Tag Archives: cpuc

In the face of “environmental and social justice” obligations, Comcast attempts retreat from rural service

by Steve Blum • , , , ,

Tesoro viejo 2

Comcast wants to give up its campaign to compete with a small rural telephone company – a rural local exchange carrier (RLEC) – in a high end, new development outside of Fresno. After the California Public Utilities Commission decided to allow such wireline voice competition if the would be competitor serves the greater community and not just wealthy exurbanites, Comcast asked to withdraw its request for permission to go head to head with Ponderosa Telephone in the Tesoro Viejo development.

No reason was given for the retreat, just a simple statement that Comcast “has determined that it will not, at this time, pursue expansion of its certificate of public convenience and necessity to include Ponderosa’s service territory”. But it’s easy to connect the dots:

  • Comcast adamantly refuses to voluntarily engage with the CPUC on any issue for any reason, lest it become entangled in regulatory obligations.
  • To enter an RLEC’s territory, the CPUC decided that Comcast or any other competitive wireline voice service provider has to promise to serve the same ratio of residential to commercial and low income to affluent customers as the RLEC they’re targeting.
  • The CPUC administrative law managing the case, Zhen Zhang, asked Comcast to comment on how its entry into Ponderosa’s territory would impact “achievement of any of any of the nine goals of the commission’s environmental and social justice action plan”.
  • Comcast decides to abandon that attempt.

In response, Zhang cancelled a hearing on the matter, but didn’t say whether or not she would grant Comcast’s never mind motion.

The big question that’s still to be answered is whether Comcast intends to do an end run around California’s telephone service regulations and provide phone service by other means in Tesoro Viejo. It’s installing its lines and equipment as construction proceeds in the development, and is offering broadband and video service to residents. Comcast also insists that the CPUC doesn’t have any jurisdiction over phone service using voice over Internet protocol (VoIP) technology.

Again, it’s not hard to connect the dots.

CPUC considers topping up broadband subsidy fund, but money will still fall short

by Steve Blum • , , , ,

Sick piggy bank

California’s primary broadband infrastructure subsidy fund will grow by about $70 million, if the California Public Utilities Commission approves a proposal to nearly double the tax that pays for it.

The California Advanced Services Fund (CASF) gets its money from a tax on phone calls made within California. That’s source of revenue is on the decline. The CPUC can collect up to $66 million a year for the fund (more, under certain circumstances), and sets the tax rate accordingly. During the first three years of the commission’s current five year authorisation, the CASF tax rate was set at about half a cent on the dollar – 0.56%. Because of the decline in intrastate telephone revenue, that rate would have led to a five year deficit of more than $100 million in money available for broadband infrastructure subsidies.

The deal on the table would raise the rate to 1.019% for the final two years the CPUC is allowed by law to assess the CASF tax on phone bills. CPUC staff estimates that would bring the annual take up to the annual $66 million limit, and hold the five year deficit at $53 million.

Most of the money in CASF goes towards building networks, but not all of it. Some of it pays for broadband promotion and other programs. The table below shows my calculations. Bottom line, there would be about $216 million available for new broadband infrastructure grants, instead of about $145 million, as I estimated in June.

That’s a help. More Californians will get the broadband service they need. But CASF will soon run dry, likely this year. More than $500 million was requested in the last round of infrastructure grant applications in May. And the CPUC has authorised – but not yet implemented – an extra round of applications to backfill bids for federal broadband subsidies in October. With the California legislature’s failure to address the state’s broadband and broadband funding deficits in its recently concluded session, what we see (or not) is all we’re going to get.

