Wednesday, August 10, 2022

California’s plan to shut the digital divide hits business roadblocks • Sacramento Information & Overview

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Advocates say large telecom proposals might water down the state’s formidable effort to attach 98% of residents by 2026.

By Robin Urevich, Capital & Foremost

This story is produced by the award-winning journalism nonprofit Capital & Foremost and co-published right here with permission.

California has $6 billion in federal COVID aid funds with which to shut the digital divide, however advocates argue that telecom business proposals might sabotage the state’s excessive stakes experiment in on-line democracy. In Sacramento, the businesses are jockeying to be first in line for multimillion greenback state grants to attach the unconnected, advocates say, and pressuring lawmakers to weaken provisions that may make broadband extra reasonably priced to low earnings Californians.

One in 5 Californians — principally decrease earnings individuals of coloration and rural residents — lack broadband connections at dwelling, which implies they’ve far fewer alternatives for work and training, even for public advantages and different companies. The pandemic laid naked these inequities, and final summer season California’s lawmakers voted unanimously to approve spending $6 billion in federal COVID-relief funds no later than December 31, 2026, for infrastructure initiatives that can present broadband entry to at least 98% of California households.

The state plans to construct its personal open-source fiber optic community to attach native communities to the worldwide web, and it’s providing $2 billion in grants to corporations and native governments to deliver unconnected residents and companies on-line.

The large cable and telecom companies which have lengthy fought to maintain native governments and different opponents out of the broadband market didn’t publicly oppose the plan. However now, simply as California has the instruments to shut the digital divide, open the market to competitors and doubtlessly drive down costs, the business is advancing proposals that would water down the state’s reforms, mentioned Paul Goodman, an legal professional on the Heart for Accessible Know-how, a Berkeley incapacity rights group.

“It’s one of many many issues that retains me up at night time,” Goodman mentioned. “If California units sturdy guidelines, different states will observe. California units the tone for the remainder of the nation.” The state might start accepting purposes for the $2 billion in federal funds as early as July 2022, a CPUC spokesperson mentioned.

AT&T, Constitution Communications and Comcast are California’s largest web service suppliers — and are among the many largest such corporations within the nation. They spend tens of millions on marketing campaign contributions on the state and federal stage and, armed with battalions of lobbyists, the businesses wield substantial affect in Sacramento.

Since 2019, AT&T, Constitution, Comcast and Cox Communications, together with their commerce teams, have collectively contributed greater than $8 million to candidates, the state Democratic and Republican events and political motion committees in California.

Lawmakers routinely argue that marketing campaign money doesn’t alter their resolution making. Nonetheless, most industries, cable and telecom included, preserve the cash flowing to marketing campaign coffers and influential political motion committees 12 months after 12 months.

“It’s an AT&T Invoice”

Arguably, essentially the most closely debated broadband invoice within the legislature is AB 2749, which is essentially backed by business. It speeds the approval course of to the advantage of large telecom and cable corporations, its opponents contend. It offers web regulators on the California Public Utilities Fee (CPUC) six months to approve or deny grant purposes — and if the company takes too lengthy and misses the deadline, the purposes are deemed granted.

“It’s an AT&T invoice,” mentioned Ernesto Falcon of the Digital Frontier Basis. “They wish to get the cash themselves. The much less time you give native governments [to apply], the higher for them.”

Assemblymember Sharon Quirk-Silva, an Orange County Democrat, says the invoice is hers alone. She says it’s a commonsense means to make sure the cash stays in California to profit Californians. If the cash isn’t spent by 2026, it have to be returned to the federal authorities, she notes.

Nonetheless, a Capitol insider who requested to not be named mentioned the invoice, which is the main target of business lobbying efforts, is certainly AT&T’s.

AT&T didn’t reply emailed questions on whether or not the corporate had advised language for the invoice. However a USTelecom spokesperson wrote to Capital & Foremost on the corporate’s behalf, saying, “We help AB 2749 as a result of it features a cheap shot-clock to course of purposes and gives that purposes might be deemed authorised if not acted upon in a well timed method.”

The 180-day deadline would give bigger, extra skilled web service suppliers an opportunity to scoop up funding earlier than native governments and small start-ups also have a likelihood to use, mentioned Tracy Rhine, a lobbyist for the Rural County Representatives of California (RCRC).

“You’ve incumbent service suppliers that perceive how to attract down the funding,” Rhine mentioned. “However they may not have the very best resolution for an unserved space.”

Pushing Again on Value Caps

Earlier this 12 months, lawmakers helped the telecom business win a key battle over whether or not the state can demand worth caps and decrease price web plans in change for tens of millions of {dollars} in grant funding.

At an April 6 oversight listening to, at which all however one of many audio system have been business reps or members of native enterprise associations, Assemblywoman Tasha Boerner Horvath (D-Encinitas) argued {that a} 10 12 months worth freeze and the requirement that grantees provide a low price, $40 per 30 days plan proposed by the California Public Utilities Fee could be counterproductive in that it could discourage corporations from making use of for the grants.

“I’d like to listen to an evidence of how our web service suppliers will come into Oceanside with a ten 12 months worth freeze or cap?” demanded Boerner Horvath. At the least one a part of the San Diego County metropolis has no web entry, Boerner Horvath mentioned. “The service supplier gained’t present in Oceanside, and Oceanside might be left behind, and Oceanside has usually been left behind.”

Boerner Horvath didn’t reply to an interview request.

