Four ISPs claim California right of first refusal for broadband subsidies, but big telcos sit it out

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Four Internet service providers exercised their jus primae noctis right of first refusal for California broadband subsidy priority by Tuesday’s deadline. That’s assuming all four got it right, which is doubtful.

When the California Advanced Services Fund (CASF) program was turned into a piggy bank for AT&T and Frontier rewritten last year, one of the benefits lawmakers slipped into the bill was an annual opportunity for incumbent providers to claim unserved areas, in exchange for a promise to upgrade broadband service within six months. They could apply for CASF money in those areas, but no one else could.

It was one of many giveaways to big incumbents, but only one of the four falls into that category. Of the major Californian ISPs, only Charter Communications filed, and it didn’t exactly claim a right of first refusal. Rather than explicitly promising any upgrades, Charter simply pointed out that it’s under CPUC orders to convert its remaining analog cable systems in California to full digital capability, and then asked to CPUC to deny any subsidy requests in its territory “in the spirit of the [right of first refusal] process”.

Charter got one thing wrong, though. It said it had until May 2019 to finish those upgrades. That’s only true in Monterey County, where a separate agreement governs. For the other communities in Tulare, Kings and Modoc counties where it has build out obligations the deadline is November 2018, per the CPUC resolution that granted Charter permission to buy Time Warner and Bright House cable systems in California (page 71, item g if anyone is curious).

The other three include Anza Electric Cooperative, which has one CASF grant in the bag and another pending for a fiber to the home build in its Riverside County electric service area and Conifer Communications, a wireless ISP that’s claiming territory that’s arguably in, or at least in the general neighborhood of, its existing service area in Amador, Calaveras, Mariposa, Stanislaus and Tuolumne counties.

The fourth is Geolinks, also a wireless ISP, with plans to apply for a CASF grant and expand into the same Monterey County communities that Charter is claiming. The new CASF law limits right of first refusal eligibility to “existing facility-based broadband provider[s]”, which is a term the CPUC has defined as providers that intend to “upgrade service in their existing underserved territories”. Geolinks has no facilities in Monterey County, although it does offer service further south on the central coast. Whether they’re close enough is something for the lawyers to argue over. As is the competing “notice” from Charter.

Anza Electric Cooperative, Inc., “CASF Right of First Refusal Annual Demonstration Letter”, 15 January 2018.

Charter Communications, “Notice of Planned Deployment of Broadband Passings”, 16 January 2018.

Conifer Communications, “Right of First Refusal Letter”, 16 January 2018.

Geolinks, “Right of First Refusal Letter”, 15 January 2018.

California senate leadership will decide if net neutrality goes to a vote

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A bill to reinstate network neutrality rules in California is in legislative limbo. The senate appropriations committee put senate bill 460 into the suspense file, where it’ll sit until the end of the week. At that point the committee, in consultation with senate leadership, will decide whether it will move on to a floor vote.

Opinions split along party lines on the Federal Communications Commission’s decision to roll back broadband’s status as a common carrier service, and in the process eliminate rules that banned paid prioritisation, throttling and blocking of Internet traffic. Republicans thought the federal government is doing a fine job with telecoms policy, while democrats begged to differ. But there was bipartisan agreement on one point – if the state does decide to try to regulate broadband service, the job should not go to the California Public Utilities Commission.

“Historically, we have the problem of overplacement of responsibility at the PUC”, said senator Jerry Hill (D – San Bruno). “Wherever this goes, the PUC is not the correct place”.

“It’s almost a blank check to the PUC…to fix a problem that doesn’t exist”, said senator Jim Nielsen (R – Tehama). It’s likely to be a substantial check – a preliminary estimate by the CPUC and the governor’s finance office puts the annual administrative tab at more than $1 million per year over the next five years.

That’s money that would have to be spent until – as is all but certain – a federal court eventually tosses out SB 460.

Because SB 460 was originally introduced as a broadband subsidy bill last year, then gutted and completely rewritten as a net neutrality bill this year, the appropriations committee has to approve it by the end of the week and the full senate has to act on it by the end of the month. Otherwise, it’ll die a quiet death.

