Tag Archives: cpuc

Case against San Bernardino FTTH embraces low federal expectations

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A proposed $28 million grant for a fiber to the home project in the Phelan area of San Bernardino County has drawn two formal challenges. One, from Frontier Communications, was completely predictable, but the other, from the California Public Utilities Commission’s office of ratepayer advocates (ORA), was somewhat unexpected.

Only somewhat, because ORA has a track record of sporadically opposing grants for FTTH systems from the California Advanced Services Fund (CASF). However, its objections usually second guess design or budget decisions. This time though, ORA is taking Frontier’s side, arguing that CASF subsidies shouldn’t be given for projects in areas where incumbents are getting federal money via the Connect America Fund program.

There are two big problems with that argument. First, the federal money generally pays for minimal upgrades to existing, and typically antiquated, broadband infrastructure. To get the money, Frontier only has to commit to providing service at 10 Mbps download and 1 Mbps upload speeds. In other words, substandard service that leaves communities underserved by the CPUC’s minimum benchmark of 6 Mbps down and 1.5 Mbps up, and therefor eligible for CASF money.

ORA makes much of Frontier’s claims that it can do better, but if this project is approved, Race Telecommunications will offer gigabit service for $60 a month to every home in its footprint. And that’s an enforceable obligation, since it’s tied to the grant money. Frontier, on the other hand, can’t be forced to deliver on its half promises about speeds and it’s making no commitments about prices.

Second, Frontier won’t be serving all the homes in Race’s proposed project area: the federal money is scattered around a checker board of census blocks, per the map above. Some people will be left without broadband service at all, and others will end up with speeds that wouldn’t have been considered sufficient ten years ago, let alone today.

The real problem is that the federal program is poorly designed. It pays for propping up incumbents’ slow service, out of date infrastructure and inconsistent deployment. If the aim is to avoid overlapping subsidies, then it’s the federal money that should be spent elsewhere. Its increasingly aggressive rhetoric and lawyerly intimidation notwithstanding, Frontier does not own exclusive rights to the Phelan community. The people – the ratepayers – there deserve advocacy too.

CPUC tells FCC not to confuse copper networks with telecoms service

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Don’t confuse copper wireline infrastructure with the services it supports. That’s the message from the California Public Utilities Commission to the Federal Communications Commission. In comments regarding possible changes to federal wireless and wireline telecoms regulations, the CPUC said that the "FCC’s assumption that copper has outlived its usefulness is overstated"…

Copper technology is not inherently obsolete. Copper was originally used for telecommunications because it could serve as the backbone of a universal voice network: it was cheap to install, easy to use, and readily available. When the voice network expanded to provide broadband capability, new copper technologies were invented to provide data services and the internet to homes and businesses, using the existing architecture and infrastructure. Meanwhile, telecommunications carriers have gradually pushed fiber technologies further out from the core (where its capacity was well-suited to the big traffic requirements of interoffice communications), but fiber-to-the-home is not yet ubiquitous. Many carriers—especially those without a wireless affiliate—provide high-speed service to the home using either fiber or copper. For example, advances in the G.fast protocol have led to carrier strategies for serving multi-dwelling units using the existing copper loops. And some services—certain credit card readers, alarm systems, closed captioning, and emergency services, for example—still rely on copper technology. In a transitional technical environment like this one, all of these technologies—copper, fiber, wireless—should be used to their fullest. The FCC’s conflation of “fiber facilities” with “next-generation services” masks the difficulties that may arise if copper retirement is approached hastily.

That’s a position that four of the five CPUC commissioners agree with – they voted to approve these comments at their meeting on 15 June 2017, with commission president Michael Picker abstaining.

The comments also pushed back against federal preemption of California’s utility pole and right of way regulations, pointing out that the CPUC "currently has three ‘pole and conduit’ proceedings open". Under federal law, individual states can opt to regulate pole access and other telecoms policy themselves. California is one of twenty states that has done so.

Charter moves fast where fiber competition looms

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But is it fast enough?

If you want to steer telco and cable company capital investment toward your community, apply competitive pressure, preferably with a full scale fiber to the home project. Once again, that lesson has been learned as the simple and reliable mechanics of microeconomic theory have pushed a major cable company to accelerate spending in an area it has long ignored.

Charter Communications is required to upgrade the antique analog cable systems it has long maintained in redlined communities. That’s one of the conditions attached to the California Public Utilities Commission’s approval of its purchase of Time Warner and Bright House cable systems in the state. Charter’s deadlines for doing so range from two to three years, with most of its territory in California due for digital service within two and half years of the merger’s approval. That happened nearly a year ago, so the time remaining is more like one to two years.

