Tag Archives: monopoly

DISH might build out 5G in rural California, but don’t bet the ranch

by Steve Blum • , , , ,

Dish neponset

DISH won’t have to build its own 5G network everywhere in California, or even in every county, if the T-Mobile/Sprint merger is approved. Jeff Blum, DISH’s chief Washington, D.C. staff lobbyist, testified at a California Public Utilities Commission hearing on Friday. He ducked and dodged questions about DISH’s exact intentions for the California assets and people that T-Mobile would spin off, under an antitrust settlement reached with the federal justice department, saying plans were still being made, data was still being analysed, decisions were in the hands of other companies and, well, so on.

Topic number one for the hearing was “does the agreement with DISH substantially alleviate any competitive harms of the proposed merger?” In the long run, the answer depends on whether DISH invests enough money – it says $10 billion, others say a lot more – to build a 5G mobile broadband network that will directly compete with those operated by AT&T, Verizon and the combined T-Mobile/Sprint. But DISH’s network won’t have to completely cover California.

An important bit of jargon is “partial economic area” (PEA). The Federal Communications Commission sliced up states and territories into 416 PEAs that represent regional markets. It assigns some mobile broadband spectrum, including the frequencies in the 600 MHz range purchased by DISH, on a PEA by PEA basis. Assuming the merger goes through as is, DISH has until 2025 to build sufficient infrastructure to reach 75% of the population in each of those PEAs.

When pressed about DISH’s plans for rural California, Blum first said that DISH would have to serve all of the state’s 58 counties, or it would face billion dollar fines and/or forfeitures. But further cross examination showed that to be false. He clarified that DISH has 600 MHz spectrum in PEAs that cover all California counties, but its build out obligation is on a PEA, not county, level. Which gives DISH two options for walking away from any given California county or rural community.

First, PEAs typically encompass several counties and cross state lines, as the map below illustrates. One county that got particular attention during Blum’s cross examination – because T-Mobile made a big deal of it – is Kings, in the San Joaquin Valley. It shares a PEA with Fresno, Tulare and Madera counties. DISH could ignore Kings and Madera counties completely, along with a few low income Fresno and Tulare communities, and still easily meet its 75% population coverage requirement.

Del Norte County is in an even more precarious position. It’s the sole California county in a PEA that includes six Oregon counties and it’s home to only 3% of the total population.

There are other examples. If you want to run the numbers, my spreadsheet is here.

Second, DISH could redline an entire PEA if serving it isn’t sufficiently profitable. “If we fail to build in one PEA then we lose that PEA”, Blum said.

Right. Losing responsibility for a service area that you don’t want to serve is a blessing, not a mortal blow.

Blum also outlined a third option: DISH could, in effect, lease frequencies to small local wireless operators. In “a very, very rural area, for example…we see an opportunity to partner with them”, he said. In other words, they’ve thought this through.

DISH’s plans, or lack thereof, for serving rural communities might not matter. Its worth as a competitive counterweight in the mobile broadband marketplace will be determined in urban counties. It would be replacing Sprint, which doesn’t provide credible rural service in California anyway and whose competitive value comes from the heat it generates in urban and suburban communities with denser and richer populations.

Going by the current schedule for the CPUC’s review of the T-Mobile/Sprint/DISH ménage, the next step is for the companies and opponents of the deal to file their arguments one way or the other. Assuming no surprises, that’ll happen on 20 December 2019, which will set the stage for a final CPUC vote as early as February.

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

Jeff Blum is not my dad. My dad was Geoff Blum. 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. My dad was amused by that. Take it for what it’s worth.

Approval of T-Mobile/Sprint deal could depend on DISH’s testimony at CPUC hearing

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

Executives from T-Mobile, Sprint and, particularly, DISH will be cross examined tomorrow morning, as two days of hearings kick off at the California Public Utilities Commission in San Francisco. Witnesses from the CPUC’s public advocates office will also be on the stand. They’ll all have to explain written testimony they submitted about the wonderfulness, or lack thereof, of T-Mobile’s proposed takeover of Sprint, and asset and people spinoff to DISH.

