Tag Archives: public policy

No power to regulate broadband means the FCC has no power to preempt California’s net neutrality law

by Steve Blum • , , ,

California is firing back at the monopoly model telecoms companies that want to block the state’s network neutrality law. Senate bill 822 was passed by the legislature and signed by governor Jerry Brown in 2018. It’s been on hold while a court fight over the Federal Communications Commission’s repeal of its own net neutrality rules played out.

Now it’s in front of a federal judge in Sacramento. The job of defending SB 822 belongs to California attorney general Xavier Becerra. His office filed its first full response to the claim that SB 822 is preempted by the FCC’s decision.

When the FCC declared that broadband is an “information service” and not a common carrier “telecommunications service”, it put broadband into a category of services that it’s not allowed to regulate in any meaningful way. That lack of authority was the FCC’s basis for repealing net neutrality rules: no authority means no rules.

In the brief, the California attorney general’s office argues that if there’s no authority to regulate, then the FCC also lacks authority to preempt state laws in that regard. That’s taken directly from the D.C. appellate court decision last year that mostly upheld the FCC’s net neutrality repeal. One big exception was the FCC’s attempt to impose a blanket preemption on state level broadband regulations.

Consequently, the brief concludes, California can go its own way…

The FCC repealed the bulk of the [Obama era net neutrality rules] because it determined it had no statutory authority to impose net neutrality conduct rules on [broadband] providers. That is different from a congressionally-authorized decision to refrain from regulating [broadband] providers; therefore, the repeal does not have preemptive force. That SB 822 enacts many of the same net neutrality protections repealed by the 2018 Order does not, in and of itself, result in conflict preemption. It is “quite wrong” to view the absence of federal regulation, on its own, “as the functional equivalent of a regulation prohibiting all States and their political subdivisions from adopting such a regulation.”

The first decision that federal judge John Mendez has to make is whether to ice California’s net neutrality law while the court battle drags on. If he says no and rejects Big Telecom’s request for a preliminary injunction that would block enforcement of SB 822, net neutrality will be the law of the land in California.

CPUC considers topping up broadband subsidy fund, but money will still fall short

by Steve Blum • , , , ,

Sick piggy bank

California’s primary broadband infrastructure subsidy fund will grow by about $70 million, if the California Public Utilities Commission approves a proposal to nearly double the tax that pays for it.

The California Advanced Services Fund (CASF) gets its money from a tax on phone calls made within California. That’s source of revenue is on the decline. The CPUC can collect up to $66 million a year for the fund (more, under certain circumstances), and sets the tax rate accordingly. During the first three years of the commission’s current five year authorisation, the CASF tax rate was set at about half a cent on the dollar – 0.56%. Because of the decline in intrastate telephone revenue, that rate would have led to a five year deficit of more than $100 million in money available for broadband infrastructure subsidies.

The deal on the table would raise the rate to 1.019% for the final two years the CPUC is allowed by law to assess the CASF tax on phone bills. CPUC staff estimates that would bring the annual take up to the annual $66 million limit, and hold the five year deficit at $53 million.

Most of the money in CASF goes towards building networks, but not all of it. Some of it pays for broadband promotion and other programs. The table below shows my calculations. Bottom line, there would be about $216 million available for new broadband infrastructure grants, instead of about $145 million, as I estimated in June.

That’s a help. More Californians will get the broadband service they need. But CASF will soon run dry, likely this year. More than $500 million was requested in the last round of infrastructure grant applications in May. And the CPUC has authorised – but not yet implemented – an extra round of applications to backfill bids for federal broadband subsidies in October. With the California legislature’s failure to address the state’s broadband and broadband funding deficits in its recently concluded session, what we see (or not) is all we’re going to get.

CASF Infrastructure Account, assuming surcharge increase to 1.019%

Authorised – total$575,000,000
Infrastructure shortfall (est.)($47,248,062)
Infrastructure Account net of shortfall$527,751,938
Infrastructure awards as of 31 Dec 2019$271,333,358
Infrastructure grants awarded in 2020$10,825,350
Cumulative admin overhead as of 30 Jun 2019$16,732,595
Estimated admin overhead FY 2019-25$13,142,082
Total Infrastructure Account spent/encumbered$312,033,385
Funds remaining for new CASF infrastructure grants$215,718,553

AT&T delivers low quality service to low income Californians, but lavishes fiber on the rich

by Steve Blum • , , , ,

Att outages by hh income

AT&T provides the highest quality service in the highest income neighborhoods of California, and the lowest quality in communities with the least income, according to a network quality study done by the California Public Utilities Commission.

