Tag Archives: cpuc

CPUC asks for more time to adapt to FCC broadband subsidy program, but doesn’t say how

by Steve Blum • , , , ,

Paicines pole route

The FCC is heading toward a vote on Thursday that would raise its eligibility and minimum service standards for broadband subsidies to 25 down/3 Mbps up and award $20 billion in broadband subsidies as quickly as possible, perhaps in a single reverse auction in November. That’s welcome progress and a great thing for states that either have rational broadband policies or have no interest in broadband policy at all.

But not so great for California, which has irrational broadband subsidy policies.

Higher speed standards and a rapid timeline mean the opportunities for projects that combine money from its new Rural Digital Opportunity Fund (RDOF) with California Advanced Services Fund (CASF) subsidies are minimal.

In a letter to the FCC last week, CPUC president Marybel Batjer asked the FCC to move more slowly, or at least be more flexible…

Over the past month, CPUC staff have had ex parte meetings with FCC staff and commissioners’ offices to explore the possibility of a federal-state partnership in the planned [RDOF] reverse auction. Based on new information gathered during those meetings, it appears unlikely California would have sufficient time to make necessary changes to existing statutes and program rules to achieve this goal.

Batjer didn’t suggest, let alone commit to, asking the California legislature to raise the abysmally slow CASF speed standards. Instead, she asks for “a set-aside or partnership”, similar to “special privileges afforded to New York and Alaska”. A separate FCC filing made by CPUC staff suggests delaying the RDOF auction until the middle of 2021.

CASF is California’s primary broadband infrastructure subsidy program. It does not match up well with FCC or federal agriculture department programs. The biggest roadblock is the 6 Mbps download/1 Mbps upload speed minimum that California lawmakers set in 2017 when they accepted large payments self-serving arguments from AT&T, Comcast and other monopoly model incumbents, and lowered California’s broadband subsidy eligibility standard (and set the minimum acceptable service level for subsidised infrastructure at 10 Mbps down/1 Mbps up).

Internet magic means phone calls aren’t phone calls, AT&T tells CPUC

by Steve Blum • , , , ,

Alice tall 625

We’re all mad here.

On Thursday in San Francisco, AT&T defended itself against charges that it’s in contempt of California Public Utilities Commission orders and that it broke CPUC rules and state law. AT&T is admitting that California law no longer bars the CPUC from regulating Internet protocol enabled service such as voice over Internet protocol (VoIP), but doesn’t appear to be giving up the fight. Instead, it’s falling back to a second line of defence that was thoughtfully provided by the Federal Communications Commission.

The dispute centers on next generation 911 service, but it’s also the first test of the CPUC’s ability to regulate services that ride on Internet technology since the expiration of a state law that previously blocked such regulation. I sat in on the AT&T contempt hearing for a few minutes – would’ve spent more time, but that wasn’t the way my day went. It was just a brief taste, but the flavor was consistent with AT&T’s written response. Which was mostly dry arguments about who provides each piece of the increasingly complex communications path between the public and 911 answering centers, and how that maps to the equally complex web of California’s regulatory obligations and AT&T’s deliberately byzantine corporate structure. Links to AT&T’s filing and the hundreds of pages of exhibits are below.

Previously, AT&T’s defence rested, in large part, on the California legislature’s 2012 decision to bar the CPUC from regulating VoIP and similar, Internet-delivered services. No longer. Its latest response mentions that now-expired law only in passing, and in the past tense.

But AT&T prepared a fallback position. In an attachment, AT&T tries to define next generation 911 service as an “information service”, as opposed to 911 service based on legacy technology , which it admits is a “telecommunications service”. This nonsense is the result of the Federal Communications Commission’s 2017 decision to repeal network neutrality rules and declare, in Alice in Wonderland fashion, that transporting data from point A to point B via the Internet isn’t telecommunications.

AT&T jumped down that same rabbit hole by claiming, in effect, that phone calls that ride on that one, particular kind of digital transportation aren’t phone calls. Unfortunately, AT&T isn’t trying to make its case to the Queen of Hearts.

Why, sometimes I’ve believed as many as six impossible things before breakfast.

