Comcast deal started, but didn't finish, the job of defining the CPUC's broadband regulatory role

29 April 2015 by Steve Blum
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Reintroduce, reuse, recycle.

A lot of energy and angst was expended over the defunct Comcast – Time Warner – Charter mega-merger and market swap, much of it involving the California Public Utilities Commission’s review of the deal. With the abrupt end to the transaction, there’s nothing much left to do about it until the next dealmaker comes along to pick up the pieces. But it wasn’t all wasted work.

The process set the CPUC on the path to overseeing broadband infrastructure, services and markets in California. Coming as it did in the middle of the debate over imposing common carrier utility rules on the broadband industry, the Comcast deal turned a theoretical debate into practical deliberations over what should be done.

Last August, CPUC commissioner Carla Peterman and administrative law judge Karl Bemesderfer decided that their preliminary review of what was the relatively narrow issue of transferring control of Time Warner’s wholesale phone business and a relative handful of Charter private line customers to Comcast would take into account the wide open question of whether the broadband elements of the deal – which weren’t originally on the table – were in the public interest.

That decision to roll broadband considerations into the review was a bold and controversial step. It was based primarily on a generous reading of a section of federal telecoms law that gives state utilities commissions the job of removing “barriers to infrastructure investment”. Cable and telephone companies hated it, consumer groups loved it and Comcast, particularly, vowed to fight it to the end.

Six months later, Bemesderfer drafted a decision for the full commission to consider that would have used that authority to impose stringent conditions on the deal. It was followed by the FCC’s decision to formally bring broadband under common carrier rules, which drew sharper lines around what might be done by state regulators, and then by a second draft decision, by commission Mike Florio, to kill the deal altogether.

With the collapse of the merger, though, there’s nothing for commissioners to actually adopt as policy, and no opportunity to see if it survives the inevitable legal challenges. But there is a solid record of debate and mounds of evidence regarding how much authority the CPUC has over broadband infrastructure and services in California. The next time the question comes up – perhaps as the commission ponders Frontier’s proposed purchase of Verizon’s wireline systems – we’ll already be a long way towards getting a definitive answer.