Tag Archives: middle mile

CPUC knows how to end taxpayer-funded middle mile fiber grabs. As it should

by Steve Blum • , , , ,

Connected central coast 625

It can be done right. As it has.

One of the challenges to broadband subsidy proposals submitted to the California Public Utilities Commission this week shows why open access middle mile fiber is a necessity for closing rural broadband gaps, and how the lack of it is a major barrier to improving Internet service in California.

Plumas Sierra Telecommunications, which is the telecoms arm of the Plumas Sierra Electric Cooperative, objects to Frontier’s request for money to pay for a building a middle mile fiber route to reach the towns of Herlong and Janesville in Lassen County. Plumas Sierra doesn’t object to spending California Advanced Services Fund (CASF) subsidies on middle mile fiber. It wants Frontier to make use of the CASF-funded middle mile fiber that it’s built, rather than using more CASF money to overbuild it.

Parsing Plumas Sierra’s objections illustrate a major problem with the way in which CPUC approves middle mile projects. Plumas Sierra claims that it “already provides wholesale services via its existing middle-mile fiber-optic infrastructure with high-quality and reasonable price levels”. Translation: we don’t lease subsidised dark fiber to competitors, but we will sell them higher priced services over it.

Frontier does the same thing. It received $11 million from CASF last year for a project to build 137 miles of middle fiber and upgrade DSL facilities in Lassen and Modoc counties. Dark fiber strands on that network are not available on the open market.

The result is a patchwork of taxpayer-funded middle mile routes scattered across rural California that private companies can use to extract monopoly profits – “rents”, in microeconomic terms. CASF rules allow broadband companies to indulge in this sort of rent seeking behavior at public expense.

There are exceptions, though. The CPUC recently imposed open access obligations on a middle mile project that it funded for the Karuk Tribe in Humboldt County, and six years ago it did the same for a route now owned by Crown Castle in Santa Cruz and Monterey counties. That project has been up and running for three years, and supports a growing ecosystem of independent broadband operations (see the image above).

The CPUC can change its open access middle mile policy on its own. Or perhaps the California legislature can be persuaded to do it. Senate bill 1130 is still alive at the state capitol. As presently written, it would make open access mandatory for any CASF-subsidised middle mile infrastructure. Either way, it needs to be done.

Zayo, a major fiber optic network owner, sold to private investors

by Steve Blum • , , , ,

Zayo bay area

Zayo announced yesterday that it had “a definitive merger agreement to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund”. The $8.2 billion deal takes Zayo off the New York Stock Exchange and puts it in the hands of owners who might have the patience to play the long game against the monopoly-model telcos – AT&T, Verizon and CenturyLink, particularly – who control the lion’s share of long haul and metro fiber in the U.S.

Might.

In the statement announcing the deal, the head of Digital Colony, Mark Ganzi, at least spoke encouraging words. He said Zayo “has a unique opportunity to meet the growing demand for data associated with the connectivity and backhaul requirements of a range of customers”. That’s true enough, and if – if – Ganzi is sincere it would indicate that his Plan A is to make Zayo a stronger competitor, rather than flipping it as quickly as possible to one of the big players.

According to a story in Bloomberg by Gillian Tan and Nabila Ahmed, the deal will cool down recent pressure to perform from shareholders…

Zayo, led by Chief Executive Officer Dan Caruso, has been under pressure from activist investors including Starboard Value and Sachem Head Capital Management.

After peaking at $39.35 last July, Zayo shares tumbled as low as $20.46 as the company struggled through organizational changes and concerns that the market for fiber lines was becoming overcrowded. The shares began to rebound late last year on news that a sale was in the works. In March, it announced that it was evaluating strategic alternatives.

Zayo owns or controls a lot of fiber in California. The map above shows its metro fiber network in the Bay Area. It also owns a middle mile route between the Bay Area and Sacramento, among other fiber assets. With the sale of Level 3 to CenturyLink in 2017, Zayo is one of the few big, independent sources of fiber remaining in California.

As the press release noted, Zayo’s new owners need to get regulatory approvals before they can take possession. That includes sign off by the California Public Utilities Commission. Zayo holds a certificate of public convenience and necessity (CPCN), which allows it to take advantage of privileges, such as the ability to install conduit and fiber in public streets and to attach cables to utility poles. It obtained the CPCN in 2008 when it acquired NTI, a smaller telecoms company. The CPUC had to approve the purchase then, and will have to do so again with this latest transaction.

Verizon buys enough fiber to reach Mars, sorta

by Steve Blum • , , ,

Make it quick.

