T-Mobile’s proposed drop kick of employees to DISH might boomerang in California

by Steve Blum • , , , ,

Feral kid boomerang

T-Mobile bought out another opponent to its merger with Sprint, but could have hurt its chances of gaining regulatory approval in California.

Following its deal to get resale, retail and spectrum assets from T-Mobile, DISH filed a request yesterday with the California Public Utilities Commission to withdraw its opposition to the merger, saying its agreement with T-Mobile and the federal justice department “will facilitate and accelerate DISH’s entry into the wireless market as a fourth nationwide facilities-based mobile network operator thus solving the harms of the reduction in competition” caused by the merger.

That’s arguable, but might not matter. The California attorney general took the lead on the competition question. The CPUC, on the other hand, is looking at a broader range of issues, which may include whether the merger is “fair and reasonable to affected public utility employees, including both union and nonunion employees”.

Under the deal, DISH would get Sprint’s “prepaid” – i.e. pay for service in advance – wireless customers, who tend to have lower incomes than “post paid” – billed monthly for services used – subscribers. Those customers will continue to use the networks operated by the new, merged Sprint/T-Mobile company, as will any other customers DISH signs up. In industry jargon, DISH will be a “mobile virtual network operator” (MVNO), reselling services provided by the new T-Mobile company.

T-Mobile agreed to hand over information about employees who work on the “prepaid” side of the house, and make them “available for interviews” in case DISH wants to “make offers of employment”. But DISH isn’t required to hire them, and T-Mobile isn’t required to keep them. Combined with DISH’s decades-long obsession with keeping labor costs low and its reliance on independent retailers, that adds considerable weight to the argument made by the Communications Workers of America that the merger will “eliminate jobs”.

It’s also another reason for the CPUC to not rush to judgement on the merits of the merger, as T-Mobile urged last week. It could be months before a decision, and when it comes it might not be yes.

California still blocks the path to a T-Mobile Sprint merger

by Steve Blum • , , , ,

Caltrans flagger stop

The T-Mobile/Sprint merger ball is back in California’s court. Friday, T-Mobile, Sprint and DISH reached an agreement to shuffle assets and set the stage for a new, nationwide mobile network to emerge.

Maybe.

But that satisfied the anti-trust lawyers at the federal justice department.

It hasn’t done it yet for California attorney general Xavier Becerra or the California Public Utilities Commission, though.

Becerra is one of 13 state AGs who are backing a joint lawsuit in federal court, with the goal of blocking the merger as originally proposed. He’s still opposed, saying in a press release “DISH has never shown any inclination or ability to build a nationwide mobile network on its own and has repeatedly broken assurances to the Federal Communications Commission about deployment of its spectrum”.

The CPUC also has to approve the transaction, and its review has been going on for more than a year. Also on Friday, T-Mobile asked Karl Bemesderfer, the CPUC administrative law judge managing the case, to accept the federal government’s wisdom and then speedily approve the merger.

That won’t happen.

The CPUC dances to its own rhythm, and the next beat of the drum is two weeks away: opponents of the deal have that much time to respond to Friday’s motion. It’s not hard to guess what they’re going to say – just read the CPUC public advocates office’s objections to a substantially identical request to “advise the commission” of the endorsement of the merger by the Federal Communications Commission’s republican majority. The PAO argued then that decisions have to be based only on what’s in the CPUC’s official record, and the typical process for adding new information to the record takes weeks, if not months.

An hour before T-Mobile served its CPUC motion on Friday, the California Emerging Technology Fund (CETF) launched a lobbying campaign aimed at pressuring Becerra and the CPUC into “immediately” approving the deal. Back when this all started, CETF opposed the merger, but quickly flipped to enthusiastic support after receiving a $35 million payoff from T-Mobile.

