Tag Archives: broadband

Is AT&T too big and scattered to succeed?

by Steve Blum • , , , ,

Att vans

With the acquisition of Time Warner’s movie and TV production companies, AT&T theoretically has the assets to become a vertically integrated content creation, packaging and delivery behemoth. But not all of its assets – including its management team – are necessarily well suited to the task.

AT&T’s challenge is to avoid outrunning its ability to manage three very different types of businesses: entertainment production, subscription-based linear video distribution and a huge heterogeneous telecoms network. Two of those businesses – subscription video and telecoms – are changing rapidly, and AT&T needs both vision and capital to stay in the game.

So far, it appears to be short on both. There’s a limit to what you can do with a satellite video network. DirecTv will never be interactive, so it can’t leverage its distribution investment to create on demand services that mimic over the top (OTT) providers in the same way cable companies can.

AT&T’s telecom business is also showing the strain. It’s holding back on 5G and fiber upgrades, and increasingly relying on its existing 4G infrastructure and technology. AT&T is replacing copper networks in rural and other less lucrative communities with 4G-based fixed wireless service , in part by relying on federal public safety and universal service fund subsidies. It’s also investing in marginal 4G upgrades and labelling it 5G. Well, 5Ge. But, as AT&T intends, it’s easy to miss the little e.

Outside of the limited areas where it’s investing in fiber upgrades, AT&T’s networks are taking a back seat to more specialised players in its footprint. Cable companies can deliver faster broadband service more widely and have a plausible chance of creating OTT-like video services that are only available inside a provider’s own network, via fast lanes that are isolated from the public Internet. OTT companies are sucking up consumer viewing hours and pure play, or near pure play, mobile companies could move more quickly towards true 5G service (although Verizon has put its early and much hyped pre–5G deployments on hold).

It will take an exceptionally talented and diverse executive team to pull these ill-fitting assets together into a unified programming and telecoms juggernaut. AT&T’s “fix” for HBO, for example – simply telling everyone to start producing more great stuff – and its disingenuous, if not downright deceitful, mislabelling of 4G service indicates that it doesn’t yet have the management and vision it needs to prevail over the long run.

For AT&T, success might end up defined as simple survival.

Federal agencies begin to sing the same broadband policy music, according to NTIA report

by Steve Blum • , , , ,

Mormon tabernacle choir

There’s more coherency and cooperation amongst federal broadband development planning and programs, according to a report just released by the National Telecommunications and Information Administration. Once you get past the love letter penned to president Donald Trump by a couple of his cabinet secretaries, it’s a good overview of how at least some parts of the federal bureaucracy are trying to coordinate broadband policy.

The need for better execution is clear. The report notes the gap between urban and rural broadband availability – 2% of urban residents lack access to fixed service at a minimum speed of 25 Mbps down and 3 Mbps up. The divide is even wider when, um, overly optimistic fixed wireless availability claims are factored out.

Most of the agency initiatives mentioned in the report already exist, and focus on streamlining processes for things like getting permits to build fiber routes through federal lands or renting space on federally owned towers. That’s all useful, and it’s good to know that, little by little, federal agencies are making it easier to get some work done.

But money talks. No new broadband funding was announced, but the report does highlight the federal agriculture department’s new ReConnect program, which will direct $600 million into rural projects. It also offers clues to other sources of broadband money in the federal bureaucracy…

Other Agencies have also made broadband an allowable expense within their current funding streams. Funding for broadband infrastructure may be supported by block and formula grants provided through programs managed by HUD and the DOE. The Economic Development Administration (EDA), Appalachian Regional Commission (ARC), and DRA have identified broadband as an eligible expense and a priority for economic development. These funding streams are critical. They can catalyze private investment and ensure that services are sustained and upgraded over time.

The report also recommends closer cooperation between the agriculture department and the Federal Communications Commission, suggesting that the USDA’s infrastructure construction grants and the FCC’s Connect America Fund (CAF) operating subsidies could complement each other.

Perhaps, but it would require a major change in the way the FCC decides who gets CAF money. Right now, incumbent telephone companies get first dibs on nearly all the money, and what’s left over is auctioned off. USDA, on the other hand, opens up infrastructure grant application windows at irregular intervals. Redesigning the programs would almost certainly require congressional approval.