It’s DISH’s intended role as a new, nationwide mobile telecoms competitor that’s likely to get the sharpest attention. Only one DISH representative will attend, chief D.C. staff lobbyist Jeff Blum. So far, he hasn’t been very forthcoming about DISH’s plan for California, and the CPUC administrative law judge managing the merger review, Karl Bemesderfer, indicated he will drill down on it. During a pre-hearing conference call, Bemesderfer said “I want to hear how DISH is going to do what it says it’s going to do”.

The initial line-up, which could change, has T-Mobile’s executives and a hired economist testifying tomorrow, as well as PAO staff and its hired economist. Blum is due to take the stand on Friday.

Meanwhile, Sprint’s Lifeline billing problem just got a little bit bigger. According to a Wall Street Journal story, Sprint was getting subsidies from the Federal Communications Commission and, presumably, the California Public Utilities Commission for low income customers who weren’t really customers. Weren’t even alive.

As the Benton Institute for Broadband and Society thumbnail of the WSJ story puts it…

Sprint also made mistakes in tallying how many subscribers were using their Lifeline service in 2013 and 2014. Because of an error in how it counted usage at the time, spam texts could keep dormant accounts live and allow Sprint to continue to collect subsidies for those customers, the documents show. In one case, the phone of an Oregon woman who died months earlier was still deemed active.

Living and dead, Sprint was collecting on at least 4,600 dormant customers just in Oregon.

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.

Contract for the Web addresses virtues and vices of government intervention

by Steve Blum • , , , ,

Contract for the web

The “Contract for the Web” campaign published its manifesto last week, titled, naturally enough, Contract for the Web. It’s a declaration of nine principles, including “make the internet affordable and accessible to everyone”, “respect and protect people’s privacy and personal data to build online trust” and “develop technologies that support the best in humanity and challenge the worst”, which are among the tasks the contract assigns to private companies. Individuals are urged to “be creators and collaborators on the web”, “build strong communities that respect civil discourse and human dignity”, and “fight for the web”.

The Contract was written by a wide range of companies and organisations, ranging from Google to Change.org to the German government, and the effort is led by Sir Tim Berners-Lee, the inventor of the World Wide Web. Even so, it’s been criticised for having no teeth. The likes of Facebook, Twitter and Microsoft have signed on to it, there’s no guarantee that they’ll pay any attention to it.

True enough. There’s more to it, though.

The Contract opens with a clear call for government enforcement, and even intervention. The first three principles state that governments will…

  1. Ensure everyone can connect to the internet.
  2. Keep all of the internet available, all of the time.
  3. Respect and protect people’s fundamental online privacy and data rights.

Simply stating that a government – any government – should do something is of little consequence. But as governments adopt the Contract, in whole or in part, over time, it’ll grow teeth. And governments and subordinate agencies are doing that.

The details of the privacy principle track with the European Union’s general data protection regulation. Tasks to “ensure everyone can connect to the internet” include measures that local governments in California have already adopted, such as “dig once” policies and pole access agreements.

Regulatory agencies are in the game, too. For example, the Contract sets the goal that “1GB of mobile data costs no more than 2% of average monthly income by 2025”. The California Public Utilities Commission is considering affordability standards for broadband and other utilities that are heading in the same direction.

Government is far from being a universally benign force in the world, though, and the Contract recognises that fact too, for example calling for requirements that…

Government demands for access to private communications and data are necessary and proportionate to the aim pursued, lawful and subject to due process, comply with international human rights norms, and do not require service providers or data processors to weaken or undermine the security of their products and services.

That’s a message that the U.S. government needs to hear.

DISH will be grilled on mobile plans for California at CPUC hearing

by Steve Blum • , , , ,

Dish kangaroos ces 5jan2015

DISH is the sole focus of a California Public Utilities Commission hearing next week. Administrative law judge Karl Bemesderfer decided yesterday that there’s enough evidence in hand for the CPUC to evaluate nearly all of the issues surrounding the proposed merger of T-Mobile and Sprint.

