Tag Archives: public policy

A Washington, DC republican gets net neutrality religion

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Another network neutrality bill landed in Washington, D.C. on Monday. What’s interesting about this one is that its author is a republican and it would reinstate the core rules established by the Obama administration’s Federal Communications Commission in 2015, but overturned by the Trump administration’s team late last year. At the time, representative Mike Coffman (R – Colorado) urged the FCC to delay repealing net neutrality so federal lawmakers could make the decision instead. The FCC went ahead anyway, so Coffman finally offered his bill in reply.

It sets out the same “bright line rules” as the 2015 FCC decision: no blocking, throttling or paid prioritisation, as well as its ban on interconnection charges. Unlike the net neutrality bill working its way through the California legislature, it wouldn’t ban zero rating, though. Coffman also sidesteps the question of whether broadband is a common carrier service: his bill puts broadband into its own category.

As a encore yesterday, Coffman became the first republican in the U.S. house of representatives to sign a petition asking for a vote on a resolution of disapproval that would cancel the FCC’s net neutrality repeal. He’s number 177 on the list. The magic number is 218, a majority of house members. There are plenty of democrats who haven’t signed, although if republican dominoes start to fall, they will probably close ranks too. The resolution was passed by the U.S. senate, with three republican votes. The gap is wider in the house, though. There are 193 democrats, so 25 republicans would have to climb on board. And then president Donald Trump has to sign it.

That’s pretty much the same challenge that Coffman’s bill has to overcome. Its likely first stop will be the subcommittee run by representative Marsha Blackburn (R – Tennesse), who is a reliable friend of AT&T, Comcast and other big monopoly model broadband companies.

Any bets on what’s going to happen?

Dig once is OK, dig never is not, FCC says

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The Federal Communications Commission fired a shot across the bow of local governments last week, when it published a draft version of a “declaratory ruling” that, as the name implies, declares that moratoria that block broadband deployment violate federal law.

The ruling is primarily concerned with permits to build wireless facilities – cell sites, for the most part – and to install broadband infrastructure, such as conduit, in the public right of way. Some cities refuse to process permit applications for particular, broadband-related projects, the FCC draft says, either because they have formally decided not to – imposed a moratorium, in other words – or because they just sit on applications they don’t like and, in effect, create a de facto moratorium.

Some moratoria, though, are intended to promote broadband infrastructure deployment, and the FCC draft fudges that issue…

Some “street-cut” requirements, which providers sometimes refer to as moratoria, are not designed to thwart construction, but to promote “dig once” policies “in order to preserve the roadway and incentivize interested providers to deploy telecommunications conduit,” and would not qualify as unlawful moratoria if the state or locality imposing such street-cut requirements does not bar alternative means of deployment such as aerial lines or sublicensing existing underground conduits.

Assuming the FCC adopts the draft – as it almost certainly will – the immediate effect will be minimal. The commission would be placing “states and localities on notice” and provide them “the opportunity to ensure that their requirements comply with federal law”. Should they be so ungrateful as to not heed this advice, ultimate enforcement of the declaration would still be in the hands of courts, either directly or via an appeal of any future FCC orders preempting specific local laws. At this point, the FCC says it wants to “inform judicial resolution”.

The declaratory ruling is one item in a larger package of draft rules, that include formal a one touch make ready (OTMR) process, that lets a new broadband company put cables on poles without having to wait – sometimes forever – for incumbents to finish making the pole ready. It won’t have a direct effect in California, though. It only applies to states that use the default federal regulations for managing pole attachment. Here, the California Public Utilities Commission sets pole attachment rules.

Frontier, CETF broadband adoption deal crashes and burns

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A forced partnership between Frontier Communications and the California Emerging Technology Fund (CETF) to enroll low income broadband users fell far short of its 200,000 household goal, gaining only 9,173 subscribers over its two and a half year lifespan. That number is one of the few things that Frontier and CETF agree on. Who’s to blame and what comes next are hotly disputed.

It’s uncertain how many of those households were enrolled by CETF. Frontier independently acquired some, if not most, of those new subs through its normal sales channels.

One of the conditions the California Public Utilities Commission imposed when Frontier bought Verizon’s wireline telephone systems in California was an “aspirational” – delusional would be a better description – pledge to bring 200,000 low income households into the digital world in less than three years. To do that, Frontier promised to distribute “up to” $3 million to community organisations, via CETF. It’s a non-profit corporation tasked with managing tens of millions of dollars worth of so called “public benefit” obligations that were likewise extracted from telecoms mergers in California.