One agency is conspicuously absent from the action items. Although the report mentions the federal transportation department, it doesn’t sketch out a role for it, and there’s no mention of dig once requirements for federal highway projects.

Frontier-CETF shotgun marriage will continue til death do us part

by Steve Blum • , , , ,

Shotgun wedding

Frontier Communications and the California Emerging Technology Fund (CETF) have tentatively settled a dispute over a mandated low income broadband marketing program. Under the terms of the agreement, instead of ending last year, as previously scheduled…

  • The program will continue indefinitely.
  • Frontier will pay CETF an additional $25,000.
  • CETF won’t have to pay back any of the approximately $700,000 remaining from the $1 million advanced to it.
  • Performance goals remain “aspirational” rather than hard targets.
  • The two organisations will hold lots of meetings and exchange lots of reports, mostly about things they plan to do, with no obligation to perform and complete freedom to unilaterally change their minds.
  • Frontier gets an extra couple of years to complete the gargantuan task of installing 33 free WiFi hotspots.

The program was one of the conditions imposed by the California Public Utilities Commission when it allowed Frontier to buy Verizon’s wireline telephone systems in California in 2015. It had the delusional aspirational goal of signing up 200,000 qualifying subscribers to low priced broadband plans, offered to low income households by Frontier and other Internet service providers.

The original deadline was 30 June 2018. By that point, about 9,200 low income subs had been signed up. CETF and the non-profit organisations it’s working with accounted for 4,300 of those new subs, versus a funded quota of 50,000 (the rest were signed up by Frontier, though its normal sales channels). The deal was that Frontier would pay $60 per new sub, with a total budget of $3 million.

The settlement keeps the $3 million on the table until the non-profits hit the 50,000 new sub mark, or until everyone gets tired of the whole thing. It could take a long time. Although Frontier’s initial obligation expired at the end of last June, it agreed to extend it another year. During the past six months or so, CETF’s non-profit clients only signed up another 200 subscribers, according to the numbers in the settlement agreement.

The next step is for the CPUC to review the settlement, and decide whether or not to accept it.

AT&T, Frontier, Charter carve out exclusive California subsidy territory

by Steve Blum • , , , ,

As expected, AT&T and Frontier Communications blocked broadband infrastructure grants in vast swaths of rural California yesterday, at least for anyone but themselves. The companies filed reports with the California Public Utilities Commission stating they weren’t giving up federal Connect America Fund subsidies in any of the census blocks they claimed in 2015.

Charter Communications tried a similar trick, submitting a letter telling the CPUC where it will be upgrading video-only analog systems to digital capability later this year. There are a couple of problems with Charter’s promises, though. First, it’s admitting it hasn’t complied with the CPUC decision that allowed it to buy Time Warner’s cable systems in California. In that decision, Charter was ordered to upgrade all of its analog territory to digital capability by November, 2018. That deadline has already passed.

Second, Charter is invoking “the spirit” of the right of the first night first refusal granted by the California legislature, but not accepting any of the hard responsibilities that go along with it. As a practical matter though, if Charter delivers on its most recent promise, it could be enough to preempt any California Advanced Services Fund (CASF) grants to independent Internet service providers in its remaining analog service areas.

This right of first refusal for incumbents, and the additional privileges granted on top of it to Frontier and AT&T, were included in assembly bill 1665, which was passed by the legislature in 2017. The bill set aside $300 million for CASF infrastructure grants, and gamed the rules to make it easier for AT&T, Frontier and other incumbents to get their hands on it, but harder for potential competitors to qualify.

No other right of first refusal claims were distributed yesterday. Others might have been filed, but there’s no indication at this point that any were.

Last month, the CPUC restarted the program. The first batch of CASF infrastructure grant applications are due on 1 April 2019. We’ll find out then whether incumbents have left enough room for meaningful independent broadband upgrades anywhere in California.

