California bill would use existing phone surcharge to secure bonds for local government and cooperative-owned fiber to the premise infrastructure

Proposed legislation introduced this month in the California state Senate offers a potentially viable means of financing fiber to the premise (FTTP) advanced telecommunications infrastructure builds owned by local governments and nonprofits such as consumer telecom cooperatives. It does so by creating a financing mechanism to secure bonds to fund FTTP construction with proceeds from an existing California Public Utilities Commission (CPUC) surcharge on voice lines to subsidize advanced telecom projects in high cost areas of the state not served by incumbent landline and wireless internet service providers.

Debt service for the bonds could also be provided by project sponsors since the proposed legislation authorizes the CPUC to require they demonstrate the ability to reasonably finance and implement the projects utilizing the proposed bond financing.

The measure is proposed as an urgency measure that would take effect immediately upon enactment.

California like rest of nation suffers from poor advanced telecom service

The Social Cost of Weak Broadband Competition in California: Over the last 8 years, California has spent more than $200M funding projects and subsidizing service to close the broadband digital divide. While the intent is good, the results are limited given that home broadband subscriptions are unchanged today from 2010. It is clear that California cannot subsidize its way out of the digital divide. Despite the claims of Sosa and the Big 5, California’s uncompetitive fixed broadband service hurts everyone. The answer is to either promote retail competition or regulate the Big 5’s monopolies like we do in the energy sector.

California like the rest of the nation has the worst of all worlds: a naturally monopolistic advanced telecommunications market but no monopoly regulation as is done for electric power and natural gas utilities. The U.S. Federal Communications Commission nominally recognized advanced telecommunications as a natural monopoly utility in 2015, placing it under Title II of the Communications Act that regulated basic telephone service before it with rate regulation and a universal service requirement. "Nominally" because this regulatory scheme was put in place on paper only and not enforced.

The author is correct in noting we cannot extricate ourselves from this unfortunate circumstance with subsidies because they don't fundamentally alter it.

Cable and telco lobbyists block broadband infrastructure subsidies in California

Cable and telco lobbyists block broadband infrastructure subsidies in California: Frontier is the only major incumbent that’s been willing to play with the CASF program, and now that it’s taking over Verizon’s wireline systems it should be even more enthusiastic. But it’s clear that most would prefer to have CASF die a quick and quiet death. Cable companies won’t touch anything that might entangle them with state regulators. AT&T and Verizon are all about mobile, and aren’t interested in investing in wireline service. Most of all, cable companies and mobile carriers are upset that independent competitors are getting CASF subsidies.

This is the death knell for California's failed -- as measured by its goal to bring advanced telecommunications services to 98 percent of households by last year -- California Advanced Services Fund infrastructure subsidy program operated by the state's Public Utilities Commission.

The proposed legislative hill on which the seven-year-old CASF died would have pushed that goal to 2020 and retained a circa 2001 legacy DSL level Internet service standard to define eligible projects as those falling below that standard. In that regard, the CASF was already slowly dying relative to bringing modern telecommunications services to Golden State residents. The legacy incumbents anxious to preserve their de facto market monopolies from the threat of interlopers were only too happy to thrust in the dagger after years of challenging projects proposed for CASF subsidization.

The likely final straw was the PUC's approval last month of subsidies for a relatively large fiber to the premise build proposed to serve nearly 2,000 southern Nevada County premises. That would put FTTP infrastructure built by someone other than themselves squarely in their nominal service territories. Which from the perspective of the incumbent telco and cable companies, posed a dangerous precedent that could have opened the door to even larger builds.

State level telecom state-level infrastructure programs like the CASF are underfunded and technically substandard. They are also very vulnerable to incumbents efforts to hamstring or kill them outright. That circumstance makes the case for a robust federal telecommunications infrastructure initiative to bring fiber optic connections to every American home, business and school. The job is too big and too important to the nation's future to be left to the states.

