Charter takeover of Time Warner would be anticompetitive, protests say

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Maybe Comcast and Charter will get a junction named after them too.

Charter Communication’s bid to buy two rival cable companies, Time Warner and Bright House, appears headed down the same rhetorical highway that led to the death of Comcast’s similar attempt earlier this year. At least in California.

Three formal protests were filed against Charter’s request for approval of the deal from the California Public Utilities Commission, by the CPUC’s own office of ratepayer advocates (ORA) and various advocacy organisations. As is to be expected at this early stage of the process, none of the protests were particularly specific and mostly focused on making the case that the CPUC can review the broad public interest implications of the deal, including its effect on the market for broadband services in California. In many ways, the arguments mirrored the language that the commission considered, but ultimately did not adopt, while it was weighing the benefits and the potential damage of the Comcast deal.

As it did with the Comcast merger, ORA’s protest made the point that reducing the number of overall competitors reduces market competition, even where they are not going head to head…

The Commission should view the current proposed merger as evidence of a tipping point in terms of broadband consolidation. Should regulators approve the proposed Charter merger with TWC, ORA fears that it will be become more difficult for other broadband providers to compete effectively against Charter and it will be extremely difficult, if not outright impossible, for new entrants to break into the broadband market. The CPUC should not let history repeat itself. Approving a merger which would ultimately lessen, to an apparently significant degree, competition in the broadband market, and which would leave, as the only remedy, an unpredictable and uncertain Department of Justice antitrust lawsuit, is not something that the CPUC should allow to happen.

Los Angeles County also is jumping into the debate, asking the CPUC for extra time to file its own protest.

CPUC endorses extending lifeline tax to broadband service

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One of the ways that broadband service and infrastructure is subsidised is through universal service taxes paid by consumers on their telephone bills, both in California and at the federal level. Broadband itself, however, is not taxed in that way.

Earlier this year, the Federal Communications Commission decided that broadband is a telecommunications service that, to one extent or another, falls under common carrier rules and universal service obligations previously reserved for traditional telephone service. At the time, there was the usual partisan bickering over whether the FCC intended to use the new rules to extend universal service taxes to broadband. The official answer was no, but it seemed obvious that the real answer was not yet.

Now the FCC is asking for comments on whether subsidised, inexpensive “lifeline” telephone programs for low income people should include some level of broadband service. Which raises the question of where the money to pay for it will come from.

At its meeting last week, the California Public Utilities Commission looked at several issues surrounding lifeline broadband service – you can read the entire analysis here – including how to pay for it. The CPUC’s answer, which it’s submitting to the FCC, is essentially that telephone and broadband bills should be treated the same

[Federal telecoms law] requires “all providers of telecommunications service . . . [to] make an equitable and nondiscriminatory contribution to the preservation and advancement of universal service.” Since [Broadband Internet access service (BIAS)] is now a telecommunications service, and BIAS providers are telecommunications carriers under federal law, they should be required to contribute to the universal service fund.

I’m not a fan of the tax system, but I agree with the logic. Putting telephone and broadband into different policy buckets is an increasingly artificial and unsustainable practice.

Express lane bill for tower permits clears California legislature

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Not much point if no one pays attention.

Permit applications for new cellular towers and other wireless telecoms facilities will be deemed granted in California, if local governments don’t make a decision within Federal Communications Commission deadlines. Assuming governor Jerry Brown agrees.

The California assembly waved assembly bill 57 through on a 66 to 8 vote last week, agreeing to amendments made in the state sentate. The measure puts teeth in the FCC’s shot clock: if an application for a new tower or other wireless facility isn’t approved or denied in 5 months or one for collocation of equipment on existing facilities isn’t acted upon within 3 months, then the permit is automatically granted. There are provisions for temporarily stopping the clock while applicants answer questions, and local governments can still try to block cell towers in court.

AB 57 was backed by mobile carriers, affiliated lobbying groups and business organisations, and initially received near unanimous support from lawmakers. But it drew strong opposition from local governments, citizens groups and their lobbyists, and the list of legislators either voting against it or abstaining grew as time went on. According to the legislative analysis prepared for the assembly, the arguments against the bill boiled down to we want local control

Opposition argues that this bill effectively eliminates the ability of local agencies to meet the needs and best interests of local communities on determining the siting and collocation of wireless facilities. Opposition notes that federal law and regulations are sufficient on the matter and no change to state law is needed.

That ability, however, is pretty much limited to stalling unpopular permit applications, rather than engaging in substantive reviews. The bill’s author, assemblyman Bill Quirk (D – Hayward), said that it doesn’t affect the existing authority local agencies have over wireless facilities (which isn’t much anyway) but does prevent them from exploiting a “loophole” to create “unreasonable delays” in reaching decisions.

