AT&T gets a contract with California landline, DirecTv workers

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AT&T and the primary union representing its employees – the Communications Workers of America – finally crossed the finish line in their marathon negotiations in California and Nevada. The rank and file voted to approve the latest deal by a 58% to 42% margin. That comes after the first deal they struck was rejected by the membership in July, on a 53% to 47% vote.

According to Fortune, the deal was sweeter the second time around…

Like the original agreement, the revised contract included wage hike totaling 11% over four years and some job security promises, but also increased employees’ healthcare contributions to cover insurance premiums to 29% by 2020.

Since last year’s seven-week strike at Verizon (VZ, +0.08%) led to workers there getting a better contract offer, labor tensions have been rising across the telecommunications industry. Increasing healthcare costs and job security against outsourcing have been among the most difficult issues.

It was a long and difficult process, with the union and AT&T going 16 months without a contract. At one point in May, CWA members walked off the job for three days to protest the slow pace of talks. Wireless employees also joined that mini-strike, but they’re not covered by the agreement that was ratified this week – that only takes in landline and DirecTv workers. Negotiations on a contract for the wireless workforce continue.

It’s the first time that employees who came in to AT&T via the DirecTv acquisition have been covered by the contract. Bringing them in under the CWA/AT&T umbrella was just one of the challenges. Over the years, AT&T and CWA have built up a structure that treats different groups of employees differently, even ones that do similar, or in some cases largely identical, jobs. Those splits within the workforce were one of the major factors behind the rejection of the first contract in July.

If we dumb down standards, more people will have advanced broadband, says FCC

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The Federal Communications Commission is floating the idea of treating fixed and mobile broadband service as equivalents when it assesses whether or not people in the U.S. have access to “advanced telecommunications services. It’s an annual enquiry, and in 2015 it produced the useful benchmark of 25 Mbps download and 3 Mbps upload speeds as the minimum threshold for any given broadband service to be reckoned as advanced.

For now, the FCC is just asking for public comments on the concept, although given the weight afforded to lobbyists for AT&T, Comcast, Verizon, Charter and other major telecoms companies, don’t be surprised if comments from some members of the public are deemed, um, more equal than others.

The question posed by the FCC is whether fixed and mobile broadband are two different paths to the same, advanced telecommunications goals…

13 percent of Americans across all demographic groups are relying solely on smartphones for home internet access. Given that Americans use both fixed and mobile broadband technologies, we seek comment on whether we should evaluate the deployment of fixed and mobile broadband as separate and distinct ways to achieve advanced telecommunications capability. Taking into account the differences between the various services and the geographic, economic, and population diversity of our nation, we seek comment on focusing this…Inquiry on whether some form of advanced telecommunications capability, be it fixed or mobile, is being deployed to all Americans in a reasonable and timely fashion.

An inconvenient truth – also well explained by the FCC in last week’s notice – is that mobile broadband technology does not have the speed or the overall capacity to deliver data like wireline services can. But they also suggest a solution: lower the minimum standard for advanced services to 10 Mbps download and 1 Mbps upload for mobile, while keeping the fixed benchmark at 25/3.

That is an irrational and dangerous path to follow. Speed matters, and setting a lower standard for mobile service would mislead and ultimately disappoint anyone who was conned into relying on it because the FCC stamped an advanced services label on it. And it would only encourage lobbyists for AT&T, Frontier Communications and other telcos that are milking the last dollars they can out of decaying rural copper networks to make the same argument for wireline service.

Lowering standards in order to please incumbents with deep pockets and a habit of being generous to their Beltway friends would be a supreme disservice to the U.S. public and a dereliction of the FCC’s duty.

Big telecoms mergers could test Trump’s anti-trust chops

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There’s a lot of sniffing around telecoms companies in these dog days of summer. Softbank, Japanese tech investment giant which owns Sprint, is reported to be sniffing around T-Mobile, with a merger in mind. If it happened – if regulators allow it to happen – it would take the U.S. mobile telecom sector down to three companies, from the current four.

