Broadband service gets permanent state, local tax exemption

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It’s blurry when you bundle, though.

A permanent ban on state and local taxes on Internet access was approved by the U.S. congress on Thursday, and sent on to the president, who said he will sign it. It’s a permanent extension of an existing law that says that states and local governments may not impose “taxes on Internet access” or “multiple or discriminatory taxes on electronic commerce”. The measure – which was tacked onto the end of an international trade bill – also phases out an exception for seven states that taxed Internet access before congress enacted the original ban. Subscribers in Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wisconsin are now paying a total of $563 million a year in taxes on Internet access. That will end by 2020.

It’s not completely impossible, though, for a state or local government to tax you for Internet access. According to a report by the congressional research service

Internet access is often bundled with other services such as voice or video service. In these situations, if the ISP can reasonably separate the charges related to Internet access from the other service charges, the Internet access charges remain exempt from taxation; otherwise the Internet access charges can be taxed.

The things you do or buy on the Internet can be taxed, but the language about “multiple” taxes means you can only get tagged once for buying something. For example, you can’t be required to pay sales tax by two states at opposite ends – upload and download, say – of a transaction, unless the second state gives you a credit for the money you paid to the first state. “Discriminatory” means that tax rates can’t be higher for something just because it was purchased or delivered online.

Artificial intelligence is smart enough for (some) federal highway safety rules

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Assume feet and hands.

The federal highway transportation safety agency agrees with Google that the artificial intelligence system that controls its autonomous cars is the driver for purposes of federal vehicle safety rules. According to a letter sent to Google by the agency and posted on its website

Google’s design choices in its proposed approach to the [self driving vehicle] raise a number of novel issues in applying the [federal motor vehicle safety standards (FMVSSs)]. Those standards were drafted at a time when it was reasonable to assume that all motor vehicles would have a steering wheel, accelerator pedal, and brake pedal, almost always located at the front left seating position, and that all vehicles would be operated by a human driver. Accordingly, many of the FMVSSs require that a vehicle device or basic feature be located at or near the driver or the driver’s seating position. For vehicles with an [artificial intelligence] driver that also preclude any occupant from assuming the driving task, these assumptions about a human driver and vehicle controls do not hold.

Google isn’t home and dry yet, though. Some rules – that cars have a foot or hand operated parking brake, for example – need to be re-written, since “the [self driving system] will have neither feet nor hands to activate brakes”. The agency was also skeptical about Google’s claim that no steering wheel, pedals or other controls are needed at all.

But the agency offered a solution: go through a (lengthy) process to change the rules, but ask for a waiver in the meantime. That doesn’t mean it’s approving Google’s design, just that it’s clearing the way for testing to see if an artificially intelligent car meets federal standards. That’s a better approach than the install a steering wheel anyway approach the California department of motor vehicles is taking while it figures out what to do with self driving cars.

Click to download a printout of the NHTSA web posting

Californian WISPs argue for exclusive right to offer poor service at a high price

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True. Someone needs to think smarter.

A couple of fixed wireless operators are fighting a rear guard action against a fiber to the home project in Nevada City. Approved for a $16 million California Advanced Services Fund subsidy by the California Public Utilities Commission in December, the Bright Fiber project would bring FTTH service to about 2,000 homes in the Nevada City area. Smarter Broadband and ColfaxNet don’t like that: they’ve gotten used to selling slow and expensive service to people that don’t have a choice. For example, Smarter Broadband’s rate card for “restricted line of sight” customers is $99 for 1 Mbps download and 384 Kbps upload speeds.

