California must take Frontier’s bankruptcy as seriously as PG&E’s

by Steve Blum • , , , ,

Frontier Communications filed for bankruptcy protection last night. In a statement posted on its website, the company said it was washing away $11 billion in debt, out of a total of $22 billion owed to creditors, much of it the result of its purchase of Verizon’s legacy wireline telephone systems in California. The statement has the usual blah-blah-blah about its hope to “continue providing quality service”, but according to a story on Bloomberg by Allison McNeely, Frontier will “hand control to its unsecured creditors, according to people with knowledge of the matter”.

That, along with a number of immediate steps such as securing additional financing, is now up to a federal judge in New York, where the company filed its Chapter 11 petition.

Frontier has more than two million wireline customers in California, most of whom were acquired from Verizon in 2015. At the time, Frontier was seen as the better alternative, particularly in rural California where Verizon had allowed legacy copper systems to rot on the poles. Some had never been upgraded to the point where they could provide any kind of broadband service. The California Public Utilities Commission approved the deal, with conditions that included broadband upgrades and the expectation that Frontier would fulfil its promises to focus on improving wireline infrastructure throughout the state.

That didn’t happen. A CPUC study last year found that Frontier (and AT&T) was “in effect, disinvesting in infrastructure overall, and [the disinvestment is] most pronounced in the more rural and low-income service areas”. The neglect was charitably attributed to Frontier’s financial condition, which was dire enough then, but the company had already established a pattern of broken promises, ranging from a botched Verizon cutover to a wireless bait and switch. The CPUC opened an investigation into some of Frontier’s shortcomings late last year, but fining the company for its bad conduct four years ago will do little to keep broadband and phone service running in California, let alone upgrade its decaying rural systems.

When PG&E filed for bankruptcy last year, the CPUC rightly went into emergency mode and, along with governor Gavin Newsom and the California legislature, has been an active player in the complex process of remaking the state’s largest energy utility and protecting its customers. Frontier’s final crash warrants the same level of attention, and rural Californians deserve the same level of protection and respect.

Quick changes coming for California broadband subsidy fund to plug covid-19 gaps

by Steve Blum • , , , ,

Forbes ag tech hartnell alisal demo 13jul2107

More money might soon be flowing from the California Advanced Services Fund (CASF) to meet critical broadband service needs that have been given renewed attention because of the covid–19 emergency and the need for everyone to conduct business and educate kids, along with everything else that’s moved online. A request for ideas on how to make faster and better use of CASF in response to the emergency was sent out by the California Public Utilities Commission last month. Responses were filed on Thursday, and last night CPUC administrative law judge Brian Stevens sent out a notice saying that immediate changes to the program will be considered by commissioners. He didn’t say when, but it’s clear that there’s a sense of urgency and he didn’t foreclose the possibility that action will be taken on an emergency basis, without the usual public comment period that can last a month or more.

Links to all the filings are below.

The Central Coast Broadband Consortium was one of several organisations that offered comments last week (full disclosure: I helped draft and submit them). We urged this kind of fast action, as well as suggesting that a mostly ignored pilot program for short broadband line extensions to low income households be turbocharged and used to pay for fast deployment of wireless service to those who need it most.

Several organisations focused on the digital literacy and broadband promotion – AKA “adoption” – programs funded by CASF, with suggestions for expanding their scope and generally pushing the money out to where it’s needed faster. Rural County Representatives of California, an association for California’s rural counties, and the CPUC’s public advocates office suggested using the available money to pay for mobile hotspots that can be quickly pushed out to students who can’t otherwise get online. That addresses lack of Internet access, which is the fundamental problem. Paying for laptops, as the Greenlining Institute recommends, is a wonderful thing, but not much help if people don’t have a connection at home and can’t leave the house to find one.

The cable industry’s Sacramento lobbying front – the California Cable and Telecommunications Association – doesn’t like the idea of subsiding service from mobile competitors. The California Emerging Technology Fund agrees, suggesting that adoption money be used, in effect, to pay commissions to non-profit organisations who sell discounted broadband subscriptions for monopoly-model cable and telephone companies.