Charter Communications is getting a lot of attention, too. Softbank first tried to engineer a merger, and when that failed began talking about buying the company outright. But if it’s really in the hunt for T-Mobile, a second mega-deal with Charter becomes unlikely.

But it has company. According to a story on CNBC, Altice is looking at adding Charter to its U.S. kennel, which so far includes Suddenlink and Cablevision. It’s not much of a powerhouse in the U.S., yet, but the France-based company is a major player in Europe. If it wants to buy Charter, it has to entice controlling owner Liberty Media and its big dog, John Malone. The question, according to CNBC, is whether Altice’s track record of boosting the value of acquired cable companies by slashing operating expenses will do the trick…

In its short time operating in the U.S. market, Altice has shown a unique ability to cut costs and generate substantially higher margins, before taxes and other costs, than predecessor managements. But Liberty is still wary of taking Altice paper in the belief that it is too early to tell whether those gains are sustainable…

Charter, with $60 billion in debt and an expected purchase price that could reach or exceed $500 a share would represent an enterprise value of almost $200 billion.

Altice’s U.S. holdings may be small enough to avoid triggering a fatal anti-trust response from the federal justice department. In past times, a T-Mobile-Sprint combination probably would set off alarm bells – similar mergers did – but things might be different now. Conventional wisdom is that the Trump administration wouldn’t be so worried about increased telecoms market concentration, concerns about its treatment of the AT&T – Time Warner deal notwithstanding. We might know soon if that’s a good assumption.

No express lane offered for CenturyLink, Level 3 review at CPUC

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“I’m hoping there’s something more that the parties can do to prepare for a decision at a later date”, Regina DeAngelis, an administrative law judge with the California Public Utilities Commission, told lawyers for CenturyLink, Level 3 and a handful of organisations that have involved themselves in the regulatory review of the two companies’ plan to combine into one. She presided over yesterday’s pre-hearing conference at the CPUC’s San Francisco headquarters – the opening event of what could be an enquiry lasting several months.

Which is exactly what CenturyLink and Level 3 are trying to avoid. And what DeAngelis was warning might happen.

The deal they struck last October has CenturyLink buying Level 3 for $34 billion. In order for that to happen, they need to get approval from two federal agencies – the Federal Communications Commission and the justice department – and a couple dozen or so states that have chosen to play an active role in telecoms oversight. They gave themselves a year to finish those reviews and close the sale, but left the door open for extending it by mutual agreement. They also set 30 September 2017 – eleven months – as a benchmark date, when transaction costs begin to creep up.

So they’re trying to push the pace of the CPUC’s review. They started out by asking for commission approval by mid-September, but given mandatory public notice requirements – 30 days before commissioners vote on a proposed decision – DeAngelis threw cold water on that idea, saying “I can tell you that won’t happen”.

It doesn’t seem like two extra weeks will help much, either. That would require turbo-charging standard operating procedures and, as DeAngelis wryly noted, “this commission isn’t often known for moving that quickly”.

That’s particularly true when a merger or other major transaction involving regulated companies attracts formal protests. In this case, five organisations formally challenged it. Three settled their differences with CenturyLink – the CPUC’s independent office of ratepayer advocates (ORA) and two consumer groups, the Greenlining Institute and TURN. Lawyers for Greenlining and ORA were at yesterday’s conference, and endorsed CenturyLink’s push for a fast decision.

Two others are still in the fight, though. The California Emerging Technology Fund wants CenturyLink to spend more money in California, with its guidance, and VoIP provider Telnyx objects to what it says are plans to shut down Level 3’s independent wholesale business after the sale closes. With active third party opposition added to the CPUC’s responsibility to do its own due diligence, an expedited decision is not the way to bet.

The next step is for DeAngelis to issue a scoping memo, which be the roadmap and schedule for the rest of the proceeding.

