Tag Archives: charter communications

CPUC should follow New York’s lead, hold Charter to obligations

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The California Public Utilities Commission imposed a long list of obligations on Charter Communications, when it granted permission for the purchase of Californian cable systems belonging to Time Warner and Bright House in 2016. Some of those requirements mirror the conditions that the New York Public Services Commission attached to its approval of the deal.

Unlike the NYPSC, however, the CPUC has not demanded public accountability from Charter. New York regulators nipped at Charter’s heels since the acquisition closed, and then revoked permission and ordered Charter to reverse the sale and give up its New York markets because “the company was not interested in being a good corporate citizen”.

Typically, the CPUC does not take an active role in enforcing conditions attached to telecoms deals. The job of being the cop on the beat is often left up to outside organisations. If you want a particularly vivid example of how that approach does or doesn’t work, take a look at the mess surrounding Frontier Communications’ purchase of Verizon’s wireline phone systems in California in 2016.

Although it’s arguably right to expect outside parties to take responsibility for enforcing their own contracts, there’s little reason to think they’ll take on the additional work of policing the CPUC’s own decisions. For example, when it approved the Time Warner purchase, the CPUC gave Charter two and a half years – until November 2018 – to convert its legacy TV-only analog systems to digital service…

Within 30 months of the closing of the Transaction, New Charter shall convert all households in its California service territory to an all-digital platform with download speeds of not less than 60 Mbps…

On December 31, 2016 and every year thereafter until December 31, 2019 New Charter shall submit a progress report to the Commission and [the CPUC’s office of ratepayer advocates] identifying progress made.

In theory, the CPUC has some idea already as to whether or not Charter is performing. It’ll be a relatively straight forward process to confirm that all of Charter’s analog systems in the San Joaquin Valley, and in Modoc and Monterey counties, have been upgraded to digital service come November. The CPUC should be as proactive in enforcing its own decisions and pursuing the public interest as its New York colleagues.

New York says Charter is “just lining its pockets”, revokes Time Warner purchase

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The New York state public service commission started the process of unwinding Charter Communications’ purchase of Time Warner Cable systems, in a decision issued on 27 July 2018. The NYPSC says Charter is evading its responsibility to extend its infrastructure and upgrade its service, particularly in rural areas. Those obligations were imposed when the NYPSC gave its blessing to the acquisition.

According to the NYPSC, Charter’s sins include…

  • The company’s repeated failures to meet deadlines;
  • Charter’s attempts to skirt obligations to serve rural communities;
  • Unsafe practices in the field;
  • Its failure to fully commit to its obligations under the 2016 merger agreement; and
  • The company’s purposeful obfuscation of its performance and compliance obligations to the Commission and its customers.

These recurring failures led the Commission to the broader conclusion that the company was not interested in being a good corporate citizen and that the Commission could no longer in good faith and conscience allow it to operate in New York. Today’s actions are meant to address Charter’s failings and to ensure New York has a partner interested in the public good, not just lining its pockets.

Charter’s response was to call the NYPSC’s rhetoric “politically charged” – fake news, in other words. As you might expect, the company is challenging the ruling, and is demanding more details from the NYPSC. According to a story by Alan Breznick in Light Reading

In the company’s second-quarter earnings call…Charter Communications Inc. Chairman & CEO Tom Rutledge made it clear that Charter has no intention of obeying the state Public Service’s Commission order to exit the state because of its allegedly repeated failures to meet its cable buildout and broadband speed commitments. Instead, Rutledge said Charter will try to resolve the conflict with state regulators and, if necessary, will fight the PSC’s actions in court.

“Hopefully we can work it out,” Rutledge said in response to an analyst’s question on the call, noting that it will likely take some time. “But, if necessary, we’ll litigate. We believe we’re in the right.”

It’s just the beginning of the story. The end is months, if not years, away.

