CAL FIRE has determined that the Camp Fire was caused by electrical transmission lines owned and operated by Pacific Gas and Electricity (PG&E) located in the Pulga area.
The fire started in the early morning hours near the community of Pulga in Butte County. The tinder dry vegetation and Red Flag conditions consisting of strong winds, low humidity and warm temperatures promoted this fire and caused extreme rates of spread, rapidly burning into Pulga to the east and west into Concow, Paradise, Magalia and the outskirts of east Chico.
The investigation identified a second ignition sight near the intersection of Concow Rd. and Rim Rd. The cause of the second fire was determined to be vegetation into electrical distribution lines owned and operated by PG&E.
That conclusion is backed by a full report, but consistent with past practice it’s been forwarded to the Butte County district attorney’s office for use in the ongoing criminal investigation into the blaze.
That doesn’t necessarily mean that Cal Fire thinks PG&E broke the law. Butte County DA Michael Ramsey started his own criminal investigation last November, and the full report was sent to him. According to a Bay City News Service story, he won’t release it “until a final decision is made on whether to file criminal charges”.
Cal Fire’s conclusion comes as no surprise to PG&E, which has been working under the assumption that it will be held responsible for the Camp Fire, given the way California utility liability laws work. Even if PG&E (or any other electric or telecoms company that uses utility pole routes) did everything it was supposed to do, if its equipment started the fire, it has to pay the full damages.
In 2013, the Karuk Tribe, working with the Yurok Tribe, received a $6.6 million grant to build a middle mile fiber route that would connect tribal lands and other nearby communities in northern Humboldt County to long haul fiber networks. The project never got fully underway, though. So it was redesigned, with a bigger budget. Originally, the entire project would have cost $13 million, split nearly evenly between the CASF grant and money contributed by the tribes. Now, it’s specced to cost $26 million, with more than two-thirds of that coming from CASF. The new grant request is for $11 million, bringing the total state subsidy to $18 million.
The Klamath River area is remote and lacks modern broadband service. Poverty levels are high, and infrastructure, in general, is lacking. On the face of it, the rebooted Klamath River Rural Broadband Initiative is exactly what CASF was created to fund. The question will be whether a middle mile project first developed under the old CASF program will still be fundable under 2017 rules written and rigged for the benefit of major campaign contributors incumbent service providers. Frontier Communications is the legacy telco in or around that part of Humboldt County, and lobbied hard for those changes. Now, a middle mile fiber project can only receive CASF subsidies if it is “indispensable” to delivering last mile service to homes, and federally subsidised areas are off limits to everyone except, in this case, Frontier.
The new rules don’t apply to the original grant but likely will for any new money, particularly since the project was significantly redesigned. Frontier can be counted on to guard its turf, and not always with the full truth. It won’t be an easy decision for commissioners.
The Sonoma County proposal was submitted by Web Perception, a WISP that has several access points near Petaluma. It’s asking for $5.1 million to add back haul capacity and an access point to its existing system. It claims that the upgrade will make it possible to reach 5,500 homes it can’t reach now, at least, presumably, at the California legislature’s woeful minimum speed level of 6 Mbps download and 1 Mbps upload. Based on the map prepared by the CPUC, this project could also run into trouble with the new eligibility restrictions.
The next step is to sit back and wait for challenges from providers that might claim to already offer service in the 14 project areas proposed for CASF subsidies in this latest round (one pending application was submitted last year). Incumbents have three weeks to file their objections.
San Francisco’s options, according to the report, range from continuing to arm wrestle with PG&E, to building some limited extensions of existing city-owned electric distribution lines, to simply taking over PG&E assets and operations…
The City can completely remove its reliance on PG&E for local electricity services through purchasing PG&E’s electric delivery assets and maintenance inventories in and near San Francisco, and operating them as a public, not for profit service. The City will pay PG&E a fair price for the assets that reflects asset condition. In this option, the City will also offer jobs to PG&E’s union and other employees who currently operate the grid.
This option would also involve bundling in the City’s limited municipal electric system and customers from the City’s community choice aggregator, one of many such county and regional-level agencies created in California to serve as a middle man between investor-owned utilities, such as PG&E, and electric customers.
