Tag Archives: public policy

CPUC should follow New York’s lead, hold Charter to obligations

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The California Public Utilities Commission imposed a long list of obligations on Charter Communications, when it granted permission for the purchase of Californian cable systems belonging to Time Warner and Bright House in 2016. Some of those requirements mirror the conditions that the New York Public Services Commission attached to its approval of the deal.

Unlike the NYPSC, however, the CPUC has not demanded public accountability from Charter. New York regulators nipped at Charter’s heels since the acquisition closed, and then revoked permission and ordered Charter to reverse the sale and give up its New York markets because “the company was not interested in being a good corporate citizen”.

Typically, the CPUC does not take an active role in enforcing conditions attached to telecoms deals. The job of being the cop on the beat is often left up to outside organisations. If you want a particularly vivid example of how that approach does or doesn’t work, take a look at the mess surrounding Frontier Communications’ purchase of Verizon’s wireline phone systems in California in 2016.

Although it’s arguably right to expect outside parties to take responsibility for enforcing their own contracts, there’s little reason to think they’ll take on the additional work of policing the CPUC’s own decisions. For example, when it approved the Time Warner purchase, the CPUC gave Charter two and a half years – until November 2018 – to convert its legacy TV-only analog systems to digital service…

Within 30 months of the closing of the Transaction, New Charter shall convert all households in its California service territory to an all-digital platform with download speeds of not less than 60 Mbps…

On December 31, 2016 and every year thereafter until December 31, 2019 New Charter shall submit a progress report to the Commission and [the CPUC’s office of ratepayer advocates] identifying progress made.

In theory, the CPUC has some idea already as to whether or not Charter is performing. It’ll be a relatively straight forward process to confirm that all of Charter’s analog systems in the San Joaquin Valley, and in Modoc and Monterey counties, have been upgraded to digital service come November. The CPUC should be as proactive in enforcing its own decisions and pursuing the public interest as its New York colleagues.

Performance, not weasel words, should drive California broadband subsidies

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The reboot of the California Advanced Services Fund (CASF) broadband infrastructure subsidy program continues, with a new round of comments and suggestions landing at the California Public Utilities Commission.

I drafted the Central Coast Broadband Consortium’s filing. One issue that the CPUC should consider very carefully is what qualifies as a bona fide service offer.

When the California legislature allowed lobbyists for AT&T, Frontier Communications, Comcast and Charter Communications to rewrite the law and turn CASF into their own, private piggy bank, the minimum broadband standard was lowered to 6 Mbps download and 1 Mbps upload speeds. If an incumbent “offers” such service, then the area in question isn’t eligible for an infrastructure grant.

The point we made is that…

In order for such an offer to be valid, an incumbent provider must be capable of actually delivering service at 6 Mbps download and 1 Mbps upload speeds (hereinafter, “6/1 service”) consistently to any household that subscribes to it. Although it is common industry practice to advertise service at a certain level and then condition it with a long and difficult to parse list of exceptions, there are no such exceptions in the statute. An incumbent is either capable of delivering 6/1 service to every household that subscribes to at least that level of service at all times, or it is not. If an incumbent is not capable of fulfilling an offer of 6/1 service, or better, at all times in any given census block or to any given household, then that census block or household is unserved.

An offer that can’t be fulfilled is not a offer at all. Incumbents should not be allowed to block independent projects on the basis of marketing claims or service that meets the minimum standard only some of the time. The 6/1 standard is ridiculously low to begin with. The least the CPUC can do is require incumbents to actually meet it.

CPUC won’t kill SCE’s dark fiber business. Yet

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

Southern California Edison fought its dark fiber battle to a draw, but all out war looms on the horizon. That’s my reading of a proposed decision by a California Public Utilties Commission administrative law judge that would end SCE’s quest for approval of a bulk fiber lease deal with Verizon, if the commission votes to approve it next month.

SCE, like other electric utilities in California, installed fiber optic cables on its pole routes, initially to monitor and operate its infrastructure. But one cable has dozens of fiber strands, and over the past 20 years SCE has leased out some of that surplus capacity, under terms approved by the CPUC that require it to rebate 10% of the gross revenue generated to electric customers.