California Internet infrastructure subsidy rules erect roadblocks for last mile fiber projects

A notable aspect of California’s eight-year-old program to subsidize the cost of constructing Internet telecommunications infrastructure is the general lack of participation by incumbent telephone and cable companies. In that regard, it has not fulfilled the usual public purpose of subsidy programs designed to help offset the costs of building and operating telecommunications infrastructure in high cost areas such as those used for landline telephone service.

The program, the California Advanced Service Fund (CASF), is administered by the California Public Utilities Commission, which is directed under California Public Utilities Code Section 281(a) to "administer the CASF to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies..."

Instead, the CASF has subsidized mostly middle mile fiber and a small number of last mile wireline and wireless projects by non-incumbents. The last mile projects have nearly all been located in remote areas of California not served by the incumbent telephone and cable companies. Proposed projects elsewhere such as the Bright Fiber project in the Sierra Nevada foothills have been subject to lengthy bureaucratic delays under CPUC rules governing CASF eligibility.

The rules parse the state into thousands of discrete “unserved” and “underserved” areas where existing providers don’t sell specified advanced telecommunications services and authorize incumbents to challenge projects that would overbuild them and fall outside of these designated areas. The rules and a federally-funded project by the CPUC to map these areas have served to erect red tape roadblocks that stymie projects proposed by non-incumbents as project proposers, incumbents and consumer advocates argue over the mapped territories and boundaries. These parochial disputes have chewed up enormous amounts of time and resources and delayed construction of much needed telecommunications infrastructure, defeating the public policy intent of Section 281(a).

While California is not among about 20 states that have statutes designed to protect incumbents from overbuilders, the CASF rules have operated to produce a similar result, leaving millions of California residents without robust wireline Internet service options. California innovated much of today’s information and communications technology and is rightly regarded as a leader in the field. However, when it comes to advanced telecommunications infrastructure, the Golden State is a laggard.

“Broadband” infrastructure subsidy programs falling behind in the gigabit world

As telecommunications becomes an Internet-based, fiber delivered service, programs aimed at subsidizing the cost of infrastructure construction are rapidly going out of date. For example, the U.S. federal government’s Connect America Fund helps underwrite the cost of building infrastructure in areas with service providing Internet connections of less than 3 Mbs down and 1 Mbs up. The California Advanced Services Fund targets areas with less than 6 Mbs down and 1.5 Mbs up. Both definitions are now technologically obsolete in that they are purposed for “broadband" service and define "broadband" based on a moving and quickly obsoleted throughput target that only measures speed but not latency or jitter --  key components of throughput quality.

It's no longer a broadband environment where the term broadband was used to distinguish advanced services from 1990s "narrowband" dialup. It's now a "gigabit" world of fiber to the premise (FTTP) that can provide exponentially superior throughput with no near term threat of obsolescence.

In addition to using an outdated and incomplete measure of throughput, these programs are deeply flawed insofar as they aim to preserve the hegemony of the legacy metal wire-based legacy telephone and cable companies with eligibility standards based on the companies’ need to constrain bandwidth on their bandwidth-limited metal wire plants. Program subsidies are only available in areas deemed “underserved” and “unserved” relative to services provided – and not provided -- by the incumbents. 

This isn't a practical definition since the footprint of wireline-based services of the incumbents is highly granular at the network edge due to market segmentation and arbitrary redlining of discrete neighborhoods deemed undesirable and therefore unserviceable.

For the most part, the large first tier incumbent telcos and cablecos have spurned the subsidies, probably because they are far too limited to allow them to significantly upgrade their plants to FTTP. They also likely realize accepting subsidy funding would potentially increase pressure on them to provide service to all premises in their service territories as some advocate, urging the U.S. Federal Communications Commission to regulate the Internet under a common carrier scheme like that in place for decades for voice telephone service.

California screamin: Internet policy quagmire fosters failure

Plan for rural broadband collapses | The Press Democrat
This story illustrates the real world consequences of what happens when legacy incumbent wireline Internet providers control government subsidy programs designed to help cover the cost of deploying Internet infrastructure. They refuse to accept the subsidies themselves for high cost areas and lobby to influence the eligibility rules so that others can't easily qualify for funding.

