Broadband bill targets California fairgrounds, details yet to come

by Steve Blum • , , , ,

Bolado park san benito county 13apr2019

A bill aimed at upgrading broadband service at fairgrounds in California was introduced in the assembly by assembly Robert Rivas (D – San Benito). Assembly bill 2163 would “ensure that all California fairgrounds are equipped with adequate broadband and telecommunications infrastructure to support local, regional, and state emergency and disaster response personnel and operations”.

In its initial form, AB 2163 doesn’t answer the key question: where does the money come from? Earlier conversations about improving broadband facilities at fairgrounds opened up the possibility of raiding the California Advanced Services Fund (CASF) for that purpose, but the draft doesn’t mention that. CASF is California’s primary broadband infrastructure subsidy program. The last time legislators took it up, they turned CASF into a piggybank for monopoly-model incumbent service providers, like AT&T, Frontier Communications and cable companies.

The bill does open the door a crack to general broadband infrastructure improvements, but just a crack. It calls for “fostering new economic opportunities in neighboring communities”, which might mean better public-facing broadband infrastructure. Or it could mean better online livestock auctions at county fairs. We’ll see.

At this point, AB 2163 is a statement of intent rather than fully fleshed out legislation. That’s common practice this early in the session. More meat will probably be added to the bill once it makes it to its first committee hearing, probably toward the end of March. That’s when we’ll have a better idea if it’s intended to make meaningful upgrades to the woefully slow broadband infrastructure that’s common in rural California, or if it’s just a way to add money to the internal information technology budgets for the California office of emergency services and/or the department of food and agriculture.

An early clue will be which committee (or committees) are assigned to review it. A proposal to dip into CASF or to do much of anything that’s related to telecoms infrastructure would have to go to the industry-friendly assembly communications and conveyances committee. If it’s just about departmental IT budgets, then it might be run through the public safety and/or agriculture committees. So far, that assignment hasn’t been made, and doesn’t need to be for a few weeks yet.

As you might guess from reading this post, let alone this blog, I have opinions about how to improve broadband infrastructure in rural California, which I’ve shared publicly and privately. I’m not a disinterested commentator. Take it for what it’s worth.

FCC revises subsidy rules, won’t zonk California because of our low broadband standards

by Steve Blum • , , , ,

Monty hall

The Federal Communications Commission approved a small do-over to the rules for its new broadband subsidy program, the Rural Digital Opportunity Fund (RDOF). Instead of blocking subsidies to any area where state broadband dollars are being spent, it will only do so where the money is paying for service at a minimum of 25 Mbps download and 3 Mbps upload speeds.

That’s good new for California. Our primary broadband subsidy program – the California Advanced Services Fund (CASF) – deems communities with broadband at the achingly slow rate of 6 Mbps down/1 Mbps up as adequately served, and only requires grant recipients who build infrastructure with state money to hit the barely better speed of 10 Mbps down/1 Mbps up.

As originally written, the FCC’s decision could have been read as writing off CASF-funded communities with those speeds. Democratic commissioner Geoffrey Starks certainly thought so, and called out the problem before the FCC voted last month. But FCC rules allow the text of a decision to be tweaked even after it’s approved. In his final comments, Starks said the FCC republican majority had a change of heart…

I received notice that the Report and Order we had voted had been revised by the Chairman in response to the concerns I raised…the post-adoption revision approved by the majority was changed to read:

In addition, we will exclude those census blocks which have been identified as having been awarded funding through the U.S. Department of Agriculture’s ReConnect Program, or awarded funding through other similar federal or state broadband subsidy programs to provide 25/3 Mbps or better service. This is consistent with our overarching goal of ensuring that finite universal service support is awarded in an efficient and cost- effective manner and does not go toward overbuilding areas that already have service.

The FCC will vote again later this month on the tentative date of 22 October 2020 to begin a reverse auction to distribute the initial $16 billion of RDOF subsidies, even earlier than originally planned. That’s not so wonderful for California. The president of the California Public Utilities Commission, Marybel Batjer, requested a delay to give California time to get its broadband subsidy act together. The FCC doesn’t plan to wait.