The study’s initial findings were released last year. The top line conclusion was that AT&T and Frontier Communications are deliberately choking off investment in ageing copper phone systems, particularly in rural areas – now-bankrupt Frontier because it had no money for upgrades; AT&T because it could get away with it.

Chapters of the study are being released piecemeal. Some of the details are startling. The final conclusions and recommendations chapter expands on the initial summary’s description of AT&T’s economic redlining strategy. The average annual income in places where AT&T has upgraded its systems to full fiber to the premise technology is $72,000, versus $61,000 where it’s left copper networks in place.

Although the number of AT&T service outages climbed everywhere over the seven years of the study, high income neighborhoods also have more reliable service. Customers whose household income averages $42,000 a year or less experience nearly twice the number of “out of service incidents” as those who make $88,000 a year or more.

The study concludes that AT&T is holding people in low income communities hostage to deteriorating copper-based service and milking them for all they’re worth…

Those areas with the lowest household incomes tend to have the highest trouble report rates, the longest out-of-service durations, the lowest percentages of outages cleared within 24 hours, and the longest times required to clear 90% of service outages…wire centers that have experienced the smallest [legacy copper phone service] drop-off rates have exhibited the poorest performance on all service quality metrics. Clearly, those communities that AT&T perceives as the most captive are afforded the lowest levels of attention by the company. Since, as we have also found, wire centers that have received fiber upgrades exhibit superior performance on all of the service quality metrics, the fact that these upgrades have favored higher income communities may well explain the apparent inverse relationship that we have observed as between household incomes and service quality overall.

Recommended solutions include tightening service quality standards – including treating small, rural facilities the same as large, urban ones – and increasing fines when those standards aren’t met. Although the study points to the CPUC’s cynical policy of allowing AT&T and Frontier to effectively pay fines to themselves as part of the problem, it doesn’t explicitly recommend changing it.

For more background documents, click here.

Meaningless fines lead to AT&T’s, Frontier’s deplorable quality in California

by Steve Blum • , , , ,

Verizon taft 2dec2014

A study of AT&T’s, Verizon’s and Frontier Communications’ telephone network quality conducted by the California Public Utilities Commission shows that overall performance is poor across California. Low income communities have worse service and more outages than high income ones, but it’s not particularly good anywhere

Maximum Customer Trouble Report Rates of 6%, 8% or 10% of switched access lines per month (based on wire center size) are unduely generous because failure rates as high as these can hardly constitute acceptable service quality.

The apparently overly generous standard adopted…for Trouble Reports per Hundred access lines is in stark contrast to the requirement…that 90% of all out-of-service conditions are to be cleared within 24 hours. In fact, with the exception of the unique situation extant during the months of February and March 2016, this requirement has never been met by either AT&T or by Verizon/Frontier either on a companywide or on an individual wire center basis.

Although AT&T and Frontier, which now owns Verizon’s wireline systems, face fines, in theory, in practice they don’t: the CPUC allows them to spend the money on system maintenance and upgrades. In theory, it’s supposed to be extra maintenance and upgrade spending, but the loose accounting standards the CPUC applies makes that requirement meaningless.

The study recommends that “fines imposed due to an ILEC’s failure to meet service quality standards should be high enough so as to have the same financial consequences as poor service quality under competitive market conditions”. It doesn’t say how high that should be, but Verizon’s “unique situation” proved that telcos can perform when real money is on the line…

Verizon had actually cleared 91.58% and 92.64% of [out of service] conditions “within 24-hours of receiving notice of the out of service condition” for the months of February and March 2016, respectively, thus seemingly meeting the…requirement as the Commission had directed to be achieved as a precondition for the closing [of the sale of Californian systems to Frontier]. Faced with a powerful $10.5-billion financial incentive to do whatever was necessary to meet this condition, Verizon managed to make it happen – perhaps by importing personnel from some of its other…operations outside of California. However, this two-month compliance…was clearly an anomaly. When Frontier filed its…report for the second quarter of 2016…it showed 24-hour completion percentages for April, May and June 2016 of only 42.92%, 20.85%, and 72.35%, respectively.

It’s time for the CPUC to disavow its cynical decision to allow AT&T and Frontier to keep the money they would otherwise have to pay out in fines.

For more background documents, click here.

CPUC confronts California’s “monopolised” broadband market, despite “imaginary” and “perverse” federal policy

by Steve Blum • , , , ,

Cpuc 10sep2020

With the intent to “effectively deploy quality, affordable, and reliable broadband to all Californians”, the California Public Utilities Commission voted on Thursday to break the grip of telecommunications monopolies and change the way the industry is structured, incentivised and regulated.