These comments in the story from Cathy Emerson, manager of two consortia involved in expanding Internet access and Mitch Drake, head of the company that applied for subsidy funding from the California Public Utilities Commission, sum up the sorry situation:

“We're looking at a significant Catch-22,” Emerson said. “The federal
and the state programs are trying very hard to make use of legislative
moneys that have been collected, intended to be used for broadband
deployment. And yet the very language of the legislation has been so
effectively edited to the favor of the incumbents that it's extremely
difficult to try to offer services to these rural-most pockets.”

“I call this the great stalemate,” said Drake. “There's a huge need in
Northern California, and we've got a program that was designed to take
care of the need, and we've got incumbent carriers who made this
financial decision, for one reason or another, not to serve these rural
communities. But at the same time they are the biggest opponents,
preventing anyone from doing anything about it.”

It's going to get even harder for non-incumbent providers and local governments to qualify for the CPUC's California Advanced Services Fund network construction subsidy dollars in this year's funding round under revised rules recently adopted by the CPUC. Steve Blum has the depressing details in this blog post.

Rural areas shortchanged in broadband Internet service - Paradise Post

Rural areas shortchanged in broadband Internet service - Paradise Post: Jim Moorehead is working with the Broadband Alliance of Mendocino County to get the service to that county's rural areas. He said there are about 16 other counties in the same boat.

"We're not critical of the big companies for not doing it," he said. "They've got a responsibility to their shareholders." Still, he said he would like to see more money going toward installing those services for rural areas.

When a ratepayer gets a bill, he is paying a lot of nickel and dime charges. One of those charges is the California Advanced Services Fund (CASF), which is money that goes into closing the "digital divide," Moorehead said.

"That fund can help close it," he said. "The problem is, the carriers are fighting it."

A lot of this going on in California. It costs too much for the legacy incumbent telephone and cable companies to provide Internet connectivity to all premises in their service areas, so the kids there end up marooned in broadband backwaters. The incumbents don't want the subsidies Moorehead mentions to offset the high costs -- or anyone else receiving them either.

In addition, the CASF utilizes outdated, speed-based standards to determine areas eligible for subsidies rather than setting a higher, goal-based standard such as universal fiber optic premises Internet connectivity. It's a perfect prescription for a race to the bottom in a state that has historically viewed itself as a leader.

Colorado legislation would redirect high cost telephone subsidies to Internet infrastructure

Two Colorado legislators are developing legislation to repurpose surcharges on voice landline and cell phone service to subsidize landline telephone service in high cost, less densely populated areas of the state to instead defray the cost of building out Internet infrastructure. "By funding land lines and copper-line phones, we're funding buggy whips,” Senator Gail Schwartz, D-Snowmass Village, told the Denver Post.

Rocky Mountain State lawmakers will however face resistance from incumbent telcos who want to preserve the status quo and continue to provide Internet service over their existing copper cable plants to a subset of wireline customers while deeming the rest unprofitable to serve. Throughout much of the United States, the latter cohort are in innumerable small pockets beyond the short range of DSL signals and/or where the existing copper cable is too old and deteriorated to deliver Internet service. First formed around 2000 and still around more than a decade later, they are like thousands of little holes in a big Swiss cheese, comprised of discrete premises, roads, streets and neighborhoods. Rather than “unserved areas,” they are more accurately described as redlined addresses and neighborhoods, typically avoided by both telcos and cable companies. The unfortunate residents are forced to rely on obsolete dialup offered by telcos or satellite Internet more properly suited to remote areas of the planet while the more fortunate may have access to fixed terrestrial wireless service from a local provider.

Incumbent telcos insist rules for government subsidy programs direct funds only to “unserved areas.” But building new wireline premises infrastructure is a costly, large scale endeavor that can make filling in these numerous voids one at a time impractical even with subsidies. In California, for example, incumbent telcos have largely shunned subsidies for premises Internet infrastructure offered through a six-year-old subsidy fund, the California Advanced Services Fund (CASF), similar to that being contemplated for Colorado. They have also challenged proposed CASF wireline projects by arguing the projects would serve premises adequately served by mobile broadband services.

