Tag Archives: monopoly

Study spots “third wave” of community broadband enthusiasm, but no swell of cash

by Steve Blum • , , ,

Wipeout

A “third wave” of community broadband initiatives is developing in the United States, but before it’s surfable, state and federal policy changes are needed. That’s the conclusion of a paper written by Sharon Strover, Martin Riedl and Selena Dickey, of the University of Texas at Austin.

They identify barriers deliberately created by lobbyists working for major incumbents and their capture of policy making machinery – such as the Federal Communication Commission’s industry-dominated broadband deployment advisory committee which offered legislative recommendations that would “eliminate municipal broadband”. But they also see community and corporate trends that are pushing against monopoly business models…

We see potential for community network development in the United States, acknowledging existing projects but also an abundance of obstacles. Their presence and growth testifies to the need for alternative regulatory arrangements…

New connectivity models in the space of community networks, innovation in terms of open source hardware, newly opened spectrum such as TV white spaces, as well as investments through private corporations into connectivity efforts such as terragraph (Facebook) and satellite internet (Facebook, Google, others), all foment this third wave of community networking efforts, but can only succeed in the long run if they are simultaneously accompanied by supportive federal and state policies. In the broad scheme of things, this calls for an end to protectionist legislation curtailing the opportunities to experiment and to offer services that communities themselves believe are more efficient, less costly and more attuned to their needs.

Strover, Riedl and Dickey are correct in calling for open and creative use of public money earmarked for educational and medical networks, greater flexibility in federal programs and more widely available state and local subsidies “to various types of providers”.

That’s a good start toward solving the critical problem that community, and particularly municipal, initiatives face: paying for building a network and for operating deficits that might last far longer than advocates generally care to contemplate. But it’s only a partial solution. Consumers and businesses also have to embrace the reality that better infrastructure and service comes at a price, and universal infrastructure and service comes at a universal price. There’s a point where someone else’s money becomes everyone’s money.

TANSTAAFL.

Scoping New Policy Frameworks for Local Broadband Networks, Strover, Riedl and Dickey.

T-Mobile tells CPUC it does not “intend to address DISH’s fitness” in Sprint merger review

by Steve Blum • , , , ,

The Federal Communications Commission formally approved T-Mobile’s takeover of Sprint on Wednesday, but California’s blessing (or not) will almost certainly wait until sometime next year. How far into next year the California Public Utilities Commission’s review of the merger goes will depend on whether T-Mobile’s plan to transfer people, spectrum, stores and cell sites to DISH, to create a new U.S. mobile carrier to replace Sprint as a fourth competitor in the market, is deemed relevant.

T-Mobile’s lawyers think it’s irrelevant, and don’t want to cooperate if the CPUC’s inquiry heads in that direction. In a very small print footnote, in an email sent yesterday to the administrative law judge (ALJ) managing the CPUC’s inquiry, T-Mobile’s lead California attorney Suzanne Toller said…

Joint Applicants [T-Mobile and Sprint] do not intend to address DISH’s fitness as a wireless provider or its viability as a fourth competitor, as those matters are not properly within the scope of these proceedings.

The “scope of these proceedings” is still to be determined. ALJ Karl Bemesderfer must decide if he will allow opponents of the merger to challenge T-Mobile’s claim that its arrangement with DISH and other aspects of its settlement with the federal justice department’s anti-trust unit have no meaningful effect on the California wonderfulness of the Sprint merger. He framed it, in part, as a due process question during a hearing last week, and indicated he was considering a request made by opponents, with specific attention to DISH’s capabilities and intentions, for several months of additional testimony, rebuttal and arguments.

Lawyerly bluster aside, the “properly” bit seems to be at the base of the vague threat to ignore Californian proceedings that T-Mobile’s legal team floated at the hearing. If the effect of the merger on competition in California’s broadband market is “properly” within the CPUC’s jurisdiction, then DISH is fair game and T-Mobile will have to wait for a decision. If the question is completely in the hands of federal agencies, then we already have the answer.

Links to the stack of arguments and exhibits everyone has filed are here.

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

With or without California’s approval, T-Mobile looks for quick consummation of Sprint merger

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

Does DISH matter? That’s the question that’ll determine whether the California Public Utilities Commission makes a (relatively) fast decision to allow T-Mobile to acquire Sprint. If it doesn’t, lawyers for T-Mobile and its allies hinted that the deal might move ahead without Californian conditions or, indeed, permission.

