“Fool me once, shame on you, fool me twice, shame on me.”
The California Emerging Technology Fund and a long list of affiliated groups want the FCC to force Comcast to live up its own commitments, if the proposed merger with Time-Warner Cable and the market swaps with Charter Communications are approved. In a letter to the commissioners and supporting documents, CETF blasts the way Comcast has handled a program – called Internet Essentials – it claimed would give $10 per month Internet service to low income families with children…
In 3 years, Comcast has signed up only 11% of the eligible households in California and the nation. That is 35,205 households in California out of more than 313,000 eligible families. At that rate, it would take another decade for Comcast to reach just half of the currently-eligible population…
In the first 3 years, the program has been riddled with problems, including 8–12 week waits before getting service, credit checks on customers in violation of advertised program rules, a non-working online sign-up system, and customer representatives who give out wrong or inconsistent information.
Sleazy practices include signing up only the eldest child in a household, so eligibility will end years sooner, upselling poor families into more expensive packages, and telling callers – erroneously – that they can’t get Internet Essentials unless they have a social security number and are willing to hand it over to Comcast.
The poor performance of Comcast CSRs should come as no surprise to anyone who listened to the audio recording posted last week of the customer service phone call from hell. The flood of comments and condemnations that followed it made it clear that it was Comcast’s smash mouth customer service policy that was at fault, not some hapless employee.
Internet Essentials is a good program, in theory. It was originally offered as a way to grease the skids for Comcast’s purchase of NBC Universal, and then extended when the Time-Warner was announced. Its failure to run the program in good faith, as documented by CETF, points to the futility of relying on Comcast’s promises, though. I’m glad CETF is asking the FCC to include stricter oversight as a condition of any merger, but a better question is whether Comcast is fit to control 80% of California’s cable market. There’s no point to offering a second chance.
It’s time to close the door on the last round of applications for broadband construction subsidies from the California Advanced Services Fund. Of the 32 proposals submitted on 1 February 2013 – nearly a year and a half ago – 17 were funded for total of $48.6 million in grants and $127,000 in loans. The final two were approved by the CPUC in June – an FTTH project in Mono County and a fixed wireless system in Shasta County.
Twelve proposals didn’t make it, for a variety of reasons. Some were pulled because of competitive upgrades from incumbent service providers, others either didn’t have a ready-for-prime-time application with a supportable business case and/or valid eligibility claim, or were bumped in favor of another applicant for the same area. The total ask on the rejected projects was $170 million.
That leaves three projects, totalling $29.1 million in grants and loans still on the table, and still under review. Two of those – ViaSat at $11 million and Bright Fiber at $17 million – have run into a buzz saw of challenges from incumbent providers. The third one – a DSL upgrade in Madera and Fresno Counties proposed by Ponderosa – is relatively modest at $945,000 but has likewise stalled in the review process.
With the CPUC’s approval of a new timeline and rulebook for the CASF program, the next round is underway. The next application window will open on 1 December 2014, but it will stay open until the money runs out – when an application is submitted is relatively unimportant. All that matters is when it’s finally approved by the commission. Whether by design or default, the 3 unresolved applications have, for all practical purposes, been bumped into the next round.
The most difficult and costly part of any wireline broadband infrastructure project is getting cable from point A to point B. There are two primary ways of doing it: stringing it on poles or running through buried conduit. Since the chances of getting permission to build a new pole route in California is only slightly better than the odds of getting approval to drill for oil in San Francisco Bay, your only independent alternative is to start digging, at the rate of $30 to $60 a foot or more.
But public utilities in California do not operate completely independently. That’s good news if you have the seal of approval from the California Public Utilities Commission, otherwise known as a certificate of public convenience and necessity. That piece of paper gives you the right to go to other (older) utilities, like PG&E or AT&T, and force them to let you use their poles and conduits. Up to a point, anyway. If there’s no space available, then it’s generally up to you to pay the cost of making room, which can be quite high if poles have to be replaced or new duct work installed.