Nearly.

In his ruling, Bemesderfer mused…

What then do we need to hear testimony about? The significant change in the terms of the proposed merger that has occurred over the past months is the addition of DISH as a proposed fourth facilities-based wireless carrier, replacing Sprint. The hearings will focus on the impacts of this change on California consumers and the potential competitive harms of the proposed merger.

He didn’t say who would have to testify, but some of the questions he posed are clearly for DISH, such as how the deal to spin off T-Mobile and Sprint customers, employees and assets to DISH will “affect customer service, consumer protections and privacy rights of California consumers” and what happens to “pre-paid customers with incompatible handsets when they are divested to DISH”.

Other issues involve all three companies, such as the continued availability of low income plans and Lifeline subsidies.

But the number one question is whether or not the new and improved DISH will “substantially alleviate any competitive harms of the proposed merger”. That brings in a wide range of possible witnesses, including from an economist hired by the CPUC’s public advocates office, Lee Selwyn, who is not a fan. The squishy role assigned to DISH and its ability to fulfil it “offers no assurance that its presence will work to discipline its larger rivals to any significant degree”, he said in testimony filed last week.

The hearing is scheduled for next Thursday and Friday in San Francisco. Assuming there are no surprises, and particularly no new document dumps, the CPUC’s review of the T-Mobile/Sprint merger is still on track for a commission vote, one way or the other, sometime in February.

Cross-examination of T-Mobile testimony ordered by CPUC, as DISH’s competitive credibility challenged

by Steve Blum • , , , ,

Perry mason cross exam

T-Mobile and, perhaps, Sprint and DISH executives will be cross-examined next week, as the California Public Utilities Commission’s review of the T-Mobile/Sprint merger continues. Karl Bemesderfer, the administrative law judge managing the case, ruled yesterday that an evidentiary hearing next week is necessary, with the exact topics likely determined later today.

A key question raised by opponents of the deal is whether the federal anti-trust settlement that calls for T-Mobile to spin off spectrum, facilities, customers and employees to DISH will create an effective fourth competitor in California’s mobile marketplace. The answer depends on whether DISH can and will fulfil its end of the bargain and build out a 5G network that can provide competitive pressure on the combined T-Mobile/Sprint company, as well as AT&T and Verizon.

Lee Selwyn, an economist hired by the CPUC’s public advocates office, which opposes the merger, said in testimony filed last week that DISH can’t…

Throughout this proceeding, the Joint Applicants have repeatedly claimed that neither Sprint nor T-Mobile, each standing alone, possesses the resources necessary to construct a robust nationwide 5G wireless network, yet DISH is and will be far smaller than either of these two stand-alone companies…

A larger scale of operations enables the service provider to spread its fixed costs over successively larger numbers of customers, thereby achieving successively lower average costs and, as a result, increasing the firm’s competitiveness overall. DISH’s scale of operations will necessarily be far smaller than either that of pre-merger Sprint or T-Mobile, making it all the more difficult for this newly-minted fourth wireless [mobile network operator] to compete with the three substantially larger incumbents. Sprint is a far stronger competitor in a four-firm market than DISH can possibly become…

This is by no means to suggest that DISH’s late entry into this well-established market cannot be profitable for DISH. DISH has some 12-million DBS and streaming TV subscribers, and may be able to leverage those relationships into a profitable business…But DISH’s ability to profitably address a small fraction (less than 3%) of the national wireless services market offers no assurance that its presence will work to discipline its larger rivals to any significant degree.

DISH CEO Charlie Ergen has a long history of economically rational behavior. It’s how he grew a small store in Tennessee into a media distribution giant worth billions of dollars. So far, DISH’s legal team has resisted offering any hard details about future plans. Next week’s hearing is an opportunity to fix that problem.

T-Mobile’s “loopholes” and DISH’s number games could leave rural California unserved, merger opponents say

by Steve Blum • , , , ,

Tmobile billboard

Opponents of T-Mobile’s proposed takeover of Sprint filed their opinions of the deal as it currently stands at the California Public Utilities Commission on Friday. There’s a few hundred pages of testimony and exhibits to plow through, which are linked below if you’re interested.

