T-Mobile, Sprint ordered to halt merger in California, but don’t seem to care what CPUC thinks

by Steve Blum • , , , ,

Caltrans flagger stop

T-Mobile and Sprint completed their merger yesterday morning, but they’ll have to wait at least a couple more weeks, and maybe longer, for a decision from the California Public Utilities Commission before they can begin combining their operations in California.

If.

If they pay any attention to an order issued yesterday afternoon by CPUC commissioner Clifford Rechtschaffen. Responding to a Tuesday night letter from T-Mobile’s then-COO and now CEO Michael Sievert, Rechtschaffen ruled…

[California] Public Utilities Code Section 854(a) states in relevant part that “[n]o person or corporation, whether or not organized under the laws of this state, shall merge, acquire, or control … either directly or indirectly, any public utility organized and doing business in this state without first securing authorization to do so from the commission.” Both Joint Applicants, T-Mobile and Sprint, have California subsidiaries that are public utility telephone corporations under state law, and subject to the jurisdiction of this agency. The merger of the companies’ operations in California is therefore subject to CPUC approval. Accordingly, Joint Applicants shall not begin merger of their California operations until after the CPUC issues a final decision on the pending applications.

There’s good reason to think the two companies will effectively ignore the order. In the letter, Sievert told Rechtschaffen and CPUC administrative law judge Karl Bemesderfer that they “lack jurisdiction” over the merger, and he would close it without their blessing. Rechtschaffen is the “assigned commissioner” for the CPUC’s review, which means he oversees it, and Bemesderfer is managing it.

In lengthier comments filed yesterday, T-Mobile’s lawyers tried to offer a legal basis for that point of view, but Rechtschaffen is unconvinced, to say the least.

T-Mobile’s defiance is risky, as the company acknowledged yesterday in the fine print of its triumphal press release

There are several factors that could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to…the risk of litigation or regulatory actions, including litigation or actions that may arise from T-Mobile’s consummation of the business combination during the pendency of the California Public Utility Commission’s review of the business combination.

“Regulatory actions” will happen, beginning with the CPUC’s review of the merger, which is scheduled to go to a commission vote on 16 April 2020. Assuming it’s approved more or less as written, the draft of that decision imposes a long list of service and employment conditions on the combined company. Fines and other penalties are also possible, although that will take months, if not years, to sort out.

What is certain to follow, though, is litigation. T-Mobile says its mobile business isn’t governed by California law. Rechtschaffen says it is, and it’s a good bet his fellow commissioners agree. That dispute will have to be settled in a federal court.

Assigned Commissioner’s Ruling, T-Mobile/Sprint merger, 1 April 2020

T-Mobile letter informing CPUC of intent to complete merger, 31 March 2020

Comments on the proposed decision of administrative law judge Karl Bemesderfer, 1 April 2020:
Joint Applicants (T-Mobile and Sprint)
CPUC Public Advocates Office
Communications Workers of America
TURN
Greenlining
California Emerging Technology Fund

TURN and Greenlining protest of Sprint’s CPCN relinquishment, 1 April 2020
CPUC Public Advocates Office, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020
Communications Workers of America, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

T-Mobile tells CPUC it “lacks jurisdiction” and should address its “deficiencies”, as Sprint deal closes without its permission

by Steve Blum • , , , ,

History of the World, Part 1 - Piss Boy

T-Mobile is doing what it planned to do all along: complete its acquisition of Sprint today, regardless of whether it has regulatory approval to do so from the California Public Utilities Commission. In a letter sent to the CPUC commissioner and the administrative law judge in charge of the merger review, T-Mobile’s chief operating officer Michael Sievert said he’s doing what he thinks he needs to do, and not only is the commission powerless to act but it should see the light and rubber stamp the deal…

Finally, as we have explained to the Commission previously, an April 1 close is critical to the parties, as accounting and financial reporting needs, and the imperative for accuracy of such reporting, significantly limit the available closing dates for the merger, and delaying beyond April 1 would result in substantial — and ever-increasing — harm and risks to [T-Mobile and Sprint].

