Tag Archives: cpuc

Comcast reveals plan to pick a juicy cherry in Madera County

by Steve Blum • , , , ,

Tesoro viejo

Comcast wants permission to offer phone service to a new Madera County development in Ponderosa Telephone’s territory. In a required public disclosure of a private meeting between a California Public Utilities Commission staffer and a lobbyist and a lawyer for Comcast, the company revealed that it is targeting Tesoro Viejo, a master planned community of 5,200 upscale homes on two and a half square miles of rural land in southern Madera County.

According to the filing, Comcast says that if it offers phone service in the development, it would create “additional consumer choice” but “would have limited effect on Ponderosa and its draw on [a rural telco subsidy] fund”. As a matter of general policy, the CPUC doesn’t authorise competitive phone service in areas where small, heavily subsidised rural telcos, like Ponderosa, operate. That policy is under review, but Comcast doesn’t want to wait, presumably because it’s already put out a press release saying it will provide…

A wide range of innovative and advanced technology solutions, including high speed broadband, WiFi, video entertainment and “smart home/smart business” security/automation offerings, to homes, businesses and public spaces throughout the new Tesoro Viejo master-planned community.

Telephone service isn’t specifically mentioned – it would make for an awkward conversation at the CPUC – but the press release’s boilerplate includes phone service in the list of Comcast’s otherwise unregulated offerings.

Ponderosa wants to block Comcast, arguing that the CPUC already has concerns about competing telephone service leading to higher subsidy costs in rural areas, and if Comcast is allowed to pursue its plan, “the cherry-picking problem will be exacerbated”.

Comcast’s claim of a “limited effect” on CPUC subsidy requirements is disingenuous. The effect will be limited to the relatively affluent and densely packed customers in the development, who would otherwise be paying Ponderosa for phone and, perhaps, broadband, service. The CPUC will still have to help keep Ponderosa afloat so that its less well off and more scattered rural customers can continue to be served. Less revenue from the most profitable customers means more subsidies than would otherwise be required.

On the other hand, Comcast is correct when it says that allowing it to compete with Ponderosa will lead to greater consumer choice. At least for consumers who 1. have sufficient income to meet its revenue targets, and 2. are close enough together to minimise its cost and maximise its profit.

The CPUC has a hard decision to make: limit consumer choice and the need for taxpayer subsidies for all, or pick up the increased tab for rural residents while their more new, affluent neighbors reap the benefits of an open market. It’s a question that should be deliberatively answered at a top policy level, and not ad hoc in response to a company’s target of opportunity.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

Comcast seeks CPUC blessing to compete with rural telco, but only for not so rural customers

by Steve Blum • , , , ,

Sierra 625

Comcast says it’s striking a blow for telecoms competition, Ponderosa Telephone says no, it’s cherrypicking business customers at the expense of rural residents. At issue is Comcast’s request to expand the area in which it’s authorised to offer telephone service to include the service territory of Ponderosa Telephone Company, a small, incumbent local exchange carrier (ILEC) that serves parts of Fresno, Madera and San Bernardino counties. Presumably, Comcast is eyeing Fresno and/or Madera counties, where both it and Ponderosa operate.

Historically the California Public Utilities Commission, which regulates telco operating authority, has protected small, rural phone companies from competition. That’s not because of sentimental attachment. Those small telcos serve communities that aren’t sufficiently lucrative markets to attract big incumbents like AT&T and, consequently, are heavily subsidised. As Ponderosa points out in its protest, the CPUC previously concluded that allowing competitors to pick and chose their customers in rural communities would “result in the small ILECs losing revenue and needing to seek a larger draw from the [telephone subsidy] program”.

With no apparent sense of irony, Comcast claims to be fighting for a competitive telecoms market, reminding the commission that it has “found that the presence of competition in local telecommunications markets leads to efficient pricing, improved service quality, expanded product and service capabilities, greater reliability, and increased consumer choice”. But Comcast’s application also says that it won’t expand its footprint and will only increase service in areas where it presently offers video service – areas that are densely populated enough to support its urban/suburban business model. This isn’t about upgrading service or infrastructure in truly rural communities.

