State legislators draw the battle line for fight over muni broadband

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A more serious – and serious-minded – challenge has emerged to FCC chairman Tom Wheeler’s supposed plan to pre-empt state laws restricting municipal broadband projects. The National Conference of State Legislatures sent Wheeler a letter threatening to take the FCC to court if he moves ahead…

As you consider your course of action on this matter, we encourage you to heed the principles of federalism and caution you of the numerous decisions by the United States Supreme Court with regard to the relationship between the state and its political subdivisions. This is a fundamental tenet of state government…

Aside from the Constitutional challenges, such an attempt disregards the countless hours of deliberation and votes cast by locally elected lawmakers across the country and supplants it with the impulses of a five- member appointed body in Washington, D.C.

The two big questions are 1. how far can congress go in telling states how to manage subordinate local agencies, and 2. has it already given sufficient authority to the FCC, in regards to municipal broadband? The answer to question 1 is likely to be pretty darn far when it comes to telecoms policy, but the supreme court’s answer to question 2 has, up to this point, been no.

NCSL is a bi-partisan organisation that, among other things, functions as a lobbying platform for state legislators, who make up its membership. One of its core principles is opposition to federal legislation or regulatory action that diminishes state authority or puts burdens upon it.

There’s a foundation attached to NCSL that includes corporate lobbyists – from AT&T and Comcast, among others – but the organisation itself is run by serving legislators and legislative staff alone. It would be easy to dismiss the letter as a favor to corporate campaign contributors, except it also reflects the widely – universally? – held opinion in state capitols that decision-making authority should rest there, and not in Washington.

The limits on the FCC’s power to tell states how to divvy up authority and responsibilities amongst subordinate agencies will be the question that muni broadband pre-emption lives and dies on, if Wheeler stops talking and starts acting.

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Comcast apologises for beating up customers, all the way to the bank

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You want to cancel? Squirt a few first.

Comcast’s senior management had a mommy/daddy moment this week. On Monday, COO Dave Watson sent a memo to employees saying basically that the viral recording of a Comcast customer service rep browbeating a subscriber who wanted to cancel was a wee bit over the top, but hey, we understand…

The agent on this call did a lot of what we trained him and paid him — and thousands of other Retention agents — to do. He tried to save a customer, and that’s important, but the act of saving a customer must always be handled with the utmost respect.

He wrote about about how important it is to listen and be sensitive to customers. Doggone it kids, we can do better. Here’s your juice box.

Then yesterday, daddy-in-chief Brian Roberts spoke to Wall Street analysts and said, yeah, but we’re getting results…

We firmly believe that our operating improvements are rooted in providing customers a better experience. And while we are making progress with better service tools and online tools and improved service levels, we are also very cognizant that there is ample room for further improvement and this is a top priority for us.

We do feel confident that there are measurable improvements in the experience we are offering customers, this includes faster broadband speeds, best in-home Wi-Fi, more content choices on more devices and what we believe is the best user interface and guide experience in the market and maybe in the world.

Translation: what that CSR-from-hell said was what we told him to say, and what we’re still saying and that’s why we’re making beaucoup bucks. His mistake was to get caught, and we’re making damn sure that never happens again.

Comcast has an aggressive culture and attitude, remarkably so even for a major corporation. That was highlighted yesterday in a letter to the FCC from the California Emerging Technology Fund that documented the abusive way in which the company treats low income families in California. It’s time to take a hard look at whether it’s in the public interest to give Comcast near-monopoly control of the California cable market.

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Comcast’s broken promises detailed in letter to FCC

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“Fool me once, shame on you, fool me twice, shame on me.”

The California Emerging Technology Fund and a long list of affiliated groups want the FCC to force Comcast to live up its own commitments, if the proposed merger with Time-Warner Cable and the market swaps with Charter Communications are approved. In a letter to the commissioners and supporting documents, CETF blasts the way Comcast has handled a program – called Internet Essentials – it claimed would give $10 per month Internet service to low income families with children…

In 3 years, Comcast has signed up only 11% of the eligible households in California and the nation. That is 35,205 households in California out of more than 313,000 eligible families. At that rate, it would take another decade for Comcast to reach just half of the currently-eligible population…

In the first 3 years, the program has been riddled with problems, including 8–12 week waits before getting service, credit checks on customers in violation of advertised program rules, a non-working online sign-up system, and customer representatives who give out wrong or inconsistent information.