Usually, the CPUC reviews SCE’s fiber leases one by one. But last year, SCE asked permission to sign a master lease with Verizon, and then add individual fiber routes to it over time.

That rational and reasonable approach was first accepted, then rejected after rookie commissioner Clifford Rechtschaffen stepped in. So-called consumer advocates, who don’t seem to understand that consumers need fast, affordable and competitive broadband service too, jumped in as well. The ultimate result was a proposed decision that would have split the gross revenue 50/50. SCE said that would kill its dark fiber business model – which is probably true – and that, in any event, the Verizon deal was dead because of the CPUC’s delays.

With the SCE decision looming, Pacific Gas and Electric also asked to cancel its request for CPUC permission to get into the telecoms business.

The proposed decision published yesterday would allow SCE to withdraw its application for approval of the now moot Verizon deal, but opens the door to a comprehensive, and potentially far more damaging, review of electric companies’ dark fiber leases…

The scope of the proceeding has raised broad policy issues that include identifying what policy frameworks promote the most effective utilization of ratepayer-funded dark fiber throughout California’s regulated electric utility infrastructure and assure safety, universal access to utility services, and non-discriminatory access to this infrastructure, especially amidst policy changes at the federal level. The Commission may consider opening a rulemaking to consider these and other broad policy issues and, in that broader context, reconsider the appropriate revenue sharing allocation for dark fiber route leases.

Electric companies are one of the few sources of independent dark fiber left in California. Killing their fiber business would harm consumers, both as electric customers, who would have no revenue to split at all, and as broadband customers, who pay high monopoly prices for low levels of service.

For now, we can only hope that “universal access to utility services” means all utilities, including broadband.

New York says Charter is “just lining its pockets”, revokes Time Warner purchase

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The New York state public service commission started the process of unwinding Charter Communications’ purchase of Time Warner Cable systems, in a decision issued on 27 July 2018. The NYPSC says Charter is evading its responsibility to extend its infrastructure and upgrade its service, particularly in rural areas. Those obligations were imposed when the NYPSC gave its blessing to the acquisition.

According to the NYPSC, Charter’s sins include…

  • The company’s repeated failures to meet deadlines;
  • Charter’s attempts to skirt obligations to serve rural communities;
  • Unsafe practices in the field;
  • Its failure to fully commit to its obligations under the 2016 merger agreement; and
  • The company’s purposeful obfuscation of its performance and compliance obligations to the Commission and its customers.

These recurring failures led the Commission to the broader conclusion that the company was not interested in being a good corporate citizen and that the Commission could no longer in good faith and conscience allow it to operate in New York. Today’s actions are meant to address Charter’s failings and to ensure New York has a partner interested in the public good, not just lining its pockets.

Charter’s response was to call the NYPSC’s rhetoric “politically charged” – fake news, in other words. As you might expect, the company is challenging the ruling, and is demanding more details from the NYPSC. According to a story by Alan Breznick in Light Reading

In the company’s second-quarter earnings call…Charter Communications Inc. Chairman & CEO Tom Rutledge made it clear that Charter has no intention of obeying the state Public Service’s Commission order to exit the state because of its allegedly repeated failures to meet its cable buildout and broadband speed commitments. Instead, Rutledge said Charter will try to resolve the conflict with state regulators and, if necessary, will fight the PSC’s actions in court.

“Hopefully we can work it out,” Rutledge said in response to an analyst’s question on the call, noting that it will likely take some time. “But, if necessary, we’ll litigate. We believe we’re in the right.”

It’s just the beginning of the story. The end is months, if not years, away.

Frontier knows how to game the broadband subsidy system, and that’s OK CPUC says

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The California Public Utilities Commission has decided that broadband subsidy proposals can be challenged almost forever, instead of right up until the moment commissioners vote, as it has allowed in the past. It rejected an appeal of a 2017 grant by a wireless Internet service provider in Trinity County, Velocity Communications, ruling that once a draft decision is issued, ISPs can’t submit speed test data that purports to show that the area in question is “served” and thus ineligible for a California Advanced Services Fund (CASF) grant. That’s good news.