Comcast is correct about the benefits of competition, despite going to great expense to avoid facing it elsewhere. But Ponderosa’s point is also true. The more it relies on revenue from remote and economically deprived communities, the more taxpayer subsidies it will need to continue to serve them.

The dispute is formally about voice telephone service, but it involves broadband policy too. Both Comcast and Ponderosa are retail Internet service providers, who rely on privileges granted by state law – either as telephone or video companies – to build wireline infrastructure in the public right of way and access wholesale services. Changing those privileges and protections will also change the economics, and consequently the availability, of broadband service in Ponderosa’s territory.

Do you limit the choices available to homes and businesses in places where revenue runs thicker in order to reduce the subsidies needed to maintain baseline service in more sparsely populated communities? Or do you maintain the status quo – in service as well as public support – for all?

That’s the choice the CPUC has to make, and it comes as no surprise. The commission is in the process of reexamining its telecoms competition policy in rural areas, as both Comcast and Ponderosa point out. Ponderosa argues, correctly, that this is a major policy decision and shouldn’t be made by default in a narrow, administrative proceeding. Near term, the CPUC should reject Comcast’s application, but long term, it has a difficult problem to solve.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

T-Mobile’s merger with Sprint could get even closer scrutiny in California

by Steve Blum • , , , ,

Californian opponents of T-Mobile’s proposed takeover of Sprint want more hearings and another round of written evidence and rebuttals, before the California Public Utilities Commission moves ahead with approving or rejecting it. Prior to last week’s hearings, the CPUC in-house consumer advocacy unit – the public advocates office (PAO) – asked the administrative law judge hearing the case to, in effect, slow the proceeding down to give them time to review four thousand pages of testimony and evidence that T-Mobile and Sprint dropped on them. The PAO is recommending that the CPUC not allow the merger to take place.

After the hearings, other opponents – two private consumer advocacy groups, TURN and the Greenlining Institute, and the Communications Workers of America (CWA), a telecoms labor union – endorsed the request for more testimony and hearings. As CWA put it

Justifying an application for the first time with 4,000 pages of “rebuttal testimony” is entirely improper and violates intervenors’ due process rights. The Commission has held that “[p]roviding the basic justification in rebuttal is unfair, since parties are not generally given the opportunity to respond to rebuttal with testimony of their own.”

Sprint and T-Mobile naturally don’t agree. They submitted more than 250 pages of additional material that argues that there was nothing in the 4,000 pages that was particularly new or didn’t directly respond to points previously made by opponents to the deal. The companies particularly object to adding more hearings and filings because doing so “would substantially disrupt the schedule adopted by the Commission – adding at least six weeks of unjustified delay”.

The Federal Communications Commission is also reviewing the proposed merger. Assuming there isn’t another federal government shutdown, it’s scheduled to reach a decision by the end of May. Even if the CPUC’s review remains on its original track, it could run even longer than that.

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

Crown Castle, PG&E punt fiber attachment dispute back to CPUC

by Steve Blum • , , ,

Crown Castle and PG&E failed to reach agreement on pole attachment terms, as directed by the California Public Utilities Commission administrative law judge (ALJ) arbitrating their ongoing dispute. Instead, PG&E submitted its standard pole space leasing agreement, and Crown Castle submitted the same, with several modifications that make it more to its liking.

The heart of their dispute is that Crown Castle wants to buy attachment space on poles, and PG&E just wants to lease it to them. Incumbent telecoms companies, like AT&T, can buy space, but they have to buy all of the communications zone, which is section of the pole, typically three or four vertical feet, that’s suitable for attaching telecoms cables. Once they buy the whole zone, they’re then responsible for leasing out attachment space by the foot to competitive telecoms companies like Crown Castle.

Crown Castle isn’t interested becoming the telecoms landlord on PG&E poles, and there’s some doubt as to whether CPUC rules allow them to do it in the first place. The ALJ heard both sides arguments, as well as comments from other interested comments, and decided that there’s nothing in the CPUC rules that says PG&E has to sell pole attachment space by the foot.

