ISPs Resist Proposed Rules for Calif. $2B Grant Program

Big ISPs warned the California Public Utilities Commission that proposed price and speed requirements could discourage participation in a $2 billion last-mile federal funding account (FFA) required by the state’s $6 billion broadband law. Consumer and local government groups debated how best to prioritize funds in other comments posted Tuesday and Wednesday on a proposed decision (PD) up for vote at the commission’s April 7 meeting (see 2203020062).

"The PD presents a couple of significant unworkable requirements that will very likely prevent Charter (and other well qualified providers) from participating” in the FFA, Charter Communications commented in docket R.20-09-001. The California Cable and Telecommunications Association (CCTA) said the plan includes "several requirements that are unnecessary, unsupported by law or economic theory, and likely to deter qualified applicants from even seeking FFA support.”

"The PD attaches onerous conditions to the funding that will raise serious questions about whether the regulatory and administrative burden is worth the potential benefit of receiving FFA grant funds,” agreed Frontier Communications.

Phone and cable companies slammed proposals to freeze prices for FFA-funded plans for 10 years and to require recipients to offer $40 monthly plans with 50 Mbps symmetrical speeds for the lifetime of the infrastructure. Those possible rules would exceed requirements of the U.S. Treasury Department’s Coronavirus State and Local Fiscal Recovery Fund final rule and California Advanced Services Fund broadband infrastructure grant rules, said AT&T: Unless the CPUC changes course, “there will be less competition for the funding, and the Commission is less likely to be able to disburse all the funding in a timely manner.”

The proposed 10-year freeze should be shortened to two years at most, said AT&T, Verizon, cable companies and smaller LECs. Don’t require a 50/50 Mbps low-income plan because many ISPs already offer low-cost plans with 100 Mbps download and "reasonable upstream speeds," said CCTA, citing a Comcast 100/10 Mbps plan.

CPUC should seek to quickly distribute funds and eliminate barriers that could discourage applications, commented CalTel and other small rural LECs. “The PD does not live up to these standards. It treats the FFA grant program like any other existing grant program, with stringent requirements that will delay distribution and ‘one-size-fits-all’ requirements that will impede interest in the funds." Small LECs have higher costs and could lose money if they have to provide a $40 low-income service, they said.

Consumer groups cautioned that $40 could become too expensive for low-income households even after a $30 discount under the federal affordable connectivity program. The CPUC should monitor how the reduction of the federal subsidy from $50 under the emergency broadband benefit to $30 under ACP affects subscriptions of low-income households, said AARP.

Allow parties to move to revise the $40 monthly ceiling if the FCC changes the ACP subsidy, said the CPUC’s independent Public Advocates Office. Also, PAO opposed excluding provider-imposed fees from the $40 ceiling since they could make the full price unaffordable. Many big ISPs “charge monthly rental equipment fees that range from $5-$15/month, and charge per-instance fees for late payments, disconnection and reactivation of service, all of which range from $5-$35.”

Priority Areas

PAO recommends prioritizing unserved areas with low-income households and previously redlined areas, it said. "The Commission should revise the PD so that it utilizes demographic factors to rank priority areas; the alternative is ignoring and thereby exacerbating gaps in broadband access that already exist among demographic groups.”

The CPUC should include marginalized communities in its definition of priority areas, or award more points to applications that serve them, said the Utility Consumers’ Action Network. Also, give more points to Environmental and Social Justice communities, UCAN said. Small Business Utility Advocates urged the commission to clarify that staff may identify priority areas based on a high density of unserved small businesses.

Small LECs support a U.S. Census definition of rural and urban that would have resulted in 11 rural counties sharing $1 billion in FFA funding, but the CPUC proposal adopts a recommendation by The Utility Reform Network (TURN) that expands the rural pool to 27 counties, said CalTel and others. "The TURN methodology significantly dilutes the amount of funding for truly rural counties to the benefit of counties like Los Angeles, Orange and San Diego.”

Award more points for tribal partnerships, said the Yurok Tribe. The tribe raised concerns “that tax-funded public entities, non-profits, and cooperatives will always be advantaged over Tribes that are striving to create access for the most underserved families in California."

"Because the communities and households that are still unserved in 2022 can often be identified by their unprofitability, household income, or other demographic factors unrelated to broadband needs, the Commission should prioritize applications from entities -- including counties, other local agencies and groups of local agencies, and Tribes -- that are accustomed to providing infrastructure and services based on need,” said the California State Association of Counties.

Localities shouldn’t need to get certificates of public convenience and necessity and credit letters, said Rural County Representatives of California. "Instead require local governments to demonstrate administrative capability and expertise in financial administration; demonstrated relationships with financial advisors; in-house or contracted expertise in evaluating broadband infrastructure project feasibility; and demonstrated relationships with, and support from, experienced public or nonprofit broadband system operators.” Also, the CPUC should have a public right of first refusal “process for local governments with identified plans to deploy broadband services in a priority area,” RCRC said.

San Francisco raised concerns that the proposed process “will cause applicants to spend a lot of time, effort and expense designing networks and putting together administrative structures for areas that may already be served,” the city and county said. “Such areas are easily subject to objection and ultimately may not be fundable." San Francisco proposed a pre-application process "that would focus on identifying an area eligible for service, provide an opportunity for objection, and allow for analysis by the Commission staff in a short period of time.” That “would reduce the risk of the objection process derailing a project” and give the applicant time to revise, it said.

Verizon assumes the PD would allow fixed wireless, said the carrier: Excluding wireless projects “would be legal error and inconsistent with the federal rules that do not exclude wireless projects."