The bad news is that until the draft decision is issued – typically a month before the commission votes – incumbents can take all the pot shots at grant applications they want. By rejecting the appeal, commissioners put their stamp of approval on the routine practice of ignoring the deadlines they set. It’s OK, they said, for Frontier Communications to persistently lobby staff after the formal challenge period closes…

Velocity is correct that Commission staff accepted a late filed challenge from Frontier…the deadline for submitting letter challenges to a CASF application is 14 days after web posting of the CASF application by Commission staff. Historically, Commission staff has been lenient with this requirement and accepted late-filed challenges after the 14-day period out of an abundance of caution…

What Velocity fails to acknowledge, however, is the significant difference between Commission staff accepting a late filed challenge while the evidentiary record is still open compared to accepting new evidence after the proposed resolution has been issued and the evidentiary record has been closed. There is no statute, Commission decision, resolution, or rule prohibiting Commission staff from accepting a late filed challenge while the evidentiary record is still open (prior to the issuance of the draft resolution), which is what staff did in regard to Frontier’s challenge.

Allowing ISPs to file perpetual challenges to broadband infrastructure projects wouldn’t be a huge barrier if the CPUC otherwise stuck to its schedule, which calls for a final decision on proposals within three and a half months. But abuse of its open door policy – Frontier is a major offender – creates delays that can drag on for years and effectively kill independent projects that incumbents find inconvenient.

Slow decisions lead to slow broadband service, and that suits Frontier’s and ATT’s business model perfectly.

Caltrans backs off requiring extra conduit in highway projects, but broadband cooperation door still open

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

Caltrans updated its “user guide” for installing broadband infrastructure into highway projects. The big change is the elimination of a shadow conduit requirement – telecoms companies that take advantage of opportunities to install facilities in highway projects are no longer obligated to install extra conduit and fiber for Caltrans, at their own expense.

On the whole, it’s not a killer change. The more independent broadband infrastructure in the ground – Caltrans is nothing if not independent – the better. But Caltrans still has the option to pay for any conduit and fiber it might want to add. Since it doesn’t typically make its telecoms facilities available to private companies, the impact on competition is nil. Except where municipal broadband is concerned. Caltrans will cooperate with local agencies, in its own way, and in theory the less inventory it has, the less there is that might be shared. As a practical matter, though, the impact isn’t significant.

The important thing this is that independent Internet service providers and local agencies still have a clearly defined onramp to Caltrans projects. It takes some initiative, though. Caltrans publishes an interactive map showing where it’s planning to do some work – there’s a link to the current version on Caltrans’ wired broadband page – but it’s up to ISPs and agencies to keep track of what’s going on in their areas. Once a likely project is identified, Caltrans says that “companies or organisations working on broadband deployment may collaborate with Caltrans to install a broadband conduit as part of a project”. The next step is to email the Caltrans single point of contact for the district that’s involved. A link to the current list of those contacts is also on the wired broadband page.

This is all the result of assembly bill 1549, passed in 2016. It didn’t put Caltrans in the broadband business as we originally hoped, but it did open a plainly marked door for cooperation. It’s up to ISPs and local agencies to walk through it.

I served on Caltrans’ conduit task force and I’ve advocated for and helped to draft AB 1549. I’m involved and proud of it. Take it for what it’s worth.

PG&E cancels competitive dark fiber business plan

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

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.

PG&E’s competitive dark fiber ambitions stall at CPUC

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

Update: PG&E filed a request with the CPUC, asking to withdraw its application to become a certified, competitive telecoms company. More tomorrow.

It’s been more than 15 months since Pacific Gas and Electric asked for permission to get into the dark fiber business in a big way. In April 2017, it asked the California Public Utilities Commission to certify it as a telecoms company, which would allow it to lease its surplus dark fiber to commercial customers. It’s already in the dark fiber business, but it’s limited to leasing capacity to service providers that are already certified.

As is common practice, potential competitors and so-called consumer advocates jumped into the middle of the CPUC’s review – intervened, as its called. Instead of managing its own process, the CPUC was content to let these intervenors dicker with PG&E. It wasn’t productive. I attended a couple of those sessions as an observer – my clients include municipal electric utilities with fiber interests – and wasn’t impressed by the quality of the conversation. Now, those talks have broken down and everything was tossed back into the lap of the CPUC administrative law judge who currently has the ball (it’s been passed around a bit).