AT&T’s Response to Administrative Law Judge’s Ruling Regarding Order to Show Cause, 6 January 2020
Exhibit 1
Exhibits 2 through 8
Exhibits 9 through 15
Exhibit 16

CPUC begins process of holding Frontier to account for service outages, but it might be too late

by Steve Blum • , , , ,

Nearly four years after the fact, Frontier Communications is being held to answer for the fumbled cutover of Verizon wireline customers it acquired in 2015. Last month, the California Public Utilities Commission formally opened an investigation into the widespread reports of dead lines and customer service meltdowns that went on for weeks after Frontier closed on its purchase of Verizon’s decaying copper telephone systems and somewhat more modern fiber to the home FiOS territories in California. On top of that, according to the CPUC’s order instituting investigation (OII), Frontier disclosed customer information it was supposed to keep confidential…

Starting April 1, 2016, Verizon transferred (a process it refers to as cutover of services) its California voice, internet, and video services to Frontier. The cutover caused two issues: (1) Many Frontier customers experienced service outages or interruptions between April to June 2016 to their voice, internet, and video services; customers also experienced poor customer support from Frontier in resolving such issues; and (2) during the same period, Frontier published customers’ address records that were designated as blocked from publication in online and printed directories.

As a starting ante, the CPUC order proposes a $2.5 million fine for Frontier, for the unlisted information disclosures alone. And that number could go up, and additional fines for the outages could be imposed, as the CPUC investigation proceeds. Those fines aren’t the sort of debt that Frontier can easily wash away in the bankruptcy filing it’s planning to make in March, according to reports.

The OII is the beginning of a process that will run for a year or two. By the time it’s finished, Frontier could have completely new owners and management, or it might even be out of California altogether. The reports say Frontier wants to reorganise under chapter 11 of U.S. bankruptcy law, which allows for the possibility of keeping the company in one piece, but doesn’t guarantee it.

Frontier will walk the same bankruptcy path as PG&E, Bloomberg says

by Steve Blum • , , ,

The end is near for Frontier Communications, as we know it. According to a story in Bloomberg by Allison McNeely, Katherine Doherty and Sridhar Natarajan, California’s second biggest telephone company will file for bankruptcy in March. Frontier is carrying $17.5 billion in debt – its purchase of Verizon’s Californian wireline systems accounts for a significant chunk of that – and continues to lose broadband subscribers.

Despite being initially considered a saviour for rural Californians held hostage by Verizon’s decrepit copper phone lines – many communities lacked even slow 1990s DSL service – Frontier has proven to be unable to improve broadband service, outside of its affluent urban territories. It fumbled its cutover of Verizon customers, and now faces an investigation by the California Public Utilities Commission as a result. It’s enthusiastically tapped the piggybank that California lawmakers created when they gutted the California Advanced Services Fund program, but has mostly used the money to patch up legacy DSL systems at cost levels more commonly associated with full fiber upgrades.

California is not the only place where Frontier is performing poorly, according to a story in Ars Technica by Jon Brodkin…

Frontier Communications failed to properly maintain its telecom network in Minnesota, leading to “frequent and lengthy” phone and Internet outages, an investigation by the state Commerce Department found in January 2019. The investigation led to a settlement. New York state officials are also investigating Frontier over its repeated outages and long repair times.

Many Frontier customers in different states have been hit with giant overcharges and cancellation fees, or draconian policies like one requiring customers to pay for router rentals even when they have purchased their own router. (A new US law scheduled to take effect in June 2020 would ban that practice.)

The Bloomberg article indicated that Frontier would be filing for chapter 11 bankruptcy protection, which allows it to continue operating while it sorts out its finances. It’s the same procedure PG&E is using.

California attorney general’s opposition to T-Mobile/Sprint deal will be the deciding factor in CPUC’s review

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

Advice from California’s attorney general hasn’t played much of a role in the California Public Utilities Commission’s review of major telecoms mergers in recent years, but T-Mobile’s proposed takeover of Sprint will be different. Attorney general Xavier Becerra’s forceful opposition to the merger will, all but certainly, figure prominently in whatever decision the CPUC makes.

When evaluating major transactions involving regulated utilities, state 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”.

Mere advice or not, the AG’s office expects the CPUC to listen. Or at least it did in 2015 when it gave a green light to the Frontier’ purchase of Verizon’s wireline telephone systems. The opinion from then-attorney general Kamala Harris warned that even though California law considers it “as advisory” and does not require the commission to defer to it, “the attorney general’s advice is entitled to the weight commonly accorded an attorney general’s opinion” and “attorney general opinions are generally accorded great weight”.