Filings:

AT&T CAF–2 report, 15 January 2019
AT&T census block list, 15 January 2019
Charter Communications upgrade notice, 15 January 2019
Frontier Communications CAF–2 report, 15 January 2019
Frontier Communications census block list, 15 January 2019

Newsom’s budget plan lowers barriers to public broadband financing

by Steve Blum • , , , ,

Following up on one of the items in his campaign manifesto, California’s new governor, Gavin Newsom, might make it easier to finance municipal broadband projects. One of the many, many ideas offered in his maiden budget proposal is to make it easier to form enhanced infrastructure financing districts by eliminating requirements for voter approval of bond issues…

Various economic development tools have been introduced following the dissolution of Redevelopment Agencies (RDAs), including Enhanced Infrastructure Financing Districts (EIFDs). However, only three EIFDs have been formed since statute created them in 2014. EIFDs can be created by cities or counties without voter approval and expend tax increment revenues without voter approval. However, an EIFD must receive 55-percent voter approval to issue debt.

The Budget encourages the formation of additional EIFDs through removal of the 55-percent voter approval requirement to issue debt. This change will allow EIFDs to support longer-term infrastructure commitments, similar to former RDAs.

Although it’s always been arguable that EIFDs can build and operate publicly-owned broadband infrastructure, the California legislature removed all doubt last year when it passed assembly bill 1999. Public agencies in California – cities, counties and special districts, including EIFDs – were given explicit authority to get into the broadband business.

As with the redevelopment agencies that were killed off by the legislature in 2012, an EIFD would repay the debt with future increases in tax revenue attributable, in theory, to the infrastructure improvements. It’s a complicated process. Even if Newsom succeeds in making it easier for EIFDs to borrow money, that doesn’t mean it’ll be easy.

Forming an EIFD will not be the first step towards a community broadband project. It will come further down the road, after a city or other local agency decides it wants to get into the broadband business. But it’s one more tool in the kit, and that’s useful.

Zorro in, Yoda out as a new political era begins in California

by Steve Blum • , , , ,

Zorro 625 tall

California has had three democratic governors in the past 75 years: Pat Brown, Jerry Brown and Jerry Brown’s chief of staff. And the chief of staff – Gray Davis – didn’t end well. That changes on Monday, when Gavin Newsom is sworn in.

Jerry Brown earned his reputation as the wise old man at the California capitol. But he’s also a skilled operator, with the finest political mind in California. He would jump into a fight when it was both necessary and winnable, and he rarely, if ever lost. By contrast, Newsom is a crowdpleaser with a swashbuckling persona. He’ll have to duel with fellow Sacramento action heroes once the Jedi master leaves town.

Brown often accommodated telecoms companies that have political money to spend. He was willing to veto one giveaway to telcos in 2017, but he signed another. His office successfully pressured the CPUC to reverse its endorsement of net neutrality rules in 2014, allegedly to protect cash flows from AT&T, Comcast and other monopoly model broadband companies. Then last year, Brown signed California’s own net neutrality law, although it was a politically safe move because the real teeth had been taken out of it, and what was left was destined to be iced by federal courts.

Newsom has to decide to what degree he’ll please telecoms lobbyists who, he must hope, will continue to write big checks to him, to lawmakers and to party causes.

Newsom also has to fill a vacant seat on the California Public Utilities Commission. Who he appoints could say a lot about his priorities – or lack thereof – regarding utility policy in general and, perhaps, broadband policy in particular. Assuming no one resigns from the CPUC, Newsom will have one seat to fill in his first two years as governor. Carla Peterman, who came to the CPUC from the California Energy Commission, ended her term on Monday.

Brown began his third term as governor in 2011, and in his first three months appointed people to the CPUC who had a diverse range of industry experience. Mike Florio was a longtime attorney with TURN, a utility consumer advocacy group, Catherine Sandoval is a telecoms law professor and former FCC staffer, and Mark Ferron was a banker and tech financier. Over time, though, Brown shifted to appointing close aides with extensive political and, particularly, climate change portfolios, but virtually no industry or regulatory experience.

With more political debts to pay and none of Brown’s elder statesman gravitas, Newsom could succumb to pressure and appoint commissioners who appeal to allies with a special interest in the CPUC’s business. There’s no deadline for filling the vacant CPUC seat. Brown was about three weeks into his term when he made his first appointments. It’ll be interesting to see if Newsom can move as quickly.

New congress, old issues return to Washington, D.C. in 2019

by Steve Blum • , , , ,

There were two wins for broadband development policy in Washington D.C. this year, and both were backed by agriculture interests. In March, a big federal spending bill passed, with $600 million going to the new ReConnect broadband infrastructure grant and loan program, and the once-every-five-years farm bill was approved earlier this month, with at least $1.7 billion more for similar purposes.