There is another net neutrality bill in the hopper, though, one that was introduced this year and has a longer shelf life. SB 822, by senator Scott Weiner (D – San Francisco), is more artfully – if still vaguely – crafted to survive legal challenges, although to what, if any, extent that’s even possible is debatable. Nevertheless, Weiner, who also thinks the CPUC is the wrong agency for the job, said during the hearing yesterday that he’s talking with SB 460’s author – senate president pro tem Kevin de Leon (D – Los Angeles) – and “we want to work together collaboratively”.

Governors agree scrapping net neutrality was wrong, but differ on role of states

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The end of network neutrality and broadband’s status as a common carrier service doesn’t sit well with a pair of western governors. Speaking during the National Governors Association summit held alongside CES in Las Vegas last week, Nevada governor Brian Sandoval and Montana governor Steve Bullock both thought it was a bad decision by the Federal Communications Commission, but had different views on whether net neutrality is something that can be addressed at the state level.

“I’m concerned about the decision. I don’t support the decision but the exclusive regulation of that issue is within the FCC”, said Sandoval, republican. "The danger, in my mind, is having 50 different sets of rules and regulations associated with that, particularly with something as ubiquitous as the Internet.

“It took us all a little by surprise, that we would repeal something that seemed to be working pretty darn well”, said Bullock, a democrat. “If congress doesn’t act, we’ll see if there’s something states can do”.

Sandoval chairs the association and brought it to Las Vegas for the first time. Proximity didn’t seem to be a selling point for California governor Jerry Brown, who skipped the conference. The hot topic was technology and transportation. “We had 26 states with us this week, and the focus was on transportation, particularly autonomous vehicles”, Sandoval said. He sees self driving car policy as a responsibility that states share with the federal government, and coordination is necessary.

Bullock agreed. “We need to help provide an environment and a regulatory framework that supports innovation”, he said. “I don’t think it’s government’s role to prop up businesses that can’t compete, but where we can facilitate the opportunities for technologies…most governor work in concert with private companies”.

Energy innovation and infrastructure was also high on their list.

“None of these developments can happen without equal advancements in energy”, Sandoval said. “While states are driving innovation, the burden of modernising and maintaining the nation’s transportation and energy network is a shared obligation. State, federal and local governments must partner to invest in quality infrastructure and meet our nation’s needs”.

It’s a pressing problem, Bullock said. “One of the most antiquated technologies in the western United States is the electric grid”.

Futile or not, California senate committee approves net neutrality bill

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Network neutrality rules were endorsed by the California senate’s energy, utilities and communications committee last week. On a 7 to 2 party line vote – democrats aye, republicans nay –the committee approved senate bill 460, by senator Kevin de Leon (D – Los Angeles). It would reinstate the net neutrality requirements that the Federal Communications Commission repealed last month.

The bill is supported by consumer advocacy groups, and opposed by telecoms companies, including AT&T, Frontier Communications and Comcast’s and Charter’s lobbying front, the California Cable and Telecommunications Association (although someone needs to check in with Comcast – it has not ruled out paid prioritisation, as CCTA’s chief lobbyist, Carolyn McIntyre, testified).

On the face of it, SB 460 has no practical effect so long as the FCC decision, which explicitly preempts state-level net neutrality rules, stands. As the committee’s staff analysis delicately noted…

Under the Order that was just issued, the FCC states they “preempt any state or local measures that would effectively impose rules or requirements that we have repealed or decided to refrain from imposing in this order.” As such, the success of implementing this bill is largely hinged on the new order being repealed or rejected, in whole or in part. Considering the high likelihood that the courts will be asked to weigh in, it seems within the realm of possibilities that the new order may not withstand a court challenge.

But if the FCC’s decision is tossed out in court, the federal net neutrality rules snap back into place. So there’s not much practical value to de Leon’s bill, except that it gets him noticed by voters who care about such things, without greatly upsetting the big money donors who oppose it. De Leon needs a lot of name recognition and cash – he’s running for the U.S. senate against Dianne Feinstein, who has plenty of both.

