CPUC not bugged by incumbent advantages, approve new broadband subsidy rules

26 June 2014 by Steve Blum
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Whether you like the rules or not – and for what it’s worth I don’t – it’s game on for the next round of broadband infrastructure construction subsidies from the California Advanced Services Fund. In a unanimous vote this morning, the California Public Utilities Commission approved new rules and a timeline for applying for CASF grants and loans.

Existing Internet service providers that offer substandard service (6 Mbps down/1.5 Mbps up, per the CPUC) are first in line: they can block potential competitors from getting CASF funding in their service areas. If they file a letter saying they’ll upgrade service by 1 November 2014, they have a year to get it done (it’s a 6 month safe harbor with a 6 month extension for reasons any half competent lawyer could cobble together).

The worry is that substandard incumbents will game the system in order to block potential competitors from offering something better. Commissioner Carla Peterman put existing providers on notice…

Regarding the concern around potential gaming as it relates to delay of distribution of funds, I’d just encourage [CPUC] staff to keep monitoring the situation and get back to the commissioners if they see a problem.

If an incumbent doesn’t exercise this right of first refusal, any private sector broadband provider can apply for funding to build out competitive infrastructure in underserved areas, as well as new plant in completely unserved areas, on 1 December 2014. From then on, the CPUC will accept applications as they come until the money runs out. In theory, CASF is supposed to be spent down by the end of 2015, which is the California legislature’s deadline for approving subsidised projects “that will provide broadband access to no less than 98% of California households”.

Together with new eligibility rules adopted earlier this year, today’s resolution also makes it possible for independent ISPs – those without formal CPUC certification as telephone companies – to get CASF grants and loans. And the commission approved a long list of priority areas identified by regional broadband consortia, including a dozen here on the central coast, as being in particular need of broadband upgrades – more on that later.

As for next steps, no one has said it any better than Robert Heinlein

Certainly the game is rigged. Don’t let that stop you; if you don’t bet, you can’t win.