Sleazy practices include signing up only the eldest child in a household, so eligibility will end years sooner, upselling poor families into more expensive packages, and telling callers – erroneously – that they can’t get Internet Essentials unless they have a social security number and are willing to hand it over to Comcast.

The poor performance of Comcast CSRs should come as no surprise to anyone who listened to the audio recording posted last week of the customer service phone call from hell. The flood of comments and condemnations that followed it made it clear that it was Comcast’s smash mouth customer service policy that was at fault, not some hapless employee.

Internet Essentials is a good program, in theory. It was originally offered as a way to grease the skids for Comcast’s purchase of NBC Universal, and then extended when the Time-Warner was announced. Its failure to run the program in good faith, as documented by CETF, points to the futility of relying on Comcast’s promises, though. I’m glad CETF is asking the FCC to include stricter oversight as a condition of any merger, but a better question is whether Comcast is fit to control 80% of California’s cable market. There’s no point to offering a second chance.

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New season for broadband infrastructure subsidies in California

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It’s time to close the door on the last round of applications for broadband construction subsidies from the California Advanced Services Fund. Of the 32 proposals submitted on 1 February 2013 – nearly a year and a half ago – 17 were funded for total of $48.6 million in grants and $127,000 in loans. The final two were approved by the CPUC in June – an FTTH project in Mono County and a fixed wireless system in Shasta County.

Twelve proposals didn’t make it, for a variety of reasons. Some were pulled because of competitive upgrades from incumbent service providers, others either didn’t have a ready-for-prime-time application with a supportable business case and/or valid eligibility claim, or were bumped in favor of another applicant for the same area. The total ask on the rejected projects was $170 million.

That leaves three projects, totalling $29.1 million in grants and loans still on the table, and still under review. Two of those – ViaSat at $11 million and Bright Fiber at $17 million – have run into a buzz saw of challenges from incumbent providers. The third one – a DSL upgrade in Madera and Fresno Counties proposed by Ponderosa – is relatively modest at $945,000 but has likewise stalled in the review process.

With the CPUC’s approval of a new timeline and rulebook for the CASF program, the next round is underway. The next application window will open on 1 December 2014, but it will stay open until the money runs out – when an application is submitted is relatively unimportant. All that matters is when it’s finally approved by the commission. Whether by design or default, the 3 unresolved applications have, for all practical purposes, been bumped into the next round.

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If you’re wondering how much it costs to use existing poles and conduit, it’s public information

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The most difficult and costly part of any wireline broadband infrastructure project is getting cable from point A to point B. There are two primary ways of doing it: stringing it on poles or running through buried conduit. Since the chances of getting permission to build a new pole route in California is only slightly better than the odds of getting approval to drill for oil in San Francisco Bay, your only independent alternative is to start digging, at the rate of $30 to $60 a foot or more.

But public utilities in California do not operate completely independently. That’s good news if you have the seal of approval from the California Public Utilities Commission, otherwise known as a certificate of public convenience and necessity. That piece of paper gives you the right to go to other (older) utilities, like PG&E or AT&T, and force them to let you use their poles and conduits. Up to a point, anyway. If there’s no space available, then it’s generally up to you to pay the cost of making room, which can be quite high if poles have to be replaced or new duct work installed.

Even so, the contract terms that regulated utilities impose on each other are, to a large extent, regulated and publicly disclosed. Jim Warner at UCSC has taken the trouble of hunting down several of these contracts and posting them. As he explains…

Regulated utilities with access to public right-of-way must share resources with other utilities. Rates are established in contracts that also set other terms of sharing. Underground duct rents for about $1 per foot per year. Right to attach a cable to a phone or power pole is about $5 per pole per year. I have a collection of contracts with rates.

Which is right here, although I’ve pasted the links he’s gathered to date below as well. Happy reading.

  • Sonic and AT&T, 2010
  • IP Networks and AT&T, 2010
  • Pioneer Telephone and AT&T, 2010
  • Summary of rates charged by AT&T to dozens of companies, 2011
  • Plumas Sierra Telecommunications and AT&T, 2012
  • Summary of rates charged by AT&T to dozens of companies, 2012
  • Summary of unbundled rates charged by AT&T to dozens of companies, 2012
  • Fireline Network Solutions and AT&T, 2013
  • AT&T trenching terms – who pays – 2013
  • Suddenlink and AT&T, 2013
  • Suddenlink and AT&T, 2013
  • AT&T’s stand-alone structure access agreement for poles, conduits and rights-of-way, 2013
  • PG&E’s standard overhead facilities license, 2007
  • PG&E fee schedule for wireline attachments to distribution poles, 2014
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    Job cuts show Microsoft CEO is serious about new direction

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    Microsoft’s new CEO, Satya Nadella, has gotten it right. His 10 July 2014 email to Microsoft employees set out a clear path forward for the struggling giant and this week’s announced layoffs of 18,000 employees turned that vision from clear into ruthless. Which is the only way the company will survive as a major tech player in the 21st century.

