fiber that it’s built, rather than using more CASF money to overbuild it.

Parsing Plumas Sierra’s objections illustrate a major problem with the way in which CPUC approves middle mile projects. Plumas Sierra claims that it “already provides wholesale services via its existing middle-mile fiber-optic infrastructure with high-quality and reasonable price levels”. Translation: we don’t lease subsidised dark fiber to competitors, but we will sell them higher priced services over it.

Frontier does the same thing. It received $11 million from CASF last year for a project to build 137 miles of middle fiber and upgrade DSL facilities in Lassen and Modoc counties. Dark fiber strands on that network are not available on the open market.

The result is a patchwork of taxpayer-funded middle mile routes scattered across rural California that private companies can use to extract monopoly profits – “rents”, in microeconomic terms. CASF rules allow broadband companies to indulge in this sort of rent seeking behavior at public expense.

There are exceptions, though. The CPUC recently imposed open access obligations on a middle mile project that it funded for the Karuk Tribe in Humboldt County, and six years ago it did the same for a route now owned by Crown Castle in Santa Cruz and Monterey counties. That project has been up and running for three years, and supports a growing ecosystem of independent broadband operations (see the image above).

The CPUC can change its open access middle mile policy on its own. Or perhaps the California legislature can be persuaded to do it. Senate bill 1130 is still alive at the state capitol. As presently written, it would make open access mandatory for any CASF-subsidised middle mile infrastructure. Either way, it needs to be done.