Monday, November 10, 2008

Less than enthusiatic response to California broadband build out subsidy program

A key recommendation of California Gov. Arnold Schwarzenegger's Broadband Task Force to build out broadband Internet infrastructure in the Golden State is getting a less than enthusiastic response from the state's incumbent telcos.

In comments filed last week with the California Public Utilities Commission (CPUC), which is considering expanding eligibility for 40 percent project subsidies to a wide variety of organizations and local governments, both large and small Incumbent Local Exchange Carriers (ILECs) complain the 40 percent subsidy is too low to make it worthwhile to invest in infrastructure for high cost areas currently unserved or underserved by broadband providers. They call on the CPUC to abandon the fixed 40 percent subsidy and instead award amounts based on the cost of the project.

The CPUC's internal Division of Ratepayer Advocates (DRA) is also calling on the CPUC to revamp the subsidy program, the California Advanced Services Fund (CASF). "The general paucity of bidders for CASF funding" and just six ILEC-proposed projects submitted for funding to date "suggests that the Commission’s anticipated advancement of broadband availability and competition is not bearing fruit," the DRA stated in its filed comments in the CASF proceeding. "While the factors that have led to this outcome are unclear, what is clear is that one of the Commission’s goals for the CASF – encouraging a diversity of advanced technologies and service providers – is unlikely to be met unless there is a critical review of the CASF, as it is currently structured and administered."

The DRA also recommends against allowing municipalities and other entities that are not under the CPUC's jurisdiction from proposing projects because the CPUC would have to enforce compliance with CASF funding requirements through the courts.

The six ILEC-proposed projects to bring wireline-delivered broadband unserved areas to be considered by the CPUC at its Nov. 21 meeting total just $372,976 in requested CASF funding.

The largest of the six proposals is by Verizon California and seeks $174,000 to serve 382 housholds in the Pinyon Crest area of Riverside County. AT&T has proposed four projects in both northern and southern California, including what is arguably a token effort to bring broadband to two residences in the Mount Wilson area of Los Angeles County.

Only one of the proposed projects meets original CASF project criteria of being capable of providing at least 3 Mbs downloads and 1 Mbs uploads -- one by Frontier Communications to provide service for 171 households in the Lake Almanor area of Plumas County.

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