CPUC reforms bump ahead, but details are still lacking

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The assembly utilities and commerce committee has approved two senate bills – SB 215 and SB 512 – that are key elements of a proposed package of California Public Utilities Commission reforms, although the details are yet to be worked out. One of the standard practices of the California legislature is for amendments to bills to be worked out behind closed doors after committee members vote to approve them. And that was the explicit understanding yesterday, which was agreed on largely party line votes – democrats tending to favor, republicans not.

The committee also approved SB 1017, which would open up more information submitted by regulated utilities to CPUC. That measure was bitterly opposed by telephone companies, who found a sympathetic ear from chairman Mike Gatto (D – Los Angeles), one of the three legislators who joined with governor Brown on Monday to announce the deal. Gatto’s suggested accomodation was to simply exempt information submitted by telecoms companies from disclosure rules. That idea was politely shot down by the measure’s author (and another member of the troika), senator Jerry Hill (D – San Bruno), who said in effect that the intent was to open all of the CPUC’s business to more public scrutiny. No guarantees, though, that the final language will read one way or the other.

A measure that extends broadband facilities subsidies for public housing also moved forward. SB 745 was approved by the committee with largely technical amendments suggested in a previously published analysis.

Yesterday’s votes by Gatto’s committee keep all four bills alive for the purposes of the current legislative session. The real language will likely come to light in August, after lawmakers come back from their summer break. The broad outline of the grand CPUC reform plan was made public on Monday, but the details are still very much in play. Stay tuned.

CPUC reform proposal increases transparency and avoids drag

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The long list of reforms planned for the California Public Utilities Commission by governor Jerry Brown and a trio of lawmakers will make proceedings more transparent and open to public participation, and appears to moderate some of the procedural sand that current proposals would throw into the gears. Well meaning sand, but sand nonetheless.

The package announced on Monday rolls in bills that Bay Area senators Jerry Hill and Mark Leno have already put on the table. As currently written, the palindromic senate bills 215 and 512, by Leno and Hill respectively, would put further limits on closed door meetings between commissioners, senior staff and people with an interest in matters before the CPUC. The commission could spread its meetings around the state – right now the vast majority are at its San Francisco headquarters – and would be required to publish more information about proceedings in progress and better statistics about how well it meets deadlines, and make some practices less lawyerly.

That’s all to the good. The more information that’s available on a timely basis and the fewer opportunities for finagling behind the scenes, the more level and fair the playing field will be. It’s a way of counterbalancing the resources and motivated attention that big, regulated utilities can bring to bear on the commission.

What isn’t on the governor’s list is a provision in Hill’s proposal that would require the CPUC to seek out potentially interested parties and encourage them to participate, before a proceeding is formally kicked off. Given the statewide reach of commission decisions and the multitude of agencies, businesses and interest groups in California, that alone could drag out decisions for additional months or years.

Also missing is an expansion of what is known as intervenor compensation. That’s money that utilities or, sometimes, the commission itself pays to individuals or organisations that jump into proceedings and oppose, to one degree or another, the positions taken and requests made by those utilities. SB 512 would add local governments to the list of intervenors eligible for compensation, and a third, apparently defunct bill, AB 2120, would have included schools. There’s nothing wrong with local governments getting involved – I’ve enthusiastically helped clients do just that – but the last thing California needs is a new ratepayer subsidised cottage industry of consultants and lawyers selling cities, counties and school districts on the dubious value of making speculative filings. The deal reached with the governor – at least as announced – leaves that perk out and rightly so. If you subsidise more gridlock, you’ll get more gridlock.

What the package does do is remove requirements that often require third parties to fight it out to the bitter end in order to qualify for compensation. To the extent it encourages brevity and focus, that’s a good thing.

What we really need, of course, is to start seeing the actual bill language. The first clue could come later today. Both SB 215 and SB 512 are up for a hearing today in the assembly’s utilities and commerce committee, chaired by LA assemblyman Mike Gatto, also a member of Monday’s legislative troika.

UPDATE: AB 2120 isn’t defunct, after all. It’s moving to a hearing in the senate appropriations committee in August. SB 512 was approved by the assembly utilities and commerce committee, still with the intervenor compensation language more or less intact.