CPUC rejects almost all attempts to block broadband infrastructure subsidies

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Just a relative handful of census blocks in California will be excluded from state broadband infrastructure subsidies as a result of the first round of jus primae noctis right of first refusals granted to incumbent providers by the California legislature. Four service providers filed claims, and three were completely rejected by California Public Utilities Commission staff. The fourth was partially accepted.

Only one of California’s big monopoly-model broadband service providers tried – unsuccessfully – to make a play. Charter Communications’ notice was rejected. It was not a right of first refusal filing, but rather – as CPUC staff correctly noted – was “an informational submission”. Charter wants the CPUC to block competition in areas where it is obligated to upgrade its analog-only systems to full digital service by this coming November (not May 2019, as it falsely testified in its informational submission).

In order to claim the privileges of jus primae noctis right of first refusal granted by the California legislature, Charter would have to promise to extend service to every home in the census blocks it’s carving out. That would be a wonderful thing, but that’s not what Charter intends to do. It’ll pump digital services through cable plant it’s already installed, but won’t go any further, unless doing so would reach homes with sufficient disposable income to meet Charter’s business model objectives. Which it’ll do anyway, jus primae noctis notwithstanding.

One claimant – Conifer Communications – won the right to block Californian subsidies in a some – but not all – of the census blocks it tried to grab. Whether that ends up being meaningful is another question. In theory, Conifer is obligated to upgrade its service in the census blocks claimed. As a matter of practice, it’ll have a basis for arguing that since it didn’t get everything it wanted, then it needn’t do anything.

Anza Electric Cooperative wasn’t as fortunate. Its claim was tossed because it specified census block groups instead of census blocks. A rational person might conclude that a promise to serve an entire census block group means that all census blocks within it will be served, but rationality is not the same as being bureaucratically correct.

Geolinks’ claim failed on a couple of accounts. It didn’t specify which census blocks it would fully serve. Instead, it drew a line around a larger territory and promised to upgrade whatever unserved census blocks that area might contain. Plus, the rules of the game limit jus primae noctis the right of first refusal to existing service providers. Geolinks doesn’t have its own infrastructure yet in the Monterey County communities it targeted.

There’s still room for administrative appeals and legal challenges, but not a lot of hope. Assuming prospective broadband service competitors pay attention to the fine print, the 2018 round of jus primae noctis right of first refusals has done little harm.

Four ISPs claim California right of first refusal for broadband subsidies, but big telcos sit it out

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Four Internet service providers exercised their jus primae noctis right of first refusal for California broadband subsidy priority by Tuesday’s deadline. That’s assuming all four got it right, which is doubtful.

When the California Advanced Services Fund (CASF) program was turned into a piggy bank for AT&T and Frontier rewritten last year, one of the benefits lawmakers slipped into the bill was an annual opportunity for incumbent providers to claim unserved areas, in exchange for a promise to upgrade broadband service within six months. They could apply for CASF money in those areas, but no one else could.

It was one of many giveaways to big incumbents, but only one of the four falls into that category. Of the major Californian ISPs, only Charter Communications filed, and it didn’t exactly claim a right of first refusal. Rather than explicitly promising any upgrades, Charter simply pointed out that it’s under CPUC orders to convert its remaining analog cable systems in California to full digital capability, and then asked to CPUC to deny any subsidy requests in its territory “in the spirit of the [right of first refusal] process”.

Charter got one thing wrong, though. It said it had until May 2019 to finish those upgrades. That’s only true in Monterey County, where a separate agreement governs. For the other communities in Tulare, Kings and Modoc counties where it has build-out obligations the deadline is November 2018, per the CPUC resolution that granted Charter permission to buy Time Warner and Bright House cable systems in California (page 71, item g if anyone is curious).

The other three include Anza Electric Cooperative, which has one CASF grant in the bag and another pending for a fiber to the home build in its Riverside County electric service area and Conifer Communications, a wireless ISP that’s claiming territory that’s arguably in, or at least in the general neighborhood of, its existing service area in Amador, Calaveras, Mariposa, Stanislaus and Tuolumne counties.

