California to Probe Telecom Competition as FCC Shifts to Republicans

Florio urged increased CPUC oversight of the industry, which he said put up “considerable resistance” to competition probes. “That role is going to become even more important in the future if the FCC, as seems likely under the new administration, is either hobbled or disbanded,” he said. “This is not an area of the economy that can go without oversight and regulation given its centrality to the future of our entire economy.”

It’s likely the state regulator will further assert itself in telecom regulation if the FCC steps back under the next administration, emailed Tellus Venture President Steve Blum. “California in general and the CPUC in particular have acted independently on broadband issues -- the Comcast, Charter and Frontier transactions are examples -- and have gotten out in front of the FCC on other issues,” including in 2010 adopting higher speed standards for grant projects, he said. “If the FCC leaves the field, the CPUC will have no problem with stepping in, assuming federal law doesn't preclude it.”

The CPUC directed Communications Division staff to write a report by Dec. 1, 2018, analyzing "broadband availability by speed and geography; the number of broadband service providers by geographic area; broadband penetration rates by geographic area; areas of the state having a single and no broadband provider, and voice and broadband market share by various geographic areas in California.” The proposed decision would require a third-party survey of customer broadband speed experience. Within nine months, the CPUC will open a rulemaking to examine telecom access to poles, conduit and rights of way, it said.

To inform the staff report, the agency directed communications providers to annually submit voice and broadband subscriber and deployment data at a census block level for the next two years, with mobile providers allowed to submit at the census tract level. Transport, special access and wholesale service providers must additionally submit data on network wholesale and interconnection access locations; location of interoffice transport and other wholesale transport facilities by technology type and capacities and whether such facilities are available to unaffiliated providers of broadband internet access service; and other information requested by staff to monitor competition, CPUC said. In the CPUC report, staff will recommend whether to continue to require the reporting.

“The residential high speed broadband market is highly concentrated throughout California,” said one finding in the proposed decision. “Aggregated and averaged market data understate the barriers to competitive market entry, and thus the market choices available to individuals and businesses, particularly in rural areas,” said another. One competitive bottleneck is access to utility poles, it said. Rural/urban and economic digital divides widened while technology has advanced and converged, said the CPUC. “It is unclear whether the growth of wireless, VoIP, and other alternative means of voice and data communication has kept prices and services for traditional landline service just and reasonable, or even whether that question is relevant to a marketplace in which most consumers obtain voice service in a bundle with broadband and other services.”

All five commissioners supported the investigation and proposed rulemaking. “While we have done a great job of opening up certain areas to competition … in fact there are very important bottlenecks that we need to address,” said Commissioner Catherine Sandoval. While supporting the decision, President Michael Picker said the commission should consider how the proposed pole access rulemaking might overlap with the commission’s separate look into pole safety.

The Utility Reform Network wanted more and probably will seek rehearing, an attorney for the group told us. TURN Staff Attorney Christine Mailloux praised the CPUC’s findings of concentrated markets for voice and broadband and bottlenecks for new entrants. “Despite these findings, the Decision fails to acknowledge or address in its ordering paragraphs the lack of meaningful competition for residential consumers and the problems that many consumers face regarding availability, reliability, and affordability of basic phone service and broadband and the continued market power of incumbent carriers covering much of our diverse state,” Mailloux emailed. “TURN will likely file an Application for Rehearing because we believe the Commission prematurely closes the docket leaving further action by the Commission on these key issues to chance and its mere hope that further data gathering will be fruitful.”

“By taking on incumbents' control over scarce telecommunications infrastructure and the way it's used to block competition, the CPUC is targeting the heart of the problem,” said Blum, a broadband consultant for local governments in California. “If independent broadband providers can't get access to poles and conduit, or reasonable middle mile connectivity or wholesale last mile facilities, then they can't compete.” The commission statement that the broadband market is highly concentrated could foreshadow “meaningful action,” he said. “The decision to move ahead with aggressive data collection, including information about infrastructure chokepoints, and to begin the process of making new rules for pole, conduit and right of way access are the first steps in that direction.”

Also at the meeting, CPUC members voted 5-0 to OK a citation program for communications providers for safety violations (see 1611020044). The resolution allows Safety and Enforcement Division staff to assess penalties for safety violations committed by the providers. The division can do that already for other industries, but lengthy formal proceedings previously were required for communications providers. The CPUC also extended the deadline to Feb. 4 for a rulemaking to revamp the California High Cost Fund-A program. The two-month extension wasn’t the first (see 1611210013).