Effort to give FCC all of California’s data on Comcast deal

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Adding better dirt to the pile.

The California Public Utilities Commission has amassed a stockpile of proprietary information and confidential analyses regarding the proposed mega-merger and market swap that would put all of Time-Warner’s and nearly all of Charter Communication’s cable systems in California in the hands of Comcast. A utility consumer advocacy group, The Utility Reform Network (TURN), wants all that information turned over to the FCC for its consideration as it likewise evaluates the deal…

TURN recommends…the CPUC provide the FCC with copies of the full confidential versions of the briefs, including all attached declarations and exhibits, and data requests questions and responses of all parties in these consolidated proceedings, giving the FCC the benefit of the analysis and recommendations of all of the parties on the issues that are critical from a California-centric perspective. While the issues important to California are similar in nature to those affecting other jurisdictions – federal and other states – the presence of Comcast as the dominant broadband provider in northern California and Time Warner as the dominant broadband provider in southern California exacerbates the impact on California. Furthermore, a direct competitor to a post-merger Comcast, Charter, will be eliminated, if the proposed merger and related transactions are approved. Truly, the impact of this merger on California and its citizens is much greater than on any other state.

An analysis of the merger done by the CPUC’s office of ratepayer advocates that shows Comcast gaining monopoly control of broadband for two-thirds of Californian homes. The top line of that study has been released, but not the underlying data. The FCC should have the benefit of that work as it reviews the national implications of the merger. It has its own processes for keeping information confidential – hell, it even keeps its own decisions secret – so there should be no reason not to forward it on.

FCC says the dingo ate my decision

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I’ll do it after my nap.

A thousand word blog post explaining why the FCC hasn’t released the text of its decision last week that brings Internet service and infrastructure under common carrier rules boils down to one feeble excuse: we haven’t finished writing it yet.

The explanation, offered by FCC general counsel Jon Salet, is nonsense. It goes on at length about the need for robust internal discussions at the FCC and the necessity of preparing a final document that responds to the points raised by dissenting commissioners

Commissioners often prepare individual statements expressing their opinions on the order, and those statements are generally first shared with the other Commissioners and staff. The statements may generate additional internal discussions, during which both the order and the statements may be clarified. In addition, the order itself must address any significant argument made in the statements – or risk being overturned in court for failing to address the issue.

It’s nonsense because, first, if there had been a legitimate internal discussion before the vote, the dissenting points would have already been addressed in the text as approved last week.

Second, and more to the point, the California Public Utilities Commission does the same job as the FCC – it regulates telecoms companies within the limits of its jurisdiction – and also combines quasi-judicial and quasi-legislative functions. The CPUC has no problem releasing drafts under discussion and amending those drafts as it goes along, with all the cards out on the table before commissioners vote. Even if it takes a few days to prepare the final, formal document, there is full public disclosure of what has been approved. It’s not rocket science.

Presumably, the same faulty logic also applies to the FCC’s decision to preempt state restrictions on municipal broadband systems. The FCC’s decisions last week will re-shape the U.S. telecoms industry. Continuing to maintain secrecy is irresponsible.

California legislature considers raising broadband standard to 25 Mbps

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Californians can and should go faster.

While we’re waiting for the FCC to let us know what it actually did in its net neutrality and muni broadband decisions last week, let’s take a look at new broadband development bill that’s in the hopper in Sacramento: assembly bill 238, introduced by assemblyman Mark Stone (D – Santa Cruz).

Stone wants to raise the minimum broadband speed in California to meet the FCC’s recently adopted 25 Mbps down/3 Mbps up standard. If a given area doesn’t have at least one provider (presumably truthfully) advertising service at that speed, then it would be eligible for broadband infrastructure subsidies from the California Advanced Services Fund (CASF)…

In California, home to the development of much of the world’ s most advanced telecommunications technology, 2.6 million people do not have access to any services offering wireline 25Mbps/3Mbps broadband speeds. The lack of access especially affects people living in rural counties…It is the intent of the Legislature to enact legislation to pursue the deployment of advanced telecommunications services with broadband speeds of at least 25 Mbps downstream and 3 Mbps upstream in all areas of the state.

Currently, the California Public Utilities Commission sets the Californian minimum at 6 Mbps down/1.5 Mbps up, but hints are emerging that it might adopt the FCC’s standard on its own, with or without legislative urging.

