Tuesday, August 13, 2013

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.

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