Tag Archives: monopoly

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 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.

CPUC reaffirms T-Mobile/Sprint approval, but wrangling over California jobs continues

by Steve Blum • , , , ,

Tmobile store la 23oct2019

The conditions imposed by the California Public Utilities Commission when it approved T-Mobile’s takeover of Sprint will stand, at least for now. The CPUC decided earlier this month to reject a request to re-do its decision made by opponents of the deal. Tweaks were made to the April decision that approved the merger, but those amount to yes, we meant what we said.

Requests for rehearing are often made but rarely granted. It’s a procedural box that needs to be ticked before a CPUC decision can be challenged in court, either by T-Mobile or its opponents.

T-Mobile is also asking for changes to the CPUC’s conditions, but it’s using a different process – a petition for modification of the decision. Among other things, it wants to remove a requirement to add 1,000 new jobs while keeping the combined T-Mobile/Sprint workforce in California more or less intact.

Although T-Mobile “voluntarily committed” to keep its post-merger California headcount the same as the pre-merger total, that included a plan to hire 1,000 people for a new call center in Fresno County. So 1,000 people elsewhere in California would lose their jobs. Or move to Fresno to take presumably lower paying positions.

In its objection, the Communications Workers of America, the primary telecoms union in California, said that data scraped from T-Mobile’s website shows the bloodletting is already underway

From April 2020 to July 2020, in California, T-Mobile closed 16% of Sprint retail locations, 6% percent of T-Mobile branded stores and 2% of Metro stores. 6% of Boost stores were also closed during this period.

Industry sources back up that assertion.

T-Mobile didn’t dispute those numbers in its response, instead repeating its argument that the CPUC doesn’t have the authority to tell it to hire more people.

Modification petitions usually come to the same end as rehearing requests: technical tweaks might be made, but the substance of the CPUC’s original decision will stand. Whether the CPUC can enforce the decision is still an open question, though. I don’t doubt it’ll try, but given T-Mobile’s defiance, federal courts will provide the final answer.

Links to arguments, exhibits and other paperwork filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.

Cable companies can’t cherry pick “wealthy customers” but they can compete with rural telcos, CPUC decides

by Steve Blum • , , , ,

Tesoro viejo construction 25aug2019

Cable companies and other “competitive local exchange carriers” (CLEC) will be able to offer telephone service in (mostly) rural areas of California formerly reserved for small, independent telephone companies. The California Public Utilities Commission voted on Thursday to open up rural local exchange carrier (RLEC) territories to wireline voice competition. There were no changes to the first draft of the new rules proposed by commissioner Martha Guzman Aceves last month.

That permission comes with much needed strings attached, Guzman Aceves said…

It’s a little of an ironic position for me knowing that many of the carriers that want to compete in these rural territories often are some of the major barriers of competition elsewhere. But nonetheless, we need to comply with federal and state law, and open these territories.

The major condition obligates cable companies and other CLECs to serve the same ratio of residential to commercial and low income to affluent customers as the RLEC they’re targeting…

This is a particularly important condition because of the propensity to cherry pick – by carriers throughout the state – and to only serve certain demographics. By meeting this proportionality measure, it guards against serving only the subset of wealthy customers or commercial customers…Doesn’t mean they have to serve the whole area. It means their self designated territory has to proportionately have the same demographics.

The hope is that taxpayers won’t be stuck with with the tab for ever increasing subsidies for low income, sparsely populated communities. RLECs, which were originally formed to deliver phone service in remote areas shunned by AT&T, are supported by “universal service” programs that are paid for by taxes on everyone’s phone bills. Cable companies, on the other hand, carefully choose who they will and won’t serve based on how much money they expect to get from a given neighborhood or community.

The usual suspects submitted their usual arguments against the new RLEC competition rulebook, but to no avail.

