Tag Archives: cpuc

Prosecutors in, CPUC out as California’s net neutrality enforcer

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Democrats and republicans in Sacramento agree on at least two things: network neutrality rules are good and the job of enforcing them shouldn’t go to the California Public Utilities Commission. The California senate’s appropriations committee gave senate bill 460 a green light, and sent it on for a formal floor vote yesterday, after wrangling a promise of significant changes.

Senator Kevin de Leon (D – Los Angeles) authored SB 460. As originally written, it would have revived net neutrality rules that the Federal Communications Commission scrapped last month. Committee democrats liked that, republicans didn’t. But lawmakers from both sides of the aisle objected to making the CPUC California’s broadband cop. The appropriations committee chair, senator Ricardo Lara (D – Bell Gardens) opened discussion of SB 460 yesterday by announcing that de Leon agreed to change tack…

The author has committed to…amending the bill prior to a vote on the senate floor to address those concerns by striking out the CPUC as the oversight agency and instead designating the [California attorney general], the DAs – the district attorneys – and the city attorneys as enforcement entities.

Lara also said that de Leon would add language requiring state agencies to buy Internet service from providers that follow net neutrality principles, a feature of a parallel bill, SB 822, by senator Scott Wiener (D – San Francisco), and something that has a far better chance of surviving a federal court challenge.

Republicans seem to be warming to the idea. Senator Patricia Bates (R-Laguna Niguel) endorsed the decision to put enforcement duties in the hands of state and local prosecutors – who already have consumer protection responsibilities – then went on to say she’s “working very hard to ensure net neutrality is there, but not through a regulatory structure that creates a patchwork that we would have to deal with as we travel to other states”. Bates didn’t mention how she intended to do it, though.

The state senate either has to vote on SB 460 before the end of the month, or it automatically dies. Even if it does, SB 822 will continue chugging along – it’s a brand new bill with different, more generous deadlines.

Frontier exceeds federal expectations but understates Californian obligations

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Frontier Communications put out a puzzling press release yesterday. What should have been a celebration of good news, was instead a mish-mash of misdirection and lawyerly evasions that raised more questions than it answered.

The good news is that Frontier has upgraded broadband availability for 39,000 of the 90,000 rural Californian homes it promised the Federal Communications Commission it would serve with a minimum of 10 Mbps download and 1 Mbps upload speeds, in exchange for $228 million in subsidies. That means it reached 43% of the total by the end of 2017, which is better than the 40% benchmark it’s required to hit.

Well done.

But the press release’s headline says that Frontier expanded broadband service to more than 275,000 homes. Which sounds like a lot. It also kinda sounds like those customers didn’t have any Frontier broadband service to begin with. But it doesn’t actually say that.

What it does say is that “100,000 additional households” should have been reached by the end of last year, but since federal securities law requires this sort of public statement be truthful – otherwise, executives could end up in prison – the press release doesn’t quite say it happened. The release says Frontier “is expanding” rather than “has expanded” broadband service. The tense of the verb is a get out of jail free card.

A good explanation for the press release’s weirdness can be found in the hundreds of pages of testimony, settlement contracts and, ultimately, the California Public Utilities Commission decision that allowed Frontier to buy Verizon’s wireline phone systems in 2015. That decision requires Frontier to either upgrade or extend new service to 827,000 Californian locations by 2022. Those are mostly residences, but some businesses are included too. The total breaks down further, into medium speed (25 Mbps down and 2 Mbps down), low speed (10 Mbps down/1 Mbps up), and abysmal speed (6 Mbps down/1 Mbps up) upgrades and extensions. Yesterday’s press release kinda skipped those details.

It also neglected to mention that six counties it’s required to specifically address – Modoc, Shasta, Lassen, Plumas, Siskiyou, and Tehama – haven’t been touched. Or at least that’s the way it reads – none are on its list of 15 counties where upgrades and extensions have been completed. Or rather, are being completed.

So what Frontier is really saying is that it’s hit 33% of its ultimate mandate in California and it hasn’t accomplished anything yet in the most remote corners of its service area, where the hard work will be.

