AT&T seeks state sanction to exit residential premise service, transition customers to mobile wireless

Fellow blogger Steve Blum of Tellus Venture Associates calls bullshit on AT&T for sponsoring California legislation that would relieve it from its premise landline universal service obligations under Title II of the federal Communications Act. Blum has the same problem with the bill as I do. It's dressed up as enabling AT&T to transition from copper POTS service to Internet protocol-based service. As Blum points out, AT&T can do that without the need for enabling legislation. It has chosen not to make an orderly transition over the past two decades. That's a business issue, not one of regulatory policy.

The bill is essentially seeking state sanction to transition AT&T residential landline customers to its mobile wireless service. The thing is, that's not premise service under Title II's universal service obligation. However, with the U.S. Federal Communications Commission not enforcing its 2015 Open Internet rulemaking bringing IP-based services under Title II's universal service requirement, AT&T faces no regulatory consequence for "mobilizing the world" of its residential customers with service not engineered or priced for residential premise service.

Internet service franchises offer local governments potential work around to incumbent-sponsored state video franchises

Mediacom questions Iowa City deal with ImOn | The Gazette: Jeff Janssen, vice president of sales and marketing with ImOn Communications, said Tuesday he had not seen the Mediacom letter, but said ImOn has lease agreements similar those with Iowa City in other communities like Hiawatha and Marion.

Janssen also noted a franchise agreement only becomes required when cable TV is added to the list of service offerings. ImOn’s current plans for Iowa City are strictly for telephone and Internet services, he said.

“Franchise agreements are all around cable TV,” he said. “Once we decide, or if we decided to offer cable TV in Iowa City, we would get that franchise agreement, we are required to.”

This issue was bound to emerge sooner or later. In the early 2000s, legacy incumbent telephone and cable companies realized that with the emergence of the Internet and its capability to deliver TV programming, local governments would come under intense pressure from their constituents to require ISPs offering video services to provide Internet connections to all premises under municipal franchise agreements. That would have required substantial capital investment incompatible with the incumbents' business models based on milking their existing wireline "footprints" -- and not modernizing and expanding them to reach every doorstep.

To head off this prospect, the legacy incumbent cable and telephone company lobbies went into high gear to get state laws enacted putting states in charge of so-called "video franchises" and usurping local government authority over video services.

But that left a potential loophole for local governments to franchise Internet services other than video -- what's at issue in this Iowa case. Watch for this gambit to take off elsewhere, especially in states where there are also laws barring local governments from building and/or operating their own Internet services. Local governments could get around both restrictions by creating Internet service franchises and partnering with private ISPs as their franchisees. (Also referred to as "telecommunications franchises" in this item on a recent Brookings Institution panel discussion). They could also pressure the legacy incumbent telephone and cable companies by requiring them to obtain an Internet service franchise serving all premises if they wish to offer Internet services other than video within their jurisdictions.

With interest in wireline-delivered video declining among "cord cutting" consumers and incumbents relying more on Internet service for revenue, that pressure could be quite intense. It would also give localities a powerful tool to bring service to all of their residents and businesses given the U.S. Federal Communications Commission's lack of interest in enforcing its recently adopted rulemaking reclassifying Internet as a common carrier telecommunications service subject to the universal service and anti-redlining provisions of Title II of the Communications Act.

At start of new year, U.S. faces worst of all worlds on federal telecom modernization policy

As 2016 dawns, the United States faces the worst of all worlds when it comes to federal policy on telecommunications infrastructure modernization to ensure all American homes and small businesses have access to landline Internet connections.

In early 2015, the nation adopted policy classifying Internet service as a common carrier telecommunications service. Under the Federal Communications Commission’s Open Internet Order, Internet service is subject to the Communication Act’s universal service requirement, mandating service be provided upon request and barring neighborhood redlining by Internet service providers. Nevertheless, a year later, millions of U.S. premises that attempt to order service will -- as they have for more than a decade -- continue be turned away by ISPs because the FCC is not enforcing these provisions.