CenturyLink will kill telecoms competition if it buys Level 3, VoIP company says

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CenturyLink plans to apply its closed, monopoly-centric business model to wholesale services that Level 3 Communications now sells on the open market, if the two companies are allowed to combine. That’s the gist of an objection filed yesterday to CenturyLink’s planned purchase of Level 3 by a VoIP service provider, Telnyx LLC.

VoIP providers like Telnyx buy wholesale connectivity services that allow subscribers to make calls to the rest of the world via the public switched telephone network (PSTN). That’s the system that makes it possible for you dial a few numbers and reach pretty much any other phone in the world.

Telnyx claims that Level 3 is one of only three companies that sell this service on an unbundled basis to VoIP providers, and one of those – Inteliquent – is pulling out of the market. That meant that Telnyx had to scramble to find a replacement…

In searching for other suppliers, Telnyx contacted Level 3 regarding its competing PSTN Interoperability Services, which Level 3 presently sells to IP service providers including Vonage. Members of Level 3’s sales team informed Telnyx that Level 3 will not sell the product to Telnyx, because after the merger the combined CenturyLink will not offer the product to competing service providers.

That’ll leave Peerless as the only vendor in California, and it doesn’t serve the entire state. Many rural areas, according to the Telnyx filing, are reachable only via Level 3. And, if CenturyLink takes over and runs Level 3 like the monopoly-centric telco that it is, telecoms competition will be seriously damaged in California…

The truth is that the Proposed Transaction will eliminate Level 3 as an aggressive independent competitor in the wholesale space both nationally and in California. In addition to PSTN Interoperability Services, the Joint Applicants provide wholesale intemet access and backhaul services that provide essential middle mile connections that enable other providers to connect California residential and mobile customers to the internet. If the Commission does not take action to prevent Level 3 from removing itself as a potential competitor in the market for any or all of these wholesale services, the Commission may indirectly increase rates for wholesale services and place additional barriers on competitors that will remain in the marketplace.

Telnyx is jumping into the fight late, but that’s not unusual when the California Public Utilities Commission reviews major transactions. CenturyLink’s occasionally hyperbolic pleadings notwithstanding, the CPUC’s consideration of the Level 3 deal is still in an early stage – the scope of the review has not been established yet. It’ll be up to the administrative law judge in charge of the proceeding to decide whether to let Telnyx make its case.

CenturyLink puts the joint back into its venture with Level 3

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Someone at CenturyLink – or maybe Level 3 Communications – finally inhaled deeply, exhaled fully and chanted California’s national mantra: go with the flow, go with the flow. In its latest filing with the California Public Utilities Commission, CenturyLink finally admitted that the September deadline for closing its deal to buy Level 3 that it’s been puffing and huffing about, I’m sorry, huffing and puffing about isn’t a deadline at all.

Since the purchase agreement was announced last October, CenturyLink has been trying to jam it through the necessary regulatory reviews by wailing about a phoney, self-imposed deadline and falsely claiming that the deal won’t hurt competition in what passes for a broadband market in California.

A brief and pleasant walk along railroad right of ways in the Sierra Nevada, the Salinas Valley or other key Californian telecoms corridors is all it takes to put the lie to that nonsense. Typically, you’ll find four fiber optic lines in the ground owned by Level 3, CenturyLink, AT&T and Verizon. Only one of those companies – Level 3 – will lease dark fiber or sell basic wholesale connectivity services to competitive retail broadband providers or private network operators in the normal course of business. The other three are legacy incumbent telcos – the biggest three in the U.S. – with a monopoly business model that’s pretty much limited to selling bandwidth by the bit, the most profitable and expensive way possible.

If you roll Level 3 into CenturyLink, you lose the only competitive, market-based barrier to unlimited rent extraction by incumbent telcos in California’s middle mile broadband sector. That has a direct effect on retail prices and service availability, since competitive last mile providers will either have to jack up their own subscription rates or exit the business altogether.

