Tag Archives: cpuc

California attorney general joins lawsuit to block T-Mobile-Sprint deal, likely delays it indefinitely

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile’s proposed merger with Sprint is “presumptively anticompetitive” according to California attorney general Xavier Becerra and eight other state attorneys general (plus their counterpart in the District of Columbia). On Tuesday, they sued the companies in a New York-based federal court with the goal of blocking the deal. The ten – all democrats – say there would be substantial damage to the market for mobile telecoms services if it goes through…

Sprint and T-Mobile are close competitors. Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for consumers. If consummated, the merger will eliminate the competition between Sprint and T-Mobile and will increase the ability of the three remaining MNOs to coordinate on pricing. The new combined company will also have reduced incentives to engage in innovative strategies to attract and retain customers compared to Sprint and T-Mobile today…The cumulative effect of this merger, therefore, will be to decrease competition in the retail mobile wireless telecommunications services market and increase prices that consumers pay for mobile wireless telecommunications services.

According to several news reports, the move is unusual because state AGs usually coordinate with the federal justice department. Staff attorneys there reportedly want to block it, but the republican-appointed head of the anti-trust unit is on the fence. The lawsuit could delay the merger for months or even years.

One likely side effect is that the California Public Utilities Commission’s review of the merger will be further delayed, perhaps indefinitely. Under some circumstances, when reviewing mergers California law requires the CPUC to “request an advisory opinion from the attorney general regarding whether competition will be adversely affected and what mitigation measures could be adopted to avoid this result”. Since the lawsuit asks that T-Mobile and Sprint “be permanently enjoined from and restrained from carrying out the merger”, Becerra won’t be suggesting mitigation measures until the case is either decided by the court, or a settlement is negotiated. T-Mobile has argued that the particular circumstance involved – annual California revenue of half a billion dollars or more – doesn’t apply in this case, but so far hasn’t prevailed.

Wildfires burn in northern California, but proactive power cuts might have limited the damage

by Steve Blum • , , ,

Thomas fire 2018 utility lines 300

Pacific Gas and Electric did two rounds of proactive cuts over the weekend, in response to warnings of high fire danger due to weather conditions. It was no false alarm. Cal Fire’s online map shows more than a dozen wildfires in PG&E’s territory, including the Sand Fire in Yolo County that’s grown to at least 2,200 acres. There’s no basis to speculate why any of those fires began – that’s a question for later.

However, there is reason to suspect that it might have been worse if PG&E hadn’t cut off electricity to approximately 23,000 customers in Butte, Napa, Solano, Yolo (but not where the Sand Fire began) and Yuba counties. Before power could be turned back on, PG&E crews had to inspect 800 miles of lines and, according to a PG&E press release, they “found instances of damage to de-energized equipment caused by the extreme weather event”.

Shift California’s broadband subsidies from consumer upgrades to paying incumbents to serve public agencies, CPUC told

by Steve Blum • , , ,

There’s an idea on the table to make it even easier for big, monopoly model broadband service providers to tap into the taxpayer-funded telecoms piggybank created by the California legislature when it approved assembly bill 1665 a couple of years ago. AB 1665 rewrote the rules for the state’s primary broadband infrastructure subsidy program, the California Advanced Services Fund (CASF).

The latest proposal to remake CASF surfaced at a panel discussion organised by the California Public Utilities Commission in Sacramento a couple of weeks ago. One of the panelists, Sunne McPeak, the CEO of AB 1665’s sponsor, the California Emerging Technology Fund (CETF), signaled that she wants to expand CASF to include, among other things, funding “public safety” projects.

On the face of it, that sounds like a wonderful thing, but it would be a radical change for CASF. It means flipping the fund from building infrastructure and increasing broadband availability for everyone to, in effect, subsidising ongoing operating expenses for public agencies. In other words, CASF would be absorbed into the state’s information technology budget, whether or not (likely, not) extra money was put into it.

Even if CASF money was strictly limited to paying for construction costs, it would act as an operating subsidy by offsetting upfront installation charges, which are paid out of public agency budgets, either all at once or over time. It’s a golden opportunity for companies like AT&T that can shift resources and facilities away from less profitable homes and small businesses, and toward more lucrative institutional services in rural areas where they maintain monopoly control.

A remote fire station or a county fairgrounds might get wicked fast broadband service – as it should – but it would be a zero sum game with the local economy ending up on the losing side. The better way to do it is to upgrade rural broadband infrastructure, particularly middle mile fiber, that serves everyone, public safety agencies and ordinary people alike.

It might or might not be too late to roll this gift to major incumbents into a bill during the current legislative session. The workings of the California legislature are more opaque this year, with greater power to decide the fate of bills given to committee chairs who can, and do, collect cash from politically generous cable and telephone companies. It’s possible to slip special benefits into existing bills, or create brand new ones via the gut and amend process, as the legislative session winds down to its September conclusion.