Among those voting yes was senator Scott Weiner (D – San Francisco), who has introduced net neutrality bill with a somewhat different approach. Weiner was glad that de Leon was also pushing for net neutrality, but he had concerns about whether SB 460 would withstand court challenges. He – and most of the other committee members – also expressed misgivings about making the California Public Utilities Commission the state’s Internet cop.

The next stop for the bill is the senate’s appropriations committee, which is scheduled to consider it tomorrow.

Old tech gets a hot new makeover at CES

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It seemed you couldn’t walk down an aisle at CES without seeing an electric bicycle, or an electronic accessory for the human powered kind. Like the Wink Bar, which took top honors at the Showstoppers LaunchIt pitchfest, held the day before the show formally opened.


Wink Bar.

The Wink Bar, developed and sold by Velco, a Paris-based start up, was declared the best of the twelve new products pitched in rapid fire succession to a panel of four judges with deep experience in venture capital and entrepreneurial enterprises. It’s a high tech handlebar that links to your smartphone and guides you through unfamiliar cities with simple flashing lights that cue you to start and stop, and go right and left. It’s sold through bike shops for $279.

It’s more than simple route planning, though. It’s also a platform for tourism and bike sharing services – Velco’s partners use it to create tour routes through cities. Customers can ride safely and quickly with their eyes on the road, and not on a map or smartphone screen. The company sold 70,000 Wink Bars last year and is targeting 14 million units in annual sales by 2021.

The rest of the field was…

  • Athom – hub that controls home automation and entertainment technology.
  • Big Boy Systems – headset that records 3D video and audio, just as a human would.
  • Cardiomo Care – wearable analytical device for heart disease prevention.
  • Cinema Snowglobes – another old-into-new transformation, with the venerable snow globe reimagined as a video snack (pictured above).
  • Cubomania – interactive, educational cubes for kids.
  • Pebby Corp. – a networked, robotic ball that lets you play with your dog while he’s at home and you’re at work.
  • Picoo – wands that kids use to play elaborate games of tag.
  • Robomart – self driving store for grocery retailers.
  • SolarGaps – solar cells.
  • Stream – internationally roaming WiFi hotspots.
  • Zhor-Tech – smart shoes that analyse your gait and tell you, among other things, if you’re drunk.

Big brother, small ball and connected cars at CES

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CES 2018 marked a turning point in the consumer electronics business. For the first time, the big companies talked more about services than products. This shift has been long in the making – it’s why the organisers no longer refer to it as the Consumer Electronics Show – and 2018 was the tipping point. It was all about connected home products, with long neglected categories like kitchen appliances and washers and dryers suddenly taking center stage. The products themselves are increasingly generic, with differentiation coming from the voice recognition and artificial intelligence services that manufacturers bundle in.

The thought of my refrigerator or garage door opener constantly analysing my actions and predicting what I’ll want next seems spooky, even unsettling, to me, but conventional wisdom is that what older consumers perceive as surveillance state products, younger ones embrace as high level service. Plenty of innovation was on display, but it came from cloud-delivered services, and not from a box.

Small and medium sized companies were not the place to look for breakout products this year. I checked out the evening showcases, which cater mostly to smaller and newer exhibitors. The first, CES Unveiled, didn’t have much under the veil. Most of the exhibitors were small companies with, at best, incrementally innovative products. The lineups at Showstoppers and Pepcom’s Digital Experience were better, but aside from a 300-mile marathon trek on a Onewheel electric board, there weren’t many wow moments. Same for Eureka Park, the now huge section of the CES show floor dedicated to start up companies. There were plenty of toys, and lots of me-too products and barely discernible upgrades to existing products.

Looking ahead, one path for startup success will be through the big AI platform operators, either the generic ones like Amazon or Google, or the in house systems developed by the big boys.

This year will also be remembered as the year when cars became a consumer electronics product. The north hall of the Las Vegas Convention Center looked like a car show. Automakers have exhibited in past years, but there were more of them, and more with marketing messages crafted around connected services. Even ones that you wouldn’t ordinarily associate with the automotive market, such as health monitoring.

Carmakers also have extensive AI projects underway, as the rush towards self driving cars picks up speed. If cars are just another consumer electronics platform, then the big auto companies will also be players in the consumer AI game.