Even so, the contract terms that regulated utilities impose on each other are, to a large extent, regulated and publicly disclosed. Jim Warner at UCSC has taken the trouble of hunting down several of these contracts and posting them. As he explains…
Regulated utilities with access to public right-of-way must share resources with other utilities. Rates are established in contracts that also set other terms of sharing. Underground duct rents for about $1 per foot per year. Right to attach a cable to a phone or power pole is about $5 per pole per year. I have a collection of contracts with rates.
Which is right here, although I’ve pasted the links he’s gathered to date below as well. Happy reading.
Microsoft’s new CEO, Satya Nadella, has gotten it right. His 10 July 2014 email to Microsoft employees set out a clear path forward for the struggling giant and this week’s announced layoffs of 18,000 employees turned that vision from clear into ruthless. Which is the only way the company will survive as a major tech player in the 21st century.
Star legacy businesses – Windows OS, Office productivity software, Xbox – will survive, but primarily as stepping stones to cloud and mobile services, which are intended to reach customers regardless of whether they’re using Microsoft products…
All of these apps will be explicitly engineered so anybody can find, try and then buy them in friction-free ways. They will be built for other ecosystems so as people move from device to device, so will their content and the richness of their services – it’s one way we keep people, not devices, at the center. This transformation is well underway as we moved Office from the desktop to a service with Office 365 and our solutions from individual productivity to group productivity tools – both to the delight of our customers.
He seems to have adopted a two-pronged strategy: keep making Windows phones and tablets, and Xbox consoles, but ensure that any significant software, service or content that works on them will perform seamlessly and equally well on Apple, Android and other devices. He put his finger right on the key problem he’s faced with, which is that the scarcest resource is a customer’s attention span.
Apple’s strength is an ethos that says make it elegant, but first make it work. Nadella might or might not get around to making Microsoft elegant – a tall job, to put it most mildly – but he grasps that the “stuff” he sells has to work. Which means delivering maximum satisfaction with minimum differences and learning curves across a universe of platforms, devices and operating systems.
The Microsoft of 20 and 30 years ago had the youthful fire to take on a job like that. If Nadella can rekindle it, he will succeed. The job cuts he’s making shows that he intends to.
The Six Californias campaign had some good news and some bad news for its supporters. The good news is that it gathered 1.3 million signatures in its petition drive – half a million more than the number necessary to get it on the ballot. The bad news is that the proposal to split our state six ways won’t go to a vote in November. Instead, the initiative’s backers intentionally slipped the 26 June deadline for filing the petitions – the advice they gave to circulators was to mail signatures back by 7 July.
Assuming that there wasn’t massive fraud or illegible handwriting involved – and of course, the professionally aggrieved have already filed complaints to that effect – Californians will have a chance to vote on the plan in November 2016. Which means we’ll have more than two years to talk about it.
That’s the main purpose – I believe – behind the drive. The proposal is not going anywhere, even if voters approve – the measure is riddled with suicide pills. But it will be healthy for Californians to have an existential debate. Contrary to what the petition claims, our state is not ungovernable. Execution isn’t exactly optimal, but the mechanism of Californian governance is functional. The problems with the actual operation of it – starting with the trump card of campaign cash – are likelier to be multiplied by six than subtracted from the equation if we split apart. And California isn’t exactly an aberration in that regard.
North or south, east or west – we have common interests as Californians. Let’s not miss this opportunity to discover it.
Blackburn’s not shy about extending a helping hand, particularly towards money.
States would be free to ban municipal broadband projects, under under language inserted into a bill and approved by the U.S. house of representatives (h/t to the Baller-Herbst listserv for the heads up). Since bills that get passed by the republican-controlled house seem to have a rocky time in the democrat-controlled senate (and vice versa), it’s unlikely have any practical effect. But the idea is to pre-empt FCC chairman Tom Wheeler’s (likely empty) talk about stepping in between local governments that want to get into the muni broadband business and states that want to ban it.
