[CalFiber] SB1130 2020 Post-Mortem

Samantha Corbin samantha at corbinandkaiser.com
Thu Sep 3 10:30:52 PDT 2020

The unfunded mandate argument is a straw man. The Governor and Senate had agreed to a funding deal that would have provided an additional 137 million a year to support this program and Rendon, his leadership team, and his office multiple times refused to consider amending in that language in to 1130.

Cant argue there isn't funding when you refuse outright to allow amendments to fund.

I doubt voters back home who are trying to work remotely and set their kids up on school via zoom are going to be much impressed by the "inter house conflicts" and "broken down negotiations" arguments that I hear floating around. Voters expect the legislature to do their job. They don't care about that stuff, and it's not an excuse.

On the bright side, the Governor is apparently good to put money towards this concept.

All that said, it's still a helpful exercise to get your funding arguments together because while not all arguments against the bill (as this conversation and our recent experience has evidenced) are genuine, oftentimes members of the legislature are fooled by them. Let's make sure they have the right info to make good choices for their districts.

From: CalFiber <calfiber-bounces+samantha=corbinandkaiser.com at lists.eff.org> on behalf of Paul Goodman <paulg at greenlining.org>
Sent: Thursday, September 3, 2020 10:21 AM
To: Stephen Blum <steveblum at tellusventure.com>
Cc: calfiber at lists.eff.org <calfiber at lists.eff.org>
Subject: Re: [CalFiber] SB1130 2020 Post-Mortem

I've been thinking about the funding issue, and I'm increasingly confident that we can successfully argue that broadband deployment leads to decreased greenhouse gas (GHG) emissions, and that broadband projects can therefore be financed out of California's Greenhouse Gas Reduction Fund. With the exception of this year, California has funded the GGRF ~1.5 billion annually.  An additional benefit of this funding is that there's a requirement that 25% of the funds provide benefit to disinvested communities, and that 10 percent of the funds provide investment in disinvested communities.

I've been putting together an outline for a white paper/article explaining my reasoning, and I think it's promising. However, I have some reservations about this as a strategy.  First, we'd be robbing Peter to pay Paul--broadband investment should come from new revenue resources, not by taking it from the existing GHGF.  Additionally, this strategy will likely cause an outcry from enviro groups, so that is definitely part of the calculus.

I'd love to hear people's thoughts on this.

On Thu, Sep 3, 2020 at 9:15 AM Stephen Blum <steveblum at tellusventure.com<mailto:steveblum at tellusventure.com>> wrote:
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, though.

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<https://www.tellusventure.com/blog/californias-broadband-upgrade-fund-could-fall-by-more-than-100-million-after-state-senate-committee-clamps-subsidy-bill/>

Part 2: California broadband subsidy fund dwindles to less than a third needed for pending projects<https://www.tellusventure.com/blog/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<https://www.tellusventure.com/blog/nearly-all-broadband-subsidy-proposals-could-survive-californias-chopping-block-nearly/>

CPUC adds California money to federal broadband subsidy bids. If<https://www.tellusventure.com/blog/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<mailto:steveblum at tellusventure.com>

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

...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
dane.jasper at sonic.com<mailto:dane.jasper at sonic.com>
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CalFiber at lists.eff.org<mailto:CalFiber at lists.eff.org>
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