Bemesderfer has leeway to shorten the process, or even under some circumstances to allow semi-informal consideration of new developments. He proceeds quickly when there’s a genuine need, but he doesn’t cut corners and he generally expects companies and their lawyers to take responsibility for properly making their own case. And he typically allows opponents a chance to respond.

Even if the CPUC gets out in front of Becerra (not a good bet) and approves the deal, a decision by September is very unlikely and October would be optimistic.

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

FCC’s San Francisco broadband preemption appealed

by Steve Blum • , , , ,

San Francisco is taking the Federal Communications Commission to court. Again. On Monday, the City and County of San Francisco filed a challenge to the FCC’s preemption of its broadband access ordinance with the ninth circuit federal appeals court, also based in San Francisco.

The ordinance requires building owners to allow tenants to buy broadband service from the provider of their choice. Providers are able, under the ordinance, to use any available wiring inside the building that’s owned by the landlord to deliver such service. The FCC ruled earlier this month that San Francisco can’t tell an ISP that’s already using a given wire to deliver service that it has to share it with another ISP. San Francisco’s initial response amounted to duh.

But the ordinance is still under threat, because the FCC continues it’s look into the matter, and could preempt the whole thing. So filing a federal court challenge could be one way for San Francisco to head off any further FCC action.

At this point, San Francisco isn’t saying why it thinks the FCC is out of bounds, except to say it’s aggrieved and to make the ritual claim that the ruling is “arbitrary and capricious”…

San Francisco was party to and actively participated in the underlying proceeding before the FCC that led to the Order, and is aggrieved by the Declaratory Ruling part of Order within the meaning of [federal law].

San Francisco seeks review of the Declaratory Ruling part of the Order because it: (i) was issued in excess of the FCC’s statutory authority; (ii) is arbitrary and capricious and an abuse of discretion; and (iii) is otherwise contrary to law, including the United States Constitution.

San Francisco respectfully requests that this Court hold unlawful, vacate, enjoin and set aside the Declaratory Ruling part of the Order, and grant such other relief as this Court may deem just and proper.

Another ninth circuit case that San Francisco and a long list of other cities and counties are pursuing is the challenge to last year’s preemption of local pole ownership and public right of way control by the FCC. Yesterday, the FCC ask for month’s delay in the case, which was summarily rejected by the ninth circuit. It’ll have to submit it’s reply to the case against it next month.

Money talks or AT&T broadband walks, CPUC study shows

by Steve Blum • , , , ,

Haas att broadband study

How much money you and your neighbors make determines whether or not you have access to modern broadband service and infrastructure. The network practices study released on Monday by the California Public Utilities Commission cites conclusive evidence of aggressive redlining by AT&T. It is a major – and actionable – report that makes the case against the two companies, but its conclusions come as no surprise.

A study done in 2017 by U.C. Berkeley’s Haas Institute for a Fair and Inclusive Society found that…

The median household income of California communities with access to AT&T’s fiber-to-the-home (FTTH) network is $94,208. This exceeds by $32,297 the $61,911 median household income for all California households in the AT&T wireline footprint.

On the other hand, the median household income of homes served only by AT&T’s 1990s legacy DSL technology is $53,186, according to the Haas Institute. The CPUC study found the same divide between haves and have nots…

Whether deliberate or not, AT&T’s investment policies have tended to favor higher-income communities, and have thus had a disproportionate impact upon the state’s lowest income areas. For example, the weighted average 2010 median annual household income for wire center serving areas that had been upgraded with fiber optic feeder facilities to support broadband services was $72,024, vs. only $60,795 for wire centers without such upgrades Using 2010 US Census data, we find a clear inverse relationship between household income and all of the principal service quality metrics.

The report leaves it up to the reader to decide if AT&T’s income-based redlining is deliberate, but makes it clear that AT&T’s financial strategy is aimed at extracting the maximum dollars possible from communities trapped in legacy monopoly systems…

Persistent disinvestment, extensive affiliate transactions at self-serving transfer prices, extraordinarily large rate increases, and deteriorating service quality all point to “harvesting” as AT&T California’s overarching strategy for its legacy services and customers…The potential gains that AT&T California can realize by raising prices and curtailing investment and maintenance expenditures far exceed any financial penalties it might suffer from persistently poor service quality.

