Tag Archives: cpuc

T-Mobile, CETF slammed for $35 million deal to win approval of Sprint merger

by Steve Blum • , , , ,

Your winnings sir

A $35 million payoff that, um, inspired the California Emerging Technology Fund (CETF) to “enthusiastically and wholeheartedly support” T-Mobile’s acquisition of Sprint was lambasted yesterday by organisations that still oppose it. The California Public Utilities Commission’s Public Advocates Office (PAO) and two advocacy organisations, TURN and the Greenlining Institute, filed objections to the agreement.

One issue in dispute is whether it is a formal settlement, which has to be negotiated and reviewed under CPUC rules, or something else. Which is what T-Mobile and CETF seem to think it is, because they didn’t follow those rules, according to the filings.

But the substance of the deal also came under fire. The objections noted, as I did last week, that T-Mobile’s promises of good behavior and grand public benefits were either recycled (in a somewhat melted form) from earlier statements or were so vague and subject to T-Mobile’s discretion as to be no promise at all.

The single significant new commitment in the agreement was $35 million, to be paid to CETF over five years by T-Mobile. The money is supposed to go towards what the contract calls “digital inclusion policy and programs”, with $22 million earmarked for various non-profits and public agencies, in a manner to be determined by CETF and T-Mobile. CETF keeps the remaining $13 million to spend on its ongoing operations.

The PAO asked the commission to reject the deal. Noting that CETF “receives a disproportional amount of funding” that “exceeds any commission approved operating costs percentage”, the PAO said it…

…has determined that the agreement is not in the public interest or reasonable on its face…

The Agreement requires New T-Mobile to provide $35 million over 5 years to CETF’s “Digital Inclusion Policy and Programs” projects without any basis in the record to evaluate, verify, and monitor these programs to ensure that the amount of $35 million is appropriate. While the Public Advocates Office strongly supports efforts to close the digital divide, as described above, additional hearings are necessary to investigate these proposals. The record does not sufficiently describe what these programs do, the amount of money necessary to properly fund them, who operates them, or any other details about them.

CETF and T-Mobile have ten days to respond. One possible outcome is that the administrative law judge managing the CPUC’s review could order new hearings to delve into the details of the agreement. That has the potential to further delay an inquiry that has been extended by at least a couple of months because of earlier cheap lawyer tricks by T-Mobile.

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

Comcast tells CPUC it must say yes to rural cherrypicking because it can’t say no

by Steve Blum • , , , ,

Paicines pole route

Comcast took its best shot at explaining why it should be allowed to jump the queue and start competing against Ponderosa Telephone before the California Public Utilities Commission decides what the future will be for small, rural telephone companies. The answer: because the developer wants us and the Federal Communications Commission says we can.

The dispute centers on Tesoro Viejo, an upscale master planned community under construction in the foothills of Madera County. Comcast claims the developers offered Tesoro Viejo as a cherry ripe for picking, and it wants to oblige them. There’s nothing preventing Comcast from providing video and broadband service, but if it wants to bundle in telephone service and offer the full triple play, it needs the CPUC’s permission.

That’s because Ponderosa Telephone serves the foothills of Madera and Fresno counties, as well as more remote communities further up in the Sierra Nevada. It’s one of ten small, highly subsidised telephone companies that serve deeply rural areas of California, the edges of which are now right in the path of exurban development. The CPUC protects those rural telcos from competition in an effort to minimise the amount of taxpayer dollars it takes to keep them afloat.

That policy is under review, but Comcast doesn’t want to wait. Ponderosa, on the other hand, doesn’t want to be nibbled to death. It argues that top level policy has to be decided first “because competition raises public policy questions with a collective impact on stakeholders throughout the state”.

It’s a tough question. Comcast is an unlikely champion. It moves quickly to kill potential competition whenever its territory is threatened. But regardless of how disingenuous it’s being, Comcast is correct in saying that more choice brings greater benefits to consumers. Once its process is complete, the CPUC might trim, or even eliminate, the privileges that rural telcos enjoy.