Far from collapsing, the consumer electronics industry on display at CES was expanding into new services and new sectors, all of them linked by live data streams.

Connected, automated homes are the new frontier for big consumer electronics companies

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Home automation, powered by cloud-based artificial intelligence, is now a mainstream product category, taking center stage at the major consumer electronics companies’ booths at CES. The huge 4K and 8K screens that dominated Samsung’s display the past few years were stuck in a back corner, while the main aisles were lined with home appliances with voice recognition systems and driven by artificial intelligence.

LG led its press conference with artificial intelligence, via both its in-house platform and Google Assistant. Its flag bearer is CLOi, a smart speaker shaped like a cute little robot with expressive eyes that’s “capable of physical and emotional interaction”, according to marketing VP David VanderWaal.

Yes. It is.

He asked “what’s for dinner”? CLOi just blinked and stared at him. “CLOi, are you talking to me yet? What recipes can I make with chicken?” More blinks and stares. Instead of a virtual June Cleaver, VanderWaal was dancing with Peg Bundy. Sorry guys, AI won’t be a wormhole back to the 50s.

In-house AI platforms might still be a work in progress, but Google Assistant and Amazon Alexa are ready for prime time and are also included in products from major manufacturers. When VanderWaal invoked Google Assistant during his demo, it responded flawlessly.

There was no shortage of third-party home automation hubs on display, many of them claiming AI capabilities and universal compatibility, but the prospects for most are fading. The one bright spot remains vertical markets, such as home security or commercial properties, where professional installation and support makes economic sense.

Consumers don’t want to wrestle with the things they buy – it’s a lot easier to flip a light switch than it is to wrestle with a Z-wave network or hack at automation scripts. When you speak a command and it just works though, it’s a mainstream product.

New broadband top cop talks and walks a narrow beat

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Death threats kept Federal Communications Commission chair Ajit Pai away from CES, but the acting chair of the Federal Trade Commission, Maureen Ohlhausen, sat down for an interview on Tuesday with Consumer Technology Association CEO Gary Shapiro. Her agency is responsible for broadband consumer protection enforcement, after the FCC bucked the job over last month. Appropriately, Shapiro opened with a couple of questions about network neutrality.

Ohlhausen said her concern is transparency – service can be pretty much anything so long as terms are disclosed – and the FTC will look at one basic question: whether consumers get what they’re promised. She made vague references to anti-trust laws and the FTC’s reacquired authority over telecoms companies, now that broadband is no longer reckoned to be a common carrier service (although she neglected to mention that her new found authority is under challenge in court). Ohlhausen’s expertise and jurisdiction are clearly not broadband-specific.

Nevertheless, Shapiro tried to draw Ohlhausen out on broadband issues, noting there are “a hundred different telecommunications companies in Europe” that offer lower priced broadband at a variety of speeds, while the U.S. telecoms market is dominated by four players. Ohlhausen said mobile carriers would provide competition in the future, pointing out that they’re now delivering broadband at speeds that consumers would have considered to be adequate a few years ago.

True. But expectations are higher now and will continue to rise. The 5G networks that Ohlhausen is banking on may deliver speeds that consumers likewise consider adequate today. But those upgrades are many years away for most U.S. residents, and their expectations and their bandwidth consumption will continue to rise. Ohlhausen also forgot to mention that the two biggest mobile companies – AT&T and Verizon – belong to Shapiro’s gang of four.

When the FCC and FTC reached a working agreement on how to divvy up broadband responsibilities, Pai called the FTC “our nation’s premier consumer protection cop”. Perhaps. But Ohlhausen shows little enthusiasm for the job.

FCC swings a policy sledgehammer at local governments in 2018

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They might have ducked substantive statements about network neutrality, but two members of the Federal Communications Commission had a lot to say yesterday about local governments. Commissioners Michael O’Rielly and Mignon Clyburn clashed during an FCC panel discussion at CES, which also included their colleague, Brendan Carr. O’Rielly and Carr are two-thirds of the republican majority on the commission; Clyburn is a democrat.