FCC documents:
FCC report and order, Rural Digital Opportunity Fund, published 7 February 2020
FCC public notice, Rural Digital Opportunity Fund, published 7 February 2020

FCC commissioner statements, 7 February 2020:
Geoffrey Starks
Ajit Pai
Jessica Rosenworcel
Michael O’Rielly
Brendan Carr

FCC’s $270 pole rental limit for wireless attachments might be “arbitrary and capricious”, appellate judge says

by Steve Blum • , , , ,

Los angeles streetlight cell 1 23oct2019

Federal appeals court judges hearing the challenge brought by local governments to the Federal Communications Commission’s 2018 preemption of ownership and control of street lights tried to get an FCC lawyer to explain how the commission settled on $270 as the allowable annual pole rental limit. The attorney, Scott Noveck, couldn’t oblige judges Jay Bybee and Mary Schroeder…

Bybee: I’d still like you to get to how you get to the $270.

Novek: So your honor, what I believe happened is that the commission took a look at various state small cell bills…

Bybee: It’s interesting, counsel, that you just characterised it as ‘you believe’. Because there isn’t anything in the record that tells us what the commission did, other than look at bills that were pending in a number of states, mostly in the heartland, not on the coast.

Novek: I want to try to answer that, but I just want to say to preface that, that this is just a safe harbor. And this order would have been perfectly reasonable even without any safe harbor at all.

Schroeder: When you say safe harbor, what do you mean? Do you mean that if it’s below that there’s no problem with it?

Novek: So, what I think what the commission was doing here was recognising that there exists a certain level of fees below which the fees are so likely to pass muster, they’re so likely to be within what the actual costs are, that it wouldn’t make sense to be expending resources on litigating those…But nothing at all precludes localities from charging higher fees where their costs are higher.

Bybee: Does the commission have an obligation to explain why it chose $270 as opposed to, let’s say, $250 or $300?

Novek: Well, I do think that at that point you’re in the area of paradigmatic line drawing, where agencies, I think, are at their greatest deference.

Bybee: They could have chosen $200 or $400 – that’s significant, isn’t it?

Novek: Your honor, I don’t think that this was, um, something that we were able to calculate with mathematical precision…

Bybee: You can calculate it with mathematical approximation. I don’t even see the approximation.

Novek: So, what the commission did here…

Bybee: The numbers that are in the bills that the commission relied on…are in the range of about $100. So the $270 appears – I mean, it may be generous for the cities, and maybe it was out of an abundance of caution. I’m just trying to figure out whether they just drew a number out of a hat, which might make it arbitrary and capricious.

The $270 figure originally came from lobbyists for mobile carriers, such as AT&T, Verizon, T-Mobile and Sprint. In 2017, they convinced California lawmakers – whom they and their colleagues influence with millions of dollars in payments – to enact a similar limit, which was vetoed by governor Jerry Brown.

The challenge to the FCC’s 2018 preemption is now in the hands of the three judges from the federal ninth appellate circuit, who heard the case last week in Pasadena. Their decision is likely to come sometime in the next three to six months.

Links to petitions, court documents and background material are here.

FCC’s rural 5G justification for urban wireless preemption is comfort to AT&T but not to Fresno, appeals court told

by Steve Blum • , , , ,

Ninth circuit oral argument pole preemption 10feb2020

Federal appellate judges drilled down into arguments made by local governments and the Federal Communications Commission on Monday, as they considered a challenge to the FCC’s 2018 decision to cap rental rates for locally owned street light poles and other assets in the public right of way, and effectively give mobile carriers unfettered use of public property.

One justification for this preemption of local property ownership was that if big cities with big potential for subscriber revenue charge high fees, then carriers like AT&T and Verizon won’t have money left over to spend in less profitable small cities and rural communities. That prompted a question from judge Jay Bybee about whose rights and whose benefits are being protected…

So the FCC’s theory is that the reason we’re not going to allow costs above a certain level – anything above costs – is prohibited and preempted is because, the theory is, that the carriers could then take that money and invest in rural areas, other cities and so forth.

So if the City of Los Angeles agrees to $400 – the city says it’s $400, it’s our cost – and the carriers all agree, because they’re very anxious to get into Los Angeles immediately, and the City of Fresno comes and says ‘we don’t think it’s above $300’, does the City of Fresno have the right to bring an action, because these carriers are being slow to develop 5G in Fresno?

Joseph Van Eaton, with the Best, Best and Krieger law firm, which represents many cities in California and elsewhere, replied…

No, in fact that’s one of the flaws, the basic flaw in this whole cross subsidy argument, because that’s what this really is, that carriers will take money saved in Los Angeles and invest it in an area that’s not now profitable.

There’s no economic theory that supports that idea. The whole universal service fund is based on the idea that a rational investor will make money where they can make money and then they don’t take good money and pour it into an area where it’s not profitable out of the goodness of their hearts. That’s why we actually have evidence where Lincoln, Nebraska dropped the fee to $95 and said ‘all you have to do is build out these less profitable areas’ and they got no takers.