This year, next year or the year after: keep a close watch.

AT&T, Charter, Comcast, Frontier, Digital Path challenge California broadband subsidy proposals

by Steve Blum • , , , ,

Santa barbara county pole 29oct2015

Of the 13 new projects proposed for construction subsidies from the California Advanced Services Fund (CASF) in May, only four are unchallenged: three proposed by Charter Communications in Riverside, San Bernardino and Ventura counties, and one proposed by a wireless Internet service provider in Sonoma County. The rest face objections from incumbent Internet services providers that want to protect their turf.

Ten challenges, plus a snarky letter from AT&T, were filed against broadband projects being reviewed for CASF grant eligibility by yesterday’s deadline. Under the rebooted CASF rules, an incumbent provider has, effectively, five weeks to submit evidence that it offers broadband service at the California legislature’s pathetic minimum of 6 Mbps download and 1 Mbps upload speeds in census blocks where a CASF infrastructure grant is requested.

None of the publicly distributed challenge notifications contain any details about incumbents’ broadband coverage or availability. That data is submitted separately to CPUC staff. But if you want to read the notices, you can find them here.

Charter Communications and Frontier Communications are challenging each other’s projects. Frontier is fighting Charter’s request for $277,000 to build 12 miles of new lines in Perris in Riverside County; Charter objects to Frontier’s $1.7 million project in the Taft area of western Kern County.

Charter also joined with Comcast and, sorta, AT&T to try to block a $5.3 million proposal from Cruzio to offer fiber-to-the-home service to 13 mobile home parks in Santa Cruz County. Comcast and Charter filed standard challenge notices and presumably provided valid broadband availability data to CPUC staff; AT&T sent a letter helpfully reminding CPUC staff to read the rules.

The most prolific challenger, though, is Digital Path, a Butte County-based wireless ISP that apparently wants to kill six proposals to build out broadband service to nearly a thousand homes in Lassen, Modoc and Plumas counties. It’s challenging Frontier’s $11.8 million DSL upgrade plan for the northeastern corner of California, and four FTTH and one FTTH/wireless hybrid projects, also totalling $11.8 million, proposed by Plumas-Sierra Electric Cooperative.

I’m collecting the 2019 CASF infrastructure grant proposals here. Information about the program is here. All the CASF-related documents I’ve collected in 2019, including the challenge notifications, are here.

The Central Coast Broadband Consortium assisted Cruzio with its Equal Access Santa Cruz grant application, and I was a part of that effort. I’m not a disinterested commentator. Take it for what it’s worth.

CPUC approval of T-Mobile-Sprint deal slipping to August, if then

by Steve Blum • , , , ,

Caltrans slow 2

Even if the federal justice department has an Ajit Pai-like epiphany about T-Mobile’s proposed takeover of Sprint and approves the deal today – not likely – there’s diminishing hope that California’s review of the merger will wrap up before August. And the possibility of a mid-September decision is growing.

There are three structural reasons for the delay. First, the CPUC only has one voting meeting scheduled for July, on the 11th, and there’s a four week gap between the commission’s last August meeting and its first one in September. Second, there’s a statutory minimum 30-day public review period between the publication of a draft decision and a vote by commissioners.

To make the 11 July 2019 meeting agenda, the CPUC administrative law judge managing the case, Karl Bemesderfer, would have to publish his proposed decision by next Tuesday. He could do that, but the third structural problem – the commission’s slow moving, adversarial and quasi-judicial decision making process – argues against it.

Two weeks ago, T-Mobile filed a motion to “advise” the CPUC about the deal it reached with the Federal Communications Commission. That set a two-week clock ticking for opponents to weigh in. Yesterday, the CPUC’s public advocates office (PAO) argued that commission decisions have to based on what’s in the official record, and not on news bulletins from Washington, D.C. The PAO’s response pointed out that T-Mobile took exactly that position earlier this year…

Joint Applicants’ [i.e. T-Mobile’s and Sprint’s] request to “advise” the Commission of their FCC filings is essentially the same as DISH Network’s January 29, 2019, Motion to Take Official Notice of Supplemental Authority, which requested that DISH’s FCC filings be considered in this proceeding. In response to DISH’s Motion, Joint Applicants argued that it “would cause prejudice to the Joint Applicants by enabling DISH to belatedly introduce arguments long after the relevant deadlines have passed, to which the Joint Applicants could have responded had the arguments been timely made.” On February 5, 2019, [Bemesderfer] denied DISH’s request, stating “…introducing what amounts to a legal pleading at this [point] is simply prejudicial to the applicants and so that motion is denied.” The arguments regarding prejudice and timeliness are equally applicable now.

