Cable Industry Reaches Compromise on Broadband Legislation

According to Senator Padilla’s office and the Assembly Utilities and Commerce (U&C) Committee, the cable industry has reached a compromise agreement to allow Senate Bill 740 to be placed before the Assembly U&C committee for reconsideration this coming Monday August 12, 2013, at 3 p.m. in Room 437 of the State Capitol.  Padilla’s office says the California Cable & Telecommunications Association (CCTA) has agreed to remove its opposition to the bill with these amendments, leaving no party on record with opposition.  The bill failed to move out of the U&C Committee on a vote of 5-3-7 on a prior vote in early July.

The amendments that were published yesterday do the following:

1. The definition of an "unserved" or "underserved" area for which the California Advanced Services Fund (CASF) may be used is defined by the CPUC in its Decision No. 12-12-015.
2. The incumbent broadband providers (usually the cable and telephone provider) have a right to first refusal "within a reasonable timeframe" should a particular CASF application be submitted to the CPUC for an area that incumbent broadband provider serves.
3. A local government agency may obtain a CASF grant only for UNSERVED household or business, only if the CPUC has conducted an open application process and no other eligible entity has applied.
4. The CPUC annual report will include an accounting of unserved and underserved "households", in addition to "areas."

The first change sets the disputed "underserved" definition as being speeds of 6 megabits per second download and 1.5 Mbps upload.  While this is higher than the FCC’s current speed of 4 Mbps/1.5 Mbps definition, it does set the definition in law, instead of allowing it to be set by the regulatory agency, the California Public Utilities Commission.

The second change allows an incumbent to take on an upgrade in underserved areas, once an application has been prepared and submitted to the CPUC by a non-incumbent eligible entity.

The third change limits the places where a local government agency may obtain a CASF grant to unserved areas (excluding underserved areas), and only if no other eligible entity has applied in an open application process.  The CPUC’s current process is an open application process.

The fourth change requires more granularity of how the CPUC’s reporting on the program is done, moving from "areas" to "households".  This change is likely to benefit rural residents, who claim that current broadband data submitted by incumbent providers overstate actual coverage.

In terms of the benefits of the compromise:

• $90 million will be added to the CASF program from 2015-2020 from telephone user surcharges on intrastate services;
• CASF grants are targeted to unserved areas where there is no broadband first and underserved areas where slow broadband exists second;
• Eligibility will be opened up beyond just "telephone corporations" and holders of wireless licenses with the CPUC; and
• CPUC review of actual levels of broadband service is required before funding is awarded.

Finally, passage of SB740 will provide funding for AB1299 (Bradford) for some CASF funds to be directed to publicly-supported housing community broadband connections should AB1299 pass.