A joint filing by California’s small rural telephone companies suggested keeping the window for infrastructure grant applications open beyond the current 4 May 2020 deadline, as did Pacific Lightwave. That’s a good idea. In our comments, the CCBC suggested opening a second window at the end of July, but not closing the current one is even better. AT&T wants infrastructure grant procedures to be streamlined – a good idea, and rules changed to make it a supplement to federal programs – a good idea for AT&T and Frontier Communications, who could scoop up the money; a bad idea for everyone else in California.

Comments on California Advanced Services Fund and covid–19 response, filed 9 April 2020:
Central Coast Broadband Consortium
Rural County Representatives of California
CPUC public advocates office
Electronic Freedom Foundation
Access Humboldt
Greenlining Institute

City and County of San Francisco
Sacramento Public Library
California Department of Education

Small LECs (small rural telcos)
Race Telecommunications
Pacific Lightwave
AT&T
Geolinks
California Emerging Technology Fund
California Cable and Telecommunications Association

CPUC takes up T-Mobile/Sprint merger behind closed doors as Thursday’s scheduled vote nears

by Steve Blum • , , , ,

The California Public Utilities Commission will hold a rare closed door meeting later this morning to discuss the T-Mobile/Sprint merger. The announcement was made on Friday morning, following the Thursday afternoon flurry of filings and weeks of lobbying by supporters and opponents of the deal.

Although the commission is careful to provide proper notice that a closed door “ratesetting deliberative meeting” might be held in this sort of case, it’s unusual. I don’t follow all the action everyday at the commission, so I won’t hazard a guess as to how often they do this, but I can’t recall it ever happening in a proceeding that I’ve been following. On the other hand, the bulk of the CPUC’s business involves utilities, such as energy and water, that I don’t spend a lot of time on and that are more directly involved with true ratesetting processes.

“Ratesetting”, by the way, is used as a catch-all category for matters that don’t fit neatly into the other three types: quasi-legislative, adjudicatory and catastrophic wildfire, the latter being a recent addition to the lexicon. The different types of proceedings run under different rules, particularly where lobbying and other ex parte communications with CPUC decision makers are concerned. The ratesetting procedural rules are, in effect, the default rules.

A closed door meeting provides an opportunity for commissioners to discuss a complicated case ahead of a formal vote. They’re not supposed to come to an agreement, or even a general consensus, regarding the outcome, but they can sort out the issues among themselves – the companies and their friends and foes won’t be there.

A draft decision approving the T-Mobile/Sprint merger with stiff conditions is still on Thursday’s “voting meeting” agenda, but events have overtaken it. The two companies completed their transaction without CPUC permission two weeks ago. T-Mobile said it would abide by an order to not begin merging the operations it acquired in California, but only until Thursday, and it’s threatened to pull back on what it considers to be optional commitments if the case isn’t closed then.

It’s going to be an interesting week.

Links to arguments, exhibits and other paperwork filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

T-Mobile’s actions mean its California obligations “will be taken lightly” or “totally ignored”, CPUC told

by Steve Blum • , , , ,

Tmobile 5g small towns 6jan2020

A final flurry of rebuttals defending and attacking T-Mobile’s de facto takeover of Sprint landed at the California Public Utilities Commission yesterday. The bulk of the comments amount to what I said before. But there are some interesting bits amongst all that.

The Communications Workers of America (CWA) – the primary telecoms union in California – unearthed a U.S. congressional report from 1993, when the lines were drawn between state and federal jurisdiction over mobile carriers. As CWA relates it, that staff report specifically included “transfers of control” in the list of matters that fall under a state’s authority to regulate “the other conditions of commercial mobile service”, beyond the market entry and pricing issues that are reserved for the Federal Communications Commission.

There is support in past CPUC decisions and California public utilities law for the notion that the commission has the authority to approve or deny mergers between mobile companies, but the final battle over that position will be fought in a federal court where federal law rules.