Frontier beat its first hurdle of 40% completion of federally subsidised broadband builds by the end of 2017. It has to hit 60% this year, 80% next year and 100% by the end of 2020, when it also has to have reached an additional 100,000 previously unserved households. With comparable speeds. Of the rest, 400,000 upgrades/extensions need to be done by the end of 2022 and 250,000 have a less well defined deadline.

All Frontier says about that is “details will be reported to state regulators in coming months”. We can only hope those details will be shared with the public, too.

Download:
CPUC decision granting [Frontier Communications] application [to buy Verizon systems] subject to conditions and approving related settlements, 3 December 2015

Blame game won’t stop California broadband subsidy giveaway

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The California legislature intended to protect AT&T’s and Frontier Communications’ rural broadband monopolies and subsidise their low speed service, when it passed assembly bill 1665 earlier this year. In effect, that’s what the California Public Utilities Commission said last week as it approved a resolution that allows the two biggest incumbents to claim exclusive rights to broadband infrastructure subsidies in the rural communities they serve (or not).

Telephone and cable industry lobbyists re-rigged the California Advanced Services Fund program and found enough friends in the legislature – democrat and republican – to approve it by more than a two-thirds majority. They tagged it urgent, which means the CPUC has to implement it now. So it is.

As it’s writing new rules to implement AB 1665, the CPUC is paying attention to the plain text of the bill, and not to its smoke screen of straight-faced deception and phony fact sheets. As it should.

The California Emerging Technology Fund (CETF), which sponsored AB 1665 and allowed it to be turned into a cable and telco wish list filed an objection to the CPUC’s resolution, saying that “it could be interpreted to be rolling protectionism for large incumbents that locks in old technology and blocks the opportunity for fair participation by smaller companies”. Yes. Because it does.

CETF claims that lawmakers didn’t intend to block small companies and that it asked its legislative champions to put that in a letter. But darn it, the bill’s authors “have not yet provided a written position”.

Guess what. It doesn’t matter how many letters politicians write or what promises CETF made while the bill was moving through the legislature. The CPUC’s reply last week was blunt and proper: “Staff implements AB 1665 as written”.

AB 1665 is a bad bill. The people behind it knew what it said and knew it would favor monopoly providers over rural Californians. Deflecting blame onto legislative pen pals or the CPUC serves no legitimate purpose. The first step toward fixing the damage it does is to acknowledge it as the failure it is.

CPUC’s cable franchise renewals remain private and privileged

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Cable companies won’t be held publicly accountable for their business practices or service levels by the California Public Utilities Commission. That’s the result of a unanimous vote by commissioners on Thursday.

The CPUC’s semi-independent office of ratepayer advocates (ORA) asked the commission to revisit a 2014 decision that established a perfunctory, closed door review of statewide video franchise renewals. Cable lobbyists sweet talked California lawmakers into ending local franchise authority in 2006, and replacing it with a single, statewide process run by the CPUC. But they gamed the bill – the Digital Infrastructure and Video Competition Act, or DIVCA as it’s known – so that there’s very little they need to do to get a statewide franchise, and even less they need to show the CPUC when it comes up for renewal every ten years.

The way the CPUC interpreted its responsibility in 2014, the only avenue for local governments or citizens to object was to take a cable company to court and win. Only if a cable company doesn’t comply with a court order by the time their ten year franchise rolls around for renewal, will the CPUC listen to a public complaint. ORA can go a little further and review confidential material, but if they find something wrong, all a cable company has to do is resubmit the application.

Otherwise, the CPUC has a chummy conversation with the cable company and rubber stamps the renewal.

Even though he issued the decision that was approved on Thursday, commissioner Clifford Rechtschaffen offered a sliver of hope that maybe there’s a way that the CPUC can listen to someone other than cable company lawyers and lobbyists…

I do recognise that ORA has raised a legitimate question about how it can effectively advocate during this franchise renewal process. So I look forward to learning more about the way that ORA can do this and bring legitimate concerns about issues within our jurisdiction to the Commission’s attention.