Notwithstanding our abiding view that the Commission lacks jurisdiction over this transaction, we have fully cooperated in the CPUC’s 20-month review process. T-Mobile stands ready to honor the nearly 50 voluntary California-specific commitments it has made in connection with the deal. However, notwithstanding our appreciation of the proposed decision’s recognition of the many benefits of the merger, it contains a number of obligations that in addition to exceeding the CPUC’s jurisdiction are not supported by the record, are practically impossible, are unfair and discriminatory to T-Mobile vs our competitors – including the entrenched incumbents, and/or are anti-competitive. Accordingly, [T-Mobile and Sprint] urge you to revise the proposed decision to address those deficiencies and to proceed with a vote on the modified proposed decision to close the proceedings at the Commission’s April 16 meeting as scheduled.

Sievert opened the letter by blaming his defiance on the covid–19 emergency, but went on to justify it by airing the same arguments T-Mobile and its local lawyers have been making for the past 20 months, long before the pandemic began. T-Mobile has to get about the “important work” of integrating networks so it can deliver “massive benefits” to Californians, he said.

The question now is how, or if, the CPUC or California attorney general Xavier Becerra will respond, and what happens to the truckload of “voluntary California-specific commitments” that T-Mobile dangled in arguments and testimony or the sterner conditions in the draft decision that’s so upsetting to Sievert. Saying you “stand ready” to keep a promise isn’t the same thing as promising to keep it.

Those conditions include requiring T-Mobile to increase its workforce in California by 1,000 jobs, keep its promise to compete for in-home customers, and offer better broadband service in rural communities.

We might get a peek at what’s to come later today, when the first round of public comments on the proposed decision are due and challengers can have their say. A posse from the CPUC’s public advocates office, the Communications Workers of America and TURN made the rounds of commissioners’ staff last month, as did T-Mobile and its helpmate, the California Emerging Technology Fund. Those opponents urged complete rejection of the merger. It’s a fair bet they’ll repeat that advice in their comments, as well as offer some polite suggestions for disemboweling this morning’s transaction.

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

T-Mobile goes nuclear in California, preps to close Sprint deal without CPUC’s blessing

by Steve Blum • , , , ,

Slim pickens rides the bomb

T-Mobile and Sprint asked to withdraw their application for California Public Utilities Commission approval of the wireline elements of their merger agreement yesterday. At the same time, Sprint sent the CPUC a letter “relinquishing its [California] certificate of public Convenience and necessity” (CPCN). That sets the stage for the two companies to close their deal without CPUC permission, perhaps as soon as tomorrow, which is the day they’ve been targeting all along. It also provides a basis for challenging, if not ignoring completely, any conditions the CPUC might impose on them, such as those proposed in a draft decision that commissioners are scheduled to consider on 16 April 2020.

T-Mobile and Sprint have two requests pending with the CPUC. They’re asking for permission to transfer Sprint’s wireline CPCN – its authorisation to operate as a telephone company in California – to T-Mobile, and they’ve notified the CPUC that they plan to combine their mobile wireless operations. The commission bundled those two matters into a single case, something that T-Mobile (and Sprint, but it’s T-Mobile running the show) objected to all along.

The CPUC’s jurisdiction over the wireline asset transfer is very clear, but it is uncontroversial. The far bigger mobile side of the deal is what opponents – including California attorney general Xavier Becerra – are worried about and what the proposed conditions directly address.

The CPUC’s authority over a mobile carrier is murky at best. Mobile licenses are issued by the Federal Communications Commission, which approved the transfer. Carriers have to register their federal licenses with the CPUC, but arguably – at least if you’re T-Mobile – that’s just an informational filing, with no state-level regulatory review needed or allowed.

T-Mobile’s lawyers have been making that argument all along, and threatened more than once to go ahead with the merger without waiting for a decision from the CPUC. Taking the wireline issue off the table will make that far easier to do.

