Tag Archives: ab1366

California legislature tweaks telecoms policy instead of killing it

by Steve Blum • , , , ,

Despite AT&T’s quest for de facto deregulation of telecommunications infrastructure and service, no major telecoms policy changes emerged from the California legislature this year. A few small ball telecoms-related bills did emerge by the end of the 2019 session early Saturday morning, though, and were sent on to governor Gavin Newsom.

Assembly bill 1366 is dead, at least for this year. There was no last minute conniving to pull it out of the committee deep freeze it landed in earlier in the week. It could come back in 2020, either as a fast track do-over in January or reintroduced as a new bill.

It’s fair bet that lobbyists from AT&T, Comcast, Charter Communications, Frontier Communications and mobile carriers will want to take another try. The moratorium on regulation of voice over Internet protocol (VoIP) phone service and other “Internet protocol enabled” services ends as the new year begins, but there will be no practical effect for months, if not years. There are no VoIP-specific regulations ready to snap back into place and any effort to create new ones, or even reinterpret old ones will take a long time.

A few telecoms bills dealing with more specific issues were approved and are in the governor’s hands, including…

  • AB 1699, Marc Levine (D – Marin) – prohibits mobile carriers from throttling data traffic on accounts used by public safety agencies during emergencies. It’s largely symbolic. The only question is whether mobile carriers, or their lobbying front organisation, will challenge it federal court immediately, or wait until there’s a serious attempt to enforce it.
  • SB 670, Mike McGuire (D – Sonoma) – requires telecoms companies to notify the state office of emergency services when an outage isolates a community. State OES would then pass the information along to local agencies.
  • SB 208 and AB 1132 would crack down on caller ID fraud in various ways.

Newsom has until 13 October 2019 to decide what to do.

AT&T’s backdoor telecoms deregulation bill runs out of room in the California senate

by Steve Blum • , , , ,

Coyote cliff 625

“AB 1366 was pulled by the author, so it will not be considered today”, said senator Ben Hueso (D – San Diego) as he called the senate’s energy, utilities and communications committee to order yesterday. Assembly bill 1366 would extend a ban on regulation of voice over Internet protocol (VoIP) and other “Internet protocol enabled” services in California.

Conventional wisdom says the bill is dead for this year. It wasn’t amended before last night’s constitutional deadline, so there’ll be no more wrangling over the bill’s language. On the other hand, there are still three days left in the legislative session and it’s a high stakes bill for monopoly model telcos and cable companies like AT&T and Comcast. They stuff a lot of cash into lawmaker’s pockets have deep, philosophical points yet to make.

No reason for pulling the bill was offered. A hastily prepared analysis by committee staff shows that the line up of organisations for and against it didn’t change. AT&T, Frontier Communications, and the lobbying front organisation that Comcast and Charter Communications duck behind – the California Cable and Telecommunications Association – still support it; the Communications Workers of America, AT&T’s principal union, and the California Labor Federation still oppose it. In the heat of the end-of-the-session rush, what ends up in print often doesn’t reflect backroom reality, but in this case it’s probably accurate. Organised labor is probably the only force in Sacramento with more political power and money than AT&T, Comcast and Charter.

AB 1366 was disowned on Friday by assembly member Lorena Gonzalez (D – San Diego), who introduced it earlier this year and muscled it to within inches of the goal line. Presumably, she passed it over to two other assembly members – Jay Olbernolte (R – San Bernardino) and Tom Daly (D – Orange) – because the stiff opposition from labor organisations, which are the foundation of her political base, finally made it impossible for her to front for it.

The bill was amended during the handoff, limiting the ban’s extension to two years. But other amendments added even more perks for incumbent telecoms companies, particularly AT&T and, to a lesser extent, Frontier. Not surprisingly, that turned out to be a bad way to win friends in the final days of the legislative session.

