Tag Archives: cpuc

CenturyLink trades long haul fiber routes for permission to buy Level 3

Allowing two of the major – sometimes only – sources of inter-city dark fiber to merge would be anti-competitive and illegal, according to the federal justice department. So in order to gain approval to buy Level 3 Communications, CenturyLink agreed to a settlement that requires it to give up control of 24 strands of dark fiber between 30 pairs of cities, including five key California routes.

The settlement also requires CenturyLink to divest overlapping metro fiber systems in Albuquerque, Boise and Tucson.

The fiber will be leased for up to 35 years to a single company that “has the intent and capability (including the necessary managerial, operational, technical, and financial capability) of competing effectively in the sale of Dark Fiber [leases] to end users”. The transaction, and compliance with detailed instructions on how it’ll be carried out (links below), will be overseen by an independent trustee.

The lines in (and out of) California to be sold are:

  • Los Angeles to Las Vegas
  • Sacramento to Salt Lake City
  • Sacramento to San Francisco
  • San Diego to Phoenix
  • San Francisco to Los Angeles

The routes between San Francisco and LA, and from San Francisco to Sacramento and on to Salt Lake City generally follow railroad right of ways. Just a quick glance at the track confirms that the fiber buried there belongs to AT&T, Verizon, CenturyLink and Level 3. It’s a critical bottleneck for anyone trying to enter the retail broadband market along those corridors.

Taking Level 3 out of the mix would leave it all in the hands of companies with a legacy, Bell-centric telephone business model that maximises profit by restricting wholesale supply and selling what’s left at retail rates. Which pretty much kills any hope of broadband competition at modern service levels.

The best solution would have been to nix the deal, and keep Level 3 as the only heavyweight independent operator in the dark fiber business. The agreement that federal anti-trust lawyers reached with CenturyLink is a reasoned, if less satisfactory, alternative.

The California Public Utilities Commission and the Federal Communications Commission still have to bless the deal. The settlement reached by the federal justice department will go a long way toward greasing the skids at both agencies.

Proposed Final Judgment
Explanation Of Consent Decree Procedures
Asset Preservation Stipulation And Order
Complaint against CenturyLink and Level 3

Governor Brown urged not to lower California’s broadband speed standard

Governor Jerry Brown has two weeks to decide if California’s broadband speed standard should be slower than it is now, and if the California Advanced Services Fund should be turned into a piggy bank for AT&T, Frontier Communications and the cable industry. That’s what assembly bill 1665 would do, if Brown allows it to become law.

He’s getting plenty of encouragement to sign it, from the California Emerging Technology Fund and, one might safely assume, the platoon of lobbyists that telephone and cable companies maintain in Sacramento and back with generous cash contributions to politicians of both parties. Of course, the payments these companies make – which the chief counsel for the state’s ethics agency once described as “kind of legalised bribery” – would be dwarfed by the $300 million that AB 1665 sets aside for them.

There are groups asking the governor to veto the bill, too. The Central Coast Broadband Consortium sent an opposition letter (full disclosure: I drafted it). The North Bay North Coast Consortium sent one too, signed by Mendocino County supervisor Dan Hamburg…

AB 1665 was to re-authorize this vital and popular state broadband program, and we worked hard this year to find a sponsor and bring this bill forward after 2 failed prior attempts. A large coalition of groups came to support the “Internet For All Now” act and momentum was gained. Unfortunately, when the incumbents saw that they could not stop this bill, they were able to insert one damaging amendment after another, each worse than the last, so that eventually the original intent of the bill was lost and now our state broadband program is a give-away to the large incumbent carriers and makes it virtually impossible for the independent providers to get funded. The loss of competition that will result from this bill will be extremely damaging to California’s future.

The California Public Utilities Commission hasn’t taken a public stance on AB 1665, but a strong indicator of where commissioners might lean on it can be found in a Federal Communications Commission filing they unanimously approved on Thursday. They recommended that the FCC keep its current 25 Mbps download/3 Mbps upload speed standard in place.

That’s quite different from lowering California’s minimum speed standard to 6 Mbps down/1 Mbps up standard, as AB 1665 would do.

October dawns with CenturyLink-Level 3 deal still undecided

Today is the day that a CenturyLink lawyer described as “almost too awful to contemplate”: October is here and CenturyLink doesn’t have permission yet to buy Level 3 Communications, from either the California Public Utilities Commission or federal regulators that are reviewing the transaction.

It’s not really all that horrible. The 30 September 2017 deadline was a target that the two companies set for wrapping everything up. It’ll cost them more to keep the financing arrangements intact, but the tab isn’t going to hugely different from what it would have been if they had a better grasp of what it takes to get big telecoms mergers okayed and allowed more time from the beginning. Or if they hadn’t wasted almost five months before filing the right paperwork with the CPUC.