    Star legacy businesses – Windows OS, Office productivity software, Xbox – will survive, but primarily as stepping stones to cloud and mobile services, which are intended to reach customers regardless of whether they’re using Microsoft products…

    All of these apps will be explicitly engineered so anybody can find, try and then buy them in friction-free ways. They will be built for other ecosystems so as people move from device to device, so will their content and the richness of their services – it’s one way we keep people, not devices, at the center. This transformation is well underway as we moved Office from the desktop to a service with Office 365 and our solutions from individual productivity to group productivity tools – both to the delight of our customers.

    He seems to have adopted a two-pronged strategy: keep making Windows phones and tablets, and Xbox consoles, but ensure that any significant software, service or content that works on them will perform seamlessly and equally well on Apple, Android and other devices. He put his finger right on the key problem he’s faced with, which is that the scarcest resource is a customer’s attention span.

    Apple’s strength is an ethos that says make it elegant, but first make it work. Nadella might or might not get around to making Microsoft elegant – a tall job, to put it most mildly – but he grasps that the “stuff” he sells has to work. Which means delivering maximum satisfaction with minimum differences and learning curves across a universe of platforms, devices and operating systems.

    The Microsoft of 20 and 30 years ago had the youthful fire to take on a job like that. If Nadella can rekindle it, he will succeed. The job cuts he’s making shows that he intends to.

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    Six Californias are really one conversation piece

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    The Six Californias campaign had some good news and some bad news for its supporters. The good news is that it gathered 1.3 million signatures in its petition drive – half a million more than the number necessary to get it on the ballot. The bad news is that the proposal to split our state six ways won’t go to a vote in November. Instead, the initiative’s backers intentionally slipped the 26 June deadline for filing the petitions – the advice they gave to circulators was to mail signatures back by 7 July.

    Assuming that there wasn’t massive fraud or illegible handwriting involved – and of course, the professionally aggrieved have already filed complaints to that effect – Californians will have a chance to vote on the plan in November 2016. Which means we’ll have more than two years to talk about it.

    That’s the main purpose – I believe – behind the drive. The proposal is not going anywhere, even if voters approve – the measure is riddled with suicide pills. But it will be healthy for Californians to have an existential debate. Contrary to what the petition claims, our state is not ungovernable. Execution isn’t exactly optimal, but the mechanism of Californian governance is functional. The problems with the actual operation of it – starting with the trump card of campaign cash – are likelier to be multiplied by six than subtracted from the equation if we split apart. And California isn’t exactly an aberration in that regard.

    North or south, east or west – we have common interests as Californians. Let’s not miss this opportunity to discover it.

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    States rights invoked as muni broadband grandstanding continues in Washington

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    Blackburn’s not shy about extending a helping hand, particularly towards money.

    States would be free to ban municipal broadband projects, under under language inserted into a bill and approved by the U.S. house of representatives (h/t to the Baller-Herbst listserv for the heads up). Since bills that get passed by the republican-controlled house seem to have a rocky time in the democrat-controlled senate (and vice versa), it’s unlikely have any practical effect. But the idea is to pre-empt FCC chairman Tom Wheeler’s (likely empty) talk about stepping in between local governments that want to get into the muni broadband business and states that want to ban it.

    But regardless of its eventual fate, the most interesting thing about the bill is its sponsor, Marsha Blackburn (R – Tennessee). According to an article in the International Business Times, AT&T and Comcast alone have put more than $100,000 into her pocket, and other telecoms companies and lobbying fronts have added tens of thousands of dollars more in campaign cash.