Only a large scale overbuild of the outmoded copper cable plant with fiber to the premise infrastructure makes sense over the long term from both a technological and economic standpoint. State and federal Internet infrastructure subsidy funds should be structured accordingly.

California unlikely to subsidize community fiber Internet infrastructure over near term

The California Public Utilities Commission’s (CPUC) construction subsidy fund for Internet infrastructure won’t likely help offset the cost of building community owned fiber to the premise networks.

The CPUC’s California Advanced Services Fund (CASF) limits grant and loan subsidies to infrastructure projects that would serve either an “unserved area,” defined in CPUC Decision 12-02-015 as not served by any form of wireline or wireless facilities-based broadband such that Internet connectivity is available only through dial-up service or an “underserved” area defined as an “where broadband is available, but no facilities-based provider offers service meeting the benchmark speeds of at least three megabits per second (mbps) download and at least one mbps upload.” The CPUC retroactively revised the definition in 2012 resolutions T-17362 and T-17369 as areas “where broadband is available, but no wireline or wireless facilities-based provider offers service at advertised speeds of at least 6 mbps download and 1.5 mbps upload.”

Under either definition, both fixed and mobile wireless providers could block CASF funding of a community fiber project. And under the definition adopted in the 2012 resolutions, they wouldn’t even have to actually provide service to an area. They could merely claim they advertised service there at the specified 6/1.5 Mbs speeds.

Senate Bill 740, legislation re-authorizing the CASF that’s making its way to the desk of Gov. Jerry Brown incorporates by reference the definitions of unserved and undeserved areas in Decision 12-02-015.

The bill would also give incumbent wireline providers that have not built out their networks to serve all premises effective veto power over any community-based project to reach underserved households -- typically those in areas out of reach of DSL or cable Internet service or having access to slow DSL in areas where aging, poor quality copper cable plant (illustrated in the photo below) cannot support higher speeds. The bill bars funding of these projects “until after any existing facilities-based provider has an opportunity to demonstrate to the commission that it will, within a reasonable timeframe, upgrade existing service.” 

"Reasonable timeframe" isn’t defined in the bill and thus would likely be defined by incumbent telcos that told regulators and consumers since the early 2000s that they were building out their DSL service to reach them. (They’re still waiting more than a decade later, providing an operative definition of what's reasonable). The bill would also give incumbent telcos and cablecos the ability to stymie community fiber projects built by local governments simply by applying for CASF funding.

California lawmakers revise legislation governing Internet infrastructure subsidy program

California lawmakers are scaling back a previously proposed increased appropriation for the state’s broadband infrastructure grant and loan subsidy program. As amended this week, SB 740 would also redefine the policy goal of California Public Utilities Commission’s California Advanced Service Fund (CASF) to fund projects to ensure broadband access to at least 98 percent of California households by 2016. SB 740 would also prioritize funding for those areas of the Golden State deemed to be “unserved.” The CPUC has defined this to mean “an area that is not served by any form of wireline or wireless facilities-based broadband, such that Internet connectivity is available only through dial-up service or no broadband service can be identified.”

From a practical perspective, this means only modest wireless Internet infrastructure projects will be subsidized by the CASF since unserved areas per the CPUC’s definition are likely to be very thinly populated. These will also likely be very low budget projects per the CPUC’s decision to require project sponsors kick in 30 percent of the project costs for unserved areas.

The CPUC has also written the CASF rules to discourage community fiber builds by allowing projects in “underserved areas” only if the area has no wireline or wireless service offered at advertised speeds of at least 6 mbps download and 1.5 mbps up. That means an area that is only partially served by an existing wireline providers could not be overbuilt to fill in the coverage gaps. Under the rule, such project would also not qualify since wireless providers could merely advertise service at the minimum speeds, further slicing and dicing a potential fiber service area such to render the project ineligible under the rules. On top of that, the rules require community fiber project sponsors to kick in 40 percent of the project costs – an onerous burden for newly formed entities.