Might.

That’s a decision that needs to be taken deliberately and with the full consequences for all – rural residents, exurban immigrants, California taxpayers – in mind. Doing it reactively in response to rich targets of opportunity is a disservice to everyone.

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

T-Mobile, Sprint scramble to keep merger deal alive in California

by Steve Blum • , , , ,

The odds of T-Mobile getting permission from federal and California regulators to buy Sprint are getting longer. The Wall Street Journal is reporting that the federal justice department is reluctant to approve the deal in its current form. That has a familiar ring to it – it was the same kind of antitrust concerns that led to the justice department and Federal Communications Commission killing Comcast’s bid to take over Time Warner’s cable systems and do market consolidating swaps with Charter in 2015.

T-Mobile seems to be trying to pick up the pieces in California. Its lawyers filed a notice yesterday saying that company representatives will meet with California Public Utilities Commission commissioner Martha Guzman Aceves next week. They didn’t say what they planned to talk about, but it’s not much of a reach to suppose they’ll try to divert attention away from the microeconomic, antitrust harm the deal will do to all Californians, and towards the special benefits that a few have managed to extract for themselves.

Those megabuck spiffs will evaporate if the deal collapses. The CPUC is reviewing it, with a long list of issues to address. A decision is at least two months away, and likely more.

The Journal’s story also kicked off a new round of damage control by the companies and speculation on what a deal that would satisfy anti-trust concerns would look like. A story in Investor’s Business Daily speculated that some kind of hybrid wholesale model, where both companies retail service via a consolidated network, might fly.

The CEOs of T-Mobile and Sprint jumped on Twitter to make what amount to non-denials.

John Legere, T-Mobile’s chief, issued a tightly spun response in which he objected to “the premise of this story, as summarised in the first paragraph”. Translation: the facts reported in paragraph two, three, four and more are true. Marcelo Claure, CEO of Sprint, simply said the article “is not accurate”. As in, I wouldn’t have put it quite that way.

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

Utilities shouldn’t bear damage costs alone, California wildfire report recommends

by Steve Blum • , , , ,

California governor Gavin Newsom’s wildfire “strike force” published its findings on Friday. The report offers suggestions for preventing, or at least reducing, catastrophic wildfires, and for paying for the damage when they do happen. The short answer is spread the costs around.

One of the central concepts floated by the report is to change California’s strict liability standard, which requires electric and telecoms utilities to pay for all wildfire damages if their equipment is involved in starting a fire, whether or not they did something wrong. Instead, the report suggests moving to a “fault-based standard”, where “utilities pay for damage if caused by their misconduct”. If there was no bad behavior on the part of a utility, though, the cost would shift to “insurance companies and uninsured or underinsured property owners”.

Another idea is to have all investor owned electric utilities, and possibly municipal ones, to pay into a fund that would act as an insurance policy of sorts by covering catastrophic wildfire costs. One issue is that the shareholders and ratepayers of lower risk utilities, such as San Diego Gas and Electric, would, in effect, subsidise those served by utilities with higher wildfire risks, such as Pacific Gas and Electric – assuming that a post-bankruptcy PG&E can even afford to participate.

Part of the solution, the report says, is to take advantage of the “opportunity to build a new, responsible, and accountable utility for northern California” created by the bankruptcy proceeding. Although the report mentions breaking up PG&E into smaller regional companies or municipal utilities, it doesn’t say how that can be accomplished, given that federal judges – bankruptcy and criminal – will be making those decisions for the time being. The only suggestion is for the state to “actively monitor and appear in the bankruptcy proceeding” and “be heard”. So far, that seems to be having little effect.

There’s more. Besides the obligatory nod toward cutting greenhouse gas emissions, the report also outlines some obvious measures: reduce wildland fuel loads, improve emergency planning and education, and upgrade firefighting technology and manpower. And it takes a welcome swipe at the predatory bar, listing “attorneys representing victims” as stakeholders who need to bear some of the burden of wildfire damages, presumably by reducing the “substantial” cost of legal fees and expenses.

