[CalFiber] SB1130 2020 Post-Mortem

Stephen Blum steveblum at tellusventure.com
Thu Sep 3 10:31:19 PDT 2020

One of my clients (a city) tried to do this a few years back. The stumbling
block then was documenting the GHG decrease that would be attributable to
better broadband. At the time, the only way we could meet the documentation
requirements was to convince large Silicon Valley employers to participate
and provide us with the data. One city, in another county some distance
away, didn't have the horsepower to do that.

If it's a statewide, or even regional, project, it might be feasible now,
particularly since the telecommuting ecosystem is a lot larger and better

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 10:21 AM Paul Goodman <paulg at greenlining.org> wrote:

> 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>
> wrote:
>> I wrote a three-part blog post about available CASF money, and also
>> followed the RDOF/CASF topic. Links are below.
>> tl/dr:
>> 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
>> 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
>>> CEO
>>> 707-237-6205
>>> dane.jasper at sonic.com
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