It’s only a sliver, though. Rechtschaffen expressed his sympathy in a narrow, legalistic way, which is how the CPUC has viewed its duties under DIVCA. In order to do anything more, it will have to change its thinking and claim greater responsibility.

California broadband decisions hide in D.C.’s shadow today

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The big broadband news will be coming from the FCC later this morning (although there won’t be much, if anything, that’s actually new). But the California Public Utilities Commission is also meeting today, with a handful of broadband-related issues to decide.

One of the resolutions up for a vote would slap down a request from the CPUC’s office of ratepayer advocates to take another look at how cable companies are (not) held accountable under California’s statewide franchising law. A cable company’s statewide franchise comes up for review every ten years, but it’s done behind closed doors and renewal is effectively automatic. ORA wanted the CPUC to reconsider that gift, but did not convince the commissioner who wrote the draft – Clifford Rechtschaffen – that there was good reason to do so.

Another draft resolution begins the process of bringing the California Advanced Services Fund (CASF) broadband subsidy program into line with changes dictated by assembly bill 1665, which was signed into law earlier this year. AB 1665 gave AT&T and Frontier Communications a privileged place at the head of the subsidy line, and the resolution that’s likely to be approved today fills in some of the details, but leaves hard questions for later. Like whether Frontier or AT&T should be held accountable for making false promises about where and how they’ll upgrade broadband infrastructure.

There are also three housekeeping items, involving the technicalities of the California Advanced Services Fund (CASF). One reinstates a tax on phone bills – also authorised by AB 1665 – to collect the money that’ll be funnelled to Frontier and AT&T. The other two are about due diligence – financial reporting rules for regional broadband consortia and waiving a performance bond requirement for a grant recipient that gained CPUC certification instead.

There’s not much suspense about the outcome today, either in Washington, D.C. or in San Francisco. All five broadband items are on the CPUC’s consent agenda and, absent objection from a commissioner, will slide through without discussion.

PG&E must put all its fiber on the market, not just the bits it, or others, want sold

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PG&E agrees with many of the restrictions that the California Public Utilities Commission’s office of ratepayer advocates (ORA) wants to put on its proposed telecommunications business plan. Without knowing the details of PG&E’s 2,600 mile fiber network in northern California, it’s impossible to know whether that climb down is a strategic retreat or a concession rendered meaningless by the simple facts of its infrastructure or business plan.

The CPUC is reviewing PG&E’s application for certification as a telephone company. Over the years, PG&E has built up an inventory of fiber optic assets, either because it had internal communication needs or because another telecoms company swapped fiber strands for access to PG&E’s electricity transmission and distribution infrastructure. It wants permission to put those assets on the market, either as simple dark fiber or the medium for lit transportation services.

ORA wants to ban PG&E from “using fiber lines installed in the power zone” of utility poles for its dark fiber and lit service business. The power zone is the uppermost area of poles, where wires used for electric service are installed. The area below it, where cable and telephone companies attach their wires, is the communications zone. But that’s only on poles used for distribution of electricity – low voltage, last mile service in telecoms terms. Poles used for transmission of electricity – middle mile, in other words – don’t have a communications zone. Any fiber installed on transmission infrastructure is, by definition, in the power zone.

The conditions proposed by ORA are in the context of utility poles used “for network distribution”. If what ORA wants and what PG&E is agreeing to only involves fiber installed on poles used for distribution, and not on transmission poles, or conduit of any kind, then it might be no big deal. PG&E might not have a significant amount of fiber in the power zone of local distribution poles. That’s an expensive proposition, compared to installing fiber in the communications zone, where safety concerns are fewer and construction costs are less. So it might not make a difference either to PG&E’s business plan or to its ability to be a competitive counterweight to telecoms incumbents with monopoly business models.

But if those conditions affect more than a trivial amount of last mile fiber, or in any way restrict PG&E’s ability (or willingness) to sell access to middle mile routes on its vast transmission infrastructure – the crown jewel of its network – then the CPUC should reject them. Instead, the CPUC should treat PG&E as the incumbent it is: all of its fiber should go on the market. Otherwise, allowing it to act as a telecoms company will not “enhance competition in the public interest”, as PG&E claims.

