Tag Archives: cpuc

Federal court says cable and telcos can pay the same rate for pole access

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

Federal law does not require telephone companies to be treated differently from cable companies, when it comes to attaching cables to utility poles. That’s the ruling of a federal appeals court (h/t to Omar Masry at the City and County of San Francisco for the pointer). It rejected a challenge from electric utilities to a 2015 decision by the Federal Communications Commission that equalised the standard charge for utility pole access, and trimmed back an irrelevant distinction. The rate is now the same whether the full service telecommunications company doing the attaching is the descendant of a television service provider or an old school telco.

Before then, telcos paid higher rates, which meant more money for electric utilities that owned poles. But the FCC’s decision to classify broadband as a telecommunications service and put it in the same common carrier regulatory bucket as telephone service created a quandary. Since cable companies are also Internet service providers, could electric companies start charging them the higher rate, and maybe push up broadband access costs in the process?

There was another problem. Or maybe an opportunity, depending on your point of view. Some states, like California, have exercised an option allowed by federal law and set their own rates for utility pole attachments – they were already charging cable and telephone companies the same, lower rate. Which might have given them a competitive advantage over states that relied on the FCC rules.

The court said that the FCC had sufficient reason to make the change…

The FCC sought to eliminate the disparity between the Cable and Telecom Rates in order to avoid subjecting cable providers offering broadband service to the higher Telecom Rate, and to avoid rate disparity between states whose pole attachment rates are regulated by the FCC and those states that had elected to regulate pole attachment rates using the Cable Rate even for telecommunications providers…This approach represents a “reasonable policy” choice, and thus we defer to the FCC’s interpretation.

It’s a good solution, but it misses the central issue. Cable and telephone companies are in the same business: selling television, telephone and broadband service, and buying up content companies to fill the pipeline. There’s no rational reason anymore to treat them differently.

$20 million still available for California broadband subsidies

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

There’s about $20 million, plus or minus, left for broadband infrastructure grants in the California Advanced Services Fund (CASF), against pending proposals totalling $5.7 million. That’s without taking into account a possible top-up that’s under consideration in the California legislature, but which might also make spending it on anything other than minimal upgrades by Frontier Communications or AT&T virtually impossible.

Over the years, the California legislature has pumped $315 million into the kitty, with $270 million of that allocated to construction subsidies for broadband systems – middle and last mile – in areas that are either completely unserved or lack service at a minimum of 6 Mbps download and 1.5 Mbps upload speeds. The balance is budgeted for broadband facilities and programs in public housing, regional broadband consortia operations and a lightly used infrastructure loan account.

From the time the CASF program began in 2008 until today, the California Public Utilities Commission has approved grants totalling $225 million for broadband projects. That’s a net figure – it doesn’t include the $4.5 million for grants that were approved but later rescinded, primarily because the projects didn’t happen.

The CPUC also pays for its own overhead out of the infrastructure grant fund, with $15 million either spent or budgeted through the middle of next year. Currently, the annual overhead hit is just north of $3 million. There’s at least four or five more years of administrative oversight required, but as the work shifts from reviewing applications to managing project grants, that yearly figure will probably come down. So to keep the numbers round and on the conservative side, let’s say another $10 million will be needed for CPUC overhead, for a total of $25 million.

That leaves $20 million still available for broadband construction grants. There are four project proposals currently under review – Kennedy Meadows in Tulare County ($2.3 million), Connect Anza Phase 2 in Riverside County ($2.2 million), Las Cumbres in Santa Cruz County ($730,000) and Vandyland in Santa Barbara County ($460,000) – that total $5.7 million.

I’m not betting all of them will be approved as proposed, but any way you look at it, there’s somewhere between $15 million and $20 million in the CASF broadband infrastructure grant program that hasn’t been spoken for. That’s enough for a couple of mid-sized, middle mile projects, one big new fiber to the home build, or maybe even a dozen or so smaller upgrade proposals. But only if California lawmakers don’t turn CASF into a private piggy bank for AT&T and Frontier.

CenturyLink tones down deadline threat to CPUC

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

Okay, maybe not high noon. But can we say twelve-ish?

When CenturyLink and Level 3 Communications signed their marriage license, they set an 11 month time limit to take their vows. That’s common enough in major transactions – setting closing dates makes it easier to structure financial packages and it keeps everyone focused on getting it done. But blowing past such deadlines is not uncommon either, and coming to agreement on extensions is a relatively straightforward process, if the companies involved still want to make it happen.

