Tag Archives: public policy

Experience and expertise give ISPs an edge in hunt for federal rural broadband subsidies

by Steve Blum • , , , ,

Salinas ag tech summit 13jul2018

The federal agriculture department’s ReConnect program is new. It supplements an older program that wasn’t much use in California. We’re hopeful this new version will be better for us. But we won’t know until we see results. Grant money will be awarded on a competitive basis, with the first grant application deadline last month, and windows for grant/loan combinations and pure loans coming up.

On paper, it’s easier for Californian projects to qualify – e.g. projects submitted by private, for profit ISPs, which we have, as opposed to co-ops and similar, which we don’t so much. USDA grant applications are different from what we’re used to with California Advanced Services Fund (CASF) grants. The application requirements tend to be more technical, and the review more objective.

Sometimes that’s good, sometimes not.

When an Internet service provider asks me if they should apply, I have three gating questions:

  • Do you have GAAP compliant financial statements? Not can you put them together if you had to, but could you give those to me right now if I asked?
  • Do you have someone in your organisation with a four-year engineering degree?
  • Have you applied for a federal telecoms grant in the past?

If the answer to all three questions is no, then you’re going to have a harder time meeting the application requirements. The USDA isn’t big on do-overs. They run applications through an initial screening – which is partly automated – and kick out the ones that aren’t up to spec in their judgement.

So the companies and other organisations that have been successful in the past have been the ones that submit financial and technical detail that complies with USDA’s standards. Qualified accountants and engineers have a significant edge. Some organisations have people who perform at that level without the qualifications, but that’s not the way to bet.

Experience also matters. The ones who win grants tend to be the ones who have learned to play the game. The odds of success on your first go-round are lower, but once you climb the learning curve, your chances increase. If you’re looking at this as a one-off opportunity, I wouldn’t be optimistic. But if you look at it as something that you’ll develop as part of your business model for the long term, then I think it’s worth the effort.

FCC will preempt San Francisco apartment broadband access ordinance, and that’s just for starters

by Steve Blum • , , , ,

The Federal Communications Commission is preparing to preempt part of a San Francisco ordinance that requires landlords to open up access to existing wiring within a building, and allows any Internet service provider to use it to deliver service to tenants. In a draft ruling released yesterday, the FCC proposes to block any requirement that forces a landlord to share wiring it owns that’s already in use. It would apply to both residential buildings, such as apartments or condos, and office buildings – “multiple tenant environments” (MTEs), as the FCC puts it.

Just in case you were worried that the FCC will stomp all over any local effort to improve access to broadband service, the draft also declares that it does not “preempt state and local efforts to promote facilities-based broadband deployment and competition”.

Well, not really.

In language that would do George Orwell proud, the FCC’s draft says it’ll only preempt local initiatives that “contravene federal law and policy”. Since the FCC reckons that it’s in charge of making federal telecoms policy, it’s actually saying if we don’t like it, we’ll preempt it.

The draft is clear that the FCC doesn’t think the City and County of San Francisco should have any say about who can use whom’s facilities, but for now the preemption would be limited to rules about wires are in use. If a customer in San Francisco, say, cancels broadband service from Comcast but keeps video service, then a competitive ISP wouldn’t also be able to use the wiring that serves the apartment. On the other hand, if the customer cancels all services and there’s unused coax between the apartment and a telecoms closet, then the landlord is still obligated to lease it to a competitive ISP of the tenant’s choice. For now.

San Francisco’s ordinance requires landlords to allow tenants to buy broadband service from any ISP, via existing wiring if that’s the most desirable way. ISPs have to pay “just and reasonable compensation” for the use of those facilities, and follow particular procedures for giving notice to landlords, but at the end of the day they can come in.

A challenge to that ordinance was filed, but initially rejected by the FCC because the legal basis was weird. Or rather, not weird enough for the FCC’s republican majority, which now plans to stretch the regulation cited in that case – the over the air reception device (OTARD) rule – way past the breaking point in regards to another case involving cell sites.

The San Francisco preemption and the pledge to only preempt things it doesn’t like are just a couple of items in a long to do list in yesterday’s draft. The FCC also plans to take a broad look at the relationship between telcos, cable companies and independent ISPs, landlords and tenants. Assuming commissioners vote to approve it at their meeting next month – which is a pretty safe bet – they’ll ask for public comments what else they might do to “accelerate the deployment of next-generation networks and services within MTEs” and on “the impact that revenue sharing agreements between building owners and broadband providers, exclusivity agreements regarding rooftop facilities, and exclusive wiring arrangements have on broadband competition and deployment”.