AT&T abandons copper to spend rural broadband subsidies on wireless

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As it accepted $2.6 billion in federal subsidies over six years to improve rural broadband service, AT&T told the Federal Communications Commission that it’ll spend the money on building out its wireless infrastructure, rather than upgrade decaying copper networks. Consistent with the story it told the FCC during its successful bid to acquire DirecTv, AT&T called out plans to rely on what it previously labeled as wireless local loop technology to deliver broadband service to rural customers in areas that are eligible for Connect America Fund (CAF) money…

We anticipate meeting our CAF Phase II obligations through a mix of network technologies, including through the deployment of advanced wireless technologies on new wireless towers that will be constructed in previously unserved areas. We will diligently pursue the necessary tower siting and permitting processes so that these new towers can be completed in a timely manner.

Wireless local loop is a hybrid of fixed and mobile wireless technologies. It involves linking cell towers primarily designed to support mobile service to homes and businesses by permanently installing antennas and receivers aimed at those towers. In the past, AT&T has said this type of system is capable of supporting Internet speeds in the 15 Mbps range, which in theory exceeds the FCC’s 10 Mbps download and 1 Mbps upload standard for CAF-subsidised service.

AT&T hasn’t released any information about how much this service would cost. If it tracks with typical mobile broadband rates it will be far more expensive than wired service, but it could be priced differently.

It’s not a forgone conclusion that AT&T will be allowed to abandon its rural copper systems in favor of wireless service, but the company is making it clear to the FCC and everyone else that it is heading in that direction.

CPUC will investigate AT&T, Verizon wireline network conditions

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How much of it looks like this?

The condition of AT&T’s and Verizon’s copper telephone networks in California will be independently examined. By a vote of 4 to 1, the California Public Utilities Commission decided to speed up an existing study of wireline systems in the state, instead of scrapping it altogether.

That study has been in the works since 2011. It isn’t popular with AT&T or Verizon, which put up vociferous opposition, or with CPUC president Michael Picker, who voted against it on Thursday.

But the other four commissioners disagreed. The CPUC’s review of Frontier Communication’s proposed purchase of Verizon’s wireline systems, which included a series of public hearings around the state, put a spotlight on decaying infrastructure.

“I’ve probably spent more time than most of you looking at telephone lines and conduits. We’ve seen a lot of things out there that do evidence deterioration in the network”, commissioner Catherine Sandoval, who conducted the hearings, said. “Communities are very concerned about what’s going on in the network, in the physical network”.

Sandoval and fellow commissioner Mike Florio opposed Picker’s attempt to cancel the investigation. The crucial third vote emerged a couple of weeks ago when commissioner Carla Peterman said she could support it if some changes were made.

The study could inform several decisions commissioners will have take in coming months. But it’s likely to be a while before any useful data is generated – commissioners gave staff six months leeway just to get it started. That frustrated Peterman, who urged managers to hurry it along, saying “I continue to be amazed at the various hurdles we have to jump through in order to implement our decisions”.

Faster rural Internet headlines faster Canadian election

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Speed matters in Canada.

Better broadband infrastructure and service seems to be the shortest route to rural voters hearts, at least in Canada. Instead of hyping more generous farm subsidies or big, new water projects, Canadian prime minister Stephen Harper is making faster Internet access for rural areas a top promise, as he campaigns for a fourth term

At a campaign event in the eastern Ontario community of Lancaster, south of Ottawa, Mr. Harper says there is no infrastructure investment more critical to Canada’s economic fortunes than Internet access.

His plan calls for spending an extra C$200 million (about US$150 million) to build out faster broadband service to 350,000 more homes by 2017. That’s about 3% of the Canadian population – proportionately, the U.S. equivalent would be something like 3 million households.

The U.S. federal government is no stranger to such promises. The stimulus program of 2009 aimed to upgrade broadband infrastructure for 7 million homes, but gradually lowered the goal to a tenth of that level – about 700 hundred thousand – before giving up on quantitative targets altogether. At last count, the program had only managed to light up a couple hundred thousand households, and it’s not entirely certain those are all rural.

Harper is hedging his bets, also pledging better roads and bridges, and more doctors and nurses for rural areas, familiar campaign themes on both sides of the border. There is one difference, though, that should be the envy of burnt out U.S. voters: the length of the Canadian election cycle. It began about two and a half months ago, and runs through mid-October. Of this year.

Big telcos claim half a billion dollars for rural California broadband

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The two biggest incumbent telephone companies in California will be taking federal subsidies to upgrade rural broadband service. Yesterday was the deadline for AT&T and Verizon to claim the money, and both more or less said yes.

AT&T’s acceptance was unambiguous. It’s taking the Federal Communication Commission’s offer of $60 million a year in Connect America Fund (CAF) subsidies to boost Internet service speeds to 10 Mbps down/1 Mbps up for 106,000 homes and businesses in rural California. Interestingly though, AT&T turned down $3.7 million to upgrade 7,000 customers in Nevada.

Verizon, on the other hand, doesn’t want anything to do with CAF money. It turned down subsidies everywhere it operates except California and Texas, where it put a marker down on behalf of Frontier Communications, which is in the process of buying Verizon’s wireline systems in those states. Verizon said no to the money offered for Florida, where it is also selling out to Frontier – no reason given as yet. Adding Verizon’s $32 million annual CAF allocation to the $6.1 million it claimed for systems it already owns gives Frontier a total of $228 million in subsidies over six years to upgrade 58,000 Californian customers.

