Tag Archives: monopoly

T-Mobile Sprint merger will eliminate thousands of California jobs, union says

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The Communications Workers of America (CWA), which is the largest telecoms union in California, asked to join the California Public Utilities Commission’s inquiry into T-Mobile’s proposed takeover of Sprint yesterday. In its “motion for party status”, CWA said it represents wireless industry workers at AT&T and “as members of T-Mobile Workers United, an organisation of T-Mobile and MetroPCS employees”.

Many could lose their jobs, according to the union’s motion…

The T-Mobile/Sprint merger will have a significant impact on CWA members, both as workers in the industry and as consumers of wireless services. CWA’s research shows that the merger will result in the loss of 3,185 retail jobs in California due to store closures and consolidation. In addition, the proposed transaction could increase concentration in the wireless industry labor market with negative impact on industry-wide wages…

CWA District 9 intends to actively participate in this proceeding.

It’ll be up to the CPUC administrative law judge handling the case to decide whether CWA can jump into the proceeding at this point, but such requests are typically granted. The commissioner in charge, Clifford Rechtschaffen, didn’t call out employment issues as a particular focus of the inquiry in the “scoping memo” he issued a couple of weeks ago, but he also stated that the list was “non-exhaustive”.

Reviewing labor implications would be completely consistent with past practice and California’s public utility law, which directs that utility mergers must “be fair and reasonable to affected public utility employees, including both union and nonunion employees”. It’s not 100% clear whether the T-Mobile Sprint transaction is big enough to require that kind of review, but there’s little doubt the CPUC can choose to do so.

Two other groups that are protesting the merger – TURN and the Greenlining Institute – also filed paperwork, saying they expect to ask to be compensated by the companies for their efforts, as California law also allows. They estimate that they’ll run up a combined bill of $152,000.

T-Mobile, Sprint merger review widens in California

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It seems someone jumped the gun at the California Public Utilities Commission, and prematurely sent out a ruling defining the scope of California’s regulatory review of T-Mobile’s proposed purchase of Sprint. On Thursday, the commissioner in charge of the inquiry, Clifford Rechtschaffen, issued an amended version of the “scoping memo” he released the week before, saying the first one “was mailed in error”.

There are several wordsmithing changes in the updated version, and a few that are more substantive. One big change is a broad, up front statement making it clear that there are no particular limits to what the review will cover…

The scope of this proceeding includes all issues that are relevant to evaluating the proposed merger’s impacts on California consumers and determining whether any conditions should be placed upon the merged entity.

Additions to the specific, but “non-exhaustive” list of items that will be covered include consideration of potential new services the combined company might offer and – for both new and existing services – the impact on communities and regions, as well as California a whole.

The net result is that the focus (if you want to call it that) of Rechtschaffen’s investigation is even wider than before. It won’t be limited to a few specific and largely technical issues, as T-Mobile and Sprint had hoped.

The original schedule called for a final decision by next June. The core of the new schedule tracks with the original one, but the beginning of public hearings over the next two or three months, and the final wrap up next spring (or maybe summer?) are more indeterminate. Instead of the CPUC voting on a final decision in “June 2019”, the schedule calls for that to happen in “2nd Quarter 2019”. Given the way decisions are drafted, reviewed and then put on the commission’s agenda, June is still a reasonable bet. But it might happen sooner. Or later – CPUC timelines have been known to slip.

Broadband speeds are the first casualty of truth

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Internet service offerings slow down when service providers are forced to advertise accurate speed levels. In particular, the speed of teaser packages, designed to lure in price conscious subscribers, fall by 41%. That’s the conclusion of a British consumer group, following a study of how ISP advertising practices changed in the wake of a new U.K. regulation that forces them to make accurate service claims.

The Consumers’ Association says the down shift was sudden, coming soon after the new rules took effect…

The majority of broadband providers have been forced to cut the headline speeds they advertise when selling deals, following recent changes to advertising rules, according to new [Consumers’ Association] research.

An analysis of the biggest broadband providers found that, since new rules were introduced by the Committees of Advertising Practice in May, 11 major suppliers have had to cut the advertised speed of some of their deals, with the cheapest deals dropping by 41%…

Previously, suppliers were able to advertise broadband deals which claimed ‘up-to’ speeds that only one in 10 customers would ever reach.

But the new advertising rules mean that at least half of customers must now be able to get an advertised average speed, even during peak times (8-10pm).

There’s no equivalent requirement in the U.S.

The Federal Communications Commission punted the consumer protection ball to the Federal Trade Commission. Even when it subsidises incumbent telcos, like AT&T and Frontier Communications, to provide 10 Mbps download and 1 Mbps upload service in rural areas, it only expects them to hit 80% of that speed 80% of the time.

