Tag Archives: fcc

Sprint takes half billion dollar revenue hit after ending improper California, federal subsidies

by Steve Blum • , , , ,

Sprint booth mwc la 2019 22oct2019  Klovia 2 att net s conflicted copy 2019 11 04

Losing California and federal subsidies it took for inactive Lifeline accounts smacked Sprint hard in the third quarter of 2019. The company released financial results yesterday, reporting that its third quarter revenue dropped to $5.0 billion, compared to $5.3 billion in the second quarter, and $5.4 billion in the third quarter last year.

Cutting off, and perhaps reimbursing, the money it was collecting for 885,000 Lifeline customers nationwide – and an estimated 145,000 in California – who were no longer using the service was number one of two reasons for the slide, according to a statement released by chief financial officer Andrew Davies

We recently notified the FCC that we had claimed monthly subsidies for serving subscribers even though these subscribers may not have met usage requirements under Sprint’s usage policy for the Lifeline program. We are committed to reimbursing federal and state governments for any subsidy payments that were collected incorrectly. While not material to overall results, net operating revenue, wireless service revenue, adjusted EBITDA*, operating income, and net loss in the quarter were all negatively impacted by this issue.

Wireless service revenue of $5.0 billion in the quarter was down $453 million year over year, mostly due to both lower Lifeline revenue as a result of the associated usage issue discussed above and the continued amortization of prepaid contract balances as a result of adopting the new revenue standard last year.

The Federal Communications Commission initially pegged Sprint’s liability at “tens of millions”, but that was just starters. It didn’t include co-subsidies from state programs or fines. One investment analyst group estimates the total liability in “the low billions of dollars”.

So far Sprint’s, um, oops hasn’t surfaced in the California Public Utilities Commission’s review of the pending Sprint/T-Mobile merger, although the Communications Workers of America tried unsuccessfully to make it an issue at the FCC.

Large scale telco, cable and mobile service outages follow California power cuts

by Steve Blum • , , , ,

Cell site outages 28oct2019

Hundreds of thousands of Californians lost their wireline broadband and phone service over the past week, as the state’s major electric utilities cut off power to millions of people in an attempt to prevent wildfires from breaking out. Mobile broadband and telephone subscribers were equally hard hit, with one county – Marin – losing more than half of its cell sites at one point.

The Federal Communications Commission has been tracking wireline and mobile service outages since last Friday, when the power cuts were hitting hard in Pacific Gas and Electric’s northern California territory, and public safety power shutoffs were beginning to bite in the southern California service areas of San Diego Gas and Electric and Southern California Edison. I’ve compiled all of their reports through yesterday into a single document, which you can download here.

From a telecoms point of view, the outages were at their peak on the FCC’s Sunday morning (0830 California time, 28 October 2019) report. At that time 455,000 telco and cable subscribers in 32 counties were without their landline connections and 3.3% of the total number of cell sites were down.

Some counties were hit much harder than others. Marin County lost 57% of its cell sites, while there were no reports of cell site outages in Santa Barbara County. Calaveras, Humboldt, Lake, Napa, Santa Cruz and Sonoma counties lost between 19% and 39% of cell sites.

It’s not clear what the wireline outage figure represents. Participation in the FCC’s disaster reporting system is voluntary. The list of willing companies hasn’t been made public and there’s no way of knowing if all of the telephone and cable companies in those counties are cooperating. The reports from the ones that are cooperating are based on “communications infrastructure status and situational awareness information” and “network outage data”. Which might not include all, or maybe even most, of the households and businesses which are offline because their equipment – cable and DSL modems, for example – don’t have backup power. The network might be fully functional, but if customer premise equipment is down, then service is too.

So that 455,000 customer wireline outage figure might be low.

FCC chair Pai makes the case for rural 5G and basic broadband infrastructure subsidies

by Steve Blum • , , , ,

Pai mwc la 2019 22oct2019

Ajit Pai was at his geeky best yesterday as he played the big room at the Mobile World Congress trade show in Los Angeles. The Federal Communications Commission chair focused on topics he knows well – spectrum, network security, infrastructure deployment, service access – and mostly steered clear of weaknesses that have rightly drawn down a deluge of criticism on him: local government operations, common carrier/net neutrality policy and a taste for industry cheerleading.