Heading into a key hearing this week, CenturyLink clearly and honestly conceded, without its customary back pedalling and quibbling footnotes, that 30 September 2017 is no deadline at all, 31 October 2017 is only a deadline if they want it to be and the whole thing could actually wait until next year.

The CPUC has no justification for abdicating its due diligence obligations simply for the pleasure of being “extremely helpful” to a major monopolist. Its responsibility is to Californians, who rightfully expect a competitive broadband market.

Bitcoin’s disruption is the healthy and rewarding result of a free market

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Cryptocurrencies like Bitcoin are different from other software and standards-based platforms. There are no governing authorities or dominant players or established industry groups. That’s deliberate. The whole point is to create a way of exchanging value that’s not centrally regulated by governments or private organisations. But that means a super-majority of the millions of individual users have to accept and adopt software updates, or else there’s the risk that Bitcoin will splinter into different versions with different values.

That’s what happened last week. The debate within the Bitcoin community over the best way to increase the capacity and speed of the underlying software resulted in a tenuous compromise earlier this year between many users with different interests. But not all of them. So on Tuesday, another big group agreed on a different method of updating the software and began running it their own way, in the process creating a new version called Bitcoin Cash.

Anyone who had one Bitcoin on Monday now has one unit of Bitcoin and one unit of Bitcoin Cash. The splinter group is big enough that the new unit of Bitcoin Cash actually has some value. It’s fluctuated wildly, but might – might – be stabilising in the $200 to $300 range. On the other hand, it’s not big enough (yet) to have hurt the value of the original Bitcoin, which topped $3,000 for the first time yesterday.

The drama isn’t over. A cryptocurrency’s value is, from the beginning, the cumulative result of millions of freely made, individual decisions, rather than a declaration made by a central authority that’s then moderated by whatever market forces are allowed. The compromise within the original Bitcoin community hasn’t been implemented yet and could fall apart, producing even more versions of the currency. That’s the inevitable – purposeful – risk of an unregulated medium of exchange. So far, as Bitcoin holders learned today, that risk is overwhelmingly outweighed by the reward.

Cryptocurrencies’ crowd source incentives prevent collapse into one crowd

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The disruption in cryptocurrency markets this week, when Bitcoin sorta split into two, was the result of disagreements between different interests about the technology and crowd-sourced methods used to run it. It was also inevitable and purposeful – cryptocurrencies are intended to rise and fall according to the cumulative decisions of millions – eventually, billions – of sovereign, individual users, who won’t always agree with each other.

Bitcoin’s underlying software can’t keep up with the growing number and speed of transactions between its users. The limits of the software has been a known problem for years, but the urgency of solving it has increased in the past few months as the strain on the system began to slow down transactions.

The solution is simple: upgrade the software. But sometimes simple things are supremely difficult, and so it is with Bitcoin.

It’s nothing like updating a commercial application like Excel or iTunes that’s owned by a single company – Microsoft or Apple just do it. It’s not even much like Linux or other widely used open source software that can comfortably exist with many different versions – distros – floating around. Linux might be open source, but any given installation is a closed system – so long as you’re satisfied with the way your preferred version runs on your hardware, all is well. Operationally, it doesn’t matter if the person sitting next to you uses a different distro.

But if you’re exchanging information with other people – which is what Bitcoin is all about – then everyone has to format and process the data in the same way. Email works because everyone has more or less settled on a set of open standards that are periodically updated by industry groups that include big companies, like Google and Microsoft. If enough of the major players agree then pretty much everyone else has to follow along, or risk being shut out.

The same principle applies to cryptocurrencies like Bitcoin, but because schisms like we saw this week produce competing versions that, so far, have added value to the overall market and can be freely exchanged within their respective universes, there’s also an incentive to not standardise. By preventing consolidation into a single, monopoly platform, that balance has kept an ecosystem of independent cryptocurrencies alive.