Absent regulatory action ensuring compliance with these requirements and frustrated by technologically outmoded, spotty and overpriced Internet telecommunications service, state and local governments are naturally concerned over the adverse economic impacts. Consequently, they’re looking to build their own modern infrastructure. But given the billions of dollars needed to build it, they’ll need substantial financial backing from the federal government. Since none exists or appears to be forthcoming, pressure for strong policy action at the federal level will grow this year.

The Great Wall of incumbent telecommunications infrastructure

Every divided territory has a boundary, border or wall mark its limits. Throughout much of the United States, it's that place where despite having plenty of existing infrastructure, incumbent telephone and cable companies draw an arbitrary boundary where the "footprint" of their landline telecommunications infrastructure capable of providing modern Internet service ends and the digital divide begins.

 
On the other side of the border, digital subscriber line (DSL) signals peter out and can't reliably provide service over twisted pair copper designed for a time when the Internet hadn't yet been conceived. There are also pockets of homes and small businesses in sufficiently close proximity of each other to qualify for cable Internet service, but do not because there are aren't enough along short spans of roadway between them and the wall's edge. Like border signs, the boundaries of these areas are often demarcated with utility pole advertisements offering those in the digitally deprived zone "New Super Fast Internet" that's actually substandard satellite service that should only be offered in the most remote and isolated areas of the U.S.

The U.S. Federal Communications Commission could tear down the wall by enforcing the universal service provision of Title II, Section 254(b) of the Communications Act of 1934 (as amended in 1996) that provides that access to advanced telecommunications and information services be available in all regions of the nation. Section 202 of the law also contains an anti-redlining provision barring providers from discriminating against localities in providing service.

State rep flustered by AT&T FTTP deployment to unspecified areas of Bradley County, Tennessee

Report: State broadband access lacking | The Cleveland Daily Banner: The debate is now continuing over whether Tennessee should change its laws allowing municipalities, such as Chattanooga’s EPB, to extend its broadband service footprint into adjacent areas. Communication conglomerates such as AT&T and Verizon have been vigorous in their fight against such measures saying any competition between government and private companies would not be fair. There are those who argue that point, particularly noting AT&T has received hundred of millions of dollars in federal subsidies that are supposed to aid in providing broadband access to rural areas.

AT&T announced Aug. 25 it would be introducing its fiber network to “areas of Bradley County.” State Reps. Kevin Brooks and Dan Howell, who have spearheaded efforts in Nashville to change the laws, questioned why the announcement said “areas” of the county. “What areas exactly? Why not all areas of Bradley County?” Brooks asked in a statement to the Cleveland Daily Banner in response to the announcement.

The answer, Rep. Brooks:

1. Whatever areas we cherry pick because the FCC isn't enforcing its Open Internet rules classifying Internet service as a common carrier telecommunications utility requiring universal service and barring redlining.

2. Even if it did, we couldn't afford to comply and would have to go bankrupt.

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica: Sen. Ron Johnson (R-Wisc.) agreed that net neutrality rules harm ISP investment and offered a lengthy analogy to explain why. Johnson said he wants to cut through the “rhetoric, slogans, and buzzwords,” before saying that enforcing net neutrality rules is like letting too many people use a bridge and ruin people’s lawns. Net neutrality rules, he said, also give pornography the same level of network access as remote medical services.

This is an unfortunate outcome of the misplaced obsession with the "net neutrality" aspect of the U.S. Federal Communications Commission's 2015 Open Internet rulemaking that erased the line between legacy and advanced telecommunications services by reclassifying Internet service as a common carrier telecommunications utility under Title II of the Communications Act. The obsession with net neutrality is so exaggerated that the term has become synonymous with the rulemaking.

The Open Internet rulemaking does properly require ISPs to treat all telecommunications traffic equally and without preference as to content. But with millions of Americans left offline and many still using circa 1994 dialup access that was state of the art when Bill Clinton was serving his first term as president, the higher value of the rulemaking is bringing Internet service under the universal service and anti-redlining requirements of Title II that have governed telephone service for decades -- and not debating whether the network should give priority to porn or any other information. Those requirements also comport with Metcalfe's Law, which holds a network is only as valuable as the number of subscribers on it.