The ban on VoIP regulation was imposed by the legislature in 2012, when no one was sure what direction VoIP or other services that ride on the Internet would take. Now we know. Today, VoIP is the telephone service technology preferred by telephone and cable companies because 1. it’s a century or so ahead of legacy copper phone tech, and 2. it’s unregulated. As a California Public Utilities Commission analysis shows, telcos are switching customers to VoIP at a rapid rate, to the point that state regulation of broadband and telephone infrastructure and service, which depends on legacy copper rules, will effectively end.

California telecoms backdoor deregulation bill, AB 1366, stalls

by Steve Blum • , , , ,

Front line dispatch 625

Assembly bill 1366 was “pulled by the author” ahead of a committee hearing this afternoon. The California senate’s energy, utilities and communications committee was supposed to review amendments made last Friday, but that didn’t happen. No reason was given. The bill might be dead, or it might be going through a final rewrite, ahead of tonight’s hard, constitutional deadline for amending it. Or something else – anything is possible today. Tomorrow, well, that’ll be a different story. Stay tuned.

AT&T snakes perks into California deregulation bill, while its author ducks for cover

by Steve Blum • , , , ,

Copper head snake 625

AT&T slipped more special privileges into a bill that would, in effect, deregulate broadband and modern voice service in California. At the same time, the bill was disowned, sorta, by its godmother, assembly member Lorena Gonzalez (D – San Diego).

Assembly bill 1366, which would extend an existing ban on regulation of voice over Internet protocol service (VoIP), was amended ahead of Friday’s soft deadline for changing bill language in the California legislature (Tuesday is the hard, constitutional cutoff for amendments). Many of the changes are tweaks that weaken the few, feeble consumer protections that were added to the bill as it moved through committee and floor votes. AT&T, because of its basic service obligations over a large rural footprint and its plans to replace wireline networks with low capacity fixed broadband technology, will benefit particularly. So will Frontier Communications for the same reasons, albeit over a much smaller subscriber base.

Gonzalez, who introduced the bill and muscled it through the Sacramento sausage machine, took her name off of it and handed it over to a pair of assembly members – Jay Olbernolte (R – San Bernardino) and Tom Daly (D – Orange) – who are less likely to be damaged by blowback from organised labor, which strongly opposes AB 1366.

The prior version of AB 1366 would have allowed current California Public Utilities Commission regulations governing basic telephone service and universal service programs to encompass VoIP service. No longer – those potential loopholes were sewn shut on Friday. A more specific set of rules that sets out requirements for incumbents when they are the “carrier of last resort” – an issue primarily for rural areas – still applies to VoIP, but only to the extent that they must “offer” telephone connections to hard-to-reach customers. The CPUC would no longer be able to oversee “the provision of” those carrier of last resort services. In other words, AT&T and Frontier can use VoIP to meet their most basic service obligations, but the quality and reliability of that service is up to them.

Another gift is the exclusion of “services using radio frequency spectrum licensed by the Federal Communications Commission” from already weak and exception-ridden time frames for restoring VoIP service following an outage. The immediate benefit will be to mobile carriers that use new “voice over LTE” (VoLTE) technology, but over the long term it will also apply to “wireless local loop” (WLL) systems that AT&T plans to use to replace rural telephone lines. WLL runs on licensed spectrum, but not much of it – capacity is a fraction of what wireline networks can carry.

Another change might make AB 1366 easier to swallow for some union allies in the legislature, but also sets up a potentially lucrative payday for lawmakers, particularly those planning to run for statewide office. Instead of lasting five years, the ban on VoIP regulation would only last two years. That would mean a rerun of this session’s backroom dealing, just ahead of the 2022 campaign cycle for California constitutional offices. That’s when big, corporate contributions, such as those AT&T, Comcast and the rest lavish on their friends, are needed to reach voters across the state. Gonzalez plans to run for the California secretary of state’s job then.

Unanimous approval by key committee sends AT&T’s deregulation bill to a vote of the full California senate

by Steve Blum • , , , ,

When the legislative dust settled on Friday, after a whirlwind morning in which the fate of hundreds of bills were announced after being decided behind closed doors in Sacramento, assembly bill 1366 remained alive. Carried by assembly member Lorena Gonzalez (D – San Diego) would, on the face of it, simply extend an existing ban on regulation of “Internet Protocol enabled communications services”, including voice over Internet protocol (VoIP) telephone service.

