VoIP regulation promised by California lawmakers after AT&T-backed bill boomerangs

by Steve Blum • , , , ,

Feral kid boomerang

Once again, a higher power interrupted the ongoing love affair between AT&T, Comcast and friends, and the California assembly’s primary telecommunications policy committee. As with the last time, the central issue is voice over Internet protocol service, with major labor unions – particularly, the Communications Workers of America (CWA) – opposing an attempt to exempt VoIP and other “IP enabled services” from oversight by the California Public Utilities Commission.

Assembly bill 1366 would extend a 2012 law that bans the CPUC from regulating IP-delivered services. Originally, the extension was indefinite, but an amendment accepted yesterday during an assembly communications and conveyances committee hearing limits it to ten years. The law applies to services, such as VoIP or instant messaging, that ride on top of Internet connections, rather than broadband service itself.

The hearing began with the bill’s author, Lorena Gonzalez (D – San Diego), and an odd assortment of non-profit organisations using scare tactics to argue in favor of it. The implication was that if AB 1366 isn’t passed, the CPUC will make VoIP unaffordable or outlaw it altogether. Or kill the Internet. Or puppies. Or do something. Awful.

They were followed by a long line of other non-profit groups that don’t usually concern themselves with telecoms issues, but often have a history of taking money from companies that do. Such as AT&T, Comcast, Charter Communications, Verizon, T-Mobile and others, whose lobbyists also made their presence known.

Consumer and telecoms advocacy groups opposing AB 1366 followed, but it was the speaker from the CWA and the solid wall of red t-shirt clad union members that seemed to grab lawmakers’ attention. Gonzalez quickly pivoted and said she’d work with them to figure out a way to regulate VoIP, because what she’s really afraid of is that the CPUC will do nothing…

We do want to and need to ensure that…the opportunity for service and for complaints and to have this followed up on is equal, and we are going to work with CWA on addressing that situation. I mean, the folks that we’re talking about, who are currently in opposition, I talk to them every day. Obviously, I’m not doing something to oppose labor. These are the people I come from and I represent and they live in my community. We want to provide a framework by which, actually, service will improve, that we can have access to service, that we will have restoration time guaranteed. If we left that up to the PUC, we might get a restoration time 14 years from now.

Translation: if CWA doesn’t cut a deal with AT&T, we’re going to regulate VoIP.

There are two issues in play. One is whether or not to treat Internet-delivered services the same way as largely identical, regulated ones.

The other is the CPUC itself. I watched three utility-related hearings yesterday, and the CPUC’s glacially slow decisions and idiosyncratic operations were bashed by all sides in each one. Legislative attempts to disestablish the commission, or reduce its scope of authority have been increasingly common in recent years. Most failed or were trimmed back, but that was while Jerry Brown was governor. He tended to shield the CPUC and executive departments from legislative micromanagement. Gavin Newsom might not be so protective.

T-Mobile, CETF slammed for $35 million deal to win approval of Sprint merger

by Steve Blum • , , , ,

Your winnings sir

A $35 million payoff that, um, inspired the California Emerging Technology Fund (CETF) to “enthusiastically and wholeheartedly support” T-Mobile’s acquisition of Sprint was lambasted yesterday by organisations that still oppose it. The California Public Utilities Commission’s Public Advocates Office (PAO) and two advocacy organisations, TURN and the Greenlining Institute, filed objections to the agreement.

One issue in dispute is whether it is a formal settlement, which has to be negotiated and reviewed under CPUC rules, or something else. Which is what T-Mobile and CETF seem to think it is, because they didn’t follow those rules, according to the filings.

But the substance of the deal also came under fire. The objections noted, as I did last week, that T-Mobile’s promises of good behavior and grand public benefits were either recycled (in a somewhat melted form) from earlier statements or were so vague and subject to T-Mobile’s discretion as to be no promise at all.

The single significant new commitment in the agreement was $35 million, to be paid to CETF over five years by T-Mobile. The money is supposed to go towards what the contract calls “digital inclusion policy and programs”, with $22 million earmarked for various non-profits and public agencies, in a manner to be determined by CETF and T-Mobile. CETF keeps the remaining $13 million to spend on its ongoing operations.

