The FCC put sharp restrictions on the role of state utility regulators when it decided to put Internet service and infrastructure under common carrier rules. But it did not write the California Public Utilities Commission completely out of the game.
Helen Mickiewicz, a senior attorney for the CPUC, told commissioners yesterday…
The order affirms the FCC’s longstanding conclusion that broadband Internet access service is a jurisdictionally interstate service for regulatory purposes and therefor beyond the reach of the states…The practical effect of that, actually, is not so different from where we were before. Because before, the FCC said it’s one unified information service and states you can’t regulate that. Now it’s saying, well, it’s two parts and one part is a common carrier service and we don’t want you getting involved in that.
Sorta. The CPUC still has role in managing pole attachment and other right of way rules, although – no surprise – the FCC’s decision is ambiguous about exactly what that means. Universal service responsibility is also shared with the feds. And state utility commissions can bring complaints about Internet service providers to the FCC.
Two pending CPUC decisions hang on divining the FCC’s intent. The proposed mega merger and market swap that would give Comcast control Charter and Time Warner territories in California – 84% or more of the state – is under CPUC review, but there doubts about the extent of its options. Google is asking for the same access to utility poles as cable companies. Under the old rules, the CPUC is saying no, at least tentatively, but the new rules can be interpreted as saying the opposite.
Both the Comcast merger and the Google pole attachment decisions have been kicked to May, at the earliest. Drawing the line between state and federal jurisdiction over ISPs will take even longer.
Google Fiber’s Utah expansion appears limited to Salt Lake City and, maybe, some surrounding areas. In its announcement and press event on Wednesday, the Google team talked about “metro area—Salt Lake City”, but the emphasis was on the city proper.
There’s also no prospect, at this point, for Google to step in and rescue the Utopia municipal fiber system, as it did in Provo. Six of the eleven cities in the consortium want to move ahead with a refinancing deal proposed by Macquarie Capital, but no promises have been made yet and final decisions are still months away.
One of the cities that opted out, Orem, is apparently feeling pressure to change its mind. According to a story in the Orem Daily Herald, some see a connection between the opt-out and the Utopia board’s reluctance to expand…
Councilwoman Margaret Black posed the question that most council members were thinking.
“Are we getting the short end of the stick because we opted out of Macquarie?” asked Black, referring to Macquarie Capital Group, the investment company looking to negotiate a contract with UTOPIA for buildout of the fiber network.
“There is a concern that Orem is unpredictable and not easy to work with,” [city manager Jamie] Davidson said. “It’s concerning to me to see new options entering the market with a stranded investment for the future.”
Google also has a track record of backing away from cities with stroppy local officials, and it’s hard to imagine that it would want to jump into the middle of the bickering going on between Utopia members.
California is the only western state that hasn’t approved the Comcast-Time Warner-Charter menage and it’s lagging behind most of the rest of the U.S. too, according to a filing made by Comcast back in January and posted yesterday by the California Public Utilities Commission. The filing also gives a glimpse into how the CPUC’s ex parte process actually works, as opposed to how Comcast proposed to make use of it.
At a series of meetings over two days with advisors to three CPUC commissioners – Florio, Randolph and president Picker – a full poker hand’s worth of Comcast lobbyists and lawyers tried to chivvy the process along…
[Michael Brady, Vice-President of Regulatory Affairs of Comcast Cable] provided an overview of the status of the Federal Communications Commission’s (“FCC”) and other states’ approval of the transaction. He noted that almost all required state public utility commission (“PUC”) approvals of the transaction had been received and that the FCC clock was scheduled to expire in late March. [Chris MacDonald, Vice President of Government Affairs for the West Region] indicated that in the twelve states served by Comcast in its West Region, all required state approvals had been obtained except for the CPUC’s and that all required local approvals had been obtained except for one in Arizona, which was expected in February.
The other states in Comcast’s West Region are Arizona, Colorado. Hawaii, Kansas, Missouri, Nebraska, New Mexico, Oregon, Texas, Washington and Wisconsin. But there are hold outs elsewhere, notably New York.