Pai touted the FCC’s “5G Fast Plan”, which includes opening up more spectrum for mobile broadband use, building fiber backhaul and, more controversially, preempting local and state control over public right of ways and the assets they install, and own, there. He said his highest priority is closing the digital divide, particularly in rural areas, a job he compared to the federal rural electrification program that began 80 years ago…

I didn’t underestimate, by the way, the impact that 5G could have in some of these rural areas. This often one of the questions I get – ‘well, isn’t it just simply a densely populated urban use case?’ That is not the case at all…When you think about what farms and ranches are, it’s not simply the tangible things you can see, like corn, and soybean and wheat growing. These are essentially huge amounts of data that need to be uploaded into the cloud, analysed quickly and then the services that you need, to be deployed at scale. Similarly, I visited a farm recently in North Dakota…where we visited a corn farm that’s using connected combines to analyse virtually every single square yard…to analyse everything from the fertiliser that needs to be deployed on that square yard, the yield that they got this year compared to last year. All of that is going to require high bandwidth, symmetric service. I think that’s a particular 5G use case that’s going to be really compelling.

Pai said that the “$20 billion” Rural Digital Opportunity Fund, which the FCC is spinning up to replace the Connect America Fund program, will “create some of the hard infrastructure” to support 5G development in rural areas, such as “the fiber infrastructure that’s needed for backhaul”.

He’s right about all of that. 5G-class wireless connectivity can have huge benefits for agriculture and rural communities. The question remains, though, will it even happen? To date, the FCC’s rural broadband subsidies have mostly been spent on slow, outdated DSL technology, and not on modern broadband infrastructure. That needs to change.

Federal court fast not-so-slow tracks appeals of FCC’s preemption of local pole ownership

by Steve Blum • , , , ,

The good news is that the appeal of the Federal Communications Commission’s preemption of local ownership of streetlight poles will be fast tracked. The not so good news – which isn’t exactly news to people who follow such things – is that fast is a relative term.

An order issued yesterday by the ninth circuit federal appellate court in San Francisco granted a request “to expedite oral argument” in the case, made by dozens of local governments. What that means is that the court is looking at “dates for February 2020 and the two subsequent…months” for those arguments to happen.

The judges hearing the case will also have to decide whether to handle everything at once, or break it up into more manageable bits. The primary case involves two decisions made by the FCC last year, both dealing with the way state and local governments manage access to roads and anything else considered to be the public right of way, and the degree of ownership control they can exercise over structures, such as light poles or traffic signals, they install there. One decision dealt mostly with deployment of wireline telecoms infrastructure, the other with wireless facilities.

One issue that’s particular to municipal electric utilities – whether federal law allows the FCC to regulate their utility poles – was separated out earlier. The cities and counties litigating the main case asked for arguments for and against one touch make ready rules for privately-owned utilities to be heard separately. Yesterday’s order said the three judge panel will sort that out later.

Assuming that oral arguments happen sometime between February and April, and the judges issue a decision in a three to six month time frame (typical, but it could be longer or shorter), then we won’t know if the FCC’s decisions will stand until this time next year. That’ll add to the uncertainty faced by cities as they try to manage the expected avalanche of permit applications for small cell facilities and associated fiber optic installations.

Cities ask federal court to speed up review of pole ownership preemption, FCC says keep it slow

by Steve Blum • , , , ,

La small cell

Local governments from around the U.S. asked the federal appeals court in San Francisco to speed up consideration of their challenge to the Federal Communications Commission preemption of local ownership and control of the public right of way and assets located in it, such as street light poles and traffic signals.

In a motion filed last month, they told judges that on the one hand, disputes are piling up, and on the other, the FCC is aggressively pushing ahead…

First, there are several other cases progressing through the lower courts that will be affected by the outcome of this appeal…Delay in resolution will simply complicate the work of district courts and Circuit Courts of Appeal throughout the country, as more applications are filed and more disputes arise.