AT&T is not alone. I found a similar pattern in Charter Communications’ investment choices. Until the CPUC forced it to do otherwise, it held low income communities captive in analog-only systems that offered limited television service at exorbitant prices.

When Californians are trapped in monopoly telecom markets, AT&T and Frontier take the money and run

by Steve Blum • , , , ,

Leaning pole

Competition matters. When telephone or cable companies face a competitive threat – either from each other or from an independent Internet service provider, they respond by upgrading infrastructure and service, and by cranking up the volume on promotional discounts. The converse is true: no competition means no infrastructure investment or service upgrades or marketing love.

That’s a lesson I’ve learned time and again with municipal and independent broadband projects. When a city or an independent credibly threatens to enter the market, incumbents respond. Santa Cruz is a good example. When the City of Santa Cruz partnered with Cruzio, a local ISP, to build a muni fiber-to-the-premise system, Comcast upgraded its infrastructure. The deal didn’t come to fruition, but Cruzio’s subsequent solo fiber build out gave AT&T an incentive to upgrade neighborhoods with sufficient revenue potential to FTTP status.

It’s also a major conclusion of a report just released by the California Public Utilities Commission. It shows competition determines to a large degree where AT&T and Frontier Communications invest what money they’re willing or able to spend in California. According to the study, Frontier allows its facilities to decay in communities where it has monopoly control…

Wire centers with the smallest decrease in POTS lines fared far worse in terms of most service quality metrics. The deterioration in service quality in these small wire centers, generally serving communities with the fewest number of competitive providers, suggests that the company has been devoting more of its resources and efforts to those communities most impacted by competition for traditional POTS services.

The study found the same pattern in AT&T’s territory, concluding that it’s pursuing a “harvesting strategy” – a polite way of saying milking the cash cow by relying “upon successive price increases and customer inertia to maintain its declining [legacy telephone] revenue stream”, despite continually worsening service quality.

The study recommends increasing the amount of fines imposed by the CPUC on AT&T and Frontier for substandard service, as a substitute for competition – make the fines match the losses that the two companies would otherwise suffer if competitors were present. That’s difficult because 1. figuring out the proper amount is a fraught exercise, and 2. thanks to cynical maneuvering by outgoing president Michael Picker, the CPUC doesn’t actually fine telcos. It lets them keep the money so long as they claim they’re spending it on “incremental” service improvements.

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.

Caltech turns eastern California fiber network into earthquake detector

by Steve Blum • , , , ,

Caltech readout

Fiber optic networks do more than just ride out major earthquakes without dropping a bit. They can also detect and collect data on the quakes themselves. Two major quakes – magnitude 6.4 and 7.1 – hit eastern California on 4 and 5 July 2019 respectively, in the high desert of Kern and San Bernardino counties, where seismometers aren’t thick on the ground. To understand what happened, and what continues to happen, Caltech scientists needed to quickly get more sensors into the field.

Fortunately, the eastern slope of the Sierra Nevada – Mono, Inyo, Kern and San Bernardino counties in California, and Washoe and Douglas counties and Carson City in Nevada – has fast, earthquake ready fiber connectivity.

The Digital 395 open access fiber optic network, which links Reno to Barstow along the eastern Sierra, runs right through the area that was hardest hit. By connecting “surveillance technology initially developed for military and general security applications that can detect ground movement” to a single fiber strand, an underground fiber route – or sections of it, at least – can be used for “pre-shock detection of P and S waves across the fibers”, according to Michael Ort, CEO of Praxis Associates/Inyo Networks, which built and operates Digital 395. In other words, fiber optic networks can be used detect the big incoming shockwaves a few critical seconds before they hit, as well as provide valuable scientific data about the event.