CASF Infrastructure Account, assuming surcharge increase to 1.019%

Authorised – total$575,000,000
Infrastructure shortfall (est.)($47,248,062)
Infrastructure Account net of shortfall$527,751,938
Infrastructure awards as of 31 Dec 2019$271,333,358
Infrastructure grants awarded in 2020$10,825,350
Cumulative admin overhead as of 30 Jun 2019$16,732,595
Estimated admin overhead FY 2019-25$13,142,082
Total Infrastructure Account spent/encumbered$312,033,385
Funds remaining for new CASF infrastructure grants$215,718,553

AT&T delivers low quality service to low income Californians, but lavishes fiber on the rich

by Steve Blum • , , , ,

Att outages by hh income

AT&T provides the highest quality service in the highest income neighborhoods of California, and the lowest quality in communities with the least income, according to a network quality study done by the California Public Utilities Commission.

The study’s initial findings were released last year. The top line conclusion was that AT&T and Frontier Communications are deliberately choking off investment in ageing copper phone systems, particularly in rural areas – now-bankrupt Frontier because it had no money for upgrades; AT&T because it could get away with it.

Chapters of the study are being released piecemeal. Some of the details are startling. The final conclusions and recommendations chapter expands on the initial summary’s description of AT&T’s economic redlining strategy. The average annual income in places where AT&T has upgraded its systems to full fiber to the premise technology is $72,000, versus $61,000 where it’s left copper networks in place.

Although the number of AT&T service outages climbed everywhere over the seven years of the study, high income neighborhoods also have more reliable service. Customers whose household income averages $42,000 a year or less experience nearly twice the number of “out of service incidents” as those who make $88,000 a year or more.

The study concludes that AT&T is holding people in low income communities hostage to deteriorating copper-based service and milking them for all they’re worth…

Those areas with the lowest household incomes tend to have the highest trouble report rates, the longest out-of-service durations, the lowest percentages of outages cleared within 24 hours, and the longest times required to clear 90% of service outages…wire centers that have experienced the smallest [legacy copper phone service] drop-off rates have exhibited the poorest performance on all service quality metrics. Clearly, those communities that AT&T perceives as the most captive are afforded the lowest levels of attention by the company. Since, as we have also found, wire centers that have received fiber upgrades exhibit superior performance on all of the service quality metrics, the fact that these upgrades have favored higher income communities may well explain the apparent inverse relationship that we have observed as between household incomes and service quality overall.

Recommended solutions include tightening service quality standards – including treating small, rural facilities the same as large, urban ones – and increasing fines when those standards aren’t met. Although the study points to the CPUC’s cynical policy of allowing AT&T and Frontier to effectively pay fines to themselves as part of the problem, it doesn’t explicitly recommend changing it.

For more background documents, click here.

Phone service is phone service and emergency obligations apply regardless of technology, CPUC decides

by Steve Blum • , , , ,

Telephone companies have to follow disaster readiness and response rules laid down by the California Public Utilities Commission, regardless of the technology they use. That’s the CPUC’s opinion anyway. In a sharply written unanimous decision published yesterday, commissioners rejected challenges to telephone (but not broadband) emergency response obligations that they imposed on incumbent telcos, cable companies, mobile carriers and VoIP providers alike last year.

The regulatory logic that underpin those obligations also formed the basis for the CPUC’s initial response to the covid–19 emergency and the disaster resiliency standards for communications services that it recently adopted. The same cast of characters are fighting those edicts using similar arguments, so yesterday’s decision is both a good indication of how the commission will respond and how it will defend itself when the fight moves to federal courts, as it surely must.

AT&T, Charter Communications, Comcast, Frontier Communications and their lobbying front organisations claimed, among other things, that the CPUC’s disaster relief requirements were preempted by federal law because when phone service is delivered via 21st century voice over Internet protocol (VoIP) technology instead of 19th century copper wires and exchanges it magically transmogrifies from a telecommunications service to an information service.

Not true, the commission said. First of all, a federal court has already determined that telephone service is defined by the service provided and not by the technology used…

As the Court’s analysis demonstrates, the phrase “to facilitate communication by telephone” encompasses services beyond traditional landline service if the service facilitates “two-way communication by speaking as well as by listening,” regardless of the “[t]he exact form or shape of the transmitter and the receiver or the medium over which the communication can be effected.” Wireless service and VoIP service both facilitate two-way communication by speaking as well as by listening.

