Why California Is Falling Behind

Published April 1, 2005

A recent California Public Utilities Commission (PUC) report warned the state is falling behind in developing sound policies that will speed the deployment of broadband.

Released in February, the well-written report deserves attention from telecom policymakers around the country. “Broadband Deployment in California” contains a wealth of facts and identifies key policy problems responsible for slowing broadband rollout and economic growth.

From the beginning, the report acknowledges the many technological advances that rely upon sufficient bandwidth, such as telemedicine, distance learning, smart homes, and telecommuting. It also acknowledges that while California’s early adopters and tech-savvy population are leading the nation in broadband use, the state is lagging in “developing policies to continue broadband growth and facilitate deployment of next-generation technologies.”

Putting Up Roadblocks

In other words, California has become complacent when it comes to one of its most important industries. To those who view the state through a high-tech lens, it might seem a mystery that California has allowed anti-broadband policies to thrive. For those who consider California the “left coast,” perhaps the answer is clear.

Far too many California bureaucrats can’t restrain their compulsion to control business. But the economy can handle only so much dysfunctional behavior. For instance, the report reveals that in March 2000, Pacific Gas & Electric wanted to lease space on its towers to a fiber-optic cable company. In October 2002, the California PUC denied approval, shutting down the potential deployment.

The agency then changed its mind, but put up a different regulatory roadblock involving an issue a different commission had already ruled on. Then, in April 2004, following a petition and many staff hours of explaining, the PUC granted the request. By then it was too late, as the fiber-optic company had filed for bankruptcy.

In today’s digital world, speed is key to competition and progress. When a regulatory agency takes four years to approve a lease request for the rollout of new services, it is effectively killing economic growth and jobs. That’s an embarrassment to the Golden State and must be corrected immediately.

Recognizing the Problem

And then there’s the “right of way” issue.

In order to build broadband infrastructure in California, right-of-way permits are often required by various agencies, including federal, state, local, and even tribal governments. Obtaining the permits can take as little as a few weeks but sometimes months or even years.

Officials in Orange, Riverside, and San Bernardino counties recently took two years to approve permits for SBC. People who complain that providers are taking too long to get broadband service to a particular area should consider the enormous barriers government has created to high-speed rollout. To the credit of the PUC, it has recognized these serious problems.

“Uncertainty caused by the right-of-way application process is a barrier to [broadband] deployment. Financing of projects is often based on estimated completion dates that are impossible to predict under the current process,” the report said. But the problem involves more than uncertainty.

For one thing, the government-imposed rules and regulations are not technology-neutral. For another, cities will sometimes use fees assessed against technology companies as a way to address budget problems. These facts foreshadow a gloomy scenario for California’s technology industry if things don’t change soon, because broadband rollout isn’t just about broadband.

Supporting Growth

Software companies, computer and hardware manufacturers, content providers, and many others depend on fast pipes for work and play. A number of studies have shown that greater broadband deployment would stimulate significant statewide economic growth.

Telenomic Research estimates increased broadband deployment would create 1.2 million jobs nationally and 100,000 jobs in California alone. Including the impact on retail, manufacturing, health care, and other sectors of the economy, the Gartner Group estimates California could create as many as two million new jobs. These numbers make it imperative that the PUC and other lawmakers take great care to ensure broadband is allowed to thrive.

California may currently lead the nation in the number of broadband lines, but public policy puts the state’s lead at great risk. The PUC’s “Broadband Deployment in California” report helpfully points out the problems. Now it’s up to policymakers to act on that knowledge and implement real reform.

Sonia Arrison ([email protected]) is director of technology studies at the Pacific Research Institute. Reproduced with permission of TechNewsWorld and ECT News Network. Copyright 2005 all rights reserved.

For more information …

The California Public Utility Commission’s February 1 report, “Broadband Deployment in California,” is available online at http://www.cpuc.ca.gov/published/comment_decision/43597.htm.