More voices join California broadband subsidy policy debate

26 May 2017 by Steve Blum
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A potential overhaul of the California Advanced Services Fund (CASF) – the state’s primary broadband infrastructure subsidy program – was mooted at a California Public Utilities Commission workshop yesterday. The alternative scenarios that were presented were, to a large extent, wish lists from incumbents and, particularly, heavily weighted toward supplementing AT&T’s and Frontier’s business models – carving out federally funded areas, extending existing copper networks or focusing just on their territories for example.

Incumbents had good words for that approach – not surprising – but for the most part participants vocally opposed dropping the CASF performance threshold to 6 Mbps download and 1 Mbps upload speeds, from its current 6 Mbps down/15 Mbps up level. They also blasted the idea of allowing Frontier and AT&T to block competition in areas where they are getting federal subsidies, which amounts to most of rural California. Representatives from independent Internet service providers, regional broadband consortia and the CPUC’s office of ratepayer advocates participated, pushing for higher service standards, greater accountability and less bureaucratic overhead in the program.

A Frontier representative argued that the company should get special consideration for bringing more than $200 million in federal Connect America Fund subsidies to California. The problem with that is that Frontier didn’t bring the money, the FCC allocated those dollars to California and gave Frontier a right of first refusal, which it exercised. Had Frontier passed on the money, the FCC might have given it to the state – the CPUC in particular – as it did in New York, where Verizon declined to participate.

There are limits – perhaps a complete ban – on the CPUC’s ability to change minimum CASF speed levels on its own. Senate bill 740, passed in 2013, effectively baked the 6 Mbps down/1.5 Mbps standard into law. So if the upload standard is reduced to 1 Mbps and/or the download standard is raised to 10 Mbps, it’s going to require action by the California legislature. That’s what the proposed assembly bill 1665 is about – it would reduce the broadband standard to 6 Mbps down/1 Mbps up, in order to accomodate the ageing infrastructure that AT&T and Frontier Communications operate in most of rural California.

So lawmakers will decide. They are weighing AB 1665’s lower broadband standards and new rules that are gamed to funnel $300 million of taxpayer money to Frontier and AT&T. Yesterday’s workshop was the first genuine opportunity they’ve had to hear both sides of the debate.