Verizon is pumping up the volume about its three year deal with Corning to spend $1.05 billion on “fiber optic cable and associated hardware”. It even got a congratulatory (and self-congratulatory) press release from Federal Communications Commission chairman Ajit Pai. As it should It’s a big commitment and will add a considerable amount of potential bandwidth to the U.S. supply.

Verizon also claims that it will be buying “up to” 20 million kilometers (12.4 million miles, it helpfully adds) of “optical fiber” each year, from 2018 through 2020. That’s enough optical fiber to wrap around the Earth almost 1,500 times. It could circle the Sun almost 100 times. It’s even enough optical fiber to build a middle mile line from Earth to Mars. Until it snaps off a few minutes after closest approach, anyway.

It is truly a big deal, but not as big a deal as a quick glance might lead you to believe. Verizon is careful to distinguish between “optical fiber”, which is a strand of glass, and “fiber optic cable”, which is a bundle of optical fibers. Cables come in many sizes, but 432-strands are typical for mobile carriers these days. Cables with 864 strands are not unheard of, and 288 is probably as small as you’re likely to see from them (granted, there are unlikely builds out there). But let’s say 432 strands.

That implies a build of 29,000 miles a year, or 87,000 miles total. At a total cost of $1.05 billion and allowing a bit for “associated hardware”, that comes to somewhere in the neighborhood of $2 a foot, which is in the volume discount ballpark for 432-strand cable. I’m sure it’s more complicated than that, but in round numbers it looks like Verizon is planning to build something like 80,000 to 100,000 miles of fiber plant over the next three years.

That’s a lot of backhaul, and a lot of cell sites.

CPUC broadband subsidy skepticism grows, grants on hold

by Steve Blum • , , , ,

A proposal to build a 300 mile middle mile fiber network connecting remote communities in northern California to high speed Internet access might or might not be in line for extra cash. The Digital 299 project would go through the mountainous terrain along state route 299 from Redding in the Sacramento Valley, through Trinity County and on to Eureka on the Humboldt County coast.

Yesterday, the California Public Utilities Commission weighed a recommendation from staff for a $41 million subsidy from the California Advanced Services Fund against pleas from local communities along the proposed route for an extra $6 million that they believe is necessary to make the project financially viable. They also asked for a waiver of performance bond requirements and closer coordination of environmental reviews.

No action was taken, but commissioner Carla Peterman promised to draft an alternate version of the decision and bring it back for a vote. It’s an open question, though, whether at least two other commissioners will go along with it. Liane Randolph indicated she was favorably inclined, but as he often does, CPUC president Michael Picker complained about a lack of strategic broadband vision – ironic, since it’s his job to provide that kind of leadership – and said “I’m likely to vote against this under any circumstances”.

It was the first time the two newly appointed CPUC members, Martha Guzman Aceves and Clifford Rechtschaffen, had a chance to consider CASF broadband infrastructure subsidy policy or specific proposals. Rechtschaffen echoed Randolph’s comments, but Guzman Aceves joined Picker in taking a harder line. Like Picker, she also pushed back on a second CASF grant proposal, for the Light Saber project, a small fiber-to-the-home system in a leafy neighborhood in southern Santa Clara County. It’s a much smaller build, but still involves a substantial amount – $1 million – and Guzman Aceves was skeptical about spending state subsidy money on high income communities.

The Light Saber proposal was pulled indefinitely, at least until commissioners have a chance to consider setting broadband deployment priorities. Digital 299 will likely back for a second look sooner, perhaps at the next commission meeting in March.

More push for more money for northern California middle mile project

by Steve Blum • , , , ,

The Digital 299 middle mile fiber project under consideration for a $42 million subsidy from the California Advanced Services Fund (CASF) will have been under review for a year and half, if the California Public Utilities Commission votes on it as scheduled next week. Yesterday was the deadline for submitting comments – pro or con – and seven organisations did so.

The applicant, Inyo Networks, is asking the commission to increase the grant to $49 million. The original request was for $51 million but it was cut because CPUC staff determined that the area is largely underserved – i.e. substandard service is available – rather than completely unserved following challenges by local wireless providers. The difference is that underserved areas are eligible for subsidies amounting to 60% of construction costs, while unserved areas get 70%. One of those wireless operators is back at it, asking the commission to reject the grant. Velocity Communications claims it’ll be upgrading service in the area real soon now.

The California Center for Rural Policy and the California Emerging Technology Fund filed comments backing the request for more money. So did Frontier Communications, the incumbent telephone company along much of the 300 mile route. But Frontier also backed away from any commitment to upgrade its own customers in the area to the CPUC’s minimum standard of 6 Mbps download and 1.5 Mbps upload speeds.