T-Mobile can’t simply say never mind. The CPUC can deny, or ignore, the motion to withdraw the wireline transfer application, and there’s potentially months of wrangling ahead over Sprint’s abandonment of its CPCN. But once the transaction is closed, it’ll be difficult to unwind, even if yesterday’s gambit is ultimately rejected by a court. We might know as soon as tomorrow whether the companies will try to cowboy it out and complete the merger while the CPUC is chewing it over.

Motion of Joint Applicants to Withdraw Wireline Application, 30 March 2020
Sprint Communications Company – Tier 1 Advice Letter Relinquishing Certificate of Public Convenience and Necessity, 30 March 2020

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

Urban networks showed strain but generally held up as Californians began sheltering in place

by Steve Blum • ,

https://haasinstitute.berkeley.edu/sites/default/files/haas_broadband_042417-singles.pdf

Most broadband networks in urban California managed the load well as covid–19 shelter in place orders began taking effect, according to speed data analysed by BroadbandNow, a broadband sales website. The underlying data came from Measurement Lab, an open source Internet monitoring project that includes universities, foundations and major tech corporations among its members.

BroadbandNow compared the median download speed in the 200 largest U.S. cities (34 of which are in California) during the week of 15 to 21 March 2020 to the median speed range for the prior weeks of 2020. That’s the week that began with Bay Area counties imposing lockdowns and ended with a statewide quarantine order from governor Gavin Newsom.

Broadband speeds in 21 cities, mostly in southern and central California, stayed within 2020 ranges. The 13 that saw decreases were evenly split between the north and south.

San Jose, which along with Fremont had the slowest median speed, ran 38% under its prior 2020 range, the second worst in the state. Oxnard was hit the hardest in California, with a 42% drop in median Internet service speeds, which was also the second worst in the U.S.

I’m not reading too much into these numbers yet. The week of 15–21 March was an uneven scramble of lockdown orders and efforts to comply. The following week’s data, when all Californians were under more or less the same regime, will be more telling.

City                           Median download speed (Mbps) 15–21 March 2020% Below prior 2020 median range
Oxnard44–42%
San Jose29–38%
Irvine54–20%
Torrance49–15%
San Diego44–13%
Moreno Valley30–12%
Sacramento31–11%
Hayward51–10%
Santa Rosa59–10%
San Francisco38–8%
Oakland53–7%
Huntington Beach82–4%
Glendale53–2%
Anaheim48In range
Bakersfield31In range
Chula Vista40In range
Corona52In range
Escondido44In range
Fontana38In range
Fremont24In range
Fresno34In range
Garden Grove42In range
Lancaster64In range
Long Beach41In range
Los Angeles41In range
Modesto34In range
Oceanside45In range
Palmdale59In range
Riverside40In range
Salinas53In range
San Bernardino45In range
Santa Ana30In range
Stockton38In range
Whittier53In range

Source: BroadbandNow

The $2 trillion covid-19 stimulus bill is not a broadband bill, but it helps. A little

by Steve Blum • , , , ,

Salinas windmill cell site

Update, 27 March 2020: president Trump signed the bill, it’s a done deal.

Update, 27 March 2020: the U.S. house of representatives approved the bill, it now goes to president Trump.

A vote on the $2 trillion federal covid–19 stimulus bill is expected in the U.S. house of representatives later today, and president Trump says he’ll sign it immediately. I also found the full text of the bill, as published by the U.S. senate’s appropriations committee. Assuming it’s really the final-final version, it’s not going to do very much at all to fill the broadband gaps that separate many people, particularly in California’s rural counties, from the online business, education, health, information and entertainment services that we now rely on.

But there are a couple of sparks of good broadband news in the text. In the short term, it authorises the federal veterans affairs department to…

Enter into short-term agreements or contracts with telecommunications companies to provide temporary, complimentary or subsidized, fixed and mobile broadband services for the purposes of providing expanded mental health services to isolated veterans through telehealth or VA Video Connect.

It also pumps $50 million into grants to libraries (and museums) for “digital network access”, “internet accessible devices” and “technical support”, and waives matching fund requirements.

The bill doesn’t address the Federal Communications Commission’s E-rate program. There’s no extra money and no prescribed changes in eligibility, or allowed uses of existing funds.