Yesterday, CPUC administrative law judge Karl Bemesderfer listened to arguments from lawyers on T-Mobile’s side who pressed for a quick end to the case, and from opponents of the deal who pushed for lengthy, formal litigation. At issue is T-Mobile’s (and Sprint’s, but T-Mobile is running the show) proposal to shift people, spectrum and real estate to DISH, and create a new, fourth competitor in California’s mobile broadband marketplace.

That agreement was reached with anti-trust lawyers working for the federal justice department, after the CPUC’s nearly year-long inquiry was closed. T-Mobile’s ace legal team asked Bemesderfer to “take notice” of the settement, which led him to formally re-open the record and, perhaps, restart a process that could run until sometime next spring.

At the end of the 80 minute “pre-hearing conference” – CPUC-speak for a hearing to decide if there’s going to be a hearing – Bemesderfer cut to the chase…

Both sides have raised, I think, quite compelling points. Joint applicants have made the case that the California-only commitments have not been altered by the post closing-of-the record events in Washington. And I also think joint intervenors have made a case that they have a due process right to test that proposition…

I thank you all for coming and supplying me with your thoughts, and I will go think about this for a while and then I’ll supply you with mine.

Then there’s the vague threat T-Mobile’s lawyer floated about what might happen if the CPUC is the last regulatory agency in the U.S. that doesn’t approve the deal. Suzanne Toller said that it would raise “a number of some very interesting questions about the scope of the commission’s jurisdiction” over T-Mobile, Sprint or any other mobile carrier.

Translation: jam us up and we’ll jam you up in federal court.

Rachelle Chong, a lawyer representing the California Emerging Technology Fund, which flipped from opposing the deal to enthusiastically supporting it after accepting a $35 million payoff honorarium from T-Mobile that it can only cash in if the deal goes through, put it more bluntly. She expressed “very serious concern” about what would happen “if T-Mobile were to pack up its bags and leave California because it can’t get its approvals for this deal”.

Translation: T-Mobile won’t give us the money. Its other California-specific commitments are toast too.

There’s no chance T-Mobile will turn off its network in California, but there’s a real possibility that it can get a federal (or even Californian) judge to say the CPUC is out of bounds. At that point, all promises are off the table.

There’s no particular timeline for Bemesderfer to issue a decision, but a week or two wouldn’t be a crazy guess.

Links to the stack of arguments and exhibits everyone has filed are here.

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

T-Mobile/Sprint merger review might go longer and harder in California, as DISH’s act is questioned

by Steve Blum • , , , ,

The California Public Utilities Commission should get the dish on DISH, before deciding whether T-Mobile’s proposed takeover of Sprint “would serve the public interest”, according to a protest filed yesterday by a coalition of opponents to the deal. The group includes the CPUC’s public advocates office, two consumer advocacy groups and the Communications Workers of America, the primary telecoms union in California. To do that, they propose a schedule of testimony and arguments that would bump any decision on the merger until sometime next spring.

T-Mobile refiled its application for CPUC approval last month, after its deal with Sprint was extended to include spinning off assets to DISH in order to maintain sufficient competition in the mobile services marketplace. Or so the federal justice department believes. DISH owns a considerable amount of mobile spectrum, but hasn’t put it to use yet – it’s primarily a satellite TV outfit, not a telecommunications network operator or service provider.

Under the new agreement, DISH gets spectrum, cell sites and retail outlets from T-Mobile and Sprint, so it can eventually build its own network. In the meantime, it would lease capacity from T-Mobile, and resell it under its own brand name – become what’s known as a mobile virtual network operator (MVNO). In their protest, the opponents questioned whether DISH is capable of fulfilling those promises…

This Proposed Transaction dissolves the fourth main wireless carrier and proposes the creation of a possibly inferior substitute to become a new fourth carrier. This could have profound impacts on competition, jobs, and quality of service, among other things. Especially, the Commission should examine whether approving the [deal with DISH] and creating a new wireless carrier is more beneficial to California than simply keeping Sprint as a strong and viable fourth carrier.

  • Is DISH, as [an MVNO] operating on New T-Mobile’s network for the first several years of the settlement, an adequate replacement for Sprint to serve customers in the prepaid market?
  • Can a client MVNO, new to the mobile wireless market, realistically be expected to provide the same level of competitive check that Sprint, a competitive Mobile Network Operator (MNO), currently exerts on T- Mobile?