The FCC’s 180-day clock has stopped in the meantime, and in any event it’s just a guideline and not a guarantee.
It appears that most of the meetings were consumed by a laundry list of benefits Comcast claims will fall to California, if the deal is approved without conditions. The pitches happened less than a month before a proposed CPUC decision was released, which would lock in many of the perks that Comcast was waving around. No surprise, it’s a decision that Comcast vehemently objects to.
It’s not official yet, but you can safely bet that the California Public Utilities Commission won’t be voting this Thursday on whether or not to approve the proposed Comcast-Time Warner-Charter mega merger and market swap. The CPUC posted an announcement yesterday that another “all parties” meeting will be held in Los Angeles in April to try to thrash out the three-cornered fight over the deal.
Comcast and its presumed partners want the transactions to be rubber-stamped with no conditions, consumer advocacy groups – including the CPUC’s office of ratepayer advocates – say it should be killed outright, and two other groups – the California Emerging Technology Fund (CETF) and Caltel, a lobbying organisation for competitive phone companies – want the conditions, at least those that benefit their respective interests.
A CPUC administrative law judge has drafted a proposed decision that would allow the deal to go through, but with a list of 25 conditions include rates, services offered, access by competitors and a low cost Internet access program for low income households that could end up costing hundreds of millions of dollars.
This will be the second all parties meeting. The first was held last month in San Francisco. Comcast wanted to negotiate terms behind closed doors, but the two commissioners scheduled to be there – Carla Peterman and Catherine Sandoval – spoke up at the last CPUC meeting to say that wasn’t going to happen and the right way to do it is with all the interested parties in the room. It’s open to the public and scheduled to run four hours on the afternoon of 15 April 2015.
How justice is done.
Two court challenges were filed today with the intent of overturning the FCC’s decision to regulate Internet service and infrastructure using common carrier rules. One was filed in Washington, DC by an industry lobbying group – the US Telecom Association – and the other by a Texan wireless ISP – Alamo Broadband – in New Orleans, both with the respective federal appeals courts there.
US Telecom does not like anything about the rules…
US Telecom seeks review of the Order on the grounds that it is arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act…violates federal law, including, but not limited to, the Constitution, the Communications Act of 1934, as amended, and FCC regulations promulgated thereunder; conflicts with the notice-and-comment rulemaking requirements of [federal law]; and is otherwise contrary to law.
As US Telecom acknowledges its appeal might be too early in the process, but all that means is they’ll re-file later. The New Orleans filing isn’t available yet, but it’s said to take similar tack.
The reason for filing now is to try to beat the deadline for getting in on the appeals court lottery. As Harold Feld explains well in his blog, when challenges are filed in multiple courts within the first ten days of a new regulation becoming effective, the court that gets the case is selected at random. It was the DC appeals court that overturned the FCC’s last attempt at net neutrality rules, which suits the big lobbying groups like US Telecom as well as mobile phone and cable TV trade organisations. No idea if Alamo Broadband thinks there’s an advantage to be had in New Orleans, or, possibly, if it’s a stalking horse for pro-common carrier advocates who might see friendlier judges there.
Update: Alamo Broadband’s filing can be downloaded here. It’s pretty much the same as US Telecom’s.
Blue indicate likely communities redlined by Charter, although analysis is still in progress. Yellow is where Charter offers broadband. Click for a bigger – 8.5 MB – version.
One condition could make all the difference for the proposed decision in front of the California Public Utilities Commission that would formally approve the pending mega merger and market swap between Comcast, Time-Warner and Charter. The way the decision reads now, it would impose 25 different conditions on the deal, ranging from rates that can be charged for particular telephone and broadband services, to budgets for marketing to low income households, to requirements for battery backups. The CPUC’s authority to impose many of those requirements is debatable and its ability to enforce them is tenuous.
