Everyone is wireless, who cares if copper is crap AT&T tells CPUC

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Apple pie versus orange pie.


In a refreshingly honest, lay-your-cards-on-the-table move, AT&T told the California Public Utilities Commission that it shouldn’t bother investigating the condition of wireline phone systems in the state, because

The number of wireline customers is now a small fraction of the Communications market. As of 2013, wireline customers made up only 20% of the market…Just five years prior, the wireline market was 35%.

Thus, not only is the wireline share very small, it is falling precipitously. About 70% of calls to 911 come from wireless phones, reflecting their dominance in the market. It makes no sense to set service quality metrics, adopt penalties, or audit the wireline networks when they serve such a small and diminishing share of the market.

Translation: the faster the copper rots on the poles, the faster customers will switch to more profitable and less regulated cellular service. Don’t spoil it for us.

That’s where the candor ends, though. The pie charts AT&T offered as proof (see above) are at best completely disingenuous and at worst a bald faced attempt to deceive. The key word is “customers”. Not households or, more broadly, premises, which are the usual measures for wireline service. So a home with one landline and four people, each with a mobile phone, comprises one wireline customer and four wireless customers. Apples and oranges.

The charts were derived from FCC reports released in 2010 and 2014 (and referenced in AT&T’s comments via broken links – good ones are below). Both reports carefully distinguish between “end-user switched assess lines” – i.e. landline phone connections – and “mobile wireless subscriptions”, and then warn…

We emphasize that the presentation of mobile wireless telephone subscriber counts in…this report does not [constitute], or imply, Commission analysis of the extent to which wireline and mobile wireless telephone services are demand substitutes or complements in general or in any particular situation.

AT&T also seems to have forgotten to mention the essential role that copper plays in delivering fast, reliable and cheap broadband service, at least in comparison to mobile technologies.

Verizon and AT&T want the CPUC to spike an investigation into the state of their copper phone networks. CPUC president Michael Picker wants to oblige them. At least two other commissioners – Mike Florio and Catherine Sandoval – are pushing to speed up the enquiry instead. A vote is scheduled for 13 August 2015.

Local Telephone Competition: Status as of December 31, 2008 (released June 2010).

Local Telephone Competition: Status as of December 31, 2013 (released October 2014).

Come and take us away, Verizon’s employees tell Frontier

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Hey! I’m over here.

Verizon’s unionised workforce in California want a new boss. The Communications Workers of America (CWA) dropped its previous opposition to Frontier Communication’s purchase of Verizon’s wireline telephone systems in California, after reaching an agreement with Frontier to extend the current union contract for two years, with pay increases and 100 shares of stock for each union member, and add 150 union jobs in the state.

Initially, CWA warned the California Public Utilities Commission of “the potential harm to thousands of its members in California” and lodged a protest against approval of the sale, saying “this transaction will impact the economic health of millions of households, businesses, schools, health care facilities, government agencies, and other institutions in California”.

But now that the contractual issues have been resolved, those overheated concerns have evaporated. [CWA is telling the CPUC]() that it “supports the proposed acquisition and believes approval of this transaction is in the public and employees’ interest”.

The message was delivered in person to commissioner Catherine Sandoval and a CPUC administrative law judge at a hearing in Santa Clara on Monday. Frontier executives were there, too. The atmosphere was genuinely friendly: the pro forma good words spoken during the hearing were followed up by collegial conversations afterwards.

It’s easy to be cynical about CWA’s Damascene conversion, but there seems to be substance in what, to all appearances, is a good working relationship with Frontier. That stands in stark contrast to the escalation war of words between Verizon and the union as the clock ticks down on contract negotiations on the east coast.

$10 Internet access for low income homes is the only novel requirement of AT&T-DirecTv deal

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The Federal Communications Commission released the details yesterday regarding the conditions imposed on AT&T in exchange for approving its purchase of DirecTv.

Those conditions a commitment to build out and offer fiber-to-the-premise service to 12.5 million customer locations, restrictions and reporting requirements on AT&T’s management of its Internet service business, and a discount stand-alone broadband offering for low income households which is the only major element of the deal that you could call truly new. At least for AT&T.

Details about the FTTP commitment are still very hazy, but it appears that the bulk of those customer locations will be the kinds of places that AT&T already reaches with fiber (and those locations are counted in the 12.5 million). Places like big office buildings in central business districts, where one fiber connection in the basement can serve dozens or even hundreds of customer locations. Or greenfield housing developments and big multiple dwelling unit properties where FTTP technology is cheaper to install than now-expensive old-school copper. It’s nice that AT&T is installing more fiber connections, but there’s nothing in the 241 page order and opinion that indicates that AT&T is going to do anything that it wasn’t planning to do in the first place.

