Customer complaints about Frontier Communications slowed in June, following outages and other transition problems after its April 1 acquisition of Verizon wireline customers in Texas, Florida and California, state officials told us last week. But states continue to scrutinize complaints and monitor Frontier, they said. Separately, Frontier faces FCC and other government scrutiny after suffering a 911 system outage June 27 in Riverside County, California.
A federal court said it will hear Charter Communications’ complaint challenging state authority over interconnected VoIP services. In a Tuesday ruling (in Pacer), the U.S. District Court in Minnesota denied a motion by the Minnesota Public Utilities Commission to dismiss the challenge. Charter’s complaint alleged the PUC overstepped its authority by imposing state regulations for traditional phone services on VoIP services. The case began in March 2013, when Charter transferred 100,000 Minnesota customers to an affiliate that provided VoIP phone service that wasn't certified by the PUC. The agency said interconnected VoIP is a telecom service subject to state regulation, but Charter and intervenor the VON Coalition said it’s an information service and subject only to FCC regulation (see 1605200015). Judge Susan Nelson said the case involves “questions of fact” that are inappropriate for resolution on a motion to dismiss. The PUC’s “attempt to have these issues resolved as a matter of law by comparison to judicial decisions and FCC orders addressing other services ignores the FCC’s case-by-case approach regarding particular services,” she said. Nelson said FCC decisions cited by the PUC -- including the net neutrality order and its USF order requiring interconnected VoIP to contribute to universal service -- didn’t settle the question of whether interconnected VoIP is a telecom or information service, nor did the Supreme Court’s 2005 Brand X ruling. The judge said her ruling Tuesday “simply determines that -- in this highly fact-dependent and complex field -- Defendants have not shown as a matter of law that, taking the allegations of the Complaint as true, Charter Phone is necessarily an ‘offering’ of telecommunications. Any such determination must await further proceedings.” The PUC will “vigorously defend its positions” as the case moves forward, a commission spokesman said. VON Coalition Executive Director Glenn Richards called the order “the necessary first step in what we hope will ultimately lead to a decision that the Minnesota PUC has no jurisdiction over interconnected VoIP." VON advocates for VoIP providers including AT&T, Vonage, Google and Microsoft/Skype. State officials have said that the recent U.S. Court of Appeals for the D.C. Circuit decision affirming the FCC net neutrality order may help the PUC fend off the Charter lawsuit (see 1606170049). Charter declined to comment Thursday.
A New Jersey court affirmed a Board of Public Utilities stipulation for a Verizon broadband deployment requirement. In an opinion Thursday, the New Jersey Superior Court, Appellate Division, denied a challenge to the 2014 BPU decision by the New Jersey Division of Rate Counsel. A 1993 board requirement required Verizon to provide broadband throughout its territory in New Jersey by 2010, but by 2012 the company had completed 99.4 percent. Verizon and the board negotiated a stipulation of settlement, and in 2014, the BPU approved a new plan whereby Verizon must provide broadband within nine months in any census tract where at least 35 customers with no access to broadband or 4G wireless make a request. The Rate Counsel said the decision was unlawful, arbitrary and capricious, and violated the Administrative Procedure Act because it was approved without a hearing. The regulator and telco said no hearing was required and the board satisfied due process by allowing the public to provide input. Verizon said the Rate Counsel should have raised procedural arguments before the board. In the opinion, the court said its role isn’t to decide whether an administrative agency policy is wise but rather if it’s lawful. “Applying this standard to our review, we conclude the Board's decision to approve the stipulation without an evidentiary hearing was supported by sufficient credible evidence on the record as a whole … and was legally correct, essentially for the reasons expressed by the Board in its order approving the stipulation.” Nobody, including the Rate Counsel, requested a hearing in comments to the board ahead of the decision, the court said: “By affording a period for public comment, the Board provided a sufficient hearing for the public and interested stakeholders to question the stipulation and to urge the Board to adopt or reject it.” The court classified the opinion as “unpublished,” meaning it’s non-precedential. The decision pleased Verizon, which is "eager to move forward and continue making the network investments that have made New Jersey one of the most wired states in the country," a spokesman said. The Rate Counsel disagrees with the decision, Division Director Stefanie Brand said. It's reviewing the opinion and considering next steps, she said. The 30,000 to 40,000 people in New Jersey without broadband access "deserve more of a hearing," she said. It's unclear "how they're going to get broadband or whether they're going to get broadband." The BPU "is satisfied" with the ruling recognizing "the wide deference granted" to the agency, including its interpretations of rules and the regulator's "flexibility in determining the most appropriate proceeding process," an agency spokesman emailed Friday.