The fourth is Geolinks, also a wireless ISP, with plans to apply for a CASF grant and expand into the same Monterey County communities that Charter is claiming. The new CASF law limits right of first refusal eligibility to “existing facility-based broadband provider[s]”, which is a term the CPUC has defined as providers that intend to “upgrade service in their existing underserved territories”. Geolinks has no facilities in Monterey County, although it does offer service further south on the central coast. Whether they’re close enough is something for the lawyers to argue over. As is the competing “notice” from Charter.

Anza Electric Cooperative, Inc., “CASF Right of First Refusal Annual Demonstration Letter”, 15 January 2018.

Charter Communications, “Notice of Planned Deployment of Broadband Passings”, 16 January 2018.

Conifer Communications, “Right of First Refusal Letter”, 16 January 2018.

Geolinks, “Right of First Refusal Letter”, 15 January 2018.

Charter’s broadband is not the help poor people need, CPUC says

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But check out what’s on pay per view.

Charter Communications lost its latest battle to keep free WiFi service out of public housing in California, but the defeat came long after the war ended in victory for cable companies and their lobbying front organisation in Sacramento. It means that 47 publicly subsidised communities, scattered across the state, get to keep grant money they received from the California Advanced Services Fund to install broadband facilities. Most of them had opted for WiFi systems that would offer slow connections at no cost to residents.

In its order denying the appeal, the CPUC pointed out that there’s “evidence that Charter’s service is not affordable”…

In an appeal to Charter’s challenge to Eden Housing’s…grant applications, Eden stated, among other things, that (1) its housing sites are occupied by 100% low income residents, with an average household income of $35,000 and much lower at its senior housing sites. “A large majority of our residents – currently an average 73% — have no access to broadband services because they cannot afford to pay the monthly service fees offered by Comcast and Charter. . . . [T]he monthly fees could cause a severe hardship to a family and, in some cases, a basic need could go unmet to pay the bill…A monthly fee is an obstacle for this group”.

The California Public Utilities Commission denied appeals of two decisions giving the grants – typically less than $50,000 and many much less – to public housing complexes where Charter and its cable brethren offer service at prices beyond what residents are supposed to be able to pay, particularly when bundled with even more costly television packages. It’s a sweet deal for cable companies, which is why Cox Communications chimed in with an amen filing.

It’s also why California Cable and Telecommunications Association prevailed on a simpatico state senator, Ben Hueso (D – San Diego), to slip language into a reauthorisation bill last year that outlawed grants to public housing that’s been blessed with such attention. As a result, the CPUC is scheduled to vote Thursday on new rules that will make its public housing broadband subsidy program equally friendly to California cable companies.

Order denying rehearing of decision T-17515
Order denying rehearing of decision T-17514
Modified resolution T-17515

Net neutrality is carefully tailored, FCC jurisdiction paramount says Charter

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Master of disguise.

Proving the adage that it’s an ill wind that blows no good, Charter Communications is taking shelter behind the Federal Communications Commission’s decision to regulate broadband as a common carrier service. In a request submitted to a federal court in New York (h/t to the Hollywood Reporter), Charter argued that the New York attorney general shouldn’t be allowed to sue it in state court over consumer fraud allegations, because the FCC has preempted such matters when it issued its network neutrality order in 2015. The accusations mostly involve Time Warner Cable’s practices before Charter bought it last year.

It’s a legal question that turns on whether the New York attorney general is pursuing a garden variety consumer fraud case that just happens to involve Internet service or trying to regulate the broadband industry. In its filing, Charter has very kind words for common carrier rules…

Pursuant to the [federal communications act], all common carriers (including [Internet service] providers) “engaged in interstate or foreign communication by wire or radio” must employ “just and reasonable” “practices . . . in connection with [their] communication service,” and the FCC is statutorily charged with “prescrib[ing] such rules and regulations as may be necessary” to implement this requirement…

To implement “th[is] carefully tailored regulatory scheme,” the FCC “announce[d] [its] intention to exercise [its] preemption authority to preclude states from imposing obligations on [Internet service] that are inconsistent” with the FCC’s…(“[T]he [FCC’s] jurisdiction is paramount and conflicting state regulations must necessarily yield to the federal regulatory scheme.”).