The network and customer service level management practices requirements are likewise remarkably similar to the way the FCC expects Internet service providers to behave under the common carrier network neutrality rules imposed earlier this year.

The standalone low income broadband program resembles Comcast’s Internet Essentials package, which also has its roots in regulatory approval requirements: $10 a month for 5 to 10 Mbps where available, $5 per month for 3 Mbps where not. Eligibility is a little different, though. Any household with an individual who is eligible for food stamps can get the discounted deal. The plan would be available for up to five years.

Frontier tells CPUC it can fix Verizon’s problems

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Been there, done that.

Frontier Communications already knows how to upgrade Verizon’s ageing copper telephone networks and make them broadband capable, according to Melinda White, president of Frontier’s western region, which includes California.

“We’ve done this before with Verizon so we’re very familiar with the products, and attributes of this deal”, White said. Frontier bought ten small copper-line phone systems in California from Verizon a few years ago, she said. Eight of those were telephone only, with no broadband service offered. Since then, Frontier has upgraded 82% of the customers on those eight systems to DSL capability and overall, she said, the company offers broadband service to 96% of the company’s Californian customers.

She was speaking at a workshop organised by the California Public Utilities Commission and chaired by commissioner Catherine Sandoval in Santa Clara yesterday. The CPUC is holding a series of meetings around the state to get public comment on Frontier’s purchase of the rest of Verizon’s wireline systems in California – copper and fiber to the home – and to talk with company representatives about various issues involved with the transaction.

One of those concerns is whether problems Frontier had when it took over east coast systems owned by Verizon and AT&T would be repeated in California. White said that the bulk of the complaints related to problems transferring AT&T’s video on demand business and its Internet protocol based Uverse system, and that cutovers of customers on conventional phone systems were relatively flawless and quick. White said the plan is to do the same in California. “We will be doing a flash cutover, so on Day One a Verizon customer will wake up and be a Frontier customer”, she said.

USDA broadband grants ditch California again

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It’s sounding like a broken record (if anyone actually remembers what a broken record sounds like). The federal agriculture department’s Rural Utilities Service (RUS) announces another round of Community Connect grants, for local broadband projects in poorly served or completely unserved areas, applications come in, the winners are announced and California comes up with goose eggs (anyone remember what that means either?).

That’s been the story for four years running now. RUS awarded a total of $13 million in Community Connect grants for five projects in four states: Alaska, Minnesota (which was down for two), Oklahoma and Virginia.

The list contains a big clue as to why California might have been shut out: four of the five projects were awarded to telecommunications cooperatives, a business model that’s commonly used in midwestern and southern states (and Alaska). The U.S. department of agriculture in general, and RUS in particular, goes with what it knows. And it’s most familiar with the tiny counties and family farm economies of the midwest and south.

There are only three rural utilities cooperatives in California, and all of them were primarily organised to provide electric service, although a couple have also branched off into broadband.

The fifth grant went to a private wireless Internet service provider, AtLink in Oklahoma. The company seems to understand the system. It website says it received a federal stimulus program grant, via USDA.

It’s easy and, I think, correct to blame bureaucratic shortsightedness and inertia for the lack of love shown California. But that’s not going to change anytime soon. Californian Internet service providers need to learn how to play the game too:

Certainly the game is rigged. Don’t let that stop you; if you don’t bet you can’t win. RAH.

CPUC says yes to Petrolia and queues up Backus

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Frontier Communications will get $203,000 from the California Advanced Services Fund (CASF) to build a microwave middle mile connection to the Humboldt County town of Petrolia and upgrade DSL service to 25 Mbps down and 1.5 Mbps up. The California Public Utilities Commission voted unanimously on Thursday to award the grant. Petrolia was initially identified as a candidate for a CASF subsidy by the Redwood Coast Broadband Consortium and is the first on a long list of high priority communities – as determined by the CPUC – to get actual project approval.

Next up for consideration is a fiber-to-the-home build for the Backus Road neighborhood on the outskirts of the town of Mojave in Kern County. The draft resolution that’s on the table now would allocate $2.2 million for the project, with $353,000 earmarked to offset state and local income taxes that the applicant – Race Telecommunications – might or might not have to pay. The balance of $1.9 million would cover 70% of the cost of building out FTTH facilities to 253 homes, for a total cost to CASF of about $9,000 per home, if the full tax contingency fund is used.

