We’re not selling lit service to Verizon, says SCE

by Steve Blum • , , , ,

In an apparent attempt to dial down the heat on regulatory review of its dark fiber leasing deal with Verizon, Southern California Edison wants to remove any reference to electronics from the paperwork it filed with the California Public Utilities Commission.

SCE has been in the dark fiber business for a couple of decades, and is certified by the CPUC as a competitive telephone company – it holds a certificate of public convenience and necessity (CPCN) that allows it to lease dark fiber and sell other telecommunications services, including lit data transport, on its 5,000 mile fiber network. Because it’s first and foremost a regulated, privately owned electric utility, there are conditions attached, such as sharing revenue with ratepayers and closer, ongoing scrutiny of its telecoms business by the CPUC than would otherwise be the case.

Earlier this year, SCE asked the CPUC to give its blessing to a master fiber lease agreement with Verizon. The idea was to have the CPUC approve top level terms for what would be an open-ended business arrangement between SCE and Verizon. Within the constraints of that master agreement, the two companies would be able to negotiate leases for particular fiber strands on particular routes as the need arose over time. It’s a common practice in the fiber business and would eliminate the need to file the necessary, but nearly identical, paperwork with the CPUC every time SCE leases a new strand to Verizon.

At first, it seemed uncontroversial. The commissioner responsible for the review, Cliff Rechtschaffen, outlined a perfunctory decision making process. Then two things happened. The commission began an overall look at the way utility poles are managed in California, and Pacific Gas & Electric asked for essentially the same CPCN authority SCE has, under terms that were largely similar, but used a different formula for determining how money should be split between ratepayers and shareholders. Rechtshaffen widened the scope of his enquiry, citing, among other things, SCE’s apparent intention to sell lit services to Verizon. In other words, instead of leasing bare strands of dark fiber and letting Verizon worry about the rest, it would presumably be attaching electronics to each end and transporting data back and forth. Which is something PG&E also wants to do.

Since then, TURN, an old school consumer advocacy group, and the cable industry’s lobbying front organisation have jumped in on the proceeding, even as California’s recent wildfire catastrophes have made relations between the CPUC and privately owned electric utilities increasingly fraught.

SCE’s latest move is to tell the CPUC that it wants to take out the word “electronics” from its original application “because it suggests that the subject of the Application involves lit fiber, when it does not”.

Since it’s the first time around, PG&E will get a hard look at its request for telephone company status, and there’s no doubt a decision will take many months, if not years. SCE, on the other hand, has been in the fiber business for nearly 20 years, operating under rules approved by the CPUC that have provided significant benefits to electric ratepayers and telecoms subscribers, who are pretty much the same people anyway. Neither the company, its customers or the public that depend on both should have to suffer through an interminable review of a simple contract that plays by those rules.