Second, this appeal is a matter of great importance to virtually every locality in the nation. While this appeal is pending, Local Government Petitioners and Supporting Intervenors and similarly situated parties are confronted with uncertainty as to how to develop and apply local standards for small cell deployment, which is rapidly occurring…

Third, the Commission is not waiting for this Court to decide the validity of the Orders challenged on appeal. In fact, the Commission is currently building on those Orders, which makes possibly unwinding them all the more difficult.

The FCC opposes anything that would speed up what increasingly looks like a case it will lose. Its response says, in effect, there’s no reason to hurry, because any problems that are created can be fixed later. That was the gist of a ruling earlier this year by federal appellate judges in Denver, just before they handed everything off to their colleagues in San Francisco.

That’s a line of argument that might apply equally well to the FCC’s preemption orders, which also set tight deadlines for action on permit applications filed with local government by telecoms companies.

Net neutrality ruling sinks FCC local pole ownership preemption theory

by Steve Blum • , , , ,

Although a federal appeals court in Washington, D.C. blessed the Federal Communication Commission’s “2018 Order” repealing network neutrality rules, the judges hearing the case overturned one section that tried to preempt any effort by state or local governments to step into the gap. If the plain language of Tuesday’s opinion is also applied to the FCC’s attempt to preempt local ownership and control of street light poles and other publicly owned assets located in the public right of way, then it’s a slam dunk bet that it’ll be overturned too.

Last year, the FCC issued two far reaching decisions preempting nearly all state and local authority over construction of broadband infrastructure, one dealing with small cell sites and the other dealing primarily with wireline projects. It claimed the authority to do so based on an expansive interpretation of federal communications law that boiled down to we’re in charge of national broadband policy, so what we say goes for everyone.

“No dice”, said the D.C. appeals court. Its opinion made two particular points: 1. congress never gave the FCC the necessary authority to occupy policy territory that legally belongs to states, and 2. if the FCC wants to exercise the authority it does have, it has to do so case by case, by the evidence…

Not only is the Commission lacking in its own statutory authority to preempt, but its effort to kick the States out of intrastate broadband regulation also overlooks the Communications Act’s vision of dual federal-state authority and cooperation in this area specifically. Even the 2018 Order itself acknowledges the States’ central role in “policing such matters as fraud, taxation, and general commercial dealings…remedying violations of a wide variety of general state laws,” and “enforcing fair business practices” — categories to which broadband regulation is inextricably connected…

We have long recognized that “whether a state regulation unavoidably conflicts with national interests is an issue incapable of resolution in the abstract,” let alone in gross…

Because a conflict-preemption analysis “involves fact-intensive inquiries,” it “mandates deferral of review until an actual preemption of a specific state regulation occurs.” Without the facts of any alleged conflict before us, we cannot begin to make a conflict-preemption assessment in this case, let alone a categorical determination that any and all forms of state regulation of intrastate broadband would inevitably conflict with the 2018 Order.

The ninth circuit federal appellate court in San Francisco is hearing the challenges to the FCC’s blanket preemption of local and state authority over right of ways and public property. It’s not obligated to follow the D.C. circuit’s opinion, but given that it has a history of being even more skeptical of federal agency supremacy than its Washington colleagues, it’s heavy odds that it will.

Hope for California’s net neutrality law, as court upholds repeal of federal rules

by Steve Blum • , , , ,

Open internet dont tread on me 2

The Federal Communications Commission’s republican majority acted properly and within the limits of its authority in 2018 when it cancelled network neutrality rules approved in 2015 by the then-democratic controlled FCC. Mostly. A three judge panel on the federal appellate court based in Washington, D.C. – aka the DC circuit – issued its opinion yesterday, providing support for California’s enactment of its own net neutrality rules, but otherwise rejecting most of the arguments made by net neutrality advocates.

But not all. The judges overturned “the portion of the 2018 [FCC] order that expressly preempts ‘any state or local requirements that are inconsistent with its deregulatory approach’”. That action could open the door to state-level net neutrality regulations, similar to what the California legislature enacted last year when it approved Senate Bill 822.