So now Crown Castle is telling the ALJ that 1. commissioners should disregard her ruling and give it what it wants anyway, and 2. if they don’t do that, they should change PG&E’s standard pole space leasing agreement to, among things, create a 45 day shot clock for PG&E to approve or reject a request to attach to a particular pole. If PG&E has “provided no response” within that time, Crown Castle could attach its fiber at will. It also wants to know when other companies ask to lease any remaining space, wants to be able to work on poles without notifying PG&E and doesn’t want PG&E to rearrange any of its cables without its permission. Which add up to many of the privileges that come with pole space ownership, without the responsibility of managing leases with other telecoms companies.

PG&E plans faster, wider power cuts during high fire threats in 2019

by Steve Blum • , , , ,

Pacific Gas and Electric will cut off electricity more automatically, more thoroughly and over a wider area when “extreme fire risk conditions” are present. That’s one of the wildfire risk mitigation measures it promises to implement this year.

Along with five other privately owned Californian electric utilities, PG&E submitted its wildfire prevention plan to the California Public Utilities Commission yesterday. It says it will inspect more lines, cut down more trees and harden more equipment in the coming months and years, as well as aggressively turning off power when the threat of wildfires is high. The proactive power cuts will be greatly expanded, to include…

  • 25,200 miles of low voltage distribution lines, up from 7,100 miles.
  • 5,500 miles of transmission lines, up from 370 miles. Instead of limiting it to lines carrying 70 kilovolts or less, lines of up to 500 kilovolts will be cut off if necessary.
  • Potentially 5.4 million customer premises, up from 570,000 customers.
  • Areas that face an “elevated” fire threat, in addition to those that face an “extreme” one.

PG&E also says it will streamline “decision criteria to reduce the level of judgment in the criteria to the extent feasible”. In other words, reduce the opportunity for managers to dither over whether or not to cut power.

One result is predictable and entirely acceptable: more PG&E customers will complain because their power is off. That happened last year, when PG&E proactively cut power in some northern California communities in October. It’s not a huge leap of logic to suppose that the backlash made managers more reluctant to turn off the juice in November. High winds and dry conditions were present once again, and led to the Camp Fire in Butte County, which killed 86 people and destroyed the town of Paradise.

A PG&E transmission line is suspected of sparking that fire. Under the new plan, it could have been turned off – it was in a high risk area, conditions were extreme, and it was 110 kilovolts (within the new limit but over the old one) – and probably would have been if the decision had been based on automatic criteria rather than a subjective judgement call.

The plan will be reviewed by the CPUC and by the federal judge that’s supervising PG&E criminal probation. Judge William Alsup has been sharply critical of PG&E and suggested it should do many of the things proposed in the plan, although not all his suggestions were included in it.

The wildfire prevention plan notwithstanding, yesterday was not a good day for PG&E. A natural gas line exploded in San Francisco and set several buildings on fire. There were no reports of injuries. It was apparently caused when a fiber optic construction crew hit a gas line. Whenever underground construction work is done, the contractor is supposed to notify PG&E and other utilities, which are then responsible for coming out and marking where their lines are. That’s a job that PG&E is accused of shirking in the past by the CPUC. Responsibility for yesterday’s blast is yet to be determined.

Wildfire mitigation plans
Bear Valley Electric Service
Liberty Utilities
Pacific Gas and Electric
Pacificorp
San Diego Gas and Electric
Southern California Edison

T-Mobile tries to make California merger case with soft engineering and hard hype

by Steve Blum • , , , ,

Ebbc mobile broadband availability 2012

T-Mobile and Sprint claim that if they are allowed to merge, then California will see “enormous public-interest benefits”. That’s what the companies told the California Public Utilities Commission in testimony submitted as part of the regulatory review of their proposed deal. That claim is founded in large part on T-Mobile’s description of a glorious 5G future that includes download speeds of up to half a gigabit and coverage that reaches deep into the most rural areas of California.