UK considers universal service legislative requirement

Families face paying thousands for high speed internet access | Daily Mail Online:

Every family will win the right to demand a ‘fast’ broadband connection it was announced in the Queen’s Speech yesterday, but those in remote communities may have to pay hundreds of pounds to get it. The new Digital Economy Bill hopes to finally bring broadband technology to one million people whose properties have until now been treated as economically unviable or too difficult to provide with high-speed connections. But the legislation falls short of the Conservative Party’s manifesto pledge to ensure every home gets access to so-called ‘superfast’ broadband.

         *  *  *

Adam Marshall, of the British Chambers of Commerce said: ‘If implemented in full and at pace, this could go some way to improving the poor digital connectivity that far too many firms face.’Government sources said BT, which is in line for subsidies worth 1 billion to roll out broadband to 95 per cent of homes by the end of next year, has resisted the idea of a legal guarantee. But ministers have decided the threat of legal action is needed to ensure the final five per cent of homes also get a decent connection.

It boggles the mind to consider a relatively small island nation has so many premises still off the Internet grid in 2016. The U.S. already has a universal service/nondiscrimination requirement in law per the Federal Communications Commission's 2015 Open Internet rulemaking but is not enforcing it.

Administration’s “broadband” push window dressing

Always something happening and nothing going on
There's always something cooking and nothing in the pot
-- John Lennon, Nobody Told Me

The Obama administration’s PR initiative this week on U.S. telecommunications infrastructure deficiencies is largely window dressing and will likely mean the wired network that Americans have today for their home and small business Internet connection is likely the same one they’ll have for the foreseeable. This prediction was made in 2012 by former U.S Federal Communications Commission official Blair Levin and continues to hold true in 2015:

"For the first time since American ingenuity birthed the commercial Internet, we do not have a single national wireline provider with plans (real plans, not “fiber to the press release”) to deploy a better network. For most Americans, five years from now, the best network available to them will be the same network they have today."

The reason is the same as in 2012: insufficient available capital. Building Internet infrastructure to serve homes and businesses is a high cost endeavor. Those high costs have produced market failure on the supply side as the administration acknowledges, noting in this fact sheet that three of four Americans lack networks providing a level of service increasingly required for many online services. “Rarely is the problem a lack of demand — too often, it is the capital costs of building out broadband infrastructure…”

The administration is correct that local governments will have to play a major role in meeting the Internet infrastructure needs of their residents, infrastructure many argue is as critical in the 21^st century as roads and highways were in the 20^th. But it has no meaningful plan to help these localities finance infrastructure construction beyond highly limited and restricted funding available through existing grant and loan programs directed to rural areas of the nation that are only a drop in the bucket relative to the many billions of dollars needed.

In fairness to the administration, even it if did have a plan, it would face difficult odds getting Congress to appropriate the necessary funding. That has left the administration with little to offer in the way of tangible economic assistance. The administration is relaunching its BroadbandUSA website, where among other things it will offer “funding leads” for financing infrastructure construction. Given the lack of needed dollars, the administration has also been reduced to talking points that unfortunately won’t do anything to build last mile fiber to the premise infrastructure including:

• Increasing “competition.” (Sounds great, but ignores the fact that telecommunications infrastructure is a natural monopoly, not a competitive consumer market like groceries, vehicles and air travel. It also undermines Obama's position that Internet should be regulated under Title II telecommunications common carrier rules that are predicated on a monopoly market.)
• Enforcing “net neutrality” rules on Internet service providers. (A wonky term that doesn’t mean anything to consumers with subpar or no wired Internet service options).

FCC’s Title II order adopts ultra light touch on net neutrality enforcement

While much of the media has been abuzz over the concept of net neutrality – the principle that all Internet traffic be treated equally – an initial review of the FCC’s report and order issued last week classifying Internet services as telecommunications services under Title II of the Communications Act indicates the regulatory agency is adopting a decidedly light touch approach on enforcing net neutrality. The question of whether net neutrality is being respected has arisen at interconnection between network layers, choke points specifically addressed in the FCC’s order and report.