The upshot is California policymakers will end up going through the motions and the CASF monies left largely unspent as sizable areas of the state unserved by the incumbent telephone and cable companies are consigned to technologically substandard, low value Internet service options.

California legislation would expand Internet infrastructure subsidy fund

Introduced February 22, California Senate Bill 740 boosts the size of the California Public Utility Commission's California Advanced Services Fund (CASF) infrastructure subsidy fund from $125 million to a maximum of $325 million and extends its life from 2015 to 2020.

Now if only the PUC would only make the CASF funding freely available to community fiber projects, it might actually achieve some real benefit for Californians, particularly those residing in areas lacking wireline Internet connections from incumbent telcos and cable companies.

California PUC rectifies its mischaracterization of Internet infrastructure subsidy fund

Several months ago, this blog called out the California Public Utilities Commission (CPUC) for incorrectly asserting the public policy goal of its program to subsidize the build out of Internet infrastructure in the Golden State was instead to encourage “the adoption of broadband.”

To its credit, the CPUC has rectified its gross misstatement of the law authorizing its $100 million plus California Advanced Service Fund (CASF). It did so this week, buried 18 pages deep into a proposed order that would loosen eligibility for CASF infrastructure loan and grant funding to include entities not holding a Certificate of Public Convenience and Necessity (CPCN) or a Wireless Identification Registration (WIR):

“We wish to make clear that although we propose to modify the CASF eligibility requirements to include both for profit and nonprofit broadband infrastructure providers, it is not our intent to change the focus of the CASF program. The CASF was created to fund the deployment of broadband infrastructure in unserved and underserved areas of the state, rather than the adoption of broadband services.” (Emphasis added)

The CPUC should also make it easier for consumer owned, community-based providers such as telecom cooperatives to access CASF funding for last mile (to the premises) Internet infrastructure construction – a critical infrastructure link singled out for attention in the proposed order. A key need of these providers is technical assistance grant funding to retain engineers and expert consultants to develop preliminary network designs and business case analyses. These deliverables would help ensure that the contemplated projects pencil out and would generate sufficient revenues to justify the prudent investment of CASF funds.

The CPUC should also revisit its unworkable, hair splitting exercise in futility of attempting to map out what neighborhoods are considered “unserved” and “underserved” based on throughput speed and census block groups. The inherent variation of legacy telco infrastructure Internet service from one address to the next doesn’t lend itself to these broad brush delineations. Internet service available at a given premise can be entirely different from another one just a quarter mile or a half block away.  Some overlap or "overbuilding" as it is called by incumbent providers will the inevitable consequence of progress.  But it must occur if the United States is to remedy what President Barack Obama decried in his State of the Union speech at the beginning of this year as the nation's "incomplete" Internet telecommunications infrastructure.  A network filled with holes does not a network make.

California PUC misstates public policy goal of Internet infrastructure subsidy fund

The California Public Utilities Commission (CPUC) has adopted a decision implementing a grant and loan program to subsidize the construction of advanced telecommunications infrastructure in the Golden State through its California Advanced Services Fund (CASF). Under urgency legislation enacted in 2010, SB 1040, $100 million was allocated for grants and $15 million in revolving loans for the CASF's Broadband Grant and Revolving Loan accounts. The CASF is one of several subsidy funds administered by the CPUC to help offset the cost of providing telecommunications services in areas of the state where it is costly to provide them in order to make them more widely available.

The CASF is codified at California Public Utilities Code Section 281(a) which directs the CPUC to "develop, implement, and administer the California Advanced Services Fund to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies..."

While not stated as a finding of law in a draft of the decision issued for public comment prior to its adoption earlier this week by the commission, the decision adopted by the CPUC nevertheless states on page 3:

"We emphasize that the ultimate goal of the CASF program is to increase the adoption of broadband."