According to a joint update PG&E and the intervenors filed with the CPUC

Despite the good faith effort of the Parties, it became clear that an agreement would not be reached on any of the issues and all settlement discussions ended on July 30, 2018…the Parties no longer believe that settlement will be reached on any of the issues in this proceeding.

Now, the ALJ hearing the case is asking PG&E to answer several pertinent questions about its quest to add telecoms to its portfolio. That would have been a fine thing to do a year ago.

We’ve already seen Southern California Edison’s fiber deal with Verizon collapse this year, due to the CPUC’s needlessly complicated process, and the misguided efforts of competitors, advocates and a CPUC commissioner to extract benefits, public or otherwise, from it. It would be a tragedy for Californian consumers – who need affordable broadband access as much as they need electricity – if PG&E’s bid to make the northern California telecoms market more competitive also fails.

California net neutrality bills back on track

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The new versions of senate bills 822 and 460 were filed in Sacramento yesterday, and appear to once again be a legitimate revival of network neutrality, as promised last month.

SB 822, authored by senator Scott Weiner (D – San Francisco), is the big kahuna. The bill reinstates the three bright line rules first adopted by the Federal Communications Commission in 2015, when it had a democratic majority, and then repealed in 2017 after republicans took control: no blocking, throttling or paid prioritisation.

Zero rating – not counting certain content against subscribers’ monthly data caps – is also on the list of banned practices, unless its done across the board. It would be okay for AT&T to say all data used to watch video is zero rated, but not for it to limit the freebie to its own content, for example movies produced by Warner Brothers or distributed by DirecTv.

There’s language that attempts to close loopholes. ISPs couldn’t erect upstream toll gates for content or application providers, or deliver an in-house service over a subscriber’s connection and claim it wasn’t coming via the Internet. In other words, the bandwidth you buy is your bandwidth.

One change that’s been made is to draw a distinction between fixed – wireless or wireline – and mobile Internet service. At this point, the same rules would apply to both kinds of service. If it was done to limit the damage done by the inevitable court challenges, then it’s a good thing. It needs to be closely watched, though, to make sure that the change isn’t an invitation for the army of lobbyists fighting the bill to fiddle with it.

SB 460, by senator Kevin de Leon, would require state and local agencies to only buy Internet services from ISPs that abide by SB 822’s rules.

The bills are tied together. Both have to pass for either to take effect. There are some committee hurdles for the bills to get over, but that’s a formality so long as democratic leaders are on board. The legislature has until the end of the month to act.

California’s net neutrality amigos ride into action tomorrow

FacebookTwitterGoogle+PinterestLinkedInRedditEmail

The California legislature is back in session tomorrow, following a month long summer break. The fires ravaging California will certainly be top of mind for everyone, but broadband bills remain on the table. Network neutrality is the big issue, and activists are certain to keep the pressure on to pass effective legislation.

Senate bills 822 and 460 are paired up, and together will reinstate the 2015 Obama era net neutrality rules scrapped late last year by the Trump administration’s republican majority on the Federal Communications Commission. And go a bit further.

If the deal reached in the rush to get out of town last month holds together.

SB 822 is the main event. It bans blocking, throttling and paid prioritisation – as did the 2015 rules – and adds zero rating to the list of forbidden practices. Or at least it did until the industry-friendly assembly communications and conveyances committee got its hands on it. Chair Miguel Santiago (D – Los Angeles), with close support from his wingmen, assemblymen Eduardo Garcia (D -Imperial) and Evan Low (D – Santa Clara), did the bidding of AT&T, Frontier Communications, Comcast, Charter Communications and others, and eviscerated SB 822.

The outcry from activists and democratic leadership – net neutrality is a flagship issue for the party, particularly in Washington, D.C. – was intense. Garcia backed down at a capitol press conference, and promised to work with senators Scott Wiener (D – San Francisco) and Kevin de Leon (D – Los Angeles), the authors of SB 822 and SB 460 respectively, to restore the bills to their former glory.

If all goes to plan, we should see revised drafts of both bills tomorrow or shortly thereafter. Wiener is leading the net neutrality charge and said as much at the press conference. The question will be whether the new text matches the stringent language of the original versions. With platoons of lobbyists for big telecoms companies dug in for a fight, we can take nothing for granted.