With a $35 million side deal, CETF tells CPUC it backs T-Mobile’s takeover of Sprint

by Steve Blum • , , , ,

T-Mobile is getting a little help from a new Californian friend. In addition to a steady trickle of support letters sent to the California Public Utilities Commission by groups that are not well known for broadband advocacy or telecoms expertise, T-Mobile now has the California Emerging Technology Fund (CETF) on its side as it tries to gain approval for its takeover of Sprint.

CETF will leave its seat on the opposition side of the table and “enthusiastically and wholeheartedly support” the merger. In exchange, T-Mobile will pay CETF $35 million over five years “to sustain its core mission to close the digital divide in California and to promote digital inclusion policy and programs”. $22 million of that is earmarked for grants to schools, non-profit organisations and local governments to run various “digital inclusion” programs. The remaining $13 million – better than $2.5 million a year – goes into CETF’s “core” budget – if the T-Mobile-Sprint merger is eventually completed.

There’s more to the deal, but once it’s boiled down, it’s not a lot more. In the contract, T-Mobile repeats commitments already made to the Federal Communications Commission, the CPUC and, it seems, “other intervenors in the CPUC” review of the merger. Other deal points, such as continuing Sprint’s lifeline program for low income households and spending a modest amount advertising it, sound a lot like business as usual for a mobile carrier.

There are a few spiffs, like a wooly promise to add 5G capability at ten county fairgrounds around the state and to make “good faith efforts” toward a “goal” of signing up hundreds of low income households to broadband and telephone service. For the most part, though, the final say in when, where and how anything will be done rests with T-Mobile. They’ll mostly have to “consult” with CETF and others, and file periodic reports that, mostly, won’t be made public.

This kind of agreement is a common feature of CPUC telecoms merger reviews. CETF raised objections to Charter’s takeover of Time Warner Cable’s systems and Frontier’s acquisition of Verizon’s wireline territory in California, and reached megabuck settlements. The Frontier agreement had similarly vague language, leading to a public spat with CETF, which was eventually ironed out.

Whether CETF’s support and T-Mobile’s cash will make any difference to the CPUC is not a sure thing. Much of the ongoing review has focused on the microeconomic impact of reducing mobile broadband competition in California, which this agreement doesn’t address.

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

Crown Castle won’t have to wait for new PG&E pole attachment terms, CPUC says

by Steve Blum • , , ,

PG&E wants a do-over on a utility pole access decision by the California Public Utilities Commission, but it’ll have to comply with it in the meantime. Wednesday, the CPUC’s executive director refused to delay execution of an arbitrated contract between PG&E and Crown Castle while commissioners decide what they’re going to do with the appeal filed by PG&E last month.

The CPUC’s decision gives PG&E 45 days to approve or deny Crown Castle’s pole attachment requests. If the shot clock expires, Crown Castle can move ahead without permission and install fiber lines on PG&E poles. It also requires PG&E to keep Crown Castle informed of other attachment requests, but allows Crown Castle to work on its own lines without giving PG&E advance notice, so long as no electrical shutoffs are needed. A few days after the commission unanimously approved those new contract terms, PG&E asked for a rehearing, citing safety concerns.

The decision gave PG&E two weeks to sign the deal, which are long gone. Crown Castle wants the commission to forget about any rehearings and “take all enforcement measures possible, including penalties and other measures” to force PG&E to get on with it. Which is what, it seems, PG&E will have to do. Wednesday’s letter from CPUC executive director Alice Stebbins said there will be no delay because “merely making a general statement of irreparable harm and referencing the filing of an application for rehearing are insufficient grounds for me to grant the requested extension”.

All this is happening while the CPUC slowly considers whether pole attachment and route management rules need to be changed – it began an inquiry more than two years ago – and while federal are moving more quickly to resolve PG&E’s bankruptcy filing and potential violations of criminal probation terms. It could get more complicated.