But regardless of its eventual fate, the most interesting thing about the bill is its sponsor, Marsha Blackburn (R – Tennessee). According to an article in the International Business Times, AT&T and Comcast alone have put more than $100,000 into her pocket, and other telecoms companies and lobbying fronts have added tens of thousands of dollars more in campaign cash.
She also represents a state that puts restrictions on publicly owned broadband systems. Tennessee doesn’t allow municipal utilities to extend broadband service outside of existing boundaries, a restriction that earlier prompted EPB, the city-owned electric company in Chattanooga (which Blackburn doesn’t represent), to threaten to file a complaint with the FCC…
There are vast areas of Tennessee, surrounding EPB’s electric service territory, where citizens and businesses have little or no broadband Internet connectivity…For several years EPB has received regular requests to help some of these communities obtain critical broadband internet infrastructure. However, since 1999, while state law has allowed EPB to provide phone services outside its electric service territory, it has prohibited EPB from offering Internet and video services to any areas outside its electric service area.
Blackburn is framing the issue as a question of states rights. Regardless of any financial motives she might have, it’s a legitimate issue. Local agencies are sub-units of state governments, and there are few restrictions on a state’s discretion to delegate power. A 2004 U.S. supreme court ruling affirmed that principle, particularly in regards to muni broadband. All Blackburn might accomplish is to make a warm, fuzzy gesture toward her campaign contributors. Which might be all she intended to do in the first place.
Fast, focused, low cost and sustainable projects are the answer to the problem of how to extend modern Internet access into publicly supported housing. That’s the conclusion of a report prepared by California Public Utilities Commission staff that lays out recommendations for implementing assembly bill 1299 – approved last year – which spends money from the California Advanced Services Fund on broadband facilities and marketing programs in public housing.
The report carefully draws boundaries. Inside wiring and networking equipment would qualify for CASF subsidies, backhaul fiber installed out in the street gets squat. In theory. CASF money is only part of the business plan – the capital expense part – so applicants have to have a long term operations plan…
Staff recommends the Commission award grants and loans to finance up to 100 percent of the installation costs, but not maintenance or operation costs. Additionally…staff recommends that the Commission require grantees to maintain and operate the network for five years after receiving Commission funding.
Operating networks is not a sweet spot for public housing authorities or non-profits. That’s a job that independent Internet service providers know best. Unfortunately, ISPs won’t be eligible to get the money directly – that’s written into the law – but there will be an opportunity to work with public housing operators, which are eligible.
The report includes a long list of other recommended requirements and restrictions, including technical specifications. The commission is taking comments on the report until 28 July 2014, and rebuttals for ten days after that. The next step is a formal draft resolution that will lay out the rules in detail, which will go through the same comment/reply cycle before the commission votes on it. If all goes to plan – but don’t plan on it – the program will be in place by the end of September, setting up a December application window.
The City of Benicia is working with Lit San Leandro LLC (LSL) to bring a gigabit-class fiber network to the Benicia Industrial Park and the adjacent Arsenal area. That’s the top line from a status report I gave to the Benicia City Council this evening.
Benicia issued a request for proposals last year, asking interested service providers to submit ideas for delivering industrial and commercial-grade broadband service. Among the resources the City put on the table was $750,000. The most attractive proposal – for a full fiber network – was submitted by LSL. Since then, both the City and LSL have been working on solving key challenges, such as how to connect the local network to long haul fiber and Tier 1 data centers.
LSL identified several potential solutions, and is working on more detailed plans. Parallel to that, the City and LSL will be negotiating a formal contract, which will be brought back to the City Council for approval, likely in the next two or three months. After that, LSL can begin construction.
The preliminary network design includes a loop through the central core of the Benicia Industrial Park, with spurs serving the Arsenal area just to the south and the periphery of the park.
I helped the City develop the RFP, evaluate the proposals and get to the point where a tentative agreement is in place with LSL. The work was based on a report I did last year for the City, which looked at alternatives for meeting the broadband needs of current BIP tenants and businesses that might be considering moving there.
If all goes to plan, the Benicia project will be LSL’s second metro fiber network, the first being in San Leandro – another project I assisted with.