Like Comcast, Cox and (formerly) Time Warner Cable, Charter isn’t one of the formal plaintiffs that are fighting the FCC’s decision in federal court, but it’s a member of the National Cable and Telecommunications Association, which is. Vehemently. Among other things, it accused the FCC of having improperly “arrogated to itself breathtaking authority”. Charter opposed the reclassification of broadband as a common carrier service, calling it “unnecessary and harmful”, among other things.

Charter, like other cable companies, frequently uses lobbying fronts, such as the NCTA, to fight its corner in regulatory and legal battles. It agreed to more or less abide by the FCC’s common carrier rules as a condition of its purchase of Time Warner Cable last year, but that shouldn’t be confused with agreeing with the FCC decision or, indeed, accepting its jurisdiction over broadband service at all.

Nor should its bald faced pleading before the federal court.

Charter agrees to digital upgrade for Salinas Valley

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Work in progress.

More than 100,000 people living in and around the Salinas Valley are on track for a digital upgrade from Charter Communications within the next three years. If Charter is allowed to buy Time Warner and Bright House cable systems in California and elsewhere.

Charter is the incumbent cable company in most of the Salinas Valley – the major exception is the City of Salinas, which is Comcast territory. Its Monterey County video franchise areas are stuck in the analog era, with 36 channels of old school, standard definition television that costs an eye-watering $106 per month. No broadband, no digital video.

That could change soon. The City of Gonzales and Monterey County negotiated binding agreements with Charter. In exchange for dropping opposition to the Time Warner/Bright House purchase at the California Public Utilities Commission, Charter has committed to digital upgrades – broadband and video – for its existing systems in the region, so long as the deal is approved by the CPUC and federal authorities.

Long frustrated by a lack of affordable, high speed Internet access – Gonzales is designated a high priority area for broadband development by the CPUC – the city intervened in California’s review process last September, and Monterey County followed in December. Charter has reached settlements with a few of the other intervenors as well, but several organisations remain opposed and are arguing for a variety of benefits, including additional build outs, discounts for low income households (which Charter is already promising) and cash payments. Or they’re urging that the deal be killed completely.

The CPUC’s review is scheduled to be finished in May, with decisions from federal regulators expected in the same time frame.

I’m assisting the City of Gonzales with its efforts at the CPUC and its negotiations with Charter. I am not a disinterested commentator. Take it for what it’s worth.

City of Gonzales and Charter Communications memorandum of understanding, 22 February 2016

City of Gonzales motion to withdraw from Charter proceeding, 7 March 2016

Monterey County and Charter Communications memorandum of understanding, 10 February 2016

Monterey County motion to withdraw from Charter proceeding, 11 February 2016

Charter and Comcast could control 70% of U.S. broadband market

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More consolidation.

Ars Technica has crunched the numbers, and reached the conclusion that if Charter Communications is allowed to buy cable systems owned by Time Warner and Bright House, it will end up with monopoly control of 25 Mbps down/3 Mbps up broadband service for about a quarter of U.S. households, and that when combined with Comcast’s footprint, service to the majority of homes will be controlled by one of two companies

Charter said in November that it would serve 23 percent of the nation’s 25Mbps-and-up broadband subscribers if it can buy TWC and BHN. Comcast has about 47.6 percent based on our calculations, pushing the two companies’ total over 70 percent. The vast majority of Comcast subscribers have speeds of at least 25Mbps…

Charter’s “less than 30 percent” quote came in May 2015, and the company followed up with its more precise estimate of 23 percent in December.

A Charter spokesperson told Ars that it calculated the 23 percent estimate by comparing the merging companies’ December 2014 subscriber numbers to the December 2014 FCC data, so that means the expanded Charter would have about 9.58 million subscribers with 25Mbps speeds.