Nevertheless, CenturyLink has insisted that unless the California Public Utilities Commission approves its purchase of Level 3 no later than its 14 September 2017 meeting, the entire transaction will be in peril and the meaningless concessions it’s made in response to protests by consumer groups will disappear. That claim has always been nonsense, and CenturyLink has begun to slowly back off from it. In a footnote to its latest plea to the CPUC, CenturyLink and Level 3…

…respectfully note that it would be extremely helpful if Commission approval occurred at the September 14, 2017. They note that the Commission’s second September meeting falls on September 28, 2017, only one business day prior to the anticipated Transaction closing date.

An express lane through the CPUC’s normal public review process has gone being an imperative to merely “extremely helpful” to the U.S.’s third largest telco, and the 30 September 2017 brick wall has dissolved into an “anticipated” date.

Even so, CenturyLink couldn’t resist one little head fake away from the truth: yeah, the meeting is one business day before the deadline, but it’s two actual days. And when $34 billion is on the table, no one will mind showing up for work on a Saturday. Not that it’ll be necessary though. Last year, when Charter Communications bought Time Warner Cable – a much bigger deal, as CenturyLink helpfully points out – it closed the day after the CPUC gave its blessing.

It is probably true that pushing the closing date into October or later will cause CenturyLink some grief. But it only has itself to blame. It waited more than two months before it filed its first request for permission, and then dawdled three more months as it tried to slip the deal through administratively. CenturyLink wasted five months between the time it announced the Level 3 purchase and its request for formal approval from the CPUC.

Few would argue that the CPUC’s process moves quickly enough – I sure wouldn’t – but it is what it is. When a deal stinks as badly as this one does, there’s no excuse for the CPUC to abandon its due diligence responsibilities in order to be extremely helpful to a major incumbent telecoms company.

Cable tightens the screws on California public housing broadband

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The California cable industry continues to gain ground in its perverse, and oxymoronic, fight to fence off public housing communities from government subsidies. Last year, cable industry lobbyists convinced a biddable senator to slip a big perk into a bill extending the life of a program that pays for broadband facilities – mostly equipment that’s used to provide free (and slow) WiFi access – in public housing. It was language that limited grants to only “unserved” properties, where residents aren’t offered market rate broadband service at all.

The problem with that is cost. People who are eligible to live in public housing have very low incomes and, in theory, can’t afford to pay the going rate for a lot of the basic services most of us take for granted. In practice, however, cable companies have been successful at upselling residents from basic service to pricey bundles of television and, sometimes, Internet service, which can represent a huge chunk of their monthly disposable income. Since they’re not able, often, to put up antennas or satellite dishes, they have little choice. Which is a monopoly trap cable companies ruthlessly exploit and zealously guard – even from the mild threat posed by free WiFi access.

The California Public Utilities Commission, which runs the program, has just published proposed new rules for public housing broadband grants. At the request of the cable industry’s lobbying front organisation – the California Cable and Telecommunications Association – it tightened up earlier draft language that would have left a window of opportunity open to take income levels into account when deciding whether a public housing community was “unserved”.

Originally, the standard would have been that “a housing unit is ‘not offered broadband Internet service’ if the occupant of the unit cannot access a commercially available broadband Internet service…utilizing the facilities at the premises”. Access is a term of art that can take in a number of factors, including service affordability.

Cable lobbyists objected, saying that shifted “consideration to residents”, rather than just assessing the physical ability to connect. CPUC staff agreed and changed it to read that eligibility depends on Internet service simply being available at a housing unit, regardless of whether a resident can access it.

The commission is scheduled to vote on the new rules at its 24 August 2017 meeting, and they’re taking public comments until 14 August 2017.

CenturyLink defends Level 3 deal with Trumpian flourish

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

They could have just tweeted it.

Sean Spicer has a new gig, ghostwriting legal briefs for CenturyLink. There’s no other way to read CenturyLink’s latest filing with the California Public Utilities Commission. It’s a whingeing, self-contradictory and occasionally bitter reply to the California Emerging Technology Fund’s (CETF) continued opposition to CenturyLink’s proposed purchase of Level 3 Communications.

CETF’s objections weren’t particularly on point – they were more concerned with spending CenturyLink’s money than maintaining a competitive fiber market in California – so it’s no surprise that the rebuttal skids and spins like a Lada sedan in a Moscow ice storm. It collides with itself, jabbing a finger toward a woolly promise to spend big on California infrastructure and work with CETF and others to “identify projects for such investment”, but quibbling in the fine print of a footnote that those are merely “possible locations”.

On the central question before the CPUCwill the transaction cripple wholesale fiber competition in California? – CenturyLink offers facts and alternative facts. It first says, okay, so we’re taking out a competitor

The instant transaction involves the transfer of control at the parent level of the Level 3 Operating Entities that provide services to a (limited) number of wholesale and enterprise customers only. The transfer is to CenturyLink, the parent company of a non- dominant carrier in California that also provides competitive services to wholesale and enterprise customers.