Second, while generally upholding the Federal Communications Commission’s repeal of network neutrality rules, a federal appeals court in the District of Columbia said last year that there’s no blanket preemption of state regulation of information services…

The [D.C. appeals court]…presents a more reasoned analysis, which preserves state authority over consumer protection matters that the FCC has either no authority to preempt or where no actual conflict exists. [It] supports the Commission’s consumer protection efforts in the Decision. Therefore [the telco and cable company] preemption argument fails.

Similarly, the CPUC rejected arguments made by AT&T and the mobile industry’s lobbying mouthpiece that the FCC reigns supreme over any wireless service. The decision said emergency response requirements have nothing to do with market entry or the price of service, which the CPUC cannot regulate per federal law, but are instead “‘other terms and conditions’ of wireless service”, which the same law firmly places under state jurisdiction.

Meaningless fines lead to AT&T’s, Frontier’s deplorable quality in California

by Steve Blum • , , , ,

Verizon taft 2dec2014

A study of AT&T’s, Verizon’s and Frontier Communications’ telephone network quality conducted by the California Public Utilities Commission shows that overall performance is poor across California. Low income communities have worse service and more outages than high income ones, but it’s not particularly good anywhere

Maximum Customer Trouble Report Rates of 6%, 8% or 10% of switched access lines per month (based on wire center size) are unduely generous because failure rates as high as these can hardly constitute acceptable service quality.

The apparently overly generous standard adopted…for Trouble Reports per Hundred access lines is in stark contrast to the requirement…that 90% of all out-of-service conditions are to be cleared within 24 hours. In fact, with the exception of the unique situation extant during the months of February and March 2016, this requirement has never been met by either AT&T or by Verizon/Frontier either on a companywide or on an individual wire center basis.

Although AT&T and Frontier, which now owns Verizon’s wireline systems, face fines, in theory, in practice they don’t: the CPUC allows them to spend the money on system maintenance and upgrades. In theory, it’s supposed to be extra maintenance and upgrade spending, but the loose accounting standards the CPUC applies makes that requirement meaningless.

The study recommends that “fines imposed due to an ILEC’s failure to meet service quality standards should be high enough so as to have the same financial consequences as poor service quality under competitive market conditions”. It doesn’t say how high that should be, but Verizon’s “unique situation” proved that telcos can perform when real money is on the line…

Verizon had actually cleared 91.58% and 92.64% of [out of service] conditions “within 24-hours of receiving notice of the out of service condition” for the months of February and March 2016, respectively, thus seemingly meeting the…requirement as the Commission had directed to be achieved as a precondition for the closing [of the sale of Californian systems to Frontier]. Faced with a powerful $10.5-billion financial incentive to do whatever was necessary to meet this condition, Verizon managed to make it happen – perhaps by importing personnel from some of its other…operations outside of California. However, this two-month compliance…was clearly an anomaly. When Frontier filed its…report for the second quarter of 2016…it showed 24-hour completion percentages for April, May and June 2016 of only 42.92%, 20.85%, and 72.35%, respectively.

It’s time for the CPUC to disavow its cynical decision to allow AT&T and Frontier to keep the money they would otherwise have to pay out in fines.

For more background documents, click here.

CPUC confronts California’s “monopolised” broadband market, despite “imaginary” and “perverse” federal policy

by Steve Blum • , , , ,

Cpuc 10sep2020

With the intent to “effectively deploy quality, affordable, and reliable broadband to all Californians”, the California Public Utilities Commission voted on Thursday to break the grip of telecommunications monopolies and change the way the industry is structured, incentivised and regulated.

It’s the CPUC’s response to governor Gavin Newsom’s executive order directing state agencies to fix California’s broadband deficit.

