Tag Archives: ab1366

California telco deregulation bill amended, but not by much

by Steve Blum • , , , ,

Burlingame pole 8aug2019

The latest, but probably not the final, amendments to assembly bill 1366 are posted on the California legislature’s website. It’s the bill that would extend a current ban on regulation of “Internet protocol enabled” services, including, particularly, voice over Internet protocol (VoIP) service.

The new version does not address the core objection of telecoms labor unions and the California Public Utilities Commission. They say that because AT&T and Frontier are switching customers from regulated legacy telephone technology to unregulated VoIP service, extending the ban on VoIP regulation would effectively deregulate telephone service completely in California.

On the whole, the new amendments track with suggestions made in the most recent legislative committee analysis of AB 1366. The biggest change to the bill is to the extension itself: it’s now five years instead of ten. Another change is that telephone companies that have obligations to provide a basic level of voice service to anyone that wants it – AT&T is the biggest example – would still have to do that, even if they were using VoIP technology.

There’s still a requirement in the bill for residential VoIP providers to “initiate steps to restore service within 24 hours of receiving a report of a service outage” and complete the restoration within 72 hours, although there’s a long list of exceptions to the rule. Language was added to clarify 1. that the California attorney general “may” – not shall – “institute and prosecute actions or proceedings to enforce” the new rules, and 2. that the CPUC has no “jurisdiction or authority” in that regard.

Other changes require the CPUC to collect consumer complaints and forward them to the attorney general, and allow the California office of emergency services to set some 911 standards.

The Communications Workers of America, AT&T’s biggest union, is strongly opposed to the bill, and democratic lawmakers have been visibly uncomfortable with the idea of going against their wishes. Right now AB 1366 is in the hands of the senate’s appropriations committee, which will decide behind closed doors at the end of the month whether it moves forward or not.

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.

CPUC is next target for Newsom’s “strike team” leader

by Steve Blum • , , ,

Batjer 2014

The new president of the California Public Utilities Commission is Marybel Batjer. Originally appointed by governor Jerry Brown, she heads the California government operations agency, which oversees “procurement, real estate, information technology, and human resources” for all state agencies. Governor Gavin Newsom announced on Friday that she will replace outgoing president Michael Picker.

Batjer seems to like a challenge. In his brief six months in office, Newsom has already tapped Batjer to clean up two bureaucratic black holes: the Department of Motor Vehicles and state government’s information technology “mess”. She’s leading Newsom’s “DMV Strike Team”, which has the daunting task of creating “a more customer-friendly and user-centered culture” at the agency. She will wrap up that assignment this month before taking on the CPUC.

Her resume is impressive. Batjer worked as cabinet secretary for former California governor Arnold Schwarzenegger and chief of staff for former Nevada governor Kenny Guinn, and held top level jobs in state and federal government, all the way back to the Reagan white house. No one will have to explain to her how state bureaucracies do and don’t work.

She’s not a career political minion or a former utility executive, and there’s no evidence of particular telecoms, energy or regulatory policy expertise in her background. Add it all up, and you get a bureaucratic turnaround specialist.

If you’re interested in hearing her talk about remaking California government to “meet the needs of our digital society”, and attracting and retaining millennials in the state workforce, click the picture above to see the video.

Newsom made a shrewd choice. As with the DMV, there’s no affection for the CPUC in the California legislature. No one has tried to disestablish it (yet) this year, but antipathy toward the commission is a driving force behind assembly bill 1366, which would deregulate telephone service in California. Perhaps not as a big a driving force as the money that AT&T, Comcast and other monopoly-model incumbents pay to state legislators, but it serves well as a closing argument.

The California senate has to confirm Batjer, but she can begin the job while that’s going on. There’s about a year and a half left on Picker’s term, so she’ll have to be reappointed if she’s planning to stay beyond the end of 2020. There’s no obvious opportunity for Newsom to make further changes – absent resignations, the roster of commissioners is set until then.

Telephone deregulation bill amended by California senate committee, but it’s still a hot mess

by Steve Blum • , , , ,

Deregulation of telephone service – and with it, telecommunications infrastructure – moved ahead yesterday in the California senate’s energy, utilities and communications committee. Backed by AT&T, Frontier Communications, Comcast and other monopoly model incumbents, assembly bill 1366 was approved on a largely positive, but not quite unanimous vote. It extends a ban on regulation of voice over Internet protocol service (VoIP) by the California Public Utilities Commission and other state agencies. As the shift from old style, regulated telephone service to unregulated VoIP continues, the effect is to allow telcos and cable companies to back out from under the CPUC’s jurisdiction.

That’s a clearly stated goal of the bill’s author, assemblymember Lorena Gonzalez (D – San Diego) who told the committee “we’ve got to figure out a better way than just handing something to the PUC, which would take ten years to get the kind of progress we’re making right now with this bill”.