One issue in front of the CPUC, which has to decide whether to allow the merger to happen, is the effect it would have on rural broadband service. That includes promises from T-Mobile and DISH, which is being spun up as a competitive replacement to Sprint.

Kristina Donnelly, an analyst with CPUC’s public advocates office, pointed out that the promises T-Mobile made to the FCC and the deal it cut to pay $35 million to the California Emerging Technology Fund (CETF) don’t amount to much, and could leave rural Californians without 5G service…

T-Mobile included many loopholes in both the FCC and CETF commitments that New T-Mobile can later use to circumvent build-out responsibilities…

Aside from the ineffectual nature of certain monetary fines contained in the [settlement with with the federal justice department], there are other concerns with how the FCC commitments and the CETF [memorandum of understanding] commitments are structured. For example, the 90 percent build-out commitment in the CETF MOU would allow New T-Mobile to avoid costly rural deployments. In fact, this commitment is structured in a way that means most rural areas may not see any purported 5G coverage or speed benefits of the proposed merger.

The rural loophole isn’t small. In DISH’s case, it’s the size of 48 counties, according to Lee Selwyn, an economist hired by the PAO. Noting that DISH promised to reach 20% of the U.S. population by 2022 and 70% by 2023, Selwyn testified “in the context of California” that means…

DISH can meet the 20% coverage commitment by serving less than all of Los Angeles County only. DISH can meet the 70% commitment by serving most, but not even all, of just ten of the state’s 58 counties. While DISH has talked about how it will serve rural areas, the small number of cell sites that it apparently plans to deploy raise questions as to the veracity of that promise. While I do not expect that DISH will actually pursue the type of highly concentrated geographic coverage that these commitments would seem to allow, there is no question but that DISH can meet these 20% and 70% coverage goals at considerably lower cost by focusing its investments in the more densely populated parts of the State.

Debbie Goldman, a Washington, D.C. staffer for the Communications Workers of America, invoked T-Mobile’s erstwhile disdain for DISH to drive that point home…

T-Mobile itself highlighted DISH’s lack of fitness as a buyer in an FCC filing in March, 2019, commenting that DISH has a track record of price increases for its services, speculative warehousing of spectrum, and failing to meet FCC-imposed deadlines. T-Mobile additionally commented that “DISH stands out for its efforts to game the regulatory system” and “has little interest in actually delivering real 5G service.”

There might or might not be a formal hearing next week where either side can cross examine the other, although the PAO is asking for one. So far, the CPUC’s extended review of the T-Mobile/Sprint deal is still running on a trajectory that could land a final decision in February.

Opposition testimony and exhibits filed on 22 November 2019

CPUC public advocates office:
Kristina Donnelly, testimony
Kristina Donnelly, exhibits
Shelly Lyser, testimony
Eileen Odell, testimony
Cameron Reed, testimony
Cameron Reed, exhibits
Lee Selwyn, testimony

Communications Workers of America:
Debbie Goldman, testimony
Attachment A
Attachment B
Attachment C
Attachment D

Paul Goodman, Greenlining Institute

Sunne Wright McPeak, California Emerging Technology Fund

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. Take it for what it’s worth.

Video entertainment “should not be considered essential” says AT&T. Amen say Comcast, Charter

by Steve Blum • , , , ,

Darth leia 625

For a company that paid $85 billion to become a video entertainment giant, AT&T has an odd idea of what’s essential and what’s not. In objections to a California Public Utilities Commission staff proposal, AT&T argued that “video entertainment” should play no role in determining what level of broadband service is “essential” and whether it’s affordable or not. It specifically targeted Netflix and ESPN+ as examples of non-essential services that are not “appropriate essential functions” and should not be included in calculations of what level of broadband speeds and data caps are necessary for Californians to conduct their every day lives.

