Click for the complete challenge letter.
Three rural telephone companies are challenging wireless broadband projects in the Sierra Nevada proposed by Cal.net for construction grants from the California Advanced Services Fund (CASF).
Volcano Telephone Company, Calaveras Telephone Company and Sierra Telephone Company jointly sent a letter to the California Public Utilities Commission on Friday saying they provide adequate broadband service – at least 6 Mbps download and 1.5 Mbps upload speeds – to some of the areas targeted by Cal.net in Amador, Calaveras, El Dorado and Mariposa counties.
According to the latest data available – submitted at the end of June 2014 – Volcano and Sierra do claim to provide that level of service or better throughout their service territories, with the possible exception of a couple of census blocks. Calaveras Telephone, on the other hand, reported providing qualifying service in less than two-thirds of its service area. Of course, it might have upgraded its system since then.
It’s hard to tell how much of an impact the challenges would have on Cal.net’s projects if the companies’ claims are correct. There are only a couple of challenged areas included in Cal.net’s Tuolumne-Mariposa project. The challenge doesn’t call out the El Dorado South and East project by name, but does include a couple of areas within it, again a relatively small part of the total.
The Amador-Calaveras-Alpine project might be hit harder, since Calaveras Telephone and Volcano claim to provide service in 35 of the 55 census block groups included in the application. However, Cal.net only intends to serve a fraction of the homes in that area – about 15% – so it’s possible it’s just plugging gaps in the telcos’ coverage.
CPUC staff has to sort out the claims and counter-claims, by requiring site surveys and speed tests if necessary. In the past, some CASF project proposals have been trimmed and even scrapped altogether because incumbents have successfully proved they offer adequate service. Not all challenges succeed, though. It’ll come down to what is actually available on the ground.
Whoops. Missed the ruby slippers again.
FCC chairman Tom Wheeler and U.S. attorney general Eric Holder both took a victory lap yesterday, proclaiming that the death of the Comcast-Time Warner-Charter deal was, respectively, “in the best interests” and the “best outcome” for U.S. consumers.
And so it is. And doubly so for California, where Comcast would have been left with control – monopoly or duopoly – of at least 86% of the broadband market.
Time Warner released a perfunctory statement saying, in effect, we’re not exactly chopped liver. Charter hasn’t said a word about it yet, which is one more indication that it’s likely to be the next suitor to knock on Time Warner’s door with a bouquet of flowers and a few billion dollars.
Comcast’s CEO Brian Roberts spent about 12 minutes on CNBC (which Comcast owns) this morning saying nothing to see here, move along and get back to work. That was echoed in an email that was sent around to employees, according to DSL Reports.
The best write up I’ve seen of the deal’s final days is by Washington Post writers Cecilia Kang and Brian Fung. One tidbit: Roberts tried to save the deal via a personal phone call to Wheeler on Monday. The interesting thing wasn’t that the appeal was in vain, but that Wheeler took the call and discussed a proceeding that was about to turn very adversarial. That’s the kind of behavior that resulted in a criminal investigation, complete with search warrants, into conversations between former California Public Utilities Commission president Michael Peevey and a PG&E executive. Comcast did file the required notice that the private conversation took place, though.
It was a rapid end to a 14 month saga that saw dozens – hundreds? – of advocates and activists battling over the merits and the dangers of the merger, and thousands – tens of thousands? – of hours of staff time devoted by regulatory agencies. Monday is soon enough to start picking up the pieces.
H/T to Fred Pilot at the Eldo Telecom blog for the pointers to the Comcast email and the latest in the Peevey/PG&E story.
Hard to guarantee good predatory behavior.
UPDATE 24 April 2015: Comcast and Time Warner have officially called it off.
The mega-merger and market swap involving Comcast, Time Warner and Charter is either dead or dying, according to news reports. Bloomberg reported that Comcast isn’t happy with FCC and federal department of justice plans to send the deal into a hearing process, which is usually a prelude to killing proposed mergers, although it’s possible to mount a defence. Rather than go through that, though, Comcast would rather just spike the deal altogether, according to Bloomberg.
Company representatives met with justice department and FCC staff on Wednesday. According to the Wall Street Journal, staffers weren’t convinced that trying to get Comcast to abide by conditions that would mitigate the harm the deal would do is a lost cause…
Justice officials made clear during the session they had significant concerns about the deal, but it wasn’t a drop-dead meeting and the two sides are expected to continue a dialogue, according to people familiar with the matter.
Justice officials are said to be wary of attempting to address the agency’s concerns through “behavioral remedies,” or pledges by Comcast that it will conduct business in a certain way.
But there might not be a lot of scope for more “structural” conditions on the deal. Comcast and Time Warner Cable already have deals with Charter Communications Inc. to sell or spin off systems serving 3.9 million customers if the merger goes through.
That wariness mirrors concerns in California, where commissioner Mike Florio is proposing to scuttle the deal too, largely because there’s little confidence that putting conditions on it would work.