AB 1366 was amended, but I don’t know exactly what those amendments are yet. Printed copies were given to committee members just before the bill was taken up. It appears that the changes are largely in line with recommendations in an earlier analysis by committee staff and will, to some degree, allow VoIP regulation in regards emergency services and “last resort” rural services.

Judging from the discussion, though, the bill is still confusing and contradictory, with drafting errors, loopholes and a vague and largely useless enforcement mechanism. Gonzalez said that more changes would be made later.

Gonzalez and a couple of representatives from non-profit groups (who demonstrated no particular telecommunications policy involvement or knowledge) spoke in favor of the bill. They were followed by long line of similarly irrelevant endorsers, led by AT&T staff lobbyist Bill Devine, and joined by lobbyists for Frontier, Comcast, Cox Communications, CTIA and Verizon.

Then came the opposition.

A representative from the Communications Workers of America, AT&T’s principal union, repeated arguments made in the assembly. CPUC commissioner Martha Guzman Aceves then made the case for keeping the commission in the game…

We know that millions of Californians do not benefit from any competition in the communications marketplace, that hundreds of thousands have no high speed broadband access, and a third of Californians – 13 million approximately – do not benefit from any competition. This is an oligopoly, it’s not a free market. This bill prohibits the state from guaranteeing essential and reliable communications services to all Californians, simply because the infrastructure has been upgraded. It will eliminate programs to insure infrastructure access to rural Californians, to the deaf, to the disabled and to the poor…

The bill is not about stifling innovation or apps like Skype. This bill is about deregulating the companies that own and manage the poles, wires and radios in California. Companies like Comcast and AT&T, not these apps. Under this bill, these companies will be left to their own sense of social responsibility…

They’ll decide which communities receive the next generation of technologies, like fiber, like 5G…they’ll decide whether or how quickly infrastructure is repaired or upgraded in poor communities and rural communities. They’ll decide whether they address complaints from local governments and your constituents…They will decide whether the service they provide is reliable and redundant so all Californians can reach 911 dispatchers at all times.

The next stop for AB 1366 is the senate appropriations committee, where more amendments might surface. That might not happen until the end of August. If it survives, it’ll go to a vote by the full senate. Labor organisations are strongly opposed to the bill, a fact that made Gonzalez visibly uncomfortable. If that opposition continues, all bets are off on AB 1366’s future.

California senate committee considers AT&T-backed bill to end telephone service regulation

by Steve Blum • , , , ,

Darth leia 625

A bill that would extend California’s ban on regulation of “Internet protocol enabled” services, including voice over Internet protocol (VoIP) service, is due for a hearing in the California senate’s energy, utilities and communications committee today. Assembly bill 1366, authored by Lorena Gonzalez (D – San Diego), would allow AT&T, Frontier Communications, Comcast, Charter Communications and other big, monopoly model incumbents to do an end run around California’s laws, according to the California Public Utilities Commission.

Several regional broadband consortia have also gone on the record opposing it. I drafted the Central Coast Broadband Consortium’s opposition letter, which says, in part…

The current text of AB 1366 extends a ban on oversight by the California Public Utilities Commission of telephone service provided via Internet protocol technology. When first enacted, this ban made sense and had little practical effect, because “Voice over Internet protocol” (VoIP) service was in its infancy. The child has grown up, though, and VoIP is a fully mature service that is rapidly supplanting traditional, and traditionally regulated, analog telephone service.

There might be good arguments for ending state oversight of telephone service. We do not support that position, but it is an appropriate subject for debate and deliberation by the California Legislature. Such a drastic change in California policy should not be enacted through a back door maneuver, as AB 1366 would do.

As of this morning, the version of the bill approved by the California assembly is still on the table. It includes token amendments made in the assembly that have vague language about VoIP service quality, but are of little practical use. The senate committee’s staff prepared an analysis that confirms that the token amendments in the bill “are largely unenforceable”. The analysis proposes a few more marginal changes, but leaves the core of the bill – as pushed by AT&T, Frontier, Comcast, Charter and a long list of their financially groomed, um, friends – intact.

The amendment came in response to strong opposition from the Communications Workers of America, the primary union representing AT&T employees. They are still listed as opposing AB 1366. The key test today will be whether or not CWA members turn out to oppose the bill, as they did in the assembly’s communications and conveyances committee.

AB 1366 will effectively end telecoms regulation in California, CPUC says

by Steve Blum • , , , ,

Cpuc graphic voip vs pots 24jun2019

Update: AB 1366 will be heard in the senate energy, utilities and communications the week after next (h/t to Adam Bender at Communications Daily for the heads up).

Assembly bill 1366 will block modernisation of California’s telecommunications grid and allow telephone and cable companies “to disregard California laws”, according to a position paper unanimously adopted by the California Public Utilities Commission yesterday. The commission’s opposition comes ahead of a California senate hearing on the bill scheduled for the week after next.