FCC is finally playing with a full deck

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It was bipartisanship, of a sort, when the U.S. senate confirmed Jessica Rosenworcel and Brendan Carr as FCC commissioners yesterday. Senate democrats wanted to score some points and republicans were in a mood to let them do it – never underestimate the motivational power of an imminent summer vacation.

It was the product of complicated – and completely typical – Beltway horse trading. The bottom line, though, is that the Federal Communications Commission is back up to its full strength of five members with three republicans and two democrats – the privilege of the majority goes to the party that has a president in the white house.

The deal that was reached means that democrat Rosenworcel is confirmed to a full five year term and republican Carr serves out the final year of former chairman Tom Wheeler’s term before getting a shot at five years of his own. Current chairman Ajit Pai, on the other hand, has to wait until senators come back in September before he gets the blessing for another full term on the commission.

Democrats get two perks. First, when Pai’s nomination comes up, it’ll be a full roll call vote, so democrats can properly bash him first. Carr and Rosenworcel, by comparison, slid through in a quick and painless batch vote with a pile of pending nominees for various other federal jobs. Second, when Carr comes around again next summer, he’ll be paired up with democratic commissioner Mignon Clyburn or whoever is nominated to replace her, should she not want, or get, a third term. That way, two-party symmetry can be maintained.

Having a full slate of commissioners probably won’t make much of a substantive difference. Carr’s policy outlook seems to be in line with Pai and Michael O’Rielly, his republican brothers, and whether it’s three to two or two to one, it’s still all the majority that’s needed. But Rosenworcel is an intellectual match for Pai, and has worked well with him in the past, sometimes on opposites sides and sometimes not. With her back on board, at least the debate will be improved.

More wireless broadband spectrum auctions proposed in U.S. senate

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A second bill aimed at freeing up more wireless spectrum for broadband service is floating in the U.S. senate. Tagged the Airwaves act, it would set deadlines for the Federal Communications Commission to auction off several bands and other federal agencies to give up ownership of several more. It would also set aside 10% of the auction proceeds for wireless broadband infrastructure in poorly served rural areas.

It was introduced earlier this week by a bipartisan pair of senators – Maggie Hassan (D – New Hampshire) and Cory Gardner (R – Colorado) – and immediately praised by wireless industry lobbyists and FCC commissioners alike. Presumably they’ve seen the full text, although it hasn’t been officially published yet. On the public safety side of the fence, the National Public Safety Telecommunications Council also seems to have seen it. According to a post on the group’s blog

By Dec. 31, 2018, the FCC would have to complete an auction of the 3550-3650 megahertz band. By Dec. 31, 2019, it would have to auction the 28 GHz (27.5-28.35 GHz), 37 GHz (37-38.6 GHz), and 39 GHz (38.6-40 GHz) bands, for which the FCC adopted rules last summer (TR Daily, July 14, 2016).

By Dec. 31, 2020, the FCC would have to complete an auction of bands that the FCC generally decided in a further notice last summer to study for 5G use. They are the 24-25 GHz (24.25-24.45/25.05-25.25 GHz), 32 GHz (31.8-33.4 GHz), 42 GHz (42-42.5 GHz), 48 GHz (47.2-48.2 GHz), and 51 GHz (50.4-52.6 GHz) bands.

Within one year, the FCC would have to identify spectrum between 71.25 and 84 GHz for unlicensed use…

The bill also would require the National Telecommunications and Information Administration to submit a report to Congress by Dec. 31, 2020, on the relocation of federal operations between 1300-1350 MHz and 1780-1830 MHz.

The Airwaves act joins the Mobile Now act in the U.S. senate’s hopper. Introduced at the beginning of the year, it’s been languishing in the commerce, science and transportation committee, despite (or perhaps because) its author is John Thune (R – South Dakota), the chair of that committee.