It’s the CPUC’s response to governor Gavin Newsom’s executive order directing state agencies to fix California’s broadband deficit.

Commissioner Martha Guzman Aceves, who is leading the effort, explained the reasoning behind it in stark terms…

It’s not really focused on how we are improving our current failed system, but it’s really asking what the different ways and approaches we can take to systemically change our current system around providing the critical service of Internet.

We’ve been forced by our federal government to succumb to rules based on imaginary definitions of what the Internet is, which then block our ability to ensure universal service, and affordable service, through regulation. The justification has been made that competition will solve for it all, that the carriers will compete and bring down the prices and serve everyone. This neoliberalism economic theory has failed many Californians.

In fact, as you all know, 23% of Californian households do not have the Internet at home. That’s leaving 8.4 million Californians digitally disadvantaged and unable to participate in many of the benefits of economic and civic life.

And this has to change.

We all know this so intimately today as we take refuge in our homes, not only from covid but from the clouds of smoke and particulates that spread across our state. The Internet has been able to save many jobs, many people’s health, and our children’s education. And every Californian, every neighborhood needs the Internet to be resilient.

Before the Internet came to be, our strategy for serving all Californians’ telecommunications needs was to incentivise carriers based on a regulatory monopoly utility model. But…what we have left is really only an incentive-based set of strategies which have failed to meet the needs of universal service and affordability.

A major reason why this incentive-based approach through competition is not working is because there is no competition.

Only a very small group of Californians have choices. Less than 7% of Californians are served by three or more providers. About half of us have two choices. But over 40% have one or fewer. They may not have service at all.

Throughout the state, as an example of this 40% that have one or fewer service providers available to them, there’s not any area in the state where a cable company is competing with another cable company. If that cable company chooses not to serve all the residents in the community, there is no cable option. This is due, once again, to the perverse federal construct and the lack of obligation to serve all Californians…

So what does this result in? Everything that you know already. Tribes and rural communities left behind with poorly maintained infrastructure with insufficient speeds. Neighborhoods and urban communities that are redlined. And excessive pricing, due to this monopolised and oligopolised market that we have across the state…

So today I’m very excited…to ask the public to engage in this proceeding and offer their ideas for developing strategies for deploying more fiber in areas that lack it. Which can also provide for actual competition and, ultimately, affordability and universal access. This is a call for innovation, though pilots, through new partnerships and new strategies. We all know the urgency, and I’m very excited to get moving on these transformative solutions.

The other four commissioners stated their enthusiastic support, and then voted unanimously to launch the “Broadband for All” rulemaking.

This sort of proceeding typically drags on for years at the CPUC, but there’s reason to be optimistic that this time will be different. Newsom gave state agencies a December deadline for action. Under president Marybel Batjer – Newsom’s troubleshooter who was appointed last year – the CPUC has moved more quickly, particularly on high priority problems like covid–19, wildfires and utility bankruptcies.

The best way for cities to prepare for 5G is to get 4G right

by Steve Blum • , , , ,

Burlingame poles

There are differences between 4G and 5G facilities, but not necessarily meaningful ones from a policy perspective. For most people, the two will look the same, except the 5G facility might be smaller and is likelier to look more integrated, without so many obvious components and visible wires, although there will be no shortage of exceptions. Mostly it’s because 5G technology is newer and they’ve had more time to work on it. In theory (there aren’t a lot of actual small 5G installations to go by yet) 5G facilities should be smaller than 4G, and easier to integrate into a street light or utility pole. But that might not be obvious. As a general rule, a 5G facility should fit within whatever specs a city has set for 4G facilities.

One difference that might matter is cities will start seeing permit applications for locations where 4G wouldn’t have been installed. That’s because 5G facilities are designed to be deployed more densely, and in many cases physically closer to customers.

Another difference is that cities will get a lot more permit requests for 5G installations, once work actually begins, also because they’re installing more per square mile. There have already been cases where a carrier submitted dozens of applications at once. That’s something that planning and/or public works staff have to think about – there are shot clocks with deemed approved teeth established by the California legislature – 90 days for new equipment on existing sites and 150 days for new sites.

So far, the mobile companies, carriers and infrastructure companies, haven’t gone to war over that, but it’s only a matter of time before they do.

A third issue will be fiber. For the most part, 5G cell sites need to be connected directly to fiber cables, and that means trenching and adding wires to utility poles, which also means more permit applications. It’s not a question of something particularly new, it’s going to be a problem of sheer numbers.