100 Mbps broadband means 0.2% to 0.3% lower unemployment, biggest impact in rural communities, study says

by Steve Blum • , , , ,

We can do it

Faster and better broadband service means more jobs and lower unemployment. Rural communities benefit more from gaining access to high quality broadband service than urban and suburban areas. That’s the conclusion of a study by three researchers, Bento Lobo and Rafayet Alam at the University of Tennessee at Chattanooga’s finance and economics department, and Brian Whitacre – at Oklahoma State University’s agricultural economics department.

They compared high speed broadband availability – defined as 100 Mbps download speed or better – to unemployment statistics in Tennessee between 2011 and 2015. They also factored out a potential source of bias: the tendency of Internet service providers to upgrade infrastructure and service in richer communities while redlining poorer ones.

Their results are dramatic…

High broadband speed matters and results in approximately 0.26 percentage points lower unemployment in counties with high speed compared to counties with low speed broadband…Additionally, early adoption of high speed broadband could reduce unemployment rates by an average of 0.16 percentage points per year. The results also show that compared to urban areas, the benefits of better quality broadband are disproportionately greater in rural areas.

From a policy standpoint, our research shows that investments in faster broadband can have significant employment effects, especially in rural areas…While it may make little difference to move from 10 Mbps to 25 Mbps, it could (and our results suggest that it does) make a significant difference to move to 100 Mbps or higher speeds…Our results consistently show that access to faster speed results in a decrease of 0.2 – 0.3 percentage points in unemployment, which can be in the 100s of jobs for some counties.

It’s a landmark study, and deserves to be read in its entirely, not least for the thorough review of past research into the economic benefits of better broadband service. The results also track with research conducted last year by the Monterey Bay Economic Partnership and the Central Coast Broadband Consortium, which found that broadband service at 100 Mbps download and 20 Mbps upload speeds is the minimum necessary for full participation in today’s digital economy.

Lobo, B., Alam, R., Whitacre, B. (2019). Broadband Speed and Unemployment Rates: Data and Measurement Issues, Telecommunications Policy, April 2019

Tacoma moves from courtship to consumation of deal to sell muni broadband system. Maybe

by Steve Blum • , , ,

Good to be the king

The Tacoma city council unanimously approved a plan to lease its municipal cable system, called Click, to a relatively small local Internet service provider. After years of study and negotiation, the choice came down to turning over the struggling system to one of two locally based companies: Wave Broadband, which has a growing footprint of cable and telecoms operations in California, Oregon and Washington, and Rainier Connect, which operates primarily as a reseller in the Tacoma area.

The winner, according to staff, the Tacoma public utilities board and CTC, a consulting firm, was Rainier. The Tacoma city council agreed, and passed a resolution authorising formal contract negotiations with Rainier. The final agreement is expected to be completed by the end of June.

Or not.

Based on what I’ve been reading, which I’ll cheerfully admit is only what’s been made public and doesn’t offer much of a peek behind the scenes, there’s a good chance the deal with Rainier could collapse as the city does its due diligence research and tries to craft an agreement that will withstand full financial scrutiny.

The council resolution contains a helpful table that outlines the differences between the proposals made by Rainier and Wave. Overall, Rainier simply promises to give the city more – more money, more control, more perks – but, according to the CTC report, only appears “to have the capability to scale up operations to meet its proposed obligations” which are considerably greater than the promises made by Wave, which already operates at the necessary scale.

Wave vs rainier 26mar2019

A key difference is the annual lease payment. Wave proposed paying $1 million a year, while Rainier offered an annual payment that begins at $2.5 million and grows to $3 million in year five. Both companies say they’ll upgrade the system to gigabit capacity but, here too, Rainier makes the bolder promise.

To meet these commitments, both companies need access to capital to cover upgrade costs and to finance lease payments to the city, while they turn around a business that’s in the red and make it profitable enough to stand on its own in a three-way competition with Comcast and CenturyLink. It’ll be up to city staff and outside financial advisors to dive into the numbers and decide whether 1. Rainier’s offer is based on a plausible business case and 2. if Rainier has the assets, management and credibility necessary to convince lenders and investors to carry its losses while it tries to execute it.

