CPUC proposes new rules expanding broadband infrastructure subsidy eligibility

6 January 2014 by Steve Blum
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Welcome to the party.

Companies that provide broadband service, but aren’t traditional telephone companies regulated by the California Public Utilities Commission, would have to meet certain financial standards to qualify for broadband infrastructure grants and loans from the California Advanced Services Fund (CASF), according to proposed new rules released today.

The draft decision, authored by commission president Michael Peevey, are the first step in implementing a law passed last year by the California legislature that made it possible for independent Internet service providers to apply for CASF subsidies, albeit with restrictions that give priority and preference to traditional phone companies.

The central new requirement would be…

A performance bond is required during the construction phase of the project to ensure timely completion of the project in accordance with the existing rules of the CASF program.

Obtaining a performance bond – which is sometimes also required from traditional phone companies – guarantees that projects will be finished and put applicants under a financial microscope, according to Peevey’s draft…

Based on past experience, we determine that all applicants should undergo a rigorous underwriting process to obtain a construction phase performance bond. A review of the applicant’s cash flow will be included in this underwriting process.

Under the proposed new rules, applicants would also be subject to standard CPUC oversight, including penalties for not living up to commitments.

The full commission could discuss and vote on these proposed rules as soon as its meeting on 5 February 2014 meeting. But there is still more work to do. The proposed rules only partially address the changes in the CASF program made by the legislature. Still to come, for example, are creating procedures for the right of first refusal given to incumbent carriers and figuring out how local governments fit in the picture. But it’s possible there’s enough in today’s draft to allow at least some independent ISPs to apply for CASF funding in the meantime.