Governor, legislators agree on sweeping CPUC reform package

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A plan for a major overhaul of the California Public Utilities Commission was announced yesterday by governor Jerry Brown and three legislators – Bay Area senators Mark Leno and Jerry Hill, and LA assemblyman Mike Gatto – who have been pushing for significant changes, even to the point of getting rid of it altogether (h/t to Regina Costa at TURN for the heads up).

The first item on the long list is to get the CPUC out of the business of policing some transportation services, most notably ride sharing companies like Uber and Lyft, but also certain bus companies and other land and water conveyances. Those jobs would be turned over to the department of motor vehicles or the highway patrol or other organisations under the umbrella of the California transportation agency.

Telecommunications regulation is also targeted. According to a press release from Gatto’s office, the plan calls for an assessment of “reassigning telecommunications governance by January 1, 2018”, but isn’t specific about who would be responsible for it, or what would happen with the report once it’s complete. The Sacramento Bee reports that Gatto is also dropping his proposal to write the CPUC out of the California constitution.

Other changes include tightening rules regarding conversations between utilities and commissioners and key staff about pending matters, allow local governments more scope to get involved in CPUC proceedings, open up more opportunities for public comment and speeding up the commission’s work.

So far, all that’s been released is an outline of the changes. The details will come as the three legislators, and perhaps others, put the new language into bills. No timetable was set, except a reference to “the months ahead”.

Correction: earlier, I wrote that the CPUC overhaul plan would put the commission out of the business of “regulating” transportation companies. I’ve changed that to “policing”. As released by the governor’s office, the plan would only affect “implementation and enforcement” of rules for a number of transportation services, including ride sharing platfroms like Lyft and Uber. In other words, the commission would still make the rules, but the CHP or DMV (or another department) would be responsible for putting those rules into effect. That’s the plain reading of it at this point, anyway.

LA assemblyman steps up to bat for big telecom

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You’d think he’d be a Dodger fan.

Los Angeles assemblyman Mike Gatto is doubling down on his role as the California legislature’s key player on telecoms policy this season, and he appears to have decided he’s playing on the telephone and cable company team.

As chair of the assembly’s utilities and commerce committee, Gatto blocked a proposal to put more state money into broadband infrastructure – opposed by incumbents because it also empowers competitors – and greased the skids for an AT&T-written bill that would have allowed rural and inner city copper-line networks to be replaced by wireless service. Would have except that opposition, particularly from unionised telecoms workers, stopped assembly bill 2395 before it could go to a vote of the full assembly.

Gatto is carrying industry-friendly legislation of his own, such as a last minute bill to remove most of local government’s discretion regarding cell sites – including on city and county-owned facilities – and a constitutional amendment to disestablish the California Public Utilities Commission and bring utility regulation under the direct control of the legislature. Both bills were supposed to be heard by a senate committee on Tuesday, but were bumped to today. AB 2788 was subsequently removed from that hearing agenda and is now dead. ACA 11 apparently will be heard, although that could change too.

On the other hand, Gatto authored a bill to force “cable, satellite, and Internet service providers” to allow customers to cancel their subscriptions with a simple click on a web site. That would have blown a gaping hole in incumbents’ business models. Would have. Gatto’s enthusiasm for consumer advocacy died on the assembly floor along with his one-click unsubscribe bill, which was never offered up for a vote. It was finally stricken from file – killed for lack of attention.

He is addressing important issues – technology upgrades, CPUC reform, telecoms competition, environmental and administrative roadblocks, one-sided transactions – but in every case Gatto’s deliverable is the one that appears most friendly to big cable and telephone companies, rather than one that balances interests across all stakeholders.

I posed the question earlier: is he trying to build a legacy – he leaves office this year – or is he looking for a new job? I think we have the answer.

Broadband gaps to fill, but willingness to do so in northeastern California

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Many homes will still be without broadband service in northeastern California, even after upgrades paid by the federal Connect America Fund (CAF-2) program are complete. That’s mostly because the census blocks deemed eligible for the subsidies by the Federal Communications Commission are limited – many thousands of unserved homes are outside of those areas – but also because the FCC doesn’t necessarily require that all homes in a given census block be served.