In reply comments, the lobbying front organisation that Comcast, Charter Communications and other cable companies use to push their interests in Sacramento and at the CPUC endorsed AT&T’s position, paraphrasing it as “entertainment service such as Netflix is not essential”. It’s easy for the California Cable and Telecommunications Association to trash talk Netflix; the Walt Disney Company – ESPN’s majority owner – not so much.

AT&T and its amen corner got it wrong, for at least a couple of reasons. First, the CPUC staff white paper in question identified fixed broadband service at 20 Mbps download and 3 Mbps upload speeds as the minimum necessary for a Californian household to meet its “basic needs” such as education, telehealth and safety, and enjoy “full participation in society” by doing such things as “completing job applications and accessing government assistance programs”. Netflix and ESPN aren’t on the list. Neither is HBO Max, which AT&T is hoping will pull it out of the video subscriber death spiral it’s in, or Spectrum TV Essentials or Xfinity Instant TV. Calling out entertainment services is a red herring.

It’s also arrogant.

I’ve sat in many meetings in Sacramento and listened to telco and cable lobbyists speak with contempt about people who are misguided enough to think they ought to be able to watch video via the Internet, if they don’t provide sufficient profit to be worth it to those companies to deliver modern broadband service. Full participation in society requires more than just getting email or reading a web page. It includes access to the full range of online information and social and political interaction that’s available – and essential – to those of us who are fortunate enough to have it.

Collected documents from the CPUC’s investigation into essential service and affordability metrics for utilities are here.

CPUC commissioner asserts “a significant role” over broadband affordability and essential service

by Steve Blum • , , , ,

Rechtschaffen 2 20may2019

In a ruling issued on Friday, CPUC commissioner Clifford Rechtschaffen ended any doubt over whether an inquiry into the affordability of utility services includes the cost and quality of broadband access: it does. The decision puts wind in the sails of an analysis of broadband pricing and service speeds prepared by California Public Utilities Commission staff, and meets strident objections from AT&T, Comcast, Charter Communications and other monopoly model incumbents head on…

This amended scoping memo confirms that communications services, such as broadband internet access, are included within the scope of this proceeding. This amended scoping memo finds that [California Public Utilities] Code Sections 709, 280, 281, 275.6, and the Moore Act all demonstrate that the Legislature contemplated a significant role for the Commission in closing the digital divide in California and bringing advanced communications services, including broadband internet access, to all Californians. This proceeding may assist in that goal.

The California Cable and Telecommunications Association, which is a Sacramento lobbying front organisation for Comcast, Charter and other cable companies, argued that the CPUC shouldn’t look into the affordability of broadband service because it is “an interstate service governed by federal law, and defined as an “information service” and not a “telecommunications service”. In reply comments, AT&T agreed, saying “broadband is not a public utility service”. A joint filing by small rural telephone companies said much the same thing.

Unfortunately for them, the primary legal basis for their objections – the Federal Communications Commission’s blanket preemption of state broadband regulations was overturned by a federal appeals court. So long as the FCC says that broadband is an information service, it can’t wield its telecommunications authority as a magic weed whacker to chop down state regulations.

In his ruling, Rechtschaffen also set next June as the deadline for CPUC action on affordability and service standards for broadband and other utilities, including electricity, water, gas and voice services.

Collected documents from the CPUC’s investigation into essential service and affordability metrics for utilities are here.

T-Mobile gives CPUC some insight into post-Sprint merger plans for California, but won’t make it public

by Steve Blum • , , , ,

The hundred-plus pages of testimony submitted by three T-Mobile executives to the California Public Utilities Commission sheds a little more light on what the company intends to do in California when – if – it acquires Sprint and spins off customers, employees and assets to DISH. But most of the specific plans for California submitted to the CPUC last week were filed confidentially.

Chief operating officer Michael Sievert toned down the company’s weasel words about T-Mobile and Sprint workers in California, saying that the number of employees three years after the merger closes will be “equal to, or greater than” the current T-Mobile and Sprint total, even taking into account employees who might be transferred to DISH. However, he didn’t reconcile his pledge with another T-Mobile commitment to open a call center in the San Joaquin Valley and staff it up with 1,000 workers. That leaves open the possibility that hundreds of employees, from all over California, will be given a choice between unemployment or moving to Fresno County to begin a new career as a customer service rep.

