CPUC President: States Will Continue Playing Key Role in Telecom's Future

Spreading high-speed internet will remain a key focus for the California Public Utilities Commission in the years ahead, CPUC President Alice Reynolds told Communications Daily during a wide-ranging Q&A. Reynolds addresses broadband funding, affordability issues, state USF and the FCC’s net neutrality rulemaking in written answers to our questions, lightly edited for length and clarity.

What led you to working on public policy and regulation, and what motivates you in your role as CPUC president?

As a longtime public servant -- having worked in the California Department of Justice, the California Environmental Protection Agency, and the Office of Gov. Gavin Newsom (D) -- I have enjoyed working to address complex challenges facing California ... In the broadband space in particular, there are extraordinary challenges and inequities in the state -- while nearly 5 percent of the state lacks reliable broadband infrastructure, about 20 percent of Californians are not using broadband because of literacy and affordability barriers. These are significant barriers, but I feel that we can make a difference, and we are working towards the objective of connecting these Californians every day at the CPUC.

Given your professional background in energy and environmental issues, can you talk about your personal interest in broadband or other telecom issues and why these are important to you?

In 2020, while in the Governor’s Office, I saw how the COVID-19 pandemic made clear that broadband and voice communications are essential services -- for education, for healthcare, for employment, and for meaningful participation in society. During this time, I had the honor of working on the Governor’s Broadband For All Executive Order, Broadband Action Plan, and the state’s historic broadband package enacted in 2021. Having worked on these initiatives since the beginning, I feel personally invested in carrying them through and making Broadband For All a reality.

Among state commissions, the CPUC is one of the most active on telecom and broadband issues. Why is that and why is it important for California to keep active?

Broadband access is essential to all of our communities, institutions and businesses. Ensuring all Californians have access to affordable and reliable broadband networks will accelerate continuous improvements in economic and workforce development, infrastructure, public safety, education, economy and an engaged citizenry.

How big an impact will California's $1.86 billion from NTIA’s broadband, equity, access and deployment (BEAD) program have? Was the amount in line with your expectations?

In close partnership, the state and federal government have been working to improve broadband access since the onset of the pandemic in 2020. We have taken bold actions to expand and accelerate these efforts and allocated an unprecedented amount of funding toward broadband infrastructure and digital equity. In addition to the Bipartisan Infrastructure Act, Gov. Gavin Newsom (D) signed historic legislation in 2021 committing $6 billion for achieving Broadband for All in California. This included $2 billion for “last-mile” broadband projects -- which these BEAD funds nearly double -- as well as [a] Statewide Open-Access Middle Mile Network and funds to assist local governments [interested] in deploying their own broadband infrastructure networks.

California’s Statewide Open Access Middle Mile Network will provide a foundation for “last mile” broadband projects funded by BEAD in both rural and urban communities. This infrastructure will help last-mile projects “pencil out” where existing middle mile broadband access is too expensive or doesn’t exist.

California has significant last-mile broadband infrastructure needs. We received more than $5 billion in requests for two of the CPUC’s last mile broadband grant programs (Federal Funding Account Program and Broadband Infrastructure Grant Account) that are currently active. While these applications are still in the review process, it is clear that we have more requests for funding than our state programs can cover alone. The BEAD funds are essential and will bring us closer to meeting our state’s Broadband For All objectives.

The CPUC's 5-year action plan for BEAD notes that even combining federal and state funding, there may not be enough money to reach everyone in the state. Why is it so challenging to finish the job of closing the digital divide? What needs to happen in California to get there?

As stated in the final 5-Year Action Plan, the CPUC estimates it has approximately $5 billion in funding available [including BEAD], funding from Senate Bill 156, and the California Advanced Services Fund to support broadband deployment. While significant, this funding will not enable deployment of broadband infrastructure to all unserved locations in the State if not spent prudently, coordinated effectively, and targeted toward communities most in need ... Further, this funding does not address the significant affordability and digital equity problems impacting our state. To finish the job of closing the digital divide in the state, we need permanent and sustainable solutions for addressing these challenges.

How well is the FCC's affordable connectivity program (ACP) working in California to help achieve digital equity? With ACP possibly running out of money this year, what message do you have for Congress?

California has more ACP participants than any other state. The program has attracted interest from large providers, who have largely [foregone] participation in the federal Lifeline program.

I am supportive of additional funding for the ACP. I also encourage Congress and the FCC to look at the federal and state lifeline programs to provide a permanent solution for broadband affordability. These programs have sustainable funding sources and have existed for decades, working in unison to provide essential communication service affordability to low-income consumers.

What are your thoughts on the FCC deciding to possibly restore net neutrality rules by reclassifying broadband as a Title II telecommunications service?