The California Emerging Technology Fund submitted a letter from a T-Mobile lawyer who said the company “fully intends to honor” the $35 million payoff and other generally vague conditions it agreed to in exchange for CETF’s support, “provided of course that the CPUC Final Decision or other CPUC action – such as a prolonged duration of [the order from commissioner Clifford Rechtschaffen halting the merger in California] do not substantially impact our ability to meet” those commitments.

Translation: if the CPUC jams us up, our intentions will change.

T-Mobile’s future good behavior is unlikely, according to the CPUC’s public advocates office (PAO). In its filing, the PAO concludes…

[T-Mobile’s and Sprint’s] statements and actions are further proof and a red flag that compliance with any merger decision or conditions will be taken lightly and ignored or challenged by the companies if the merger is approved or totally ignored if the merger is rejected; ultimately harming California consumers.

The draft decision that’s on next week’s CPUC agenda would approve the merger but impose a long of conditions. The game has changed, though, since it was published nearly a month ago. Draft decisions can change too, and in this case probably will to one extent or another. We should know for sure by the middle of next week.

Comments on the proposed decision of administrative law judge Karl Bemesderfer, 1 April 2020:
Joint Applicants (T-Mobile and Sprint)
CPUC Public Advocates Office
Communications Workers of America
TURN and Greenlining
California Emerging Technology Fund
CETF attachment A
CETF attachment B
CETF attachment C

Links to arguments, exhibits and other paperwork filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

T-Mobile pauses merger of Sprint operations in California, but only until next week

by Steve Blum • , , , ,

Tmobile billboard las vegas 6jan2020

In a whirlwind of conference calls with California Public Utilities Commission staff and one key commissioner, T-Mobile said it would abide by an order that stopped its merger with Sprint on an operational level in California, at least until next week’s CPUC meeting. When the two companies closed their deal last week without permission from the CPUC staff, commissioner Clifford Rechtschaffen, who is in charge of the regulatory review, quickly directed them to “not begin merger of their California operations until after the CPUC issues a final decision”.

That led to several ex parte conference calls over the following two days. The first was with Rechtschaffen and CPUC staff; three others were with staff for commissioners Martha Guzman Aceves, Liane Randolph and Genevieve Shiroma. In the follow up disclosure filing required by CPUC rules, T-Mobile says it would comply, sorta…

During each meeting, Joint Applicants’ representatives described the reasoning for the close of the merger on April 1, reiterating and expounding upon the explanation provided in the March 31, 2020 letter from Michael Sievert to Administrative Law Judge Bemesderfer and Commissioner Rechtschaffen. They also acknowledged Commissioner Rechtschaffen’s April 1 Ruling, and stated that the Joint Applicants would refrain from merging their California operations until a Commission decision is made at the April 16 business meeting.

T-Mobile’s weasel worded statement doesn’t promise to abide by the commission’s decision, or to wait beyond next week if the case isn’t closed then. As could happen. The merger is on the commission’s agenda for next Thursday, but it’s not unusual for items to be bumped to future meetings or for complex cases to remain open. Sprint’s request to abandon its license to operate a wireline telephone business in California met with protests from merger opponents who want a formal review, and T-Mobile’s subsequent attempt to withdraw its application for permission to take over that business amounts to throwing a wrench into the gears of a already complicated proceeding. Even if commissioners approve a decision of some sort next week, it doesn’t necessarily mean that’s the end of the case. Or the end of Rechtschaffen’s order to delay combining the companies’ Californian operations.

T-Mobile and Sprint aren’t alone in lobbying commissioners to see things their way. Opponents of the deal are likewise having conference calls with staff, as it the California Emerging Technology Fund, which wants the CPUC to not be so darn harsh on the new T-Mobile.

