The incumbent providers’ responses to Google Fiber’s expansion in other cities may foreshadow their responses to a municipal network in San Francisco. After Google Fiber came to Kansas City, incumbent providers Comcast and Time Warner upgraded their networks to double residential speeds, which lowered the dollar per megabit cost of bandwidth for their customers. Industry experts interviewed by the Budget and Legislative Analyst estimate that these upgrades cost very little for incumbent providers and occurred because of the competitive threat Google Fiber posed. Similarly, AT&T deployed its high speed Gigapower network in Austin shortly after Google Fiber announced its intention to build in that City. AT&T is charging $50 less per month for Gigapower in Austin, where it competes with Google Fiber, than in other cities where it does not. Similarly, Comcast upgraded residential speeds at no additional cost to customers after the City of Santa Cruz announced its intention to form a public-private partnership to deploy a FTTP network.
AT&T isn’t lowering prices where its monopoly holds fast. Comcast and Time Warner aren’t raising speeds at no additional cost where their monopoly (or duopoly) status is secure. The difference between what AT&T, Comcast and the rest charge in a competitive market and what they charge everybody else is either pure profit, or a mix of profit and cross-subsidies into competitive areas.
AT&T wants to rip out its copper phone networks in California and sell wireless voice and broadband service instead. Its lobbyists in Sacramento wrote a bill – assembly bill 2395 – that would give AT&T blanket permission to shut down regulated plain old telephone service and replace it with whatever kind of unregulated technology it deems most profitable.
For customers lucky enough to live in a high potential area – someplace dense enough with customers and cash to make wireline service sufficiently lucrative – that’ll mean voice over Internet protocol phone service running on one flavor or another of DSL broadband. Everyone else will have to make do with wireless phone and Internet service. In rural California, that’ll mean either via a slow and expensive mobile subscription or AT&T’s coming wireless local loop technology, which might or might not be as expensive – AT&T hasn’t revealed pricing – and will likely max out at 10 Mbps download and 1 Mbps upload speeds.
AT&T shovelled a lot of meaningless rhetoric about global warming, clean energy and customer education into the bill, presumably to divert attention from its real purpose. Boiled down, in 2020 AT&T can shut down its copper network anywhere in the state with 90 days notice. They’ll have to file some paperwork with the California Public Utilities Commission and promise that whatever replacement service they propose – VoIP or wireless – can reach 911. But then they “may utilize any technology or service arrangement to provide the voice services as long as it meets the requirements” for basic functionality.
That makes two bills that AT&T lobbyists have convinced friendly assemblymen to carry for them – Evan Low (D – Cupertino) has the AB 2395 ball. The other one, AB 2130 authored by assemblyman Bill Quirk (D – Hayward), would freeze the California Advanced Services Fund broadband infrastructure subsidy program and replace it with what amounts to a $100 million no-strings gift from the taxpayers to (mostly) AT&T. Taken together, the two bills guarantee AT&T’s monopoly status, particularly in rural areas, and remove any meaningful limits on exploiting it.
Next stop for both bills is the assembly utilities and commerce committee, likely some time in April.
I’ve advocated for and helped to draft competing bills. I’m involved and proud of it. Take it for what it’s worth.
All AT&T would have to do in return is make a dubious advertising claim of 10 Mbps download and 1 Mbps upload speeds, as it does now with its mobile broadband service. The current minimum set by the California Public Utilities Commission is 6 Mbps down and 1.5 Mbps up, so any place where the best upload speed available is 1 Mbps would be deemed underserved and eligible for CASF subsidies. That’s, um, inconvenient for AT&T, because it’s similarly taking billions in federal subsidies to provide what will principally be wireless service at that lower standard.
Besides lining AT&T’s pockets with California taxpayer dollars, AB 2130 would also derail a competing proposal, AB 1758. That bill would add even more taxpayer money to CASF, but raise the minimum broadband standard to the federal level of 25 Mbps down/3 Mbps up and continue to allow community-driven broadband infrastructure upgrades by incumbents as well as competing, independent service providers. Who all have to contribute significant capital of their own and strictly account for it.
If AB 2130 passes, AT&T gets rid of pesky competition and annoying accountability, and walks away with most, if not all, of a $100 million gift from taxpayers. Next stop for the bill will be the assembly utilities and commerce committee.
I’ve advocated for and helped to draft AB 1758 and its predecessors. I’m involved and proud of it. Take it for what it’s worth.