Preliminary discussions about installing distributed acoustic sensing equipment had been held with Caltech, but everything went into high gear when the quakes began hitting Ridgecrest. Zhongwen Zhan, a Caltech scientist, asked about using one of Digital 395’s strands, and got a quick yes from Ort.

He hooked up his instruments on 9 July 2019, four days after the 7.1 quake and while the ground was still shaking with aftershocks. The results were immediate, with multiple (mostly small) quakes detected every minute, beginning as soon as the equipment was turned on.

“The fiber gave them about 5,000 sample points over 10km of fiber. Before they had only a handful of sample points in the area. So you got only “discrete points” of these, not the overall picture”, Ort said.

“This first time ever use of fiber has given us many data points, making our observations more complete and natural”, said Mark Simons, JPL chief scientist and CalTech professor of geophysics. “It’s a true breakthrough that will revolutionise our perspective and help with early warning”.

Digital 395 was built with money from the 2009 federal stimulus program and from the California Advanced Services Fund (CASF). It was the first and the longest of the open access middle mile fiber routes funded by CASF, before the California legislature bowed to pressure (and money) from incumbent telephone and cable companies and banned those types of projects.

FCC proposes new map-based collection method for broadband availability reports

by Steve Blum • , , , ,

The ever increasing volume of complaints about the accuracy of broadband availability data published by the Federal Communications Commission is producing results. In August, the FCC will vote on a proposal to require Internet service providers to submit electronic map data that shows where they offer service, at what speeds it’s offered and which technology it uses.

The current data sets are based on census block reports, with a census block reckoned as served at a given speed level if one home or business within it can get that level. As a result, estimates of how many people have access to acceptable broadband service are overstated and communities that should be eligible for broadband infrastructure and service subsidies are shortchanged. Sometimes the overestimates are substantial. When taken at face value, the result can be highly embarrassing to a public agency, as the FCC learned earlier this year when it blindly accepted inflated reports of fiber to the home service in the northeast U.S.

The FCC’s proposed new method should improve the accuracy of the data, but it’s an open question as to whether it will be more (or less) useful for detailed broadband availability analysis. One advantage of census block-based reporting is that it matches up cleanly with the wealth of data collected by the federal census bureau. New methods will have to be developed to estimate the number of people and households within a reported service area, as well as all the other data the census bureau offers to broadband analysts, such as household income and education levels.

Another question is how long the transition will take. The FCC didn’t set a deadline for development of the internal systems needed to submit and process the data, although it did say that the new data would have to be submitted six months after it’s ready to accept it. That’s just the first step, though. Once the new data is in hand, it has to be evaluated and published by the FCC, and then assessed by other agencies that use it to make broadband infrastructure subsidy decisions, such as the California Public Utilities Commission and the federal agriculture department.

In the meantime, ISPs will have to continue submitting broadband availability data the old way.

FCC’s rural broadband subsidy reboot proposes faster speeds, but performance is still a question

by Steve Blum • , , ,

Paicines pole route

Broadband service at 25 Mbps download and 3 Mbps upload speeds “is not a luxury” reserved for people who live in cities and suburbs, according to a draft FCC notice that kicks off the process of rebooting federal broadband service subsidies for rural communities. In August, the FCC plans to vote on a draft notice of proposed rulemaking that would open the door to comments and proposals – from any interested party – regarding how to spend “at least” $20.4 billion earmarked for the “rural digital opportunity fund”.

It’s a reboot of the FCC’s Connect America Fund (CAF), which mostly gave money to monopoly model telcos, such as AT&T and Frontier Communications, to provide slower service – 10 Mbps down/1 Mbps up – in California and in other states where they thought they could get a sufficient return on investment by providing upgraded rural broadband service. Subsidy rights for the remaining communities they skipped, for one reason or another, were auctioned off last year. The winners were the companies that promised the fastest service for the least subsidy dollars.