Three big telecoms deals have been reviewed by the CPUC in the past five years – Frontier’s takeover of Verizon’s territories, Comcast’s three-way purchase and market consolidation deal with Charter Communications and Time Warner Cable and, after that was killed by federal antitrust enforcers, Charter’s takeover of Time Warner.

I’ve looked through the records of those three cases, and a formal opinion from the California AG appears in only one – Frontier/Verizon. It found that allowing Frontier to take over operation of Verizon’s decaying copper lines would “not adversely impact competition”, since the two companies didn’t compete directly with each other and the deal wouldn’t block new market entrants. That finding was cited among the many reasons the CPUC approved the transaction, albeit with a long list of conditions.

No mention was made, though, of AG opinions in the course of the CPUC’s review of the two cable transactions. It’s worth noting that the same logic might be applied – like telcos, cable companies don’t directly compete with each other in local markets.

That’s not true of T-Mobile and Sprint. They’re fierce competitors, particularly at the lower end of the mobile broadband and voice market, and approval of their merger depends on whether DISH can plausibly replace the competitive heat that would be lost if they combine. That’s a far more complicated question to answer. I think it’s a safe bet that the AG’s office will respond to the CPUC’s pro forma request for advice, and it won’t be ignored.

What Becerra will tell the CPUC about T-Mobile/Sprint merger

by Steve Blum • , , , ,

Tmobile billboard las vegas 6jan2020

California’s attorney general has more than one roadblock he can try to throw into T-Mobile’s path to a takeover of Sprint. The antitrust suit that Xavier Becerra and other state attorneys general filed in a New York federal court is one possibility. Closing arguments were made in that case last week – the judge hearing it didn’t ask any questions, so there are no clues about what he’s thinking. His decision is expected in the late February/early March time frame. Maybe.

Becerra’s other option lies with the California Public Utilities Commission, which is also reviewing the deal. Assuming it’s treated as a major merger (i.e. involves a utility company under CPUC jurisdiction with at least $500 million of annual Californian revenue – that’s one of many points lawyers are wrangling), California law says

Before authorizing the merger, acquisition, or control of any…telephone corporation organized and doing business in this state…the commission shall find that the proposal not adversely affect competition. In making this finding, the commission shall 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.

That opinion is requested and delivered privately, and typically doesn’t become public until the CPUC publishes a proposed decision. But it’s not hard to guess what Becerra will say. After the New York hearing wrapped up, Becerra put out a statement saying…

There should be no question now: this attempted megamerger would thwart competition in the telecom market and harm consumers from California to New York, and everywhere in between…At trial, we have repeatedly demonstrated the dramatically increased market concentration that would result if T-Mobile and Sprint were to merge.

Right now, Sprint and T-Mobile compete intensely with each other on price, features and quality. That’s competition we can’t afford to lose.

As you might expect in the middle of litigation, Becerra didn’t publicly suggest any “mitigation measures” – his stated solution is to not allow the merger at all. If that’s the advice he’s offering privately, then the CPUC will either have to try to block it (whether it can or not is another billing bonanza for the lawyers), or reach into the evidence presented and demonstrate why Becerra is wrong.

It’s one thing to sort out the arguments made by litigating parties – in this case it’s the CPUC’s public advocates office, the Communications Workers of America, consumer advocacy groups versus T-Mobile, Sprint and, following megabuck payoffs to buy their support, DISH and the California Emerging Technology Fund. It’s quite another for the CPUC to argue T-Mobile’s case against the California attorney general.

“Fleas of a thousand dogs” add gravitas to T-Mobile/Sprint merger as court challenge wraps up

by Steve Blum • , , , ,

Dog scratch

T-Mobile and Sprint square off today against a coalition of state attorneys general in a federal courtroom in New York, during closing arguments in a trial to determine whether their proposed merger violates antitrust laws. It’s one of the last hurdles for the deal, which has been under regulatory review since 2018.

Approval (or not) by the California Public Utilities Commission is also pending, as is a separate, more technical federal court review in Washington, D.C.

“We are desperately waiting for the outcome of our merger activities”, Jan Geldmacher, president of Sprint’s business to business division said at CES in Las Vegas last week. Nonetheless, he believes “a positive end is near”.

He backed his optimism up with a New Year’s greeting, perhaps in the hope of persuading opponents of the righteousness of his cause. “May the fleas of a thousand dogs infest the arse of anyone who fucks up your new year”, he said. “And may their arms be too short to scratch it”.