The language that pumps an extra $200 million into the FCC’s telehealth subsidy program is flexible, though. The FCC will have a lot of discretion regarding how it spends the money. There are no significant changes to the Rural Utilities Service’s (RUS) ReConnect broadband infrastructure grant and loan program or its telehealth and distance learning subsidies, except of course for the extra money – $100 million for ReConnect and $25 million for telehealth/distance learning.

Long term, the bill will speed up the migration of health care and other essential services to online platforms. Legacy rules and bureaucratic inertia are a barrier to increased adoption of telehealth technology, so in several places the bill has language that, as one section puts it, is aimed at “encouraging use of telecommunications systems for home health services furnished during emergency period”. It also redefines the mission of some federal telehealth programs as, for example, funding “evidence-based projects that utilise telehealth technologies” instead of “projects to demonstrate how telehealth technologies can be used”.

In other words, stop screwing around with pilots and just go live.

Federal covid-19 stimulus package doesn’t seem to stimulate broadband, much

by Steve Blum • , , , ,

Frontier verizon pole santa barbara county 10oct2015

Even by Washington, D.C. standards, $2 trillion is a lot of money. By those same standards, though, $325 million isn’t much and that appears to be the extent of direct broadband assistance in the $2 trillion covid–19 “stimulus” bill approved by the U.S. senate late last night. If there’s indirect broadband help, it’s buried in the bill’s yet-to-be-published text.

According to a summary obtained by Bloomberg Law yesterday, the bill adds $100 million to a broadband infrastructure program run by the federal agriculture department’s Rural Utilities Service (RUS), as well as $200 million to the Federal Communications Commission’s telehealth subsidy kitty and $25 million for a telehealth and distance learning program, also managed by RUS. That’s not the final word, of course. We’ll have to wait for the full text of the bill to surface before we know what’s in it.

There’s no extra money for the FCC’s E-rate program, which pays for broadband service to schools and libraries. That’s a disappointment for many, but I’ll reserve judgement until I see the actual bill. If, as has been urged, it loosens restrictions on how the money that’s already in the program can be spent, then it’ll be an immediate win. Under current rules, infrastructure and bandwidth bought through the E-rate program can’t be opened up to the public. Just taking that restriction off, even temporarily, could help close the gap between broadband haves in California’s urban areas and the have nots in rural communities. If it doesn’t do at least that much then, yeah, it’s a disappointment.

The RUS infrastructure money will go into the ReConnect program, which pays for new broadband infrastructure in rural areas. It probably won’t be much help to California, though. It’s designed for the business models and demographics of the midwest and south, and so far hasn’t funded any systems here. But it’ll help the people it’ll help, and to that extent it’s well timed. The application deadline for the current round of grants is next Tuesday, 31 March 2020, which means there should be plenty of project proposals that can be funded immediately.

The next step for the bill is the U.S. house of representatives.

California’s mountain counties get failing broadband grades, urban areas top the report card

by Steve Blum • , , , ,

California broadband infrastructure report card map 24mar2020 625

The worst broadband infrastructure in California is, not surprisingly, found in mountain counties at the north end of the state. Trinity and Siskiyou counties both get “F” grades for broadband infrastructure, with a numerical score of dead zero. Sierra County likewise gets an “F”, with a numerical score of 0.03 that’s effectively zero. It is also the county with the highest percentage of population – 88% – without any access to wireline broadband service. It’s a serious problem for rural residents as business, education, health care and education move almost exclusively online during the covid–19 lockdown.

As the map above and the tables below show, the best broadband infrastructure in California can be found in San Francisco and Alameda County, and in Los Angeles and Orange counties, and it generally gets worse the farther you get from those two hubs.