Congress didn’t do much else, though.

Unless there’s a surprise on Monday, the year will end with one empty seat on the Federal Communications Commission. Geoffrey Starks was appointed to fill a democratic party slot, but the senate never confirmed the nomination. Nor did it renew republican Brendan Carr’s term as an FCC commissioner. Disputes over the FCC’s mobile broadband rural telehealth subsidy programs stalled votes. Starks will have to be reappointed; absent another nominee, Carr will be able to serve for two more years.

Other unfinished business at the federal capitol includes…

  • Net neutrality – the senate voted to block the FCC’s rollback of network neutrality rules in May, but there wasn’t enough support in the house of representatives to bring the resolution of disapproval to a vote. Only one republican signed on to it, and it didn’t even get full support from democrats.

  • Privacy and social media – we saw lots of hearings and some disturbingly ignorant questions from elderly lawmakers, but no action on privacy legislation in D.C. Pressure is building for federal preemption, though, as a response to California’s new privacy law and similar initiatives in other states.

  • Mobile spectrum and small cell deployment – two mobile broadband policy bills by the republican majority’s point man on telecoms issues in the senate – John Thune (R – North Dakota) – are dead. The Streamline act, would have baked much of the FCC’s local pole ownership preemption into law. The Mobile Now act was aimed at opening up more spectrum for both licensed and unlicensed broadband service.

  • Municipal broadband – a bill introduced by Silicon Valley representative Anna Eshoo (D – Santa Clara) and trashed by key committee chair Marsha Blackburn (R – Tennesse) would have preempted state-level restriction on muni broadband service. Another Eschoo bill would have imposed dig once requirements on federal highway projects. Neither bill made it out of the starting blocks.

Next year, democrats take over as majority party in the house, Blackburn moves to the still-republican controlled senate, and Thune moves up the republican leadership food chain. Conventional wisdom says the two houses will deadlock, with even less chance of meaningful telecoms policy legislation being passed.

In other words, expect nothing to change.

Big telecom will see familiar, friendly faces at California capitol in 2019

by Steve Blum • , , , ,

California capitol horses 625

California broadband policy will be in the same legislative hands in 2019. Senate and assembly leaders announced committee assignments for the new term, and the chairs of the committees that dealt with major telecoms issues over the past couple of years remain the same.

Miguel Santiago (D – Los Angeles) retained his seat as chair of the assembly communications and conveyances committee. He didn’t make it into the top ranks – no leadership post or a seat on the powerful rules, appropriations or budget committees. But he’ll be able to continue to keep deep pocketed patrons, like AT&T, Comcast and Charter Communications, happy. As he tried to do when he (temporarily) blocked senate bill 822 – the net neutrality law – last year.

Santiago’s principal wingmen are back, too. Evan Low (D – Santa Clara) and Eduardo Garcia (D – Imperial) are once again on the communications and conveyances committee. Besides backing Santiago when he gutted SB 822, Low has (unsuccessfully) carried a copper-killer bill for AT&T and Garcia turned the California Advanced Services Fund into a $300 million piggybank, also for AT&T as well as Frontier Communications and cable companies. Garcia kept his seat on the appropriations committee; Low moves up to chair of the business and professions committee. Jay Olbernolte (R – San Bernardino), who also opposed SB 822, is back as the vice chair of the communications and conveyances committee.

The assembly privacy and consumer protection committee remains in the hands of Ed Chau (D – Los Angeles). He’s already introduced a placeholder bill that is a likely vehicle for amending the new privacy law that he authored last year. It was passed in order to block a tougher initiative that was otherwise headed to the November ballot. How he responds to the mounting pressure to soften it from tech industry interests is a key question for the coming session.

On the senate side, Ben Hueso (D – San Diego) returns as chair of the energy, utilities and communication committee. He, too, was a good friend of AT&T and other mobile carriers in 2017 when he enthusiastically, if not articulately, pushed SB 649. That bill, which was eventually vetoed by governor Brown, would have given them virtual ownership of street light poles and other municipal property they covet. The new vice chair of energy, utilities and communications is John Moorlach (R – Orange).