At this point, commissioners are still on track to make a decision at their 12 October 2017 meeting. They’ll have a proposed decision drafted by a CPUC administrative law judge (ALJ) that would approve the deal if adopted. The first round of comments came in, and there’s nothing particularly new. Not in the arguments presented by a group of old school consumer advocacy groups, that don’t see the harm that the merger would do to California’s wholesale broadband market and support it. Or in those made by the California Emerging Technology Fund (CETF), which does understand the damage it would do but wrongly thinks that the solution is to tell CenturyLink how and where to spend a few hundred million dollars on infrastructure projects.

The best way to fix a problem is to not create it in the first place.

Interestingly, CETF wants CenturyLink’s money to go to areas that lack acceptable broadband service based on current California standards – 6 Mbps download and 1.5 Mbps upload speeds – and not according to the dumbed down, slower speeds that CETF, AT&T, Frontier Communications and the California cable industry are pushing governor Brown to sign into law.

It’s possible that the ALJ running the proceeding, Regina DeAngelis, could make changes to the proposed decision ahead of a commission vote, or commissioners are free to offer alternative versions. If that happens, or even if a commissioner just wants more time to think about what’s already on the table, a final vote could be delayed. But so far, that hasn’t happened.

California makes AT&T’s list for limited and costly rural broadband

Taxes not included. Except in my bonus check.

AT&T says it’s official: they are launching slow, expensive wireless Internet service in rural California, and other undefined “underserved” areas, instead of upgrading ageing copper networks to modern levels. The technology is designed to support 10 Mbps download and 1 Mbps upload speeds, although there are no guarantees.

The California Public Utilities Commission, on the other hand, decided to go in the opposition direction and unanimously endorsed the higher standard of 25 Mbps down/3 Mbps up yesterday. That’ll have no effect on AT&T’s fixed wireless roll out though, whenever that actually happens.

There seems to be a different between making it official and making it real. Using the link in the press announcement, I checked a dozen locations in California where AT&T has claimed federal Connect America Fund subsidies – where its wireless local loop service is targeted – and all came back with “AT&T fixed wireless Internet isn’t in your area yet”. I got the same response when I entered the zip codes for a couple of the Texan counties that AT&T specifically called out as ready for fixed wireless service in a separate press release.

California was on a list of nine new states, bring the total where AT&T claims to offer its 10 Mbps down/1 Mbps up wireless substitute service to 18 states.

According to Ars Technica, the base rate for the service is $70 a month, or $60 a month with a contract. AT&T isn’t disclosing the monthly rate on its website, but it does helpfully point out that the base service only includes 160 gigabytes a month. Anything over that costs $10 per 50 GB, up to $200, for a total max charge of $270 a month.

This fixed wireless service is what the California legislature voted to back with $300 million of taxpayer subsidies. Whether it happens or not depends on governor Brown, who has until 15 October 2017 to approve or veto assembly bill 1665.

CPUC changes tack, heads toward an emphatic yes, speed matters

The latest draft of the California Public Utilities Commission’s broadband advice to the Federal Communications Commission specifically calls out speed as a key benchmark, and recommends that the standard for advanced telecoms capability remain 25 Mbps download and 3 Mbps upload.

The first draft ducked the speed issue and focused on other metrics such as latency and dropped connections. Which are important, particularly for high end commercial and industrial applications. But speed matters and the comments that CPUC commissioners are scheduled to consider at their meeting later this morning put it at the top of the list…

The 25/3 speed tier, the FCC’s current benchmark for “Advanced Services,” represents a useful, reasonable, and forward-looking dividing point to define a “high-speed” broadband tier. We note that higher speeds improve the performance of video streaming services from companies like Netflix and Amazon, as well as live-video feeds from companies like Facebook and Twitter. While Netflix recommends a five Mbps connection for high definition video streaming, households that include multiple end-users using multiple devices to access multiple services at the same time may find that download speed inadequate.

A significant justification cited by the FCC in its 2015 Broadband Progress Report, in creating the new 25/3 benchmark, was that households may be comprised of multiple individuals using multiple devices. The FCC has periodically raised the minimum bandwidth for “Advanced Services” over the last decade, and it is reasonable to anticipate that “Advanced Services” will not be static in the next decade. Fixed providers (especially cable providers) are already routinely offering speeds substantially in excess of the 25/3 benchmark.

