USDA broadband grants ditch California again

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It’s sounding like a broken record (if anyone actually remembers what a broken record sounds like). The federal agriculture department’s Rural Utilities Service (RUS) announces another round of Community Connect grants, for local broadband projects in poorly served or completely unserved areas, applications come in, the winners are announced and California comes up with goose eggs (anyone remember what that means either?).

That’s been the story for four years running now. RUS awarded a total of $13 million in Community Connect grants for five projects in four states: Alaska, Minnesota (which was down for two), Oklahoma and Virginia.

The list contains a big clue as to why California might have been shut out: four of the five projects were awarded to telecommunications cooperatives, a business model that’s commonly used in midwestern and southern states (and Alaska). The U.S. department of agriculture in general, and RUS in particular, goes with what it knows. And it’s most familiar with the tiny counties and family farm economies of the midwest and south.

There are only three rural utilities cooperatives in California, and all of them were primarily organised to provide electric service, although a couple have also branched off into broadband.

The fifth grant went to a private wireless Internet service provider, AtLink in Oklahoma. The company seems to understand the system. It website says it received a federal stimulus program grant, via USDA.

It’s easy and, I think, correct to blame bureaucratic shortsightedness and inertia for the lack of love shown California. But that’s not going to change anytime soon. Californian Internet service providers need to learn how to play the game too:

Certainly the game is rigged. Don’t let that stop you; if you don’t bet you can’t win. RAH.

CPUC says yes to Petrolia and queues up Backus

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Frontier Communications will get $203,000 from the California Advanced Services Fund (CASF) to build a microwave middle mile connection to the Humboldt County town of Petrolia and upgrade DSL service to 25 Mbps down and 1.5 Mbps up. The California Public Utilities Commission voted unanimously on Thursday to award the grant. Petrolia was initially identified as a candidate for a CASF subsidy by the Redwood Coast Broadband Consortium and is the first on a long list of high priority communities – as determined by the CPUC – to get actual project approval.

Next up for consideration is a fiber-to-the-home build for the Backus Road neighborhood on the outskirts of the town of Mojave in Kern County. The draft resolution that’s on the table now would allocate $2.2 million for the project, with $353,000 earmarked to offset state and local income taxes that the applicant – Race Telecommunications – might or might not have to pay. The balance of $1.9 million would cover 70% of the cost of building out FTTH facilities to 253 homes, for a total cost to CASF of about $9,000 per home, if the full tax contingency fund is used.

The system would be attached to Race’s existing fiber system at the Mojave Airport – also a CASF-subsidised project – and offer several different tiers of service, ranging from 25 Mbps down and up for $25 a month to a full gig down and up for $100 per month. The CPUC is scheduled to vote on the draft resolution at its 13 August 2015 meeting.

AT&T gets green light to buy DirecTv, FCC gets a press release

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Potemkin would be proud.

AT&T has the blessing of the Federal Communications Commission to buy DirecTv. That’s the big regulatory hurdle that the deal had to clear – the federal justice department already seemed okay with it – and yesterday the FCC said yes, with conditions

As part of the merger, AT&T-DIRECTV will be required to expand its deployment of high-speed, fiber optic broadband Internet access service to 12.5 million customer locations as well as to E-rate eligible schools and libraries. In addition, AT&T-DIRECTV is prohibited from using discriminatory practices to disadvantage online video distribution services and will submit its Internet interconnection agreements for Commission review. Finally, AT&T-DIRECTV will offer broadband services to low-income consumers at discounted rates.

There’s less substance to those conditions than either the FCC or AT&T would like you to believe. The fiber commitment is characterised as “fiber to the premise”. Probably true enough, but what they’re not saying is that building a single fiber line to a 50-story central business district office building – as AT&T is aggressively doing – gets you a lot of customer locations. As does installing fiber in newly built housing developments and multiple dwelling units – two more high potential market segment that AT&T is happy to serve.

Typically, the FCC didn’t released the details of what it’s requiring of AT&T, instead floating a happy talk press release from America’s lobbyist-in-chief that points to hollow commitments. For example, the e-rate promise only applies to schools and libraries “where AT&T-DIRECTV deploys FTTP service”.

Well, duh. If they have fiber-based service available, they’ll sell fiber-based service (but not the fiber itself). Remember, an e-rate hook-up is not free, it’s semi-market rate service that’s subsidised by federal dollars. AT&T is already all over that.

