Commissioner Seeks Overhaul as CPUC Hikes Broadband Surcharges
With state broadband support dwindling, the California Public Utilities Commission voted unanimously Thursday to double surcharges for the California Advanced Services Fund (CASF) and High Cost Fund-A (CHCF-A). The orders highlight structural problems with how the funds collect revenue, said Commissioner Martha Guzman Aceves at the livestreamed virtual meeting.
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Commissioners supported increasing the CASF charge to 1.019% from 0.56% and raising CHCF-A to 0.7% from 0.35% (see 2009210011). Both increases take effect Dec. 1. The California legislature failed to pass a broadband bill this session that could have provided additional infrastructure support (see 2008310034). Earlier this month, the CPUC received comments on a rulemaking on how it can spur broadband (see 2010130045 and 2009180038). Gov. Gavin Newsom (D) said he doesn’t plan to reconvene the legislature for a special broadband session, despite calls by some (see 2010070011).
Guzman Aceves seeks to work with the legislature to stabilize revenue, she said. “The commission has been seeing a negative repercussion from having the type of surcharge structure that we have,” she said. Revenue from voice services is declining rapidly as people use more data, while carriers determine “how much of it is voice versus data,” she said. “It’s a declining source of revenue, and it’s a volatile source,” meaning the CPUC must annually play “catch-up” by adjusting the surcharge, she said. Even with Thursday’s increase, the commission will collect at least $77 million less than the $330 million the legislature authorized for CASF through 2022, she said.
CPUC “is unable to collect sufficient funds to support broadband deployments through the current budgets for CASF and [CHCF-A] without doubling the surcharge on the remaining customers,” emailed The Utility Reform Network Staff Attorney Ashley Salas. Salas cited fewer customers subscribing to landlines and CTIA and other carriers last year stopping the CPUC from applying surcharges to text messages (see 1901310023). “There is an ever-shrinking base for which the Commission can assess a surcharge,” she said. CTIA declined to comment.
The legislature gave no direction this year on how to close the funding gap, but the CPUC is working on it through new CASF and broadband-for-all dockets, said Salas. “TURN is working with other consumer advocates to research and design the most equitable and broad base of funding for all public purpose programs, including the possibility of surcharging at least some services that would fit into the broad category of broadband services,” she said.
Doubling the CHCF-A surcharge is a “reasonable adjustment ... based on fiscal considerations,” emailed Cooper White’s Patrick Rosvall, representing independent small LECs that receive the support. Concerns about funding base reductions “are common to all of the public policy funds ... since they are all applied to the same statewide intrastate revenues,” he said.
The CASF charge as structured isn’t bringing in intended or needed revenue to sustain the program, said Rural County Representatives of California Legislative Advocate Tracy Rhine. RCRC doesn’t have a position on Thursday’s increase, she said.
The big increase to the CASF surcharge is allowed under current law, which funds it through Dec. 31, 2022, emailed former CPUC Commissioner Rachelle Chong. “The surcharge goes up and down over time in recognition of how many approved applications there are and for how much.” If any granted applications aren't completed, that money returns to CASF, she said.
At Thursday's meeting, the CPUC unanimously supported spending $900,000 in CASF grants for two broadband consortiums. Commissioners plan to vote Nov. 19 on a draft resolution to rescind about $66,000 it gave earlier to three CASF broadband public housing account infrastructure projects and make it available to other applicants.