AT&T redlines poor and rural Californians because it can, Frontier because it can’t afford otherwise, CPUC study says

by Steve Blum • , , , ,

History of the World, Part 1 - Piss Boy

Corporate choices made by AT&T and Verizon, and Frontier Communications’ dire financial condition created the growing divide between relatively modern telecoms infrastructure in affluent urban and suburban communities, and the decaying infrastructure in poor and rural ones. The result is “deteriorating service quality”, “persistent disinvestment”, an “investment focus on higher income communities” and an “increased focus on areas most heavily impacted by competition”, according to a study done for the California Public Utilities Commission by a Boston-based consulting company.

The report paints a contrasting picture of the corporate attitudes of AT&T and Frontier, but neither is flattering. The conclusions are, and should be, devastating for both companies. The report speaks for itself:

  • Both AT&T California and Frontier…[are] in effect, disinvesting in infrastructure overall, and [the disinvestment is] most pronounced in the more rural and low-income service areas.
  • AT&T has the financial resources to maintain and upgrade its wireline network in California, but has yet to do so. Frontier has a strong interest in pursuing such upgrades, but lacks the financial capacity to make the necessary investments.
  • AT&T wire centers that have been upgraded with fiber optic facilities and other broadband-related investments disproportionately serve higher income communities.
  • The AT&T wire centers serving areas with the lowest household incomes tend to exhibit the highest trouble report rates, the longest out-of-service durations, and the lowest percentages of outages cleared within 24 hours.
  • AT&T and Frontier appear to have focused most of their attention in those communities where competition and the potential for loss of customers is greatest.
  • The quality of AT&T and Frontier voice services has steadily declined over the 8-year period from 2010–2017…with the number of outages increasing and the service restoration times getting longer.
  • AT&T no longer actively markets legacy Plain Old Telephone Service (“POTS”) and is instead actively promoting broadband service to customers in order to maintain and grow its revenue steam. As a result, AT&T has allowed POTS service quality to degrade over time.
  • Investments that were made have been primarily directed toward supporting new broadband services…In locations where such investments have been made, POTS service quality has improved.
  • This study provides evidence of a strong relationship between significant adverse weather conditions and an increase in the number of service outages. This pattern suggests that the networks of AT&T and Frontier are not as robust as they need to be.

This study almost didn’t happen. CPUC president Michael Picker, who is resigning and likely will chair his last meeting on Friday, tried to block it. He bowed to “vociferous opposition” from AT&T and Verizon, which later sold its fiber and decaying copper systems to Frontier. Two former commissioners – Catherine Sandoval and Mike Florio – put a counter proposal on the table, which passed by a vote of 4 to 1, with Picker the only no vote.

There’s apparently more to come – yesterday’s report was only the executive summary, and there’s much more detailed data and analysis behind it. There’s also the question of whether the CPUC will take action – much will depend on incoming president Marybel Batjer – and whether the California legislature will allow it. Assembly bill 1366 would effectively wind down the CPUC’s oversight of telecoms in California.

Examination of the Local Telecommunications Networks and Related Policies and Practices of AT&T California and Frontier California, Economics and Technology, Inc., April 2019 (published 22 July 2019)

Table of Contents

For more background documents, click here.

Note: except for bracketed text, the bullet points above are direct quotes from the report, but the order of the quotes was changed.