The three biggest questions – how to convince PG&E to sell, how much would it cost and how would it be paid for – are left hanging. Presumably, the federal bankruptcy judge in charge of PG&E’s restructuring will have something to say about it all. The price of a buyout is described as “dependent on fair market value analysis; could be a few billion dollars initially”. The report is even more opaque about what happens after “initially”.
The money “would be revenue bond‐funded by the SFPUC using its borrowing authority”. That means that the City would repay bond obligations with the revenue collected from electric customers, after it pays its own expenses. The report estimates that gross revenue would be in the $500 million to $750 million range, but doesn’t try to figure out how much of that would be available to pay back the “few billion dollars” it would have to borrow.
Broadly speaking, there are two kinds of revenue bonds: those that are backed by taxpayer money and those that aren’t. If the former, any shortfall in revenue (or cost overruns) would come out of the City’s budget. If the latter, the bondholders could, ultimately, be stiffed. Which might seem like a fine thing to some, except that the greater risk is offset by higher interest rates on the money that’s borrowed, which in turn will be paid by electric customers through higher rates. Although it would technically be a not-for-profit business, it would have to generate a sufficient surplus – a profit in everything but name – to make those payments.
This is the second time in as many years that the City and County of San Francisco has looked at operating a major utility. Last year, the City floated a proposal to build and operate a citywide fiber to the premise broadband system, that would have cost a couple of billion dollars. That project was shelved shortly after Breed won the mayor’s job in a special election.
That’s all water under the bridge now. The tentative settlement, which still has to be formally approved by the NYPSC, walks back the invective and sets out clearer rules for how Charter’s build out to 145,000 under and unserved homes will proceed. New broadband customers in New York City won’t count, and there are provisions that would seem to force Charter to build new lines in more remote communities.
The settlement also sets 100 Mbps as the minimum broadband speed that a home should have access to…
A residential housing unit or business is eligible to count as one of the required Total Passings if it is located outside of the boundaries of the City of New York and is not passed, served, or capable of being served (by either a standard or non-standard installation), by pre-existing network from Charter or any other provider capable of delivering broadband speeds of 100 Mbps or higher.
Charter would also give $6,000,000 to the State of New York, to be bundled into an existing subsidy program that pays for broadband upgrades. First dibs on that money will go to Internet service providers that can deliver 100 Mbps or better download speeds.
I assisted the City of Gonzales with its successful effort asking the CPUC to force Charter to upgrade, also during the Time Warner review. I am not a disinterested commentator. Take it for what it’s worth.
T-Mobile’s closing case for the California Public Utilities Commission review of its merger with Sprint boils down to trust us, it’ll be glorious. Opponents, led by the CPUC’s Public Advocates Office (PAO), say you gotta be kidding. T-Mobile (and Sprint and the California Emerging Technology Fund, but T-Mobile is the lead dog in that pack) filed final arguments on Friday, saying the CPUC should approve the merger. The PAO, the Communications Workers of America (CWA), TURN and the Greenlining Institute urged commissioners to deny it, because consumer prices will rise and rural communities will be left out, among other ills. Links to the “reply briefs” are below.
The PAO argues that any benefits to the public – as opposed to rents extracted by special interest groups – “will occur without the merger, if at all”. Its rebuttal dismisses T-Mobile’s promises as “vague” and “not specific, measurable, verifiable, and enforceable”.
Just so. In Friday’s filing, T-Mobile included a long list of what it calls “commitments”, but what a careful reading shows to be mostly meaningless fluff.
For example, it promises to offer lifeline service “indefinitely”, which sounds like “forever” but could also mean “for an unspecified period of time”. High sounding goals are guarded by weasel words like “strive to” and “good faith efforts”. Any firm promises – for example pricing, wholesale terms and data caps – are limited to no more than three years, which is something like the minimum amount of time required to fully integrate the two companies.
The grand network buildout T-Mobile first promised will be limited to “90% of the cell site locations” identified in the plan it submitted earlier as evidence of its good intentions. As CWA points out, the original pledge was for a 99% build out, but the California Emerging Technology Fund helpfully negotiated it down to 90%.
And 90% of cell site locations is not the same as 90% of California’s land area. Given the far higher density of cell sites in cities and suburbs, it’s not hard to guess where the unfortunate 10% will be. Roughly 95% of California’s population lives on 5% of the land and cell site deployment correlates with population density. So eliminating the least profitable 10% of cell sites from T-Mobile’s aspirational powerpoint presentation could leave the majority of rural Californians in the dark.
