Tag Archives: public policy

Comcast seeks CPUC blessing to compete with rural telco, but only for not so rural customers

by Steve Blum • , , , ,

Sierra 625

Comcast says it’s striking a blow for telecoms competition, Ponderosa Telephone says no, it’s cherrypicking business customers at the expense of rural residents. At issue is Comcast’s request to expand the area in which it’s authorised to offer telephone service to include the service territory of Ponderosa Telephone Company, a small, incumbent local exchange carrier (ILEC) that serves parts of Fresno, Madera and San Bernardino counties. Presumably, Comcast is eyeing Fresno and/or Madera counties, where both it and Ponderosa operate.

Historically the California Public Utilities Commission, which regulates telco operating authority, has protected small, rural phone companies from competition. That’s not because of sentimental attachment. Those small telcos serve communities that aren’t sufficiently lucrative markets to attract big incumbents like AT&T and, consequently, are heavily subsidised. As Ponderosa points out in its protest, the CPUC previously concluded that allowing competitors to pick and chose their customers in rural communities would “result in the small ILECs losing revenue and needing to seek a larger draw from the [telephone subsidy] program”.

With no apparent sense of irony, Comcast claims to be fighting for a competitive telecoms market, reminding the commission that it has “found that the presence of competition in local telecommunications markets leads to efficient pricing, improved service quality, expanded product and service capabilities, greater reliability, and increased consumer choice”. But Comcast’s application also says that it won’t expand its footprint and will only increase service in areas where it presently offers video service – areas that are densely populated enough to support its urban/suburban business model. This isn’t about upgrading service or infrastructure in truly rural communities.

Comcast is correct about the benefits of competition, despite going to great expense to avoid facing it elsewhere. But Ponderosa’s point is also true. The more it relies on revenue from remote and economically deprived communities, the more taxpayer subsidies it will need to continue to serve them.

The dispute is formally about voice telephone service, but it involves broadband policy too. Both Comcast and Ponderosa are retail Internet service providers, who rely on privileges granted by state law – either as telephone or video companies – to build wireline infrastructure in the public right of way and access wholesale services. Changing those privileges and protections will also change the economics, and consequently the availability, of broadband service in Ponderosa’s territory.

Do you limit the choices available to homes and businesses in places where revenue runs thicker in order to reduce the subsidies needed to maintain baseline service in more sparsely populated communities? Or do you maintain the status quo – in service as well as public support – for all?

That’s the choice the CPUC has to make, and it comes as no surprise. The commission is in the process of reexamining its telecoms competition policy in rural areas, as both Comcast and Ponderosa point out. Ponderosa argues, correctly, that this is a major policy decision and shouldn’t be made by default in a narrow, administrative proceeding. Near term, the CPUC should reject Comcast’s application, but long term, it has a difficult problem to solve.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

Federal online privacy cop needs direction, says GAO study

by Steve Blum • , , , ,

Police academy

The federal government’s primary consumer protection agency – the Federal Trade Commission – doesn’t think too hard about policing online privacy violations, according to a report by the General Accounting Office. Generally, the FTC can act when a company engages in unfair or deceptive business practices. Figuring out what’s fair and what’s not in cyberspace is a complete puzzle, and impenetrable terms of service and other digital fine print typically give companies a get out of jail free card to companies, the report notes…

Some stakeholders said that FTC relies more heavily on its authority to take enforcement action against deceptive trade practices compared with the agency’s unfair trade practices authority. This was confirmed in our analysis of FTC’s Internet privacy enforcement actions discussed previously. However, a representative from a consumer advocacy group said that FTC’s ability to take such action is limited practically to instances where a company violates its own privacy policy—companies generally can collect and use data in any way they want if they include language in their policies asserting their intent to do so. According to a former FCC commissioner, a privacy statute could clarify the situations in which FTC could take enforcement action.

The report notes that both California and the European Union have online consumer privacy laws in place, but there’s no federal equivalent in the U.S. It concludes with a recommendation to congress that it “should consider developing comprehensive legislation on Internet privacy”, including identifying which agency is responsible for what and, somehow, balancing “consumers’ need for Internet privacy with industry’s ability to provide services and innovate”.