There’s no evidence that cross subsidy actually results in the impacts, effects the FCC has, and certainly the FCC doesn’t require it, and it doesn’t give anyone any enforceable right to say ’if you’re saving money in LA, you gotta come to our community".

All three judges asked questions of both the FCC and local government challengers during the hearing in Pasadena. Conventional wisdom is that questions asked aren’t a good guide to what judges are thinking – they might be sceptical, or they might be floating conclusions that they’re leaning towards. We’ll have to wait for them to issue their ruling, which is probably three to six months away.

Links to petitions, court documents and background material are here.

Federal judge matters not to California’s review of T-Mobile/Sprint deal, CPUC told

by Steve Blum • , , , ,

Fred gwynne judge

Opposition to the T-Mobile/Sprint merger is alive and kicking in California, as the California Public Utilities Commission’s review continues. The primary opponents of the deal – the CPUC’s public advocates office, the consumer advocacy groups TURN and the Greenlining Institute, and the Communications Workers of America union – replied to T-Mobile’s plea for immediate approval yesterday.

Like T-Mobile, the group – AKA joint advocates – made their position known in an email addressed to the CPUC commissioner and administrative law judge who are in charge of the case. A federal judge’s approval doesn’t matter so much in California, they said…

The Commission must acknowledge that the events at the [federal] District court have little direct impact on this Commission’s review of the transaction. Quite distinct from the federal review by the FCC and DOJ, the Commission has independent authority and obligation to review this merger and it should rely on that authority to continue its review…the Commission has a very clear statutory obligation to conduct a thorough and detailed review of this transaction to ensure it is in the public interest and will benefit California consumers.

The fact that the District Court has concluded its review does not require this Commission to accelerate its own review of the merger or to change its intended path in any way…Joint Advocates strongly believe that the record in this proceeding demonstrates that this transaction will harm California consumers

The email also pointed out that the CPUC has a formal process for putting things such as court decisions into the official record, which T-Mobile did not follow. The last time T-Mobile tried an end run around the formalities was when it similarly asked the CPUC to defer to the greater wisdom of the federal justice department and rubber stamp the deal. That didn’t end well – the result was another round of hearings and months of delay.

T-Mobile has already made a thinly veiled threat to close the Sprint merger without California’s blessing, and yesterday’s email might be read as setting 1 April 2020 as the deadline for that.

CPUC, Becerra yet to bless T-Mobile/Sprint deal, as California’s review extends to end of March or later

by Steve Blum • , , , ,

Tmobile billboard 2 las vegas 6jan2020

T-Mobile’s proposed takeover of Sprint was approved by federal judge Victor Marrero in New York yesterday. That leaves a separate, and more focused, federal court case in Washington, D.C. and the California Public Utilities Commission’s review as the final regulatory hurdles that the merger must clear.

Yesterday was also the 30-day public review deadline for the CPUC to post a draft decision that could be considered at its 12 March 2020 meeting. That didn’t happen, so the soonest the CPUC could approve or deny the merger will be at its 26 March 2020 meeting, unless 1. the groups supporting and challenging the merger all agree to expedite a vote (highly unlikely) or 2. the CPUC reckons it to be an emergency (even less probable).

T-Mobile’s San Francisco lawyer, Suzanne Toller, emailed Marrero’s decision to Karl Bemesderfer, the CPUC administrative law judge managing the case, and Clifford Rechtschaffen, the commissioner overseeing it. She asked them to issue a proposed decision “as promptly as possible, and no later than February 25, 2020”, so it’ll be on the 26 March 2020 agenda, in time for T-Mobile to close its acquisition of Sprint by 1 April 2020 and bestow all the glorious wonderfulness of the merger on Californians.

California attorney general Xavier Becerra is a wildcard in the CPUC proceeding. California law allows him to weigh in, and so far he’s been a strong opponent of the deal. He was a co-leader in the antitrust lawsuit that was tossed out yesterday, and he issued a statement saying the “coalition [of state attorneys general] is prepared to fight as long as necessary to protect innovation and competitive costs”. That’s not exactly a promise of battle to the death, but it’s a fair bet that he won’t be telling the CPUC that the merger is a fantastic idea and should be approved.

The CPUC isn’t strictly bound by Becerra’s opinion, assuming he provides one. But it can’t ignore it, either, and could deny the merger on that basis or impose mitigation measures that he might recommend. Typically, an opinion from the California attorney general would be privately conveyed to the CPUC, which then publishes and evaluates it in the text of the final decision, taking into account the evidence in the proceeding’s record and the arguments made by all sides.