By omission, T-Mobile’s brief confirms (if confirmation was needed) that it won’t offer the full benefits of 5G service to rural Californians. It talks a lot about using low and mid-band spectrum in rural communities, but not the high capacity, high frequency millimeter wave bands or high density, low latency deployments that will be used to improve service in urban areas where affluent customers are thickest.
It also tries to rebut a key point made earlier by an economist working for the PAO, Lee Selwyn, who said that T-Mobile’s promises of a rural 5G renaissance were bogus because even its mid-band coverage claims were based on unrealistic assumptions about how many new cell sites would be built. T-Mobile offered a quibbling response about coverage patterns, but didn’t address the core economic question of whether there’s enough revenue potential in, say, Kings County to justify building a significant number of new towers or small cell facilities.
Selwyn also leaned on conventional anti-trust analysis to show that reducing the mobile market from four carriers to three will reduce competition and result in increased prices. T-Mobile hit back at that conclusion by touting the supposedly superior (and certainly more creative) economic model produced by three economists it hired.
Who to believe? If you think the new, merged company would, as T-Mobile plausibly claims, have lower marginal – e.g. operating – costs, then the question becomes whether those savings would be used to lower consumer prices or increase corporate profits. The answer depends in large part on whether T-Mobile, AT&T and Verizon reach a comfortable pricing equilibrium instead of fighting a bloody price slashing war. Profitable equilibriums are even easier to find in a three player oligopoly than in a more heated four player market. As the PAO’s rebuttal puts it, “AT&T and Verizon already have substantially higher prices” than T-Mobile. That’s despite having lower marginal costs. Without Sprint nipping at its heels, T-Mobile can join that club too.
T-Mobile’s rebuttal also goes on at great length about its plan to offer in-home service via its 5G network, but doesn’t explain where the necessary capacity will come from, or why it would want to sell 5G bandwidth at residential prices when there’s more money to be made filling the booming demand for mobile data. The fundamental business case for 5G deployment is based on mobile revenue streams. In-home data consumption is a couple orders of magnitude greater than mobile usage, so it’s hard to see how residential service will be a mainstream offering, rather than a tactic to offload temporarily surplus capacity. Wall Street analysts are not buying residential 5G pitches, not least because what’s known publicly about Verizon’s Sacramento experiment is not encouraging.
Some of T-Mobile’s rebuttal focuses on legal issues, particularly its claim that the CPUC has no business reviewing a merger between two mobile carriers because, among other things, it says that’s the Federal Communications Commission’s job. T-Mobile’s objections will set the stage for court challenges to any adverse decision the CPUC might reach, which could kill any conditions or restrictions the CPUC might impose.
There are a few procedural loose ends to tie up, but the substantive evidence and lawyerly pleadings are in the record. The next step is for the CPUC administrative law judge managing the review, Karl Bemesderfer, to draft a proposed decision for the commission to consider. If he does that in the next couple of weeks, commissioners could vote on it as soon as 27 June 2019. It’s a complicated case and there are other potential bumps in the road, though. T-Mobile and Sprint’s agreement to extend their self imposed deadline to the end of July was a wise move.
“Reply briefs” regarding T-Mobile’s acquisition of Sprint, filed with the CPUC on 10 May 2019:
(Technically, two CPUC reviews are underway. One concerns Sprint’s wireline operations in California, and the other involves mobile services. The two reviews were combined into a single proceeding, but T-Mobile is trying to split them up again. The wireline transfer is relatively uncontroversial, but is squarely within the CPUC’s jurisdiction; the mobile merger is hotly contested, but the CPUC’s authority is less certain. It would benefit T-Mobile if the two issues were handled separately).
Instead, CETF and T-Mobile (and technically Sprint, but it’s T-Mobile that’s running the show) negotiated their deal and then submitted it to Bemesderfer, along with a request from CETF to be allowed to change sides in the case and “enthusiastically and wholeheartedly support” the merger. He said that’s how it’s been done at times in the past, so the agreement can be used to support T-Mobile’s push for CPUC approval of the Sprint merger, but that’s all…
However, all parties should be aware that granting the Motion merely permits CETF and Joint Applicants [T-Mobile and Sprint] to enter their MOU into the record of this proceeding and changes the litigation position of CETF from opposing the Sprint-T-Mobile merger to supporting it. Granting the motion does not pre-judge the question of whether the merger is in the public interest though it adds weight to the argument of Joint Applicants for that conclusion.