The catch is that this wonderfulness is “projected” and not promised. Even if the infrastructure is built, T-Mobile’s president, Michael Sievert, is careful to add a footnote in small print that reminds us…

Average data rate is not equivalent to the actual user experience. The user experience will be affected by a number of variable factors, including received signal strength, location of the mobile device and base station, and whether the device is in motion, among others.

His testimony is supplemented with an impressive collection of county by county maps offered by his chief technology officer, Neville Ray, that show how much better 5G service will be if T-Mobile can scoop up Sprint. It appears that Ray is assuming that Sprint won’t grow much – his projections for Sprint’s 5G coverage area look a lot like its current 4G and below footprint.

The real problem is that this sort of modelling produces coverage predictions that far outstrip actual results. An example is shown above. It’s two mobile broadband coverage maps for the east San Francisco Bay Area posted by the CPUC in 2012. The one on the left is an aggregate of the availability reports generated by the four major mobile carriers using predictive modelling, the one on the right is based on actual mobile download tests conducted by the CPUC, and then run through the same process. The carriers claimed nearly everything was green, the color of good and great. The CPUC’s measurements showed that service in most of the region is brown to yellow, the color of, well, you get the picture.

Oral testimony in the case begins today in a CPUC courtroom in San Francisco. We can only hope that it won’t be as larded with marketing hype as T-Mobile’s and Sprint’s written statements.

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

T-Mobile-Sprint merger gets a hard look in California this week

by Steve Blum • , , , ,

California’s review of the proposed merger of T-Mobile and Sprint goes into high gear on Wednesday. The California Public Utilities Commission will hold a hearing to allow lawyers for the two companies and the organisations that oppose the deal to cross examine experts, and others, who submitted written testimony about it. Three days have been blocked out, although it might not go that long.

The best supported and most coherent opposition to the merger comes from the CPUC’s in-house watchdog unit, the public advocates office (formerly known as the office of ratepayer advocates). It submitted lengthy arguments and a tall stack of data that shows why tipping the mobile broadband market into oligopoly status is a very bad idea

The Commission should deny the proposed transaction because of the irreparable damage to competition in the wireless market and the low-income customer markets as well as the absence of specific, measurable, and verifiable benefits to the merger. The loss of a competitive player in these markets would create significant risk of parallel conduct and higher pricing for consumers. This pricing risk is demonstrated by the two largest players in the wireless market today, AT&T and Verizon, which generally offer higher-priced plans than T-Mobile and Sprint. New T-Mobile would rival or exceed these companies in market share, creating a strong incentive for oligopolist behavior. New T-Mobile would also comprise nearly 60 percent of the wireless prepaid market that predominantly serves low-income customers, pacing excessive market power under the control of a single company and creating a virtual monopoly over these services. Because [T-Mobile and Sprint] are not under [traditional wireline telephone rate] regulation, protections cannot be implemented that are adequately enforceable and verifiable to address these risks.

Just so. The CPUC has little authority over mobile carriers, and none where mainstream consumer pricing is concerned. It can impose conditions on any approval of the merger – the public advocates office suggests some as a fall back position – but those would provide only temporary and limited protection to Californian consumers.

The best way – the only way in this case – to fix a problem is to not cause it in the first place.

Other groups with a stake in the outcome have also jumped in. The California Emerging Technology Fund (CETF) and the Greenlining Institute expressed concern about the proposed merger’s impact on low income and minority communities, but didn’t particularly object to it so long as money and other benefits were required as mitigation. It’s worth noting that CETF’s primary source of funding is money extracted from companies that have had mergers or similar consolidations under review at the CPUC, and Greenlining relies on so called intervenor compensation from the CPUC, and companies appearing before it, as a reward for raising such issues.

The Communications Workers of America also has a dog in the fight. At this point, the union wants the merger blocked, claiming it would “would result in the loss of 3,432 jobs in California”, but it also left the door open to a settlement. In the past, CWA has opposed telecoms mergers, but then flipped and supported them once its needs were met.