The Sacramento front organisation for Comcast, Charter Communications and other cable companies – the California Cable and Telecommunications Association – indignantly objected to anything that inconveniences them. The RLECs don’t like the new rules either, but at least they tried to negotiate – they asked for changes that would have allowed cable companies to enter their territories but with more stringent service obligations. Guzman Aceves’ final draft rejected both side’s arguments.

Bringing 21st century broadband to rural California will change a 20th century business (and subsidy) model

by Steve Blum • , , , ,

One of the legacies of state and federal 20th century universal telephone service subsidy programs is an ecosystem of small, independent telephone companies, often owned by families that live in the isolated rural communities that they serve. A California Public Utilities Commission decision, proposed by commissioner Martha Guzman Aceves and due for a vote in August, would begin to allow modern competitors into that ecosystem.

These rural local exchange carriers (RLECs) – serve isolated communities and individual customers in often rugged and sparsely populated terrain that AT&T historically avoided. Or at least that’s how they got their start decades ago, when rotary dial telephones were high tech and one “party line” circuit might serve (and entertain) half a dozen or more homes. Most of California’s independent telephone systems were swallowed up by bigger companies – Frontier Communications has the largest share – but 13 rural telcos, often collectively referred to as the “Small LECs”, remain.

As California’s population grew from 7 million people just before World War 2 to 40 million today, suburban and exurban development sprawled into the borderlands of highly subsidised RLEC territories. Cable companies followed, offering profitable television service to new, densely built homes with enough disposable income to pay for it.

Cable companies can provide broadband and video service wherever they please, but in order to offer full, facilities-based telephone service they need permission – a certificate of public convenience and necessity – from the CPUC. They are allowed to compete with AT&T and mid-sized telcos like Frontier, but not in the remaining RLEC territories where they can generate a sufficient return on their investment by cherry picking affluent new developments and ignoring communities with fewer homes and lower household incomes. The fewer profitable customers an RLEC has, the more taxpayer dollars it needs to serve the remaining ones.

Guzman Aceves’ draft decision tries to mitigate that problem by requiring any company competing with RLECs for telephone customers serve everyone within a “self-designed” service area that has “a proportional number of residential to commercial customers, and a proportional number of low-income and non-low-income customers”.

If approved, the new rules would bring the benefits of 21st century competition to a relative handful of rural Californians. Whether RLECs can do the same for the rest, or even simply survive, is a question that will have to be answered by Californian taxpayers.

Regulated or not, broadband is a utility and 25 down/3 up is the minimum needed. For now, CPUC says

by Steve Blum • , , , ,

Caltrans slow 2

Broadband is both a utility service and essential, according to a decision last week by the California Public Utilities Commission. A framework for analysing the affordability of utility services in the aggregate – the total monthly cost of energy, water and telecoms – was approved in a unanimous vote. The methodology sums the cost of the “essential service quantity” of all utilities and compares it a household’s ability to pay it, given all the other expenses – rent, for example – that have to be met, too.

Whether or not broadband is defined as a utility by law – cable companies, particularly, have paid millions of dollars to lawmakers to avoid that – is irrelevant. It’s a monthly expense for a service that meets the dictionary definition of utility.

Commissioner Clifford Rechtschaffen, who authored the decision, explained to his colleagues before the vote…

Essential utility services include gas, electricity, water, and telecommunications. Part of telecommunications must be good quality Internet service. Not just any connection, but high quality Internet service. The covid crisis definitely underscores that as never before.

But what is the “essential service quantity” of broadband? The commission’s decision says it’s 25 Mbps download/3 Mbps upload speeds, which is just a bit faster than originally recommended by staff, before the covid–19 emergency hit. Commissioner Martha Guzman Aceves said those speeds don’t cut it now…

The proceeding really reflects the pre-covid high speed necessity on communications, on broadband in particular – 25 down and 3 up. In my household, I can tell you, when the kids are in Zoom school and my husband and I are working at home, we have four devices on the Internet. And 25/3 is insufficient. If we are zooming, it’s insufficient. Obviously, we’re going to need to update this, as the decision says, we’re going to be updating this, but with covid I really just want to highlight that the basic need, even 25/3, from my own, anecdotal, household, is a greater need.