The system would be attached to Race’s existing fiber system at the Mojave Airport – also a CASF-subsidised project – and offer several different tiers of service, ranging from 25 Mbps down and up for $25 a month to a full gig down and up for $100 per month. The CPUC is scheduled to vote on the draft resolution at its 13 August 2015 meeting.

AT&T gets green light to buy DirecTv, FCC gets a press release

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Potemkin would be proud.

AT&T has the blessing of the Federal Communications Commission to buy DirecTv. That’s the big regulatory hurdle that the deal had to clear – the federal justice department already seemed okay with it – and yesterday the FCC said yes, with conditions

As part of the merger, AT&T-DIRECTV will be required to expand its deployment of high-speed, fiber optic broadband Internet access service to 12.5 million customer locations as well as to E-rate eligible schools and libraries. In addition, AT&T-DIRECTV is prohibited from using discriminatory practices to disadvantage online video distribution services and will submit its Internet interconnection agreements for Commission review. Finally, AT&T-DIRECTV will offer broadband services to low-income consumers at discounted rates.

There’s less substance to those conditions than either the FCC or AT&T would like you to believe. The fiber commitment is characterised as “fiber to the premise”. Probably true enough, but what they’re not saying is that building a single fiber line to a 50-story central business district office building – as AT&T is aggressively doing – gets you a lot of customer locations. As does installing fiber in newly built housing developments and multiple dwelling units – two more high potential market segment that AT&T is happy to serve.

Typically, the FCC didn’t released the details of what it’s requiring of AT&T, instead floating a happy talk press release from America’s lobbyist-in-chief that points to hollow commitments. For example, the e-rate promise only applies to schools and libraries “where AT&T-DIRECTV deploys FTTP service”.

Well, duh. If they have fiber-based service available, they’ll sell fiber-based service (but not the fiber itself). Remember, an e-rate hook-up is not free, it’s semi-market rate service that’s subsidised by federal dollars. AT&T is already all over that.

That said, I think approving the deal – with or without Potemkin conditions – is the right call. It makes AT&T a more plausible competitor to the mega-cable companies that are increasing their monopoly hold on minimum standard – 25 Mbps down/3 Mbps up – service. The problem isn’t that AT&T lacks competitive will in lucrative markets, it’s that it’s letting copper networks that serve less money-dense communities rot on the poles. That’s another regulatory battle for another time.

CPUC leaves a hard decision on its broadband authority for another time

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Some games go on forever, and reach no result.

The California Public Utilities Commission passed on the opportunity to officially assert its jurisdiction over broadband infrastructure and service yesterday. By a unanimous vote, commissioners allowed Comcast to simply withdraw its now moot application for permission to take over Charter and Time Warner cable systems in California.

The mega-merger died in April, after federal regulators insisted on deal killing conditions. The CPUC had also spent about a year reviewing it, amassing a huge amount of data and documents, in addition to the even bigger stash developed by the Federal Communications Commission.

Early on, the CPUC commissioner in charge of the review, Carla Peterman, along with an administrative law judge, ruled that the ultimate decision would take into account the proposed merger’s impact on California’s broadband market. This scoping ruling relied on a section of federal telecoms law that might or might not be read as giving the CPUC extremely broad authority to “remove barriers to infrastructure investment“. Arguably, it also conflicted with a state law intended to keep the CPUC from regulating Internet-enabled services in California, although there’s an exception for responsibilities delegated by federal law.

The CPUC’s review of the merger proceeded on that basis. The result was two competing decisions, one denying permission to do the deal and one granting it, with a long list of conditions. Both relied on the controversial authority over broadband cited in the scoping ruling. But those were only proposals based on a preliminary ruling: the CPUC as a whole never endorsed or asserted any authority to regulate the broadband market.

Even though the Comcast deal fell apart, the commission still could have approved one of the alternatives and established an official precedent for overseeing broadband infrastructure and service on the basis on that broad reading of federal law, albeit one that was sure to be challenged in court. Instead, commissioners took a third option, dropping the matter entirely and leaving unresolved the question of whether they can or will intervene in the Californian broadband market.

Yesterday’s decision requires that the trove of documents collected by the CPUC and FCC remain available for use in any future proceedings, including the CPUC’s current review of Charter Communication’s plan to buy cable systems owned by Bright House and Time Warner. And it ensures that outside advocacy groups will get paid, probably by Comcast, for the time they spent on, mostly, opposing the deal. All of that could have been accomplished via one of the other alternative decisions, too.