But some of the conditions are on firmer ground, particularly a broadband build out requirement…
Comcast shall, within 24 months of the effective date of the parent company merger, upgrade facilities to make broadband services available in all California households where [Comcast, Time-Warner, Charter and Bright House] currently provide only video service.
When the FCC imposed a very limited set of common carrier rules on Internet service and infrastructure, it left the door open a crack to universal service requirements, which traditionally have been managed at both the state and federal level. So there’s a plausible argument that the CPUC gained explicit authority to tell Comcast if it wants control of 84% or more of Californian homes, then it has to serve them all.
That’s important for cities like Gonzales in the Salinas Valley, where Charter never upgraded analog cable systems. In the Salinas Valley alone, a hundred thousand people in some of California’s poorest communities have been redlined out of the digital age. A preliminary analysis by the Central Coast Broadband Consortium points to the conclusion that they are not alone. The CPUC’s own map data indicates that even bigger swaths of Los Angeles, San Bernardino, Tulare and Kern counties fall below Charter’s red line. The analysis isn’t finished yet (full disclosure: I’m part of that effort), but the picture so far is bleak.
The City of Gonzales filed a request regarding Comcast’s plan to take over those systems, asking – successfully so far – for the CPUC’s help…
The City of Gonzales requests the California Public Utilities Commission condition the pending action…by requiring analog cable systems to be upgraded to digital systems as part of this or any action before the commission.
There are many good arguments for rejecting the deal altogether, including the likelihood that the wish list of 25 conditions will have little more effect than a letter to Santa. But the build out requirement could stick, and it’s hard to look at the communities that Charter has abandoned throughout California and say we’re going to kill your best hope of joining the 21st century. If CPUC commissioners say no – and I still think they should – they will have an obligation to use the new universal broadband service authority granted by the FCC to end broadband redlining by monopolies they now regulate.
Washington-based lobbying groups are making the first rumblings of legal challenges to the FCC’s decision to bring common carrier regulation to Internet service and infrastructure. Reuters is reporting that telecoms companies plan to let their trade associations take the lead on legal challenges.
We might see the first filings this week. The first step is for the FCC to publish the text of the ruling in the Federal Register, which might happen in the next few days. Harold Feld at Public Knowledge has an excellent blog post on how that process works and what the timing will likely be. There’s a 60-day window to take the FCC to court.
That clock is already running for anyone thinking about challenging the FCC’s other decision last month, the one that says that states can’t restrict what municipal broadband systems do. So far, no challenges have been filed but expect it to happen. The states involved – Tennessee and North Carolina – are sure to take it to court, and a national lobbying organisation for state legislators has already promised to do so.
It will be an uphill battle to overturn the new common carrier rules. In terms of the big picture, the FCC seems to be on pretty firm ground. There’s a clear basis for its authority to make that kind of decision, so legal challenges will probably try to nibble around the edges, or claim the process was flawed. It’s doubtful that’s enough to kill it, but it could put everything on hold for a couple of years while the courts grind through it.
The muni broadband decision is on shakier ground. A blog post by an attorney at Davis Wright Tremaine – a law firm with heavy high tech connections – does not offer much hope, saying “the Commission’s reasoning goes beyond known precedent on the authority of a federal agency to preempt state laws”.public
Sometimes you get the best stuff at the very end.
Blackberry unveiled a new tablet device this week, called the Secutablet. With a price north of $2,000, it’s intended for a limited market but it does show that the company finally has a plausible long term survival strategy. It’s a change of direction for Blackberry, one that executives have talked about for the past three years. Instead of making devices and operating systems, they are focusing on their core competency – security – and leveraging the brand identity that goes along with it.
There doesn’t seem to be much in the Secutablet that comes from Blackberry itself. The device is made by Samsung (which is also integrating Blackberry technology into its enterprise products), the operating system appears to be Android (although that’s still to be confirmed) and the apps, or at least the secure shell that the apps run in, come from IBM. Presumably, the secret sauce that Blackberry adds to the mix is its secure telecoms system.