Wave already competes as the third wireline provider in other communities, and has a bigger balance sheet than Rainier. Despite being headquartered in the Puget Sound area, it’s not locally owned – its corporate parent is a private equity company that paid $2.4 billion for it last year – so its less generous offer might be the result of higher internal return on investment requirements and/or debt servicing needs. But it could also reflect hard won experience over small business hope. The City of Tacoma has until the end of the month to figure out which it is.

More documents regarding the City of Tacoma and Click are here, and more blog posts are here.

AT&T, Verizon, Sprint, PRTC plead their pain of not getting everything they want from Santa the FCC

by Steve Blum • , , , ,

The opening arguments submitted by AT&T, Verizon, Sprint and the Puerto Rico Telephone Company in their appeal of last year’s Federal Communications Commission’s pole ownership preemption decision do little more than lend credence to the allegation that their challenges were launched in collusion with their friends at the FCC in a vain judge shopping attempt.

The 2018 FCC wireless order was a gigabuck early Christmas present to mobile carriers. It gave them the right to use city-owned property in the public right of way, such as street light poles, at below market rates, sharply restricted fees that local government could charge for permits to do so, and limited local discretion over street management and aesthetic standards. And it tightened shot clocks for processing permit applications for (not so) small wireless facilities.

About the only gift the FCC didn’t give mobile carriers was “deemed granted” privileges. Those would have allowed companies to start construction without permission, after shot clocks run out. California has a similar rule, enacted by the legislature, but with more generous time limits.

The FCC has declined to create deemed granted remedies for big, macro cell sites in the past, and the U.S. congress never told them to do it. In a special case created by congress, the FCC did impose a deemed granted remedy, but there’s never been any question that must do so in all cases. If there’s any question, it’s whether the FCC has the general authority to overrule state legislatures in that regard. Nonetheless, the four mobile companies filed an appeal claiming the FCC’s failure to do so was “arbitrary and capricious”.

In their first attempt to justify that claim, the mobile carriers offer page after page of boilerplate 5G hype, and then argued that the FCC’s decision to not give them everything they want had “no rational connection” to the glorious future promised by their eloquent marketing materials.

What the carrier’s intervention did earn them is four tickets in the judicial lottery that determined which appeals court would hear all the challenges, particularly those filed by cities and counties that objected to the substance of the FCC’s preemption order. It worked at first. Sprint’s ticket was pulled and a Denver-based court with a more friendly reputation caught the case. But a legal maneuver by the City of San Jose got it transferred to the ninth circuit federal appeals court in San Francisco, exactly the place AT&T, Verizon and Sprint – and the FCC – were trying to avoid.

FCC’s local pole preemption order based on speculation, ignores substantial evidence, cities tell appeals court

by Steve Blum • , , , ,

The Federal Communications Commission’s preemptions of local property rights – particularly city-owned street light poles – and local rules regulating the use of public right of ways are contrary to federal law and violate the federal constitution, according to arguments submitted to a San Francisco appeals court by dozens of cities, counties and local government associations. In their opening brief submitted on Monday, they made their case for overturning last year’s FCC rulings that swept away state and local land use, road maintenance, property leasing practices and other policies that mobile carriers find bothersome.

The two FCC rulings affect wireless and, to a more limited extent, wireline telecoms providers. All the challenges that resulted were consolidated into a single case that’s now in front of the ninth circuit federal court of appeals.

The local governments’ argument that the FCC’s wireless and wireline rulings are “arbitrary, capricious and counter to the evidence in the record” boil down to two key points:

  • Federal law says state and local governments can’t “prohibit or effectively prohibit” deployment of telecommunications services. Courts – including the ninth circuit – have previously ruled that “an ‘effective prohibition’ may not be based upon the mere possibility of prohibition – an actual prohibition is required”. Local regulations and fees that might make a particular small cell site less convenient or less profitable for a carrier are not a prohibition.
  • “Nothing in the Communications Act gives the Commission authority over non-carrier government property merely because it is convenient to communications providers, or requires a locality to take affirmative action to assist in deployment, either through making its property available, or making it available cheaply”.