California should raise its minimum standard for broadband, CPUC commissioner Catherine Sandoval said during yesterday’s meeting of the California Broadband Council in Sacramento. The goal “is to the increase the minimum speed that counts as served in California to mirror the FCC’s speed of 25 mbps down and 3 up”, she said. “I think it’s imperative that the state amend its definition”. Sandoval said she’ll be working to do that via existing California Public Utilities Commission processes, and also pointed to a bill sponsored by Santa Cruz legislator Mark Stone – assembly bill 238 – that would do the same thing.
Stone’s bill is on a two-year track now – negotiations to finalise the bill’s language didn’t come together in time to make this year’s deadline – but raising the minimum broadband service level that’s acceptable for Californians is on the table in the state capitol as well as at the CPUC. Carlos Ramos, chief information officer for the state government and the new chair of the council, questioned whether specific numbers should be baked into law. Sandoval said that standards should track with changing needs. “We certainly agree that it shouldn’t be 25/3 and then you need new legislation. There needs to be flexibility”.
Yesterday’s meeting was a reboot for the California Broadband Council. Sandoval is the CPUC’s new representative, replacing departed president Michael Peevey. Sunne Wright McPeak, CEO of the California Emerging Technology Fund, is the sole returning principal member. Sandoval and McPeak were joined by assemblyman Anthony Rendon (D – Los Angeles) and senator Ben Hueso (D – San Diego), chairs of the assembly and senate utilities committees, as well as Ramos and staff representatives from several state department
Click for a bigger version.
Schools and other big broadband users have been slow to sign up for service on Digital 395, a 500-plus mile fiber network that reaches from Reno, down the eastern Calfiornia side of the Sierra Nevada, along U.S. Highway 395, to Barstow. The slower than expected take up rate for anchor institutions is causing financial headaches for the system, according to Michael Ort, president of Praxis Associates, the lead company on the Digital 395 project.
“We need to think about the long term sustainability of these systems”, Ort said.
The more than $100 million it took to build it came from federal stimulus program grants and from the California Advanced Services Fund. To get that money, backers had to demonstrate support from government agencies and other major institutions. Organisations up and down the length of the project were quick with letters of support, but enthusiasm for the concept did not automatically become willingness to buy.
Forty percent of those anchor institutions have not signed up for service yet, and those that have tend to buy low speed service that doesn’t take advantage of the gigabit-class bandwidth an open access fiber network like Digital 395 makes possible, Ort told attendees at a broadband conference in Riverside earlier this month, organised by the California Emerging Technology Fund. Hospitals are signing up for high speed connections, he said, but that aside the average institutional customer is buying 36 Mbps service, with many opting for 10 or 15 Mbps.
Meanwhile, one third of Digital 395’s annual operating budget – $1.5 million – is going to pay property taxes. That’s good for local governments and schools, but it makes for a rough financial ride.
Looks the same from either side.
The federal justice department might save the California Public Utilities Commission the trouble of killing the Comcast/Time Warner/Charter deal.
First Bloomberg reported that the justice department is about to send the matter into a proceeding – an administrative hearing – that would, in all likelihood, end with the mega-merger and market swap being tanked on anti-trust grounds. Then, the Wall Street Journal followed up with an article saying that Comcast and Time Warner execs were planning to meet with the justice department on Wednesday to try to negotiate their way out of that dead end process. The fact that this will be the first time that the companies have met with federal regulators to discuss the merger is considered a bad sign – if either the justice department or the FCC were interested in coming up with a settlement, rather than an outright rejection, talks would have started months ago.
When it’s trying to decide whether or not a proposed merger would concentrate too much market power in the hands of a single company, the justice department relies on a metric known as the Herfindahl–Hirschman Index. Without getting into the geeky details (click here if you want to, though), Comcast’s monopoly power in California would be double the allowable level under federal justice department standards.
The CPUC’s office of ratepayer advocates completed a thorough analysis of the impact of the proposed deal in California, which played a notable role in commissioner Mike Florio’s proposal to kill the deal altogether. It’s encouraging that federal officials are finally following that lead.f
Local choice is not a free ride.
The City of Tacoma might back out of the cable TV and broadband business, and lease its municipal cable system to a private operator for 40 years (h/t to the Baller-Herbst list for the pointer).
The muni system – branded Click – was built on the back of a fiber optic network originally installed to support the city-owned electric utility. It competes against Comcast and CenturyLink, which is a benefit to local residents in the sense that they have a third option and a source of pressure on what would otherwise be cable and telephone monopolies. But it comes at a price: the electric utility is subsidising the broadband and video operation to the tune of $9 million a year according to the most recent articles.
A few months ago, the annual loss was pegged at $3 million – I’m not sure where the discrepancy lies, but accounting for cross subsidies between an electric utility and a co-owned and operated broadband system is an art, not a science.