A significant change in the way the merger is put together, such as divesting Boost Mobile or spinning off enough assets to create a new national mobile carrier, is something the CPUC ought to consider. Bemesderfer has allowed new information to be introduced, but has also given opponents a few extra weeks to respond to it. Add in the 30-day public comment period, and a decision might not land on the CPUC’s agenda until it meets on 12 September 2019.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

Picker quitting as CPUC president, as soon as Newsom picks a replacement

by Steve Blum • , ,

Picker 20may2019

Michael Picker will step down as president of the California Public Utilities Commission sometime in the coming weeks or months. He made the announcement at the end of last week’s CPUC meeting…

I’ve made comments, mostly joking, about retiring before I have to buy a new business suit, and more recently I’ve been thinking about retiring regardless of how shabby my clothing is. So you always can think of reasons of why you should stay and why you’re essential in the greater purpose of the organisation that you serve.

But to be honest with you it makes a great deal of sense for me to leave after the wildfire proceedings are voted out and the governor’s ninety day plan is released and then we have a plan for actually meeting our responsibilities in that plan. That’s been my conversation with the folks in the governor’s office and I made it clear that I’ll stay around until they’ve found the person that they want to replace and fill the position at the CPUC.

I’ll probably talk more about it as we get closer and they get closer – it could be as soon as July but probably more likely sometime after July. I can’t really say because I think they have to think long and hard about the needs of the organisation and the direction that they want to go to find a person to replace me. So thank you.

Picker was first appointed to the commission by then-governor Jerry Brown in 2014, and promoted to the top job a year later when Michael Peevey’s term as president expired. His retirement is not shocking news. He had a close, long term working relationship with Brown, but there’s no indication that he’s a member of governor Gavin Newsom’s inner circle.

On the other hand, it would be hard to find someone more qualified to be CPUC president than Genevieve Shiroma, Newsom’s first appointment to the commission earlier this year. Her resume includes an engineering degree, a career as a senior manager at the California Air Resources Board, and 20 years experience on both the Sacramento Municipal Utilities District board and the Agricultural Labor Relations Board, including terms as board president and chair, respectively.

The “folks in the governor’s office” might not need to think very long or very hard.

Wireline broadband service “is essential”, CPUC told. Again

by Steve Blum • , , ,

Cpuc enbanc 20may2019

The question of whether mobile broadband will replace wireline service reared its ignorant head again at a California Public Utilities Commission broadband discussion in Sacramento last week. Citing his wife’s preference for a mobile phone, CPUC president Michael Picker questioned the idea that “broadband to the home” is a good way of getting service to under and unserved communities, via the state’s primary broadband infrastructure subsidy program, the California Advanced Services Fund.

The panel’s best response came from Ana Maria Johnson, a program manager with the CPUC’s public advocates office. Echoing findings already made by the CPUC as well as the Federal Communications Commission, she said you need both…

A wireline broadband connection is essential. It’s not a substitute for your mobile broadband. When you have a wireline connection coming to your home you set up a wireless router where you can use your different devices – your laptop, you have your your desktop, you connect all the devices that you need. Students, in doing homework, need that wireline connection. They’re using a Chromebook, or they’re using a tablet, but they’re connecting through their wireless router on the wireline connection, because of the speed and capacity that they need to be able to do that work. Your mobile phone is essential as well, but it’s a complement to your wireline connection. So I don’t think it’s one or the other, but we know that the wireline connection is critical.

The idea that wireless networks can, via the magic of 5G and elsewise, provide all the capacity residential users need is a favorite talking point of mobile carriers, and particularly AT&T, which wants to rip out its rural copper networks. Depending on which stats you look at, in-home wireline data use is one or two orders of magnitude greater than mobile data consumption, and both continue to grow. Mobile carriers are pushing, and investing, as fast as they can just to keep pace with the demands of smartphones and other devices that can’t be reached any other way.

You need both.

California lawmakers bury bills to bury electric lines

by Steve Blum • , , , ,

In the wake of last year’s deadly wildfires, California lawmakers proposed legislation to reduce future risk by reducing electric line exposure. Those ambitions didn’t amount to much, though. Two bills to encourage utilities to move lines off of poles and place them underground, particularly in high fire risk areas were scrapped. A third one was neutered, but is still moving forward.

Senate bill 70 was passed unanimously by the senate and is awaiting its fate in the assembly. Authored by Jim Nielsen (R – Tehama), it’s less ambitious than first drafted. It establishes a “working group” to “promote the undergrounding of electrical infrastructure and the implementation of a statewide joint trenching policy”. Any money to pay for it, though, would have be found later. Originally, it included stronger language that would have required utilities to put lines underground when rebuilding or cleaning up after a wildfire.

