Telcos' California cash grab gets a nod at the CPUC

22 May 2017 by Steve Blum
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Three parallel efforts are underway to rewrite the rules for California broadband infrastructure subsidies and use the money to support substandard service and technology deployed by AT&T and Frontier Communications. The legislature is considering assembly bill 1665, which would, among other things, add $300 million to the California Advanced Services Fund for broadband construction and operating costs, and effectively give it to AT&T and Frontier. The lower service standards and eligibility restrictions in the bill would keep independent Internet service providers out of most of rural California.

While that’s being decided, the California Public Utilities Commission is 1. tinkering with the program to bring it into compliance with a law passed last year and 2. considering what might end up being a complete overhaul of the way infrastructure grant requests are processed and prioritised.

As they’ve done so far with AB 1665, Frontier and AT&T are trying to game the system and rewrite the rules so they can lock out competitors and use CASF money as a private piggy bank to back fill their budgets and claim reimbursement for work they’d be doing anyway. They made the same self serving claims in their objections to an initial CASF priority exercise and Frontier is trying to use what should be a minor rewrite of the rules as an opportunity to grab control of the cash.

They seem to have found a willing ear at the commission. A first draft of what could become a reboot of the CASF program includes at least three gifts on big incumbents’ wish lists:

  • A lower performance standard, in particular slower upload speeds that better match the outdated first and second generation DSL systems that Frontier and AT&T maintain in rural areas.
  • Eliminating or greatly scaling back requirements that grant recipients put some of their own money into projects.
  • More opportunities to challenge applications and drag out what is already a never ending review process, including allowing annual carve outs based on promises rather than performance.

For the most part, the only regulation broadband providers face in California comes from the market, at least where it might be found. It would be a perverse outcome indeed if the CPUC – California’s utility regulator – works against the market by using taxpayer money to strengthen existing monopolies and protect them from the threat of competition.