CPUC Revises Last-Mile Fund Rules Amid Controversy

The CPUC halved the earlier draft’s 10-year price freeze for FFA-supported plans to five years, “with the option to adjust” for the consumer price index (CPI). Rather than require a low-cost, 50 Mbps symmetrical broadband plan, as in the earlier draft, the CPUC would “encourage all applicants” to include an inexpensive 50/20 Mbps plan through modified evaluation criteria. Commissioners had planned to vote on the earlier version at their April 7 meeting but held the item after state Assembly members raised concerns at a hearing the previous day (see 2204070028). Big ISPs protested the price rules in March comments (see 2203230051).

The CPUC is “committed to careful review of the applications for funding with the goal of getting funds out the door quickly,” Reynolds said. “The latest version of the proposed decision provides flexibility for generally available low-income plans to support innovation and creativity, while also incentivizing the very best proposals for projects.”

Recent revisions “reflect the commission’s continuing priorities of encouraging expanded provider participation while ensuring that the funding … will be distributed quickly and that we have flexibility,” said Commissioner Darcie Houck. Commissioner John Reynolds praised “the balance struck to encourage broad participation by carriers while also preferring projects that include low-income plans and that limit customer prices increases." Commissioners Genevieve Shiroma and Cliff Rechtschaffen agreed the revised proposal is balanced.

The revised draft added “two incentives for applicants to offer longer-term pricing commitments and affordable plans.” Providers would get up to 10 points for applications that “include pricing commitments for 10 years,” and up to 20 points “for applications to include one plan offering speeds of at least 50 Mbps download AND 20 Mbps upload for no more than $40 per month.” Both provisions would include options to make consumer price index adjustments, the CPUC said. “Since applications that receive lower scores reflect a reduced commitment to provide public benefits,” Communication Division staff may recommend to the commission “via resolution to reduce the percentage of public funding, commensurate with the reduced public benefit,” it said.

The revised proposal also added language rejecting the California Cable and Telecommunications Association’s call for the agency to keep confidential much of the data in challenges to applications. “One exception to our finding is that the number of subscribers provided by an ISP objecting to a FFA application may be submitted with a request for confidential treatment pursuant to the requirements of General Order (GO) 66-D,” it said. “The Commission would need to analyze this data in greater detail, including if this information meets the definition of trade secret, before ordering its disclosure.”

Industry groups sought changes days before the vote, including to encourage, not mandate, grantees to offer low-cost broadband plans, showed a document we obtained. Also, industry asked to reduce the 10-year freeze to two years. The letterhead listed USTelecom, CCTA, AT&T, Frontier Communications and Consolidated Communications. Without those changes, California might not meet federal deadlines and forfeit billions of dollars, they said. A CCTA spokesperson declined to comment on Thursday's vote but confirmed the group authorized and helped write the industry alert before the CPUC's Wednesday revisions.

The Electronic Frontier Foundation is “generally happy” with the CPUC making the affordability plans a preference rather than a requirement, Senior Legislative Counsel Ernesto Falcon told us. EFF would have liked a requirement but thinks “the end result will be the same” because many local providers, including cooperatives, municipalities and local private players, will compete for funding. The telecom industry pressure foreshadows a fight to prevent sabotaging the $6 billion law, Falcon said.

The Utility Reform Network “is dismayed that some aspects of the program were changed due to industry pressure,” including halving the previously proposed 10-year price freeze, said TURN Executive Director Mark Toney in a statement. “In the recent weeks, the largest telephone and cable companies willfully bypassed the CPUC’s deliberative multi-phase process to pressure the state legislature to lean on the regulatory commission in complete violation of the principles and protocols of evidence-based decision rulemaking.” The revised last-mile program remains “an important opportunity to develop publicly-funded broadband, including through public-private collaboration, especially for local governments and Tribes in areas that have been ignored by the large phone and cable companies,” he said.

AT&T supports efforts to expand broadband to unserved and underserved areas by quickly disbursing FFA funding, a spokesperson said. "We appreciate the Commission’s efforts in addressing stakeholder concerns throughout this process." A Frontier spokesperson said its partnership with California lets the carrier meet telecom "needs of rural, high-cost California communities," including many tribal communities.

Controversy over the California FFA rules got the attention of an East Coast broadband official. “Great example of how Big Telecom aims to hold rural legislators hostage,” New York State ConnectAll acting Director Scott Rasmussen tweeted Wednesday in response to an Electronic Frontier Foundation thread. “Unfortunately, in many instances they’re the only provider in the district and their scare tactics of ‘we won’t participate with those rules’ are successful at stalling progress. Only answer: overbuild.”