That said, it could be useful. Anything that encourages cooperation between electric and telecoms companies, and local and state agencies, when trenching projects are planned, is a good thing.

SB 584, authored by John Moorlach (R – Orange) was killed behind closed doors by the senate appropriations committee. It began the most ambitious undergrounding bill, earmarking $400 million a year to pay for utility line relocation. It was subsequently watered down to “an unspecified amount”, and finally left behind when legislative leaders cleared the appropriation committee’s suspense file.

Assembly bill 281, by Jim Frazier (D – Contra Costa) didn’t go anywhere either. It died without a hearing in the assembly utilities and energy committee. New rules this year allow committee chairs to simply ignore legislation they, or the lobbyists that stuff cash in their pockets provide them with sage advice, don’t like. In its various forms it would have loosened environmental reviews of undergrounding projects and/or given the California Public Utilities Commission the job of requiring utilities to move lines underground in high fire risk areas.

Federal anti-trust staff want to block T-Mobile-Sprint merger, report says

by Steve Blum • , , , ,

Despite Monday’s raucous cheerleading from republican members of the Federal Communications Commission, the federal justice department is moving toward blocking T-Mobile’s proposed takeover of Sprint. According to a Reuters report, a staff review has concluded that allowing the two companies to combine, thereby reducing the competitive landscape from four nationwide mobile carriers to three, would do too much damage to the telecoms marketplace…

The U.S. Justice Department’s antitrust division staff has recommended the agency block T-Mobile US Inc’s $26 billion acquisition of smaller rival Sprint Corp, according to two sources familiar with the matter…

The final decision on whether to allow two of the four nationwide wireless carriers to merge now lies with political appointees at the department, headed by antitrust division chief Makan Delrahim…

One critic of the deal, Gene Kimmelman, president of Public Knowledge, the nonprofit public interest group, said top brass in the Justice Department’s antitrust division do not generally overrule the staff but they occasionally do.

“I’d be extremely surprised if the front office overruled this,” added Kimmelman, a veteran of the Obama Justice Department.

The federal justice department’s opinion will matter in California, too. The substantive objection to the deal made during the ongoing California Public Utilities Commission review is, likewise, that it’s anti-competitive. The economic analysis done by the CPUC’s public advocates office reaches that conclusion using the DOJ’s methodology. T-Mobile’s rebuttal relies on novel techniques developed by the “world renowned” economists it hired to make its case. Assuming the Reuters report is correct, they did not impress federal anti-trust enforcers.

A final decision by the DOJ is expected to come within a month or so. The CPUC’s review will probably run longer, for a lot of reasons, including that it might not be a bad idea to wait until a decision is made at the federal level. That could mean a CPUC vote won’t come until August, at the earliest.

Pai jumps in on T-Mobile’s side, CPUC and federal justice department not cheering Sprint deal yet

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile threw a hail mary pass to Federal Communications Commission chair Ajit Pai yesterday, hoping to move its proposed merger with Sprint over the regulatory approval line. Pai caught it and started running, but could be tackled short of the end zone by the justice department. And the California Public Utilities Commission’s review is still a whole ’nother ball game.

Yesterday morning began with Pai announcing that new promises from T-Mobile about divesting a down market subsidiary – Boost Mobile – and expanding rural wireless coverage led him to “believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it”. One colleague, commissioner Brendan Carr, who sometimes seems to thinks he’s still a private attorney representing mobile companies, joined in, saying the deal will let the U.S. “notch another win in the global race to 5G”.

Awesome stuff.

Unfortunately for T-Mobile and its republican-appointed cheering section at the FCC, not everyone agrees. Commissioner Jessica Rosenworcel, a democrat appointee, tweeted her skepticism: “we’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers…I have serious doubts”.

So does the federal justice department, at least according to a story by David McLaughlin in Bloomberg

The Justice Department is leaning against approving T-Mobile US Inc.’s proposed takeover of Sprint Corp., according to a person familiar with the review, even after the companies won the backing of the chairman of the Federal Communications Commission.

The remedies proposed by the wireless carriers earlier Monday don’t go far enough to resolve the department’s concerns that the deal risks harming competition, said the person, who asked not to be named because the investigation is confidential.

The California Public Utilities Commission is also reviewing the merger. T-Mobile wasted no time yesterday telling the administrative law judge (ALJ) managing the case about the FCC’s epiphany. The immediate effect is to add another layer of complexity and, perhaps, more time to an already complicated and lengthy case. Californian opponents of the merger get time to make an argument against accepting the FCC’s T-Mobile’s manifesto or to ask for a procedural detour to delve into it. Enough time to all but guarantee that a draft decision won’t be published in time to make it onto the agenda for commission’s last meeting in June.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.