That said, I think approving the deal – with or without Potemkin conditions – is the right call. It makes AT&T a more plausible competitor to the mega-cable companies that are increasing their monopoly hold on minimum standard – 25 Mbps down/3 Mbps up – service. The problem isn’t that AT&T lacks competitive will in lucrative markets, it’s that it’s letting copper networks that serve less money-dense communities rot on the poles. That’s another regulatory battle for another time.

CPUC leaves a hard decision on its broadband authority for another time

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Some games go on forever, and reach no result.

The California Public Utilities Commission passed on the opportunity to officially assert its jurisdiction over broadband infrastructure and service yesterday. By a unanimous vote, commissioners allowed Comcast to simply withdraw its now moot application for permission to take over Charter and Time Warner cable systems in California.

The mega-merger died in April, after federal regulators insisted on deal killing conditions. The CPUC had also spent about a year reviewing it, amassing a huge amount of data and documents, in addition to the even bigger stash developed by the Federal Communications Commission.

Early on, the CPUC commissioner in charge of the review, Carla Peterman, along with an administrative law judge, ruled that the ultimate decision would take into account the proposed merger’s impact on California’s broadband market. This scoping ruling relied on a section of federal telecoms law that might or might not be read as giving the CPUC extremely broad authority to “remove barriers to infrastructure investment“. Arguably, it also conflicted with a state law intended to keep the CPUC from regulating Internet-enabled services in California, although there’s an exception for responsibilities delegated by federal law.

The CPUC’s review of the merger proceeded on that basis. The result was two competing decisions, one denying permission to do the deal and one granting it, with a long list of conditions. Both relied on the controversial authority over broadband cited in the scoping ruling. But those were only proposals based on a preliminary ruling: the CPUC as a whole never endorsed or asserted any authority to regulate the broadband market.

Even though the Comcast deal fell apart, the commission still could have approved one of the alternatives and established an official precedent for overseeing broadband infrastructure and service on the basis on that broad reading of federal law, albeit one that was sure to be challenged in court. Instead, commissioners took a third option, dropping the matter entirely and leaving unresolved the question of whether they can or will intervene in the Californian broadband market.

Yesterday’s decision requires that the trove of documents collected by the CPUC and FCC remain available for use in any future proceedings, including the CPUC’s current review of Charter Communication’s plan to buy cable systems owned by Bright House and Time Warner. And it ensures that outside advocacy groups will get paid, probably by Comcast, for the time they spent on, mostly, opposing the deal. All of that could have been accomplished via one of the other alternative decisions, too.

Now, the question of the CPUC’s authority over broadband will be re-argued, starting at square one and maybe in triplicate. Besides the Charter transaction, the CPUC is considering Frontier’s purchase of Verizon’s wireline systems and the sale of a majority stake in Suddenlink to a European company. The decision has already been made to review the Frontier deal under the same assumption of broadband authority as was used in the Comcast proceeding, and that reasoning is likely to be applied to the other two transactions.

Without the Comcast precedent to point to, the same arguments will be made and disputed, three times over – Charter, Frontier and Suddenlink are already contesting the idea. A lot of good work was done over the past year. It’s unfortunate that the CPUC chose not to take a stand. Instead, it kicked the can down the road. That road may well lead to the same destination, but it will take longer to get there and a safe arrival is far less certain.

Brentwood FTTH ordinance posted on muni broadband policy bank

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A decision made in 1999 led to a fiber to the home system for Brentwood, California in 2015. Or at least the beginnings of one. Sonic.net is building an FTTH network using conduit installed by developers and deeded over to the City as they built new homes over the past 16 years, the result of an advanced technology systems ordinance that the Brentwood City Council added to its land development code in 1999…

The developer shall design, install, test, and dedicate to the City two advanced technology system conduits, size to be determined, within the public right of way. The developer shall install, in one of the conduits, a fiber optic system designed to serve the subject development for use by the City of Brentwood or one of its licensed franchisee…The second conduit shall remain empty and shall be reserved to serve the subject development for the use of a City licensed franchisee not wishing to utilize the City’s fiber optic system. Both conduits shall be installed to each lot line…

The developer shall design, install, test, and dedicate to the property owner two advanced technology system conduits, size to be determined, to connect the public advanced technology system to the individual home or building. The developer shall install, in one of the conduits, a fiber optic system designed to serve the subject property.

That was back when Brentwood was a sleepy little town surrounded by east Contra Costa County farmland. It boomed over the next few years, and with it came new, fiber ready homes.

I’ve posted the original ordinance, along with the accompanying staff report and council resolution from 9 February 1999, the enacting resolution approved two weeks later, a follow up report from next year, and the most current version of the City’s engineering procedures manual, which contains the referenced specifications. It’s very good work and far thinking: it’s as fresh and original today as it was in 1999.