(It’s completely separate from the California Advanced Services Fund – that money comes from taxpayers and is directly administered by the CPUC).

In May, a month before the agreements that created the program expired, CETF asked the CPUC to amend its original decision and, in effect, extend the two contracts between CETF and Frontier by decree. And, as a kicker, fine Frontier $35 million. Frontier’s response amounts to a deal is a deal.

There are other issues. One involves Frontier’s promise to give 50,000 Chromebooks to low income households – it’s unclear how many were distributed. Frontier says it will continue to give away the devices, but only to its own subscribers. Another is Frontier’s $13.99 low income broadband package, which has morphed into a confusing and hard to find array of three packages with different rules and price points. Then there’s the 50 free WiFi hotspots Frontier pledged to fire up. It apparently managed to get 17 in operation, and is working on the rest.

There’s more to the dispute. The documents published so far are linked below, and I’ll be writing about it in the weeks ahead.

On the face of it, Frontier is more or less doing what it promised. The contracts that CETF signed are vague and larded with weasel words, like “aspirational” and “up to”. The $3 million figure was a cap, with the amounts paid determined by the performance of CETF and its partners – $60 per new broadband sub they signed up (whether for Frontier’s service or someone else’s) and $50,000 for workshops. The only significant hard deadline was the expiration of the second, implementation contract at the end of last month (the initial settlement contract set the goals and outlined the program, the second one filled in the details).

On the other hand, there’s the question of what the CPUC thought it was getting when it gave Frontier permission to buy Verizon’s Californian systems. The CPUC’s formal decision was bundled up with all the settlement contracts Frontier signed with CETF, and several other groups that “intervened” in the case. Commissioners will have to decide whether to reopen that review.

Commonly, the CPUC either rejects this sort of request – a “petition to modify” a decision – or just makes technical corrections. I’m not going to hazard a guess as to what they’re going to do with this one. It’s worth noting, though, that three of the other “intervenors” – the CPUC’s office of ratepayer advocates, TURN and the Center for Accessible Technology – filed an ambivalent joint response. They “take no position regarding…CETF’s request for commission action”, but instead “urge the commission to investigate the allegations”.

Translation: it’s a mess.

Documents published to date:

Not so fast, doc. Justice department appeals AT&T Time Warner decision

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In a terse filing, the federal justice department gave notice last week that it is appealing a judge’s decision to allow AT&T to buy Time Warner’s content companies, with no strings attached.

The justice department didn’t outline a specific goal, but one possibility is that it wants AT&T to give up some of its new empire, perhaps Turner channels such as CNN. According to a story in Variety by Ted Johnson, it could turn out to be a risky maneuver…

Larry Downes, senior industry and innovation fellow at the Georgetown Center for Business and Public Policy, said that the Justice Department’s appeal carries risks for the government. Leon’s decision does not hold precedent, he noted, while the D.C. Circuit decision likely would.

“The court could use the opportunity to comment generally on the legal standards for opposing vertical mergers, for example, or reaffirm in broad terms the general principles of consumer harm that have guided antitrust law for the last forty years — rejecting, in effect, recent calls for expanding antitrust to take into account the economics of online platforms that don’t charge consumers and therefore don’t raise prices when they acquire other companies,” he said via email…

“The DOJ is really gambling — and could wind up losing not just this case but its ability to challenge future deals in a wide range of industries currently undergoing disruption,” he said.

Perhaps. But federal trust busters won’t get anywhere by rolling over and playing dead either. Immediately after the decision, Comcast saw daylight and moved to add Fox to its menagerie of captive content. AT&T followed up with a price hike for its Internet video service, DirecTv Now, repudiating lawyerly claims it made during the trial that consumer costs would come down.

Vertical mergers – where a company acquires its supply chain – aren’t always anticompetitive. But it always will be when dominant, monopoly model Internet service providers like AT&T and Comcast can manipulate broadband traffic to favor in-house content, as the end of network neutrality allows them to do.

CPUC approves FTTH grants, but says Frontier needs skin in the game

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Frontier Communications will get $2.7 million from the California Advanced Services Fund (CASF) for two fiber to the home projects. One is in the Imperial County towns of Desert Shores and Salton Sea Beach, and the other in Lytle Creek, in the mountains of San Bernardino County. The California Public Utilities Commission unanimously approved the subsidies at its meeting yesterday, and declined to add another $600,000 as demanded by Frontier.