The California legislature passed a generic online truth in advertising law last year, but didn’t specifically call out Internet service or ISPs. Enforcement is up to California attorney general Xavier Becerra, who hasn’t done anything with it yet.

In practice, ISPs on this side of the Atlantic can advertise any speed they want, regardless of actual performance, so long as they qualify it with “up to” and back it with a long list of exceptions and conditions, buried somewhere on their websites.

Shouldn’t we expect the truth too?

California’s regulatory review of T-Mobile-Sprint deal has light years left to run

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The proposed purchase of Sprint by T-Mobile will get a thorough workover by the California Public Utilities Commission, and a final decision on whether or not to allow it won’t come until next summer. The commissioner running the review, Clifford Rechtschaffen, laid out the issues that he’ll investigate in a ruling on Friday.

Rechtschaffen had to decide how wide ranging his inquiry will be. Sprint and T-Mobile wanted it to be very narrow, and focus on two particular issues: could a relatively small Sprint subsidiary that does some wireline business in California be sold to T-Mobile, and could T-Mobile take over Sprint’s California mobile carrier registration. Technically, that’s just a simple notice that it has a federal license, but transferring it requires CPUC sign-off. As they tried to argue, both were matters of minor paperwork. These aren’t the droids you’re looking for, move along, move along.

Protests came from the usual suspects. TURN (aka The Utility Reform Network), the Greenlining Institute and Media Alliance – non-profit advocacy groups that rely heavily on “intervenor compensation” handed out by the CPUC – objected. So did the CPUC’s internal advocacy unit, the office of ratepayer advocates. They wanted the commission to review the whole merger, and all its potential impacts on Californians.

Rechtschaffen resisted the Jedi mind trick and sided with the protestors. He listed fourteen questions that have to be answered before the CPUC makes a final decision. The timeline he laid out says that will happen in June 2019.

The topics of those questions range from the merger’s competitive impact on mobile service and the fiber backhaul markets in California, whether or not innovation will be helped or harmed, and what, exactly, are the wonderful “efficiencies” that Sprint and T-Mobile promise will come our way if they’re allowed to combine. He’ll also consider the need for and the nature of “conditions or mitigation measures to prevent significant adverse consequences” that the CPUC might impose.

The public will be involved. Rechtschaffen plans to hold a series of public hearings in November and December, which will presumably be held in several locations around California. After that, both sides will file position papers, present evidence at a formal hearing, and submit their arguments and counter-arguments. Once that’s done – by mid-March – it’ll take about three months to produce, review and vote on a final decision. That’s the planned schedule, anyway. Much can happen that might speed up or, particularly, slow down the proceeding.

AT&T and Comcast know Internet content censorship is real and it works

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I’ve seen what a world without network neutrality looks like, and it isn’t pretty. I spent a couple of weeks in China this summer with a Linux laptop and an Android phone. There was 4G mobile broadband available everywhere I went, and WiFi availability is common. But that only gets you so far.

My gmail account was blocked, along with all the other Google services I use. To get around that, I set up an Office 365 account with an alternate domain name. Microsoft appeased Beijing by doing business its way, and seems to operate without any particular restrictions. Just the restrictions that are imposed on any online company doing business on the mainland.

That meant that when I used the Bing search engine, my results were filtered to ensure I didn’t see anything that upset my Chinese hosts. I did have a VPN that occasionally let me climb over the Great Firewall, but it appeared to be playing a game of whack-a-mole with the government: an IP address that worked yesterday won’t necessarily be accessible tomorrow. I was cut off from social media. Maybe it’s healthy to take a break every so often, but government enforced abstinence is oppressive.

News was restricted. I couldn’t reach my go-to sites. The creepiest moment came in Beijing where my hotel had the BBC on its in-house TV system. While I was watching a newscast, the presenter began reading a story about unrest in western China. Halfway into her first sentence, the screen went black and stayed that way for several minutes. When it came back on, a harmless story about trade was running.

Someone was watching the live BBC feed with a quick finger on the kill switch, waiting for content that doesn’t walk the official line. Content filtering is real. It’s not a boogyman dreamed up by net neutrality advocates.

It can be done, it is being done and it’s not just about money. Without net neutrality rules, there’s nothing to prevent AT&T or Comcast or any other ISP from filtering out unflattering news or blocking websites that contradict corporate messages. That’s a power that the U.S. constitution properly denies to the U.S. government. There’s equally good reason to deny it to telecoms monopolies that have as little accountability and nearly the same degree of technical control over Internet content as the Chinese government has.

California senate bill 822 would reinstate net neutrality rules that can be the first line of defence against censorship empowered by monopoly control of the lines of communication, whether it’s in the service of politics or profit. It’s now up to governor Jerry Brown to decide if it becomes law.