Commissioner Martha Guzman Aceves, who is leading the effort, explained the reasoning behind it in stark terms…

It’s not really focused on how we are improving our current failed system, but it’s really asking what the different ways and approaches we can take to systemically change our current system around providing the critical service of Internet.

We’ve been forced by our federal government to succumb to rules based on imaginary definitions of what the Internet is, which then block our ability to ensure universal service, and affordable service, through regulation. The justification has been made that competition will solve for it all, that the carriers will compete and bring down the prices and serve everyone. This neoliberalism economic theory has failed many Californians.

In fact, as you all know, 23% of Californian households do not have the Internet at home. That’s leaving 8.4 million Californians digitally disadvantaged and unable to participate in many of the benefits of economic and civic life.

And this has to change.

We all know this so intimately today as we take refuge in our homes, not only from covid but from the clouds of smoke and particulates that spread across our state. The Internet has been able to save many jobs, many people’s health, and our children’s education. And every Californian, every neighborhood needs the Internet to be resilient.

Before the Internet came to be, our strategy for serving all Californians’ telecommunications needs was to incentivise carriers based on a regulatory monopoly utility model. But…what we have left is really only an incentive-based set of strategies which have failed to meet the needs of universal service and affordability.

A major reason why this incentive-based approach through competition is not working is because there is no competition.

Only a very small group of Californians have choices. Less than 7% of Californians are served by three or more providers. About half of us have two choices. But over 40% have one or fewer. They may not have service at all.

Throughout the state, as an example of this 40% that have one or fewer service providers available to them, there’s not any area in the state where a cable company is competing with another cable company. If that cable company chooses not to serve all the residents in the community, there is no cable option. This is due, once again, to the perverse federal construct and the lack of obligation to serve all Californians…

So what does this result in? Everything that you know already. Tribes and rural communities left behind with poorly maintained infrastructure with insufficient speeds. Neighborhoods and urban communities that are redlined. And excessive pricing, due to this monopolised and oligopolised market that we have across the state…

So today I’m very excited…to ask the public to engage in this proceeding and offer their ideas for developing strategies for deploying more fiber in areas that lack it. Which can also provide for actual competition and, ultimately, affordability and universal access. This is a call for innovation, though pilots, through new partnerships and new strategies. We all know the urgency, and I’m very excited to get moving on these transformative solutions.

The other four commissioners stated their enthusiastic support, and then voted unanimously to launch the “Broadband for All” rulemaking.

This sort of proceeding typically drags on for years at the CPUC, but there’s reason to be optimistic that this time will be different. Newsom gave state agencies a December deadline for action. Under president Marybel Batjer – Newsom’s troubleshooter who was appointed last year – the CPUC has moved more quickly, particularly on high priority problems like covid–19, wildfires and utility bankruptcies.

Low income home broadband subsidies proposed by CPUC, but cable and telco cooperation needed

by Steve Blum • , , , ,

Tanimura and antle housing 13jul2016

Wireline broadband service for low income Californians will be subsidised by the state’s telephone “lifeline” program, if a draft decision released last week is approved by the California Public Utilities Commission. The plan depends on California’s ability to “exercise its bulk purchasing power to secure volume discounts for participants”, rather than on pure regulatory muscle.

Qualifying households would pay a discounted rate for broadband and phone service. Current voice-only wireline lifeline service typically runs between $7 and $11 per month. Mobile carriers also participate in the lifeline program, but the rules are different – service is generally free to qualifying households and some level of broadband service is usually included.

The draft plan would add California’s monthly lifeline phone subsidy of $14.85 a month to the $9.25 provided by the Federal Communications Commission’s program for bundles of wireline broadband and phone service, which may be delivered via voice over Internet protocol (VoIP) technology. Voice-only service would still be offered, but the monthly subsidy would be $2 less.

The big question is: what will telephone and cable companies do with it?