There’s also an interesting list of FTC privacy enforcement actions at the end of the report. It summarises 101 cases over ten years, between 2008 and 2018. Most ended with no penalties or other meaningful result at all, although a rumored multibillion dollar smack at Facebook would, if true, change that calculus. A few resulted in million dollar-plus penalties but the remainder ended with relative slaps on the wrist. It’s a clear illustration of why the FTC needs better direction and motivation if it’s to be the “nation’s premier consumer protection cop”.

Spreading high tech wealth and restricting self-employment on California governor’s to do list

by Steve Blum • , , , ,

California governor Gavin Newsom took aim at technology companies during his state of the state address on Tuesday. Although bullish on California’s high tech economy, he dangled the possibility of a tax on data…

California is proud to be home to technology companies determined to change the world. But companies that make billions of dollars collecting, curating and monetizing our personal data have a duty to protect it. Consumers have a right to know and control how their data is being used.

I applaud this legislature for passing the first-in-the-nation digital privacy law last year. But California’s consumers should also be able to share in the wealth that is created from their data. And so I’ve asked my team to develop a proposal for a new Data Dividend for Californians, because we recognize that your data has value and it belongs to you.

He didn’t explain what a “data dividend” is, but given his long list of new and expanded state programs, it seems likelier that he’s thinking in terms of taxing tech companies rather than requiring them to send dividend checks to everyone.

Newsom also talked about changes in employment law but, again, was short on details. Referencing a California supreme court decision that limited the ability of individuals to work as self-employed contractors – Uber drivers, for example – Newsom called for…

A new modern compact for California’s changing workforce…to ensure technological advancements in AI, blockchain, big data, are creating jobs, not destroying them, and to reform our institutions so that more workers have an ownership stake in their sweat equity.

He plans to give the job of figuring out how to do that to a new commission that will include representatives from businesses, but also from labor unions, which have actively worked to hinder self-employment in California in the past.

There was no mention of broadband or other telecoms issues in Newsom’s speech, but he did talk about electric utilities, primarily PG&E. He promised to be an active participant in PG&E’s bankruptcy case, saying he’s “convened a team of the nation’s best bankruptcy lawyers and financial experts from the energy sector” to “seek justice for fire victims, fairness for employees, and protection for ratepayers” while never wavering on safety or pursuit of clean energy goals. As with most everything else, Newsom didn’t say how he would do all that, but at least he offered a 60-day deadline for coming up with answers.

Pai talks up rural 5G, but puts his money on 4G subsidies

by Steve Blum • , , , ,

Salinas windmill cell site

5G technology has a role to fill in rural broadband service, but it won’t be the kind of 5G that mobile carriers are hyping. That’s according to Federal Communications Commission chair (and Charlton Heston Courage Under Fire Award winner) Ajit Pai. He was speaking at rural broadband trade show in New Orleans last week.

There’s no makable business case on the horizon for densified 5G mobile networks in rural communities. AT&T dismisses rural 5G as an “infill” technology, and it and other carriers are not leaning on rural cities and counties for pole access, as they are in richer and more populated parts of California. Pai acknowledges that, but points to fixed 5G service to homes and businesses as a substitute for fiber to the premise systems…

“Contrary to what some people have suggested, I actually think 5G has a very promising future in rural America and part of the reason is, in terms of the possibilities of fixed wireless, given the fiber penetration that some of your members have,” he said. “I think the ability of rural telecom carriers to think broadly about the future of these networks and how to extend this great fiber penetration you’ve got, there’s a huge amount of promise there.”

Pai’s FCC has a mixed record on 5G fixed wireless. On the one hand, the FCC is working on opening up tremendous swaths of spectrum – in the 3.5 GHz, 4 GHz and 6 GHz bands, particularly – to support broadband service. On the other hand, the FCC and other federal agencies are spending billions of dollars to lock rural communities into fixed 4G service for generations to come.

The FCC’s Connect America Fund program is paying for AT&T’s program to replace rural copper networks with limited capacity 4G service, and supporting similar efforts by Frontier Communications. AT&T also won the contest for a national public safety network – FirstNet – that will likewise be 4G based. Pai is not putting his money where his mouth is: the 4G-based systems that the Trump administration is subsidising do not have the potential capacity of the copper networks they’re replacing, let alone substitute for fiber.