Comcast has to explain why it’s okay to start cherry picking rich, rural customers right now

by Steve Blum • , , , ,

Tesoro viejo youtube

The California Public Utilities Commission won’t jump the gun and give Comcast permission to compete directly with the Ponderosa Telephone Company. At least not yet. Comcast has to first explain why past CPUC decisions don’t apply to its request for permission to offer telephone service in Tesoro Viejo, an upscale master planned community of 5,200 homes in Madera County. Among other things, those rules protect highly subsidised rural telephone companies from competitors that want to cherry pick affluent customers in densely populated exurban developments, and ignore people in poorer and more sparsely populated communities.

The CPUC has been thinking about changing those rules for the past twelve years, with no decision yet on the horizon. It’s the normal course of business for the commission, which considers these kinds of issues in excruciating detail via an adversarial process that includes anyone with an interest in the outcome. It doesn’t happen quickly.

In a ruling last week, commissioner Liane Randolph rejected Comcast’s request for an immediate exception to current policy, saying that questions about why those rules do or don’t apply have to be answered first. That means considering a study of rural broadband and telephone competition completed last year, and a 2014 CPUC decision that concluded that companies like Comcast…

…may tend to serve only small portions of any of the [rural telco] service areas with high quality, high reliable voice service and…may be likely to “cherry pick” business customers rather than serve significant portions of rural service territories, particularly customers whose cost to serve is high.

That’s exactly what Comcast proposes to do in Madera County. It’s been clear that its ambitions are limited to the newly built homes, and that it does not plan to offer service to homes and businesses in the surrounding area. Ponderosa’s service territory includes traditional foothill ranch lands and remote Sierra Nevada towns, as well as new and wealthier exurbs.

Comcast and Ponderosa have two weeks to answer Randolph’s questions.

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

CPUC orders Charter to prove its broadband upgrade claims

by Steve Blum • , , ,

Charter Communications was given ten days to deliver granular broadband deployment data to the California Public Utilities Commission yesterday. Administrative law judge Karl Bemesderfer granted a motion by the CPUC’s public advocate office (PAO) to force Charter to hand over information to support its claim that it is meeting the conditions imposed by the commission when its purchase of Time Warner and Bright House cable systems in California was approved in 2016.

Among other things, the commission required Charter to upgrade all of its Californian systems – new and old – to 300 Mbps download capability by the end of this year. The PAO hasn’t been able to verify compliance because the information it received “provided no explanation or supporting data to show how Charter identified or quantified the progress it claimed to have achieved”.

To fix that problem, the PAO

Requested census block level broadband deployment information similar to that provided by Charter to the Public Advocates Office during the proceeding [to approve the Time Warner/Bright House acquisition]…

And then made…

Additional requests for Charter to explain how it calculated the household percentages it provided in its December 2017 progress report letter, and to provide the data Charter used to perform the calculations.

Charter refused. So the PAO asked Bemesderfer to intervene. Despite Charter’s objection, yesterday’s ruling directs Charter to respond to the data requests “with substantive, complete, and accurate responses” by a week from Friday.

The details of the PAO’s data requests and Charter’s response are being treated as confidential. According to the commission’s 2016 decision, Charter must “offer broadband Internet service with speeds of at least 300 Mbps download” by 31 December 2019 to all of the broadband-capable homes in its new, expanded footprint.

I hope the PAO is asking for performance data as well as marketing data. It’s one thing to “offer” service, it’s quite another to deliver it.

CPUC proposes low income, no service available requirements for household broadband extension grants

by Steve Blum • , , , ,

Remote road

The final piece of the California broadband subsidy puzzle is on the table. The California Public Utilities Commission posted a draft of the new “line extension program”. It’s a pilot project set up by the legislature in 2017 when it rigged the California Advanced Services Fund (CASF), turning it into a piggy bank for AT&T and Frontier Communications.