    She also represents a state that puts restrictions on publicly owned broadband systems. Tennessee doesn’t allow municipal utilities to extend broadband service outside of existing boundaries, a restriction that earlier prompted EPB, the city-owned electric company in Chattanooga (which Blackburn doesn’t represent), to threaten to file a complaint with the FCC

    There are vast areas of Tennessee, surrounding EPB’s electric service territory, where citizens and businesses have little or no broadband Internet connectivity…For several years EPB has received regular requests to help some of these communities obtain critical broadband internet infrastructure. However, since 1999, while state law has allowed EPB to provide phone services outside its electric service territory, it has prohibited EPB from offering Internet and video services to any areas outside its electric service area.

    Blackburn is framing the issue as a question of states rights. Regardless of any financial motives she might have, it’s a legitimate issue. Local agencies are sub-units of state governments, and there are few restrictions on a state’s discretion to delegate power. A 2004 U.S. supreme court ruling affirmed that principle, particularly in regards to muni broadband. All Blackburn might accomplish is to make a warm, fuzzy gesture toward her campaign contributors. Which might be all she intended to do in the first place.

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    Independent ISPs have a shot at California public housing broadband program

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    Fast, focused, low cost and sustainable projects are the answer to the problem of how to extend modern Internet access into publicly supported housing. That’s the conclusion of a report prepared by California Public Utilities Commission staff that lays out recommendations for implementing assembly bill 1299 – approved last year – which spends money from the California Advanced Services Fund on broadband facilities and marketing programs in public housing.

    The report carefully draws boundaries. Inside wiring and networking equipment would qualify for CASF subsidies, backhaul fiber installed out in the street gets squat. In theory. CASF money is only part of the business plan – the capital expense part – so applicants have to have a long term operations plan…

    Staff recommends the Commission award grants and loans to finance up to 100 percent of the installation costs, but not maintenance or operation costs. Additionally…staff recommends that the Commission require grantees to maintain and operate the network for five years after receiving Commission funding.

    Operating networks is not a sweet spot for public housing authorities or non-profits. That’s a job that independent Internet service providers know best. Unfortunately, ISPs won’t be eligible to get the money directly – that’s written into the law – but there will be an opportunity to work with public housing operators, which are eligible.

    The report includes a long list of other recommended requirements and restrictions, including technical specifications. The commission is taking comments on the report until 28 July 2014, and rebuttals for ten days after that. The next step is a formal draft resolution that will lay out the rules in detail, which will go through the same comment/reply cycle before the commission votes on it. If all goes to plan – but don’t plan on it – the program will be in place by the end of September, setting up a December application window.

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    Benicia fiber deal puts industrial broadband plan into action

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    The City of Benicia is working with Lit San Leandro LLC (LSL) to bring a gigabit-class fiber network to the Benicia Industrial Park and the adjacent Arsenal area. That’s the top line from a status report I gave to the Benicia City Council this evening.

    Benicia issued a request for proposals last year, asking interested service providers to submit ideas for delivering industrial and commercial-grade broadband service. Among the resources the City put on the table was $750,000. The most attractive proposal – for a full fiber network – was submitted by LSL. Since then, both the City and LSL have been working on solving key challenges, such as how to connect the local network to long haul fiber and Tier 1 data centers.

    LSL identified several potential solutions, and is working on more detailed plans. Parallel to that, the City and LSL will be negotiating a formal contract, which will be brought back to the City Council for approval, likely in the next two or three months. After that, LSL can begin construction.

    The preliminary network design includes a loop through the central core of the Benicia Industrial Park, with spurs serving the Arsenal area just to the south and the periphery of the park.

    I helped the City develop the RFP, evaluate the proposals and get to the point where a tentative agreement is in place with LSL. The work was based on a report I did last year for the City, which looked at alternatives for meeting the broadband needs of current BIP tenants and businesses that might be considering moving there.

    If all goes to plan, the Benicia project will be LSL’s second metro fiber network, the first being in San Leandro – another project I assisted with.

    Downloads:

    Benicia industrial broadband status report, presentation to the Benicia City Council, 15 July 2014

    Request for Proposal, Benicia Industrial Broadband Project, 30 September 2013

    Benicia Industrial Broadband Project Assessment presentation, made to the Benicia City Council by Steve Blum, 2 July 2013

    Benicia Industrial Broadband Project Assessment report, prepared by Tellus Venture Associates, 24 June 2013

    Benicia City Council minutes, 2 July 2013

    Staff report to Benicia City Council, 2 July 2013

    Broadband Needs Assessment for the Benicia Industrial Park, prepared by Successful.com, 15 September 2010

    Map of Benicia Industrial Park and surrounding area

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