Paragraph 4 states the order’s policy respecting net neutrality, described in the media as a ban on network providers creating paid fast lanes, drawing on the metaphor of toll lanes on a busy freeway:

4. The lesson of this period, and the overwhelming consensus on the record, is that  carefully-tailored rules to protect Internet openness will allow investment and innovation to continue to flourish. Consistent with that experience and the record built in this proceeding, today we adopt carefully-tailored rules that would prevent specific practices we know are harmful to Internet openness— blocking, throttling, and paid prioritization—as well as a strong standard of conduct designed to prevent the deployment of new practices that would harm Internet openness. We also enhance our transparency rule to ensure that consumers are fully informed as to whether the services they purchase are delivering what they expect.

Paragraph 30 however specifically declines to apply Title II rules to interconnection, noting frictions among commercial players have produced differing accounts of how Internet data traffic is being handled:

30. But this Order does not apply the open Internet rules to interconnection. Three factors  are critical in informing this approach to interconnection. First, the nature of Internet traffic, driven by massive consumption of video, has challenged traditional arrangements—placing more emphasis on the use of CDNs or even direct connections between content providers (like Netflix or Google) and last-mile broadband providers. Second, it is clear that consumers have been subject to degradation resulting from commercial disagreements, perhaps most notably in a series of disputes between Netflix and large last-mile broadband providers. But, third, the causes of past disruption and—just as importantly—the potential for future degradation through interconnection disputes—are reflected in very different narratives in the record.

At paragraph 31 of the order, the FCC opts for an information gathering stance vis a vis disputes over interconnection rather than a strong enforcement role:

31. While we have more than a decade’s worth of experience with last-mile practices, we lack a similar depth of background in the Internet traffic exchange context. Thus, we find that the best approach is to watch, learn, and act as required, but not intervene now, especially not with prescriptive rules. This Order—for the first time—provides authority to consider claims involving interconnection, a process that is sure to bring greater understanding to the Commission.

Lifeline Internet access first requires universal service -- and FCC not enforcing

L.A. County backs plan to ensure Internet access for seniors and the poor - LA Times: Undergirding the county leaders' support for expanding the lifeline programs is the increasing prevalence of digital technology in the economy and social programs.

"Technology is a key component of our economy, and it is unconscionable that so many county residents lack access to broadband," said Supervisor Hilda Solis, who co-wrote the motion passed Tuesday by the board. "These individuals are being marginalized and ignored."

The policy expressed here is Internet service is now as vital as telephone service was before it. Hence per the position adopted by the county, it too requires a "lifeline" rate subsidy for lower income households to ensure universal access. However, before there can be universal access, there must be universal service.

Early this year, the U.S. Federal Communications Commission adopted its Open Internet rulemaking classifying Internet service as a common carrier telecommunications utility service like telephone service. That legal classification under the Communications Act includes a universal service obligation on providers to offer Internet service to any household requesting it. But thus far, the FCC has shown no inclination to enforce the rule, which became effective in June.

FCC inquiry could set stage to further reduce pressure on telcos, cablecos to deploy last mile infrastructure

Now that the U.S. Federal Communications Commission appears to be whiffing on enforcing Title II’s universal service and anti-redlining provisions relative to Internet service despite deeming Internet service a common carrier utility in a rulemaking earlier this year, it appears to be setting the stage to give big incumbent telephone and cable companies another potential pass on modernizing and building out their last mile infrastructures.

The FCC signaled that possible gambit this week in opening its annual review as required by Section 706 of the Telecommunications Act of 1996 to determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely manner.

In previous reviews, the FCC examined advanced telecom infrastructure providing both landline premise as well as mobile wireless and premise satellite service but opted to include only premise landline service in its determination, citing “significant concerns about the quality and reliability of the mobile and satellite service data” as well as factors including latency and usage allowances.

The 2015 review determined infrastructure deployment remained untimely as in previous reviews dating back nearly two decades and that 55 million Americans – 17 percent of the population – lack access to advanced telecommunications services capable of supporting high-quality voice, data, graphics and video.

