[CalFiber] SB1130 2020 Post-Mortem

Stephen Blum steveblum at tellusventure.com
Thu Sep 3 09:15:32 PDT 2020

I wrote a three-part blog post about available CASF money, and also
followed the RDOF/CASF topic. Links are below.


CPUC is authorised to collect up to $330 million for CASF, through 2022
($66 million/ year x 5 years). The money comes from a tax on in-state
telephone calls, which is a declining source of revenue. The CPUC set the
rate at 0.56%, beginning in 2018.

Some of that goes to adoption, public housing and consortia funding. An
even bigger bite goes to administrative overhead.

Revenue collection has fallen short and is projected to drop to $41 million
in 2020, and to $35 million in 2021 and 2022. On that basis, there is
something like $145 million left in the infrastructure fund (that's my
estimate, the CPUC's is in the same ballpark). That's versus $533 million
in pending projects.

On top of that, per legislative authorisation earlier in the summer, the
CPUC plans to offer CASF money to RDOF applicants. They haven't said how,

The CPUC is allowed to make up the shortfall, but to do so it would have to
at least double and, maybe, quadruple the 0.56% tax rate. Even then, there
wouldn't be much, if anything, left for next year, assuming most pending
projects are viable and staff gets going on the RDOF backfill.

CASF is effectively out of money, at least for infrastructure projects. In
the past, CASF funding bills were sponsored by CETF, which meant that AT&T,
CCTA and Frontier got to write the rules. That's why we have 6 down/1 up as
our standard. The revenue source CASF relies on – in-state phone calls – is
drying up. That was well known when SB 1130 was introduced. The idea was to
break the cycle by getting the strategy right, then deal with the funding
next year.

Part 1: California’s broadband upgrade fund could lose $120 million, after
senate committee caps subsidy bill

Part 2: California broadband subsidy fund dwindles to less than a third
needed for pending projects

Part 3: Nearly all broadband subsidy proposals could survive California's
chopping block. Nearly

CPUC adds California money to federal broadband subsidy bids. If

Steve Blum
Tellus Venture Associates
U.S. +1-831-582-0700
N.Z. +64-21-116-0002
steveblum at tellusventure.com

On Thu, Sep 3, 2020 at 8:13 AM Dane Jasper <dane.jasper at sonic.com> wrote:

> > One reason given was that SB1130 existed as an unfunded mandate,
> according to Rendon. Despite the fact that the CASF is already funded via
> fees assessed on our monthly ISP bills, Rendon wanted an additional funding
> mechanism attached to the bill. Are CASF taxes set to sunset in the next
> few years? This might've been what he's referencing. Would be nice to have
> a ready to go talking point to rebut this. It may already be out there, I'm
> just unaware of it.
> The CASF is funded by a surcharge on telecommunications - this means
> primarily voice telephone service. It's not an ISP surcharge, there
> are no taxes or surcharges on internet access in California.
> I don't quite see how it could be characterized as "unfunded", given
> the CASF's funding mechanism. I'm not totally on top of the current
> state of it, but I did review this page:
> https://www.cpuc.ca.gov/General.aspx?id=6442457932
> ...which seems to lead to the legislation that created the funding
> mechanisms. Maybe that $250M "cap" is headed toward sunset? I dunno -
> but I do know we're charging a fee to every voice customer every month
> and remitting that the CPUC, so there's certainly funds going
> somewhere for something!   ;)
> --
> Dane Jasper
> 707-237-6205
> dane.jasper at sonic.com
> _______________________________________________
> CalFiber mailing list
> CalFiber at lists.eff.org
> https://lists.eff.org/mailman/listinfo/calfiber
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