Federal appellate judges skeptical of FCC’s net neutrality reasoning

by Steve Blum • , , ,

Network neutrality advocates faced off against the Federal Communications Commission and its telecoms industry partners in a federal appeals court in Washington, D.C. on Friday. For more than four hours, a panel of three federal judges grilled both sides as they considered whether the FCC acted “arbitrarily and capriciously” when it rolled back net neutrality rules in 2017.

The central question is whether broadband service is a simple telecommunications service – like phone service – or a value-added information service. FCC lawyer Tom Johnson insisted that the traffic management and routing technology that enables communication via the Internet – the domain name system and caching – is fundamentally different from the traffic management and routing technology that makes it possible to dial a phone number.

Judge Patricia Millett didn’t seem to buying that argument…

Millett: They both have the capability, the capability of acquiring information, receiving information, through a telephone as much as…

Johnson: Under the broader theory that these are broad statutory provisions in which we are able to make different classification decisions based on the fact that we’re talking about different services here.

Millett: That’s what I’m trying to figure out, are you talking about different capabilities between phones and if someone uses Facetime?

Johnson: Yes, your honor, we just don’t think that phone service in offering a pure transmission pathway for ordinary voice communication offers the same dynamic experience that broadband does in accessing the Internet, but in addition it also offers…

Millett: I hear you saying those words, I’m really trying to make sure I’m understanding what the difference is, because people use telephones to acquire all kinds of information…If I want to get information from my pharmacy – I’d like to have something refilled – I can call over the phone and push a bunch of buttons and eventually I’ll have a prescription refilled. I can also go on the website and type in and tell the doctor’s office I’d like a prescription refilled. But it seems to be the exact same functionality. One is voice and one is typing, but that can’t be difference.

Johnson never directly answered Millett’s question. His defence was that there was sufficient ambiguity in federal law to create an opening for the FCC to exercise its discretion as the federal government’s expert agency in these matters. Typically, federal courts defer to that – they don’t consider whether an expert agency made the best decision, but rather whether the decision reached was one of many possible and reasonable interpretations of the facts and the law.

The plain fact is that broadband is a telecommunications service. People use it to transmit and receive information between two point without changes. The give and take at Friday’s hearing indicates that the three judges understand that point well.

Listen to the hearing here.

Charter’s vague compliance claims should be publicly verified by CPUC

by Steve Blum • , , ,

Charter Communications claims it’s providing near-gigabit level broadband service in virtually all of its Californian territory. Well, some of its Californian territory: in a filing with the California Public Utilities Commission, in opposition to a formal vetting of its claims that it is complying with service upgrade conditions imposed by the CPUC when it received approval to buy Time Warner cable systems, Charter says “it is already making service available at 940 Mbps to over 99% of the relevant households passed as of the end of year 2018”.

The filing doesn’t define “relevant” although it’s easy to assume it means all Californian households that had access to broadband service at the time of the merger. Maybe that’s because that’s what it means. Or maybe because Charter is hoping that commissioners are sloppy readers and won’t notice the weasel word.

It is also to be hoped that commissioners will take notice of another filing by Charter earlier this month, in which it promised to finish analog to digital upgrades in several California communities later this year. That’s a direct admission that it hasn’t met another CPUC imposed condition that required those upgrades to be completed by last November. There’s been no public announcement, by Charter or the CPUC, that an extension was requested or granted, although I suppose it’s possible some kind of understanding was reached behind closed doors. Or maybe Charter is hoping that commissioners won’t notice the disconnect.

I know from personal experience that Charter’s first impulse when asked to document compliance is to withhold as much information as possible, offering only as much as you might otherwise glean from their advertisements and other public statements. The threat or reality of CPUC action is an effective way of holding them accountable for a promise, and for holding their attention while they make good on it.

The CPUC should not take self-interested and unverified statements written by Charter’s lawyers at face value. Nor should it allow Charter to hide everything behind a blanket claim of confidentiality. Now is a good time to take a hard, quantitative and verified look at how – whether – Charter has met all of the statewide conditions the CPUC imposed on it in 2016. The matter should be reopened, investigated and, absent a compelling reason to suppress specific information, the results and underlying data should be made public.

Quickly.