The Worst

County            Broadband Report Card GradeGPAPercent of Population at Zero service
TrinityF0.0083%
SiskiyouF0.0017%
HumboldtF0.0115%
MariposaF0.0124%
ModocF0.0150%
LassenF0.0256%
SierraF0.0388%
AlpineF0.0483%
PlumasF0.1335%
InyoF0.1716%

The Best

County            Broadband Report Card GradeGPAPercent of Population at Zero service
AlamedaB-2.773%
San FranciscoB-2.731%
San MateoC+2.631%
Contra CostaC+2.401%
SacramentoC+2.302%
Santa ClaraC+2.273%
Los AngelesC2.091%
OrangeC1.973%
San JoaquinC-1.895%
StanislausC-1.884%

The grades are based on a methodology I first developed in 2013 for the East Bay Broadband Consortium, and have since been updating on a statewide basis for the Central Coast Broadband Consortium and other such regional organisations. It uses the broadband speed and technology claims that Internet service providers submit to the California Public Utilities Commission and Federal Communications Commission every year – the most recent data set is current as of 31 December 2018. The underlying data are not very accurate, but it is precise in the sense that companies tend to be consistent about the way they exaggerate coverage. That makes it useful for comparative purposes, which is what the California Broadband Infrastructure Report Card is all about.

The best broadband infrastructure in California is found in the Bay Area and Sacramento, and the Los Angeles/Orange County core. Those two counties straddle California’s “C” average. The large share of the state’s population those counties represent means what’s available to people there is going to look a lot like what’s available to the average Californian.

San Joaquin and Stanislaus counties also made the top 10 due to upgrades by AT&T, which claims to have built fiber to the premise systems in about 16% of the census blocks (but not necessarily throughout whole census blocks) in those two counties, and Vast Network’s middle mile fiber infrastructure, which runs through a lot of census blocks but isn’t available to homes or most businesses. It’s similar story in Fresno County. The grades reflect infrastructure deployments rather than service availability, so for a lot of Central Valley communities it’s water, water everywhere but not a drop to drink.

California Broadband Infrastructure Report Card, 24 March 2020
Central Coast Broadband Consortium wireline broadband availability analysis (22 March 2020 revision), per 31 December 2018 data
Central Coast Broadband Consortium Broadband Infrastructure Grading Methodology, 20 March 2020
Achieving Ubiquitous Broadband Coverage in the Monterey Bay Region, Monterey Bay Economic Partnership, November 2018

CPUC extends CASF grant deadline, also orders telecoms companies to disclose covid-19 response plans

by Steve Blum • , , , ,

Broadband companies will get an extra month to submit applications for broadband infrastructure grants from the California Advanced Services Fund (CASF). Originally, the proposals were due next week, on 1 April 2020. That deadline is now 4 May 2020, and the subsequent timeline for challenges and decisions also bumped by five weeks, per a memo from California Public Utilities Commission director Alice Stebbins.

It’s a necessary step (and – full disclosure – one I advocated for). As the corona virus lockdown continues, residential broadband service is the critical link that connects Californians to their jobs, businesses, education and health services, and helps keep them from going stir crazy. CASF infrastructure project proposals have taken a back seat to the frontline tasks of keeping Internet access running and scaling it up to meet ballooning demand.

The divide between California’s digital haves and have nots is starkly illuminated by the emergency. A month to rethink priorities and figure out how best to target those gaps is both necessary and welcome. The memo also reminds us that a second CASF application window is possible. A decision on that will come by 17 June 2020, when we will have a much better idea of the full extent of the current crisis.

In another action, the CPUC ordered executives of major telephone, cable and mobile broadband companies to provide…

Your company’s policies for responding to and continuing operations through the current spread of COVID–19. This should include policies relating to providing safe working environments for your employees and business continuity plans for continuing all business and service delivery operations in the event of further community transmission.

Among the specific items they have to address are credit and collection practices and call center management. As I learned the hard way this weekend, AT&T slashed technical support and other customer service operations (someone needs to explain teleworking to them). It will be interesting to learn if other industry players did the same. The companies are supposed to provide a public version of their filing, but they’ll also be allowed to keep some information confidential. They’re supposed to respond by Friday.

