Coalition of California civic, advocacy groups accuse AT&T of cherry picking, gaming federal subsidy program

A broad-based coalition of civic and advocacy groups led by the California Alliance for Digital Equity are accusing AT&T of gaming a California state advanced telecommunications infrastructure subsidy grant program. The accusation was detailed in a December 11, 2023 letter to the California Public Utilities Commission (CPUC). The letter also complains the CPUC has not provided an appropriate and transparent process to comment on the projects proposed by AT&T under the CPUC’s Federal Funding Account (FFA) program. Nearly 900 objections to proposed builds were filed with the CPUC on 484 grant applications for projects in each of the state’s 58 counties totaling more than $4.6 billion -- more than double the $2 billion available.

The funding is authorized by 2021 California legislation allocating federal funding appropriated by the federal American Rescue Plan Act (ARPA). Similar to the federal Broadband Equity, Access and Deployment (BEAD) program funded under the Infrastructure Investment and Jobs Act (IIJA) of 2021, eligibility is limited to “unserved” areas for which no landline service is offered to “an entire community” of at least 25 Mbps downstream and 3 Mbps upstream. The FFA program rules also take into consideration whether proposed projects would target areas prioritized by the CPUC based on demographic and digital equity information and analysis of the number of low-income households, median household income, disadvantaged community status, and digital equity.

“After careful review of the limited information available in FFA project summaries, it is abundantly clear that incumbent ISPs, particularly AT&T, have manipulated the grant process to secure funding for projects that are inconsistent with FFA goals and are attempting to prevent potential competitors from receiving FFA funds,” the letter states.

Every AT&T application advocates reviewed includes a map of a large potential project area with tens, and in some cases dozens, of very small and widely geographically dispersed (sometimes 50 miles or more in largely urban and suburban areas) extremely small service areas. These very small service areas form no coherent whole, and in most cases, these extremely small service areas border or overlap with similarly extremely small service areas inexplicably included in separate AT&T applications. Broadly, this approach is ‘cherry picking,’ wherein a provider delineates a sizable boundary but proposes to serve a small fraction of households within it. This approach also makes collaboration or coordination with local interests impossible.”

Like the Golden State Connect Authority (GSCA), a joint powers authority of 40 counties authorized by the 2021 California legislation to build open access fiber to the premise distribution infrastructure, the groups allege the large number of projects proposed by AT&T calls into question has the financial, technical, or operational capacity to complete all the proposed projects within the timeframe required by program. The GSCA filed objections to 50 proposed AT&T projects.

Notably, Jeff Luong, AT&T’s vice president of network engineering, reportedly said at the recent Fierce Telecom U.S. Broadband Summit that even with AT&T spending about $20 billion per year on infrastructure, “we cannot build out in all the areas we deem as economical.”

The groups expressed concern that AT&T may be gaming the program rules with the numerous small projects in hopes of winning quick approval of each and then rejecting grant funding in order to delay or exclude other applicants from receiving grants.

“We wish to emphasize that it is standard industry practice for providers to claim that they intend to deploy infrastructure in specific areas (thereby preventing other entities from receiving state or federal funding to deploy infrastructure) but never actually do,” the groups wrote.

A potential point of contention suggested by the groups but not explicitly stated in their letter is since FFA program rules limit grant funding eligibility to “an entire (unserved) community,” the disparate proposed AT&T projects cannot reasonably be construed to be serving an “entire community.” The term is not specifically defined in the rules. In a footnote, the rules suggest the CPUC reserves broad discretion to make that determination using “data from a variety of services, including broadband deployment data, subscriber data, crowdsourced data, service quality data, and qualitative data.”

Failure to modernize copper to fiber reaches inflection point

Ensuring everyone can access modern broadband networks requires not only financial investments but also the support of forward-looking public policy. Unfortunately, the regulatory environment in some states, like California, is hindering these much-needed investments. Outdated regulations such as Carrier of Last Resort, or COLR, require providers to overlook the needs of the vast majority of consumers and prevent investments in modern networks. It’s worth noting Congress and many state legislatures have invested a historic number of resources towards high-speed broadband expansion in hard-to-serve areas; however, none of these programs are intended for preserving legacy voice services.