Rechtschaffen promised that the methodology and the data being crunched will be kept current. There’s no intention of it being static“, he said. ”We’ll definitely be updating it".

CPUC votes today on setting 25 Mbps down/3 Mbps up as California’s “essential service quantity” of broadband

by Steve Blum • , , , ,

Forbes ag tech hartnell alisal demo 13jul2107

The California Public Utilities Commission is scheduled to decide today if it will set a minimum level of “essential” broadband service that Californians need to function and, indeed, survive in the 21st century. After extensive public review of the second draft of a ground breaking staff study of minimum utility service needs and people’s ability to pay for it, a decision drafted by commissioner Clifford Rechtschaffen would revise and then formally adopt the report’s conclusions and methodology.

Much of the proposed decision involves electric, gas, water and voice telephone services, which are traditionally subjects of CPUC regulation. Its jurisdiction over broadband companies and the services they provide – raw Internet access as well as things like voice over Internet protocol (VoIP) service – is controversial. AT&T, and Charter Communications and Comcast’s Sacramento lobbying front “each believe that it is not appropriate for the commission to engage this issue at all”, according to Rechtschaffen’s draft.

Nevertheless, Rechtschaffen sets a minimum broadband service level. The “essential service quantity” for household broadband is pegged at 25 Mbps download and 3 Mbps upload speeds, with a 1 terabyte monthly data cap. That’s the minimum needed to support a family in the covid–19 era…

At this critical time, when COVID–19 response measures have required more essential services to be provided online, including distance learning and telemedicine, a much higher basic speed has become a necessity. On April 24th, Commission President Batjer sent a letter to the internet service providers urging them to provide a minimum speed of 25 Mbps…for their affordable plan offerings It is likely that this shift to digital dependency will continue long after COVID–19 recovery efforts end.

A maximum affordable price isn’t set for any utility service, but a sophisticated method for calculating one is. Affordability is defined as “the degree to which a representative household is able to pay for an essential utility service charge, given its socioeconomic status”.

The minimum standards and the method for benchmarking affordable prices will become an integral element in the CPUC’s management of broadband programs, such as the California Advanced Services Fund. One might also hope that the California legislature takes notice as it considers whether to keep the state’s nominal minimum broadband speed standard at 6 Mbps down/1 Mbps up.

Competition means better broadband for a few rural Californians, CPUC draft says. It should be for everyone

by Steve Blum • , , , ,

Digital 395 19sep2013

Faster and higher quality broadband service will reach some rural Californians if cable companies and other “competitive local exchange carriers” (CLECs) are allowed to compete against rural telcos for phone customers, according to a proposed decision under consideration by the California Public Utilities Commission. Cable lobbyists and lawyers have been pushing for permission to pluck profitable customers from highly subsidised rural telcos – Small LECs, in the jargon – leaving taxpayers to pay an even higher tab to serve the rest.

The solution that’s on the table would require cable companies and other CLECs to agree to build out in wider and more inclusive service areas, and serve everyone in them, in exchange for permission to enter Small LEC territories. Authored by commissioner Martha Guzman Aceves, the draft concludes…

Competition by CLECs in the Small LECs‘ service territories should promote increased broadband deployment in remote areas and thereby offer rural customers choices in voice and other broadband services that are already offered to their urban counterparts.

Comcast, Charter Communications, Cox Communications and other Californian cable operators are not champions of an open market. They aggressively lobby against municipal broadband projects and work constantly to cripple infrastructure subsidy programs, sometimes working on their own, but more often under the guise of their Sacramento front organisation, the California Cable and Telecommunications Association, or via friendly (and funded) non-profits like the California Emerging Technology Fund. They’re eager to shift costs onto the public when they gain a competitive advantage, but not when subsidies create competition that benefits taxpayers themselves.