The AGs and the deal’s Californian opponents will risk that itch, but the federal justice department won’t. It urged federal judge Victor Marrero to defer to its wisdom and approve the deal. In arguments filed last week, the AGs said they have a say in the matter and, particularly, so does the judge…

The States have a special role in enforcing the antitrust laws on behalf of the public. TheSupreme Court has made clear that neither the States nor this Court need defer to the federal government’s approval of a merger. The States are independent enforcers of the antitrust laws, and it is the role of the Court—not any federal agency—to decide the lawfulness of the merger.

The AG’s latest (last?) filing laid out their case for blocking the deal. It boils down to two points: 1. going from four national mobile broadband companies will concentrate market power to the point that prices will rise and service will fall, and 2. there’s reason to believe DISH can add meaningful competition, even if it keeps its build out promises. The AGs doubt it will.

AT&T faces contempt hearing as CPUC defines VoIP regulatory role

by Steve Blum • , , , ,

Bluto pencils

The first shot in what could be the defining regulatory battle over broadband in California was fired in the closing days of December by the California Public Utilities Commission. An administrative law judge (ALJ) ordered AT&T

To show cause, if any, why [AT&T] should not be:

  1. Found in contempt of [a 2019 CPUC decision regarding disaster preparedness].
  2. Found in violation of the Public Utilities Code and [a CPUC rule requiring telcos to file price/service terms (aka tariffs)].
  3. Fined, penalized, or have other sanctions imposed for failing to comply with a Commission decision, [commission rules], and the Public Utilities Code.

The dispute began last Spring when CPUC demanded that AT&T file a notice – an “advice letter” – detailing its terms for “Next Gen” 911 service, which will run over an Internet protocol connection, like other Internet data, rather than using legacy copper network switching and other 20th century technology.

AT&T first blew off the demand, and then said it’s none of your business

[Mark Berry, AT&T regulatory director] spoke with [CPUC] staff and relayed the following in response to the question of why AT&T had not filed an advice letter:

  1. AT&T does not offer the services referred to in the letter and even if it did offer these services, AT&T does not agree that the CPUC can require a tariff because under [a now expired public utilities code section], the CPUC does not have authority to regulate IP-enabled services.
  2. If AT&T offers Next Gen 911services in the future, it will not file tariffs because the CPUC does not have authority over these services.

The CPUC and AT&T exchanged more such pleasantries, until AT&T finally filed some paperwork, without answering the questions asked. So AT&T executives were ordered to appear at a hearing later this month to explain themselves.

This kind of arm wrestling over filing and disclosure requirements is nothing new. Business as usual would be a good description, although it usually doesn’t get this far. This case is significant because the primary legal basis for AT&T’s refusal expired at the end of 2019. It was a law enacted in 2012 that banned the CPUC from regulating Voice over Internet Protocol (VoIP) or other “Internet protocol enabled” services. Back then, VoIP was still a developing technology, and telcos and cable companies hadn’t gone all in on it as a replacement for legacy copper service and as a way to get out from under the regulatory oversight that comes with it.

AT&T and other monopoly model telecoms companies tried to get the ban extended last year, but ran into a brick wall in Sacramento, also known as the Communications Workers of America. The betting is that they’ll try again this year – why spend billions on service quality when a few million in the pockets of lawmakers will get you off the hook?

So it’s up to the CPUC to figure out how VoIP fits into California’s regulatory ecosystem. One way the commission can do that (relatively) quickly is to litigate disputes like this one, and bake new case law into the resulting decision.

Internet regulation is at the top of California’s 2020 policy wish (or wish not) list

by Steve Blum • , , , ,

2020 might be the year that the State of California figures out what, if any, role it will play in regulating (or not) broadband service and infrastructure. As of tomorrow, the California Public Utilities Commission is no longer barred from regulating services like VoIP (voice over Internet protocol). A 2012 state law that said the CPUC couldn’t do that expired at the end of 2019.

But that doesn’t mean that anything is decided.

AT&T and its fellow monopoly model Internet service providers tried to get an extension of that ban approved in the California legislature this year. Assembly bill 1366 made it through the gauntlet of committee hearings to pass in the assembly and nearly reach a floor vote in the senate. It was finally stalled by opposition from the Communications Workers of America – organised labor contributes even more money and other kinds of support to California politicians than cable and telephone companies.

Stalled, but not stopped completely. AB 1366 can be resurrected next month, or a new bill can be written that would accomplish the same thing. Or maybe come at it from a different direction.