Today, public policies in California and states across the country should prioritize connecting as many households as possible and ensuring broadband access reaches underserved communities.

https://www.attconnects.com/how-broadband-networks-helped-create-21st-century-technology/

Some background here. AT&T California is petitioning the California Public Utilities Commission (CPUC) for geographically targeted relief from its Title II common carrier utility regulatory requirement to provide landline voice telephone service to any customer requesting a connection. It contends fixed prem wireless service served by its mobile wireless network will provide a reliable voice replacement in less densely populated areas where its isn’t deploying fiber to replace legacy copper POTS infrastructure.

Not everyone is convinced. Understandably so considering wireless is designed primarily for mobile use and can degrade in quality when too many users are using the system, particularly since these networks carry both voice and data. Wireless signals can also be less reliable in these areas that frequently feature hilly terrain and vegetation that can interfere with them.

AT&T contends the COLR requirement requires it to “wastefully” maintain “two duplicative networks:” the legacy copper POTS network as well as a “forward looking fiber” network. The problem with the tortured, ahistoric logic of this argument is AT&T and other large telecommunications companies have had decades to look ahead and modernize their copper POTS delivery infrastructure to fiber -- state of the art delivery infrastructure then and now. But because their investors are averse to this significant capital investment that cuts into earnings and shareholder dividends, the fiber future was cancelled in areas where the cost of building and operating it runs higher than others.

The delay in that crucial transition has now reached what AT&T properly characterizes as an inflection point, one that became painfully apparent during the public health measures taken during the COVID-19 pandemic stage. The issue lies not with CPUC’s COLR regulations but with AT&T’s shareholders whose interests don’t align with the broader public interest of modernizing the legacy copper POTS delivery infrastructure to fiber. The relevant public policy question is should the company's shareholders be rewarded for sitting on the sidelines for so long, leaving the nation years behind where it should be for advanced telecom?

California BEAD Five Year Action Plan: Substantially greater funding needed for universal FTTP.

California is unable to assure the timely construction of universal fiber to the premises (FTTP) infrastructure – estimated to cost $9.78 billion including infrastructure hardening in areas with high wildfire risk – because less than half that amount is available as federal and state subsidy funding.

That’s according to the state’s draft Five Year Action Plan required by the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program. BEAD requires states to file “a comprehensive, high-level plan for providing reliable, affordable, high-speed internet service throughout the (state) including the estimated timeline and cost for universal service.” Additionally, the plans must include an estimated timeline and cost for universal service and planned utilization of federal, state, and local funding sources to pay for it.

“This estimate assumes no re-use of existing infrastructure (e.g., poles, conduit, manholes, etc.) in the total investment,” the draft plan prepared by the California Public Utilities Commission states. “The timeline for universal service with fiber-to-the-premises would extend beyond the BEAD funding timeline and require additional federal and state funding.”

The draft plan cautions given the Golden State’s large size, it may be challenging for BEAD-funded subgrantees to deploy infrastructure within the required five-year timeline. Additionally, “the CPUC recognizes that developing sufficient capacity may be a challenge for some potential subgrantees, including small ISPs and localities and other entities” as well as permitting challenges.

Oregon’s draft Five Year Action Plan similarly concluded that state’s BEAD funding allocation would not sufficiently subsidize universal FTTP. Like Oregon, California’s draft plan calls for the possible use of alternatives funded by the state’s $1.86 billion BEAD allocation. Those deemed “reliable” by the NTIA include hybrid fiber-coaxial cable, digital subscriber line (DSL) technology and terrestrial fixed wireless utilizing entirely licensed spectrum or using a hybrid of licensed and unlicensed spectrum.

Ratepayer advocate urges reform of California subsidy fund

The Division of Ratepayer Advocates (DRA) of the California Public Utilities Commission (CPUC) recommends an overhaul of the CPUC's California Advanced Services Fund (CASF). The fund was established in December 2007 to subsidize advanced telecom infrastructure in high cost unserved and underserved areas of the state. Up to $100 million was allocated from a 25 percent surcharge on intrastate long distance calls, with the CASF surcharge offset by an equal reduction in the California High Cost Fund-B surcharge created to subsidize deployment of basic voice telephone service.

DRA's Sept. 13 petition was filed 12 days before California Gov. Arnold Schwarzenegger signed into law urgency legislation that would extend the CASF to 2013 and appropriate an additional $125 million to the fund.

DRA wants the following reforms implemented:

• Transparency. Applications for CASF funding should be open to the public and subject to a public comment process.

• Affordability/Adoption. The program should cap monthly rates at affordable levels for at least two years, prohibit installation or connection charges, and require funding recipients to demonstrate how they will ensure that customers adopt and can afford their broadband offerings.