I ran an analysis for the California Center for Rural Policy (CCRP), ahead of a meeting with Frontier Communications executives and supervisors from the six counties – Lassen, Modoc, Plumas, Shasta, Siskiyou and Tehama – in the region. It was organised by CCRP and the California Emerging Technology Fund (CETF) and held in Redding on Thursday. It was a follow up to the agreement negotiated between Frontier and CETF, during the regulatory review process that led to approval of Frontier’s purchase of Verizon’s wireline telephone systems in California.

The subsidised census blocks in Frontier’s service territory are concentrated in Modoc, Lassen and Shasta counties. Once the CAF-2 funded census blocks are built out – the deadline is the end of 2020 – there will still be about 1,500 homes without access to wireline broadband service. In those blocks alone. Pulling back and looking at the entire six county region, including AT&T’s territory (but not areas served by small rural phone companies), there will be more than 30,000 homes without access, with about a third of those in Plumas County.

One approach to fixing the problem is to build more middle mile fiber deeper into the region, to make last mile build outs less expensive and boost capacity all around. I ran that analysis too. A Digital 395-scale project – 500 miles, say, of dark fiber through a strategic corridor at a $100 million-plus cost – could, for example, boost wireline broadband availability in Modoc County from the current 36% to 74%, and from 56% to 81% in Lassen County.

There are other ways to approach it, particularly when there’s an incumbent telephone (or cable) company that’s willing to address the problem. As Frontier was in last week’s meeting. The company has a stated policy of working with local communities – doing more than just giving money to a softball team, as one exec put it – and so far, they’re living up to it. The problem of connectivity in northeastern California isn’t solved yet – that’ll take years – but at this point everyone involved is pushing toward a real solution. That alone is a refreshing change.

Tellus Venture Associates presentation, Northeastern Broadband Meeting with Frontier Communications, 23 June 2016

WiFi is worth more to the economy than congress thinks, FCC commission says

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What’s the value of free? That’s the question that FCC commissioner Jessica Rosenworcel is asking as she pushes for more WiFi – i.e. unlicensed and available to everyone at no cost – spectrum to be allocated. The core problem, as she sees it, is that congressional analysts don’t understand what freely available spectrum is worth to the U.S. economy

Traditionally, the legislative process has overlooked the value of the unlicensed spectrum and favored licensed spectrum. This is not because of some rancorous partisan divide. It’s not because of some unsavory battle between industries. Instead, it simply reflects the way the non-partisan staff of the Congressional Budget Office assign value to spectrum when it is licensed and sold at auction. As a result, bills that direct the FCC to sell licensed spectrum get high grades, while legislation that creates more spectrum for Wi-Fi get low marks.

This accounting method is outdated. It fails to take into account the economic activity Wi-Fi and unlicensed spectrum create every year. But we can address it if every time we identify spectrum to auction for licensed use, we also identify spectrum for unlicensed use.

A spectrum auction is a good thing, generally. Properly run, it allows a fair market value to be placed on private, exclusive use of an otherwise common resource, and it encourages rapid and intensive use of that resource once it’s sold – a company that pays billions of dollars for a small slice will want to generate a return on that investment as quickly as possible.

On the other hand, congress has a hard time quantifying that value. Lawmakers grab onto wildly inflated estimates of what an auction will bring, and then spend it several times over before a single dollar is collected. The current double-auction aimed at converting TV spectrum to mobile broadband use is a perfect example.

Rosenworcel is correct in focusing on the value of spectrum decisions to the overall economy, rather than on shortsighted, and overly optimistic, estimates of immediate income to the federal treasury.

California conduit battle continues as AT&T dances around the question

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Webpass’ fight with AT&T over access to conduit continues. That’s the word from a Kind Reader of this humble blog who seems to be in a position to know. Yesterday’s post about the complaint Webpass has filed with the California Public Utilities Commission about AT&T’s conduit access practices was behind events on a couple of points. I didn’t know the outcome of last week’s hearing or the fact that Google Fiber bought Webpass on Wednesday. Thank you to everyone who helped bring me up to speed.