PG&E rebuttal testimony regarding its CPCN application, 8 December 2017

CPUC review of PG&E telecoms plan must focus on big picture, not narrow interests

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Three groups filed testimony with the California Public Utilities Commission opposing PG&E’s plan to put its 2,600 miles of fiber on the market, as dark strands and for lit service (links are below). Caltel, a lobbying group for telecoms resellers – CLECs – offered quibbling and self-interested comments. The two others – the CPUC’s office of ratepayer advocates and TURN, an old school utility consumer advocacy organisation – urged the CPUC to either reject the plan or cripple it with nonsensical restrictions, on the basis of an outdated and narrow view of what utility regulation is all about.

For TURN and ORA, it’s about micromanaging PG&E’s fiber in the same way as its regulated, monopoly electric and gas business. They give no thought to the benefits of having an independent source of dark fiber or lit service in northern California. ORA and TURN make one dimensional arguments about what might or might not be fair to PG&E’s electric customers and, remarkably, to big incumbent telecoms companies, while ignoring the fact that electric consumers are also broadband and telephone subscribers. Protecting broadband companies that exercise unregulated monopoly and duopoly control over prices and products from PG&E’s limited competition will only hurt consumers.

Dark fiber is a critical resource for independent, competitive telecoms operators. Thanks to the CPUC’s reliance on TURN and ORA – instead of exercising its own initiative – CenturyLink will be rolling Level 3 Communications’ previously independent dark fiber into its monopoly-centric business model over the next two years. Ironically CenturyLink controls a significant amount of the capacity on PG&E’s fiber routes, via its acquisition of Level 3-owned IP Networks. The CPUC would not be serving the public interest if it protected CenturyLink’s monopoly by locking PG&E out of the telecoms business, or restricting its ability to fully use the fiber it owns.

The CPUC has the responsibility to maximise value, quality and availability across a range of utility services for Californians, individually and for the economy as a whole. It should fulfil its responsibility by independently evaluating all the pluses and minuses of PG&E’s telecoms plan, and not relying solely on the arguments of narrow interests.

Caltel testimony regarding PG&E CPCN application, 22 November 2017
Office of Ratepayer Advocates testimony regarding PG&E CPCN application, 22 November 2017, part 1
Office of Ratepayer Advocates testimony regarding PG&E CPCN application, 22 November 2017, part 2
Office of Ratepayer Advocates testimony regarding PG&E CPCN application, 22 November 2017, part 3
TURN testimony regarding PG&E CPCN application, 22 November 2017

Frontier orders a California broadband subsidy sandwich

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The first application for construction (and maybe operations) subsidies from the California Advanced Services Fund (CASF) since the program was gutted by the California legislature landed in the hopper at the California Public Utilities Commission.

Frontier Communications is asking for a $1.8 million grant, without specifying how much, if anything, it’s willing to pay out of its own pocket. It wants the money to pay for a fiber to the home system in and around the remote San Bernardino County town of Lytle Creek…

Frontier’s proposed project will cover about 4.4 square miles and is a combination of middle-mile and last-mile infrastructure using Frontier’s existing poles and rights of way to deploy fiber-to-the-home (“FTTH”) facilities capable of providing High Speed Internet, Ethernet, and VoIP service with speeds of up to 1 Gbps download and 1 Gbps upload.

“Capable of” and “up to” are weasel words that incumbent telcos, like Frontier, put in ads and other marketing material with the intent of pulling the rug out from under consumers when they have the gall to ask for it. In its project summary, Frontier makes no promises about the service it will actually offer, or the price it will charge.

Frontier says it plans to serve 339 homes with the subsidy, which comes out to $5,300 each. But what Frontier doesn’t mention is that Lytle Creek is one of the blank spaces on its federally subsidised checkerboard. It’s sandwiched between areas where the Federal Communications Commission is paying for service at 10 Mbps down/1 Mbps up, which is below the otherwise federal standard of 25 Mbps down/3 Mbps up. The middle mile infrastructure that Frontier wants all Californians to pay for will support the promise, if not necessarily the reality, of modern service for some while condemning the rest to speeds consistent with 1990s DSL infrastructure.