But, it continues, fewer competitors doesn’t mean less competition

By any measure, the Level 3 Operating Entities, even when combined with the CenturyLink Operating Entities, will remain a non-dominant competitive provider without any particular market power in any relevant telecommunications market (e.g., backhaul, long haul, enterprise, etc.).

Nonsense.

Both have considerable market power now, as two of the four major long haul fiber owners on key California routes, and Level 3 is the only independent operator. Rolling it into the monopoly business model embraced by AT&T and Verizon – the other two – and by CenturyLink will only add to the wholesale fiber crunch identified by the CPUC as a root cause of California’s “highly concentrated” residential broadband market.

The CPUC needs to separate truth from fiction, and base its decision on broadband market realities and not on corporate bluster or well-meaning wishful thinking.

CenturyLink and Level 3 joint reply to CETF comments, 25 July 2017
CETF comments on CenturyLink purchase of Level 3, 21 July 2017

AT&T paints false fiber picture with official service reports

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

Fiber claims but copper service levels.

There’s something odd about the broadband availability data that AT&T submits to the California Public Utilities Commission. While doing research for the Broadband Infrastructure Assessment and Action Plan I recently completed for the City of West Sacramento (and from which this blog post liberally borrows), I noticed that AT&T claims to provide fiber-to-the-premise service (FTTP), and only FTTP service, in 31 West Sacramento census blocks, which represents 6% of AT&T’s service area.

These census blocks generally correspond to recently developed areas or areas that are targeted for future development. The kind of greenfield construction work where AT&T and other telecoms companies routinely use fiber. But it seems that FTTP coverage in these blocks is partial at best, and many, if not most, homes still receive service via copper wires.

In effect, AT&T is inaccurately reporting that all 31 of these census blocks are completely served by fiber infrastructure, and is not reporting the other types of technologies present. By contrast, in census blocks where only copper-based service is available, AT&T will report multiple technologies, for example VDSL and legacy DSL, if both are present.

A couple of things might be going on. It’s possible that AT&T is just being lazy and only reporting its marquee service levels in any given census block. But it’s also possible that it reflects the new and misleading “Fiber” brand it’s slapping on copper-based service. Or rather foreshadows it, since the reports predated the rebranding. The rationale appears to be that the service is delivered via fiber to central locations within neighborhoods – often referred to as nodes – with the final link accomplished using copper wires. But that’s fiber-to-the-node – FTTN – and not FTTP.

It’s probably a lost cause to try to get AT&T and other telecoms companies from playing these kinds of word games, but that doesn’t mean everyone else has to play them too. Insist on the truth.

Centurylink deal still contested in California, still an insider game

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

CenturyLink’s purchase of Level 3 Communications faces opposition in California, despite a squishy settlement reached with three of the four organisations that objected to the deal. The fourth organisation – the California Emerging Technology Fund (CEFT) – registered its formal rejection of the settlement in comments filed with the California Public Utilities Commission on Friday.

Because Level 3 is certified as a telephone company, the CPUC has to determine if the transfer is in the public interest – whether or not anyone protests. But pretty much anyone is allowed to jump in too – intervene in CPUC jargon – and if certain requirements are met, they can claim intervenor’s compensation for their troubles, whether or not anything genuinely useful comes of it.

CenturyLink and the three groups who settled – TURN, the Greenlining Institute and the CPUC’s office of ratepayer advocates – are pushing the CPUC to short circuit the full review process and accept the agreement they reached between themselves as a substitute. The pressure is on because CenturyLink and Level 3 have a self-imposed deadline of 30 September 2017 to close the transaction. If the review follows typical CPUC timelines a decision might not come until sometime next year, which is a result CenturyLink is anxious to avoid.

Absent its own settlement, CETF is pushing for a full review, and in the process turning up the pressure on CenturyLink. It would be unusual for the CPUC to forgo an independent inquiry if effective opposition remains. In its filing on Friday, CETF correctly points out that the settlement agreed by the other three objectors has nothing of real value it it – all CenturyLink is obliged to do is aspire to invest $323 million in its operations in California. It takes the position that the deal poses grave dangers to Californian broadband but, still, nothing that a few hundred million dollars won’t fix, if its spent with proper supervision.

Wrong.

Whether CenturyLink spends its money its own way or spreads some of it around in the ways suggested by CETF, the result will still be the end of what open competition remains on many of California’s key fiber routes. The best way to fix a problem is to not cause it in the first place. The CPUC needs to make its own decision based on a complete and disinterested review. It should not subcontract the job out to organisations with more narrow interests, however well intentioned they might be.