The line extension program was included at the urging of cable lobbyists, who wanted to tap the piggy bank too, but didn’t want to take on any of the regulatory responsibilities that normally go along with state broadband infrastructure grants. The solution was to launder the money through customers: if they live in a home that has no access to broadband, then they can apply for a grant and give the money to an Internet service provider willing to build a line extension to them. The ISP owns the new facilities, but doesn’t have to meet other CASF obligations such as price guarantees.

The new draft rules put tight restrictions on who can qualify for the money. Instead of being simply “unserved” as the California legislature defines it (i.e. without access to broadband service at speeds of at least 6 Mbps download and 1 Mbps upload), a household has to be “non-connected”, which means it “does not have a service connection to any broadband service”, at any speed. Applicants have to live at the location that will be hooked up and have an annual household income that’s low enough to qualify for the CPUC’s other low income programs – about $34,000 for a couple and $60,000 for a family of five, for example.

There’s a per-household grant limit of $5,300 for a wireline connection and $500 for a wireless one, which can pay for up to 95% of the cost of the extension. The remaining 5% has to come from the service provider that will end up owning it. A project can include more than one eligible household, so the total grant could be more, but it could also be less if the new facilities also serve ineligible homes.

For the now, the CPUC is taking comments on the draft plan. Commissioners could vote on it as early as the end of April.

California extends review of T-Mobile-Sprint merger to maybe July, maybe August

by Steve Blum • , , , ,

Caltrans slow

T-Mobile and Sprint lawyered themselves into a four week delay in California’s regulatory review of their merger deal. Yesterday, a California Public Utilities Commission administrative law judge (ALJ) granted a request from staff to force the companies to turn over additional information, and extended the deadline for opening briefs to 26 April 2019, and for rebuttals to 10 May 2019.

Under normal circumstances, it would usually take about a month after that for ALJ Karl Bemesderfer to draft a proposed decision and, absent extraordinary circumstances, state law requires another month for public review and comment before commissioners vote on it. Bemesderfer is well versed in telecoms issues and has produced draft decisions quickly in the past, so it might not take him that long. But it could, and there’s still the possible of further delays, particularly if T-Mobile continues to alternate last minute document dumps with scorched earth stonewalling. Only one commission meeting is scheduled for July, on the 11th, so even adding just a week to the schedule could knock a final decision into August.

The CPUC’s public advocates office (aka Cal Advocates) wants the deal killed “because of the irreparable damage to competition in the wireless market and the low-income customer market” it would cause. A few days before hearings began at the CPUC last month, T-Mobile dumped thousands of pages of evidence, testimony and analysis on Cal Advocates and others opposing the merger. As a result, Cal Advocates asked for more time to review the information and prepare its case. Bemesderfer gave them four extra weeks.

Cal Advocates then asked T-Mobile and Sprint to produce additional information to back up the claims made in the earlier document dump, as CPUC procedures allow. In yesterday’s ruling, Bemesderfer said T-Mobile didn’t cooperate as it should have…

Cal Advocates served the referenced data requests on T-Mobile, but received only objections to the data requests without substantive responses. On March 5 and 6, 2019, Cal Advocates and T-Mobile representatives met and conferred regarding the data requests. In those meetings, T-Mobile representatives asserted their belief that my February 26 Ruling limited Cal Advocates to using information already in its possession when preparing its briefs in this matter. Cal Advocates contends that my February 26 Ruling [granting four extra weeks for review] permits inquiry into matters raised in T-Mobile’s rebuttal testimony. I listed those matters in the February 26 Ruling…

It is self-evident that the information sought would be of value to Cal Advocates in preparing its briefs…

In light of my earlier ruing granting Cal Advocates’ motion to amend and supplement its testimony in response to the rebuttal testimony submitted by T-Mobile, I find that…T-Mobile is required to produce responses to [the data requests].

T-Mobile has been pushing hard for a fast decision from the CPUC, even going as far as sending a letter to the commissioner overseeing the review, Clifford Rechtschaffen.

It didn’t seem to have the desired effect. Perhaps this time they’ll learn that, in California, cooperation is usually faster than litigation.

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