The proposed decision is correct in saying that more competition results in better and, usually, cheaper broadband service. It’s a principle that should be aggressively pursued everywhere in California, and not just in a few affluent exurban developments that suit cable companies’ monopoly business model.

T-Mobile asks CPUC for permission to employ fewer people in California

by Steve Blum • , , , ,

Sprint store

T-Mobile wants the California Public Utilities Commission to dial back some of the obligations it imposed when it approved the Sprint merger in April. A “petition for modification” of the CPUC’s decision asks for three changes:

  • Strike the order to add 1,000 new jobs in California. As it has consistently argued, T-Mobile says the CPUC doesn’t have that authority. Meanwhile, T-Mobile is offering hundreds of former Sprint employees the, um, opportunity to “consider a career change”.
  • Push back a deadline for “providing average speeds of 300 Mbps to 93% of California” by two years, to 2026. T-Mobile seems to think there was a misunderstanding. It says the clock on its voluntary commitment to reach that service level started running when the merger closed, not when it was first proposed in 2018.
  • Trust the Federal Communications Commission and the California Emerging Technology Fund, which is now on T-Mobile’s payroll to the tune of $7 million a year, to verify 5G coverage and speed promises. As it stands, T-Mobile has to prove its claims using the CPUC’s independent Calspeed testing program.

The modification request won’t have much, if any, of a direct effect on the CPUC’s decision allowing the Sprint merger and the long list of conditions it attached. The request for extra time to meet the 300 Mbps download benchmark might get some consideration, but T-Mobile’s appeal doesn’t say anything new about the requirements to add 1,000 jobs in California and to do speed testing the CPUC’s way.

The deal’s opponents will respond, of course, and the commission will take up T-Mobile’s petition and opponents pending request for a rehearing eventually. Minor tweaks aside, both are likely to be rejected. At that point, the CPUC’s lengthy – two years and counting – process will be complete, which clears the path to court challenges, at the state and federal level. That’s where the real action will happen.

Hundreds of layoffs are following in the wake of the T-Mobile/Sprint deal

by Steve Blum • , , , ,

Sprint booth mwc la 2019 22oct2019

T-Mobile is laying off hundreds of former Sprint employees as it consolidates the operations of the two mobile carriers that merged in April. A story by Zack Whittaker and Brian Heater at Tech Crunch broke the news about Sprint employees on Tuesday…

In a conference call on Monday lasting under six minutes, T-Mobile vice president James Kirby told hundreds of Sprint employees that their services were no longer needed. He declined to answer his employees’ questions, citing the “personal” nature of employee feedback, and ended the call.

T-Mobile responded with a press release in which it claimed it would “add 5,000 new positions over the next year”, but for now it wanted to “focus” its resources…

This will result in additional career opportunities for many, as the company positions itself for long-term healthy growth. As part of this process, some employees who hold similar positions are being asked to consider a career change inside the company, and others will be supported in their efforts to find a new position outside the company.

Translation: yeah, we’re firing them.

These involuntary “career changes” should come as no surprise. During the California Public Utilities Commission’s review of the merger, T-Mobile promised on the one hand to keep its combined California workforce at the same level for the next three years, while on the other hand agreeing to open a new call center in Fresno County that would employ 1,000 people. Do the math.

The CPUC did the math, and required T-Mobile to make those 1,000 call center jobs a net addition to the combined T-Mobile/Sprint headcount as of the merger date. Whether or not that order has any teeth is unknown. T-Mobile has consistently maintained that the commission has no authority over its wireless business, and matched those words with deeds.

Even bigger job cuts are coming at AT&T. It’s primary union, the Communications Workers of America, says 3,400 AT&T employees are about to be out of work, and hundreds of wireless stores will close, according to a story in FierceWireless by Bevin Fletcher.