So who goes to the top of Charter’s priority list? According to claims it has filed with the CPUC regarding where broadband subsidy dollars should be spent, the community on Charter’s fast track is one in San Bernardino County that’s been targeted by a competitor…

Charter agreed to rebuild its broadband footprint in both Phelan and Prunedale/Aromas/Salinas—two of the priority areas identified in the White Paper. In Phelan, Charter completed its rebuild in December 2016, revitalizing its plant and improving broadband services available in 250 census blocks identified in the White Paper as high impact. Similarly, Charter is scheduled to complete the rebuild of its plant in Prunedale/Aromas/Salinas no later than May 2019.

Phelan, where Race Communications is in the hunt for a California Advanced Services Fund subsidy for an FTTH system, was upgraded within months of the CPUC’s order taking effect. In the northern Monterey County neighborhoods around Prunedale and Aromas, Charter is happy to wait the full three years.

It’s uncertain whether Charter’s plans are enough to knock Monterey County off of the CPUC’s bang for the buck list. But it is crystal clear that the faster build happened in the community where Charter faces the bigger competitor.

FTTH expansion proposed for Riverside County desert communities

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Anza Electric Cooperative wants to expand its fiber-to-the-home system in southwestern Riverside County. After being awarded a $2.7 million FTTH infrastructure grant from the California Advanced Services Fund in 2015, Anza used its existing electric plant as the backbone for a fiber network aimed at reaching 3,800 homes in its service territory.

Now, it’s asking the California Public Utilities Commission for another $2.2 million, to reach 1,200 more homes and "several businesses", and provide free service to fire stations and the Ronald McDonald camp for kids with cancer According to the public version of its grant application summary

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 (AEC’s) existing service territory covering over 500 square miles, located wholly within western Riverside County. The area encompasses the communities of Mountain Center, Pinyon Pines, and Garner Valley which totals approximately 200 square miles of our service territory…

Connect Anza, as an integral part of AEC, will provide reliable, affordable broadband high speed, Fiber-ToThe-Home (FTTH) internet service to its member-owners at the lowest possible cost. Connect Anza will offer speeds of 50Mb/s both down and up to residents at a price point of $49.00 per month with no cap or limits. AEC will also offer VoIP service including CASF e911 requirements at a monthly rate of $20.

There’s one big difference between this project and Anza’s previous one: the first time around, it was going head to head with Verizon, which paid virtually no attention to its own wireline telephone systems, let alone potential competitors.

Since then, Frontier Communications has taken over those systems, including the ones that don’t offer even 1990’s legacy DSL in most of Anza Electric’s territory. The relatively few areas where broadband service is offered, speeds don’t reach the CPUC’s minimum of 6 Mbps download and 1.5 Mbps upload speeds. In contrast to Verizon, Frontier aggressively, and increasingly beligerently, challenges CASF grant proposals that pose a competitive threat to its monopoly control of, at best, poorly served areas of rural California. It won’t be so pleasant this time around.

California FTTH grant approved under current subsidy program rules

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California’s primary broadband subsidy program will stay on its present course, at least until the legislature changes it or the California Public Utilities Commission resets priorities and rules going forward. That’s the takeaway from a CPUC vote to approve a $1.1 million grant from the California Advanced Services Fund (CASF) for a fiber to the home project in southern Santa Clara County.

It’s an important message to independent Internet service providers who might be considering CASF-funded projects in the future: it’s expensive to prepare and submit applications – more than $100,000 in some cases – and the prospect of having one rejected a year or two later because the rules changed increases the risk beyond the point most are willing to go.

By a 3-to-2 vote, the commission approved the Light Saber Project grant, which will pay about 60% of the cost of building out an FTTH system to 150 homes in the Paradise Valley community, in the hills east of Morgan Hill. It was the second time commissioners considered the grant. The first time, they kicked it back for more work.

This time around, the debate wasn’t really about the project itself. Rather, the debate centered on whether CASF grants should be put on hold until the commission sets new priorities for the program and/or the California legislature rewrites the rules completely.

Broadband subsidy priorities shouldn’t be set retroactively, commissioner Liane Randolph told her colleagues…

The applicant put together a project under our current system, proposed it to us and as we’ve discussed there are changes and kind of systemic modification we can make to the program, or we’re happy to take further legislative direction on how to prioritise projects, but I’m hesitant to not let a particular project move forward when they’ve presented it with the program we currently have in the effect and are administering it right now.

Commissioner Martha Guzman Aceves didn’t agree, saying that as it stands, the CASF program lacks focus…

The bigger driver for me is the lack of prioritisation of the program and that’s really the context. I think the legislation will inform that. Now, the bigger issue for me is that we do have a structure that I don’t currently agree with, but I appreciate that these are the rules that are in place today.