Consolidated Telecom – formerly known as SureWest – picked up $15,000 a year to upgrade 17 subscribers in the Roseville area, while CenturyLink turned down $55,000 for 45 homes and/or businesses just this side of the Oregon border in Modoc County.

All together, the subsidies claimed by the big carriers in California are worth $98 million over six years, for a total of $590 million. The companies are required to hit construction benchmarks, which amount to upgrading at least 20% of subsidised locations every year for five years, with full completion by the end of 2020.

California senate votes for quicker wireless permit decisions

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A fast track for wireless facilities permits is one step closer to reality in California. Assembly bill 57 was approved by the state senate and sent back to the assembly, which needs to either agree with senate amendments or work out compromise language in order for it to be sent on to Governor Jerry Brown.

The senate vote was lopsided and bipartisan – 28 yes, 6 no and 6 abstentions. All of the noes and abstention were on the democratic side of the aisle

If approved, the bill would put teeth in the Federal Communications Commission’s shot clock rules, which essentially give local governments 90 days to approve or deny applications for co-location of additional equipment on existing cellular sites and other wireless facilities, and 150 days for new ones. There are provisions for stopping the clock temporarily, for example while an applicant responds to a request for more information, but once it ticks down, wireless permit applications are deemed approved unless a city or county has taken final action. There’s also a 30 day window for local governments to go to court, in order to make a case that an application shouldn’t be automatically granted.

The most recent legislative analysis points out that the bill doesn’t say that the clock stops if an application gets bogged down in environmental reviews, a popular tool of both nimbys and local governments that are intent on stalling or stopping projects. It’s also silent on the effect of open meeting notice periods and appeals processes. The analysis concludes that local governments…

Face the difficult choice of cutting short these important processes, reducing the time that they have to review applications, or denying permits and facing litigation.

One might say, though, that’s the whole point of the bill.

Possible agreement at the CPUC to investigate AT&T, Verizon networks

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A streamlined version of a decision aimed at accelerating an investigation of AT&T’s and Verizon’s wireline networks is on the table at the California Public Utilities Commission.

The debate surrounds a study of wireline network quality that has been in the works at the CPUC since 2011. Commission president Michael Picker wants to cancel the investigation, an idea that Verizon and AT&T greeted with wild enthusiasm.

Two other commissioners – Mike Florio and Catherine Sandoval – weren’t so enamoured and offered an alternate draft that 1. ripped AT&T and Verizon a new conduit for not meeting service standards (in proper legal language, of course), 2. set out other justifications for speeding it up instead of scrapping it altogether, and 3. set a six month deadline for finally getting the study underway.

Commissioner Carla Peterman objected to some of the more pointed comments in Florio’s and Sandoval’s draft during the most recent CPUC meeting a couple weeks ago, basically saying that a lot of the rhetoric was unnecessary and distracting, and all that was really needed was to clearly say get it done. If the language, but not the clear directive, of the draft was toned down, she indicated she’d be amenable to backing it.

The new version seems to meet that request. Peterman’s support is important, because it means there are three votes – the minimum needed – in favor of speeding up the investigation and get independent, neutral information about AT&T’s and Verizon’s rotting copper in California, rather than having to constantly referee arguments between the companies themselves and groups with a vested interest, of whatever kind, in the outcome.

The vote is scheduled for tomorrow.

Billions of dollars at stake this week for rural broadband upgrades

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Ready for an upgrade?

AT&T and Verizon have until Thursday to claim billions of dollars in subsidies to upgrade broadband in rural areas of the U.S., including hundreds of millions to improve service in California.

The Federal Communications Commission gives operating subsidies to telephone companies that provide broadband service in rural and/or remote areas, as a part of its universal service mandate. In the current round – Phase 2 – of the Connect America Fund (CAF) program, the FCC is offering large telephone companies a right of first refusal to accept these funds, on a state by state basis.

Frontier has already accepted $6.1 million a year for six years – $36.6 million total – and, in return, will upgrade all of its subsidised service territory in California. It’s also said that if it gets regulatory approval quickly enough to buy Verizon’s wireline systems in California, Florida and Texas, it will claim those subsidies as well – $31 million in each of six years for a total of $186 million, just in California. Nationwide, including the systems it’s trying to unload, Verizon is eligible for $144 million a year, or $864 million total.

That’s chump change compared to what AT&T could pick up, though. The FCC is offering $494 million a year – call it $3 billion total – nationwide, and $60 million a year – $360 million total – just in California.

That’s a lot of money, and you’d think that AT&T and Verizon would grab it. But there’s a good chance they won’t, because as a practical matter it would mean upgrading all households in a given area to the 10 Mbps down/1 Mbps up speed standard that the FCC set for the CAF program, not just the ones eligible for subsidies. AT&T’s and Verizon’s decisions will tell us a lot about what they really intend to do with their decaying copper networks in rural California.