Given the increasing number of consumers switching – and being switched without their consent – from legacy copper-based plain old telephone service (POTS) to VoIP since the regulatory ban went into effect six years ago, AB 1366 spells a de facto end to state oversight of broadband and telephone infrastructure and service in California. As presently written, AB 1366 has a few exceptions to the broad prohibition on state or local VoIP regulation, but doesn’t say how those will be enforced. According to the most recent legislative staff analysis of the bill, it “places these provisions in a portion of the Business and Professions Code over which no board at the Department of Consumer Affairs has oversight…As a result, lawsuits brought by the Attorney General may be the only mechanism to enforce these provisions”.

AT&T deployed its cash, lobbyists and astroturf non-profit groups to argue for the bill, with universally similar support from Frontier Communications, Comcast and other cable, telephone and mobile companies. So far, it has prevailed over objections from organised labor, the California Public Utilities Commission and the Newsom administration. The seven members of the California senate’s appropriations committee – five democrats and two republicans – unanimously voted in favor of the bill, and passed it on to the senate floor without new amendments.

There’s less than two weeks left in the California legislature’s 2019 regular session, with a soft deadline of the end of this week to amend bills, and a hard, constitutional deadline of next Tuesday. The question will be whether Gonzalez listens to her (otherwise) allies in organised labor – particularly the Communications Workers of America union – and tries to find new language they will accept, or simply sends the current version on to a vote by the full senate.

Newsom administration says telecoms deregulation bill offer little protection, particularly in rural California

by Steve Blum • , , , ,

Leaning pole

Key opposition to assembly bill 1366 is coming from inside California governor Gavin Newsom’s administration. AB 1366 is the bill that would extend a ban on regulation of “Internet protocol enabled services”, including standard telephone service delivered by voice over Internet protocol technology (VoIP). It’s backed by AT&T, Comcast, Charter Communications, Frontier Communications and other telecoms companies, and a long list of non-profit organisations that they pay, but which otherwise have no particular interest in telecoms policy.

The California department of finance registered its formal opposition to AB 1366, which requires sign-off from the governor’s office. The finance department’s objections mirror those made earlier: that the rapid conversion of California’s telephone networks from regulated legacy technology to unregulated VoIP is a backdoor path to complete deregulation of broadband and phone service and infrastructure, and the sham consumer protections added to the bill as window dressing are worthless.

The bill assigns responsibilities of enforcement to the AG without any authority besides litigation and it establishes certain requirements of VoIP service providers without providing any penalty or enforcement mechanisms if they do not comply…

The Legislature and AG do not have any mechanism for resolving those complaints outside of legislation or litigation. The Department of Justice’s resources will likely be taxed given it has to now enforce VoIP service quality requirements and work through all the issues associated with VoIP.

The damage, according to the finance department, will fall disproportionately on rural Californians…

Recent catastrophic wildfires and disasters have demonstrated broader vulnerabilities in the communications grid, highlighted the lack of resiliency, and underscored the need for standards and rules. This bill would continue to prevent the [California Public Utilities Commission] from undertaking investigations or rulemakings that would result in regulations or standards for a large share of the technology used on the communications grid…
Customers who are most at risk of experiencing service abandonment if the [carrier of last resort] requirement is not enforced will be in rural areas where there is no other provider of reliable, affordable telephone service. This represents a significant public safety concern given the increased amount of catastrophic wildfires and disasters in these areas and need to access the communications grid unfailingly.

AB 1366 is in legislative limbo right now. It’s sitting in the California senate’s appropriations committee, which means that legislative leadership will decide on Friday whether it moves forward to a vote by the full senate. Although the millions of dollars that AT&T and the rest of the telecoms industry pays to California senators and assembly members matters a lot, but maybe not as much as the opposition of organised labor and, now, the governor’s office, if not the governor himself.

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.