Much thanks goes to Margaret Wimberly, Brentwood’s City Clerk, who dug the documents out of the archives. Sixteen years is too far back for the City’s online system, so she had to do some old fashioned leg work to find them. It’s an under-appreciated skill these days.

Both pdf and doc versions are now up on the Municipal Broadband Policy Bank page, except for the engineering manual, which is pdf only. I did the Word conversion from the pdf originals, any errors are strictly my own.

CPUC to choose between broadband activism or accommodation

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Two key broadband decisions are scheduled to go in front of the California Public Utilities Commission tomorrow. Commissioners have to decide what kind of funeral to hold for the not-so-dearly-departed Comcast – Time Warner – Charter mega-merger, and whether they need to actually investigate the condition of California’s ageing copper telephone networks, or just assume the telcos will take care of it.

There are three completely different alternatives on the table for wrapping up the Comcast deal:

There are two competing versions of a decision on whether to investigate the state of Verizon’s and AT&T’s legacy copper networks. CPUC president Michael Picker wants to scrap a previously approved study and rely on the theoretical threat of future penalties to ensure the telcos will repair and maintain their copper, instead of letting it rot on the poles as they seem to be doing now. Commissioners Catherine Sandoval and Mike Florio are pushing instead to jump start the now stalled investigation.

Together, these two decisions will say a lot about how the CPUC will operate under Picker, six months into his term as president. And particularly about the CPUC’s approach to broadband regulation. Skipping the study of copper network quality would be a signal that the CPUC plans to sit back and get its information primarily from the companies it regulates, rather than gathering it independently.

Either approving or denying the Comcast deal would put a formal stake in the ground that says the commission believes federal law gives it the authority and the responsibility to actively regulate broadband infrastructure and service in California. Sweeping it under the carpet, on the other hand, would mean throwing away a year’s worth of arguments, investigation and deliberations and leaving everyone to guess how future mega-deals – like Frontier’s purchase of Verizon’s wireline systems or Charter’s buyout of Time Warner and Bright House – will be evaluated.

It’s a clear choice: will the CPUC be an activist regulator, or an accommodating one?

AT&T goes to the mattresses in North Carolina

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AT&T is putting a move on Google Fiber and Frontier, inside of Frontier’s territory in Durham, North Carolina, according to a story by Lauren Ohnesorge in the Triangle Business Journal (h/t to Fierce Telecom for the pointer). The story quotes a local AT&T executive as saying that the company will soon be offering its Gigapower service, apparently via fiber to the premise technology and on what appears to be a limited basis…

AT&T has the resources to spread its technology more broadly. And it’s soliciting partnerships to make it happen, reaching out to developers to try to get more communities on board with the service, dubbed GigaPower. Already, 15 multi-family communities in the Triangle have signed on for its high-speed service.

According to the story, AT&T’s foray into overbuilding another large, incumbent telephone company is an outgrowth of a deal it did last year with a consortium of higher education customers to build out a middle mile/institutional fiber network in the area. AT&T will own the core fiber infrastructure used to provide this new service, although it’s not saying it will own all of it.

As with most AT&T announcements, details are scarce, but here’s what I think is happening: in keeping with its publicly announced strategy of building fiber to support its mobile network and large commercial customers, and to use that infrastructure to go after low hanging fruit – “high potential” customers – AT&T is going to offer high bandwidth services to business campuses, new residential developments and large apartment/condo complexes. This initiative does not look like a move into a full scale FTTH overbuild.

It’s welcome news. AT&T is both responding to competition – as it did with Google in Austin – and initiating it, albeit at the high end of the market. Landline telephone companies don’t often intrude onto each other’s turf – they’re usually as strict about it as any old time Mafia boss. Until, like those Mafia bosses, they decide it’s worth going to war.

Six Californias, six challenges drawn by broadband adoption map

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Overall, California’s broadband adoption rate isn’t bad, compared to much of the U.S. or other countries. That’s one of the many pieces of good news in a study released last week in conjunction with the announcement of a federal pilot program aimed at increasing broadband access in public housing. The map above shows the pattern, with dark green coastal areas doing best and the red south poorly.

One thing that struck me about the map, though, was that it also does a fair, if rough, job of outlining the six proto-states proposed last year by Silicon Valley entrepreneur Tim Draper in his failed quest to break up California. Whatever you think of his Six Californias initiative drive (or the silly names proposed for the new states), you have to give him credit for identifying critical economic gaps between regions.