Recommendation: The CPUC should inform the FCC of its findings…and recommend that at a minimum the FCC maintain its 25Mbps/3Mbps speed benchmark for fixed advanced telecommunications capability.

It’s an important message, both for the FCC, which is considering dumbing down the standard to please telecoms lobbyists and for governor Brown, who has a bill sitting on his desk – assembly bill 1665 – that would lower California’s speed standard to 6 Mbps down/1 Mbps up. Also at the behest of big campaign contributors telephone and cable companies.

Measure mobile performance, don’t just assume says CPUC draft

The California Public Utilities Commission might not offer an opinion on how fast broadband service should be in order to support “advanced telecommunications capability”, but it is on track to say whether mobile and wireline service should be lumped together. According to draft comments that’ll be filed with the Federal Communications Commission if CPUC commissioners concur, the answer is a qualified no

The CPUC should share its finding that mobile and residential broadband services are “generally not substitutes”, in order to assist the FCC in its consideration of this issue. The object of the CPUC’s investigation was to take a snapshot of the telecommunications marketplace in California, with an “as of” date of December 31, 2015. The CPUC should make clear that this finding was made within that timeframe, as the CPUC continues to measure wireless performance.

The draft also recommends that mobile broadband performance should be actually measured, and not just evaluated on the basis of what the design specs for 4G and 5G technology say ought to be possible…

Finally, the CPUC should urge the FCC to not use interface technologies as a proxy for speed benchmarks. While LTE (or newer generations of mobile technology about to be deployed) is required for mobile service to support advanced capabilities, the CPUC’s mobile data and analysis show that LTE air interface technology often has quality and reliability problems that cause throughput to be highly variable. The sheer number of failed mobile broadband connections experienced in the California, especially in rural areas of California, shows that air interface technology should not be used as a proxy for speed, quality or reliability.

The FCC is conducting its annual evaluation of broadband availability and performance and is considering, among other things, whether the current 25 Mbps download and 3 Mbps upload standard should be lowered, in order to make it easier to declare victory by claiming access to advanced telecoms services is ubiquitous.

The CPUC is scheduled to decide whether or not to bless the draft comments at its meeting on Thursday.

Electric utilities’ fiber business gets harder look in California

Electric companies are often also in the telecommunications business. In California, the two biggest electric investor owned utilities – PG&E, in northern California, and Southern California Edison – both have extensive dark fiber networks that they lease out to telecoms companies. SCE became a certified telephone company and began actively marketing dark fiber nearly twenty years ago, while PG&E has moved more slowly. But their business models are converging and the California Public Utilities Commission is taking a harder look at how they might be regulated.

When PG&E applied for official telephone company status earlier this year, it proposed splitting after tax fiber profits 50/50 between shareholders and customers. SCE’s original deal with the CPUC was to give 10% of gross fiber revenue back to customers. On the face of it, the actual dollar amounts might well be in the same ballpark, a question the CPUC wants both companies to address.

Commissioner Clifford Rechtschaffen is handling a request that SCE made earlier this year for pre-approval of a fiber leasing deal with Verizon. Originally, he laid out a perfunctory process for the review. But PG&E’s application, as well as a broader enquiry the CPUC is conducting into utility pole access, “require us to take a closer look at the over-arching issue of whether the proposed Master Lease Agreement here is consistent with the revenue sharing mechanism [that SCE is currently using] and in the public interest”, according to Rechtschaffen.

If the result is a clear and uncomplicated path for privately-owned electric utilities to energetically compete in the telecoms market, everyone will benefit. Fast and fair competitive access to utility poles is a problem that has to be solved anyway, so that shouldn’t be a barrier. The biggest hurdle will be intellectual. Regulators, and old school consumer advocacy groups like TURN, which has jumped in on the proceeding, have to grasp the fact that electric ratepayers and broadband subscribers are the same people. Extending the dead hand of legacy micromanagement to broadband will benefit no one.

New York fines Charter $13 million for stalled upgrades

The New York State State Public Service Commission has slapped a $13 million fine on Charter Communications, as punishment for missing broadband expansion requirements attached to regulatory approval of its purchase of Time Warner Cable systems last year. According to a story by Kendra Chamberlain in FierceCable, Charter’s build out in New York fell far short…

The agreement included statewide speed upgrades reaching 100 Mbps by 2018 and 300 Mbps by 2019, and a timeline for building out its broadband network in chunks of over 36,000 new residents and businesses per year, to be completed by 2020.

Charter was able to upgrade broadband service speeds to 100 Mbps across New York ahead of the 2018 deadline set by its agreement, but has been slow to roll out service to new households and businesses. In its first year, Charter passed just over 15,000 new premises, less than half of what it promised.