CPUC spokesman Robert Osborn countered the argument by emphasizing the incentives constructed into this system. “We’re primarily offering free networks to carriers,” Osborn mentioned. Final 12 months, CPUC funding for comparable initiatives ranged from $400,000 to $18.7 million. Osborn famous that one present state grantee, Race Communications, within the Central Valley city of Boron, prices $60 per 30 days for web speeds which are 20 instances sooner than these the CPUC proposed for a $40-per-month plan.

Nonetheless, committee members appeared unconvinced. Boerner Horvath advised a five-year worth freeze, and committee chair Sharon Quirk-Silva agreed.

Mia Bonta (D-Oakland) echoed Constitution Communications’ place, suggesting a two-year restrict on price will increase. Bonta’s district contains East and West Oakland communities the place greater than 20% of residents lack broadband web at dwelling, possible due to price.

Constitution is the state’s largest cable supplier and the fifth largest telecom firm in america, with income final 12 months of $52 billion. It’s the largest firm that participates within the state’s present web infrastructure grant program, the California Superior Providers Fund. However Constitution Vice President Keri Askew Bailey advised lawmakers, “It’s unlikely our firm will have the ability to proceed to take part.” She warned the low price plan and price freeze necessities would make the $2 billion grant program a nonstarter for her firm.

In distinction to the committee’s sharp questioning of the CPUC’s Osborn, the lawmakers tossed only some softballs at Askew Bailey.

“Would you say worth caps and different parts are discouraging your participation?” queried Suzette Martinez Valladares (R-Santa Clarita).

Because the listening to wrapped, Assemblymember Bonta commented, “That is digital fairness within the works.”

Swarming the Capitol With Marketing campaign Money and Lobbying Expenditures

It could have additionally been an illustration of how fully the cable and telecom giants have blanketed the state Capitol with their message.

4 months earlier than the November elections, the 13 members of the broadband coverage committee, often called Meeting Communications and Conveyance, have collectively obtained $186,405 in business donations through the 2022 election cycle. Boerner Horvath and Quirk-Silva have raised essentially the most thus far this 12 months with $37,900 and $28,300, respectively.

The day after the listening to, the Public Utilities Commissioners heeded the lawmakers’ requests. They postponed the vote on guidelines for the $2 billion fund; later, they modified the principles to require solely a five-year worth cap for grantees. As a substitute of a compulsory $40 per 30 days plan, grant candidates could be awarded additional factors for providing such a service.

Business commerce teams have additionally lined up in opposition to a invoice authored by Eduardo Garcia (D-Coachella), AB 2751, which might bar the state, apart from the Division of Forestry and Fireplace Safety and the Workplace of Emergency Providers, from doing enterprise with web service suppliers that don’t provide a $40 per 30 days plan. The invoice handed the Meeting however failed in a Senate committee. It could come again for reconsideration if a compromise may be reached. A Senate evaluation suggests the invoice apply solely to contracts entered into after Jan 1, 2024, and people price $1 million or extra, and never apply if just one web service supplier is offered in an space.

AT&T, Constitution and Comcast, together with the business commerce teams the California Cable and Telecommunications Affiliation and the Mobile Telecommunications Business Affiliation, have spent almost $5 million on lobbying since 2021.

The entire organizations besides Comcast checklist Garcia’s AB 2751 and Quirk-Silva’s AB 2749 on state disclosures as targets of their lobbying within the first quarter of this 12 months.

AB 2749 might be debated on June 27 in a Senate coverage committee the place the Digital Frontier Basis’s Falcon and the Rural County Representatives of California’s Tracy Rhine will possible sq. off in opposition to business.

Quirk-Silva says the invoice’s central provision — a 180 day deadline for the CPUC to grant or deny purposes — is essential as a result of web service suppliers have to know they will count on well timed choices. The CPUC has traditionally taken so long as 18 months to make funding calls, in keeping with an Meeting committee evaluation.

However the RCRC, together with the California State Affiliation of Counties, say the deadline provision goes in opposition to the intent of California’s formidable new broadband plan: to permit native and tribal governments and public personal partnerships to compete on a extra even taking part in subject with large telecom to supply web service. Rhine argues that among the massive web service suppliers “had loads of time and selected to not deploy” as a result of initiatives wouldn’t earn sufficient cash. “So it’s time for a unique resolution.”

The RCRC organized the Golden State Join Authority to help rural counties that wish to construct publicly owned broadband networks.

Native authorities owned initiatives that would faucet the fund are presently deliberate for rural Alpine and Nevada counties within the Japanese Sierras and the agricultural Salinas Valley in Central California, Rhine mentioned. Los Angeles County is presently learning the feasibility of constructing its personal fiber optic community to attach a few of its poorest communities the place many residents stay offline.

The invoice, nonetheless, might have the unintended consequence of additional delaying grant approvals. If the laws passes, the CPUC might should formulate new guidelines to align with its provisions, in keeping with an Meeting Appropriations Committee evaluation. Such rulemaking is often a painstakingly gradual course of.

Falcon mentioned he hoped a compromise may very well be labored out on AB 2749. His optimism is fueled by a latest win: In mid-June Quirk-Silva eliminated amendments that sought to bar the state from requiring decrease costs in return for presidency subsidies, which had sparked much more intense opposition.

The controversy over broadband coverage will possible proceed, nonetheless, because the state crafts a federally mandated five-year broadband plan due subsequent 12 months. Future flashpoints embody ongoing investigations by the Federal Communications Fee in Washington and the California PUC in Sacramento into digital redlining and debates over how precisely federal grant funds might be spent.

Copyright 2022 Capital & Foremost

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