At least for now.

The commission is in the middle of rebooting the CASF program, following the California legislature’s rewrite of the law that governs it. Lawmakers effectively transformed CASF from a source of independent and, to a degree, competitive broadband infrastructure financing, into a piggy bank for Frontier and AT&T. The language in the new law allows for 100% funding of broadband projects, but doesn’t require it. Commissioner Martha Guzman Aceves is in charge of making the changes, and she held out hope that Frontier could come back later and get the rest of the money. Commissioner Liane Randolph said that would be something to consider, but companies should share at least some of the costs…

I am supportive of both of these projects at the level currently recommended by staff. I’m open to – if there’s an opportunity in the future, if the criteria changes and there’s a procedural way that they can apply for more funds, but we would be approving these projects with the understanding that we would be approving them at 80 and 90 [percent] at this time. I think it’s important for the companies to have a financial participation in the project. They will eventually be able to earn a profit on this infrastructure.

As it stands, taxpayers will pick up the tab for 80% of the Lytle Creek project and 90% of the Desert Shores project. At that level, both projects will be turning a profit for Frontier within a handful of years, according to CPUC staff estimates. On the other hand, Frontier has threatened to not build anything at all if it has to invest its own money.

CPUC votes today on Frontier’s California cash grab

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Frontier Communications isn’t getting any sympathy yet from the California Public Utilities Commission. Commissioners are scheduled to vote this morning on grants for two southern California fiber to the home projects, in Lytle Creek, in the mountains of San Bernardino County, and Desert Shores and Salton Sea Beach in Imperial County. The subsidies would come from the California Advanced Services Fund (CASF).

You might think that Frontier would be happy with a gift of $2.7 million of taxpayer money, but it isn’t. It wants $3.3 million, which is the full tab for building the systems. Including the cost of buying customer premise equipment for customers who don’t exist – there are about 200 empty homes in the Desert Shores project area. Frontier claimed its household count was based on its own “its well tested methodology used extensively in broadband deployment”. Turns out Frontier’s “well tested methodology” involves using 2016 population figures, instead of the newer but, um, inconvenient data generated by the California finance department in 2017.

CPUC staff rejected Frontier’s arguments that the CPUC should pay for 100% of both projects, instead of the 80% and 90%, respectively, that’s currently proposed, saying…

Frontier has offered an interpretation of AB 1665 whereby every project is evaluated according to the unique set of criteria, chosen by the applicant, that will justify full funding for that project.

Assembly bill 1665 was passed by the California legislature and signed into law by governor Jerry Brown last year. The bill rewrote the rules for the CASF program, turning it into a private piggy bank for Frontier and AT&T, with some spiffs on the side for cable companies. It’s not surprising that Frontier thinks it can whack CASF with a hammer any time it’s running a little low on cash, but that’s the product of a seemingly limitless sense of entitlement, rather than a rational interpretation of the law.

So far, the give and take has been with staff. Commissioners will have the final say later this morning.

California electric company fiber leasing gets a reprieve

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The California Public Utilities Commission won’t kill electric companies’ independent fiber enterprises just yet. The dispute over how to share the money that Southern California Edison earns from leasing out surplus fiber with its electric customers was bumped to next month. The changes in the latest version proposed by commissioner Clifford Rechtschaffen – including making it a 50/50 split of gross revenue instead of the 10% that goes to ratepayers under current rules – were significant enough to trigger a 30 day review period. That also gives the CPUC time to think about how to handle SCE’s request to cancel its original request for a ruling, because the contract that triggered it – a master fiber lease agreement with Verizon – is off the table.

Frontier tells CPUC give us all the money!

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Frontier Communications isn’t happy with the bonus that California Public Utilities Commission staff wants to bestow on it. Instead, Frontier is demanding the CPUC pay the entire cost of two fiber to the home projects in outlying areas of California.

Frontier applied for two grants from the California Advanced Services Fund (CASF), one for $1.8 million in the San Bernardino County mountain community of Lytle Creek, and the other for $1.5 million in two towns – Desert Shores and Salton Sea Beach – in Imperial County. The applications asked the CPUC to pay 100% of the cost of the projects. The CPUC has always had the discretion to do that, but up until now has typically limited last mile infrastructure subsidies to 60% to 70% of construction costs.

