California Activists Say State Isn’t Being Transparent About How Billions In Broadband Subsidies Are Being Spent

Two years ago the state of California unveiled a major broadband plan that, among other things, aims to spend $3.5 billion to create a massive, open access “middle mile” fiber network in a bid to boost competition. It’s part of a broader quest to make broadband both more affordable and more competitive (see our Copia report from last year discussing the benefits of open access fiber).

Leveraging COVID recovery and billions in looming infrastructure subsidies, the plan also involved spending another $2 billion on “last mile” broadband connections to folks’ homes. And millions more on digital equity training and equipment. The whole plan is immensely ambitious and has huge potential to transform broadband competition in California.

But there’s trouble in paradise. Earlier this year, the state started making surprise cuts to the ambitious plan, most of which impacted low income and minority neighborhoods, much to the chagrin of activists. While Governor Newsom and some news outlets like the San Francisco Chronicle claimed the cuts were reversed after backlash, I’ve found that’s not really true.

What really happened was the deployment was split into two phases. Phase 1 remains well funded, and phase 2 isn’t, with an expected state budget shortfall looming. A big chunk of the state’s promised deployment into low income and minority neighborhoods was shoved into phase 2. With zero transparency into what was cut or why, or what shaped the state’s decision-making process.

I’ve spent the last few weeks talking to local equity activists who say the lack of any transparency is a huge problem.

The EFF’s Chao Liu, for example, wrote a blog post back in September noting that the California CPUC and Department of Technology (CDT) long utilized inaccurate maps to determine who gets funding. Maps that tend to downplay competition gaps and keep changing during deployment, without any transparency into what’s being changed or why.

Despite major backlash this fall, Liu told me little has changed:

“The state has not adequately addressed the concerns. The original maps were not restored and the CPUC and CDT moved forward with their plans, signing contracts and disbursing funds based on the new, not as great maps. In response to an outcry from the local communities the Governor has promised to make a budget request to build out the sections that were cut. The big wrinkle in this is California is almost definitely headed into a steep budget deficit so making any ask to spend large chunks of money will be difficult.”

Similarly, Shayna Englin, Director of the Digital Equity Initiative at the California Community Foundation, told me the state has also doled out nearly $2 billion in contracts but has shared no meaningful insight into how that money is actually being spent:

“There are $1.8 billion in signed contracts,” Englin noted. “You have spent that money. What segments are covered by that? What are the terms and conditions? How this network is actually being built completely undermines the last mile projects that it’s supposed to be supporting.”

A lack of transparency isn’t just bad government, it works to undermine California’s goals. Without knowing the terms and technical specifics of existing grants and deployments, companies, municipalities, and reformers hoping to expand access to affordable broadband by piggybacking on planned middle mile deployments may struggle to develop their own proposals or nail down funding.

California’s lack of transparency in relation to minority neighborhood deployment is particularly troubling, especially given the history of government redlining that contributed to many of these infrastructure and broadband gaps in the first place. That’s before you get to the U.S. government’s long history of doling out billions in subsidies, tax breaks, and regulatory favors to regional monopolies for fiber upgrades that wind up, quite mysteriously, always somehow only half-deployed.

California’s approach was supposed to be different and historic. But without some meaningful transparency into the decision making process, local equity activists like Englin say there’s a growing number of red flags:

“This process is so broken it can’t just be papered over,” Englin said. “Throwing more money down the rabbit hole won’t fix what’s rotten at the bottom: bad data, no transparency, no accountability, and no community engagement.”

Throwing billions at regional telecom monopolies in exchange for half-completed networks has been a generational pastime for the U.S. government. California’s initiative is supposed to break with that tradition by focusing more intently on open access competition that challenges regional mono/duopolies. But without transparency and public engagement, there’s growing distrust that the project will be anywhere near as transformative as promised, especially for California’s low income and minority communities.