That’s assuming that carriers want to build out to a community at all. The relationship between low community income levels and lack of telecommunications service and infrastructure is well established. A 5G permit onslaught might be a problem, but it’s a bigger problem for a community if it doesn’t come at all.

Broadband and other hot, unfinished business might send the California legislature into overtime. But don’t bet on it

by Steve Blum • , , , ,

Chp horses capitol 3feb2016

The California legislature might not be done with broadband for the year. Or with other major issues it failed to address as the regular session collapsed into inter-house and partisan acrimony last week. Governor Gavin Newson is being asked to call the legislature back into topic-focused special sessions and broadband is on the list, along with housing, policing and other disputes. It’s also possible that the legislature will come back on its own. They can do that for particular kinds of bills, mostly ones that need a two-thirds majority such as “urgency” legislature or tax measures.

It’s typical talk in Sacramento, when hard fought, important bills stall as times runs out. Or, as with a key broadband deployment and access bill, particularly powerful lawmakers – in this case assembly speaker Anthony Rendon (D – Los Angeles) and democratic floor leader Ian Calderon (D – Los Angeles) – worry more about the money AT&T, Charter Communications, Comcast and other big telecoms companies pay them than with doing their job.

I hope Newsom does call the legislature back to deal with California’s broadband divide. History doesn’t make me optimistic, though. Special session talk follows legislative meltdowns, but it’s just talk.

The first time I heard it was in 1977 when I was an intern working for a Sacramento radio news bureau, during Jerry Brown’s first term as governor. Negotiations on a bill to tax commercial and residential property separately – split the tax rolls – died on the table. It was a dire problem for many Californians at the time, as skyrocketing real estate values were sending residential property tax bills into the stratosphere. There were constant rumors of a special session, but Brown never called it.

The following spring, voters took matters into their own hands and passed Proposition 13, rolling back and all but freezing property tax rates. The first attempt to amend Prop 13 in a big way – again, by splitting the tax rolls – is on this November’s ballot, 42 years later.

The safe bet in Sacramento is on inaction.

Low income home broadband subsidies proposed by CPUC, but cable and telco cooperation needed

by Steve Blum • , , , ,

Tanimura and antle housing 13jul2016

Wireline broadband service for low income Californians will be subsidised by the state’s telephone “lifeline” program, if a draft decision released last week is approved by the California Public Utilities Commission. The plan depends on California’s ability to “exercise its bulk purchasing power to secure volume discounts for participants”, rather than on pure regulatory muscle.

Qualifying households would pay a discounted rate for broadband and phone service. Current voice-only wireline lifeline service typically runs between $7 and $11 per month. Mobile carriers also participate in the lifeline program, but the rules are different – service is generally free to qualifying households and some level of broadband service is usually included.

The draft plan would add California’s monthly lifeline phone subsidy of $14.85 a month to the $9.25 provided by the Federal Communications Commission’s program for bundles of wireline broadband and phone service, which may be delivered via voice over Internet protocol (VoIP) technology. Voice-only service would still be offered, but the monthly subsidy would be $2 less.

The big question is: what will telephone and cable companies do with it?

Comcast, likely the largest Internet service provider in California, doesn’t participate at all in the existing phone-only lifeline program and isn’t required to do so. Neither are Charter Communications and Cox Communications, although they do participate. So do AT&T, Frontier Communications and other incumbent telcos, which are required to offer lifeline service, and competitive telephone companies, which can choose to participate or not.

But.

Big telecoms companies reflexively fight any attempt by the CPUC to lay down requirements on services that move via Internet technology. AT&T was recently fine $3.5 million for blowing off CPUC rules regarding next generation 911 service and mobile carriers are challenging disaster readiness obligations, for example. The success of this broadband lifeline initiative depends on cooperation from ISPs that often prefer scorched earth resistance.

The minimum wireline broadband speed would be 25 Mbps download and 3 Mbps upload, with a monthly data cap of 1 terabyte. Unless the ISP involved doesn’t have the capability of delivering that speed level to a home, in which case best effort would be good enough, down to a hard minimum of 4 Mbps down/1 Mbps up.

That’s the “minimum service standard” set by the Federal Communications Commission, effective 1 December 2020. The FCC began setting lifeline standards for wireline broadband in 2016 at 10 Mbps down/1 Mbps up and has increased it every year based on typical usage and subscription levels in the U.S.