When asked about what plans he has for 2018, particularly regarding removing barriers to broadband deployment, O’Rielly pointed directly at local governments. While some cities are doing a good job managing permit processes and access to infrastructure, “there are many bad actors out there that see it as an opportunity for revenue gathering or power struggle”, he said. “I’m willing to use my authority to push those bad actors out of the way”.

That’s the wrong approach, Clyburn argued. “Not all communities are created equal”, she said. The FCC should “not take a sledgehammer when only a scalpel is needed”.

“We’ve tried the scalpels, we’ve tried the different approaches”, O’Rielly replied. “Now we have communities that are trying to extract dollars that they don’t deserve”.

O’Rielly said he’s waiting for the FCC’s lobbyist-laden broadband deployment advisory committee (BDAC) to come back with final policy recommendations later this month. He’s sure to be happy. BDAC’s draft proposals, released in November, are exactly the kind of sledgehammer O’Rielly seems to want: federal preemption of state and local permit processes for wireless sites and other broadband infrastructure, preemption of local ownership and oversight of poles and other wireless assets, statewide cable franchising and, for good measure, a de facto ban on muni broadband systems.

The panel session, moderated by Julie Kearney, a top lobbyist with the Consumer Technology Association, opened with an obligatory question about net neutrality and the commission’s decision to scrap common carrier status for broadband service. Aside from a couple of zingers – Clyburn called it “the destroying Internet freedom order”, while Carr blasted those who “are flaming the false flames of fear” – the conversation was about the process ahead and the occasionally collegial and occasionally not relationships between commissioners.

Trump outsources rural economic development to wireless broadband companies

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U.S. president Donald Trump put privately funded wireless broadband at the top of his rural economic development agenda yesterday. In a speech to the American Farm Bureau Federation, Trump embraced recommendations made by a government task force he created to define rural economic development policy. The task force report labeled rural connectivity “essential” and “fundamental for economic development”, and leaned heavily on wireless solutions.

“The task force heard from farmers that broadband internet access is an issue of vital concern to their communities and businesses“, Trump said. “That is why today, in a few moments, I will take the first step to expand access to broadband Internet in rural America. I will sign two presidential orders to provide broader, faster—and better—internet coverage”.

Those orders direct the interior department to make some of its assets, presumably towers and wireless sites, available for broadband development purposes and generally tell federal agencies to speed up antenna installations on federal buildings.

The task force did not call for increased federal spending on broadband infrastructure. Instead, it recommended trimming back regulations, favoring wireless facilities over wireline construction, and trusting broadband service providers to get the job done…

Past efforts to connect rural America have resulted in the allocation of substantial amounts of federal funds for broadband deployment and, while such investments made important contributions, our country has not fully achieved the connectivity needed for success in the economy of today and tomorrow. Although capital investment is one aspect of bridging the divide, far too many government policies stifle network buildout. By streamlining the deployment process, allowing access to existing infrastructure, and reducing barriers to buildout, risk can be reduced and providers can be encouraged to expand networks throughout rural America.

As we modernize and reduce regulations, we should also consider the full range of means to connect rural communities, including satellite, fixed wireless, and cellular networks. These technologies can be less expensive to deploy than traditional wired networks and are rapidly improving in quality.

The focus on building wireless infrastructure with private capital –supplemented by existing federal subsidy programs, particularly the Federal Communications Commission’s Connect America Fund (CAF) – is consistent with past Trump administration positions. Its national security policy paper, released last month, similarly called out 5G infrastructure. Republicans at the FCC and in congress favor using the CAF model as a low cost, incumbent-centric method of upgrading rural broadband. And of course, FCC chair Ajit Pai generally wants to take a weed whacker to telecoms regulations.

CAF-subsidised wireless service, as deployed by AT&T and planned by Frontier Communications, will freeze rural broadband speeds at 10 Mbps download and 1 Mbps upload for a generation or more. That service level is far below the 25 Mbps down/3 Mbps up standard adopted by the U.S. agriculture department, and it’s nowhere near enough to deliver, as yesterday’s report calls for, "reliable and affordable high-speed internet connectivity [that] will transform rural America as a key catalyst for prosperity.

But Trump says it’s enough.

Report to the president of the United States from the task force on agriculture and rural prosperity, released 8 January 2018