AB 238 would also remove the end-of–2015 deadline for approving CASF projects. Which makes sense, since legislative time tables mean it’s unlikely that Stone’s bill, if approved, would take effect until next year. Next stop for AB 238 is the assembly utilities and communication committee, which hasn’t scheduled a hearing on it yet.

Saving the environment doesn’t have to mean choking off local infrastructure and economic growth

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You can protect the coast without littering it with red tape.

To keep Santa Cruz’s tech economy growing, basic infrastructure has to get better. Broadband is a big part of it, but so is housing, transportation and office space. A day long conference in Seaside in January – the kick-off event for the Monterey Bay Economic Partnership – brought business and government leaders together from Monterey, San Benito and Santa Cruz counties to talk about creating the right conditions for an entrepreneurial culture to grow.

Nearly everyone pointed to the limits imposed by ageing or non-existent infrastructure. It’s a primary barrier – you can’t run a high tech company without high capacity broadband access, for example – but it’s also a necessary first step to overcoming other challenges as well. You need educated and motivated people, and expensive homes and jammed roads make the central coast region unattractive to the talent local companies need most.

Infrastructure improvements, though, are delayed and, sometimes, stopped altogether by challenges made under the California Environmental Quality Act (CEQA), often by people with little or no direct involvement in a project.

“CEQA is being abused by every NIMBY and special interest group across the board,” said Chris Thornberg from Beacon Economics, the conference keynote speaker. Fixing it means doing three things, he said.

“I would not allow anyone who’s not involved to use it,” Thornberg said. “Unions should not be allowed to use CEQA” as a tool in negotiations. Second, “overall, we need to make the entire system much clearer and more transparent.”

Finally, it needs to be drawn back a bit in terms of its power to constrain, Thornberg said. “I think CEQA is a little too weighted in terms of protecting the environment, at the cost of economic growth.”

Safeguarding California’s natural wonders and quality of life is important, but it doesn’t take an endless, byzantine and expensive process to do it.

FAA rules out Internet drones and delivery copters for now

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Amazon’s planned drone deliver service didn’t get any love from the Federal Aviation Administration, nor did proposals to use unmanned aircraft as Internet access points, but at least the door is now open for companies to use the technology for commercial purposes. After two years of thinking about it, the FAA released draft regulations that would allow commercial drone use within limits. A summary is here.

For example, operators (or an observer) need to maintain visual line of sight with the drone, which can’t deliver cargo and can’t fly any higher than 500 feet or faster than 100 miles an hour. You can’t fly over “any person not involved in the operations”. Although still very restrictive, the rules aren’t as bad as feared – earlier rumors had the FAA bowing to lobbyists for pilots and requiring full on licensing and other commercial aviation red tape. That didn’t happen.

The rules aren’t final yet. The FAA is thinking about carving out an exception for very light drones, up to 2 kilograms, that might open the door for flights over people or even autonomous operation.

Amazon isn’t happy, saying it might move drone delivery research and development out of the U.S. To make a package delivery service work, the rules would have to allow cargo drop offs, autonomous flying out of the view of operators and flights pretty much anyway, whether or not people were around. That’s not on offer.

The FAA’s proposed rules aren’t particularly relevant to proposals to use unmanned aircraft as – take your pick – tall towers or low flying satellites for telecommunications purposes. But the draft does open the door to more experimentation, so it’s a step in the right direction.

Still waiting to read the actual FCC net neutrality and muni broadband decisions

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The suspense is killing the Internet.

The FCC’s decisions yesterday to preempt state bans on municipal broadband projects and regulate Internet service and infrastructure using common carrier rules are still under wraps. The commission wasted no time in posting laudatory summaries, which largely reiterated past public statements. The (prepared) comments the commissioners made during the voting session were also quickly up on the FCC’s website.

But the actual text of the decisions they approved yesterday haven’t been made public.

As I noted a couple of days ago, there was the usual last minute scramble to finalise the language, so FCC staff probably didn’t have much time to prepare the approved version for a public launch. But it shouldn’t take much time.