T-Mobile and Sprint naturally objected to all these statements, filing detailed rebuttals, and scheduling time for cross examination at this week’s hearing. I intend to write a future post about those rebuttals, but if you want to read them yourself, you can find it all here:

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

CPUC judge wants complex pole attachment issues to be even more complicated

by Steve Blum • , , ,

Messy fiber attachments

Utility pole associations, which manage joint use of poles by electric utilities – privately and municipally owned – and telecoms companies of all sorts, should be regulated by the California Public Utilities Commission, according to a ruling by an administrative law judge (ALJ). The ruling focuses on a narrow dispute between two companies: big picture, it’s little more than advice to CPUC commissioners. But it’s bad advice.

The ruling concerns a dispute between Pacific Gas and Electric, which owns poles throughout northern California, and Crown Castle, which is an independent, competitive telecoms company that owns and leases fiber routes, and builds and operates cell sites. PG&E offered to lease space to Crown Castle on its poles, as it’s required to do by the CPUC. Crown Castle said it would prefer to buy outright a foot’s worth of space on PG&E’s poles, so it can get about its business of building fiber networks without worrying about keeping a landlord happy. AT&T, and other incumbent telephone companies, buy space on PG&E’s poles, but they buy the whole communications zone, which can be several feet of pole space. They are then responsible for leasing out attachment space by the foot to independent companies like Crown Castle, also as required by the CPUC.

Crown Castle didn’t want to pay for and be responsible for the entire communications zone on PG&E poles, and if they did, it’s not entirely clear that they would have the same obligation as AT&T and other incumbents to lease space to other telecoms companies. So Crown Castle and PG&E ended up in a stalemate. To resolve it, Crown Castle asked the CPUC to step in and arbitrate the dispute. The ruling issued yesterday by ALJ Patricia Miles says that PG&E is meeting its obligations by offering to lease attachment space on poles and Crown Castle has no particular right to buy it by the foot.

But the ruling goes one step further and says that procedures and contracts developed by joint pole associations – the Northern California Joint Pole Association (NCJPA) and the Southern California Joint Pole Committee – need to be approved in advance by the CPUC…

There can be no doubt that disputes such as the present one will arise again. For this reason, if NCJPA is going to continue to facilitate sale and purchase transactions pertaining to public utility poles among its member entities, the Commission should require NCJPA to submit (before implementation) for Commission review and approval…its agreements, forms, procedures and handbooks which concern the transfer, sale, lease, assignment, mortgage, or encumbrance of public utility poles. Such transactions, which are being handled by NCJPA on behalf of its members, are clearly within the Commission’s jurisdiction.

The ALJ’s report amounts to a suggestion for commissioners, who would have issue a formal decision requiring joint pole associations to get advance approval for pole attachment deal terms. If commissioners go down that road, it will be a lengthy and contentious process. Not all utilities that own and/or attach to poles are under CPUC jurisdiction. An association of municipal electric utilities objected to a draft version of the ALJ’s ruling, pointing out that the CPUC has no authority over them and shouldn’t try to tell them how to manage their own poles.

In the meantime, the ALJ’s ruling will be widely read and could influence similar one-on-one disputes between independent telecoms companies and electric utilities.

Yesterday’s ruling affirmed PG&E’s current practice, and in that regard offered a bit of clarity to the already horribly complex problem of how utility pole routes are shared and managed in California. But by threatening to extend CPUC oversight to joint pole associations, the ruling adds an unneeded and unwelcome layer of uncertainty.

The CPUC has ongoing proceedings that involve a number of issues related to pole access and, because of PG&E’s bankruptcy filing and past criminal conviction, federal judges will have a lot to say about it. The California legislature and civil courts are also involved because of the dozens of deaths and billions of dollars worth of damaged caused by fires started by electric lines. Now is not the time to drag even more players into this mess.

More documents involving the PG&E – Crown Castle dispute are here.

Federal judge slams PG&E and CPUC for deadly wildfires

by Steve Blum • , , , ,

A federal judge lambasted Pacific Gas and Electric’s and the California Public Utilities Commission’s wildfire prevention efforts, and the California supreme court allowed a key wildfire cost sharing decision by the CPUC to stand yesterday. That follows PG&E’s bankruptcy filing on Tuesday.

