CPUC puts muni ownership option on the table, asks tough questions about Frontier’s bankruptcy plan

Frontier verizon pole santa barbara county 10oct2015

Frontier Communications didn’t get a bankruptcy fast pass from the California Public Utilities Commission. Instead, a ruling yesterday by commissioner Martha Guzman Aceves sets out a long list of issues that Frontier must address before its bankruptcy exit plan is approved by the CPUC, including its impact on customers and communities, and the role of local government in providing telecoms services.

A key question is whether the CPUC “should require that local or tribal governments have a right of first offer or a right of first refusal regarding any transfer or disposal of [Frontier’s] assets”. That’s assuming Frontier is unloading any assets, intentionally or otherwise. If both answers are yes, it’ll start a new chapter in California’s municipal broadband story.

As far as I know, it’s a first. The CPUC didn’t consider offering ownership to local governments during PG&E’s bankruptcy process, although it was a hot topic at the state capitol and among city and county leaders. But a major incumbent telephone company has never gone broke in California until now, and we’re at a point in history when the standard broadband monopoly business model – lavish investment in high revenue markets; poor or no service via rotting infrastructure in rural and low income communities – is causing real harm. It’s the perfect opportunity for the CPUC to rethink basic telecoms policy.

Other issues to be considered include whether the restructuring plan…

  • Benefits customers, communities, and state and local economies
  • Maintains or improves quality of service, quality of management and financial condition.
  • Is fair and reasonable to employees.
  • Affects broadband deployment, backhaul services or network infrastructure.
  • Affects fulfilment of California Advanced Services Fund obligations, among other commitments tied to subsidy programs.

None of this will please Frontier, which wanted the CPUC to unconditionally rubber stamp its bankruptcy settlement by the beginning of October. The schedule set out in yesterday’s ruling offers the possibility of a decision early next year, but not before Frontier bids for federal broadband subsidies in the Rural Digital Opportunity Fund auction toward the end of October.