The PAO asked the commission to reject the deal. Noting that CETF “receives a disproportional amount of funding” that “exceeds any commission approved operating costs percentage”, the PAO said it…

…has determined that the agreement is not in the public interest or reasonable on its face…

The Agreement requires New T-Mobile to provide $35 million over 5 years to CETF’s “Digital Inclusion Policy and Programs” projects without any basis in the record to evaluate, verify, and monitor these programs to ensure that the amount of $35 million is appropriate. While the Public Advocates Office strongly supports efforts to close the digital divide, as described above, additional hearings are necessary to investigate these proposals. The record does not sufficiently describe what these programs do, the amount of money necessary to properly fund them, who operates them, or any other details about them.

CETF and T-Mobile have ten days to respond. One possible outcome is that the administrative law judge managing the CPUC’s review could order new hearings to delve into the details of the agreement. That has the potential to further delay an inquiry that has been extended by at least a couple of months because of earlier cheap lawyer tricks by T-Mobile.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

Comcast tells CPUC it must say yes to rural cherrypicking because it can’t say no

by Steve Blum • , , , ,

Paicines pole route

Comcast took its best shot at explaining why it should be allowed to jump the queue and start competing against Ponderosa Telephone before the California Public Utilities Commission decides what the future will be for small, rural telephone companies. The answer: because the developer wants us and the Federal Communications Commission says we can.

The dispute centers on Tesoro Viejo, an upscale master planned community under construction in the foothills of Madera County. Comcast claims the developers offered Tesoro Viejo as a cherry ripe for picking, and it wants to oblige them. There’s nothing preventing Comcast from providing video and broadband service, but if it wants to bundle in telephone service and offer the full triple play, it needs the CPUC’s permission.

That’s because Ponderosa Telephone serves the foothills of Madera and Fresno counties, as well as more remote communities further up in the Sierra Nevada. It’s one of ten small, highly subsidised telephone companies that serve deeply rural areas of California, the edges of which are now right in the path of exurban development. The CPUC protects those rural telcos from competition in an effort to minimise the amount of taxpayer dollars it takes to keep them afloat.

That policy is under review, but Comcast doesn’t want to wait. Ponderosa, on the other hand, doesn’t want to be nibbled to death. It argues that top level policy has to be decided first “because competition raises public policy questions with a collective impact on stakeholders throughout the state”.

It’s a tough question. Comcast is an unlikely champion. It moves quickly to kill potential competition whenever its territory is threatened. But regardless of how disingenuous it’s being, Comcast is correct in saying that more choice brings greater benefits to consumers. Once its process is complete, the CPUC might trim, or even eliminate, the privileges that rural telcos enjoy.

Might.

That’s a decision that needs to be taken deliberately and with the full consequences for all – rural residents, exurban immigrants, California taxpayers – in mind. Doing it reactively in response to rich targets of opportunity is a disservice to everyone.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

Local challenges to FCC streetlight preemption order move ahead

by Steve Blum • , , , ,

Charlottesville streetlights

A federal appeals court commissioner has, for now, set a schedule that sorts out the various challenges to last year’s Federal Communications Commission decisions that preempted local ownership of streetlights and similar infrastructure, and put tight restrictions on how local governments manage public right of ways. Last week Peter Shaw, a commissioner for the ninth circuit federal appeals court in San Francisco, met with attorneys for local agencies and associations that are challenging various aspects of the order, and with lawyers for mobile carriers that are pretending to be upset with the FCC’s decisions, but are actually jumping in on its side.

The result is a schedule that has the final round of written arguments completed in September, which could lead to a decision in 2020.

If.

If the San Francisco appeals court judges allow the cases to move ahead at all. They still have to decide if they’re going to grant the FCC’s request to put everything on hold until the commission gets around to closing out its proceeding.