I assisted the City of Gonzales with its successful effort at the CPUC to force Charter to upgrade. I am not a disinterested commentator. Take it for what it’s worth.

FCC colluded with mobile carriers to “game” judicial procedure, congressmen charge

by Steve Blum • , , , ,

Charlottesville streetlights

People at the Federal Communications Commission might have leaned on AT&T, Verizon, Sprint and the Puerto Rico Telephone Company to go shopping for sympathetic judges who would be more likely to bless its preemption of local ownership of streetlight poles and similar municipal assets. A letter sent by a pair of democratic congressmen – Frank Pallone (D – New Jersey) and Mike Doyle (D – Pennsylvania) – directs republican FCC chairman Ajit Pai to enlighten them on why the four wireless companies filed largely identical and completely ludicrous appeals of its September order

It has come to our attention that certain individuals at the FCC may have urged companies to challenge the Order the Commission adopted in order to game the judicial lottery procedure and intimated the agency would look unfavorably towards entities that were not helpful. If true, it would be inappropriate for the FCC to leverage its power as a regulator to influence regulated companies to further its agenda in seeking a more friendly court. To date, four FCC licensees have petitioned the federal judiciary for review of the Order in separate filings and in separate circuits.

Whether or not the four mobile carriers colluded with friends at the FCC to find a friendly court, in the end it didn’t matter. The City of San Jose completed a legal Hail Mary pass and got the all the cases sent to the ninth circuit federal appeals court in San Francisco, which tends to take a more skeptical view of FCC authority.

The mobile companies, which claim the FCC committed a grievous error by not giving them the pink slip along with the keys to the city, are still in a position to disrupt the appeals launched and joined by dozens of cities, counties and associations from every corner of the U.S. To head that off, local governments are asking the ninth circuit to hold a “case management conference”…

Because this case involves appeals by representatives of industry (which argue that the agency did not go far enough in adopting remedies sought by industry) and representatives of local governments and organizations (which argue the FCC’s actions significantly exceeded the agency’s authority), there is also likely to be a more complex pattern of briefs filed in support of, and in opposition to the FCC’s Order than is reflected in a typical agency appeal.

Right now, nine cases – three filed by mobile carriers and six by local governments – are in the San Francisco court, with four more – one by AT&T and three by local governments – apparently inbound from the federal appeals court in Washington, D.C.

Not much room for mediation in appeals of FCC local pole preemption order

by Steve Blum • , , , ,

Burlingame poles

The challenge to the Federal Communications Commission’s September Order preempting local ownership and control of municipal property grinds on. The local governments and companies appealing the order, which strips cities and counties of ownership rights to streetlight poles and other such assets in the public right of way, filed brief statements –mediation questionnaires – with the San Francisco-based federal appeals court hearing the case yesterday.

Mobile companies are appealing the order because, they say, the FCC didn’t go far enough and give them everything they wanted. It would be overly optimistic to say the likelihood of the courts agreeing with them is slim. But by filing their appeals, they get a seat at the table so they can, presumably, disrupt the cases brought by local governments.

In its questionnaire, Verizon repeated its amazing argument that the FCC isn’t allowed to not automatically allow it to attach wireless equipment to city poles if the review process takes too long – in other words, if the “shot clocks” expire…

In the underlying Order, the FCC considered state and local regulatory barriers to the wireless infrastructure siting review process, particularly the siting of next-generation infrastructure. The FCC’s refusal to implement the “deemed granted” remedy is arbitrary and capricious in violation of the Administrative Procedure Act, and is an abuse of the Commission’s discretion. It also violates other federal laws, including, but not limited to, the Communications Act of 1934.

Huntington Beach, on the other hand, restated the basic argument it and other local governments have made – that the FCC doesn’t have the authority to confiscate local property…

The Order significantly limits the rights of state and local governmental entities such as Petitioner, City of Huntington Beach, to regulate, and lease its own property for the installation of Small Wireless Facilities (“SWF”) in the public rights-of-way (“ROW”) and on city-owned streetlights, and traffic signals. SWFs will be installed primarily for the deployment of 5G Wireless Networks. The Order is an unlawful pre-emption of local and state government authority.