The issue is whether AT&T can impose whatever rules it concocts on a given day to deny – or sufficiently restrict so as to deny for practical purposes – competitive telecoms companies access to conduit and pole routes it owns. California (and federal) law says incumbent utilities – telephone, electric or, to some extent, cable – have to share pole and conduit space, but without defining the details. Like whether that means extra space in a conduit – a common condition – or just the second or third (not so likely) spare, discrete duct that happened to be installed. Which is what AT&T told Webpass, according to the request for arbitration Webpass filed.

Instead of buying AT&T’s lawyerly argument that Webpass’ complaint was technically deficient, the administrative law judge assigned to the case encouraged the two companies to work out a mutually acceptable compromise and scheduled a second hearing for next month, according to our Kind Reader. AT&T’s fallback position seems to be that particular responses about particular matters by lower level staff isn’t company policy, so nothing to see here, move along. Again, according to our Kind Reader.

This is a very important public policy question for Californian telecoms companies and regulators. It boils down to who is the gatekeeper for competition? If the answer is AT&T, Comcast, PG&E and every other monopoly provider, then don’t expect lower prices, better service or civil customer service anytime soon.

Webpass challenges AT&T’s iron grip on conduit

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Update: Webpass was just acquired by Google Fiber. That won’t have an immediate impact on the proceeding – lots of hoops to jump through first – but long term, it’ll be fun to watch. Stay tuned.

Telephone companies and other regulated utilities have to share conduit and pole access. They can charge each other a particular rate for it or, if usable space is lacking, require upgrades. But they can’t refuse access completely and it has to be granted on a non-discriminatory basis.

It is notoriously difficult to get access to AT&T conduit. Now, a complaint (technically, a request for arbitration) filed with the California Public Utilities Commission by Webpass, a competitive broadband provider, documents exactly how hard it is. Links to the full set of documents are below.

Webpass tried to get permission to run fiber optic cables through AT&T’s conduits and put splice cases and loops of coiled, slack cable in AT&T’s manholes. According to Webpass’ filing, AT&T just said no

AT&T California rejected Webpass’ plans to install splice cases and coil loops. In addition, while the drawings show that many ducts are only partially-filled, AT&T California has stated to Webpass that a fiber optic cable override (i.e., installation of fiber optic cable in available space that is already partially occupied by an existing AT&T California cable) is never allowed except in entrance facilities owned by other parties or unless AT&T California’s cable is enclosed in an innerduct, which is rarely the case. This means that even though there may be ample space in multiple partially-used conduits, in most cases AT&T California refuses to allow Webpass to install fiber in those conduits. And, in cases where Webpass is allowed to override an existing AT&T Califomia innerduct containing a fiber optic cable, AT&T California requires Webpass to install two additional innerducts, one for Webpass’ use and one to be reserved for AT&T Califomia’s use.

What is more, AT&T always denies access to the last open conduit in any location, because AT&T California claims a right to reserve that conduit for AT&T Califomia’s exclusive future use. Such conduit might be for entrance to a new building to which AT&T California just installed service (for which a spare conduit would likely remain unneeded for many years) or it could be an open conduit between two manholes in the street. In either event, if it is the last open conduit, AT&T Califomia has been very clear that access will be denied 100% of the time.

AT&T California’s policies are blatantly discriminatory and anticompetitive. AT&T California installs its own splice cases in manholes, and Webpass is informed that AT&T California has permitted other communications providers to do so as well. Exhibit C is a photograph of splice cases in an AT&T California manhole. Webpass is also informed that AT&T California freely overrides its own cables and innerducts (as well as cables and innerducts owned by other companies) in partially vacant conduit, including where the existing cable in the conduit consists of copper pairs. Additionally AT&T Califomia does not go through the same roping and tagging process to reserye space that competitive providers are compelled to follow’ AT&T California just sends out crews to install cable in any available open space and documents the build upon completion.

AT&T’s initial response was to have the complaint dismissed as improper on technical grounds. The first hearing was scheduled for last Friday and by all appearances seems to have taken place, although I haven’t confirmed it. If the CPUC jumps into this dispute with both feet, it will be an important precedent for competitive broadband providers, no matter what it decides.