Links to arguments, exhibits and other paperwork filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

CPUC whacks AT&T with $3.75 million fine for “wilful disregard” of public safety obligations

by Steve Blum • , , , ,

AT&T was ordered to pay a $3.75 million fine by the California Public Utilities commission for blowing off demands for information about its 911 service in 2019. Administrative law judge Karl Bemesderfer issued a “presiding officer’s decision” in a disciplinary proceeding launched last year after AT&T refused to file reports detailing its rates and terms for “next generation” 911 services that ride on Internet protocol technology, rather than old style plain old telephone service.

Besides being a sizeable slap to AT&T, the decision is a reminder that defiance of CPUC directives can be expensive. That’s something T-Mobile and Sprint might take notice of: if wrangling over informational filings is worth a fine of a few million dollars, how much does it cost to baldly merge two giant companies without permission?

The decision blasted “AT&T’s wilful disregard for the State of California’s obligation to ensure the public’s safety through oversight of the 911 system”…

We conclude that by their deliberate repeated refusals to respond appropriately to the letters from [CPUC communications division director Cynthia] Walker, their knowing misrepresentations regarding their handling of 911 traffic, and their deliberate ignoring of [a commission decision and general order], and applicable law, Respondents have engaged in conduct that merits a fine…

We conclude that Respondents’ conduct is not so egregious as to merit a maximum fine nor so excusable as to merit a minimum fine. For their repeated refusal to respond to the letters from Director Walker we find that a fine of $10,000 per day or $2.5 million is appropriate; for their misrepresentations regarding the handling of 911 traffic and their deliberate disregard of [a commission decision], we find that a fine of $5,000 a day or $1.25 million is appropriate, for a total fine of $3.75 million.

If AT&T doesn’t immediately file the necessary information, the fine will double to $7.5 million.

The decision doesn’t try to carve out new regulatory territory for the CPUC. Although the service in question is delivered via voice over Internet protocol (VoIP) technology, which the CPUC was generally barred from regulating until this year, there was an exception for 911 service.

AT&T, or anyone else with a particular interest, have until the beginning of May to file an appeal, and CPUC commissioners can request a review. Assuming AT&T appeals, as it certainly will, the fine will be put on hold until the process plays out.

Microtrenching bill lands in California senate with the wrong answer to the right question

by Steve Blum • , , , ,

Microtrench

Microtrenching – cutting a narrow slit in a road, inserting fiber and sealing it with glue – is an excellent tool that can result in faster broadband infrastructure deployment at lower costs. But like any tool, it’s only useful when it suits the job at hand. One of the main reasons – I’d say the main reason – the technique isn’t used more often is that there’s no set of best practices, design specifications and employment parameters that is commonly accepted by broadband companies, utility operators and, crucially, the public works and transportation officials who are responsible for road construction and maintenance.

A bill now pending in the California senate addresses that problem in a useful way: give Caltrans the job of sorting it all out and coming up with model specifications for cities and counties to use.

Unfortunately, that’s the only useful bit of senate bill 1206 by senator Lena Gonzales (D – Los Angeles), who introduced it in its present form last week. The rest of SB 1206 is a wish list that ranges from the legally dubious – have Caltrans write and impose a one size fits all permit ordinance on every city and county in California, to the technically ridiculous – redefine a microtrench from a narrow saw cut to an eight inch wide excavation.

Rigorous microtrenching specifications and guidelines developed and adopted by well respected civil engineers would be tremendously helpful to broadband providers, construction companies and everyone else who wants to see universal, high quality broadband service in California. “Everyone else” includes public works and transportation professionals, who likewise want better broadband service for their communities.

Done well and appropriately, as in the City of Loma Linda in southern California, microtrenching can offer great benefits to a community. When it’s done poorly and with little forethought it can be a disaster, as Google learned the hard way in Louisville, Kentucky. A trimmed down SB 1206 that’s sharply focused on figuring out what works and what doesn’t would be a big step forward for broadband development in California.

