Cable companies can’t cherry pick “wealthy customers” but they can compete with rural telcos, CPUC decides

by Steve Blum • , , , ,

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Cable companies and other “competitive local exchange carriers” (CLEC) will be able to offer telephone service in (mostly) rural areas of California formerly reserved for small, independent telephone companies. The California Public Utilities Commission voted on Thursday to open up rural local exchange carrier (RLEC) territories to wireline voice competition. There were no changes to the first draft of the new rules proposed by commissioner Martha Guzman Aceves last month.

That permission comes with much needed strings attached, Guzman Aceves said…

It’s a little of an ironic position for me knowing that many of the carriers that want to compete in these rural territories often are some of the major barriers of competition elsewhere. But nonetheless, we need to comply with federal and state law, and open these territories.

The major condition obligates cable companies and other CLECs to serve the same ratio of residential to commercial and low income to affluent customers as the RLEC they’re targeting…

This is a particularly important condition because of the propensity to cherry pick – by carriers throughout the state – and to only serve certain demographics. By meeting this proportionality measure, it guards against serving only the subset of wealthy customers or commercial customers…Doesn’t mean they have to serve the whole area. It means their self designated territory has to proportionately have the same demographics.

The hope is that taxpayers won’t be stuck with with the tab for ever increasing subsidies for low income, sparsely populated communities. RLECs, which were originally formed to deliver phone service in remote areas shunned by AT&T, are supported by “universal service” programs that are paid for by taxes on everyone’s phone bills. Cable companies, on the other hand, carefully choose who they will and won’t serve based on how much money they expect to get from a given neighborhood or community.

The usual suspects submitted their usual arguments against the new RLEC competition rulebook, but to no avail.

The Sacramento front organisation for Comcast, Charter Communications and other cable companies – the California Cable and Telecommunications Association – indignantly objected to anything that inconveniences them. The RLECs don’t like the new rules either, but at least they tried to negotiate – they asked for changes that would have allowed cable companies to enter their territories but with more stringent service obligations. Guzman Aceves’ final draft rejected both side’s arguments.