• Speed. The CASF minimum speed should mirror the FCC's 4/1 standard except in rare cases.

• Cost control. CASF projects should not exceed benchmark per-household costs based on what it costs in the market to install broadband.

• Open access. The Commission should require all CASF recipients to share their networks with third party providers.

• Audits. The Commission should audit each CASF funding recipient and allow public access to audit data.

DRA's petition can be viewed here.

Broadband black holes: Not just a rural issue

One of the most persistently inaccurate and misleading portrayals of U.S. broadband availability is that broadband black holes are confined to rural areas. Unfortunately for those marooned within them, they can be found in plenty of other places due to telco deployments of technologically limited DSL that deteriorates just a few miles from a central office or remote terminal -- and less than that if the copper cable isn't in pristine condition.

Case in point is part of the Northern California suburb of Vacaville, located not far from Interstate 80 west of the college town of Davis. AT&T is requesting a 40 percent subsidy from the California Public Utilities Commission's California Advanced Services Fund (CASF) to extend wireline broadband to 33 households in this area as one of five AT&T CASF projects up for consideration Thursday by the CPUC.

These projects -- designated for "underserved" areas where residents can't get broadband of at least 3 Mbs down and 1 Mbs on the upload side -- are being trumpeted by the CPUC as helping close Golden State's digital divide. But given their small size -- ranging from just five households for the smallest to 125 for the largest -- there's a danger this will make the CPUC look like it's putting out AT&T PR puffery.

4 of 5 proposed California state subsidized broadband projects challenged

Since the California Public Utilities Commission began accepting proposals last year for broadband infrastructure projects eligible for 40 percent subsidies from the CPUC's California Advanced Services Fund (CASF), about four out of five of 30 projects proposed to date have not been approved.

The reason, according to a recently issued CPUC resolution as well as other documentation posted on the CPUC's Web site is they were challenged by unnamed providers on the grounds they didn't comply with CASF funding guidelines targeting unserved areas (no broadband access) and underserved areas of the Golden State (broadband access at speeds less than 3 mbs down and 1 mbs up).

There's a lesson here as the federal government revs up its own plans for subsidizing broadband infrastructure buildout: avoid going down this slippery, ever changing slope of throughput requirements and attempting to define what constitutes served, unserved and underserved when it comes to advanced IP-based services.

These metrics are simply too subjective and prone to being manipulated and gamed by providers, particularly incumbent local exchange carriers (ILECs) more interested in preserving their territorial hegemony than serving their customers' telecommunications needs.

The better course is to allow entities such as local governments and telecommunications cooperatives with priority for federal broadband economic stimulus funding determine for themselves where infrastructure buildout is most needed. Most of these entities will likely opt for fiber and avoid the issue of throughput speeds altogether given fiber's tremendous capacity to accommodate current and future bandwidth requirements.

California broadband nonprofit hopes for share of federal economic stimulus dollars

The California Emerging Technology Fund (CETF), a San Francisco-based nonprofit that helps fund projects to improve broadband access in California using $60 million in seed funding provided by AT&T and Verizon as a condition of the telcos' recent M&A activity, is hoping to get additional funding from the federal economic stimulus legislation.

Expected to be finalized this month, the legislation calls for between $6 billion and $9 billion (House and Senate versions of the legislation, respectively) in grants, loans and tax credits to fund the build out of wireline and wireless broadband telecommunications infrastructure. The administration of President Barack Obama has characterized the broadband stimulus funding as a down payment toward the administration's overall goal of providing universal access to broadband throughout the U.S.

"We want California to be poised to take optimum advantage of the stimulus package," CETF President and CEO Sunne Wright McPeak said at the CETF's Sacramento Regional Broadband Roundtable hosted today by the Sacramento Area Council of Governments as well as several other local institutions. "We want this region to be well deployed."

If it receives federal stimulus funding this year, CETF's role subsidizing the deployment of broadband infrastructure could overshadow that of the California Public Utilities Commission. The CPUC's $100 million California Advanced Services Fund provides a 40 percent match to subsidize broadband infrastructure build out but has not attracted the level of interest hoped for by regulators.

The 3-hour roundtable discussion was attended by about 70 people representing a wide variety of individuals and organizations with an interest in expanding broadband access, applications and adoption.

El Dorado County was well represented by Carol Anne Ogdin representing El Dorado County Supervisor Ray Nutting, Woodrow Deloria of the El Dorado County Transportation Commission, Jason Harm of the El Dorado County Office of Education, Tom Straling of the El Dorado County IT Department and your blogger.