Judge William Alsup is PG&E’s probation officer. The corporation was convicted of criminal misconduct following a deadly natural gas line explosion in San Bruno in 2010, and it is accountable to Alsup for how well it’s complying with the penalties handed down, which include good behavior requirements. Alsup thinks PG&E is a danger to the public, and he doesn’t have a high opinion of the CPUC’s efforts to rein it in. According to a story in the San Jose Mercury News by Matthias Gafni and John Woolfolk, representatives from both PG&E and the CPUC tried to convince Alsup that his proposal to require PG&E to inspect more than 100,000 miles of electric lines before this summer’s fire season begins is a bad idea. He wasn’t buying any of it…

“Does a judge turn a blind eye and let PG&E continue what you’re doing, let you keep killing people?” U.S. District Judge William Alsup said inside the San Francisco courtroom. “Can’t we have electricity that is delivered safely in this state?”…

The judge also questioned the California Public Utilities Commission, the state agency charged with regulating PG&E and other investor-owned utilities.

“How did it happen so many fires occurred under your regulations?” Alsup asked a representative of the state regulator. “It sounds harsh, but that’s what the people of California deserve to know, how did that happen?”

After three intense hours, Alsup told the parties he would rule later, but the state of California did not have time to waste with another fire season approaching.

Alsup hinted he might require PG&E to use the same, aggressive power cutting tactics that San Diego Gas and Electric uses when wildfire danger is high. SDG&E began proactively de-energising lines after wildfires in 2007 that it and Cox Communications were responsible for starting.

Those fires were costly to SDG&E, and yesterday the California supreme court refused to hear its appeal of a CPUC decision to not allow it to pass on some of its liability costs – $379 million – to customers.

California’s utility costs, regulation in play as PG&E files for bankruptcy

by Steve Blum • , , , ,

Pacific Gas and Electric filed for bankruptcy protection yesterday, beginning a process that could lead to significant changes in how electricity and natural gas service is delivered in northern California, and how much it costs. It also has the potential for changing the cost sharing calculations that determine how much telecoms companies pay to share poles and conduit with PG&E.

Assuming the federal court allows the bankruptcy to go forward – not a safe assumption according to analysts quoted by Barrons – private contracts and some regulatory directives by the California Public Utilities Commission could be, um, reimagined. PG&E hinted at what might change in its press release announcing the filing

As part of the filings, PG&E also filed various motions with the Court in support of its reorganization, including requesting authorization to continue paying employee wages and providing healthcare and other benefits. In the filings, PG&E also asked for authority to continue existing customer programs, including low income support, energy efficiency and other programs supporting customer adoption of clean energy. PG&E expects the Court to act on these requests in the coming days.

Translation: if you work for us, don’t make assumptions about your paycheck or benefits package for the time being, and if you’re relying on rents extracted by the CPUC or California legislature, make contingency plans.

It’s not time to push the panic button – an experienced bankruptcy judge won’t start slashing and burning – but it isn’t the time to rely on old certainties either. A new U.S. marshal just rode into town, and hasn’t decided whether the local sheriff is the solution or the problem.

Monday, in an emergency meeting held amidst a crowd of raucous protestors, the CPUC gave PG&E permission to borrow more money, which it will have to do to pay for operations during the bankruptcy proceedings – so called debtor in possession financing.

The CPUC also filed a brief with the federal judge overseeing PG&E compliance with criminal sanctions resulting from the deadly San Bruno natural gas explosion in 2010. According to Politico, the CPUC objected to a hugely expensive electric line inspection throughout PG&E’s territory proposed by judge William Alsup, arguing “the proposal interferes with their oversight and would endanger public safety”. It’s arguable whether Alsup’s idea would help or hinder public safety, but there’s no question that it shoves the CPUC aside. Which might be why he’s proposing it: CPUC oversight did not prevent the San Bruno explosion or the Camp Fire or any of the other fires, deadly or otherwise, that PG&E is implicated in.