The two companies are asking the CPUC to reconsider the grant, recycling the same, unsuccessful arguments they made against the project last year. Bright Fiber filed its response, saying, among other things, that it’s about serving everybody and not just a lucky few…

What the Commission has decided…is the equivalent of a broadband “equal rights act” for households in areas where fixed line-of-sight signals from a wireless provider’s tower are inaccessible. Just because one house can receive a line-of-sight signal should not disqualify other nearby houses who cannot receive such a signal due to terrain, foliage, or lack of line-of-sight with the wireless provider’s tower. As noted in the Resolution, the project area terrain “is both irregular, with many hills and valleys as is typical in the Sierra foothills, and heavily forested.” As a result, the Resolution correctly notes that wireless signal propagation is poor due to the leaves, branches and tree trunks in such areas.

No word yet on whether the rehearing will be granted.

Tellus Venture Associates assisted Bright Fiber with preparation of its CASF grant application. I’m not a disinterested commentator. Take it for what it’s worth.

Big incumbents turn up giga-game heat

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Comcast and AT&T see high speed broadband opportunity in many of the same places. The two companies will go head to head with gigabit offerings (or at least giga-somethings) in five markets, according to a story by Sean Buckley in FierceTelecom

Comcast has made its intent clear: it’s finally going to bring its DOCSIS 3.1-based gigabit broadband services to five cities this year, a move that directly challenges AT&T and Verizon and their FTTH buildout and pricing strategies.

Following initial launches in Atlanta and Nashville, Comcast will bring the service to Chicago, Detroit and Miami later this year…it’s targeting all markets where AT&T is also offering its GigaPower 1 Gbps service. AT&T itself, the very next day after Comcast’s announcement, said that it would expand GigaPower in four large metros.

Deployment plans are still short on fiber. AT&T’s so-called GigaPower packages come in two flavors: a gigabit via fiber and 300 Mbps or less via hopped up copper. Comcast will rely on Docsis 3.1 technology, which, it says, will push residential service into the gigabit range via traditional coax. Outside plant upgrades remain necessary, though. According to the FierceTelecom article, Docsis 3.1 requires building fiber deeper into neighborhoods, splitting nodes and upgrading system bandwidth to 1.2 GHz.

Competitive heat in affluent, customer-dense markets is a good thing, but it also provides a stark contrast to rural areas and more distant suburbs. Cable companies don’t tend to build there in the first place, and big wireline phone companies are retreating, Verizon by selling systems to Frontier and AT&T by switching to fixed wireless service. Competition matters.

Wheeler keeps muni broadband cards close to chest

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Muni broadband? Never heard of it.

Eight republican senators, including presidential hopeful Marco Rubio, sent a letter to Federal Communications Commission chairman Tom Wheeler asking four questions about municipal broadband (h/t to the Baller Herbst list for the pointer). Or it might have been eight separate letters – doesn’t matter. Wheeler sent separately addressed but otherwise identical letters in reply.

If you take Wheeler’s letter at face value, the FCC has no plans to anything at all regarding municipal broadband. But it’s a mistake to take anything Wheeler says at face value. Parsing those words a little more carefully…

  • Muni ISPs aren’t getting any money from the FCC rural broadband experiments program, and won’t unless they jump through hoops first, such as becoming a certified (and regulated) telephone company and getting designated as an eligible telecommunications carrier for subsidy purposes. Translated into Californian, that means no FCC money for you. Cities don’t answer to the California Public Utilities Commission and are very happy to keep it that way.
  • If a muni broadband system completely overbuilt a small rural phone company, then that company would lose its subsidies. However, “that situation does not exist today”. Tomorrow, who knows?
  • The FCC’s preemption of state restrictions on muni broadband only applies to Tennessee and North Carolina, but there’s nothing stopping the FCC from extending it to other states, either on a blanket basis or state by state in response to requests.
  • The FCC is maintaining plausible deniability regarding any other muni initiatives. There are “no fiscal year 2016 outreach plans focused on municipal-owned broadband networks”, but there’s “regular contact with…public sector parties around the country”.

It’s a nominally neutral response to politically charged questions. Wheeler is leaving the gate open to two opposite paths: whip out a new initiative at a time of his choosing, or back off from previous full throated endorsements of muni broadband in an election year when lobbyists’ cash is king.