The press releases and commissioner statements don’t shed much light on the critical details. Democrat-appointed chairman Tom Wheeler’s panglossian summary and republican commissioner Ajit Pai’s flaming dissent regarding the decision to overturn (severe) state restrictions on municipal broadband in Tennessee and North Carolina might indicate that the actual text is long on social justice rhetoric and short on constitutional reasoning. Or it might just be a reflection of the personalities behind the comments.

Frustrating.

The same bipolar representations are clouding the decision to bring the Internet under common carrier rules. It’s either the dawn of a new age of freedom and prosperity or a water slide into the apocalypse.

The California Public Utilities Commission – the nation’s second most powerful and important telecoms regulator – has figured out how to release pending decisions in advance, provide opportunities for fast public feedback and post ongoing updates as changes in the text are made ahead of any votes. There’s no excuse – motive, certainly, but no excuse – for the FCC to make momentous decisions behind closed doors.

FCC imposes common carrier rules on the Internet, preempts muni broadband bans

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The deed is done. Both, actually. The FCC voted this morning to use common carrier rules to regulate Internet infrastructure and service, and to preempt two state bans on municipal broadband in two particular communities.

“The Internet is simply too important to allow broadband providers to be the ones making the rules”, said chairman Tom Wheeler.

The three democrats on the commission – chairman Tom Wheeler and commissioners Jessica Rosenworcel and Mignon Clyburn – voted (and spoke) in favor; the two republican commissioners – Ajit Pai and Michael O’Rielly – voted against, after reading lengthy and sharply worded dissenting statements.

So far, all we have are commissioner statements and press releases summarising the actions, but largely reiterating previously released talking points. We’re still waiting on the release of the full text of the decisions. I’ll update this post with a link to the texts when available, and post my take on the details as I work my way through it all.

In its first action this morning, the FCC ruled that state restrictions on municipal broadband in Tennessee and North Carolina are superseded by federal law, according to the summary in the commission’s press release

There is a clear conflict, the Order finds, between Section 706 of the Telecommunications Act of 1996, which directs the FCC to take action to remove barriers to broadband investment and competition, and provisions of the Tennessee and North Carolina law that erect barriers to expansion of service into surrounding communities, including unserved and underserved areas.

Wheeler had previously said that the FCC’s action would be specifically tailored to the specific circumstances in Wilson, North Carolina and Chattanooga, Tennessee, and that might be what’s in the actual text, but the language in the press release clearly has a much wider aim.

How the FCC will vote is certain, what’s to be approved isn’t

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Tomorrow should be the big day. Common carrier regulation of broadband infrastructure and service is scheduled to be on the table at the FCC. There’s a possibility it could be bumped a month, though. Republican commissioners Ajit Pai and Michael O’Rielly want it delayed. Actually, they want it stopped altogether. But democrats hold three of the five commission seats, so that’s a sideshow.

One of the democrats, Mignon Clyburn, is reportedly pushing chair Tom Wheeler to make changes. Since this is all happening behind closed doors, it’s not certain if she wants to pull back or double down, or just shuffle things around for whatever reason. And there are likely others twisting Wheeler’s arm, too.

Assuming it does come to a vote, though, the outcome is a foregone conclusion: the democratic party appointees – Clyburn, Wheeler and Jessica Rosenworcel – will vote in favor; Pai and O’Rielly will vote against.

What we’ll learn from the meeting are the critical details and actual language of the new rules. Probably. The FCC sometimes takes several days to publicly post the full text of decisions, but given the intense attention on this issue it’s likely to move quickly. If it doesn’t, count on someone scanning a hard copy – official or bootleg – and pushing it out.

Once approved, the new rules will take effect after the formalities have been completed. Expect court challenges and congressional blustering, but, revolutionary or not, this decision is in the FCC’s regulatory comfort zone and the working assumption is that it’ll stick.

Commissioners will also vote – again, almost certainly in favor and split 3 to 2 on party lines – on preempting two particular state bans on municipal broadband. Wheeler said these decisions will send “a clear message and provides precedent for how the Commission would view similar restrictions”. The FCC is on shakier legal ground, so we’ll see a couple years of litigation before there’s any hard effect, if at all.

In the meantime, state legislators will, at least, look over their shoulders when considering any muni broadband bills and, at most, begin crafting statutory language that skirts around the FCC’s decision. There are any number of lobbyists from Comcast, AT&T, Verizon and the rest who will be happy to help.