A plain reading of that assertion does not comport with California Public Utilities Code Section 281(a), which clearly states public policy intent that the goal of the CASF is "deployment of of high-quality advanced communications services to all Californians."

The CPUC's declaration is also illogical. In order to increase the adoption of broadband, infrastructure must first be built to deliver it. That's the commission's stated purpose of the CASF Broadband Grant and Revolving Loan -- to help capitalize the construction of infrastructure capable of providing premises Internet connectivity in high cost areas where it hasn't been deployed. Moreover, the CPUC's decision distinguishes adoption from infrastructure deployment, noting at page 9 that applicants for CASF-funded infrastructure projects must submit a plan to encourage adoption of the broadband service in the proposed area(s) including the number of households the applicant estimates will sign up for the service (the take rate), the marketing or outreach plans the applicant will employ to attract households to sign up for the service.

Without deployment of the necessary infrastructure, broadband simply isn't available as hundreds of thousands of Californians trying to get by on dialup and satellite are painfully aware. And if broadband isn't available at any price, it cannot be adopted by anyone. First things first.

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.

California legislation would expand subsidy program

As the U.S. Federal Communications Commission considers retasking the Universal Service Fund that was originally formed to subsidize voice telephone service in high cost areas to advanced telecommunications infrastructure, California is considering urgency legislation to expand and make permanent its own similar subsidy program.

The California Advanced Services Fund (CASF) was established by the California Public Utilities Commission 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.

SB 1040 would leave the CASF in place indefinitely and expand its budget to $250 million with up to $25 million available in any given fiscal year. The urgency measure also liberalizes the use of CASF funds. To subsidize broadband infrastructure construction, $20 million would be allocated to grants and $3 million for loans.

One of the most important elements would be a new Regional Broadband Consortia Grant Account that earmarks $2 million in technical assistance grants to fund the cost of broadband deployment activities other than actual infrastructure construction. The money would be available to a wide variety of groups including local and regional governments, schools and colleges, health care providers, libraries and community-based organizations.

This is a critical element of the bill since many such entities that were interested in applying for broadband infrastructure grants and loans appropriated in the American Recovery and Reinvestment Act of 2009 lacked adequate funding to retain experts to help them with the engineering and business planning work needed in order to prepare project proposals.

A California Senate floor analysis of SB 1040 notes the Senate Energy, Utilities and Communications Committee was told at a Feb. 16 hearing that four percent of Californians - 1.4 million people in mostly rural areas, do not have access to broadband service. Only about half of Californians have Internet access at speeds meeting the CPUC's definition of basic broadband of 3 Mbs down and 1 Mbs up.

SB 1040 is advancing without opposition and would become law immediately after being signed by the governor. The CPUC would then open a rulemaking proceeding to implement the new CASF provisions later this year.

California PUC approves $7.9 million supplemental broadband stimulus funding for 9,000 square mile Central Valley wireless project

The California Public Utilities Commission today conditionally approved a resolution providing $7.9 million in supplemental funding for a major wireless broadband project requesting federal funding via broadband infrastructure subsidies allocated in the American Recovery and Reinvestment Act of 2009. The supplemental funding allocated from California PUCs' California Advanced Services Fund covers half of a 20 percent recipient match required under the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program and is contingent on federal funding approval.

The California Valley Broadband (CVB) project, proposed by a the consortium of Moreno Trenching Ltd, Mika Telecom Group and MT2 Telecom, LP, plans to build wireless infrastructure that will serve about 77,195 households in Fresno, Madera, Merced, Sacramento, San Joaquin, Solano, and Stanislaus counties. The consortium claims it will deliver Internet connectivity and VoIP over nearly 9,000 square miles at speeds of up to 20 Mbs on the download side and up to 6 Mbs uploads using two unregulated (WiFi) frequencies and one licensed (WiMAX) frequency "to accommodate range, terrain, tree and other interference issues."