Wheeler’s letter to senator Tim Scott
Wheeler’s letters to all eight senators, if you really care

Cable lobby keeps shovelling false figures at California broadband policymakers

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I participated on a broadband funding panel, organised by the California Broadband Council at its meeting last week. Other panelists included telephone and cable industry representatives and a wireless Internet service provider. Much of the discussion was about the California Advanced Services Fund (CASF) – the state’s primary broadband infrastructure subsidy program – and how it interacts with other sources of funding, public and private.

The cable industry’s principal lobbyist in Sacramento, Carolyn McIntyre, tried to paint a false picture of how CASF has impacted broadband service and usage in California, claiming that only 4,000 new customers have signed up for service as a result of subsidised projects. That’s bunk, to put it politely. I pointed out that she was conflating middle mile and last mile projects, and then ignoring the tens of thousands – or more – of cable and telephone customers who have received upgraded or completely new service because incumbents have been able to take advantage of cheap and plentiful wholesale bandwidth.

The prime example is the Digital 395 project in eastern California. Several independent last mile projects have grown from it, but primarily in small, isolated communities. The project’s biggest impact is being felt in larger towns such as Mammoth Lakes, where Suddenlink – the incumbent cable company – plugged into the network and simply flipped a switch to increase broadband speeds by a factor of ten. For the same price. Similar stories can be found in towns along the route served by Verizon, Frontier and Charter – whether via direct access to cheap bandwidth or out of a justifiable fear of new competition, incumbents improve consumer service and value propositions when open access middle mile fiber rolls into town.

Muni broadband debate heats up in Tennessee, because it can

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Something you don’t see in Washington.

All or nothing federal policies are great when you’re getting it all, but when the political winds shift and you end up with nothing, it’s not so wonderful. That’s why I think the Federal Communications Commission’s preemption of state restrictions on municipal broadband is a bad idea: its current more is better policy will only last as long as three commissioners agree with it, but its authority to regulate muni broadband will live forever. Assuming, of course, that a federal appeals court ends up ruling in the FCC’s favor, which is far from a foregone conclusion.

The case in question involves, among other things, a Tennessee law that prevents a municipal Internet service provider from expanding beyond its city limits. And it’s now the target of a bill introduced in the Tennessee legislature, that’s drawing the usual fire from incumbents, according to a story in the Chattanooga Times Free Press

“We’re talking about AT&T,” Sen. Todd Gardenhire, R-Chattanooga, bluntly told a rally of business owners, families and local officials gathered in the state Capitol. “They’re the most powerful lobbying organization in this state by far.”

The bill has been opposed for years by AT&T, Comcast and other providers who say it’s unfair for them to have to compete with government entities like EPB. But EPB, as well as some lawmakers like Gardenhire, say if the free market isn’t providing the service, someone else should.

“Don’t fall for the argument that this is a free market versus government battle,” Gardenhire said. “It is not. AT&T is the villain here, and so are the other people and cable.”

State legislatures can bend to the will of deep pocketed lobbyists, but they also have to ultimately answer to voters. Muni broadband advocates have a fighting chance at winning support and changing minds, as we’re seeing now in Tennessee. That’s better odds than you get at the FCC, where public input is limited, for all practical purposes, to lobbyists and lawyers with deep pockets, and where rules are written, debated and finalised behind closed doors, with no opportunity for public review.

Mobile carriers get fixed terms for utility pole access in California

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Lower obstacles for higher poles.

Mobile broadband carriers – i.e. licensed cellular telephone companies – now have the same access to utility poles in California as wireline telephone and cable companies. That’s the result of a unanimous California Public Utilities Commission decision that modified the rules for attaching wireless broadband equipment, including ancillary gear such as power cabinets and back up batteries, to poles

With one exception, the amended ROW Rules provide CMRS carriers with the same access to utility infrastructure as CLECs and CATV corporations. The one exception pertains to pole-attachment fees. Currently, the ROW Rules allow public utilities to charge each CLEC and CATV pole installation an annual attachment fee equal to 7.4% of a utility’s cost-of-ownership for the host pole. The 7.4% fee is based on the assumption that a CLEC or CATV pole installation occupies one vertical foot of pole space.