Comcast, likely the largest Internet service provider in California, doesn’t participate at all in the existing phone-only lifeline program and isn’t required to do so. Neither are Charter Communications and Cox Communications, although they do participate. So do AT&T, Frontier Communications and other incumbent telcos, which are required to offer lifeline service, and competitive telephone companies, which can choose to participate or not.

But.

Big telecoms companies reflexively fight any attempt by the CPUC to lay down requirements on services that move via Internet technology. AT&T was recently fine $3.5 million for blowing off CPUC rules regarding next generation 911 service and mobile carriers are challenging disaster readiness obligations, for example. The success of this broadband lifeline initiative depends on cooperation from ISPs that often prefer scorched earth resistance.

The minimum wireline broadband speed would be 25 Mbps download and 3 Mbps upload, with a monthly data cap of 1 terabyte. Unless the ISP involved doesn’t have the capability of delivering that speed level to a home, in which case best effort would be good enough, down to a hard minimum of 4 Mbps down/1 Mbps up.

That’s the “minimum service standard” set by the Federal Communications Commission, effective 1 December 2020. The FCC began setting lifeline standards for wireline broadband in 2016 at 10 Mbps down/1 Mbps up and has increased it every year based on typical usage and subscription levels in the U.S.

The draft decision would also end support for deeply discounted legacy voice packages that limit the number of calls that can be made each month and allow mobile carriers to offer optional “bolt on” upgrades to free plans that would be paid for by the customer. If a customer buys an upgraded plan, then can’t pay for it, they still get basic service. The mobile carrier can remove the bolt ons, but still has to provide the minimum free service, which is unlimited talk and text, plus 4GB to 6 GB of monthly data at the FCC’s current ill defined speed standard of “3G mobile technology”.

The CPUC is accepting comments on the draft decision, with a vote possible in October.

AT&T guilty of obfuscation, delay, deception, inaccuracy, evasion, omission and contradiction regarding 911 service, CPUC says

by Steve Blum • , , , ,

Bluto pencils

AT&T has to pay a $3.75 million fine because of its “pattern of obfuscation, delay, and deception” in dealing with the California Public Utilities Commission, and the “inaccuracy, evasion, omission, and contradiction” in its description of its 911 service. The core issue was whether AT&T is required to file particular paperwork regarding next generation 911 services. The answer from the CPUC is an emphatic yes. AT&T’s refusal to do so and the manner in which it refused earned it the multimillion dollar fine.

The CPUC’s unanimous vote upholds a ruling earlier this year by an administrative law judge. AT&T appealed to the commission, claiming it had done no wrong because it merely slipped through legal loopholes created by differences in technology.

It’s a claim AT&T continues to make, most recently when it objected to new CPUC disaster readiness rules. That argument was debunked by the commission’s decision, which reiterated that 911 service is 911 service, regardless of how it’s provided or what network segment of the 911 system is being provided…

The Commission seeks to protect Californians who need safe energy delivery and reliable communications through the natural and man-made disasters to which California is increasingly prone. The Commission’s need for “accurate information from the utility in order to, among other things, ensure that it is providing just, reasonable and safe service” is acute, given the inherent information asymmetry between regulator and regulated entity. AT&T has not provided accurate information pertaining to the issues before us…

Emergency service tariff violations are not garden-variety regulatory misfeasance. The transport of emergency communications is a life and death matter. The difference between transport that guarantees 98%, 99.9% or 99.999% availability for a given trunk line can well mean the difference of an ambulance or fire truck that arrives on time and one that does not.

If anything, the decision said, the $3.75 million fine “may even be too modest” because of AT&T’s “financial resources” and the severity of its violation of “the public trust attendant on the utility services it provides”.

Commissioners made one significant change to the penalty. Originally, AT&T would have been given 30 days to file the necessary paperwork, and if it didn’t, the fine would have doubled to $7.5 million. Instead, AT&T will be fined $15,000 for every day it’s late.