Three points to watch for in FCC muni broadband decision

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The FCC has to win an uphill fight against past court decisions if Thursday’s expected preemption of two particular state bans on municipal broadband is to have any practical effect.

The primary obstacle is Gregory v. Ashcroft, a 1991 U.S. supreme court decision that said, in effect, if congress wants to “upset the usual constitutional balance of federal and state powers” then it must make that intention “unmistakably clear in the language of the statute”. In 2004, the supreme court relied on that principle in Nixon v. Missouri Municipal League, which – seemingly very plainly – said congress didn’t give the FCC authority to interfere with how states manage the telecoms activities of subordinate agencies. Cities and counties are not independent: both are created by state governments and given particular responsibilities and powers, which vary from state to state.

But it’s a lawyer’s job to find loopholes and end runs around problems like that. So expect the FCC’s decision to explain why this time is different. Possible lines of attack include…

  • The Nixon case was about one particular section of U.S. telecoms law and there’s another section – 706 – that actually does give the FCC that power. Look for some kind of basis for saying the very broadband language of section 706, which the courts have already found inadequate to support net neutrality rules, is a “plain statement” by congress in “unmistakably clear” terms that it intended to give the FCC authority to tell states how to delegate broadband work to cities and counties.
  • Broadband service is so fundamentally different from, say, wireline telephone that it can only be regulated at the federal level, if the FCC is to achieve the goals set by congress.
  • At least one of the muni utilities involved in the FCC proceeding – Chattanooga, Tennessee, possibly – is actually an independent corporation rather than a political subdivision of its respective state. That’s a scenario the Nixon decision specifically avoids addressing.

To withstand court challenges, the FCC’s decision has to demonstrate why its authority to preempt state management of subordinate agencies either meets the unmistakably clear plain statement standard or is irrelevant to it. That’ll be a tough case to make, but I’m looking forward to reading it.

Temporary conditions will make Comcast’s Californian monopoly permanent

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It won’t get any better when the referee leaves the ring.

One of the more fascinating aspects of a proposed California Public Utilities Commission decision approving the Comcast/Time-Warner/Charter mega merger and market swap is an analysis of the resulting broadband market in the state. Prepared for the CPUC’s office of ratepayer advocates by Lee Selwyn, a telecommunications analyst, the study reaches the bottom line conclusion that if Comcast swallows up all of Time-Warner and Charter subscribers in California (except for Charter’s subs in the Lake Tahoe area), Comcast would have monopoly control of the broadband market in 78% of its expanded service area.

That’s using the FCC’s new broadband standard of 25 Mbps download speed. If you run it based on the CPUC’s current minimum of 6 Mbps down, Comcast’s monopoly control drops to 17% – that’s largely because AT&T offers at least 6 Mbps down in most of its service area, but not 25 Mbps.

From a microeconomics standpoint, though, a duopoly isn’t much better than a monopoly – either way, the companies involved can control pricing and service levels without much regard for consumers. Selwyn’s calculations show duopoly control of the new service area at 99% for 25 Mbps service and 88% for 6 Mbps.

As bad as it looks, the reality is probably be worse. The published numbers don’t include upload speed calculations. Given AT&T practice of squeezing more download speed out of ageing copper systems by sharply throttling upload capacity, Comcast would have an even greater monopoly and duopoly control.

The proposed decision also pegs Comcast’s prospective combined share of Californian households at 84%, a figure supported by Selwyn’s analysis. In other words, at the 25 Mbps level, Comcast would have monopoly control of two-thirds – 66% – of Californian homes, and be the dominant duopoly partner in about three-quarters – 74% – of the state at 6 Mbps.

Selwyn’s report is being kept confidential by the CPUC, at least for the time being. He used data provided by the companies that’s so far been deemed proprietary, so there’s no opportunity to dive deeper into it.

But the published figures tell a damning story. If the merger and market swap is approved, Comcast would have effective control of broadband service in California, and be able to maximise the value of the money it stuffs in political pockets at the state capitol and the local level.

The proposed decision includes a number of conditions Comcast would have to meet – including pricing, customer service and simple good behavior – but only for two to five years. Comcast’s stranglehold, though, would be permanent. Californians would be better served if the CPUC rejected the merger completely.

Download the numbers in a spreadsheet here.

Download the numbers as a pdf file.

Download the full text of the proposed decision here.