Bemesderfer is yet to rule on a flurry of motions filed in the past week. TURN and Greenlining either want the CETF deal excluded from consideration, or be given more time to offer a rebuttal. No decision yet on that request, but Bemesderfer’s latest ruling might be read as an indication of where it’s heading. Also pending are a motion by the PAO to exclude T-Mobile’s not very detailed offer of 1,000 new jobs at a Central Valley call center if the merger is completed, and another request by Sprint and T-Mobile for the CPUC’s immediate approval.
At this point, the only immediate action to expect is another weekend with plenty to read – rebuttal arguments from all sides are due later today. Assuming all goes to plan, I’ll post an update on that on Monday.
Zayo announced yesterday that it had “a definitive merger agreement to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund”. The $8.2 billion deal takes Zayo off the New York Stock Exchange and puts it in the hands of owners who might have the patience to play the long game against the monopoly-model telcos – AT&T, Verizon and CenturyLink, particularly – who control the lion’s share of long haul and metro fiber in the U.S.
In the statement announcing the deal, the head of Digital Colony, Mark Ganzi, at least spoke encouraging words. He said Zayo “has a unique opportunity to meet the growing demand for data associated with the connectivity and backhaul requirements of a range of customers”. That’s true enough, and if – if – Ganzi is sincere it would indicate that his Plan A is to make Zayo a stronger competitor, rather than flipping it as quickly as possible to one of the big players.
Zayo, led by Chief Executive Officer Dan Caruso, has been under pressure from activist investors including Starboard Value and Sachem Head Capital Management.
After peaking at $39.35 last July, Zayo shares tumbled as low as $20.46 as the company struggled through organizational changes and concerns that the market for fiber lines was becoming overcrowded. The shares began to rebound late last year on news that a sale was in the works. In March, it announced that it was evaluating strategic alternatives.
Zayo owns or controls a lot of fiber in California. The map above shows its metro fiber network in the Bay Area. It also owns a middle mile route between the Bay Area and Sacramento, among other fiber assets. With the sale of Level 3 to CenturyLink in 2017, Zayo is one of the few big, independent sources of fiber remaining in California.
As the press release noted, Zayo’s new owners need to get regulatory approvals before they can take possession. That includes sign off by the California Public Utilities Commission. Zayo holds a certificate of public convenience and necessity (CPCN), which allows it to take advantage of privileges, such as the ability to install conduit and fiber in public streets and to attach cables to utility poles. It obtained the CPCN in 2008 when it acquired NTI, a smaller telecoms company. The CPUC had to approve the purchase then, and will have to do so again with this latest transaction.
As currently written, the CPUC wouldn’t give public safety agencies veto power over de-energisation decisions. They can ask for a delay, but “the electric…utilities retain ultimate authority to grant a delay and responsibility to determine how a delay in de-energisation impacts public safety”.
One question left for later is how, exactly, electric utilities will decide whether to cut off power to “transmission lines”. Those are the high voltage lines that are typically strung on tall, steel towers that march across the landscape. Shutting off a transmission line – as opposed to, say, a neighborhood “distribution line” – could impact hundreds of thousands, perhaps millions, of people. For now, electric utilities have the authority to shut down transmission lines as they see fit. That’s a good thing – last year’s deadly Camp Fire in Butte County, which killed 86 people, was apparently sparked by a transmission line.
That aside, most of the draft decision focuses on communication, with the public and with public safety agencies. Electric companies would have to create clear, 24/7 lines of communications with public safety agencies and anyone who operates “critical facilities and infrastructure”, which includes broadband and phone systems.
Electric customers “should understand the purpose of proactive de-energisation, the electric..utilities’ process for initiating it, and the impacts if deployed”. The burden of making sure that happens would be placed on electric utilities, who would have to “reach customers no matter where the customer is located and deliver messaging in an understandable manner”.