When the California legislature rewrote the rules for CASF subsidies last year, it bowed to cash pressure from lobbyists for Frontier – as well as AT&T, Comcast, Charter and other big monopoly model incumbents – and turned the program into their private piggy bank. One change specifically – and unnecessarily – authorised the CPUC to pay for “all or a portion” of a project, based on an assessment of its worthiness.

So that’s what CPUC staff did when they evaluated Frontier’s applications, and drafted two resolutions for commissioners to consider at their meeting tomorrow. They recommend giving Frontier grants for 90% of the Desert Shores project cost and 80% in Lytle Creek.

That’s more than any other last mile project subsidised by CASF, but it still isn’t enough for Frontier. It filed objections to the staff proposal, essentially arguing that the CPUC is obligated to give them all the money.

Nonsense.

The CPUC’s job is to try to untangle the mess that lawmakers made last year when the CASF program was rewritten. That means developing a rational process for identifying and funding broadband projects in unserved and otherwise eligible areas of California, Frontier’s overwhelming sense of entitlement notwithstanding.

FCC lowers rural speed standard to 8 Mbps down, 800 Kbps up

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Internet service providers who get Connect America Fund subsidies from the Federal Communications Commission have to use the money to deliver service at a minimum of 10 Mbps download and 1 Mbps up load speeds, in most cases – effectively all cases in California so far. Last week, the FCC defined what that standard really means: subsidised carriers have to run quarterly speed tests that show they’re hitting 80% of the required speed, 80% of the time. As the FCC explains in its order

For example, if a carrier receives high-cost support for 10/1 Mbps service, 80 percent of the download speed measurements must be at or above 8 Mbps, while 80 percent of the upload speed measurements must be at or above 0.8 Mbps.

The required testing process is reasonably rigorous. ISPs can choose the method they use, but the tests have to be run during peak usage times – defined as 6pm to midnight – and measure speed and latency all the way from a customer’s home to (or through) an FCC server, and back. So subsidised ISPs – primarily AT&T and Frontier Communications in California – will be held responsible for their middle mile capacity as well as the final hop to subscribers. Customers have to be randomly selected, but AT&T and Frontier are only obligated to test 50 locations each, although it could end up being more, particularly for Frontier, because it does business in California under subsidiary companies.

It’s not unreasonable to expect a network that’s specced at 10 Mbps down/1 Mbps to deliver 8 Mbps down/800 Kbps up most of the time. But it’s also reasonable to expect a company that’s accepted taxpayer subsidies to deliver service at 10 Mbps/1 Mbps to build enough overhead into its system so it can meet its obligations, most of the time. Unfortunately for rural California, the FCC chose the latter.

SCE says fiber deal with Verizon is dead, and the CPUC killed it

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Southern California Edison and CPUC commissioner Clifford Rechtschaffen exchanged shots on Thursday, as the battle over electric company fiber continues. Rechtschaffen released a new version – an “alternate” – of a draft decision that required SCE to give up 75% of the gross revenue it would have received from a fiber master lease agreement (MLA) it reached with Verizon. He cut that down to 50%, which is still significantly more than the 10% that the existing rules, which have been in effect for almost 20 years, require.

Whether or not SCE knew Rechtschaffen’s revisions were coming, it filed a preemptive motion asking to withdraw the application that kicked off the proceeding almost a year and half ago. That application was initially given a green light in a proposed decision that was issued in June 2017, and then pulled back for what turned out to be a year of wasted argument.

SCE said that while the CPUC dithered, Verizon found fiber elsewhere and the agreement and the application are now irrelevant…

In the seventeen months since SCE filed its application, Verizon Wireless has continued to obtain the additional infrastructure it requires from its existing providers. While there may be future business opportunities with Verizon Wireless for dark fiber lease transactions independent of the MLA, at this time, the volume of lease route orders SCE would be able to enter into under the MLA is less than what SCE had planned when it filed the application. Had the Commission adopted the June 5, 2017 proposed decision, SCE may have been able to carry out the MLA, but at this juncture the original justification for the application is no longer economically viable.

No doubt, the proposed revenue split – whether it’s 75/25 or 50/50 – is a factor too. Under the current 10/90 formula, SCE says it wasn’t making very much money. It claims ratepayers were already getting 74% of the profit from fiber leases. If that’s the case, then either of the new formulas would have shoved its fiber business deep into the red. That’s not economically viable either.

The California Public Utilities Commission is scheduled to vote on, well, something on Thursday. Whether it does or not is another question – last week’s back and forth could mean it’ll be delayed again.