The differences in broadband adoption rates highlight those gaps. If you’re on the coast, or near it, and between San Francisco and Los Angeles, you’re probably doing okay. You and your neighbors are more likely than most to be connected to the Internet and, more importantly, to the Internet economy. Those would have been the new states of Silicon Valley and West California (even though it’s east of most of the others).

Same story if you’re in the strip of counties that run from the Marin coast, east through Sacramento and on up into Mother Lode country. Draper wanted to call it North California; I think Boomerstan would have been more apt.

South California – San Diego and the Inland Empire – looks almost as good, both in terms of broadband use and the general economy (although the economic gap is probably bigger than the broadband picture would lead you to think).

The two relative failures are, as Draper drew it, Central California (the San Joaquin Valley and the east side of the Sierra) and Jefferson – the far north of the state (and the only name with any sense or sense of history behind it)).

California is still whole, but the whole is made up of distinct pieces. Improving broadband availability is important where ever you are, but it’s a different problem, with different solutions – and urgency – depending on which region you call home.

Cooperative FTTH looks like a low cost option for a lucky few in California

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Southwestern Riverside County just got in line for a fiber to the home (FTTH) upgrade. The Anza Electric Cooperative submitted an application for $2.8 million from the California Advanced Services Fund (CASF) to run fiber alongside its existing electric system…

Connect Anza will deploy a fiber optic cable on existing poles and rights of way and establish a network of sufficient capacity to establish high speed, quality internet service for Anza Electric Cooperatives existing service territory covering over 500 square miles, located wholly within western Riverside County. The area encompasses the communities of Anza, Aguanga, Mountain Center, Pinyon Pines, and Garner Valley.

Rural electric cooperatives are rare in California (there are three) but are common elsewhere in the U.S., particularly in the the midwest and south. It’s a business model developed during the Franklin Roosevelt administration and has extended to telecommunications cooperatives, which are often, but not always, built around electric co-ops.

That approach has a couple of advantages. First, rural cooperatives are the preferred business model for the federal Rural Utilities Service, the arm of the agriculture department that handles broadband grants and loans. That institutional bias is a major reason California has been shut out of federal broadband grants in recent years. But that’s not a problem for Anza, or for the other two – Plumas-Sierra (which is also applying for CASF money) and Surprise Valley in Modoc County.

Second, if you already own the poles, conduit and other outside plant that goes along with an electric utility, then your FTTH construction costs go way down, particularly in rural areas. Anza’s total project cost is pegged at $4.7 million. If you assume that it’ll reach all 3,900 premises currently served by the cooperative – it’s not entirely clear from the publicly released information that’s the case, but let’s assume so for the moment – then the total cost is about $1,200 per premise and the subsidised portion of that is about $700. That’s a tenth of the typical CASF subsidy request for FTTH projects, and a hundredth – a penny on the dollar – of the high end of the range.

Mobile operators take federal subsidies and subsidised customers for granted, for now

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Innovative enough for lifeline subscribers.

The Federal Communications Commission runs a lifeline telephone program that provides subsidies to low income people in order to make sure they have access to at least a minimum level of telephone service. It’s more or less technology-neutral – wireless operators, and particularly re-sellers – have been enthusiastic participants. But as the FCC asks for comments on how its lifeline program should be changed, it notes that even as the mobile industry is constantly improving subscription offers and consumers are increasing use, the subsidised side of the business is stagnant…

It has been over three years since the Lifeline Reform Order, and the standard Lifeline market offering for prepaid wireless service has remained largely unchanged at 250 minutes at no cost to the recipient. Unlike competitive offerings for non-Lifeline customers, minutes and service plans for Lifeline customers have largely been stagnant…

Consumers average between 690 and 746 minutes per month, depending on the type of device they use. And according to Nielsen, the average monthly minutes-of-use for a postpaid consumer is 644. These figures suggest that a typical wireless voice consumer uses two-to-three times the amount of voice service offered on a standard plan by typical Lifeline wireless resellers and suggests that low-income consumers do not have comparable offerings.

That doesn’t include broadband, although the FCC is also looking at how to roll it into the program as well. Which means getting mobile operators and resellers to be as generous with subsidised customers as with market-rate subscribers takes on greater urgency…

We note that low-income consumers that are more likely to only have mobile broadband service, likely due to affordability issues, may rely on that service more heavily than the majority of consumers who can offload some of their usage onto their residential fixed connection. We seek comment on how, if at all, this dynamic should affect our choice of minimum service levels.

Comments are due next week, reply comments will be taken for two months after that.