It’s still a messy set of cases. A consensus statement filed before the case management conference by all the litigants tends to confirm the allegation that the FCC colluded with mobile carriers in a judge shopping play. The “industry petitioners” – AT&T, Verizon, Sprint and Puerto Rico Telephone Company – are lined up on the FCC’s side…

Some of the Small Cell Appeals were filed by local governments and publicly-owned utilities (the public petitioners), and separate appeals were filed by various providers of wireless services (industry petitioners). Their positions are in opposition, and industry petitioners, as well as certain intervenors, will support the FCC in opposing the public petitioners, and vice versa.

However, optimism about the case appears to be dying at the FCC. “It seems increasingly likely that the courts will return some part of our small cell infrastructure decisions back to this agency with a remand”, commissioner Jessica Rosenworcel wrote in a comment endorsing the FCC’s latest preemption attempt. Translation: it’s not looking good for our team.

A schedule that gets the initial legal skirmishing out of the way by September is a positive step. The next question to answer is whether the FCC’s stalling tactics will succeed in derailing it.

5G hype gets a reality check in 2020

by Steve Blum • , , , ,

It looks like 2020 will be the year that genuine 5G smartphones will finally be in the hands of consumers. Two developments this week cleared away significant uncertainty about who will be offering 5G phones, when it will happen and whose technology they’ll use.

The two companies settled a long running legal dispute over intellectual property rights to core 5G technology, including a deal for Apple to buy modem chips, which do the heavy processing work of wrangling radio waves into data streams at one end and reading them at the other.

The second announcement came shortly afterwards. Intel said it’s giving up its quest to build competing modem chips and leaving that market segment to Qualcomm. Not the entire market, though. There are a lot more kinds of chips that go into smartphones, 5G and otherwise, and Intel still plans to make them.

One of the benefits, if you want to call it that, of a monopoly is faster standardisation. Which reduces supply chain uncertainty for manufacturers and simplifies technical challenges for carriers, increasing the odds that predictions of mass market 5G product and service availability by the end of 2019 will come true.

Those early handsets won’t be made by Apple. Major Android phone makers are pushing to have 5G products in the market for this year’s Christmas selling season, but Apple didn’t make the same promise. Now, it can’t. Apple won’t be able to design and tool up to make Qualcomm-based iPhones until 2020, perhaps not until the second half of the year.

But there’s finally a clear roadmap for all major smartphone makers to make the jump soon enough to begin building a meaningful 5G user base in 2020. Mobile carriers will be judged on the basis of how well they deliver on the hype and the deceptions they’ve relied on so far. We’ll finally know what 5G really means.

T-Mobile, Sprint scramble to keep merger deal alive in California

by Steve Blum • , , , ,

The odds of T-Mobile getting permission from federal and California regulators to buy Sprint are getting longer. The Wall Street Journal is reporting that the federal justice department is reluctant to approve the deal in its current form. That has a familiar ring to it – it was the same kind of antitrust concerns that led to the justice department and Federal Communications Commission killing Comcast’s bid to take over Time Warner’s cable systems and do market consolidating swaps with Charter in 2015.

T-Mobile seems to be trying to pick up the pieces in California. Its lawyers filed a notice yesterday saying that company representatives will meet with California Public Utilities Commission commissioner Martha Guzman Aceves next week. They didn’t say what they planned to talk about, but it’s not much of a reach to suppose they’ll try to divert attention away from the microeconomic, antitrust harm the deal will do to all Californians, and towards the special benefits that a few have managed to extract for themselves.

Those megabuck spiffs will evaporate if the deal collapses. The CPUC is reviewing it, with a long list of issues to address. A decision is at least two months away, and likely more.

The Journal’s story also kicked off a new round of damage control by the companies and speculation on what a deal that would satisfy anti-trust concerns would look like. A story in Investor’s Business Daily speculated that some kind of hybrid wholesale model, where both companies retail service via a consolidated network, might fly.

The CEOs of T-Mobile and Sprint jumped on Twitter to make what amount to non-denials.