For its next annual review, the FCC announced an inquiry this week seeking comment on whether mobile wireless and satellite should be included:

While fixed terrestrial broadband service can have advantages for high-capacity home use, mobile broadband has become increasingly important for many uses, including connecting on social media, navigating during travel, communicating with family and friends, receiving timely news updates, and more. In the event mobile broadband is added to the assessment, the FCC is seeking comment on what speed of service should serve as the benchmark for assessing availability. The FCC is also proposing to consider the availability of fixed satellite broadband in its annual assessment of fixed broadband availability.

Such a move could also pave the way for creating a benchmark lower than the new speed standard of 25 Mbps down and 3 Mbps up established in the 2015 Section 706 review since this level of service is not offered by mobile wireless and satellite providers. That would make it easier for the FCC to declare advanced telecom infrastructure is in fact being timely deployed. Doing so would effectively sanction the deplorable status quo that has existed for many years where about one in five customer premises remain unable to obtain premise landline Internet service.

Legacy incumbent telcos, cablecos not entitled to state sanctioned monopoly without FCC enforcement of Title II universal service requirement

Colorado Localities Vote for Broadband, but Must Get Creative to Actually Deploy It: “Cities don’t do this because they want to compete with the incumbent — they do it because the incumbent refuses to,” said Tom Roiniotis, general manager of Longmont Power & Communications, which runs the network.

Why the refusal? One big incumbent legacy telco explains: 

Mark Soltes, CenturyLink’s assistant vice president in Colorado for public policy and government affairs, said the gaps in service across the state are due to rugged landscapes and far-flung population centers. “You’re looking at deployment in some places where there’s no payback,” he said.

That's the economic reality and there's nothing unreasonable in CenturyLink's justification. It owes its investors a profitable return. But if a public sector entity steps into the gap where the numbers don't pencil for CenturyLink or other legacy incumbent, that's hardly market competition. In an open market, competitors compete for market share and profitable business. That's not the case when a public sector entity provides an essential telecommunications utility that's not being provided a private sector player because there's not a sufficient business case to do so. It's simply serving the need where the private sector cannot.

Nor do incumbent telcos and cablecos have a right to a state sanctioned monopoly. Particularly when the U.S. Federal Communications Commission is not enforcing the universal service and anti-redlining requirements of its current Open Internet regulations based on Title II of the Communications Act and is poised to repeal those rules later this month. If the FCC did enforce the rule, then the incumbents would have a far stronger and reasonable position. At present, they do not.

Early indications that FCC not enforcing Title II Internet universal service, anti-redlining provisions

--FCC accepts AT&T assertion of Title II compliance on its face

--Consumer complaint against Comcast closed despite demand for $535,000 to establish Internet service

 

Earlier this year, the U.S. Federal Communications Commission deemed Internet service a common carrier utility under Title II of the Communications Act and thus subject to the law’s universal service and non-discrimination obligations. New FCC rules implementing the policy became final on June 12, 2015 and withstood judicial petitions by large telephone and cable companies and their trade associations to block them from taking effect.

Going forward, it remains to be seen whether the FCC will enforce Title II universal service and anti-redlining requirements against the large, dominant telephone and cable companies that provide much of the nation’s premise landline Internet service in tightly proscribed “footprints” within their service areas. Early indications are that the FCC is opting to not enforce these requirements even though it specifically declined to forbear their enforcement in its March 12, 2015 Open Internet Order and Rulemaking, finding that doing so would not be in the public interest. Harold Feld of Public Knowledge termed universal service “the quintessential common-carrier obligation.”

Nevertheless, it appears the FCC rather than enforcing key Title II obligations is choosing to merely pass complaints of violations on to providers and then summarily closing them out once the provider communicates with the complainant. I offer my own experience as evidence.

On June 15, 2015, I attempted to place an online order for Internet service for my home office premise in Northern California and received this screen:

I also obtained the following communication from an AT&T agent in a June 15, 2015 online chat session:

Agent: Unfortunately, neither AT&T Business U-verse nor DSL services are available in your area. There may be several reasons why AT&T Business Internet Service is not available in your area. The most common reason is that there are a set number of ports to deliver service in each area, and we've reached capacity. It's also possible that your business is outside of the range to receive service.

A subsequent attempt to order a small business bundle of phone and Internet service resulted in this email from AT&T:

Dear Fred Pilot,
I'm sorry but internet services are not available to this address at this time. Do you want to continue with the phone line and long distance order?
Thank you for choosing AT&T.