Now, the question of the CPUC’s authority over broadband will be re-argued, starting at square one and maybe in triplicate. Besides the Charter transaction, the CPUC is considering Frontier’s purchase of Verizon’s wireline systems and the sale of a majority stake in Suddenlink to a European company. The decision has already been made to review the Frontier deal under the same assumption of broadband authority as was used in the Comcast proceeding, and that reasoning is likely to be applied to the other two transactions.

Without the Comcast precedent to point to, the same arguments will be made and disputed, three times over – Charter, Frontier and Suddenlink are already contesting the idea. A lot of good work was done over the past year. It’s unfortunate that the CPUC chose not to take a stand. Instead, it kicked the can down the road. That road may well lead to the same destination, but it will take longer to get there and a safe arrival is far less certain.

Brentwood FTTH ordinance posted on muni broadband policy bank

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A decision made in 1999 led to a fiber to the home system for Brentwood, California in 2015. Or at least the beginnings of one. Sonic.net is building an FTTH network using conduit installed by developers and deeded over to the City as they built new homes over the past 16 years, the result of an advanced technology systems ordinance that the Brentwood City Council added to its land development code in 1999…

The developer shall design, install, test, and dedicate to the City two advanced technology system conduits, size to be determined, within the public right of way. The developer shall install, in one of the conduits, a fiber optic system designed to serve the subject development for use by the City of Brentwood or one of its licensed franchisee…The second conduit shall remain empty and shall be reserved to serve the subject development for the use of a City licensed franchisee not wishing to utilize the City’s fiber optic system. Both conduits shall be installed to each lot line…

The developer shall design, install, test, and dedicate to the property owner two advanced technology system conduits, size to be determined, to connect the public advanced technology system to the individual home or building. The developer shall install, in one of the conduits, a fiber optic system designed to serve the subject property.

That was back when Brentwood was a sleepy little town surrounded by east Contra Costa County farmland. It boomed over the next few years, and with it came new, fiber ready homes.

I’ve posted the original ordinance, along with the accompanying staff report and council resolution from 9 February 1999, the enacting resolution approved two weeks later, a follow up report from next year, and the most current version of the City’s engineering procedures manual, which contains the referenced specifications. It’s very good work and far thinking: it’s as fresh and original today as it was in 1999.

Much thanks goes to Margaret Wimberly, Brentwood’s City Clerk, who dug the documents out of the archives. Sixteen years is too far back for the City’s online system, so she had to do some old fashioned leg work to find them. It’s an under-appreciated skill these days.

Both pdf and doc versions are now up on the Municipal Broadband Policy Bank page, except for the engineering manual, which is pdf only. I did the Word conversion from the pdf originals, any errors are strictly my own.

CPUC to choose between broadband activism or accommodation

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Two key broadband decisions are scheduled to go in front of the California Public Utilities Commission tomorrow. Commissioners have to decide what kind of funeral to hold for the not-so-dearly-departed Comcast – Time Warner – Charter mega-merger, and whether they need to actually investigate the condition of California’s ageing copper telephone networks, or just assume the telcos will take care of it.

There are three completely different alternatives on the table for wrapping up the Comcast deal:

There are two competing versions of a decision on whether to investigate the state of Verizon’s and AT&T’s legacy copper networks. CPUC president Michael Picker wants to scrap a previously approved study and rely on the theoretical threat of future penalties to ensure the telcos will repair and maintain their copper, instead of letting it rot on the poles as they seem to be doing now. Commissioners Catherine Sandoval and Mike Florio are pushing instead to jump start the now stalled investigation.

Together, these two decisions will say a lot about how the CPUC will operate under Picker, six months into his term as president. And particularly about the CPUC’s approach to broadband regulation. Skipping the study of copper network quality would be a signal that the CPUC plans to sit back and get its information primarily from the companies it regulates, rather than gathering it independently.

Either approving or denying the Comcast deal would put a formal stake in the ground that says the commission believes federal law gives it the authority and the responsibility to actively regulate broadband infrastructure and service in California. Sweeping it under the carpet, on the other hand, would mean throwing away a year’s worth of arguments, investigation and deliberations and leaving everyone to guess how future mega-deals – like Frontier’s purchase of Verizon’s wireline systems or Charter’s buyout of Time Warner and Bright House – will be evaluated.

It’s a clear choice: will the CPUC be an activist regulator, or an accommodating one?