The CVB project faced multiple challenges from incumbent telco and cable companies who claimed they already serve census block groups in the proposed CVB footprint. But PUC staff rejected the bulk of the challenged census block groups finding the incumbents didn't offer broadband as the California PUC defines it: at least 3 Mbs for downloads and 1 Mbs on the upload side.

It remains to be seen however how the NTIA will respond to protests the incumbents lodged against CVB's proposed project that is pending approval for the 80 percent BTOP subsidy.

In allowing incumbents to contest proposed broadband infrastructure projects in the first round of stimulus funding that closed last summer, both the NTIA and the Rural Utilities Services of the U.S. Department of Agriculture -- which is also distributing a portion of the broadband stimulus funds -- set the stage for an adversarial process that by implication would require the agencies to adjudicate contested applications. However, it's likely they are less able than the California PUC to carry out that function since the PUC can reference the state's broadband availability maps and has dedicated staff evaluating comparatively far fewer proposed projects.

Since putting in place a process to resolve applications contested by the incumbents and make findings of fact regarding whether the area of a proposed infrastructure project is underserved or unserved requires substantial time and resources, my guess is the two federal agencies simply put contested applications into a "hold" file while trying to figure out how to square the applications with incumbent telco/cable objections. That would explain why so many now impatient applicants haven't heard anything whatsoever after rushing to get their applications in by the first round funding deadline in mid-August of 2009 after having been initially led to believe they'd know by the year end holidays at the latest whether their projects were approved for funding.

This sets the stage for political blow back from federal and state representatives in areas where broadband stimulus projects in their districts are stuck in limbo after hearing from frustrated constituents asking them to expedite approval of their applications. The incumbents couldn't stop the broadband stimulus provisions from becoming law in the rush to enact ARRA one year ago. So they may instead opted to fend off threats to their territorial hegemony (remember, an incumbent telco/cable "service territory" doesn't mean everyone is served) in a "death by a thousand cuts" strategy to vector and shoot down stimulus applications one by one.

California PUC conditionally funds start up cooperative's middle mile project

The California Public Utilities Commission has demonstrated its support of start up telecom cooperatives -- entities this blogger believes play a crucial role in the rapid expansion of advanced telecommunications infrastructure in areas that are not sufficiently profitable for incumbent providers.

In a resolution adopted earlier this week, the CPUC agreed to fund 19 percent of the California Broadband Cooperative's planned open access wholesale middle fiber project along 448 miles of Highway 395 in the Golden State's Eastern Sierra area including the counties of Mono, Inyo, Eastern Kern and San Bernardino. Coop membership is open to local governments, institutions and Internet Service Providers.

The 19 percent funding level is beyond the 10 percent level the CPUC established in July in an effort to utilize its $100 million California Advanced Services Fund (CASF) to leverage $7.2 billion in federal subsidies for broadband telecommunications infrastructure allocated in the American Recovery and Reinvestment Act (ARRA). The CASF funding is contingent on the project being approved for ARRA funding.

In the initial round of ARRA broadband funding that closed in August, the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program (BTOP) generally required project grant applicants to put up a 20 percent funding match. In an effort to get more California projects funded, CASF kicked in half the match amount, bringing total project funding up to 90 percent. That left it to applicants to come up with the remaining a 10 percent match.

However, the California Broadband Cooperative noted as a start up nonprofit with no financial history it would find it all but impossible to come up with the 10 percent match for its proposed $101.4 million project under grant and loan subsidies for broadband infrastructure construction under the BTOP and the USDA's Rural Utilities Service (RUS) program.

Kudos to the California PUC for recognizing that alternative, nonprofit business models like cooperatives are needed in the quest to close the digital divide in California and that these entities face unique and substantial start up funding challenges. As the NTIA and USDA draw up new rules governing an upcoming and final round of funding for broadband infrastructure projects early next year, the agencies should keep the California PUC's action in mind.