That benchmark was set by the Federal Communications Commission as the minimum speed necessary to make use of advanced, 21st century applications, content and other broadband-delivered services.

On the other hand, 70% isn’t as bad as 90%, which is the figure that opponents of the Charter transaction are citing. The Ars Technica article attributes the difference to older data used by the coalition of groups that want the deal killed.

In California though, the figure is likely to be in the 80% range. The estimate made during last year’s review of Comcast’s failed buyout of Charter, Time Warner and Bright House systems in California was 84% control of the high speed market, and newer figures calculated during the review of the current Charter proposal indicate not much has changed here.

Telecoms lobbyists tell Calfornia lawmakers which side of the digital divide they’re on

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Lobbyists for AT&T and the California cable industry gave state assembly members clear insight into why rural broadband development is such an intractable challenge. It wasn’t exactly the insight they were planning to deliver – that consisted mostly of platitudes about the wonderful work they’re doing and the evils of subsidising independent companies that would dare to compete against them. The insight came from the way they tried to divert attention away from the rural questions that the assembly’s select committee on the digital divide in California is tasked with answering, and toward the investment they’re indisputably making in more lucrative urban areas.

Bill Devine, a staff lobbyist for AT&T, talked at length about the $7.4 billion investment that his company has made in California. He mentioned wireline in passing, but came back time and again to extoll the wonders of AT&T’s mobile service. Which is where most of that spending is going – even wireline work is tilted heavily toward reaching cell sites with fiber. Some of that construction is in rural areas, but not much in relative terms. Devine characterised the rural share as “hundreds of millions of dollars”. Not chump change, but that’s about a tenth or less of AT&T’s spending. In other words, urban areas – 5% of the state, geographically – get something like 90% or 95% of AT&T’s upgrade investments while rural areas – 95% of California – get the leftovers. Population density is a factor, but geography matters too. You can’t concentrate spending so heavily on 5% of California without ignoring infrastructure needs in the rest.

Carolyn McIntyre, representing the cable industry’s lobbying front in Sacramento, was asked directly if her support for extending broadband service to at least 98% of Californians was based on a statewide aggregate, or if that’s a goal that should apply region by region. “Statewide” was her answer. Which suits her cable company clients just fine. They, too, are happy to concentrate their investments on dense and affluent areas and, like Charter Communications in the Salinas Valley, redline the rest.

The message, albeit unintended, was clear: big cable and phone companies are a big part of California’s rural digital divide problem, and have no interest in being part of the solution.

Charter plans to strengthen its broadband business by trading away redlined communities

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Charter Communications will get a 2% bump in its Internet service market share, if the massive restructuring of the U.S. cable industry proposed by it, Comcast and Time-Warner is approved by federal and state regulators. By unloading systems that perform relatively badly on Comcast and a newly formed cable company – currently with the placeholder name of SpinCo – and, in return, adding systems from Time-Warner and Comcast, Charter will see its Internet subscriber base rise from 35% of homes passed to 37%. That’s according to Charter’s most recent quarterly report, released last week.

The systems it’s getting aren’t actually that much better – 36% broadband service penetration. The real gain comes from getting rid of the dogs, with an aggregate figure of 33% Internet uptake.

A significant reason for the poor results in some of those systems is a lack of capital investment – Charter hasn’t spent the money necessary to bring all of its customers into the twenty-first century. Particularly poorer ones.

On California’s central coast, for example, Charter has redlined communities in the Salinas Valley. Castroville, Gonzales, Soledad, Greenfield and King City struggle with outdated, analog-only systems, while just to the north, in Watsonville and Hollister, for example, Charter has upgraded to digital, broadband-capable plant.

Given its apparent lack of interest in investing in low-income communities, it’s probably a good thing that Charter wants to get out of California, although turning 80% of the state’s cable market over to Comcast seems a high price to pay. And brings no guarantee that the red line will be erased.