AB 1366 didn’t address broadband service as such. It’s about “Internet protocol enabled” services – anything that rides on top of broadband service – although regulations for a top level service could have implications for the underlying broadband service too. It would have extended an existing ban on IP-enabled service regulations by any state agency or local government. That could mean anything from Facebook to email to Netflix to Google search, which arguably shouldn’t be regulated at the state level. It also means VoIP, which is voice telephone service that runs on top of unregulated broadband service rather than via the old dial up, regulated phone network, AKA “plain old telephone service” (POTS).

A 2019 federal appeals court ruling allowed state-level regulations, although to what extent is still an open question. California already has Internet regulations on the books – a 2018 bill imposed network neutrality rules on ISPs. Enforcement, which is in the hands of the California attorney general, is stalled until federal court challenges are resolved. But the door is now open. Whether, and how, California lawmakers walk through it is top of the broadband policy watch list for the new year.

California broadband subsidy program pumped $35 million into infrastructure in 2019

by Steve Blum • , , ,

Dig once conduit 1oct2019

The California Advanced Services Fund (CASF), the state’s primary broadband infrastructure subsidy program, closes out 2019 with thirteen projects funded – $35 million in grants total – and no backlog of stale applications. That success is a welcome change from past practice, when project proposals sometimes languished for years. Changes made to the program by the California Public Utilities Commission in 2018 paid off, producing a consistent and predictable process.

Casf 2019 broadband infrastructure grants

Congratulations are due both CPUC staff who implemented the changes and managed the program, and to commissioner Martha Guzman Aceves who led the effort to rewrite the rules and procedures. It was tough job, given that lawmakers paid more attention to the checks they get from AT&T, Comcast and the like than to California’s broadband needs when they rigged the CASF program in favor of big, monopoly model providers.

Incumbents’ cash still mattered, and not in a good way. Frontier Communications came away with the most CASF money and will do the least with it. Three grants totalling $12.0 million were approved for DSL upgrades in Kern, Lassen, Modoc and Placer counties. Frontier only committed to offer slow service at 10 Mbps download and 1 Mbps upload speeds, despite the subsidies. It had four projects on the table this year, and requested $16.1 million. One, in Colusa County, was rejected because Frontier (and Comcast) already provided service in the proposed area. Subsidies for other projects were trimmed, partly for the same reason and partly because Frontier tried to double dip and get state and federal funding for the same homes.

Plumas Sierra Electric Co-op received $9.7 million for five projects in Plumas and Lassen counties, which was $2.2 million less than it originally requested. Nearly all of the 414 funded homes will get full fiber-to-the-premise (FTTP) service. A handful of remote residences will be served from that fiber infrastructure by wireless extensions.

Two companies received CASF grants for mobile home parks. Cruzio, an independent Internet service provider based in Santa Cruz, won $2.4 million to serve seven parks in Santa Cruz County with gigabit class FTTP service. It initially requested $5.3 million to build out to 13 parks, but challenges from Comcast and Charter Communications (and a snarky letter from AT&T), and review by CPUC staff, eliminated six of them.

Charter also received money to extend its hybrid fiber-coax plant to two mobile home parks, in Ventura and Riverside counties, as well as a neighborhood in San Bernardino County. It asked for $1.7 million and got $1.4 million. Most of the difference is due to the rejection of a fourth application in Riverside County, following a challenge from Frontier.

A half-assed $5.1 million request from a Sonoma County wireless operator didn’t make it through the process either.

The CPUC approved an additional $9.1 million for Race Communications’ Gigafy Phelan project. The extra money is necessary because utility pole inspection practices are increasingly rigorous and California labor costs, particularly for fiber optic work, are up. Relative to other CASF-funded builds, Gigafy Phelan is a mega-project. It’ll bring full FTTP facilities with gigabit service at DSL prices to 7,600 homes in San Bernardino County. Because Gigaphy Phelan was originally approved under the old rules, CASF is only paying for 60% of the project’s costs. Race has to contribute $24.5 million in matching funds.

There’s only one CASF request still active. The Karuk Tribe is asking for an increase of $11.3 million for its long-stalled project to bring Internet service to communities in and near its lands in Humboldt County. The initial request was made in May, but middle mile connectivity problems remained to be solved. The (probably) final proposal (see map below) was submitted earlier this month.

Karuk map casf krrbi 10dec2019

Links to 2019 CASF project applications, challenges and approvals are here.