Wave Broadband is offering to lease the system for $2 million a year, with another $1.5 million a year pledged for investment. Wave, and its sister company Astound, have experience in the overbuild business, operating systems in the San Francisco Bay Area that also compete with Comcast, as well as AT&T. It promises to upgrade at least some customers to what it calls a “Gigabit broadband service”.
The decision is up to the Tacoma city council. Some members have expressed serious reservations about turing Click over to a private operator, but current losses combined with increasing television programming costs and the need to keep investing in system upgrades makes an exit strategy of some kind increasingly attractive.
Not what the CPUC was thinking of ordering.
It’s almost certainly too little, too late, but Comcast has offered a few concessions to the California Public Utilities Commission, in the hopes of gaining approval for its proposed mega-merger and market swap with Time Warner and Charter. According to an article in the Los Angeles Times, Comcast came to a public meeting in LA last week with a much lighter alternative to the long list of conditions proposed by a CPUC hearing officer…
On Tuesday the company submitted a list of voluntary commitments that it said would be acceptable. Comcast pledged to provide phone service for poor and disabled residents throughout its service area, provide billing statements in Braille or large print. The company also dropped its previous objections to a request to offer a free phone battery to disabled and low-income customers.
Comcast offered to spend $25 million to extend Internet lines to communities that lack service.
The cable giant also said it would offer its $9.95-a-month “Internet Essentials” program to eligible low-income students and families for at least five years after the merger closes.
It’s a meager offer, compared to the original proposed decision that’s in front of the commission, but it underlines one of the primary reasons that commissioner Mike Florio floated an alternative decision that denies the merger request completely.
Comcast is willing to make a handful of token and temporary gestures, but will otherwise fight any restrictions or requirements that don’t suit its goals. The CPUC’s ability to compel Comcast to do anything is limited, and could be virtually non-existent if legal challenges are successful. As is quite likely.
The harm of giving Comcast monopoly control of broadband and cable TV in the vast majority of California has been well documented. Meaningful mitigation is simply not possible. The best choice left is to reject the deal completely.
Click for the video.
Project Loon isn’t so loony, according to the latest Google video about the project. In it, Mike Cassidy, the Project Loon team lead, said that they’ve figured out how to scale up from single test launches in New Zealand and California to dozens of launches a day, supported by a manufacturing facility that can turn out the thousands of balloons they need.
The idea is to float high-altitude balloons equipped with LTE mobile phone technology in the stratosphere, and steer them into a usable telecoms constellation by varying the altitude. One recent benchmark was figuring out how to keep the balloons reliably flying for more than 100 days.
Google plans to work with terrestrial mobile broadband companies. The video features an interview with Tony Baird, Vodafone New Zealand’s technology director. He talks about how Project Loon will be integrated into their existing network.
That’s a good clue to what kind of bandwidth and capability Project Loon brings to the table. Vodafone NZ has pretty good LTE coverage in major cities, tourist areas and along main roads. You get deep into farm country or take off into the bush, and service can be spotty. If Project Loon is designed to backfill difficult nooks and crannies and very low population density areas for mobile carriers, it doesn’t need a ton of bandwidth to be useful. It’s one thing to build a system that provides universal service over a wide area, it’s quite another – and much more doable – to plug gaps in a full service, nearly full coverage network.
Google’s end game might be more ambitious, but it seems its immediate aim is to get a usefully limited balloon-based system up and running. That goal seems to be in reach.
Cut the cord carefully, if you bleed Dodger blue.
Video is an essential part of high speed broadband service. That’s the conclusion that Google has apparently reached. Google Fiber exec Milo Medin spoke at a conference in Florida earlier this week and, according to a story in Fierce Telecom, said…
What we have found is that while it’s not necessary to offer voice service because of wireless [substitution], if you don’t offer a good TV service your ability to compete with incumbents that bundle Internet and TV together is significantly impaired.
The ability of Google or any other new entrant in the broadband access business to offer television service, though, is also significantly impaired. Content companies charge small pay TV companies more per household than large ones, and some programming – particularly prized local sports programming – is completely unavailable. Medin pointed to Time Warner’s exclusive lock on L.A. Dodger games as an example of why Google Fiber won’t be expanding to southern California anytime soon.
Although more and more homes are doing without cable or satellite television subscriptions, it was only last year that the total number of U.S. pay TV subscriptions started to slip. According to the SNL-Kagan consultancy, there were about a quarter million fewer cable and satellite households in 2014 than in 2013. But that’s barely a tick in a market that claims 100 million of the 116 million homes – 86% – in the U.S.
Control of high value programming and a commanding share of video subscribers is a huge advantage for any broadband provider, which is why Comcast bought NBC/Universal and lusts after Time Warner. Television and Internet access services are not separate, stove-piped businesses, [preliminary decisions by a California Public Utilities Commission administrative law judge]() not withstanding.