Lobbyists ask FCC to hit cities with another taxpayer funded broadband mugging

by Steve Blum • , , ,

The ravaging horde of (largely) telco and cable lobbyists known as the Federal Communications Commission’s broadband deployment advisory committee (BDAC) has drafted its latest letter to Santa advice to FCC chair Ajit Pai.

Not surprisingly, it thinks that Charter Communications, Comcast, AT&T and other monopoly model broadband service providers aren’t getting enough love from local governments. Love, in this case, meaning give us everything you have, then go out and get us more.

If a city owns dark fiber, then it should be required to hand it over to “any private sector communications provider” on demand, and only be allowed to keep enough for its “reasonably anticipated 50-year fiber needs”. That’s one of the giveaways that telecoms lobbyists put into the latest draft of their model state broadband code. The FCC already endorsed the seizure of city property, such as light poles, in the public right of way, so the next step, according to the draft, is to claim the same squatters rights on “buildings and other vertical assets that are located outside of the public right of way”.

But why stop at taxpayer owned assets? Why not tax anyone whose business depends on broadband, and give it to telcos? As Jon Brodkin writes in Ars Technica, that’s what AT&T asked for, and largely got…

An AT&T executive who is on the FCC advisory committee argued that the recommended tax should apply even more broadly, to any business that benefits financially from broadband access in any way. The committee ultimately adopted a slightly more narrow recommendation that would apply the tax to subscription services and advertising-supported services only.

It’s difficult to imagine that the FCC will try to impose this wish list on states and local governments, but then it was hard to believe they’d try to preempt local ownership of street light poles. As they did.

More likely, this time around the republican majority on the FCC will say you’ve been nice little lobbyists this year, and put their stamp of approval on the draft. Then they’ll hand it down to state lawmakers who are, collectively, being paid millions of dollars by those same lobbyists.

CPUC reboots California broadband infrastructure subsidies, as well as can be hoped

by Steve Blum • , , , ,

California has more than $300 million available to subsidise broadband infrastructure, thanks to a law passed last year by the California legislature. Also thanks to that law, the rules governing who can get the subsidies and where it can be spent were rigged, with the aim of protecting telco and cable monopolies, and funneling money into their pockets.

It was up to the California Public Utilities Commission to rewrite the rules that subsidy applicants have to follow and that govern how broadband subsidy proposals will be evaluated and approved. Or not.

That process went on for nearly a year, with lobbyists for Comcast and Charter Communications, lawyers for AT&T and a hodgepodge of staffers for Frontier Communications working hard 1. to prevent independent, competitive Internet service providers from getting any money, 2. to make sure they had unimpeded access to it, and 3. to avoid any inconvenient restrictions on what they could charge or what level of service they could deliver to subsidised communities.

Yesterday, by a unanimous vote, the CPUC approved new rules that both stay within the narrow lines drawn by telco lobbyists California lawmakers and provide independent, community-driven projects as good a chance of being funded as the law allows.

This rewrite of the California Advanced Services Fund (CASF) program was led by commissioner Martha Guzman Aceves. Following the vote, she said the goal is to focus broadband infrastructure spending on the communities that need it most, and get it to them as quickly as possible…

This [decision] approved a framework towards meeting the regional goals, now, of 98% per consortia region – those are geographical regions throughout the state – to try to get more parity and access throughout the state.

The [decision] sets up a faster application review timeline, it sets up clear funding rules that allow an applicant to determine ahead of time how much funding an application is eligible to receive…

These new rules improve the accuracy of data, as well, used to determine eligibility. Over the years we’ve had many struggles here, in our decisions, about whether or not a community is served. And this provides much clearer rules to determine that.

The PD also prioritises low income areas, that are unserved and, at best, have dial-up service. The applications that serve these unserved low income areas will receive 100% funding.

The first application window for this new round of CASF infrastructure grants closes 1 April 2018.

Revision 2 of proposed decision of commissioner Guzman Aceves, implementing the California Advanced Services Fund infrastructure account revised rules, published 12 December 2018 and approved on 13 December 2018.

Revised appendix, detailing the application process and grant eligibility rules.

Links to other documents – decisions on other issues, drafts, comments and more – are here. I’ll post the final version of the decision and the appendix there, when available. But the final version should track exactly with the revision linked above.

I’ve been involved in the debate over the CASF program, and in assisting with project proposals since 2009. I’m not a disinterested commentator. Take it for what it’s worth.