California local governments, nonprofits eligible for 90% broadband stimulus subsidization

California local governments and nonprofit entities that can successfully navigate the complex, 121-page set of rules governing the first round of grants providing up to 80 percent subsidization of broadband infrastructure build outs under the National Telecommunications and Information Administration's Broadband Technology Opportunities Program -- and do so in the just two weeks remaining before the Aug. 14 application deadline -- could get as much as 90 percent of their project costs subsidized.

To leverage the federal broadband stimulus funds, the California Public Utilities Commission had previously approved an order expanding its subsidy program for broadband infrastructure, the California Advanced Services Fund, to provide up to half of the 20 percent match required of regulated telecom providers proposing BTOP projects.

Expanding the CASF funding to include local governments, telecom cooperatives and other non commercial providers required legislative authorization. Gov. Arnold Schwarzenegger signed the legislation, AB 1555, into law July 29. An urgency measure, the bill takes effect immediately.

It remains to be seen if any such projects will be proposed given BTOP rules that make it difficult to qualify projects and give incumbent providers effective veto power, particularly in areas deemed "underserved" under the guidelines.

California PUC approves subsidy for fixed WISP build offering 14Mbs symmetric service

The California Public Utilities Commission announced July 9 that it approved a 40 percent subsidy totaling $2.8 million from its California Advanced Services Fund for fixed terrestrial wireless infrastructure to provide broadband connectivity to more than 14,000 unserved premises in Alpine, Amador, Calaveras, Tuolumne, and Mariposa counties.

According to the CPUC resolution approving the project, it will be built over a 20-month period by Mother Lode Broadband and will leverage a regional network of existing mobile cellular towers reinforced with "expanded backhaul" -- most likely fiber.

The proposed throughput will blow existing WISPs -- both mobile 3G cellular as well as fixed premises providers -- clean out of the water. It's on a business class scale providing symmetric connectivity of "up to" 14 Mbs. There's no word on latency and Mother Lode Broadband is mum on what protocol -- WiMAX is a likely possibility -- that it plans to use. In addition, the CPUC resolution is silent on the technology that will make service this scale possible, only revealing it will employ "high capacity licensed spectrum."

Only time will tell if this is for real or simply more wireless vaporware. With the deployment planned over 20 months, there is a relatively large amount of that -- and probably too much for those 14,000 premises that needed broadband 10 years ago and are still stuck on dialup or sucking a satellite. "I'll believe the speeds when I see them," one skeptical Northern California industry insider tells me.

California PUC adopts order aimed at leveraging federal broadband infrastructure grants

The California Public Utilities Commission announced July 9 it has adopted a proposed order designed to leverage and maximize California's share of $7.2 billion set aside for broadband infrastructure construction in unserved and underserved areas of the nation in the American Recovery and Reinvestment Act (ARRA).

The decision pertains to grants of up to 80 percent for such projects administered under the $4.7 billion National Telecommunications and Information Administration's Broadband Technology Opportunities Program (BTOP). It would cover half of the minimum 20 percent BTOP match required of those proposing broadband infrastructure projects, bringing the potential total combined federal/state subsidy level up to 90 percent for approved California BTOP projects.

The CPUC supplemental BTOP funding would be allocated out of the regulatory agency's California Advanced Services Fund (CASF). Created in 2007, the $100 million CASF is funded by a surcharge on intrastate long distance calls, of which about $80 million remains unspent.

Projects that qualify for the supplemental grant match will have to meet a higher minimum thoughput standard than under the BTOP. While the federal standard is just 768 Kbs for downloads and 200 Kbs for uploads, under CASF rules the minimum is 3 Mbs down and 1 Mbs for uploads.

While the current CASF rules restrict funding to wireline and wireless providers that have been certified by the CPUC, the decision contemplates making the CASF funding available to entities that aren't providers such as local governments and nonprofits. That would require legislative authorization under an urgency bill currently pending in the state Senate, AB 1555.

Lawmakers should approve this measure and sent it to Gov. Arnold Schwarzenegger. California cannot rely exclusively on providers to close the digital divide and build out badly needed broadband infrastructure; local goverments and telecommunications cooperatives need to be part of the solution.