CPUC approval of Frontier-Verizon deal dodges broadband jurisdiction

11 November 2015 by Steve Blum
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Many Californians say there’s no shame in being a Dodger. Or so I’ve been told.

The tentative CPUC ruling approving Frontier Communication’s purchase of Verizon’s wireline systems in California avoids claiming any authority to regulate broadband service. Instead, the proposed decision drafted by a California Public Utilities Commission administrative law judge relies on time-tested public interest criteria, plain old telephone regulatory powers and a set of private agreements between Frontier and a long list of advocacy groups.

Those settlements lay out Frontier’s obligations regarding service and infrastructure upgrades, lifeline programs, interconnection terms and other broadband issues. Were the commission to impose those same conditions on its own, it would have to rely on a catch-all section of federal telecoms law – section 706 – that many believe trumps a California law that keeps it out of the business of regulating “Internet protocol services”. But not everyone agrees and, unlike with the failed Comcast mega-merger earlier this year, ALJ Karl Bemesderfer isn’t going to try to break new jurisdictional ground for the CPUC.

Bemesderfer’s proposed decision in the Comcast case was rendered moot when federal regulators killed the deal. Had it been approved, though, it would have set a clear – and appealable – precedent for CPUC authority over broadband…

Section 706(a) of the 1996 Telecommunications Act, codified in 47 United States Code § 1302(a) is a grant of authority to the Commission to examine the implications of the proposed merger of [Comcast, Time Warner and Bright House] on broadband deployment in California and to impose pro-competitive conditions that enhance broadband deployment, especially to schools, libraries and underserved communities.

This time around, Bemesderfer’s draft says to Frontier, in effect, just this once, I’ll hold you to the promises you voluntarily made

We conclude…that the Settlements are reasonable in light of the whole record, consistent with law, and in the public interest.

Based upon our review of the settlement documents we find…that the Settlements would not bind or otherwise impose a precedent in this or any future proceeding.

The difference between the Comcast and Frontier proceedings is the difference between cable and telephone companies: the former approach regulatory review as a smash-mouth gang fight, the latter accept it as a traditional cost of doing business. No one got everything they asked for in the proposed Frontier decision, but everyone seems to be satisfied with it.

Although it would be nice for the CPUC to make a plain statement – one way or the other – regarding its authority over broadband service, closing the Frontier-Verizon proceeding doesn’t require it and tacking it on anyway would be a needless complication that could, if appealed, scupper the whole deal. The commission will get a chance to decide if it has a meaningful broadband regulatory role as it reviews Charter’s proposed takeover of Time Warner and Bright House, which is shaping up to be another ill-tempered cable brawl.

I am not a disinterested commentator. I’m assisting the City of Gonzales with its effort to upgrade broadband service via the CPUC’s review of the Charter-Time Warner-Bright House deal. But without any ill temper: I enjoy a good fight. Take it for what it’s worth.