There are more questions in the full document, but one they didn’t ask and should have was is DISH any more serious about this promise than it was about past pledges to build a mobile network?

T-Mobile, along with everyone else, is scheduled to meet later today with the CPUC administrative law judge managing the case. They’ll talk about next steps.

Links to the stack of arguments and exhibits everyone has filed are here.

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

T-Mobile waters down California job pledge as it refiles for Sprint merger permission

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile (and Sprint, but it’s T-Mobile running the show) refiled and amended its application for merger approval with the California Public Utilities Commission on Thursday, as directed by the administrative law judge managing the case. Generally, the changes add a bit more detail about how the settlement T-Mobile reached with the federal justice department’s antitrust enforcers changes the promises it made to the CPUC earlier in the proceeding.

The core of the settlement involves transferring most of Sprint’s prepaid customers, along with retail outlets, cell sites and spectrum, to DISH, in order to create a new competitor in the mobile broadband market. The new commitments in the amended application boil down to we’re not making any promises about what DISH will do with the stuff.

Or with the people. Since some of Sprint’s employees –“prepaid asset personnel” – will be offered as a sacrifice to DISH, T-Mobile is removing them from its “voluntary commitment” to “extend job offers with comparable pay and benefits to all California Sprint and T-Mobile retail employees”.

If you read between the lines, though, it’s also possible – probable, if you assume T-Mobile’s lawyers use weasel words for a reason – many Sprint and/or T-Mobile employees will end up out of work, whether or not they’re being shopped to DISH.

On the one hand, T-Mobile originally promised “the total number of New T-Mobile employees in California three years after the close of the transaction will be equal to, or greater than, the current total number of Sprint and T-Mobile employees in California”. The amended application removes the “prepaid asset personnel” from that commitment and restates it as “no net job loss”, which indicates that the “or greater than” is weaselly worded indeed.

On the other hand, T-Mobile says it will create “approximately one thousand new jobs at a new customer experience center located in California’s Central Valley”.

Do the math. If T-Mobile adds a thousand people in Kingsburg, in Fresno County, and its Californian head count will be the same in three years as it is now, a thousand employees will have to make a career change. That might be a sound business decision, but it’s not the storyline T-Mobile is hoping the CPUC will buy into.

The next milestone in the CPUC’s lengthening review of the T-Mobile/Sprint merger is a hearing to consider what additional issues need to be addressed, and what the schedule for doing that will be. Given typical procedural timelines at the CPUC, a final decision isn’t likely until next year, perhaps some time in the first three months or so.

Links to the stack of arguments and exhibits T-Mobile and Sprint filed on Thursday are here.

AT&T’s executive shuffle puts WarnerMedia chief in charge of broadband service

by Steve Blum • , , , ,

AT&T made two key executive promotions yesterday, naming erstwhile technology chief Jeff McElfresh to head up its broadband and telephone (landline and mobile) businesses, as well as DirecTv, and promoting WarnerMedia head John Stankey to president and chief operating officer, making him the clear second in command to chairman and CEO Randall Stephenson.

Stankey’s new job, according to an AT&T press release is “bringing together the distinct and complimentary capabilities of AT&T Communications, WarnerMedia and [advertising subsidiary] Xandr to deliver…the benefits of a modern media company”.

He’s a career AT&T insider. For the present, Stankey’s “current WarnerMedia executive team” will report to him, meaning he’ll still be in charge of day to day operations there, while also having executive authority over AT&T’s distribution and advertising assets. It’s an open question whether he’ll try to use those assets, and the control over consumer broadband connections that come with them, to increase the profitability of the content arm. The republican majority on the Federal Communications Commission already cleared the path for him to do that, all he needs to do is start walking down it.

According to an update by The Information’s Jessica Toonkel, the promotion leaves everyone wondering whether Stephenson will stick around, and if he doesn’t, then what happens with WarnerMedia…

AT&T’s mandatory retirement age is 65 for top executives and Stephenson is only 59, which suggests there is no urgency. And as Stankey is 56, if Stephenson doesn’t retire early, Stankey may miss out entirely. If Stephenson waits another six years, AT&T’s board might focus on the next generation. But I hear Stephenson may choose to go earlier, which would give Stankey a shot.

That raises the question of who would succeed Stankey at WarnerMedia, including whether they bring someone in from outside. Cue the speculation. There are a lot of seasoned entertainment executives who are in circulation, thanks to various mergers.