Charter has similar obligations here in California, albeit without annual targets. The California Public Utilities Commission required Charter to upgrade all remaining analog systems to “an all-digital platform with download speeds of not less than 60 Mbps” within two and a half years, with a bump to 100 Mbps in three years, as well as extending lines to 80,000 new homes and, specifically, to convert its systems in the City of Gonzales and elsewhere in Monterey County to full digital capabilities.

Charter has already upgraded some systems in San Bernardino County, ahead of a threatened fiber to the home project, and already has construction crews in the field in Monterey County. Whether it’s performing to the same level in parts of California where there’s no pressure from competitive providers or motivated local governments is an open question. The first deadline doesn’t come until next year, and the CPUC isn’t likely to begin any enforcement action – or, perhaps, even a due diligence process – on its own before then.

I assisted the City of Gonzales with its efforts at the CPUC and its negotiations with Charter. I am not a disinterested commentator. Take it for what it’s worth.

CETF audit, more CPUC reforms approved by California legislature

A second round of California Public Utilities Committee reorganisation was approved in the final hours of the legislative session on Friday night. Senate bills 19 and 385 are heading to the governor’s desk. The main one is SB 19, carried by senator Jerry Hill (D – San Mateo), who has been deeply involved in CPUC reform efforts ever since a massive, fatal explosion of a PG&E pipeline in San Bruno in 2010.

There are general changes that affect the way the commission does business overall. Area code assignments aside, none specifically relate to the way telecommunication services or companies are regulated.

SB 19 expands the commission’s audit responsibilities, and a legislative staff analysis makes it clear that the broadband-focused California Emerging Technology Fund is a primary target…

The CPUC has often negotiated settlements, particularly related to mergers of companies, which create new entities or programs. For example, the California Emerging Technology Fund (CETF) was developed and funded as a separate nonprofit entity by the CPUC through the approved mergers between SBC-AT&T and Verizon-MCI. Last year, [former assemblyman Mike Gatto] requested an audit of the CETF. However, the CPUC had suggested that they lack the statutory authority to conduct an audit of CETF and other similarly constructed entities.

This bill will ensure the CPUC has the statutory authority to conduct such audits and require the audits are conducted in a manner that adheres to approved general auditing practices.

Other changes include banning public utility executives from becoming CPUC commissioners for “two years after leaving the employment of the utility”. Commissioners would directly appoint the chief administrative law judge and a chief internal auditor. The job of staff ethics officer would be baked into law and the public advisor’s office would be responsible for handling complaints about the way the commission does business.

Some of the CPUC’s transportation-related duties would be transferred to other state departments, including regulation of moving companies, private buses, and some water transportation and passenger aircraft. The changes seem to be consistent with governor Brown’s wishes and it’s a good bet he’ll approve both bills.

CenturyLink-Level 3 deal moving ahead in California, but not until October

CenturyLink will be allowed to buy Level 3 Communications, under the terms of a settlement reached in June with some of the organisations that challenged the deal, if the California Public Utilities Commission endorses a proposed decision posted this morning by a CPUC administrative law judge.

If the usual process is followed, commissioners will make the final decision at their 12 October 2017 meeting, or a later meeting if there’s significant disagreement amongst them. It’s theoretically possible that a vote could be taken at their 28 September 2017 meeting, but only in the sense that it’s theoretically possible for a tornado to blow through a junkyard and produce a fully functional iPhone. And even if it did, Apple’s lawyers would crush it, claiming patent infringement by the tornado. So expect a final decision in October, not September.

The proposed decision also throws out a challenge to the settlement by the California Emerging Technology Fund (CETF)…

This Settlement involves compromises of parties’ preferred outcomes. The fact that multiple parties, with divergent interests, reached a mutually acceptable compromise, however, provides evidence that the Settlement is reasonable in light of the record. Even though CETF does not join in the Settlement, the Settling Parties still include the Joint Consumer Groups representing consumer interests. The Settlement addresses the Joint Consumer Groups’’ concerns by providing discrete benefits to California consumers including,, among other things, improved service quality, funding for facility expansion and certainty for enterprise and wholesale customers with existing contracts.

There’s no mention of Telnyx LLC in the proposed decision. Telnyx jumped into the CPUC’s review of the deal at the last minute, claiming that Level 3 was cutting off wholesale VoIP services to independent service providers. Although ALJ Regina DeAngelis gave Telnyx permission to participate in the proceeding, she threw out their protest, because it wasn’t properly filed. Although Telnyx can continue to participate, it has nothing of substance on the table.

Proposed decision approving CenturyLink-Level 3 transaction, 8 September 2017