It’s not completely open season on utility poles, though. Mobile carriers still have to at least ask for local permit approvals in order to install wireless equipment in the public right of way. However, cities and counties in California are working under much tighter shot clock requirements – either approve or deny a permit within a certain amount of time, or it’s automatically granted – and any denials or conditions can, in effect, be appealed to the CPUC.

There’s also a process for getting permission from a pole owner, which doesn’t always run smoothly or to a schedule. However one frequent objection – that a pole can’t physically handle any more weight – isn’t as big a problem for mobile carriers as for wireline companies. Mobile companies only need a few, scattered poles, not miles and miles of them, so one pole will often do as well as another, and in any event the cost of replacing a single pole is relatively inexpensive compare to the alternative of building a new tower.

FCC wants cable companies to open up networks to competitive set top boxes

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And to more obligatory cat photos.

It’s been a busy couple of weeks in the broadband policy world, and I’m still getting caught up on all the developments. The California Public Utilities Commission voted to give mobile carriers the same kind of access to utility poles that wireline telcos and cable companies have – more on that tomorrow – and the Federal Communications Commission prepared to scale the walled gardens of set top boxes.

You need a set top box to get television service from a cable, telephone or satellite company. Right now, you have to take the box that your service provider offers you, with the functionality and price it determines. You can’t buy your own box and plug it in, because service providers lock down their networks and only allow you to use their equipment. Consequently, set top boxes are expensive, with an average rental price of $7.43 per month according to an FCC press release

Lack of competition has meant few choices and high prices for consumers – on average, $231 in rental fees annually for the average American household. Altogether, U.S. consumers spend $20 billion a year to lease these devices. Since 1994, according to a recent analysis, the cost of cable set-top boxes has risen 185 percent while the cost of computers, televisions and mobile phones has dropped by 90 percent.

If you could buy your own box or a television set or computer or other device with that capability built in, you 1. wouldn’t have to pay a monthly rental charge and 2. you can pick and choose the capabilities – recording multiple programs, say – you want. Up to a point.

Later this month, the FCC will vote on whether to start the process of writing new rules that would force video providers to allow third party devices to decode and record programming streams and other services – within the limits of your subscription – and display program guide information. As is the FCC’s practice, the actual text commissioners will vote on, or at least are considering at this point, is supposedly secret – it’s not officially available – so we’ll have to wait until sometime after the 18 February 2016 vote to find out what it really says.

LA legislator wants to scrap the CPUC and start over again

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When you’re in the broadband business, it’s easy to lose sight of the fact that the bulk of the work done by state utility regulators, particularly the California Public Utilities Commission, has nothing to do with telecommunications. And from the most basic, life and death perspective, broadband is nowhere near the top of the priority list.

That privileged position belongs to the natural gas industry, because a mistake can literally destroy a town, due to an explosion, as in San Bruno, or due to a major leak, such as the ongoing one in the Porter Ranch area of Los Angeles County.

The CPUC’s handling of those two incidents, and the events leading up to them, has been the target of fulsome criticism, and now, if a southern California assemblyman has his way, could mean the end of the agency. Mike Gatto (D – Glendale) says he’s going to put a constitutional amendment in front of California voters that would abolish the CPUC and allow the legislature to parcel out its various jobs…

“After hearing about how the clear warnings of the impending Aliso Canyon gas leak were lost in the shuffle, I concluded that we need to rethink the way we regulate utilities in this state,” said Gatto. “Our concern is that the CPUC is too big to succeed; it is time to hit the reset button.”

The CPUC’s role is baked into the California constitution, so to eliminate it, Gatto will need the agreement of two-thirds of the legislature (or get a few hundred thousand signatures on initiative petitions) and then agreement from voters.