As first pushed by AT&T and authored by assemblywoman Lorena Gonzalez (D – San Diego), AB 1366 would have simply extended an existing ban on any regulation of “Internet protocol enabled” services by the CPUC or other state agencies. That restriction took effect in 2013 in order to give Internet-based services such as voice over Internet protocol telephone service a chance to develop in a competitive marketplace. At yesterday’s meeting, commissioner Clifford Rechtschaffen said it’s a different world now…

The original purpose of this bill has been more than fulfilled. VoIP was a nascent technology [when the ban was proposed], it is now a dominant technology and is going to overtake and replace landlines, and the services it provides are indistinguishable from those of traditional landline service. So, extending the bill now would be a barrier to consumer protections and our ability to protect public safety during emergencies. We can provide this regulation without, in any way, undermining competition.

That’s assuming competition exists. The CPUC’s concern isn’t the wide range of messaging, social media and other services that ride on the Internet. It’s about the replacement of regulated, old school copper-based telephone services with unregulated VoIP technology, as AT&T is aggressively doing. Commissioner Martha Guzman Aceves said a “point that is raised often by the industry is competition is the solution to service quality. Unfortunately, we also know that the majority of Californians do not have competition”.

AB 1366 is still a work in progress. Strong opposition from the Communications Workers of America union caused Gonzales to backpedal during an assembly committee hearing in April, and her first try at amending the bill was not fully baked. It’s due to be considered by the senate’s energy, utilities and communications committee on Tuesday, and it’s a good bet that it’ll be amended again.

VoIP regulation, or something, passes California assembly

by Steve Blum • , , , ,

A bill that establishes consumer protections – of a sort – for people whose phone service is delivered via voice over Internet protocol technology, but otherwise leaves Internet-delivered services unregulated, was approved by the California assembly yesterday. Assembly bill 1366 passed with a lopsided, bipartisan majority: 64 votes in favor, versus six noes and ten abstentions, which have the same effect as a no vote. All the noes and all but one abstention came from democrats.

It’s still not clear exactly how AB 1366 would regulate VoIP service. Originally, the bill simply extended a ban on regulation of any kind, by local governments or state agencies, including the California Public Utilities Commission, of “Internet protocol enabled” services. That ban is due to expire at the end of the year, which worries the likes of AT&T, Comcast, Charter Communications and Cox Communications. But there are two sides to every story and in this case opposition from the primary union representing AT&T’s workforce forced inspired the author, Lorena Gonzalez (D – San Diego), to add skeletal VoIP service quality and customer service standards to the bill.

What’s still not clear is who would figure out what the bill’s vague, high level standards mean in detailed, real world terms, or how they would be enforced. No cop on the beat is identified, which means it’ll be up to the courts to ultimately figure it out, a job which is likely to require years of litigation.

AB 1366 doesn’t deal with actual broadband service, it just addresses services like VoIP or email or social media that ride on top of it.

The bill now moves to the senate side of the California capitol, where its first stop is likely to be the energy, utilities and communications committee. That’ll be the next opportunity for Gonzalez to add some clarity to it. Stay tuned.

Consumer rules for Californian VoIP providers, but no particular cop proposed by new draft bill

by Steve Blum • , , , ,

Twin peaks donuts

AT&T’s attempt to dodge regulation of voice over Internet protocol (VoIP) service took a turn down an unmarked legal road on Monday. Assembly bill 1366 is championed by assembly member Lorena Gonzalez (D – San Diego). As now reads, it would add rules about repair windows and bill credits for VoIP service outages to California’s business and professions code, but doesn’t specify any particular agency or method to police those requirements.

Generally, consumer laws are enforced by the consumer affairs department, or the California attorney general, or local district attorneys, or private lawsuits. I expect the enforcement mechanism will be made clearer as the bill moves toward an assembly floor vote. The one thing that seems certain – with due regard for my lack of legal credentials – is that the California Public Utilities Commission won’t be the cop on the beat.

As currently written, the bill gives the CPUC a limited role in collecting information about VoIP outages and complaints, but that appears to be mainly for statistical purposes, with the data forwarded to the attorney general and the legislature annually.

The version Gonzalez originally introduced would have extended a moratorium on state level regulation of VoIP or other “Internet protocol-enabled services”, but it ran into a human wall of labor opposition during a committee hearing last month. That union presence overpowered endorsements from a long line of representatives from vaguely connected non-profit organisations and lobbyists from AT&T, Comcast, Charter and other big telecoms companies that 1. don’t want VoIP regulated and 2. often make less-than-charitable payments to such organisations. Gonzalez promised to amend the bill, and make it more to the liking of the Communications Workers of America (CWA), the primary union representing AT&T field employees.

Theoretically, those amendments were made last week, when AB 1366 slid out of the assembly appropriations committee, which Gonzalez chairs. In reality, the changes were posted on Monday. Whether CWA or AT&T will be happy with the new version remains to be seen. The assembly has until the end of next week to act on it.