The purpose of CASF is to extend the benefits of 21st century broadband service to all Californians. Frontier’s Lytle Creek proposal might do that for some. Before writing the check, the CPUC needs to make sure it will deliver it to all.

More people, more fire hazards, more damage costs for utilities, at least for now CPUC says

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San Diego Gas and Electric’s shareholders will have to pick up the tab for $379 million of the $2.4 billion worth of damage (and legal fees) caused by a series of wildfires in 2007. Yesterday, the California Public Utilities Commission unanimously approved a draft decision by an administrative law judge that assigned the blame to SDG&E because, as commissioner Carla Peterman put it, SDG&E “failed to meet its burden to prove it was a prudent manager”.

That means SDG&E can’t pass the cost on to ratepayers, via a proposed $1.67 per month add on to bills for six years.

There was some discomfort with the decision, though. Some commissioners believed they were put in a straightjacket by California law and court decisions, and suggested the legislature could, or should, act to give them more discretion. Commission president Michael Picker said that while yesterday’s decision was about a particular set of circumstances, the real problem is much larger…

The number of people who are choosing to live in areas that we now know to be elevated fire hazard or extreme fire hazard is growing. That area is actually growing as we get more information about the impact of climate change. The fuel area has grown from about 31 thousand square miles of California to 77 thousand square miles of California. That’s almost 42% of the state’s landmass. Add to that the fact that as people move into these areas which are growing in terms of the severity of the hazard and we see more and more severe wind storms and lightning storms, happening more frequently here in California, we also know that those people demand and have a right to have both electric and telecommunications as they move into those fire hazard areas. So this is becoming an increasingly complex area for us.

Here, the decision that we have to make is about whether the utility or the ratepayers should be responsible for the financial cost associated with these very specific fires. What we talk about here may or may not have any precedence on any future fire issues that come before us.

This fall’s wildfires were even more destructive and, particularly, have put PG&E in the crosshairs. No causes have been established or blame assigned yet, but there’s a clear possibility that PG&E will take the hit for billions of dollars in damages. Particularly if the same law, logic and court decisions that drove yesterday’s decision are applied.

California wildfires are everyone’s problem, regardless of who’s at fault

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The recent wildfires that struck seemingly everywhere all at once, but particularly hard in the northern California wine country, might have been caused, in part, by wind whipped electric lines surrounded by a canopy of dense, dry trees. If that’s what happened, then electric companies, and particularly PG&E, could be liable for billions of dollars worth of damage.

It poses a difficult public policy question: who pays? Ratepayers, shareholders or taxpayers?

Coincidentally, the California Public Utilities Commission is due to decide that question at this week’s meeting, at least in regards to a series of wildfires in San Diego County in 2007. San Diego Gas and Electric, Cox Communications and contractors who worked on utility pole routes had to pick up a $2.4 billion tab for damages and legal fees. SDG&E is asking the CPUC for permission to pass $379 million in costs on to ratepayers, at the rate of $1.67 per month for six years.

As written, the draft decision on the table for the CPUC would deny the request, because “the costs of the 2007 Wildfires were incurred due to unreasonable management by SDG&E”.

If commissioners go along with it, SG&E shareholders will absorb the immediate cost, in the form of lower dividends or a depressed share price.

The immediate cost.

Long term, it’s a more complicated question. If more money has to be spent on tree trimming, wind loading mitigation and similar measures, it’ll change the maintenance cost calculation that determine how much telecoms companies have to pay for the right to attach their fiber and copper to utility poles that are primarily designed to support electric service.

Going forward, someone will have to pay. Whatever the immediate decision, that someone will be the people who live in SDG&E service area, directly via higher electric rates, indirectly to meet return on investment goals necessary to attract investment or via higher broadband rates driven by the cost of maintaining joint pole routes.

With the cost of rebuilding after the recent wildfires not even calculated, and a future with even bigger disasters looming as a real possibility, the CPUC has hard choices to make. Simply kicking the cost of the San Diego fire back to current investors is tempting, but a nuanced solution with a statewide mandate – including electric and broadband customers as well as investors – is needed.