CPUC Denies LTD Broadband RDOF Applications

California Public Utilities Commissioners voted 5-0 to deny LTD Broadband the application approval it needed to get about $187.5 million in Rural Digital Opportunities Fund (RDOF) support over 10 years. At a virtual meeting Thursday, commissioners also by unanimous consent cleared multiple California Advanced Services Fund (CASF) grants that LTD and others said partially overlapped areas where they won RDOF support (see 2112140019, 2112090011 and 2112080046). The CPUC got more comments Wednesday on a plan to shift to connections-based state USF contributions.

LTD’s California award was its third largest after Minnesota and Wisconsin, a December 2020 FCC document shows. LTD sued the Iowa Utilities Board earlier this month for denying ETC status needed to get about $23.2 million in RDOF support in Iowa over 10 years (see 2112070065). The South Dakota PUC heard the state telecom association’s concerns about LTD’s ETC application Dec. 1 in docket TC21-001 on about $46.6 million in 10-year RDOF support.

LTD declined to comment on the CPUC denial Thursday. The company stressed its managerial, financial and technical fitness to bring broadband to about 77,000 California locations, in a CPUC meeting last week (see 2112150053).

“States should be rigorous in their due diligence of LTD's capacity to execute these grants in a reasonable” time, emailed Institute for Local Self-Reliance Director-Community Broadband Networks Christopher Mitchell. “This is about what will often effectively be the only telecommunications carrier available for people in some rural areas, so it is life and death. States are required to ensure the companies entrusted with that responsibility are up to it.”

CPUC denial is another sign the FCC should have done more vetting of RDOF applicants upfront rather than catching them on the backend through state ETC processes, said Jonathan Chambers, partner in the Conexon rural electric cooperative consulting firm. It’s now many months later and the FCC auction rules set up no “next-in-line process” for such situations, he told us. It’s unfortunate for RDOF winners in other areas where LTD bidding reduced the final amount of dollars awarded, said Chambers: The FCC touted saving money then, but it’s “not a real savings” if there were bidders that shouldn’t have been in the auction in the first place.

Commissioners supported CASF grants worth tens of millions of dollars for Frontier Communications, Race Telecommunications and Plumas-Sierra Telecommunications. The grants got opposition including from various RDOF winners. Attorneys representing opponents including Etheric, GeoLinks and Wavelength Internet didn’t comment.

CPUC members unanimously cleared a draft on staff power to rescind CASF grants (see 2111120030) and a plan to more than double the deaf and disabled telecom program surcharge to 1.11% from 0.5% to offset declining revenue. Thursday’s meeting was the last for retiring President Marybel Batjer and Commissioner Martha Guzman Aceves, who's becoming administrator of EPA Region 9. As the meeting opened, Batjer reflected on CPUC work during her time responding to state wildfires and the pandemic, including implementing California’s $6 billion broadband bill.

State USF

Influx of federal funding isn’t reason to hit the brakes on USF contribution changes, said small rural telcos and the California Emerging Technology Fund in Wednesday replies in docket R.21-03-002. Wireless companies and consumer groups said last month the staff recommendation to shift to a flat, per-line surcharge is inequitable (see 2112010014).

CalTel and other small LECs disagreed with AT&T and CTIA arguments that California should pay for state public purpose programs (PPPs) from its general fund or rely on federal support. They said that ignores the CPUC’s “statutory obligations in administering the state’s PPPs” and legislative and commission “policies to advance universal service and close the digital divide."

Federal infrastructure and affordability support “are short term funding arising out of the pandemic emergency” and aren’t sustainable, said CETF: State appropriations aren’t sustainable, either. CETF is disappointed the CPUC proposal wouldn’t include broadband information access services in the contribution base, it said. "Including BIAS will expand the affordability and availability of services, with no material impact on broadband adoption or retention."

“While a taxpayer-funded model would expand the contribution base, it would almost certainly threaten the sustainability and stability of these programs in multiple other ways,” replied The Utility Reform Network (TURN) and Center for Accessible Technology (CforAT).

Some urged the CPUC to reject exemptions for incarcerated people and others proposed by TURN and CforAT. Such carveouts "lack a statutory basis and relevant eligibility criteria, and are unnecessarily complex,” said the California Cable and Telecommunications Association. Exemptions and a CPUC Public Advocates Office proposal to differentiate fees by customer class are too complex and costly for carriers and the commission to implement, said the CalTel group. Only exempt state LifeLine subscribers from paying in, said CETF. “For now, given all the other changes in the surcharge mechanism, CETF recommends a simplified surcharge mechanism with as few exemptions as possible absent a compelling policy reason."

"If the Commission is concerned about the sustainability and equitability of PPP funding, General Fund appropriations to support the PPPs would better achieve the more equitable outcomes sought by parties who suggest clumsy, cumbersome, or illegal modifications" to the staff proposal to try to correct its "regressive impacts," replied AT&T.