Future proof broadband infrastructure for “all Californians” is goal of new senate bill

by Steve Blum • , , , ,

Dig once conduit 1oct2019

With the aim of ensuring “all Californians will gain access to broadband that is ready for the 21st century”, a coalition of broadband advocacy groups and independent broadband companies are sponsoring a bill that would undo the self-serving damage that monopoly model telcos and cable companies, and their allies, did to the California Advanced Services Fund (CASF) in 2017.

Senate bill 1130 raises California’s minimum broadband standard from the pathetic 6 Mbps download/1 Mbps upload speeds that support incumbent business plans and little else, to modern, symmetrical 25 Mbps service, and sets a de facto goal of deploying future proof fiber infrastructure in any community, regardless of population density or household income levels.

Carried by senator Lena Gonzales (D – Los Angeles), SB 1130 landed at the state capitol last week. As currently written, it says…

  • California’s minimum broadband service standard is set at symmetrical, 25 Mbps download/25 Mbps upload speeds, with “a latency that is sufficiently low to allow real-time, interactive applications”. As a practical matter, that means service from fiber to the premise and upgraded cable modem infrastructure. Conventional telephone company copper systems (i.e. any flavor of DSL) or fixed wireless facilities can’t deliver 25/25 service on a wide scale, consumer-focused basis.
  • Subsidised projects have to be capable of delivering symmetrical 100 Mbps download/100 Mbps upload speeds, and must deploy low latency, “high-capacity, future-proof infrastructure”. That means fiber. No other technology can do that at scale.
  • Middle mile infrastructure must be open access, meaning anyone can buy capacity on it.
  • Last mile infrastructure might also have to be operated on an open access basis, to one extent or another, depending on circumstances.

There are other useful changes in the bill, including priority for “high poverty areas”, an end to the cable industry’s “line extension” money laundering scheme, and tightening the deadlines and financial responsibility for telcos and others that take advantage of right of first refusal privileges.

As with any legislation, the bill’s future is cloudy. The California legislature suspended committee hearings and floor sessions because of the covid–19 emergency. When legislative business resumes – it’ll have to, if only to meet the constitutional budget deadline – the to-do list could be very short. But that’s a problem for later. For now, SB 1130 is a welcome fix.

Friends and foes of the T-Mobile/Sprint deal want changes to CPUC’s proposed approval

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile’s decision to ignore the California Public Utilities Commission and close its acquisition of Sprint without permission will result in at least some, and probably a lot, of revisions to the draft decision approving the deal that’s now waiting for a commission vote. Comments filed on Wednesday by past and present opponents of the merger don’t address T-Mobile’s regulatory insouciance – that’ll come later – but do suggest extensive changes to what’s already on the table.

Four of the five organisations that weighed in on the draft decision argued for tougher conditions, or for rejecting the merger altogether. The fifth said the CPUC was being too tough on T-Mobile.

The CPUC public advocates office (PAO) urged commissioners to kill the deal, saying that the thousands of pages of documents and hours upon hours of hearings did not produce enough evidence to show that the T-Mobile/Sprint merger is “in the public interest”, as state law requires. If commissioners go ahead and approve it, the PAO recommends tightening up some of the conditions and, particularly, adding more teeth to enforcement provisions. TURN, aka the Utility Reform Network, made similar points.

The Communications Workers of America (CWA) and the Greenlining Institute focused on concerns specific to their constituencies. CWA, which is the primary telecommunications union in California, also argues that the evidence in the record shows that the merger doesn’t serve the public interest, with particular attention to the impact on people who work for T-Mobile, Sprint and the sizeable ecosystem of companies that’s grown around them. Although it lays out a case for rejecting the merger outright, it instead asks for additional labor-related guarantees. Greenlining similarly points to a lack of attention the draft decision pays to communities of color, and recommends adding requirements aimed at fixing that problem.

The California Emerging Technology Fund (CETF) advocated – mostly – on T-Mobile’s behalf. CETF originally opposed the deal, but decided to “enthusiastically and wholeheartedly support” it after bagging a $35 million pay off from T-Mobile. The one big point CETF made that won’t warm T-Mobile’s heart was a request for stricter CPUC enforcement of the deal it cut for the money, saying it’s “concerned that [T-Mobile and Sprint] may be tempted to not comply”.