The draft decision would also end support for deeply discounted legacy voice packages that limit the number of calls that can be made each month and allow mobile carriers to offer optional “bolt on” upgrades to free plans that would be paid for by the customer. If a customer buys an upgraded plan, then can’t pay for it, they still get basic service. The mobile carrier can remove the bolt ons, but still has to provide the minimum free service, which is unlimited talk and text, plus 4GB to 6 GB of monthly data at the FCC’s current ill defined speed standard of “3G mobile technology”.

The CPUC is accepting comments on the draft decision, with a vote possible in October.

AT&T guilty of obfuscation, delay, deception, inaccuracy, evasion, omission and contradiction regarding 911 service, CPUC says

by Steve Blum • , , , ,

Bluto pencils

AT&T has to pay a $3.75 million fine because of its “pattern of obfuscation, delay, and deception” in dealing with the California Public Utilities Commission, and the “inaccuracy, evasion, omission, and contradiction” in its description of its 911 service. The core issue was whether AT&T is required to file particular paperwork regarding next generation 911 services. The answer from the CPUC is an emphatic yes. AT&T’s refusal to do so and the manner in which it refused earned it the multimillion dollar fine.

The CPUC’s unanimous vote upholds a ruling earlier this year by an administrative law judge. AT&T appealed to the commission, claiming it had done no wrong because it merely slipped through legal loopholes created by differences in technology.

It’s a claim AT&T continues to make, most recently when it objected to new CPUC disaster readiness rules. That argument was debunked by the commission’s decision, which reiterated that 911 service is 911 service, regardless of how it’s provided or what network segment of the 911 system is being provided…

The Commission seeks to protect Californians who need safe energy delivery and reliable communications through the natural and man-made disasters to which California is increasingly prone. The Commission’s need for “accurate information from the utility in order to, among other things, ensure that it is providing just, reasonable and safe service” is acute, given the inherent information asymmetry between regulator and regulated entity. AT&T has not provided accurate information pertaining to the issues before us…

Emergency service tariff violations are not garden-variety regulatory misfeasance. The transport of emergency communications is a life and death matter. The difference between transport that guarantees 98%, 99.9% or 99.999% availability for a given trunk line can well mean the difference of an ambulance or fire truck that arrives on time and one that does not.

If anything, the decision said, the $3.75 million fine “may even be too modest” because of AT&T’s “financial resources” and the severity of its violation of “the public trust attendant on the utility services it provides”.

Commissioners made one significant change to the penalty. Originally, AT&T would have been given 30 days to file the necessary paperwork, and if it didn’t, the fine would have doubled to $7.5 million. Instead, AT&T will be fined $15,000 for every day it’s late.

Taco Bell cares more about disconnected Californians than California’s leaders do

by Steve Blum • , , , ,

Salinas taco bell broadband

Kids sitting on curb in front of a fast food restaurant in order to get the broadband connection they need to go to schools that only operate online now is the best we can do now. The California legislature was diverted by pork barrel schemes from friends of AT&T, Comcast and other monopoly model incumbents, and finally bought into submission by the millions of dollars that those big telecoms companies pay them. Lawmakers took no action on bringing California’s broadband standard up to 21st century levels and did nothing to make it available to the millions of Californians who lack access to to it.

The California Advanced Services Fund (CASF) will run out of money this year. Or come close enough to doing so that next year’s action will be negligible. Either way, the end of California’s primary broadband infrastructure subsidy program will be upon us as we begin 2021.

The total of pending infrastructure grant applications is three times more than available funds, and there’s still the possibility of a brief opening for new projects that leverage state money for the federal Rural Digital Opportunity Fund (RDOF) auction in October.

The legislature passed a bill in June that allows the CPUC to top up RDOF bids. The commission voted in August to “assign to and authorise staff to set additional infrastructure application windows”. So far, nothing has happened.

The money for CASF comes from a tax – euphemistically called a surcharge or fee – on in-state telephone calls, which is a diminishing source of revenue. The authorisation to collect it ends in 2022. Currently, it’s about half a penny on the dollar. To collect the full amount authorised, the CPUC would have to increase the rate to a full penny or more.

If the CPUC does that, then most of the pending applications could be approved and some money set aside for RDOF bids, if the largest and most speculative of the bunch are taken out. But the well will still run dry next year.

Keeping CASF going requires action from the California legislature. That didn’t happen in 2020, despite an all out push to raise CASF standards to meet 21st century broadband needs, and the start of a campaign to raise a meaningful amount of money to pay for it.

California lawmakers need to start caring as much as Taco Bell does about the public they both serve.

I’ve advocated for SB 1130, and for other useful changes to CASF. I am involved and proud of it. I am not a disinterested commentator. Take it for what it’s worth.