Randolph was joined by commissioners Carla Peterman and Clifford Rechtschaffen in voting to approve the project. Along with Guzman Aceves, commission president Michael Picker also voted no.

$900K chopped from San Bernardino FTTH subsidy plan, but it’s moving again

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A fiber to the home project in San Bernardino County is back on track, sorta. California Public Utilities Commission staff cut $900,000 from a proposed $29 million grant to Race Telecommunications for the Gigafy Phelan project, and sent it all back into a 30 day comment, reply and commission consideration cycle.

Gigafy Phelan is an ambitious attempt to extend FTTH service to 8,400 homes in California’s high desert region, in and around the town of Phelan. Or maybe it’s 7,600 homes. It depends on how homes is defined, and in this case it’s more than academic. It makes a $900,000 difference.

The federal census bureau tracks housing units and households. A housing unit is a discrete structure where people might live: “a house, an apartment, a mobile home or trailer, a group of rooms, or a single room that is occupied, or, if vacant, is intended for occupancy as separate living quarters", as the census bureau, as quoted by CPUC staff, puts it. A household is an occupied housing unit, regardless of the number of occupants or the relationships between them.

The California Advanced Service Fund – the broadband subsidy program that would pick up the tab – uses households as its primary metric. Housing units is a better measure, since a home that’s unoccupied today is as likely to be occupied tomorrow as any other, and everyone needs broadband service. But it’s just a way of keeping score and, so long as it’s done consistently, one way works pretty much as well as another.

It’s also a poor excuse for whittling down an FTTH project at the 11th hour, particularly one that delivers a gigabit for $60 a month and is the second "highest-scoring pending project application on the CASF’s project evaluation scoring matrix".

The revisions open up a window for another round of protests, and you can expect Frontier Communications will continue to object, claiming that its substandard, 10 Mbps down/1 Mbps up, federally subsidised service – at no particular price point – is enough for people who live in Phelan. The A in CASF stands for Advanced services. It’s time to get on with it.

Copper network killer rules could be back on the table

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Yanking out copper networks and replacing them with wireless service is one of the possible outcomes of the Federal Communication Commission’s reconsideration of the wireline service regulations it adopted last year. The swap can actually be done now, but only if the replacement meets certain service and quality standards.

In California, those standards are set by the California Public Utilities Commission. If the FCC rolls back its rules, it wouldn’t necessarily change that. But it could, and the CPUC might be weighing in on the FCC’s proceeding. According to a staff report prepared for commissioners

Should the FCC eliminate its 2016 standards, service providers could have the freedom to withdraw legacy services, including the attendant California nine basic voice service elements, and substitute a service that would fail to meet California’s standards. Customers might lose free access to 911, or service functionality or coverage, or access to relay service. If the substitute is wireless service, and the customer lives in a rural area, the customer could lose service altogether if the service provider has poor coverage in that area. Plus, wireless service is charged on a per-minute basis for both incoming and outgoing calls. Finally, some services, such as closed captioning and alarm systems, are dependent on copper wire; their continued viability may be threatened if the FCC does not maintain appropriate rules.

Last year, the commission went on record opposing an ultimately failed bill pushed by AT&T in the California legislature that would have done all of that. But it was by a narrow 3 to 2 vote, and only one of the commissioners who voted aye – Carla Peterman – is still on the commission.

The draft comments proposed by CPUC don’t seem likely to be controversial, though. Roughly translated, they amount to California sets its own, higher standards and we’d like to keep it that way. It’s the same position the commission has taken in the past. The harder decisions will come if the FCC tries to preempt state wireline replacement rules. Or if incumbent telcos make another run at rewriting Californian requirements.

CPUC takes another look at a Santa Clara County FTTH subsidy

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A stalled Santa Clara County fiber to the home project might get back on track this week. A proposed $1.1 million grant for the Light Saber Project is scheduled to go in front of the California Public Utilities Commission next Thursday.

It’ll be the second time that commissioners have taken a look at it. LCB Communications/South Valley Internet, an independent Internet service provider in southern Santa Clara County, applied for a $2.8 million grant from the California Advanced Services Fund (CASF) in 2015 for a plan to build out fiber to more than 500 homes in the San Martin and Paradise Valley communities, south and east of Morgan Hill, respectively. A wireless ISP challenged the application, claiming it provided service at or above the CASF minimum of 6 Mbps download and 1.5 Mbps upload speeds. The result was that San Martin, where most of the homes and lower income households were located, was removed from the project.