The FCC’s claim that it is helping rural communities by preempting urban property rights is equally bogus, according to the local governments’ brief

If a provider obtains reaps greater profits in San Francisco, Eugene or New York City as a result of preemption of those cities’ current right-of-way or infrastructure attachment fees, those increased profits do not make it more attractive or profitable for the provider to invest in deploying infrastructure in rural Mississippi. The Commission’s order does not require any amount of additional profits resulting from the preemption of San Francisco’s or Eugene’s fees to go towards providing service in other areas. Providers are free to use such additional profits to engage in corporate acquisitions, increase shareholder dividends, or repurchase stocks, which the record shows they have done rather than invest in deployment.

The joint arguments filed by local governments, as well as opening briefs filed by mobile carriers and municipal electric utilities, are just the first round in what will what will be months of litigation.

Petitioner Local Governments’ joint opening brief, 10 June 2019
Brief of petitioner the American Public Power Association, 10 June 2019
Petitioner Montgomery County, Maryland’s opening brief, 10 June 2019
Joint opening brief for Petitioners Sprint Corporation; Verizon Communications Inc.; Puerto Rico Telephone Company, Inc.; and At&T Services, Inc., 10 June 2019

Links to petitions, court documents and background material are here.

My clients are mostly California cities, including some that are directly involved in this case. I’m not a disinterested commentator. Take it for what it’s worth.

Opening briefs challenging FCC pole and right of way preemptions filed in ninth circuit

by Steve Blum • , , , ,

Tmobile small cell riverside

Dozens of local governments from across the U.S. filed joint arguments yesterday with the ninth circuit federal appeals court in San Francisco, as challenges to two 2018 Federal Communications Commission decisions move ahead. Mobile carriers and municipal electric utilities also filed opening briefs. I’ll dive deeper into the arguments in the next few days, but you can read them here now:

Petitioner Local Governments’ joint opening brief, 10 June 2019
Brief of petitioner the American Public Power Association, 10 June 2019
Petitioner Montgomery County, Maryland’s opening brief, 10 June 2019
Joint opening brief for Petitioners Sprint Corporation; Verizon Communications Inc.; Puerto Rico Telephone Company, Inc.; and At&T Services, Inc., 10 June 2019

Links to petitions, court documents and background material are here.

My clients are mostly California cities, including some that are directly involved in this case. I’m not a disinterested commentator. Take it for what it’s worth.

FCC puts political agenda ahead of regulatory relevance

by Steve Blum • , , ,

Self licking ice cream cone

The Federal Communications Commission is in danger of becoming just another one of Washington, D.C.’s self licking ice cream cones. Some would argue that it has already achieved that exalted status, but until pending court challenges to recent, major decisions – net neutrality and local property rights preemption, particularly – are decided, there’s still hope.

The latest example of hype-over-substance from the FCC’s current republican majority is the annual broadband deployment report that, at times, reads like an update from the old Soviet Union about its latest five year plan for increasing tractor production. Glorious.

Democrats on the commission can be just as political, particularly when they hold the majority, but they aren’t always so (nor, to be fair, are republicans, at least not historically). Jessica Rosenworcel, the FCC’s senior democrat, dissented from the report because it 1. relies on bad data, and 2. its standards are set too low…

This report deserves a failing grade…

The claim in this report that there are only 21 million people in the United States without broadband is fundamentally flawed. Consider that another recent analysis concluded that as many as 162 million people across the country do not use internet service at broadband speeds. Adding insult to injury, the same flawed data we rely on here is used to populate FCC broadband maps. For those keeping track, one cabinet official has described those maps as “fake news” and one Senator has suggested they be shredded and thrown into a lake…

It’s time for the FCC to adopt a 100 Megabits per second standard and set Gigabit speeds in our sight.

The FCC’s 2019 broadband deployment report sets a low standard – 25 Mbps download/3 Mbps upload speeds – and inflates service providers’ availability reports by assuming that if one person in a census block has access to a given speed level – the FCC’s standard for such reports – then everyone does. Rosenworcel is correct: the 2019 report doesn’t quantify the reality of broadband deployment in the U.S. And it certainly doesn’t justify the FCC’s self congratulatory hype.