Charter, Comcast tell FTC to kill California broadband laws

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Comcast and Charter Communications want the Federal Trade Commission to preempt California’s data privacy law, and any other state laws regarding broadband service. In comments filed last week, the National Cable and Telecommunications Association (NCTA), which serves as a Washington, D.C. lobbying front for Comcast, Charter and other cable companies, ask the FTC to tell state lawmakers and officials that they can’t enforce broadband service rules beyond what federal regulators think is appropriate (h/t to Jon Brodkin at Ars Technica for the pointer)…

The FTC should ensure that the Internet is subject to uniform, consistent federal regulations, including by issuing guidance explicitly setting forth that inconsistent state and local requirements are preempted…

California’s recently enacted California Consumer Privacy Act of 2018 imposes numerous requirements that differ from, and even conflict with, federal law.174 Moreover, a patchwork of state-level rules applying only to BIAS providers would undercut existing federal policy basing enforcement on what information is collected and how it is used, rather than on who is collecting the information. Any FTC guidance to state entities on the need to ensure consistency with FTC and FCC policy and precedent in the Internet arena thus should cover privacy and data protection issues as well.

NCTA argues, falsely, that the market for broadband service is “substantially” and “increasingly”. That’s true in a few isolated areas, but overall the trend is toward greater monopolisation of the Internet service industry. The minimum speed level necessary to take advantage of what NCTA calls “a wide array of Internet-delivered video offerings” continues to rise. More and more, cable operators are the sole source of broadband service that meets contemporary needs.

Charter and Comcast are preparing a new line of attack against state-level privacy and network neutrality rules. If, as some legal experts believe, the Federal Communications Commission has taken itself out of the broadband regulation business, then the FTC is their best hope to kill those laws. Particularly California’s new consumer privacy law and its pending resurrection of network neutrality standards.

T-Mobile’s takeover of Sprint challenged in California

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T-Mobile’s plan to buy its smaller competitor, Sprint, faces formal opposition in California. The California Public Utilities Commission’s office of ratepayer advocates and a pair of consumer advocacy groups filed formal protests to the merger, claiming, among other things, that it runs afoul of anti-trust principles and would result in a significantly less competitive mobile telecoms market.

The deal has to be approved by the CPUC, but the scope of that review is limited. So far. T-Mobile needs the CPUC’s okay to take over Sprint’s relatively small wireline business, and to put its name on Sprint’s California wireless registration. The former poses broad questions for a tiny aspect of the merger; the latter involves a narrow look at the larger business.

The protestors want the CPUC to combine it all into a single case and make it a comprehensive enquiry that considers the total impact of reducing the number of mobile broadband companies in California from four to three.

As the joint filing by the Utility Reform Netowrk and the Greenlining Institute put it…

The Wireless Application makes the rather bold claim that the elimination of Sprint as a competitor will nevertheless promote competition. However, when discussing the combined company’s position as a competitor, Applicants focus on the combined company’s ability to compete with “premium” brands like Verizon and AT&T, as well as cable companies’ voice and data plans. The Wireless Application is silent as to the combined company’s plans to target more value conscious customers. Joint Consumers are concerned that the proposed transaction would eliminate Sprint and T-Mobile as companies with affordable service offerings and reasonably priced equipment, and, instead, create a “third AT&T/Verizon” that lacks the incentive to serve lower-income or low-margin customers. In fact, the Federal Trade Commission and Department of Justices’ Horizontal Merger Guidelines expressly acknowledge that a combined company may have the incentive to eliminate lower cost offerings in order to drive customers to more expensive (and more profitable) offerings.

It is bold indeed to say that reducing the number of competitors makes a market more competitive. Maybe it’s possible to prove that it’s true. I doubt it, but the CPUC should give T-Mobile and Sprint a fair shot at making that case. If they can’t do it with hard evidence – as opposed to the rhetoric they’ve relied on so far – then the CPUC should block the merger.

PG&E cancels competitive dark fiber business plan

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That didn’t take long.

Four days after informing the California Public Utilities Commission that it couldn’t reach agreement with a grab bag of protesting organisations, Pacific Gas and Electric threw in the towel. It’s ending its plan to become a competitive telecommunications company. It won’t put its extensive inventory of surplus dark fiber, and potentially other services, on the open market.

In its request to withdraw its application for certification as a competitive telecoms company, PG&E said the world has changed since it began the process more than a year ago…

Given PG&E’s present circumstances, it is in the public interest that PG&E make current informed decisions in light of the new environment before investing significant resources in launching the new [competitive telecoms] business. PG&E and parties have diligently engaged in settlement negotiations to expeditiously make progress towards full resolution of the issues in this proceeding. However, as more time passes, the uncertainties of PG&E’s current circumstances outweigh the potential economic and busines benefit of the proposed [competitive telecoms] business. Therefore, the public interest is protected by allowing PG&E to exercise its prudent business decision-making to not continue to pursue the [competitive telecoms] business, at this time, given the significant change in circumstances since the filing of the…Application in April of 2017.

