Tag Archives: fcc

Court challenge to common carrier status for broadband chugs on

The usual suspects took their case to the U.S. supreme court last week, asking that the Federal Communications Commission’s decision to classify Internet access as a common carrier service be thrown out. Several lobbying groups, including a couple of cable industry front organisation and telco hired guns, and companies such as AT&T want the supreme court to declare that Internet access is an information service, rather than a telecommunications service.

The basic argument is that since Internet access involves a lot of background routing and (extremely brief) caching of data, broadband providers are producing and/or processing information, rather than just delivering it from point A to point B for subscribers.

If it’s information, it’s not a common carrier service. If it’s just schlepping data here and there, it’s a telecommunications service and therefore legitimately within the FCC’s scope to regulate under common carrier rules.

Regardless of whether Internet access should be regulated, or not, by the FCC, the claim that your Internet service provider is somehow adding value to your data stream is nonsense. It would be the same as arguing that because a telco has to look up the telephone number you dial and then route your call, it’s an information service too.

If that were true, telephone service – and telegraph service before it – would never have been brought under common carrier rules in the first place. Plain vanilla Internet service is no different. You type in a web address which an ISP interprets and routes your data – your request for a web page, for example – accordingly. It’s a simple transmission of data between you and the web service you specify. The ISP is adding no additional value.

This appeal to the supreme court is not likely to go very far. First, the case has been reviewed twice by an appeals court with deep experience with telecoms law and both times the ruling was in the FCC’s favor. Second, the FCC itself is reconsidering the decision. For good or ill, it might act before the supreme court even decides if it wants to take the case.

Frontier preps to pull a wireless bait and switch on Californians

Frontier Communications is backtracking on pledges made to the California Public Utilities Commission as it successfully sought permission to take over Verizon’s copper and fiber systems in California. During that process, it claimed to be a “dedicated wireline service provider” as it was trying to convince the CPUC that it could do a better job than Verizon…

Frontier is strategically focused solely on wireline telecommunications and has a long and successful history providing those services. Unlike Verizon and other large telecommunications carriers that have multiple business divisions—such as wireless and international—that compete for capital resources and management attention, all of Frontier’s capital and human resources are concentrated on wireline communications services.

Not any more. In a recent filing with the Federal Communications Commission, Frontier (along with Windstream and Consolidated) said it’s moving ahead with plans to spend federal subsidies on wireless service, rather than wireline upgrades (h/t to Trish Steel at the Broadband Alliance of Mendocino County for the heads up)…

Frontier, for example, has already begun testing fixed wireless in very rural [Connect America Fund-subsidised] areas. As Frontier’s Chief Financial Officer has explained, Frontier believes that this could be a “good solution” to the deployment challenge “in very rural America[,] and if it works the way [Frontier is] expecting it to work…[Frontier] will deploy more of that next year.”

On the face of it, Frontier’s plans for fixed wireless broadband service are similar to AT&T’s. Both companies are required to offer service at a minimum of 10 Mbps download and 1 Mbps upload speeds in federally subsidised areas, and putting up an access point with wide coverage is one way to claim they’re meeting that obligation, even though the service is unlikely to be accessible to all, or even most, of the people under that umbrella.

There’s one key difference between Frontier and AT&T, though. Because it’s also a mobile carrier, AT&T already has wireless sites, licensed spectrum and a deep reservoir of wireless engineering talent. Frontier has none of it.

Feds clear a dark path for CenturyLink-Level 3 deal in California

CenturyLink’s purchase of Level 3 Communications is on track to be approved by the California Public Utilities Commission on Thursday. It’s always possible that a decision could be bumped to a later meeting, but there’s no indication at this point that there will be any delays.

A settlement CenturyLink reached with anti-trust lawyers at the federal justice department last week takes the edge off the damage the deal will do to California’s broadband market, although it doesn’t eliminate it. Level 3 is the largest independent source – often the only source – of dark fiber, which competitive broadband providers need to compete with the likes of AT&T and Comcast.