AT&T not on FCC’s list of potential RDOF bidders, but 505 others are

by Steve Blum • , , , ,

Paicines pole route

AT&T is not on the list of 505 would-be rural broadband subsidy bidders released by the Federal Communications Commission on Tuesday. It’s also not listed as a member of any of the 38 consortia – bidding groups – and none of the other 467 contenders are obviously AT&T subsidiaries. None of the FCC registration numbers directly held by AT&T match up to any of the listed bidders either.

It’s difficult to prove a negative, but so far it appears that absence of evidence is also evidence of absence. AT&T does not appear to be interested in going after the $16 billion in ten year operating subsidies that the FCC will be awarding in the Rural Digital Opportunity Fund reverse auction next month.

The list is a bit of a tease. The FCC isn’t telling us which states these companies intend to bid in – California might or might not be in their dreams.

Other major California Internet service providers are also missing from the list, or have been tagged as having “incomplete” applications. Only one of California’s incumbent telcos filed complete paperwork the first time around. Consolidated Communications, which operates in a small area east of Sacramento, is ready to go. There were no other obviously Californian ISPs among the 121 organisations on the “complete” list.

Frontier is one of the 384 ISPs on the “incomplete” list, sailing under its bankruptcy-induced “debtor in possession” flag. So is Cox Communications, Altice (aka Suddenlink) and a couple of smaller cable operators, Horizon and Mediacom. But not Charter, despite signalling earlier this year that it would chase RDOF money, or Comcast, which comes as no surprise. Also in the incomplete category are Californian wireless Internet service providers and independent wireline ISPs.

The auction is scheduled to begin on 29 October 2020. Bidders that need to clean up their paperwork have until 6:00 p.m. eastern time on 23 September 2020 to do so. The FCC doesn’t seem likely to grant any extra time. At the same time that it published the lists, the FCC also published a sharply worded order denying five requests for extension of an earlier deadline. Pleas for waivers of eligibility or due diligence requirements usually get the same treatment.

The list will only get shorter as auction time nears.

“Virtual separation” of Frontier’s fiber systems could mean actual abandonment of rural Californians

by Steve Blum • , , , ,

San benito pole route 13apr2019

The gap between urban fiber haves and rural have nots could grow wider in California as a result of Frontier Communications’ bankruptcy settlement. Its reorganisation plan was filed with the California Public Utilities Commission yesterday, after receiving approval from the federal judge in New York overseeing the bankruptcy proceeding.

The plan turns ownership over to banks and financiers who hold billions of dollars of Frontier’s now worthless debt. A cryptic paragraph buried deep in the plan calls for Frontier to develop a “detailed” proposal for a “virtual separation” of “select state operations” where the new owners “will conduct fiber deployments” from other operations in those states which will be blessed with vague “broadband upgrades and operational improvements”.

Translation: if there’s a fast track to profits, we’ll install fiber, otherwise we’ll let the copper rot.

Verizon hung onto most of its long haul fiber when it sold its Californian telephone business to Frontier in 2016. Frontier got Verizon’s fiber-to-the-premise “FiOS” systems in southern California, mostly in relatively affluent communities. Since then, Frontier has applied for California Advanced Services Fund grants to deploy fiber in a handful of communities, while doing limited DSL upgrades in others.

This “virtual separation” of fiber worthy communities from those less fortunate was floated earlier in Frontier’s bankruptcy proceeding, provoking a sharp response from the union representing its employees in California and elsewhere and a Californian advocacy organisation. The Communications Workers of American and TURN asked the Federal Communications Commission to take a hard look at the deal…

The virtual separation appears to set up a structure through which Frontier could seek to capture the revenues from fiber deployments for investors, potentially depriving retail operations of necessary cash flows, personnel, and other resources…

The [FCC] must ensure that an entire class of customers does not remain on the wrong side of the digital divide based on Frontier’s strategic decision to limit its investment in certain communities where it remains as the only source of broadband Internet access.

As the plan approved by the federal judge reaffirms, Frontier and its creditors need CPUC permission to close the deal. That review is underway and remains on track to conclude early next year.