As of now, the CPUC’s review is in Bemesderfer’s and Rechtschaffen’s hands. Last week, Bemesderfer ordered DISH – the third player in the deal – to answer detailed questions submitted by the CPUC’s public advocates office. That means there’s still work to do, and a draft decision isn’t necessarily imminent. Looking ahead, the CPUC has one voting meeting scheduled in April, on the 16th, and two in May, on the 7th and 28th.

Marrero was unequivocal in his approval of the T-Mobile/Sprint merger, saying it would increase competition in the mobile broadband market by improving T-Mobile’s position versus AT&T and Verizon. He paints Sprint as a failed competitor that’s made poor technology choices and is losing market share and talent.

“Sprint’s financial situation…remains poor and hamstrings any meaningful investment efforts”, the decision said. “The court is thus substantially persuaded that Sprint does not have a sustainable long-term competitive strategy and will in fact cease to be a truly national [mobile network operator]”.

On the other hand, unlike the deal’s Californian opponents, he’s convinced that DISH can add competitive heat to the mobile broadband market.

“The presence of DISH as a new entrant will constitute a substantial incentive to competition in the [mobile broadband market]”, Marrero wrote. “DISH is undeniably well equipped t o enter the market by virtue of its large spectrum portfolio, which is worth roughly $22 billion dollars and rivals Verizon’s in size”.

Concerns that DISH won’t keep its promises are outweighed, in Marerro’s opinion, by the endorsement and presumed future oversight of the federal justice department and the Federal Communications Commission.

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

FCC tells appeals court if electric or cable companies can install “larger, uglier, blighted” equipment on poles, then wireless carriers can too

by Steve Blum • , , , ,

Small cell olympic blvd 22oct2019

The Federal Communications Commission defended its 2018 preemption of local property ownership and permitting authority in front of a panel of three federal appeals court judges in Pasadena yesterday. Its lawyers faced some pointed questions from the judges.

FCC attorney Scott Noveck tried to dance around the reality of the FCC’s preemption order and claim that it really wasn’t doing much at all, particularly in regards to limits on the aesthetic requirements that cities can impose on wireless facilities. Judge Daniel Bress didn’t seem convinced…

Bress: The other side has raised this point, that when you just compare the standards – the one in the small cell order as compared to the one in the statute – there’s some possible misalignment, right, where it says no more burdensome, which would suggest parity, whereas the statute suggests actually there’s some amount of discrimination that would be allowed?"

Noveck: I think the order suggests parity among similarly situated infrastructure, which I think brings those into alignment.

Bress: What does that mean?

Noveck: Well, so for instance, the problem we have here sometimes, you have times when you have, say, cable equipment or electrical equipment, and what the record shows is that in many localities they were imposing very burdensome requirements on wireless equipment that might be smaller and less, um, more unobtrusive than similar equipment you might see on a utility pole or on a pole that was being used to provide cable service, was being used to provide electrical service but, for whatever reasons, localities were subjecting the wireless carriers to far more onerous requirements. So the non-discrimination principle here is just saying that if you are claiming that small cells need to meet some burdensome aesthetic requirements, but you’re allowing other utilities to put larger, uglier, blighted infrastructure on the same poles, it’s hard to think that this is a legitimate aesthetic requirement you’re imposing.

Noveck was trying to create a false equivalence between electrical equipment, such as transformers, that are installed on utility poles, which are often placed as far out of view as practicable, and wireless equipment placed on street light poles which, by their very nature, are placed where everyone can see them. Bress didn’t seem convinced, but that’s not necessarily his thinking – appeals court judges are notoriously (and properly) hard to read. All we can do now is wait for a ruling. There’s no particular timeline for that, but three to six months is typical.

Links to petitions, court documents and background material are here.

Game on today, as cities take on FCC in court over pole ownership preemption

by Steve Blum • , , , ,

Downtown salinas

Local ownership of street light poles and other facilities planted in the public right of way is at stake, as lawyers for dozens of cities and counties and the Federal Communications Commission square off in a Pasadena court room later this morning.

A panel of three federal appellate court judges will hear arguments about why, or why not, the FCC has the authority to tell local agencies how much they can charge mobile carriers to attach equipment to their poles, and to largely replace negotiated rental contracts with simple, non-discretionary permits. Other issues, such as access to utility poles (which fall under different laws and regulations) and road maintenance policies that prohibit digging when the danger of freeze/thaw damage is greatest, will also be taken up.