So far, the trend has been for “seasoned entertainment executives” to walk away from AT&T’s management team.

T-Mobile’s California boomerang hits home, Sprint merger decision delayed for months

by Steve Blum • , , , ,

Mad max boomerang hit

Another round of brilliant lawyering by T-Mobile’s ace legal team has pushed back approval (or not) of its acquisition of Sprint by the California Public Utilities Commission until late this year or, maybe, sometime in 2020. Yesterday, CPUC administrative law judge Karl Bemesderfer ruled that the settlement T-Mobile, Sprint and DISH reached with the federal justice department should, as requested, be considered during California’s regulatory review of the merger. But not, as T-Mobile oddly argued, with blind faith in the wisdom of the Trump administration’s anti-trust team.

Bemesderfer said, in effect, yeah, it matters and thanks for mentioning it

A motion “to inform the Commission” of an action by a separate government body is not well-formed, but rather than reject it out of hand I have chosen to interpret it as a motion to re-open the record…

Because the [settlement documents submitted by T-Mobile and Sprint] appear to fundamentally change the Transaction, I agree with [T-Mobile and Sprint] that this proceeding will have a radically incomplete record on which to base a decision unless I re-open the record to admit them. But I also agree with [the CPUC public advocates office and the Communications Workers of America] that if I re-open the record…I must order [T-Mobile and Sprint] to amend the wireless transfer application to identify the changes in the Transaction…and provide other parties with an opportunity for comment…I will also schedule a pre-hearing conference to set a revised scope and schedule for the re-opened proceeding.

In theory, Bemesderfer’s ruling could completely reboot the CPUC’s review of the T-Mobile/Sprint/(and now) DISH deal and push a decision off until sometime next summer. In practice, it’s likely to have a more limited effect, with exchanges of exhibits, testimony and rebuttal, plus decision drafts and a final commission vote, taking a few months.

Administrative Law Judge’s Ruling Re-Opening Record to Take Additional Evidence and Directing Joint Applicants to Amend Application, 27 August 2019

Attachment 1 – certificate of service
Attachment 2 – Exhibit 1 Proposed Final Judgment and Exhibit 2 Stipulation & Order
Attachment 3 – Exhibit 3 T-Mobile USA Form 8-K

My collection of T-Mobile/Sprint/DISH transaction documents is here

High priced, low performing broadband service hits rural Californians hard

by Steve Blum • , , , ,

A California Public Utility Commission analysis of utility service affordability in California used household income, local cost of living and utility cost figures for far northern California – Siskiyou, Modoc and Lassen counties – to illustrate a proposed method for determining whether people can actually afford the utility service that they need. The example also illustrates a serious problem in rural California: the high cost and low quality of broadband service.

For the most part, the CPUC has no role in regulating, setting or monitoring the cost of broadband subscriptions, or the level of service provided. One exception comes when an Internet service provider asks for a grant from the California Advanced Services Fund (CASF), the state’s primary broadband infrastructure subsidy program. So the authors of the CPUC’s white paper looked at a grant given to the Siskiyou Telephone Company, an independent rural telco that serves customers in Siskiyou County.

The price that grant’s conditions allow for subsidised service that meets the 20 Mbps download/3 Mbps upload standard that the study identified as the “essential” minimum for 21st century households is $150 a month. For low income residents, that’s somewhere between 8% and 9% of remaining household income after housing costs are paid, and represent 12.5 hours of work at minimum wage.

That’s a significant burden, according to the study…

Even when receiving a CASF grant, the rates offered by this provider still make up a sizeable portion of the household’s utility budget. While these bills are not necessarily onerous for customers in the middle of the income distribution, customers at the 20th percentile spend around 3 times as much of their income after housing costs on telecommunications service.

In addition, contrary to other affordability studies allocating a minimal amount of expenses for telecommunications services, this analysis illustrates that telecommunications services are the highest utility expense incurred by a household in this [area].

That high cost, low performance paradox is common in rural California, particularly in areas that have to rely on wireless Internet service providers, who often charge even more than Siskiyou Telephone for service that’s even slower and less reliable.

Hancock, Ho, Sieren-Smith, Tome, Enriquez, Lai, Staff Proposal on Essential Service and Affordability Metrics, California Public Utilities Commission, 20 August 2019.