The ink on governor Jerry Brown’s signature was barely dry, when a plague of lobbyists and lawyers descended on Sacramento and challenged the new law in federal court. Yesterday’s ruling removes a major pillar of their case – the FCC’s attempt to specifically preempt state-level action – but they still have a general argument to make, based on federal authority over interstate commerce. Winning that argument will be harder though, because the D.C. circuit opinion resolves a regulatory paradox in California’s favor.

Following the decision, the bill’s author, state senator Scott Wiener, tweeted “SB 822 remains intact & isn’t preempted”.

Even so, SB 822 is in limbo. California attorney general Xavier Becerra agreed not to enforce it while the case against the FCC’s net neutrality repeal was underway. Yesterday’s decision is a major milestone, but not necessarily the last word. Becerra issued a press release claiming victory, but it didn’t mention what he plans to do about reviving and defending SB 822.

The appeals court judges also said the FCC has to flesh out some aspects of its net neutrality decision in light of public safety, pole attachment and lifeline program considerations, ruling in some specific respects the agency’s actions were “arbitrary and capricious”. That’ll be a paper-pushing exercise; any changes that result will almost certainly be minor.

But other than that, the D.C. circuit panel said that the FCC’s rollback of net neutrality rules will stand.

The judges cited more than 20 years of precedent – and back-and-forth FCC decisions – regarding how broadband service is or isn’t regulated. The central question was whether congress gave the FCC the authority to make such decisions, and the judges’ answer is yes. They pointed out that they “do not inquire as to whether the agency’s decision is wise as a policy matter; indeed, we are forbidden from substituting our judgment for that of the agency”. The FCC’s decision has to be “reasonable”, though, and the judges determined that it was. Much of the nearly 200 pages of the opinion was devoted to explaining why. One recurring theme was that, in many respects, the republican-majority FCC simply restored previous, widely accepted rules overturned by the democratic-majority in 2015. The judges also rejected arguments that, as a whole, the FCC’s decision was arbitrary and capricious, although they said in some respects the commission’s work “is no model of agency decision making”.

Yesterday’s decision can be appealed, either directly to the federal supreme court, or by asking all the judges assigned to the D.C. circuit to review en banc the ruling made the opinion of the three judge panel. It could yet be a long time before we get a final answer.

Sprint took megabuck subsidies for inactive lifeline customers, federally and in California

by Steve Blum • , , , ,

Sprint mwca 2018

Sprint could be collecting payments from California’s broadband and telephone lifeline subsidy program for hundreds of thousands of inactive accounts. A Federal Communications Commission press release accuses Sprint of taking “tens of millions of dollars” for 885,000 federally subsidised customers who weren’t using the service anymore. That represents 30% of Sprint’s national lifeline customer base, says the FCC.

Sprint is the 500 pound gorilla of the California Public Utilities Commission’s lifeline program, which supplements the $9.25 monthly federal subsidy with up to $15 per month. According to a brief submitted by the CPUC’s public advocates office during the ongoing review of Sprint’s proposed merger with T-Mobile…

Sprint, through its Virgin Mobile brand, is the only [facilities-based mobile network operator] that participates in the California LifeLine program. Under the trade name of “Assurance Wireless brought to you by Virgin Mobile,” Virgin Mobile serves roughly 482,000 LifeLine wireless customers in California, over 200,000 more customers than the next largest LifeLine wireless carrier, and more than all other LifeLine wireline carriers combined.

If the FCC’s 30% “inactive” rate applies equally to Sprint’s California lifeline base, then the CPUC gave the company subsidies for 145,000 non-existent customers. There isn’t enough information available yet to figure out how much money that represents, but on a back of the envelope basis, 145,000 inactive accounts subsidised at $15 each comes out to about $2.2 million per month. Even given that every payment wasn’t the $15 max, it doesn’t take too many months for California’s outlay to land in the FCC’s “tens of millions of dollars” ballpark too.