That agreement has CenturyLink giving up dark fiber strands on 30 key routes, including five in California. Unlike the CPUC’s review, the federal investigation into the effects of the merger identified the real danger it poses

Dark fiber is a crucial input for large, sophisticated customers that need to move substantial amounts of data between specific cities. These customers have specialized data transport needs, including capacity, scalability, flexibility, and security, that can be fulfilled only by Intercity Dark Fiber. CenturyLink and Level 3 compete to sell Intercity Dark Fiber to these customers, and this competition has led to lower prices for and increased availability of Intercity Dark Fiber. The consolidation of these two competitors would likely substantially lessen competition for the sale of Intercity Dark Fiber for thirty city pairs in the United States in violation of [anti-trust law].

The justice department is, at least, going after the root of the problem by trying to reduce CenturyLink’s ability to extract monopoly rents from the detail. That’s unlike the largely meaningless but relatively harmless measures under consideration by the California Public Utilities Commission, and the equally meaningless but less benign alternatives pushed by the California Emerging Technology Fund, which just aim to spread the rents around.

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

The U.S. mobile broadband market is competitve, says FCC

The Federal Communications Commission has made a case for declaring that the mobile broadband market in the U.S. is broadly competitive, in a qualitative, preponderance of the evidence sort of way. Looking at a number of different metrics, including usage (see chart above), pricing, advertising, investment coverage, the FCC decided that when it was all added up, the result was “there is effective competition in the marketplace for mobile wireless services”.

One key indicator – half statistical, half anecdote – was the way the four major nationwide carriers responded to each other when unlimited data plans were reintroduced…

One significant trend that has developed recently is the return of “unlimited” data plans. In January 2016, AT&T introduced the AT&T Unlimited Plan for DIRECTV (or U-Verse). While that plan was made available only to DIRECTV subscribers, it signaled a shift towards service providers again offering unlimited data plans. In August 2016, T-Mobile launched the T-Mobile ONE Plan offering unlimited voice, text and high-speed 4G LTE smartphone data. The next day, Sprint introduced its Unlimited Freedom plan, which offered two lines of unlimited talk, text and data for $100 a month. In February 2017, Verizon launched its Unlimited Data Plan offering unlimited data on smartphones and tablets for $80 a month. AT&T then introduced the Unlimited Choice plan, which offered unlimited data for $60 per month for a single line ($155 for four lines). In late February 2017, U.S. Cellular introduced its own unlimited data offering.

Three caveats should be kept in mind, though. For the past eight years, the FCC used a wide definition of the mobile marketplace, including sectors such as consumer devices and industry infrastructure. This latest finding focuses much more narrowly on consumer services.

Then there’s the question of rural versus urban. Although 98% of people living in suburban and urban areas have access to at least four mobile service providers, only 71% of those in rural areas do. A competitive mobile marketplace might exist for the U.S. as a whole, but it’s not evenly distributed.

Finally, there’s the question of defining what “effective competition” means. In this report, which was approved by commissioners on a party line vote, the question is largely sidestepped, relying instead, as commissioner Jessica Rosenworcel wrote in her dissent, on an “I know it when I see it” standard.

New FCC rules kick telegraph service into the 21st century

The Federal Communications Commission isn’t giving up on the telegraph. In fact, it’s giving telegraph companies a turbo-charged boost of free market competition. But don’t worry, it isn’t going completely crazy. The FCC is making it very clear that telegraph service is still subject to common carrier rules. In a lighter touch sort of way, of course, since this new and improved FCC is gung ho about light touch common carrier regulation.

In a wonderfully circular bit of reasoning, the FCC has decided that since there aren’t any telegraph companies, it’s okay for them to discontinue service without giving notice, because that will promote telegraph competition…

No entities filing [service reports] in the past five years indicated that they provide telegraph service, and we are not aware of any interstate telegraph service providers today. Nor did any entities file comments or objections in response to this proposal in the Notice…

Telegraph service is obsolete, and we find that no purpose is served by requiring any remaining (or future) providers of telegraph service to file discontinuance applications with the Commission. Nor is the public interest served by maintaining outdated and unnecessary requirements in our rules or by expending future agency resources on the processing of any such applications. To the extent that common-carrier telegraph service will ever be offered in the future, allowing unregulated discontinuance would promote competitive market conditions.