In 2018, the FCC capped the rental rate that cities can charge wireless companies for pole attachments at $270 per year. That’s in contrast to negotiated market rate deals that often top $1,000 per year and sometimes go much higher.

If they prevail, the FCC’s republican majority is ready to double down on preemptions of state and local authority over right of way management and permits for wireless facilities. At the CES show in Las Vegas last month, republican commissioner Michael O’Rielly was defiant. He said local control is “problematic” and the FCC’s response “does come with the P-word…it requires preemption. And that is something the commission is going to have to continue to do”.

Another federal appeals court, based in Washington, D.C., might have made O’Rielly’s dream less likely. In a decision that otherwise upheld the FCC’s repeal of network neutrality rules, the judges ruled that the commission overstepped its authority when it tried to preempt any and all regulation of broadband service by states. If the FCC wants to big foot state governments, it has to wait until there’s an actual regulation to preempt, and then come up with a specific basis for doing it.

Streaming video hurts cable, but it’s killing AT&T

by Steve Blum • , , , ,

Elmer fudd

The traditional, linear subscription TV business is in a nose dive. In the fourth quarter of 2019, AT&T shed 945,000 subscribers, mostly from DirecTv but also from its legacy Uverse service and its new AT&T TV platform. Add in the 219,000 subscribers who dumped its AT&T TV Now streaming service, and more than million customers walked away from AT&T’s video products.

Comcast and Charter lost TV subscribers, too. But for both companies, they each lost fewer subs over the 12 months of 2019 than AT&T lost in the last three. And both gained broadband subscribers and market share, as consumers move to higher speed service that better meets their needs than slow, DSL-based offerings from AT&T and Frontier Communications.

Like the need to watch streaming video.

Google figured out how to solve the linear TV problem. They’re not going to offer the service any more…

Google Fiber will no longer offer a linear TV product to new customers. For our current TV customers, we know you have come to rely on Google Fiber TV and we will continue to provide you with traditional TV service. And we’ll be happy to help everyone explore other options to get their favorite programming the way TV is watched now — over the Internet, with the virtually unlimited choice and control online viewing provides.

AT&T is pinning its hopes on the new HBO Max streaming service it plans to launch in May, for $15 per month. It’s beginning to look like a product that will make or break the company. With AT&T’s spending on video assets, like Time Warner, climbing and its video revenue in a nose dive, it’s betting its future on its ability to produce the same kind of instant success that Disney had with its new streaming service launch last year.

SB 917 is a plausible PG&E public buyout plan, if the public wants to pay the price

by Steve Blum • , ,

A credible PG&E public takeover plan is on the table in the California legislature. Senator Scott Wiener (D – San Francisco) introduced senate bill 917 on Monday. It’s a detailed guide to acquiring PG&E’s electric and gas business, including financing and operating plans and responsibilities.

Wiener wants to create a massive utility district that encompasses all of PG&E’s vast northern California territory. It would own most or all PG&E’s infrastructure and business, after it’s been acquired via an eminent domain process – the state would use its sovereign authority to take over ownership, with the compensation paid to the company likely determined by a court. I haven’t seen any estimates of how much that would be, but when San Francisco proposed a similar takeover last year. It initially ballparked the cost at “a few billion” just for the assets and operations within the City, and ended up offering $2.5 billion, which PG&E rejected as inadequate.

Top management would work for the new Northern California Energy Utility District, but nearly all the work of running the utility would fall to a non-profit operating company. Executives aside, PG&E’s employees would end up working for the operating company.

Both the district and the operating company would be run by boards elected via a popular vote, in the same way as other Californian special districts, for example the Sacramento Municipal Utility District, which provides electric service in Sacramento County.

The most or all caveat is there because the bill also gives cities, counties and local utility districts a de facto right of first refusal. San Francisco, say, can jump in on the eminent domain proceeding and slice off PG&E assets, customers and employees within its boundaries if it “contributes its proportionate share of the compensation paid for the assets”, according to the summary of the bill prepared by the legislature’s non-partisan attorneys. Slicing off customer and cash dense urban territory could be problematic if the mega-district is left with mostly rural communities.

No surprise: PG&E doesn’t like SB 917. It released a statement saying the company opposes the bill and a public takeover “would not create a safer or cleaner operation”.

The bill promises just that, though. It includes a long list of directives, including twice a year inspections, minimising the scale of preemptive power cuts and reducing greenhouse gas emissions. Which is possible, but at a price. Similar to other local governmental agencies, the new northern California utility mega-district would have a limited ability to impose taxes, including particularly to pay back the money taxpayers would have to borrow to foot the bill for taking over PG&E.