The Communications Workers of America union is one of the leading opponents of the T-Mobile/Sprint merger, in California and federally, and has already asked the FCC to put everything on hold “until [Sprint’s corporate] character issue is investigated and resolved”. It’s a fair bet that T-Mobile and Sprint will have to answer for the false billing – Sprint is calling it an “error” dating back to 2016 – as they try to gain CPUC approval for their merger. A hearing to decide next steps in the case is scheduled at the CPUC on 10 October 2019.

FCC’s weed whacker work fails another court test

by Steve Blum • , , , ,

The Federal Communications Commission’s republican majority is now 0 for 2 in federal appeals court challenges to its weed whacker campaign to prune back telecommunications and media regulations. In an opinion released yesterday, the third circuit federal appeals court, based in Philadelphia, voted 2 to 1 to overturn an FCC ruling that loosened restrictions on media ownership, because republican commissioners blew off concerns about the effect it would have on women and minorities. In August, Washington, D.C.-based federal appellate judges overturned an FCC decision that scrapped environmental reviews for small cell site, saying it was “not logical and rational”.

The Philadelphia judges were likewise scathing in their criticism of the process, or lack thereof, that the FCC used in reaching its decision. It’s the second time in two months that federal appellate judges have rejected a controversial, party line FCC ruling because the republican majority did not do its homework…

Problems abound with the FCC’s analysis. Most glaring is that, although we instructed it to consider the effect of any rule changes on female as well as minority ownership, the Commission cited no evidence whatsoever regarding gender diversity…

Even just focusing on the evidence with regard to ownership by racial minorities, however, the FCC’s analysis is so insubstantial that it would receive a failing grade in any introductory statistics class.

The case has to do with how many TV stations a single company can own, and whether a company can own a TV station and a newspaper in the same media market. It’s not an issue I follow closely, so if you want more background on it, take a look at this story on CNET by Marguerite Reardon.

The court’s opinion has broader significance, because it shows an increasing lack of deference to the FCC’s supposed policy expertise and decreasing tolerance for sloppy decision making that begins with an idealogical conclusion and then supports it with sophomoric legal arguments rather than basing it on the evidence in the record. Appellate court challenges to two more FCC rulings – one rolling back Obama-era network neutrality rules and the other preempting local ownership of street light poles and similar infrastructure in the public right of way – are based on similar grounds. A ruling on the net neutrality case could come at any time. The appeals of the right of way decisions still have several months, at least, to run.

Five years and two FCCs later, FTC settles data throttling case against AT&T

by Steve Blum • , , , ,

The slow motion network neutrality enforcement ping pong match between the Federal Communications Commission and the Federal Trade Commission resulted in a data throttling settlement with AT&T, according to a story by Bevin Fletcher in FierceWireless. The details haven’t been released yet, but if approved by FTC commissioners it would end a dispute over how AT&T manages – throttles – the bandwidth consumed by millions of customers with grandfathered unlimited data plans.

AT&T’s mobile data throttling isn’t limited to legacy all-you-can-eat customers, at least according to research published last year, but the FTC’s enforcement action is limited to legacy data plans that are no longer offered.

The dispute tracks with the history of net neutrality regulation. It began in 2014 with a consumer rights lawsuit filed by the FTC against AT&T, when there were no federal rules in effect regarding net neutrality. When the Obama-era FCC declared broadband to be a common carrier service, AT&T’s response was to claim the FTC no longer had jurisdiction…

The agency said AT&T had been throttling speeds since 2011, and in some cases customers’ data speeds were reduced by nearly 90%. AT&T previously said it has been “completely transparent" with customers since starting its unlimited data throttling practices in 2011.

AT&T’s website currently discloses that for unlimited plans “AT&T may temporarily slow data speeds when the network is busy.”

AT&T had also argued the FTC lacked authority under the then-imposed net neutrality regulations enforced by the FCC, which in 2015 reclassified internet service providers as common carrier telecommunications service providers under Title II of the Telecommunications Act.

Then the Trump administration’s FCC reversed that ruling, saying that broadband isn’t a common carrier service, but instead it’s an information service that’s overseen by the FTC. That reversal led to the pending settlement.