Bills to scrap local cell site review and California Public Utilities Commission delayed

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Don’t have to look far to find a horse in Sacramento.

Afternoon update: There’s a growing consensus that AB 2788 is dead, rather than just delayed. Resurrection is always possible while the legislature is in session, though. We’ll know its status for sure, at least its current status, by Monday, if not before.

A proposal to allow mobile carriers to install cell sites pretty much anywhere they want – including on publicly owned property – without meaningful review by local government has been bumped by a week. Assembly bill 2788 will be heard next Monday in the senate energy, utilities and commerce committee, instead of as originally scheduled for today. Likewise, a proposal – assembly constitutional amendment 11 – to ask voters whether they want to eliminate the special status given to the California Public Utilities Commission by the California constitution was also pushed back until Monday.

No reason was given for the delays, however it’s worth noting that both bills are being carried – authored is the term of art – by Los Angeles assemblyman Mike Gatto, who chairs the assembly utilities and commerce committee, which in turn will be considering bills next week by San Diego senator Ben Hueso, who chairs the senate energy, utilities and commerce committee. Since next week is also a notional deadline for getting bills out of committee and a hard deadline for getting measures on the November ballot, it’s a fair guess that there’s some horse trading going on.

Hueso just amended a bill of his own and made it about extending the deadline for the CPUC to spend money set aside to pay for broadband facilities in public housing. Senate bill 745 previously dealt with some arcane aspects of the California Advanced Services Fund, so it’s not quite a gut and amend maneuver, but it is a sharp change of course. He’s also a co-author on a bill – SB 215 – that would tighten rules for how regulated utilities and other interested parties communicate with the CPUC about matters before it. Both of those bills are scheduled to be heard by Gatto’s committee on Tuesday.

Net neutrality decision boosts FCC muni preemption case, but not enough

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Still not going anywhere.

The federal appeals court ruling that upheld the Federal Communications Commission’s common carrier and network neutrality rules for broadband did collateral damage to the State of Tennessee’s attempt to overturn the FCC’s preemption of state restrictions on local municipal broadband initiatives. But it doesn’t appear fatal, or even particularly serious.

At the same 2015 meeting where it voted to regulate broadband as a common carrier service, the FCC also decided to toss out state laws in Tennessee and North Carolina that prevented two muni fiber systems from expanding into neighboring jurisdictions. The two states appealed, with Tennessee walking point, and the case was heard by three appeals court judges in Cincinnati in March.

Tennessee’s case is based on three primary arguments:

  • Congress can’t tell states how to manage and delegate authority to local governments.
  • Even if it can, congress didn’t make a “plain statement” saying the FCC could insert itself into that state-local relationship when it passed the telecommunications act of 1996.
  • More than that, the section of the telecommunications act that the FCC is relying on – section 706 – doesn’t grant any authority at all and it’s just a general mission statement.

When the appeals court in Washington upheld the FCC’s common carrier decision last week, it reaffirmed an earlier ruling that section 706 does give the FCC enough additional authority over broadband service to implement the new rules. That prompted a quick response from Tennessee, telling the Cincinnati judges that the Washington guys had it wrong and they should ignore them. An even more hurried reply from the FCC urged the judges to adopt the precedent set by the DC court.

The Cincinnati judges are free to rule as they please regarding the FCC’s muni broadband preemption, but it’s never seemed likely that they would negate section 706 altogether – although if they did it would almost certainly trigger a review of both the common carrier/net neutrality rules and the muni preemption by the supreme court. Nor will they buy the argument that congress can’t involve itself at all in matters concerning state discretion over local government – that’s already well ploughed ground.

Tennessee’s remaining argument is much stronger. Section 706 is broad reaching, but it is also vague and doesn’t contain anything like a “plain statement” allowing the FCC to meddle in the relationship between state and local governments. During oral arguments in March, the judges pressed hard on that point and the FCC’s attorney couldn’t answer it effectively.

There’s no timetable for the Cincinnati court to come to a decision. It could happen today, or sometime next fall. When it does come down, though, I’m still betting that the FCC’s preemption of muni broadband restrictions will be thrown out.