John Legere, T-Mobile’s chief, issued a tightly spun response in which he objected to “the premise of this story, as summarised in the first paragraph”. Translation: the facts reported in paragraph two, three, four and more are true. Marcelo Claure, CEO of Sprint, simply said the article “is not accurate”. As in, I wouldn’t have put it quite that way.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

Pai promises $20 billion for rural broadband, but offers little hope for meaningful change

by Steve Blum • , , ,

It makes for good headlines for a slow Friday at the white house, but so far that’s about all that’s resulted from a $20 billion pledge to support rural broadband development. Federal Communications Commission chair Ajit Pai joined president Donald Trump to hype 5G plans and spectrum auctions, and tossed in a new rural broadband initiative at the end.

Sorta.

Pai’s “Rural Digital Opportunity Fund” is just the next reboot of the long standing Connect America Fund (CAF) subsidy program, that similarly poured billions of dollars into rural broadband projects, according to a story by Jon Brodkin in Ars Technica

The new program will be part of the Universal Service Fund (USF), and it will be similar to an existing USF program that began during the Obama administration. In 2015, the USF’s Connect America Fund (CAF) awarded $9 billion for rural broadband deployment—$1.5 billion annually for six years—in order to connect 3.6 million homes and businesses…

At $2 billion a year over ten years, the fund will provide more money each year over a longer period of time than the CAF program it would replace…

In an email to reporters, Pai’s office said the Rural Digital Opportunity Fund will “provide up to gigabit-speed broadband in the parts of the country most in need of connectivity.”

Arguably, CAF caused many of the problems that Pai now says he wants to solve. The program was custom designed to funnel taxpayer money to big, incumbent telephone companies, who, in return, promised to deploy slow speed, low capacity service – 10 Mbps download and 1 Mbps upload speeds, often via bandwidth-limited fixed wireless systems – by the end of next year.

There’s no indication that the FCC’s telco-centric approach will change, or that subsidised rural broadband service will be significantly better than what’s been deployed in the past. There are tight restrictions on how USF money can be spent and who can get it. The game was rigged by telecoms companies a long time ago and the problem is only getting worse.

Promising “up to gigabit speed” service doesn’t really promise anything. Last year, Pai embraced the 25 Mbps down/3 Mbps up standard adopted by the federal agriculture department, but even that is mired in the past – homes and businesses need access to speeds of 100 Mbps down/20 Mbps up just to keep up with current demand.

Utilities shouldn’t bear damage costs alone, California wildfire report recommends

by Steve Blum • , , , ,

California governor Gavin Newsom’s wildfire “strike force” published its findings on Friday. The report offers suggestions for preventing, or at least reducing, catastrophic wildfires, and for paying for the damage when they do happen. The short answer is spread the costs around.

One of the central concepts floated by the report is to change California’s strict liability standard, which requires electric and telecoms utilities to pay for all wildfire damages if their equipment is involved in starting a fire, whether or not they did something wrong. Instead, the report suggests moving to a “fault-based standard”, where “utilities pay for damage if caused by their misconduct”. If there was no bad behavior on the part of a utility, though, the cost would shift to “insurance companies and uninsured or underinsured property owners”.

Another idea is to have all investor owned electric utilities, and possibly municipal ones, to pay into a fund that would act as an insurance policy of sorts by covering catastrophic wildfire costs. One issue is that the shareholders and ratepayers of lower risk utilities, such as San Diego Gas and Electric, would, in effect, subsidise those served by utilities with higher wildfire risks, such as Pacific Gas and Electric – assuming that a post-bankruptcy PG&E can even afford to participate.

Part of the solution, the report says, is to take advantage of the “opportunity to build a new, responsible, and accountable utility for northern California” created by the bankruptcy proceeding. Although the report mentions breaking up PG&E into smaller regional companies or municipal utilities, it doesn’t say how that can be accomplished, given that federal judges – bankruptcy and criminal – will be making those decisions for the time being. The only suggestion is for the state to “actively monitor and appear in the bankruptcy proceeding” and “be heard”. So far, that seems to be having little effect.

There’s more. Besides the obligatory nod toward cutting greenhouse gas emissions, the report also outlines some obvious measures: reduce wildland fuel loads, improve emergency planning and education, and upgrade firefighting technology and manpower. And it takes a welcome swipe at the predatory bar, listing “attorneys representing victims” as stakeholders who need to bear some of the burden of wildfire damages, presumably by reducing the “substantial” cost of legal fees and expenses.