In the “other thoughts” box on the form, the City of Seattle added that this isn’t the kind of question that’s suitable for mediation…

Every major wireless service and infrastructure provider, hundreds of communities, and many individuals and associations participated in the Commission proceedings which resulted in the Declaratory Ruling and Third Report and Order that is the subject of this appealed. We do not believe it possible that this matter can be resolved through mediation owing to the nature and scope of the issues at hand and the numerous participants.

Mediation, or at least considering it, is a standard step in a federal appeals case. Given the scope of the issues involved and the necessary process at the Federal Communications Commission, it’s a pretty safe assumption that the case will be argued, and not mediated away.

Mediation questionnaires:

City and County of San Francisco
City of Huntington Beach
City of Seattle, et al
Montgomery County

Puerto Rico Telephone Company
Sprint
Verizon

Links to motions, petitions, court documents and background material, Californian and federal, 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.

Frontier-CETF shotgun marriage will continue til death do us part

by Steve Blum • , , , ,

Shotgun wedding

Frontier Communications and the California Emerging Technology Fund (CETF) have tentatively settled a dispute over a mandated low income broadband marketing program. Under the terms of the agreement, instead of ending last year, as previously scheduled…

  • The program will continue indefinitely.
  • Frontier will pay CETF an additional $25,000.
  • CETF won’t have to pay back any of the approximately $700,000 remaining from the $1 million advanced to it.
  • Performance goals remain “aspirational” rather than hard targets.
  • The two organisations will hold lots of meetings and exchange lots of reports, mostly about things they plan to do, with no obligation to perform and complete freedom to unilaterally change their minds.
  • Frontier gets an extra couple of years to complete the gargantuan task of installing 33 free WiFi hotspots.

The program was one of the conditions imposed by the California Public Utilities Commission when it allowed Frontier to buy Verizon’s wireline telephone systems in California in 2015. It had the delusional aspirational goal of signing up 200,000 qualifying subscribers to low priced broadband plans, offered to low income households by Frontier and other Internet service providers.

The original deadline was 30 June 2018. By that point, about 9,200 low income subs had been signed up. CETF and the non-profit organisations it’s working with accounted for 4,300 of those new subs, versus a funded quota of 50,000 (the rest were signed up by Frontier, though its normal sales channels). The deal was that Frontier would pay $60 per new sub, with a total budget of $3 million.

The settlement keeps the $3 million on the table until the non-profits hit the 50,000 new sub mark, or until everyone gets tired of the whole thing. It could take a long time. Although Frontier’s initial obligation expired at the end of last June, it agreed to extend it another year. During the past six months or so, CETF’s non-profit clients only signed up another 200 subscribers, according to the numbers in the settlement agreement.

The next step is for the CPUC to review the settlement, and decide whether or not to accept it.

Schedule set for appeals of FCC local pole ownership preemption

by Steve Blum • , , , ,

Riverside pole mount

The federal appeals court in San Francisco set 5 April 2019 as the filing date for opening briefs in the nine challenges it’s received, so far, to the Federal Communications Commission’s September order preempting municipal ownership of streetlight poles and other potential wireless assets in the public right of way.

The FCC will have a month to respond, then the challengers will have three weeks to file a final rebuttal. So it’ll be the end of May before all the opening arguments are on the table. After that, it could be a year or more before the process is complete and the San Francisco judges issue a decision.

Six of those challenges were filed by cities, counties and their associations that contend that the FCC went beyond the authority it was granted by congress, if not beyond the bounds of the federal constitution. The other three were submitted by mobile carriers who thought they should have been given even more freebies by the FCC.

Those cases were transferred to the San Francisco-based ninth circuit by the tenth circuit court of appeals in Denver, which agreed with arguments made by the City of San Jose and other local agencies that the FCC’s September wireless preemption order and its August wireline preemption order were, for legal purposes, two halves of the same decision.

There’s still a lot of housekeeping work to be done, though, before substantive arguments can begin. Four other challenges – one by AT&T and three by municipal challengers – are lodged in the federal appeals court based in Washington, D.C. Presumably those will be transferred to San Francisco, too, and then consolidated with all the others – September wireless order and August wireline order alike.

In the meantime, the FCC wireless order is in effect. At least to the extent that it has effect, which is not as much as mobile carriers would like cities to believe.