I would like to believe that this FCC order was written in the waning minutes of an all hands keg party: you call that deregulation? I’ll show you deregulation – hey, Ajit, you’re not supposed to swallow the ping pong ball. The thought of grave and grey bureaucrats ponderously weighing the free market benefits of fewer telegraph rules against the public’s need to be protected from rogue key pounders is too much to bear.

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.

FCC doesn’t know enough about competition, or lack thereof, says GAO

The Federal Communications Commission needs better information about broadband competition, according to a report by the federal government accountability office. Existing data shows that 51% of U.S. residents only have access to one provider that offers at least a minimum level of broadband service, which the GAO defines using the FCC’s own advanced services standard of 25 Mbps download and 3 Mbps upload speeds.

The agency collects a lot of data, including information about how many broadband providers serve a given market, but not key information about prices and service offerings, the GAO report said

As indicated by FCC’s broadband data, competition does not exist in all areas. As discussed above, about half of Americans have access to only one fixed broadband provider, and although most Americans have access to multiple choices for mobile broadband service, FCC and experts acknowledge that fixed and mobile service are not fully substitutable for one another…

FCC’s data and reports, as discussed, provide information on the extent of broadband deployment and other indicators of consumer experience with broadband service, but these data and reports do not show how broadband prices and service quality vary based on the number of choices that consumers have for broadband service. FCC officials told us that it is difficult to assess the effect of competition on broadband price and service quality without data showing prices and service quality indicators by the number of providers in a given area.

The FCC considered collecting price and product information in 2011, but gave up on the idea after industry lobbyists pushed back. As a substitute, the GAO report recommends soliciting “the views of stakeholders and others” on an annual basis.

The problem with this approach is that FCC regularly receives input – sometimes a flood of comments – on a wide variety of topics, but doesn’t systematically and transparently assess them or consistently incorporate them into decisions. And it’s not above cherrypicking submissions that suit politically driven, predetermined positions.

The GAO is too optimistic. Qualitative opinions and anecdotes are no substitute for hard data.

FCC chair Pai sounds smarter when he’s not the smartest guy in the room

Once he left the big stage at the Mobile World Congress Americas in San Francisco last week, Federal Communications Commission chairman Ajit Pai walked a couple of blocks to an event put on by the Lincoln Network, a Silicon Valley political club with a libertarian outlook. It was a much smaller stage, but he seemed completely at home in a room full of smart people – some even smarter than him – who would rather let the market sort things out than to try to fine tune the Digital Age using the blunt, mindless tools of government.

The moderator, tech journalist Ina Fried, asked Pai what does ideal regulation look like?

Ideal regulation is regulation that solves a market failure, regulation that creates a competitive market place that otherwise would not exist but for those rules. That’s part of the reason why I consistently say…what is the problem we’re trying to solve? And do the costs of this regulation outweigh the benefits?…What are the impacts of the rule? Is the rule solving the market failure, and if not we could have unintended consequences that could actually disincentivise investment or distort the market place in ways that wouldn’t serve consumers. How do you measure the cost and benefits? So those are some of the things I think about. And so that’s why I don’t really like the term deregulation or hyper regulation. Simply, in my view at least, the goal is to make sure our goals are tailored to the market place that exists in 2017.

Pai has a coherent philosophy of political economy and a sense of right and wrong: without it, he wouldn’t have broken with FCC tradition and political expediency and begun publishing draft decisions weeks before commissioners vote, instead of weeks afterwards, as his predecessors did. If he can hold onto his values and seek facts beyond those shovelled by the lobbyists and lawyers that slither through the halls of the FCC, there’s hope of rational decisions ahead.