Revenue from contributions to state USFs has declined in multiple jurisdictions, we found last week from state USF financial documents and from interviewing state and industry officials. Those officials cited a variety of reasons for the falling revenue. Some cited outdated contribution methodology, while others said the drop is part of deliberate efforts to control the size of funds. Some states reported efforts to revamp USF contribution methodology, and one said its hands were tied by state legislation.
The Oklahoma Corporation Commission voted 3-0 Thursday to approve final emergency rules to implement state legislation aimed at modernizing the Oklahoma Universal Service Fund. The law, signed May 9 by Gov. Mary Fallin (R), made administrative tweaks and updated the OUSF to account for technology changes, including a provision requiring interconnected VoIP providers to contribute. Per Oklahoma rules, the commission order still needs approval by the governor. At the OCC’s meeting, Chairman Bob Anthony called for strong auditing of the fund, saying the rules should specify that government officials can call for a special audit, paid for by the OUSF, when appropriate. “I have made the statement numerous times that we have overpaid out of this program millions of dollars,” he said. The new law is a step forward for the OUSF, emailed Deborah Sovereign, chief financial officer of Kellogg & Sovereign, a consulting firm that advises schools and libraries on the E-rate program. “Once fully implemented, we expect the fund demand to decrease."
A California legislative committee cleared two parts of a proposed Democratic package to overhaul the Public Utilities Commission (see 1606270076). At a hearing Wednesday, the Assembly Utilities and Commerce Committee voted to move Democratic bills SB-215 and SB-512 to the Assembly floor. The bills already passed the Senate. Proposed reforms address “the serious problems we’ve had” with the CPUC, Sen. Mark Leno (D) said at the committee hearing. He said it provides “greater transparency” and ensures “the commission serves the people of California and not the special interests that they are intended to regulate.” Leno said additional amendments are forthcoming “as we put the final touches on the agreement and resolution that we’ve reached with the administration.” The proposal isn’t as “ambitious” as one Leno proposed last year, he noted. “This is a compromise solution. Nobody got everything, but … the administration did work with us. This is a major step forward.”
California Gov. Jerry Brown (D) backed revamping the California Public Utilities Commission as proposed by Democratic state legislators, said a news release Monday. Brown worked out a deal with Assemblyman Mike Gatto (D), who supported the proposal and agreed to drop his constitutional amendment (ACA-11) to disband the CPUC. The new reform measure, SB-215, is sponsored by state Sen. Mark Leno (D).
Verizon and XO Communications responded to competitor attacks Friday at the FCC and the New York Public Service Commission as regulatory reviews moved along on Verizon’s bid to buy XO and its wireline assets. On the federal side, the FCC and DOJ have been reviewing the deal, with the Wireline Bureau last week asking for more information (see 1606230056). In the states, the companies have received deal approval from 12 of 16 jurisdictions, a Verizon spokesman said. The companies said the deal is expected to close in the first half of 2017.