That system, and the proprietary technology it’s based on, is Blackberry’s crown jewel. If they’ve finally figured out how to usefully integrate it into the devices and operating systems that have won the battle of the marketplace, then it means Blackberry has a future, albeit one’s that’s greatly diminished from the days when it was the top dog of mobile data.
The Secutablet itself is a niche device that will appeal to people that need access to very secure documents and other data. It’s a media consumption device, because that’s what tablets do well. Think of it as a substitute for paper copies of documents. I’d bet that a key feature is that a document cannot leave a device that it’s sent to (or be intercepted en route, of course), preventing unauthorised sharing. That kind of network security is an additional protection on top of the encryption and access control that any tablet could support, and it’s Blackberry’s sole remaining competitive advantage.
Comcast continues to loudly claim that its proposed merger with Time-Warner Cable and market swap with Charter Communications would not be anti-competitive because it doesn’t compete with either company. Cable operators are geographically separated and overbuilding each other is not economically feasible, Comcast says, so mixing and merging would have no effect on competition.
That’s false, according to a motion filed with the California Public Utilities Commission by its own office of ratepayer advocates (ORA). In the process of going through millions of documents that Comcast and its cohorts have given to the CPUC and the FCC for confidential review, ORA has found, it says, three items that prove that Comcast plans to sell television service via the Internet – over the top (OTT) – that, by its very nature, is not geographically limited…
The significance of these documents cannot be underestimated as they show that competitive entry into the OTT services market can now be accomplished without overbuilding, and therefore, the economic barrier to an OTT service provider entering into an incumbent provider’s operating area, such as Comcast competing head to head against TWC and vice versa, disappears…
The bottom line is that OTT is another example of Comcast using its control of telecommunications facilities to leverage ancillary markets. This matters here because one of the California-specific effects of the merger will be Comcast’s unparalleled dominance in the last-mile control of California consumers, i.e., “eyeballs,” and in the content and OTT markets.
The actual documents are still confidential, but have been submitted under seal to the CPUC administrative law judge handling the case. Assuming, as I do, that ORA’s characterisation is more or less correct, it’s another powerful argument for denying the merger altogether, rather than loading it up with conditions that are likely to be thrown out at the federal level.
The matter is on the CPUC’s agenda for next week’s meeting, but given the furore over Comcast’s request to cut a back room deal, the distinct possibility that unenforceable conditions effectively mean unconditional approval and this latest information found by ORA, don’t be surprised if it’s bumped into April or beyond.
Welcome to Sunshine Week. No, it’s not about the vernal equinox or the proper SPF level to use. It’s about open government and access to data. Several meetings and events were held in Sacramento to mark it. Yesterday, I went to Data Summit 2015, organised by California Forward.
San Francisco assemblyman Phil Ting was the first of more than a dozen speakers, talking about the need for consistent and timely release of public data in a useful way, and the bill he’s sponsoring to encourage it.
There was general agreement about the value of releasing public data – $3 trillion, if you believe a report from the McKinsey Global Institute – and the woeful state of affairs in California, where paper forms still dominate workflows at some public agencies.
What was largely missing, I thought, was discussion of two critical problems: establishing standards and convincing agency employees to embrace information publishing as a routine part of the job.
“We have to move away from the form driven mind set that has driven state government for too long”, said Jodi Remke, the chairwoman of the Calfornia Fair Political Practices Commission. She made a convincing case for the need to do so, but didn’t really have an answer. Mike Wilkening, from the department of health and human services, talked about his approach of working through offices one by one to bring people on board, rather than issue a top down make it so order. I would have liked to hear more about that.
Several speakers shared their experience developing and rolling out web and app-based tools for accessing particular information, but only Nicole Neditch from Code for America dove into the problem of creating common, open source tools for doing so. There was barely a mention, though, of establishing common standards for data publishing, which is a critical first step if open data initiatives are to break out of internal, let alone agency by agency, silos.