That’s a process that the FCC proposes to repeat. Broadband service subsidies would go to the lowest bidder in an eligible community, instead of automatically given to the incumbent telco. The definition of “eligible” would change, too…

Consumers’ demand for faster speeds has grown dramatically—and the market has largely been able to deliver. Speeds of 25/3 Mbps are widely available, and 25/3 Mbps is the Commission’s current benchmark for evaluating whether a fixed service is advanced-telecommunications capable. Thus, the item proposes a 25/3 Mbps service availability threshold as the basis for establishing eligible areas.

Providers would be able to bid at three speeds levels: 25/3 with a 150 monthly gigabyte cap, and 100 Mbps down/20 Mbps up and 1 gigabit down/500 Mbps up with a 2 terabyte cap. That’s similar to how last year’s CAF auction was organised, except that this time around 10/1 service would not be acceptable.

There are a couple of problems with the FCC’s proposal as it stands. The 25/3 minimum is inadequate – research done last year by the Central Coast Broadband Consortium and the Monterey Bay Economic Partnership identified 100/20 as the threshold for acceptable rural (and urban) service.

Another concern is performance. AT&T and Frontier claim to be meeting their build out requirements, but there’s a year to go before the final deadline and they’ve been evasive about details, so we won’t really know until then, at the soonest, if they’re telling the whole truth.

Last year’s auction winners in California were wireless Internet service providers (WISPs) that made very aggressive coverage and service level promises. Those, too, will have to be verified over the next few years to see if the FCC’s proposed “technology neutral” funding policy produces the desired results.

California kicks T-Mobile-Sprint deal to September. Or maybe much later

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

The California Public Utilities Commission can’t act on T-Mobile’s request for permission to acquire Sprint until the middle of September, at the earliest. Yesterday was the deadline for any proposed decisions – in any proceeding, T-Mobile or not – to be placed on the commission’s 15 August 2019 meeting agenda. The next scheduled meeting after that is on 12 September, which means a draft decision would have to be released for the legally required 30-day public review period by 13 August.

Even that date is optimistic. There are two good reasons to doubt that the CPUC will be in any hurry to move ahead on a final decision for the next few months. First, no one knows what the T-Mobile/Sprint deal looks like yet. All the testimony and legal exchanges to date are predicated on the relatively straightforward purchase agreement the two companies announced a year ago. If a new agreement that satisfies the concerns of the federal justice department emerges, the organisations that have been fighting against the original deal at the CPUC will want a chance to review it. That process can be shortened, but even if it moves at lightning speed it will still require several weeks.

Then there’s California attorney general Xavier Becerra, who is one of several state AGs suing to block the merger. He’s gone to court to kill the deal, so it’s a reasonable guess that he hasn’t yet responded positively – or at all – to the CPUC’s request for an opinion, as required by the California Public Utilities Code. T-Mobile might settle its dispute with the state AGs out of court, but if it doesn’t it’s looking at a trial that could stretch into next year, particularly if the judge hearing the case grants the request for a delay made by the states on Monday.

The CPUC might let Becerra worry about the anti-competitive aspects of the deal, and move ahead with a decision regarding other issues such as the merger’s impact on services for low income Californians and infrastructure in rural areas. But the fluid nature of the deal raises the possibility that an early CPUC decision could get overtaken by substantive changes to the terms, which should have been considered. That would be a risky course to take, with little or no gain to the CPUC even if it turned out well.

Extra meetings can happen. The CPUC held one on an emergency basis earlier this year when PG&E filed for bankruptcy, and another is scheduled – with proper notice – for later this month. There are also provisions for waiving the 30-day review period under California law. Don’t expect T-Mobile to get that kind of accomodation, though. The possibility of the lights going out in northern California rates as an emergency; missing an arbitrary corporate deadline does not.