T-Mobile tries to catch its California boomerang, with the usual result

by Steve Blum • , , , ,

Boomerang fingers

T-Mobile filed its reply yesterday to critics who don’t want the California Public Utilities Commission to blindly accept the wonderfulness of the deal it reached with anti-trust enforcers at the federal justice department, as it tries to complete its acquisition of Sprint. The CPUC should behold the glory of that settlement, T-Mobile’s lawyers argued, because it’s irrelevant.

Huh, you ask?

Yeah, it’s bizarre logic but it makes sense in a twisted sort of way. T-Mobile “advised” the CPUC of the federal anti-trust settlement apparently in a fit of selfless good citizenship, I suppose because no one might have noticed it otherwise. Of course, it’s simply one more bit of proof that T-Mobile and Sprint want to combine with each other and shrink the U.S. mobile broadband market from four competitive players to three oligopolistic ones because of the avalanche of social progress that will be unleashed, and not from any untoward desire to extract monopoly profits from the deal. But actually, T-Mobile’s reply brief argues, the dump truck load of public benefits that it’s backing up to California is already big enough and there’s no need to quibble about federal anti-trust proceedings because the “record before the Commission is comprehensive and complete, and the case stands submitted”.

What might be going on is that T-Mobile figured out that the federal settlement, which involves launching a new mobile competitor in the form of DISH, opens a whole new set of questions in California. Like, what happens to the Sprint and/or T-Mobile employees who will be cut loose and left with only the opportunity to apply for a new job with DISH? Will DISH make good on T-Mobile’s and Sprint’s erstwhile obligations in California? Can the new T-Mobile still offer the incredibly awesome rural service it promised (and outside experts debunked) even though it’s giving up valuable low band spectrum to DISH?

In other words, the federal settlement changed the game, and T-Mobile is backpedaling now, claiming it’s the same game and the CPUC can and should ignore it.

It’s not, and the CPUC can’t and shouldn’t.

“Essential” broadband is fixed service at 20 Mbps down/3 Mbps up, CPUC white paper says

by Steve Blum • , , , ,

Forbes ag tech hartnell alisal demo 13jul2107

“Voice and broadband services required for education; telehealth; safety; and participation in society, such as completing job applications and accessing government assistance programs” will be defined as “essential services” in California if recommendations by California Public Utilities Commission staff are eventually adopted by commissioners.

According to a staff white paper on essential utility service affordability, for broadband service that means a minimum of 20 Mbps download and 3 Mbps upload speeds, with a monthly data cap of no less than 1 terabyte (1,024 gigabytes). That’s significantly more than the 6 Mbps down/1 Mbps up service level that the California legislature adopted as the state’s minimum broadband speed standard when it bowed to bags full of cash polite requests from AT&T, Comcast, Charter and other incumbent telecoms companies eager to protect their monopoly model businesses.

People need reliable broadband connectivity, according to the paper, and it needs to be fixed service; mobile broadband doesn’t cut it…

Fixed broadband is an essential service for Californians to be able to participate fully in society. For example, telehealth usage had a 1,202% growth between 2012 and 2017. In addition, the Federal Communications Commission (FCC) states that “[a]ccess to broadband has become essential for students in all levels of education.” Furthermore, staff finds that mobile broadband services are not a viable substitute for fixed broadband services due to cost, access, and capacity limitations of wireless technology. For example, schoolwork, job applications, and government services are functions that are difficult, if not impossible, to accomplish on mobile. In addition, mobile services provide lower speeds, lower data caps, higher latency and higher prices compared to wireline broadband.

To determine whether all Californians can afford that level of service, the paper looks at three potential metrics: 1. the total cost of essential water, energy and telecoms service divided by household income remaining after housing costs are paid, 2. the number of hours of minimum wage work needed to pay that cost, and 3. a statistically based index that measures ability to pay on the basis of economic vulnerability.

Although the paper looks at some examples (more on that later), it doesn’t try to define what an affordable monthly price for broadband service, or other utilities, would be. Instead, it proposes a methodology for calculating those figures and a framework for applying it.

It’ll ultimately be up to the five CPUC commissioners to decide whether or not to adopt it. They ought to. It’s an excellent piece of work.

A workshop is scheduled for next Monday in San Francisco to discuss the methods and data proposed by the white paper, then public comments will be accepted in September. You can bet that incumbent telephone and cable companies will offer vociferous opposition.

Hancock, Ho, Sieren-Smith, Tome, Enriquez, Lai, Staff Proposal on Essential Service and Affordability Metrics, California Public Utilities Commission, 20 August 2019.