Saturday, February 04, 2012

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.

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