Reconsideration petitions on the FCC much-debated Lifeline order rained into the commission Friday. The agency received petitions from CTIA, NASUCA, NTCA, USTelecom and others in docket 11-42. “There are aspects of the Order where the Commission ignored requirements of the Administrative Procedure Act (APA), unnecessarily increased administrative burdens, as well as areas where the Commission should have been clearer,” USTelecom said. The FCC didn’t provide enough notice for changes to the carrier recertification process or port freeze requirements in the order, it said. The wireline association said the FCC should reconsider the effective date of the streamlined federal eligibility criteria and obligation to offer Lifeline broadband internet access service (BIAS) requirements. USTelecom said the date should be delayed until Dec. 31, 2017, or 12 months after Office of Management and Budget approval of the order, whichever is later: “A December 1st obligation to offer Lifeline broadband does not allow adequate time to modify systems to identify those locations where Lifeline broadband must be made available.” Among other requested changes, USTelecom urged reconsideration of the FCC decision that voice should continue to be supported in census blocks with a single Lifeline provider. And it should reconsider the exception to its minimum standard requirements for fixed providers that haven’t deployed broadband networks in specific geographic areas, it said. Also, the commission should reverse its decision that high-cost carriers with state eligible telecom carrier designations are subject to BIAS Lifeline obligations, it said. In a joint petition, NTCA and WTA also urged the FCC to reconsider the exception to the fixed broadband minimum speed standard, saying “it represents a failure to properly leverage the High cost universal service program and will inadvertently punish certain low-income rural consumers.” The FCC should reconsider phasing out support for voice-only service, and exempt rural Lifeline providers using satellite backhaul from the 150 GB minimum usage allowance standard, they said. CTIA asked the FCC to reconsider its decision to set long-term minimum capacity standards for mobile broadband at 70 percent of the average mobile data usage per household. “The record raises serious questions about whether the 70 percent average of mobile data usage per-household standard adequately accounts for the affordability of Lifeline broadband service for the lowest-income consumers who otherwise would stand to benefit the most from the Commission’s recent modifications to the Lifeline program,” CTIA said. NASUCA urged reconsideration of the decision to remove Lifeline support for stand-alone voice services and said the agency failed to adopt regulations so that customers who can’t afford bundled services can maintain basic voice service, failed to require payment arrangements for backup power for Lifeline customers, and failed to require USF contribution from broadband services. NARUC has challenged the Lifeline order in the U.S. Court of Appeals for the D.C. Circuit (see 1606030053).
Google Fiber’s acquisition of Webpass could put the internet company in a conflict with AT&T in California. Google Fiber agreed to acquire Webpass, a California CLEC specializing in point-to-point wireless broadband, Webpass said Wednesday. Webpass has an ongoing complaint against AT&T in the California Public Utilities Commission. The CLEC filed May 25 an application for arbitration after AT&T refused to give permission to run fiber through AT&T conduits and insert splice cases and coil loops in AT&T manholes. AT&T replied June 3 with a motion to dismiss, saying the parties’ interconnection agreement doesn't allow the kind of dispute resolution sought by Webpass. In the short term, the acquisition may not affect the CPUC proceeding, because the agency must approve the deal first and that could take time, Tellus Venture President Steve Blum emailed Thursday. Tellus consults with cities on community broadband. There could be a long-term impact from the deal “because Google has been relatively aggressive in pursuing these issues here in California, and particularly at the CPUC,” he said. “They've been trying to gain access to poles and conduits as a non-CLEC -- as a video company, under California law -- but acquiring a CLEC gives them a whole new range of options in terms of getting what they want from telcos (AT&T, mostly), cable and the electric utilities.” In California, Webpass has customers in San Francisco, Oakland, Emeryville, Berkeley and San Diego. Other markets include Boston, Chicago and Miami, Miami Beach, and Coral Gables in Florida. “Joining Google Fiber will be a great development for our users because the companies share the same vision of the future and commitment to the customer,” said Webpass President Charles Barr in the company’s blog post announcing the deal. “Google Fiber’s resources will enable Webpass to grow faster and reach many more customers than we could as a standalone company.” Webpass expects the deal to close this summer, subject to customary closing conditions and regulatory approvals, he said. Webpass didn’t disclose terms or comment on how the deal affects its complaint against AT&T. Google confirmed the deal on Twitter but didn’t comment further Thursday.