That left 150 homes in Paradise Valley. The grant request was trimmed to $1.1 million and sent on to the commission for consideration in February. It ran into headwinds at the meeting: the idea of subsidising FTTH service to a relatively affluent community was not well received. The median household income in Paradise Valley is $102,000 per year, which is quite a bit higher than many other communities in California. On the other hand, it’s in Santa Clara County, where the California housing and community development department sets a low income threshold of $85,000 for a four-person household.

No vote was taken and Light Saber was sent back for more work. Some of the details were adjusted, the budget was trimmed a bit, and now it’s being resubmitted to commissioners. But as the new draft of the grant resolution points out, it "is substantially the same as the prior draft resolution". What might have changed, though, is how the project is viewed in the context of the CASF program rules and project grant standards. The CPUC is considering whether to change those rules, in a process that was initiated, in part, because of the push back on Light Saber as well as the Digital 299 project, which was likewise put on hold at the same meeting. When Digital 299 came back for a vote and was approved in March, there was an acknowledgement that it had been submitted with good faith reliance on the rules as written. That reasoning applies equally well to Light Saber.

PG&E adopts a dark fiber and wholesale telecoms services business model

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The low ball fiber business plan that PG&E submitted to the California Public Utilities Commission drew criticism from several organisations that probably didn’t fully understand it – publicly traded companies usually downplay the profit potential of new ventures, to avoid hyping stocks and running afoul of federal securities laws. In its application for certification as a telecommunications company, PG&E estimated that it "will have approximately 1-5 customers after one year and will have more than 5 customers by the fifth year after commencing provision of the services". That led to speculation that there was some kind of backroom bargaining going on with incumbent telcos or other big carriers.

Not so, said PG&E in its formal reply to that criticism

The key public interest benefit resulting from PG&E adding services to its existing offerings is that it increases the supply of those services at competitive prices, which means there will be more competition in both the wholesale and retail markets, which will in turn result in more innovation and lower prices. Therefore, PG&E’s CLEC will benefit competition and is in the public interest. Certain interveners may have misinterpreted PG&E’s low estimate of the initial number of customers as a limit or cap. But this was a conservative estimate, as PG&E does not want to over-promise and then under-deliver on the benefits of adding new services to its existing offerings. However, PG&E does not intend to limit itself to this estimated number of customers. PG&E will evaluate the economics of serving any non-residential, qualified customers and will provide service to those for whom it is economical to do so. As a financially and operationally qualified provider that would leverage existing assets to offer additional telecommunications at an incremental cost that will benefit its telecommunications customers, PG&E’s expansion of services will benefit competition. PG&E does not claim these benefits will appear overnight, but expects that the competitive benefits will materialize over a few years.

It also stated flat out that "after becoming a [certified telecoms company], PG&E will continue to offer a dark fiber product". And that its wholesale customers could very well include broadband providers that want to offer competitive service to residential customers. Access to high capacity, low cost Internet bandwidth can be a substantial roadblock for entrepreneurial service providers. Where it becomes available, such as along the Digital 395 corridor in eastern California, consumer-level competition follows. The CPUC should simply take PG&E at its word and make its promises legally enforceable.

PG&E will slow walk its own fiber builds, just like everyone else’s

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It’s not going to speed up the process for reviewing requests to attach fiber optic cable to its utility poles, but PG&E won’t give its own, in-house telecoms unit any short cuts either. That’s the top line from PG&E’s reply to objections filed against its request for formal certification by the California Public Utilities Commission as a telecoms company. Several companies and organisations that are, at once, potential competitors, customers and suppliers to a PG&E-operated fiber optic venture (that’s the interconnected nature of the telecoms business) asked the CPUC to delve deeply into the way utility pole attachments are managed.

In its reply, PG&E – correctly – sorted the issues into two buckets: concerns that it would abuse the monopoly power it has as an electric company to benefit its telecoms business in the future, and general complaints about the way it manages its poles now. To alleviate the former, it proposes to maintain an arms-length relationship between the telecoms enterprise and the staff who manage its poles. Any attachment requests from its own, in house unit will have to be submitted in exactly the same, excruiatingly bureaucratic way as any other telecoms company, and slowly processed in the order received.

As for the way that process works, PG&E takes the position that it’s a matter that relates to how it operates as an electric utility, and has no bearing on whether or not it should be allowed to operate a separate telecoms business. It then goes on to explain that it should be allowed to drag out pole attachment approvals because all the people who do that kind of work get paid by the electric side of the house – which is to say by electric ratepayers – and if they had to work faster it would raise everyone’s energy bills.

That’s a semi-true statement, as far as it goes, but it misses the point. If PG&E goes beyond simply leasing dark fiber and becomes an active player in California’s telecoms market, then it should also have to begin taking on the associated responsibilities. An expanded role also brings expanded revenue, and managing poles more like a telecoms company – to one extent or another – is part of the cost of doing business.