I was pleased at McPeak's obvious zeal to get broadband infrastructure deployed as quickly as possible to enable the various applications and associated beneficial impacts discussed at the event including reducing transportation demand through telework and online commerce -- a clear benefit in this era of constrained transportation funding and strapped county budgets -- and allowing remote medical consultations for individuals living in rural areas who lack easy access to medical providers and specialists. McPeak and her staff clearly understand a salient point raised by Ogdin: that it's far cheaper (and greener) to move bytes than bodies.

AT&T audaciously claims "broadband access to all of its California service area"

One of the physical principles of cosmic black holes is no information can be known about what's inside of them because no information can escape the powerful gravity of the singularity at their centers.

Clearly, that same principle also applies to the numerous broadband telecommunications black holes in California based on a recent AT&T filing with the California Public Utilities Commission. In the introduction to the April 16, 2008 filing, AT&T asserts it "now offers broadband access to all of its California service area."

Apparently the unfortunate residences and small businesses who cannot order wireline-based broadband service from AT&T such as DSL or the telco's next generation U-Verse bundled service offering higher speeds than AT&T's legacy DSL service haven't gotten the message. Of course not. In AT&T's universe, they simply don't exist and nothing can be known about them. Out of sight, out of mind.

Perhaps AT&T is fudging by counting the limited areas where it offers its EDGE wireless network service that provides throughput not much better than the antiquated 1994 Federal Communications Commission "broadband" standard of 200Kbs. No dice. By today's standards, that's not broadband. Ditto satellite, which the telco deployed throughout much of the U.S. -- as if the entire nation was situated in the remote regions of the Arctic Circle -- in 2006 via a reseller agreement with WildBlue.

The AT&T filing objects to proposed CPUC rules designed to reduce California's digital divide and speed broadband infrastructure build out by requiring telcos and cable providers to report by census tract where they provide broadband and delineated by various speed tiers, i.e. less than 1 mbps; 1-5 mbps; and 5-10 mbps. The AT&T filing asserts CPUC has no authority to regulate broadband services because they are information services preempted by Federal Communications Commission jurisdiction.

Cable company in regulatory no man's land, SoCal city charges in lawsuit

This type of situation may begin to crop up frequently in California, where cable companies can opt to remain under local government franchise agreements or get a statewide franchise from the California Public Utilities Commission under new legislation that took effect this year, the Digital Infrastructure and Video Competition Act.

According to the San Diego Union-Tribune, the city of Carlsbad believes Time Warner is operating outside the law because it doesn't have a franchise from the city nor has it received a statewide franchise. Nor has it even applied for one according to the CPUC's Web site.

Holding up a city franchise with Time Warner is Carlsbad's insistence on higher fees to fund broadcasts of city council and other government events.

It's probable there will be other such lawsuits brought by local governments over this and, more likely, when negotiations stall over buildout requirements in which the locals insist cable companies serve their entire communities instead of leaving parts in the dark on the wrong side of the digital divide. The likely targets include telcos and other cable players -- like Comcast for example -- that have so far not applied for or received statewide franchises.

More wishful thinking from CPUC on AB 2987

The California Public Utilities Commission (CPUC) has issued what it says is the first statewide broadband franchise to a cable company, Cox Communications.

CPUC President Michael R. Peevey said the franchise allows Cox to serve four relatively small areas adjoining its existing service territory in the San Diego area, marking a rare occurrence of a cable company attempting to gain customers in a competing cable company’s territory.

Peevey predicts legislation (AB 2987) signed into law last year by Gov. Arnold Schwarzenegger that put the state in charge of cable franchises instead of local governments is likely to spur competition among broadband providers. “This is good news for consumers, who will have additional choices of providers not only for video service, but for the broadband and telephone services that typically are offered over the newly-constructed cable facilities,” Peevey said. “The Legislature’s goal was to foster video competition and broadband deployment, and that is exactly what we see beginning to happen.”

I’m not as sanguine as Peevey. The costs of moving into an existing provider’s service area with new infrastructure are quite high. Consequently, telcos and cable companies are concentrating on their existing service areas. They negotiated low build out requirements in AB 2987 that only require them to deploy broadband to less than half of their service areas by 2012. In addition, cable companies are free to operate under the terms of local government franchise agreements that were in effect when AB 2987 became law earlier this year. That allows them to stand pat and not offer service to areas that currently don’t have service — hardly paving the way for an expansion of broadband as trumpeted by the CPUC’s Peevey.