CPUC leaves a hard decision on its broadband authority for another time

by Steve Blum • , , , ,

Some games go on forever, and reach no result.

The California Public Utilities Commission passed on the opportunity to officially assert its jurisdiction over broadband infrastructure and service yesterday. By a unanimous vote, commissioners allowed Comcast to simply withdraw its now moot application for permission to take over Charter and Time Warner cable systems in California.

The mega-merger died in April, after federal regulators insisted on deal killing conditions. The CPUC had also spent about a year reviewing it, amassing a huge amount of data and documents, in addition to the even bigger stash developed by the Federal Communications Commission.

Early on, the CPUC commissioner in charge of the review, Carla Peterman, along with an administrative law judge, ruled that the ultimate decision would take into account the proposed merger’s impact on California’s broadband market. This scoping ruling relied on a section of federal telecoms law that might or might not be read as giving the CPUC extremely broad authority to “remove barriers to infrastructure investment“. Arguably, it also conflicted with a state law intended to keep the CPUC from regulating Internet-enabled services in California, although there’s an exception for responsibilities delegated by federal law.

The CPUC’s review of the merger proceeded on that basis. The result was two competing decisions, one denying permission to do the deal and one granting it, with a long list of conditions. Both relied on the controversial authority over broadband cited in the scoping ruling. But those were only proposals based on a preliminary ruling: the CPUC as a whole never endorsed or asserted any authority to regulate the broadband market.

Even though the Comcast deal fell apart, the commission still could have approved one of the alternatives and established an official precedent for overseeing broadband infrastructure and service on the basis on that broad reading of federal law, albeit one that was sure to be challenged in court. Instead, commissioners took a third option, dropping the matter entirely and leaving unresolved the question of whether they can or will intervene in the Californian broadband market.

Yesterday’s decision requires that the trove of documents collected by the CPUC and FCC remain available for use in any future proceedings, including the CPUC’s current review of Charter Communication’s plan to buy cable systems owned by Bright House and Time Warner. And it ensures that outside advocacy groups will get paid, probably by Comcast, for the time they spent on, mostly, opposing the deal. All of that could have been accomplished via one of the other alternative decisions, too.

Now, the question of the CPUC’s authority over broadband will be re-argued, starting at square one and maybe in triplicate. Besides the Charter transaction, the CPUC is considering Frontier’s purchase of Verizon’s wireline systems and the sale of a majority stake in Suddenlink to a European company. The decision has already been made to review the Frontier deal under the same assumption of broadband authority as was used in the Comcast proceeding, and that reasoning is likely to be applied to the other two transactions.

Without the Comcast precedent to point to, the same arguments will be made and disputed, three times over – Charter, Frontier and Suddenlink are already contesting the idea. A lot of good work was done over the past year. It’s unfortunate that the CPUC chose not to take a stand. Instead, it kicked the can down the road. That road may well lead to the same destination, but it will take longer to get there and a safe arrival is far less certain.