With a $35 million side deal, CETF tells CPUC it backs T-Mobile’s takeover of Sprint

by Steve Blum • , , , ,

T-Mobile is getting a little help from a new Californian friend. In addition to a steady trickle of support letters sent to the California Public Utilities Commission by groups that are not well known for broadband advocacy or telecoms expertise, T-Mobile now has the California Emerging Technology Fund (CETF) on its side as it tries to gain approval for its takeover of Sprint.

CETF will leave its seat on the opposition side of the table and “enthusiastically and wholeheartedly support” the merger. In exchange, T-Mobile will pay CETF $35 million over five years “to sustain its core mission to close the digital divide in California and to promote digital inclusion policy and programs”. $22 million of that is earmarked for grants to schools, non-profit organisations and local governments to run various “digital inclusion” programs. The remaining $13 million – better than $2.5 million a year – goes into CETF’s “core” budget – if the T-Mobile-Sprint merger is eventually completed.

There’s more to the deal, but once it’s boiled down, it’s not a lot more. In the contract, T-Mobile repeats commitments already made to the Federal Communications Commission, the CPUC and, it seems, “other intervenors in the CPUC” review of the merger. Other deal points, such as continuing Sprint’s lifeline program for low income households and spending a modest amount advertising it, sound a lot like business as usual for a mobile carrier.

There are a few spiffs, like a wooly promise to add 5G capability at ten county fairgrounds around the state and to make “good faith efforts” toward a “goal” of signing up hundreds of low income households to broadband and telephone service. For the most part, though, the final say in when, where and how anything will be done rests with T-Mobile. They’ll mostly have to “consult” with CETF and others, and file periodic reports that, mostly, won’t be made public.

This kind of agreement is a common feature of CPUC telecoms merger reviews. CETF raised objections to Charter’s takeover of Time Warner Cable’s systems and Frontier’s acquisition of Verizon’s wireline territory in California, and reached megabuck settlements. The Frontier agreement had similarly vague language, leading to a public spat with CETF, which was eventually ironed out.

Whether CETF’s support and T-Mobile’s cash will make any difference to the CPUC is not a sure thing. Much of the ongoing review has focused on the microeconomic impact of reducing mobile broadband competition in California, which this agreement doesn’t address.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

Crown Castle won’t have to wait for new PG&E pole attachment terms, CPUC says

by Steve Blum • , , ,

PG&E wants a do-over on a utility pole access decision by the California Public Utilities Commission, but it’ll have to comply with it in the meantime. Wednesday, the CPUC’s executive director refused to delay execution of an arbitrated contract between PG&E and Crown Castle while commissioners decide what they’re going to do with the appeal filed by PG&E last month.

The CPUC’s decision gives PG&E 45 days to approve or deny Crown Castle’s pole attachment requests. If the shot clock expires, Crown Castle can move ahead without permission and install fiber lines on PG&E poles. It also requires PG&E to keep Crown Castle informed of other attachment requests, but allows Crown Castle to work on its own lines without giving PG&E advance notice, so long as no electrical shutoffs are needed. A few days after the commission unanimously approved those new contract terms, PG&E asked for a rehearing, citing safety concerns.

The decision gave PG&E two weeks to sign the deal, which are long gone. Crown Castle wants the commission to forget about any rehearings and “take all enforcement measures possible, including penalties and other measures” to force PG&E to get on with it. Which is what, it seems, PG&E will have to do. Wednesday’s letter from CPUC executive director Alice Stebbins said there will be no delay because “merely making a general statement of irreparable harm and referencing the filing of an application for rehearing are insufficient grounds for me to grant the requested extension”.

All this is happening while the CPUC slowly considers whether pole attachment and route management rules need to be changed – it began an inquiry more than two years ago – and while federal are moving more quickly to resolve PG&E’s bankruptcy filing and potential violations of criminal probation terms. It could get more complicated.