Other opposition came from the usual suspects. The proposed route links the northern California coast and the rugged and sparsely populated terrain along state route 299 to long haul fiber in the Sacramento Valley. Of necessity, a middle mile project has to begin in a served area and it happens that the connection points are in or near Charter Communication’s service area around Redding. So Charter and the cable industry’s Sacramento lobbyists objected, asking the commission to slow things down. Sounds so reasonable, except that the grant application has already been under review for a more than a year longer than allowed by the CPUC’s rules. Delay a project long enough, and you’ll kill it.

Fiber route from California’s north coast to central valley in line for $42 million subsidy

by Steve Blum • , , , ,

Another major middle mile fiber project is queued up for approval at the California Public Utilities Commission. A draft decision that would grant a $42 million subsidy from the California Advanced Services Fund (CASF) to the Digital 299 project was published just before the Christmas break and is expected to be up for a vote by commissioners in February. Inyo Networks – the company behind the Digital 395 system and other CASF-funded projects – made the proposal in August 2015.

The project would build a nearly 300 mile fiber optic line west from the Interstate 5 corridor south of Redding, where connections to long haul intercity networks are available, through the mountains of Shasta, Trinity and Humboldt counties along state route 299, to two locations along the Pacific coast, at Eureka and Trinidad. According to the draft resolution

With this project, Inyo plans to: (1) bring ultra-fast and secure broadband backhaul to isolated underserved and unserved communities along the Highway 299 corridor and to those adjacent within a 15-mile distance from the backhaul; (2) establish peering points in Eureka and in the North Sacramento Valley for interconnection with other transport providers to ensure network reliability and improve the quality of educational, government, public safety, and health facilities in the project area; (3) improve cellular data services in a heavily forested, mountainous region;2 and, (4) provide high-speed, last-mile service to the community of Lewiston in Trinity County.

The project includes a small last mile component in Lewiston in Trinity County, where residents will be able to buy a symmetrical gigabit of Internet service for $60 a month, and a discounted 25 Mbps package for $30 per month. The bigger benefit, though, will be to other retail broadband service providers and major institutional users – mostly state, local and tribal agencies – along the route, and to communities along California’s north coast that lack redundant, high speed middle mile connectivity to major Internet exchanges.

No lame duck FCC decisions, says Wheeler

by Steve Blum • , , , ,

Or better yet, dead stop.

Tom Wheeler is leaving any significant decisions on telecommunications policy to the incoming Trump administration and the new republican majority that will follow on the Federal Communications Commission. The FCC chairman spoke after a very brief open meeting yesterday, saying he has not spoken with anyone from the incoming Trump administration, but he is bowing to pressure from republicans in congress, who want him to walk away from the table now. Wheeler’s answer was okey-dokey and, according to a story in FierceWireless by Colin Gibbs, told reporters that his decision to yank nearly everything off of the FCC’s agenda…

…was obviously a consequence of the requests to avoid action on issues that were deemed controversial during this transition between administrations. Certain of my colleagues identified the items on today’s proposed agenda as controversial and asked they not be considered today. I hope that this doesn’t mean that these issues won’t be quickly addressed after the transfer of leadership from this agency.

In other words, it’ll be up to the next FCC chairman and his or her majority to decide if wholesale broadband facilities and services will be regulated and how rural mobile subsidies will be structured – those were the two biggest issues that were put on hold yesterday. Don’t expect new open access requirements for set top boxes, either. Even the privacy rules adopted last month might yet be withdrawn.

He blamed the controversy on big telecoms companies, saying “all of these matters are so-called controversial, because they are opposed principally by the largest incumbent firms in the sector”.

Wheeler’s surrender might have been coordinated with the lame duck Obama administration, but it was so sudden and so complete that you have wonder if there isn’t a different motive behind it. He’s a successful lobbyist and power broker who operated over the decades with equal skill in republican and democratic administrations. If his goal is to continue that career, then he might have reckoned that he’ll be better positioned if he doesn’t piss off the new boss.

Wheeler surrenders to republicans, cancels today’s FCC agenda

by Steve Blum • , , , ,

Unconditional.

The Federal Communications Commission won’t be voting today on price controls and other regulations for wholesale broadband service and facilities. Nor will it address mobile roaming standards, or adopt rules for mobile infrastructure subsidies or set requirements for audio narration of video content for the people with vision impairments. A planned (but not revealed) enforcement action has also been scrapped. All that’s left for commissioners to do today is vote on a Freedom of Information Act request.

Chairman Tom Wheeler was reacting to demands from republican members of congress to back off from making any controversial lame duck decisions before the new administration takes office and installs its own chairman with a voting majority. Maybe overreacting is a better description – that’s how John Thune, the chairman of the senate commerce committee described it when the Morning Consult news site asked him about it.

