CPUC takes more time on broadband subsidy limits

I can explain that…

The California Public Utilities Commission is again bumping a decision on a particularly expensive broadband subsidy request for another two weeks. Commissioner Michel Florio pulled the $1.8 million grant proposal made by the Ponderosa Telephone Company for a Madera County fiber-to-the-home project from tomorrow’s commission agenda. As is customary practice, no reason was given, but it’s the second time this application has been put on hold.

It’s easy to spot what sets this California Advanced Services Fund application apart from the ten others that commissioners have approved without discussion in the past couple months: the amount of money they would be spending on each household in the proposed service area. If you count potential customers the way Ponderosa prefers – include vacation homes, vacant houses, people who share living quarters in the back country of the Sierra National Forest – the CASF subsidy would be $11,000 each for 159 potential customers. If you just look at the 32 actual households – rather than buildings – counted in the last census, that figure jumps to $55,000.

Either way, it’s high. On average, commissioners have approved $2,200 in subsidies for each potential customer reached by the nine last-mile projects in the current round, with a maximum so far of $3,800 per home for an FTTH project in Boron. A tenth grant – $6.6 million – for a combined middle and last mile project on the far northern coast came in at $8,100 for each potential customer reached by the last mile segment. But most of the cost is for the 82-mile fiber backhaul, which will also be available to many more homes and businesses along the way. It’s not an apples-to-apples comparison.

In past years, commissioners have spent as much as $10,000 per home on CASF-subsidised projects. This current batch is different, though. Due to changes made last year, CASF grants can pay up to 70% of a project’s cost, up from the previous 40% limit, which might be a reason to go higher. On the other hand, there’s a lot more money being requested by more projects this time, more than is currently available. Maximising the number of people reached by holding down per household subsidies is one way to manage that problem.

It’s possible that Florio could release his hold request before tomorrow morning’s meeting, but I don’t expect it. The Ponderosa application is likelier to reappear on the commission’s 5 December 2013 agenda.

Update 14 November 2013: As expected, a decision on Ponderosa’s Madera County project has been pushed to the CPUC’s 5 December meeting.

Tellus Venture Associates assisted with several CASF proposals in the current round, so I’m not a disinterested commentator. Take it for what it’s worth.