CPUC Proposes Rules for $750M Broadband Loan Loss Program

The California Public Utilities Commission would reject cable industry calls to limit support from the state’s $750 million broadband loan loss reserve fund (BLLRF) program to unserved areas, under a proposed decision posted Thursday (docket R.23-02-016). Rural counties praised the proposal, which the CPUC said it may vote on at the agency’s Nov. 2 meeting.

California’s $6 billion broadband law created BLLRF to fund costs of financing broadband infrastructure deployment by nonprofits and local and tribal governments. It’s meant to cover costs including those for debt issuance, credit enhancement and reserves for paying principal and interest on debt. The law required the CPUC to set eligibility requirements, financing terms and conditions. The CPUC held multiple comment rounds, with staff posting a revised proposal in June (see 2306210062). Assigned Commissioner Darcie Houck’s Thursday proposed decision would adopt that staff plan with some changes. Comments will be due Oct. 18.

It’s reasonable to support projects that would deploy broadband to unserved, underserved and served locations, said the proposal: Restricting cash to only unserved locations “may render projects financially unviable.” The CPUC would “favor enabling applicants to identify and pursue financially viable projects, which may involve a diversity of locations to be targeted,” it said. The proposed order would decline a California Broadband and Video Association (CalBroadband) recommendation to restrict support to unserved locations only. It would also reject a National Diversity Coalition (NDC) suggestion that all projects must target at least some unserved locations. “We will still prioritize projects that target a higher proportion of unserved locations,” the proposal said.

The CPUC wouldn’t “limit the amount of funds that may be allocated to a single project or a single applicant within an application cycle,” said the BLLRF proposal. “We agree that the Commission should retain flexibility to determine the amount of support to provide to a given project, and therefore also decline [CalBroadband’s] recommendation for basing the amount of support on a project’s percentage of unserved locations."

The commission rejected another CalBroadband idea to support projects in which a private entity owns the infrastructure. Staff proposed that privately owned projects shouldn't get support, though public-private partnerships would be allowed if the infrastructure is owned by a public agency or nonprofit. The CPUC said it agreed with staff because the “public benefit purpose” of infrastructure supported by the program “is most aligned with the purpose of local or tribal government agencies and non-profit organizations.”

The CPUC would adopt staff’s proposal to split available funds into two tracks, one for the general market and one for equity, "which would be limited to projects with three fourths or more of the project area in ‘priority communities.’” The CPUC would prioritize support for equity-track eligible projects, which would be prioritized for support in the general market track if there’s insufficient funding in the equity track.

Priority shouldn't be based only on how much money is requested, said Houck’s proposal. “Other factors reflecting important policy objectives merit consideration.” The proposal would adopt scoring "that will prioritize applications based on the percentage of coverage requested … whether the applicant’s project aims to benefit unserved locations, whether the provider will offer a generally available low-cost plan, and whether the project will invest in fiber optic infrastructure."

The CPUC would adopt staff’s proposal to set 100 Mbps symmetrical as a minimum service standard and require “sufficient surplus capacity to remain competitive in the future without major refurbishment upgrades.” It would decline NDC’s recommendation “to require all projects to offer a generally available low-cost or affordable broadband plan, as doing so may risk projects’ financial viability.” However, “eligible projects that offer a generally available low-cost plan will be prioritized over (otherwise identical) projects that do not offer such a plan,” the proposal said. The commission agreed with the Rural County Representatives of California (RCRC) that middle-mile infrastructure should be open access, but the proposed decision wouldn’t require it for last-mile facilities.

CalBroadband still believes California's universal broadband goal "is advanced by prioritizing projects that deploy to unserved communities and by allowing for public-private partnerships," President Janus Norman said Friday. The state cable association is still reviewing the proposed decision and will consider filing comments, he said. RCRC is also still reviewing the proposal, “but overall we are happy … and believe it is consistent with the intent of the program” as envisioned by the 2015 law, Senior Legislative Advocate Tracy Rhine said. NDC didn’t comment.