CPUC support for broadband common carrier rules stops short of the best reason

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The California Public Utilities Commission made the Monday deadline for commenting on the Trump administration’s move to scrap common carrier rules for broadband service. The filing more or less followed along with a rough draft approved by commissioners last week, and argues that reversing course would strengthen incumbent monopolies…

[Broadband service] providers must receive nondiscriminatory access to utility support structures, including poles and conduits, at just and reasonable rates, terms and conditions. Last year, the CPUC conducted a comprehensive review of the California telecommunications market, and analyzed the state of competition in various state sub-markets. The CPUC found that competitive bottlenecks and barriers to entry in the telecommunications network limit new network entrants and may raise prices for some telecommunications services above efficiently competitive levels. One particular bottleneck is access to utility poles, where the CPUC found that its safety mandate intersects, and must be reconciled with, its goal of a competitive market.

The CPUC comments also extoll other benefits of broadband’s common carrier status, including…

Which is all good as far as it goes. But the CPUC comments miss the fundamental reason broadband should be treated as a common carrier service: because it is.

The lack of competitive alternatives, as the CPUC correctly emphasises, is key. That’s only one of the elements in the mix, though.

The monopoly control wielded by what are effectively content companies with a telecoms sideline combined with the technical ability to analyse and shape user traffic in real time is unprecedented. Yet it would be instantly recognisable to the medieval jurists who conceived the principles of common carrier doctrine. Second order benefits are a fine thing, but broadband’s common carrier status is a first order necessity.

PG&E’s bid to be a fiber company gets a long review

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

PG&E will have to explain how it manages requests from telecoms companies to hang cable and other equipment on its utility poles, as the California Public Utilities Commission reviews its application to become a fully certified, commercial fiber network operator. After a meeting with PG&E and the companies and organisations that have raised objections to PG&E’s move, the administrative law judge, Jessica Hecht, and the commissioner, Liane Randolph, handling the review laid out a year-long review schedule that identifies the issues that will be addressed.

Among them is guarding against the possibility that PG&E will use its control of utility poles to put competing telecoms companies at a disadvantage. PG&E is being required to disclose…

  • Internal policies and procedures for reservation of space in and on PG&E support structures, and include forecasts for future reservation needs, if any, to accommodate its anticipated telecommunications services.
  • Statistics showing the mean and median times PG&E currently takes to respond to requests for access to its support structures, and for completing any rearrangements required to accommodate other attachers’ attachments.

Other concerns include how PG&E will split the money it makes from its planned fiber business. Some of the objectors want most of it to be funnelled back to electric customers, presumably in the form of lower rates, while PG&E is proposing a 50/50 split of fiber profits. Several of the topics under review have to do with how PG&E will keep a relatively unregulated telecoms unit separate from its highly regulated energy business, including maintaining security and safety standards, and avoiding cross-subsidies between two very different kinds of enterprises.

In general, PG&E will have to provide a lot of details about its fiber business and operations plans to the CPUC, although some of that information will likely be kept confidential.

CPUC debunks Frontier’s service claims, approves FTTH grant in Phelan

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The high desert community of Phelan, in San Bernardino County, will get gigabit class fiber to the home service. The California Public Utilities Commission voted four to one yesterday to approve a $28 million grant to Race Telecommunications, which will cover 60% of the cost of building the project. The single no came from commission president Michael Picker.

The decision had been delayed two weeks, while Race and Frontier Communications explored ways they might work together. That discussion came at the request of commissioners, who were trying to avoid spending state money in an area that was also getting federal subsidies, albeit for relatively minor upgrades to ageing DSL systems that will not meet the CPUC’s minimum standards.

The CPUC also did some ground truthing and discovered Frontier’s service claims did not line up with reality, according to commissioner Clifford Rechtschaffen…

Since our last meeting [CPUC staff] has gone down to Phelan’s central business district and established that they are in fact going forward with their upgrades to some households and businesses. They also though, and this I think is quite significant, they determined based on the engineering constraints of the project, that Frontier’s upgrade would not reach nearly 100% of the community not even the 85% that we thought before, but more like 60%. So 40% of the community would not be served. And that’s very significant. That means that we have a significant portion of the community would not be served in an area that we have identified as our highest priority.

But Rechtschaffen also warned that the Phelan project shouldn’t set a precedent, and other pending projects should be looked at differently.

The backlog of proposals for California Advanced Services Fund subsidies is being whittled down. Four grant applications are still pending, and only one of those – a middle mile project proposed by Ducor Telephone in the Tulare County mountain community of Kennedy Meadows – is completely outside of the current phase of the federal Connect America Fund subsidy program. Although, as a small rural telephone company, Ducor has access to money from related federal programs.

The other pending projects – Connect Anza in Riverside County, Vandyland in Santa Barbara County and Las Cumbres in Santa Cruz County – are, like Phelan, in the former Verizon territories acquired by Frontier and share some overlap with federally funded areas.