Chief technical officer Neville Ray’s testimony boils down to we weren’t planning to use Sprint’s 800 MHz spectrum for 5G or much of anything else, so nothing changed. He also discusses leasing 600 MHz spectrum from DISH – T-Mobile has an option to do so but, according to Ray, hasn’t decided whether or to what extent to exercise it. If T-Mobile did lease that spectrum, though, it would mean cash flowing back to DISH and, presumably, less pressure to do something with it before the Federal Communications Commission takes it back.

In other words, T-Mobile’s option might result in a significant financial benefit to DISH, that could offset some of the financial penalties it might incur if it doesn’t meet its obligations to build out a competitive 5G network. Given DISH’s history of spectrum dealing, there’s reason to question the settlement’s fundamental premise that a new, facilities-based mobile broadband network will result. The lower the net cost of walking away, the less incentive DISH has to meet its nominal commitments.

Ray also submitted California-specific information about T-Mobile’s 5G deployment and service plans, mirroring the national level information given to the FCC. But unlike the national data, T-Mobile wants to keep its promises to California secret. Those could become public as the CPUC review moves ahead, but there’s no particular reason at this point to think they will.

The filing made by executive vice president Thomas Keys made minor updates to his previous testimony, but wasn’t particularly enlightening.

Opponents of the merger have two weeks to digest T-Mobile’s testimony and respond. The CPUC public advocates office’s quest for more information from DISH is running in parallel. Opponents could similarly ask T-Mobile to provide additional data and/or ask for more time to review it all, but at this point the case is still on a trajectory for a final decision in February 2020.

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.

The wonderfulness of the T-Mobile/Sprint merger is only more wonderful, CPUC told

by Steve Blum • , , , ,

Tmobile store la 23oct2019

T-Mobile, Sprint and DISH filed their responses to the latest questions posed by the California Public Utilities Commission as it extends its review of the T-Mobile/Sprint merger to take into account the settlement reached by the companies with federal anti-trust attorneys.

I’m still working through the nearly 200 pages of “testimony”, particularly the statements by T-Mobile executives. From a quick scan, it looks like they’re following the line laid down by the company’s lawyers: nothing to see here, move on. But more on that later. Or check out the links below.

DISH’s chief D.C. staff lobbyist, Jeff Blum, responded to the question posed by commissioner Clifford Rechtschaffen in his ruling extending the CPUC’s review: “what are DISH Network’s California service obligations?”. Responded, but didn’t exactly answer. He detailed DISH’s federal obligations, and since California is still arguably one of the fifty United States the implication is those apply equally here. But he also laid out the fine print, which details granular requirements with granular penalties for granular non-compliance, which doesn’t exactly guarantee that DISH will do anything in particular in California.

Two Sprint executives – chief commercial officer Brandon Draper and staff lobbyist Peter Sywenki – filed declarations that amounted to I know nothing. Since they don’t work for T-Mobile, they aren’t “privy to [T-Mobile’s] business and network plans”.

Two hired gun economists, Mark Israel and Timothy Bresnahan, affirmed their previous paid testimony in support of the merger and offered assurances that what that they described the first time around was, if anything, even better than they thought.

Supplemental Testimony of G. Michael Sievert, 7 November 2019
Supplemental Testimony of Neville R. Ray, 7 November 2019
Supplemental Testimony of Thomas C. Keys, 7 November 2019
Testimony of Jeff Blum on behalf of Dish Network Corporation, 7 November 2019
Supplemental Testimony of Brandon Dow Draper, 7 November 2019
Supplemental Testimony of Peter N. Sywenki, 7 November 2019
Supplemental Testimony of Mark A. Israel, 7 November 2019
Supplemental Testimony of Timothy F. Bresnahan, 7 November 2019

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

I don’t know who Jeff Blum is, and he’s not my dad. My dad was Geoff Blum. 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. My dad was amused by that. Take it for what it’s worth.