California supports net neutrality. The state enacted the California Internet Consumer Protection and Net Neutrality Act of 2018 … following the Trump FCC’s adoption of the Restoring Internet Freedom Decision. This law is an effective model. The CPUC looks forward to participating in the new net neutrality NPRM adopted by the FCC.

What would the FCC treating broadband as a Title II service mean for California's regulation of broadband? What do you say to those who argue that states' telecom authority should be limited to landlines and not cover things like VoIP, broadband or wireless?

Broadband is essential in the 21st Century economy and modern life. Our communities increasingly rely on broadband for school, work and healthcare services. The ability to access and use broadband is the difference between being able to fully engage in the economy and being fully cut off. It has never been clearer that ubiquitous access to quality, affordable broadband infrastructure and service is essential. As with telephone service in the past century, I expect that state commissions will continue to play a key role in the oversight and regulation of telecommunication service providers over the next century.

What else would you say are top telecom priorities for the CPUC in the year ahead?

Affordability -- both for consumers and providers -- is a top priority. For consumers, it means having minimum speeds and performance that support the entire household at a reasonable price. For providers, it means being able to operate in high-cost areas of the state without running losses due to the lower population density.

Last April, California switched to a connections-based contribution method for state USF, responding to declining revenue from landlines among other reasons. How well is the change working?

Beginning April 1, 2023, California transitioned to a flat-rate surcharge to fund the state's six Universal Service programs. The flat-rate amount is calculated based on the number of connections, such as a phone number, that telecommunications companies operate in California. This will simplify phone bills for Californians and promote equitable fee collection by requiring all telephone users -- regardless of whether they provide traditional landline service, VoIP or wireless cellphone -- to pay the same amount.

We adopted this new surcharge method to address issues with declining revenues and inequities in how much customers were paying in surcharges to cover the cost of the state's six essential Universal Service programs. We found that the revenue-based methodology permitted providers to use different methods to identify how much of their revenue is subject to surcharges. This resulted in widely different surcharge rates for consumers, depending on whether they had traditional landline service, VoIP service or wireless service. It is still early in the implementation of the new surcharge methodology, but it appears it is easier to administer and track.

What would you say are the biggest challenges for CPUC leadership?

The CPUC oversees many industries and issues that directly impact the daily lives of the public. We are taking on many challenging and transformative issues, including combating climate change and closing the digital divide, while always being centered on equity for California’s most impacted communities. In navigating these challenges, my goals are the goals of our agency and our state’s leadership -- consumer protection, ensuring affordable, equitable, safe and reliable utility services, across all industries and technologies; the deployment of broadband internet for all and our transition to a clean energy system. These goals are clear, but achieving [them] requires active management, creativity, and constant adaptation.

Does the partisan divide in the country reveal itself within the CPUC?

No. The CPUC’s core mission is a shared goal, to empower California through access to safe, clean, and affordable utility services and infrastructure. This mission largely transcends partisan division.

With four out of five commissioners women, the CPUC has one of the highest ratios of women to men among state utility commissions. How do you think that happened? How committed is the agency to diversity, including at the staff level as well?

Commissioners are appointed by the Governor and confirmed by the State Senate. Governor Newsom has made diversity a priority in the appointments he has made across California’s executive and judicial branches. As you point out, this diversity is clear and present here at the CPUC. It makes our organization stronger, more attuned to the needs of the many diverse communities across the state, and increases staff satisfaction, performance, and retention. The CPUC hosts many internal opportunities to promote diversity and inclusion efforts for our staff. This includes events to celebrate cultural heritage months, as well as mandatory sexual harassment, diversity, and bias awareness trainings for all of our staff.

In addition, our General Order (GO) 156 encourages investor-owned utilities and their prime contractors to purchase at least 22 percent of goods and services from women; minority; lesbian, gay, bisexual and transgender (LGBT); and disabled veteran-owned businesses. Currently, more than 30 investor-owned utilities such as AT&T, California Water Association, Comcast, Frontier, PG&E, SDG&E, Southern California Edison, SoCalGas, and Verizon participate in this program. The CPUC has also created the Environmental and Social Justice (ESJ) Action Plan to serve as both a commitment to furthering ESJ principles, as well as an operating framework that is integrated into considerations throughout our agency’s work.

During your time as CPUC president, what administrative process changes have you made (or are in progress) to improve how the agency functions?

I support our executive leadership team's management of the various administrative processes of the Commission. Together, we are working to complete proceedings expediently, improve communication with the public, foster diversity, equity and inclusion, and resolve pending Intervenor Compensation claims as quickly as possible.

How would you describe the CPUC's current relationship with the FCC? Now that the FCC has five commissioners, are there any items that you hope to see the agency tackle?

I am supportive of the direction of the FCC under Chairwoman [Jessica] Rosenworcel and welcome any opportunities for collaboration with states.