The FCC today released the full details on the rural broadband experiments approved by the commission on Friday. Of legal necessity, the program is limited to regulated telephone companies, although independent ISPs can either partner with one or go through the process to become one.
Eligibility is pretty much what was expected, with one new twist. The money can only be given to “Eligible Telecommunications Carriers” (ETCs) and projects have to include voice service and meet all the rules that pertain to it. But non-ETCs can apply to take part in the experiments and get the designation later. Usually, ETC designations are made by state regulators, such as the California Public Utilities Commission, but the FCC is leaving the door open to making such a designation itself, if a state regulator takes more than 3 months to make a decision.
In that case, though, it’s not yet clear (to me at least, but I’m not a lawyer) that a company would need to first have a certificate of public convenience and necessity (CPCN) from a state regulator (in other words, officially be a regulated telephone company) or if the FCC would preempt that too. It’s an important detail because just getting a CPCN in California can take a year or more.
Winning bidders – and the FCC considers this to be a bidding process – will be picked on the basis of a quantitative cost-effectiveness model, with extra credit for projects that are restricted to tribal lands. The FCC also expects “to select a diversity of projects in terms of geography and technologies”. A total of $100 million is available…
- $75 million (with a max of $20 million per project) for networks capable of delivering 100 Mbps down/25 Mbps up and with at least 25/5 on offer to all customers within the project area. The FCC’s order talks about it in the context of fiber-to-the-premise, but doesn’t limit it to that. Presumably, beefed up VDSL or Docsis 3 cable modem service would qualify too. Pricing and data caps have to be comparable to similar wireline plans in urban areas.
- $15 million for projects that offer a service plan of at least 10 Mbps down/1 Mbps up. That’s a service level that’s often associated with AT&T’s Uverse upgrades on ageing rural copper systems, for example. But fixed wireless and hybrid experiments are also encouraged. The service plan has to allow at least 100 gigabytes of monthly traffic with latency no greater than 100 milliseconds and be reasonably priced, by comparison to FCC benchmarks. The maximum subsidy per project is $7.5 million.
- $10 million, also for 10 Mbps down/1 Mbps up, but specifically earmarked for what the FCC considers to be “extremely high-cost census blocks”. Same specs otherwise, except there’s wiggle room on latency and satellite proposals are allowed. The per-project limit is $5 million.
There is a long list of detailed requirements and qualifications for bidders. I won’t try to summarise it – if you’re interested in applying, it’s best to slog through it yourself. The CPUC previously posted some very helpful information for interested applicants, including maps of eligible areas. Bids are due in 90 days.
What – me worry?
Fierce Online Video ran a great article by Samantha Bookman comparing a cheerleading editorial in the Wall Street Journal by FCC chairman Tom Wheeler with a much more pessimistic view of future that came from a broad canvassing of Internet experts by Pew Research. According to the article, Wheeler, a former lead lobbyist for both the mobile phone and cable television industries, wrote…
“In the not-too-distant future, wireless communications will connect not just everyone, but everything. When 50 billion inanimate devices are talking to each other (Cisco’s forecast for 2020), information will flow like the breeze among sensors and databases,” he wrote. The FCC chairman also encouraged companies to somehow “push past network legacies” to find new opportunities.
If you want further enlightenment from Wheeler on the free flow of information, sorry, the editorial is hidden behind the WSJ pay wall. I have no objections to pay walls, by the way. The Internet should be a place where writers can make a living. I just think it’s hilarious.
Clearly, his information isn’t flowing “like the breeze”, because the Internet is, and should be, both a business and a place to do business. Which is why his network neutrality proposal is nonsense. Case by case review of network operators’ business practices will, if done honestly, bog down infrastructure deployment and development of new services and content in a perpetual regulatory wrestling match. If, instead, it’s driven by Wheeler’s no lobbyist left behind ethic, it’ll become a contest to write rules that benefit and, in effect, subsidise one particular business model over another. Victory will go to the companies and lobbying fronts with the deepest pockets.
Do you think the FCC chairman has a problem with that?