AT&T, Charter, Comcast, Frontier, Digital Path challenge California broadband subsidy proposals

by Steve Blum • , , , ,

Santa barbara county pole 29oct2015

Of the 13 new projects proposed for construction subsidies from the California Advanced Services Fund (CASF) in May, only four are unchallenged: three proposed by Charter Communications in Riverside, San Bernardino and Ventura counties, and one proposed by a wireless Internet service provider in Sonoma County. The rest face objections from incumbent Internet services providers that want to protect their turf.

Ten challenges, plus a snarky letter from AT&T, were filed against broadband projects being reviewed for CASF grant eligibility by yesterday’s deadline. Under the rebooted CASF rules, an incumbent provider has, effectively, five weeks to submit evidence that it offers broadband service at the California legislature’s pathetic minimum of 6 Mbps download and 1 Mbps upload speeds in census blocks where a CASF infrastructure grant is requested.

None of the publicly distributed challenge notifications contain any details about incumbents’ broadband coverage or availability. That data is submitted separately to CPUC staff. But if you want to read the notices, you can find them here.

Charter Communications and Frontier Communications are challenging each other’s projects. Frontier is fighting Charter’s request for $277,000 to build 12 miles of new lines in Perris in Riverside County; Charter objects to Frontier’s $1.7 million project in the Taft area of western Kern County.

Charter also joined with Comcast and, sorta, AT&T to try to block a $5.3 million proposal from Cruzio to offer fiber-to-the-home service to 13 mobile home parks in Santa Cruz County. Comcast and Charter filed standard challenge notices and presumably provided valid broadband availability data to CPUC staff; AT&T sent a letter helpfully reminding CPUC staff to read the rules.

The most prolific challenger, though, is Digital Path, a Butte County-based wireless ISP that apparently wants to kill six proposals to build out broadband service to nearly a thousand homes in Lassen, Modoc and Plumas counties. It’s challenging Frontier’s $11.8 million DSL upgrade plan for the northeastern corner of California, and four FTTH and one FTTH/wireless hybrid projects, also totalling $11.8 million, proposed by Plumas-Sierra Electric Cooperative.

I’m collecting the 2019 CASF infrastructure grant proposals here. Information about the program is here. All the CASF-related documents I’ve collected in 2019, including the challenge notifications, are here.

The Central Coast Broadband Consortium assisted Cruzio with its Equal Access Santa Cruz grant application, and I was a part of that effort. I’m not a disinterested commentator. Take it for what it’s worth.

Another bipartisan bill preempting local ownership of streetlight poles lands in U.S. senate

by Steve Blum • , , , ,

Despite promises to work with local government representatives to develop less onerous language, a bill to preempt local ownership of streetlight poles and other municipal property that is 1. located in the public right of way and 2. coveted by wireless broadband providers was re-introduced in the U.S. senate with no significant changes. S.1699 is sponsored by the same bipartisan team of John Thune (R – South Dakota) and Brian Schatz (D – Hawaii) that pushed it last year.

It’s still called the Streamline small cell deployment act. It would use the same formulas to calculate rental rates for poles owned by cities and counties that are used to allocate costs between telecoms and electric companies that share utility poles. In California, that rate is generally in the range of $25 – plus or minus several bucks – per foot of occupied pole space per year. It would apply to “a facility in a right-of-way owned or managed by the State or local government for the placement, construction, or modification of a small personal wireless facility”.

The bill also sets shot clocks ranging from 60 days to 150 days for small cell permit processing, whether or not a proposed facility is in the public right of way. The shot clocks would have “deemed granted” teeth…

If a State or local government or instrumentality thereof has neither granted nor denied a request within the applicable timeframe…including any temporary waiver granted under [the terms of this bill], the request shall be deemed granted on the date that is 31 days after the date on which the government instrumentality receives a written of the failure from the applicant.

Along with federal courts, the Federal Communications Commission would get the job of enforcing shot clocks and arbitrating rental rate and fee disputes. In many ways, the bill tracks with last year’s FCC order that similarly seeks to override local ownership of streetlight poles and such, with two major differences: by comparison with S.1699 (but not with the market) the FCC was more generous with rental rates, setting a “safe harbor” figure of $270 per pole per year, and the U.S. congress has the unambiguous power to preempt ownership of municipal assets within certain limits, while the FCC does not.

The first stop for S.1699 is the U.S. senate’s commerce, science and transportation committee. Thune chairs that committee and Schatz is ranking democrat. That was the case with last year’s bill too.