Particular attention would be paid to “vulnerable populations”, which includes disabled people, children, the elderly, low income people and pregnant women. Whether reckoned vulnerable or not, everyone “within the boundaries of a de-energised area (and potentially adjacent jurisdictions)” would have to notified in advance. Responsibility for that would be split between the utilities and local governments. Public safety agencies – state and local – would get “priority notification” ahead of a proactive power cut.
Notification would, if possible, begin 72 hours before de-energisation happens. That would be a heads up warning, based on current and forecasted conditions.
Pacific Gas and Electric and Southern California Edison put out those kinds of alerts last fall, but didn’t actually shut off electric lines until the fires began and people started to die. San Diego Gas and Electric, though, followed through on its warnings and turned off power to tens of thousands of customers: no fires, no deaths.
The Federal Communications Commission re-did its annual analysis of broadband availability in the U.S., after a broadband advocacy group and Microsoft separately called bullshit on the first version. But it’s not backing away from its claim that “significant progress has been made in closing the digital divide in America”.
Free Press is the broadband advocacy group that spotted a truckload of map spam when the FCC pushed out a press release in February, claiming broadband “is being deployed on a reasonable and timely basis”. That claim was based on availability data submitted by Internet service providers, including one – BarrierFree – that smeared gigabit service claims over 100% of the census blocks in eight states.
Those reports were apparently removed – the latest press release only said that “a company submitted drastically overstated deployment data” – and that did change the numbers. But it didn’t change the FCC chair Ajit Pai’s conclusion that “we are closing the digital divide”, based on analysis that apparently shows an increase of nearly five million households with access to the federal agriculture department’s benchmark broadband speed standard of 25 Mbps download and 3 Mbps upload. That’s also the minimum that the FCC says is needed for access to what it says are “advanced services” and everyone else calls plain, old service.
There is still reason to doubt this new conclusion. The FCC’s data submission specifications inherently result in over reporting: if one customer in a census block can get a broadband connection at, say, 25 Mbps down/3 Mbps up, then the entire census block is flagged as having access to that level of service. The reality, though, is often dramatically different, as Microsoft demonstrated with actual usage data it collects.
The FCC hasn’t addressed that problem yet. It’s probably too much to expect anything other than mindless boosterism from this FCC’s publicity machine. But we might get a clearer picture when the full report is finally approved by commissioners and released publicly.
The California Public Utilities Commission’s review of the deal could run until then. Its public advocates office (PAO) and two consumer groups – TURN and the Greenlining Institute – are pushing hard to kill it. Last week, the PAO asked the administrative law judge managing the case to exclude a vague new offer of Californian jobs made by T-Mobile in a meeting with a commissioner and in a recent filing.
In its opening brief, and an ex parte meeting disclosure filed the same day, T-Mobile claimed it will “build a new customer experience center in the Central Valley that alone will create approximately 1,000 new jobs in the state”. T-Mobile neglected to mention this incredible benefit in the thousands of pages of evidence and arguments it previously entered into the record, or during hours of cross examination by opponents. The purpose of all that give and take is to flesh out sketchy statements, and get specific and enforceable promises into the record. Without that opportunity, the commission won’t have “a firm understanding of [the offer’s] nature and truthfulness”, the PAO argues.
CETF and T-Mobile are also taking hits on procedural grounds.
When an organisation opposes, say, a proposed merger, but then negotiates a deal and stops objecting to it, there is a specific settlement process that the CPUC lays out for incorporating it into the final decision in the case. That process isn’t always used. As T-Mobile and CETF point out, sometimes the commission will give its blessing to an agreement that settles a particular dispute, without formally calling it a “settlement”. That happened during the CPUC’s review of Frontier Communications’ purchase of Verizon’s wireline systems in 2015 and Charter Communications’ acquisition of Time Warner and Brighthouse cable systems in 2016.
T-Mobile’s takeover of Sprint is different. No one took great exception to the various agreements with Charter or Frontier, but the PAO and the two consumer groups are sharply challenging the substance of T-Mobile’s deal with CETF. On Friday, TURN and Greenlining asked for more time to do that.
I helped put together the City of Gonzales’ settlement with Charter in 2016. We didn’t follow the formal process when we presented it to the CPUC. We weren’t out to get a megabuck payday either. Take it for what it’s worth.