PG&E didn’t say exactly which circumstances had changed, but top of the list has to be the estimated $12 billion in damages it might have to pay out as a result of last year’s wildfires. When a company faces an existential financial threat, it’s time to scrap diversification plans and focus on the core business.

But that’s not the only circumstance that’s changed. The CPUC seems to be intent on killing the competitive dark fiber business in California. Last year’s decision to wave through CenturyLink’s purchase of Level 3 Communications took the last major source of independent dark fiber in California off the market, and its savaging of Southern California Edison’s plan to do a bulk dark fiber deal with Verizon sent a clear message that electric companies that want to compete in the telecoms space need not apply.

When California’s utility regulator lines up – wittingly or not – on the same side as big, monopoly model telecoms companies like AT&T, Comcast and Charter Communications, it’s game over. Retreat was PG&E’s only option.

As TV subs cancel, monopoly control of broadband pipes is Comcast’s best hope to grow business

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As TV subs cancel, monopoly control of broadband pipes is Comcast's best hope to grow business

Comcast offered the perfect example last week of why big, monopoly broadband companies hate the idea of network neutrality, and are stuffing politician's pockets with cash arguing so eloquently against it.

Comcast's traditional cable television business is bleeding subscribers and revenue at an increasing pace, but its broadband business is booming. The company reported its second quarter 2018 financial results last week. It gained 260,000 broadband subs, but lost 140,000 video customers, which led to a 1.9% decrease in video revenue. Losing video subs is nothing new, but declining revenue is. It's the first time that's happened, according to a story by Ben Munson in FierceVideo.

The reason is Netflix and its over the top kin, according to Comcast CEO Brian Roberts, who spoke on a conference call with analysts

Continuing competition from virtual contributed to our 140,000 video customer net losses in the second quarter. We remain focused on segments that we can serve profitably as part of a broader relationship with the customer centered on a whole home experience.

One way of creating that “broader relationship” with a “whole home experience” is to manipulate customers' Internet traffic so the video content Comcast sells comes first and the bandwidth used to carry it is cheaper.

That's what paid prioritisation is all about. There are different ways to game it and Comcast lobbyists have tied themselves up in semantic knots trying to redefine paid prioritisation so that Comcast can claim to be against it while building fast lanes for itself. But it comes down to the same thing: use monopoly control of Internet service to make, say, Netflix's video streams slower and more expensive for consumers than Comcast's.

The potential, and the reality, of that kind of abuse of market power is the reason that the concept of non-discriminatory access and open pricing for critical infrastructure came in being – the common carrier principle. It's as applicable to broadband today as it was to ferries four hundred years ago.

T-Mobile’s purchase of Sprint has to clear a Californian hurdle

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T-Mobile, the third largest U.S. mobile carrier, needs the California Public Utilities Commission’s blessing to buy Sprint, the fourth largest. Sorta.

The Federal Communications Commission has jurisdiction over mobile carriers and is doing the heavy lifting in the regulatory review of the transaction. But Sprint has a subsidiary – Sprint Communications Company, or “Sprint Wireline” as it’s referred to – that sells services to business customers in California. As a result, the company has a certificate of public convenience and necessity (CPCN) granted by the CPUC, and needs its approval to transfer ownership to T-Mobile.

In the joint application submitted by the two companies, Sprint Wireline’s business is described as limited “exclusively to enterprise and carrier customers”. It’s no big deal, they claim…

This transfer will not have any impact on the provision of [competitive telecoms] service or competition in that market. T-Mobile does not currently provide such services and neither it, nor any of its California operating subsidiaries, are certificated [competitive telecoms service] providers. Moreover, because this is a parent-level only transaction, with no change in day-to-day operations of Sprint Wireline, the Commission will retain exactly the same regulatory authority over Sprint Wireline that the Commission possessed immediately prior to the Transaction. In addition, the Transaction is transparent to Sprint Wireline’s customers as Sprint Wireline will continue to honor its existing contractual obligations.

The key question is whether the CPUC looks at all the business that Sprint does in California – including mobile – or focuses on the much smaller wireline portion. Going large means closer scrutiny and, perhaps, conditions attached to the sale. A narrow focus on just the wireline business would likely be much less fraught.

In the past, the CPUC has either sidestepped the question, as it did with CenturyLink’s purchase of Level 3 Communications, or based its review on the big picture, and the tougher standards that entails, as it did with Charter Communications’ acquisition of Time Warner Cable’s Californian systems.

The T-Mobile/Sprint deal is different, because there’s a clearer regulatory distinction between wireline and mobile companies, and the certifications and licenses they’re required to have. The CPUC has to decide whether it’s a big enough difference to justify waving the deal through.