Ya think?

As Greenlining pointed out in its comments, CETF’s contract with T-Mobile is “expressly contingent upon the CPUC’s approval of the Wireline Application”, which is the application that T-Mobile now wants to withdraw.

Comments on the proposed decision of administrative law judge Karl Bemesderfer, 1 April 2020:
Joint Applicants (T-Mobile and Sprint)
CPUC Public Advocates Office
Communications Workers of America
TURN
Greenlining
California Emerging Technology Fund

TURN and Greenlining protest of Sprint’s CPCN relinquishment, 1 April 2020
CPUC Public Advocates Office, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020
Communications Workers of America, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

T-Mobile, Sprint ordered to halt merger in California, but don’t seem to care what CPUC thinks

by Steve Blum • , , , ,

Caltrans flagger stop

T-Mobile and Sprint completed their merger yesterday morning, but they’ll have to wait at least a couple more weeks, and maybe longer, for a decision from the California Public Utilities Commission before they can begin combining their operations in California.

If.

If they pay any attention to an order issued yesterday afternoon by CPUC commissioner Clifford Rechtschaffen. Responding to a Tuesday night letter from T-Mobile’s then-COO and now CEO Michael Sievert, Rechtschaffen ruled…

[California] Public Utilities Code Section 854(a) states in relevant part that “[n]o person or corporation, whether or not organized under the laws of this state, shall merge, acquire, or control … either directly or indirectly, any public utility organized and doing business in this state without first securing authorization to do so from the commission.” Both Joint Applicants, T-Mobile and Sprint, have California subsidiaries that are public utility telephone corporations under state law, and subject to the jurisdiction of this agency. The merger of the companies’ operations in California is therefore subject to CPUC approval. Accordingly, Joint Applicants shall not begin merger of their California operations until after the CPUC issues a final decision on the pending applications.

There’s good reason to think the two companies will effectively ignore the order. In the letter, Sievert told Rechtschaffen and CPUC administrative law judge Karl Bemesderfer that they “lack jurisdiction” over the merger, and he would close it without their blessing. Rechtschaffen is the “assigned commissioner” for the CPUC’s review, which means he oversees it, and Bemesderfer is managing it.

In lengthier comments filed yesterday, T-Mobile’s lawyers tried to offer a legal basis for that point of view, but Rechtschaffen is unconvinced, to say the least.

T-Mobile’s defiance is risky, as the company acknowledged yesterday in the fine print of its triumphal press release

There are several factors that could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to…the risk of litigation or regulatory actions, including litigation or actions that may arise from T-Mobile’s consummation of the business combination during the pendency of the California Public Utility Commission’s review of the business combination.

“Regulatory actions” will happen, beginning with the CPUC’s review of the merger, which is scheduled to go to a commission vote on 16 April 2020. Assuming it’s approved more or less as written, the draft of that decision imposes a long list of service and employment conditions on the combined company. Fines and other penalties are also possible, although that will take months, if not years, to sort out.

What is certain to follow, though, is litigation. T-Mobile says its mobile business isn’t governed by California law. Rechtschaffen says it is, and it’s a good bet his fellow commissioners agree. That dispute will have to be settled in a federal court.

Assigned Commissioner’s Ruling, T-Mobile/Sprint merger, 1 April 2020

T-Mobile letter informing CPUC of intent to complete merger, 31 March 2020

Comments on the proposed decision of administrative law judge Karl Bemesderfer, 1 April 2020:
Joint Applicants (T-Mobile and Sprint)
CPUC Public Advocates Office
Communications Workers of America
TURN
Greenlining
California Emerging Technology Fund

TURN and Greenlining protest of Sprint’s CPCN relinquishment, 1 April 2020
CPUC Public Advocates Office, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020
Communications Workers of America, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.