Sincerely,

Shelley Zeigler
AT&T Small Business Online

 

* * *

I filed a complaint with the FCC on June 15, 2015 contending AT&T by failing to fulfill my order for Internet service was in violation of the FCC's recent Open Internet Order and specifically Title II SEC. 201(a) of the Communications Act that requires common carriers to "furnish service upon reasonable request therefor."

On July 30, 2015, I received this update from the FCC:

Hi Frederick,

Your Ticket No. 342043 was served on your carrier for its review and response.

Your carrier has provided the FCC with a response to your complaint. You should receive a copy of the response from the carrier within 7-10 days via postal mail. As such, no further action is required. Your complaint is closed.

Thank you for your complaint and help in furthering the FCC’s mission on behalf of consumers.

*  *  *

On July 18, 2015 I received an email from the manager of the AT&T Office of the President stating that AT&T reviewed my complaint and “determined that neither DSL or U-verse are available at this time,” adding that “AT&T also finds that it is not in violation of the Open Internet Order referenced in the FCC complaint.” 

Bottom line: The FCC closed the case based on AT&T’s assertion that it is not out of compliance with Title II SEC. 201(a). The FCC’s position appears to be we’ll accept AT&T’s word it’s in compliance with the law and move on. That’s hardly what could be termed enforcement by an entity established as a regulatory agency.

Since Comcast also nominally serves my ZIP Code, I also attempted to order Comcast’s 25Mbs Internet service from its consumer website. The site responded “The address you entered could not be recognized” and offered four other addresses in my ZIP Code with numbers matching my own. A few days later, Comcast left a voice mail stating my address was "not serviceable."

I filed a complaint with the FCC alleging Comcast was in violation of Title II Section 201(a) and a ticket was opened. Subsequently, Comcast sent me an email indicating Comcast could service my address if I paid $535,000 to expand its network:

To: Frederick Pilot
Sent: Monday, June 29, 2015 8:58 AM
Subject: RE: Comcast/ESL01973870/Pilot/AE  

Good Morning Mr. Pilot,   I hope your weekend was well. I have just received word from our serviceability team. The serviceability team has confirmed that your address is over a mile from Comcast’s nearest network. The estimated cost to have the Comcast network expanded to your home is $535,000.00. 

Kind regards

Alyssa Executive Customer Relations Comcast | West Division Office: 1-888-966-7794 Ext. 3007906 M-F: 8:00a – 4:30p PDT        

Another email from Comcast clarifying that I (and not Comcast) would have to bear the cost:

WST - Comcast Executive Customer Relations 5

Jun 29 at 10:06 AM

To:  Frederick Pilot

Mr. Pilot,   If you would like to discuss paying the estimated fee of $535,000.00 to have the lines ran to your home I can get you in touch with our construction team. Please let me know how you’d like to proceed.

Alyssa Executive Customer Relations Comcast | West Division Office: 1-888-966-7794 Ext. 3007906 M-F: 8:00a – 4:30p PDT

*  *  *

I added these emails to my FCC complaint file, pointing out the demand for such a large sum in order to provide Internet service potentially violates two additional Title II provisions:

• Section 254(b)(3) requiring Internet Service Providers to provide access to advanced telecommunications in all regions of the nation at rates that are reasonably comparable to rates charged for similar services in urban areas.
• Section 202(a) of the Communications Act insofar as it is an unjust, unreasonable and discriminatory charge in order to effect a common carrier communications connection per Section 202(b). 

Apparently this additional information didn’t pique the interest of the FCC, which closed out the complaint on July 17, 2015:

FCC Consumer Complaints July 17, 2015 08:29

Hi Frederick,

Your Ticket No. 351820 was served on your carrier for its review and response.

Your carrier has provided the FCC with a response to your complaint. You should receive a copy of the response from the carrier within 7-10 days via postal mail. (None was received as of 7/31) As such, no further action is required. Your complaint is closed.

Thank you for your complaint and help in furthering the FCC’s mission on behalf of consumers. 

A follow up query to the FCC asking why the complaint was closed produced no response.