There’s no question though that the reason for the sudden and rapid retreat was pressure from congressional republicans, who are generally threatening agency heads with a life of eternal oversight hearings if they do anything interesting before Donald Trump takes office. According to the Morning Consult story by Brendon Bordelon

An FCC spokesman confirmed the schedule change was driven by Tuesday’s full-court press from Republicans in Congress urging the FCC to avoid controversial decisions in the wake of last week’s surprise election result.

“In light of the congressional letters we received, we have revised the meeting agenda,” the spokesman told Morning Consult in an email.

Technically, the wholesale broadband regulations are still on the table – the secret table; details haven’t been made public – and could be adopted while Wheeler still has a democratic majority to lean on. But that’s not the way the betting is going. Right now, a bigger priority seems to be to set the stage for the next four years. Assuming the FCC remains in the current deep freeze until January, the big question is whether democratic commissioner Jessica Rosenworcel will get a confirmation vote from the republican senate – there’s a good chance she will if Wheeler resigns quickly enough. If he hangs on, though, she’ll lose her seat at the end of the year.

FCC set to cut legacy wholesale broadband prices, oversee faster services

by Steve Blum • , , ,

Competitive split.

There’s a 45 Mbps divide in the wholesale bandwidth business, and the Federal Communications Commission is preparing new and separate regulations to address both sides. It’s one of the three key issues that chairman Tom Wheeler promised the cell phone industry he would address to clear the path for deployment of 5G technology, the other two being spectrum and local restrictions on wireless sites.

In a summary – Wheeler doesn’t release drafts of new rules to the public, preferring instead to limit his conversations to industry stakeholders – he described prices for (mostly) legacy broadband services at 45 Mbps and below as “artificially high” and outlined a plan to first cap current rates and then chop them over time, by as much as 20% in the next the three years alone.

There’s something like a market, though, at higher bandwidths, he says

For packet-based services and circuit-based services above the level of [45 Mbps], there is evidence of emerging competition and falling prices. New entrants include cable companies that, with their already ubiquitous networks, are primed to challenge incumbent [telephone companies]. In addition, revenues from high- bandwidth offerings enable competitive [telephone companies]…to deploy their own networks to serve the most attractive customers.

Instead of directly regulating prices, Wheeler proposes to reaffirm “that, with rare exceptions, providers, including packet-based Ethernet providers, are common carriers and as such need to deal on reasonable and nondiscriminatory terms”. Instead of setting prices in advance, he falls back on his version of “light touch” regulation, which is to let companies play the game as they please, with the FCC standing in the middle, acting as a referee. It’s a lawyer and lobbyist-centric approach and one that Wheeler, a former top lobbyist for both the cable and mobile industries, favors.

The new rules could appear at any time. Instead of a formal vote at a public meeting, Wheeler is privately circulating the full text of the rules among his current colleagues. When at least two other commissioners sign off on it, it’s a done deal. Then, and only then, do we get see what it says.

FCC chair Wheeler says fiber companies can’t hold 5G hostage

by Steve Blum • , , , ,

Valediction.

Backhaul is critical to development of next generation mobile networks, FCC chairman Tom Wheeler said in Las Vegas this morning, promising the commission will ensure “that lack of competition in some places cannot be used to hold 5G hostage”.

It doesn’t look like the Federal Communications Commission will be taking up pricing and access regulations for middle mile backhaul in September, though. In what could be his final CTIA keynote as FCC chair, Wheeler promised new rules, but “before the end of this year” and not before the end of the month. Might be this month, but that didn’t seem to be the direction that Wheeler is leaning.

Wheeler was vague about the timing of new privacy rules but referred to them as “imperative”. Privacy, though, wasn’t on his critical path for deployment of 5G wireless networks over the next decade. Wheeler pointed to three issues – backhaul, spectrum and local restrictions on cell sites – as the three biggest policy bottlenecks that must be overcome. He didn’t exactly declare war on “nimbyism and the recalcitrance of local authorities” but he didn’t have kind words in that regard either.

The FCC’s attempt to clear 120 MHz of television spectrum and re-use it for mobile broadband will be scaled back to 114 MHz and a new reverse auction will be launched next week, Wheeler said. Television stations wanted, in aggregate, $88 billion to give up 120 MHz, but wireless companies were only willing to pay $23 billion. The hope is that cutting back on the bandwidth will bring the two sides closer together.

New rules for cable set top boxes, which is the third major policy decision in the FCC’s hopper, weren’t mentioned. The agenda for this month’s commission meeting will be released tomorrow. We’ll find out then if any of those three issues – backhaul pricing (business data services in FCC-speak), privacy and set top boxes – will be decided soon.