California’s broadband gaps affect millions as corona virus lockdown continues

by Steve Blum • , , , ,

San benito pole route 13apr2019

At least 1.5 million Californians – 4% of the state’s population – cannot get wireline broadband in their homes, as the second week of the corona virus lock down begins. That’s what the most recently published broadband availability reports filed with the California Public Utilities Commission show. Nearly twice that many – 2.8 million people, 8% of the population – don’t have access to primary wireline service that delivers 100 Mbps download/20 Mbps upload speeds, the minimum service level needed for in-home work, education, health care and entertainment. The dead spots are disproportionately found in rural communities.

That’s the top line result from the number crunching I’ve been doing, as part of the Central Coast Broadband Consortium’s (CCBC) efforts over the past few days. Like other regional broadband consortia around California, the CCBC is working to identify broadband access gaps and resources to fill them for the 40 million Californians ordered to stay at home. The raw data are the broadband service claims filed by primary wireline Internet service providers – the companies that own the copper and fiber – as of 31 December 2018, which is the most recent data set available. I ran the data for the 58 counties in California, with breakouts for cities, unincorporated communities (AKA census designated places) and tribal areas – it’s pretty much as easy to do it for all 58 counties as it is to do it for one (or the CCBC’s three – San Benito, Monterey and Santa Cruz counties).

The analysis includes:

  • Infrastructure grade (A, B, C, D, F). The grading methodology is here.
  • Median household income estimates.
  • Population, percentage of population, number of housing units and percentage of housing units, as of 2019 estimates, with zero access to wireline broadband service.
  • Population, percentage of population, number of housing units and percentage of housing units able to access primary wireline broadband service at 6 Mbps download/1 Mbps upload, 10 Mbps/1 Mbps, 25 Mbps/3 Mbps, 100 Mbps/20 Mbps, 1,000 Mbps/500 Mbps.

The data is not particularly accurate, as is widely acknowledged, but it is precise in the sense that the inaccuracies tend to be consistent across a provider’s data set. It is sufficiently precise for the purpose of comparing one place to another, and for generally assessing broadband availability in a given county, city or other area. I’ll be writing more about it in the coming days, and welcome any ideas or critiques.

Central Coast Broadband Consortium wireline broadband availability analysis (22 March 2020 revision), per 31 December 2018 data
Central Coast Broadband Consortium Broadband Infrastructure Grading Methodology, 20 March 2020
Achieving Ubiquitous Broadband Coverage in the Monterey Bay Region, Monterey Bay Economic Partnership, November 2018

Fixed, mobile North American broadband speeds will more than double by 2023, Cisco study says

by Steve Blum • , , , ,

Cisco forecast 2018 2023

More and more people around the world will have access to faster and faster broadband connections, with speeds for fixed and mobile service doubling and tripling by 2023, due in large part to increased global deployment of fiber to the premise and 5G technology, according to a white paper recently published by Cisco. Although North America will continue to beat world broadband speed averages, the U.S. will not be among the leaders in advanced infrastructure deployment.

Cisco’s research indicates that the average North American mobile broadband connection in 2018 ran at 22 Mbps, and that will nearly triple to 58 Mbps by 2023. 5G networks will own a large share of that increase, but the U.S. won’t earn a podium spot…

The top three 5G countries in terms of percent of devices and connections share on 5G will be China (20.7%), Japan (20.6%), and United Kingdom (19.5%), by 2023.

Globally, fixed broadband speeds will also jump, particularly in countries that, unlike the U.S., are focused on making fiber infrastructure ubiquitous…

The global average broadband speed continues to grow and will more than double from 2018 to 2023, from 45.9 Mbps to 110.4 Mbps…Several factors influence the fixed broadband-speed forecast, including the deployment and adoption of Fiber-To-The-Home (FTTH), high-speed DSL, and cable broadband adoption, as well as overall broadband penetration. Among the countries covered by this study, Japan, South Korea, and Sweden lead in terms of broadband speed largely because of their wide deployment of FTTH.

North America’s average fixed broadband download speed will be comfortably above the global average at 142 Mbps by 2023, according to the white paper. That only earns us second place on the world league table, though. Asia will still be tops at 157 Mbps, and higher growth rates – 30% annually or better – in Latin America, the Middle East and Africa mean that the gap between U.S. broadband speeds and those in the developing world will continue to close.