State Commissioner Sees No Competitive Market for Most Californians

The FCC and competition aren’t enough to protect customers from service-quality problems on IP-based connections, said California Public Utilities Commissioner Martha Guzman Aceves. At the CPUC's meeting Thursday, she slammed the FCC’s 3-2 Wednesday report showing a narrowing digital divide (see 1905290017) and urged the California legislature to allow the state to regulate VoIP. Commissioner Cliff Rechtschaffen said carriers aren’t doing enough to ensure adequate service quality and questioned the effectiveness of a California policy that allows companies to avoid penalties.

The CPUC adopted by unanimous consent two orders allowing AT&T to spend $7.4 million and Frontier Communications to invest $2.9 million on network service quality rather than pay penalties for missing service metrics on repair and answer time in 2018. A 2-year-old CPUC policy permits a carrier to invest no less than twice the amount of its annual fine to enhance service quality in a measurable way within two years. CPUC also adopted an order approving $89,609 in fines from those two companies and Happy Valley Telephone, Hornitos Telephone and Winterhaven Telephone.

“These investments would not be happening without state regulation of voice service,” but CPUC’s enforcement actions cover only a minority -- about 6 million California households -- because most customers now have VoIP or bundled services, said Guzman Aceves. “Unfortunately, customers that are on VoIP today rely only on the competitive market and the FCC to ensure that all Californians receive essential service in a manner that can literally save their lives,” she said. “The so-called market does not exist for the majority of Californians,” with 80 percent having two or less providers, and 35 percent having less than two. "That's an oligopoly, not competition. If we leave it to the FCC, there will be no protections.” The FCC declined comment.

Guzman Aceves urged the legislature to put in place a “statutory structure that protects all of us,” but her comments arrived as lawmakers weigh a bill to extend by 10 years a state ban on CPUC's regulating VoIP and IP-based services (see 1904250024). The House voted 64-6 Wednesday to pass AB-1366, sending it to the Senate. Under a May 20 amendment, the bill would exempt from that prohibition “the commission’s authority relative to the safety of those lines and facilities, and its authority relative to certain network outage reporting requirements and, for participating VoIP providers, state lifeline program requirements.”

Rechtschaffen said the “verdict is still out” on whether California’s alternative investment policy “works and provides a sufficient deterrent to ensure compliance.” Carriers show some improvement, “but there's still a lot of unacceptable performance.” Many carriers are below the 90 percent out-of-service repair interval requirement, with AT&T California at 43 percent last year in January and 35 percent in December. Frontier twice last year failed to meet the CPUC’s 80 percent requirement for answer time, performing at 33 percent in one month and 49 percent in another, the commissioner said.

“Clearly, there’s a long way to go,” Rechtschaffen said. “It is critical that service quality be maintained if we are to effectively provide notification and mitigation for the risk of wildfires during emergencies.” The CPUC reflected on its communications regulatory role, particularly in light of recent disasters, at an all-day meeting last week (see 1905200052).

“It’s ironic that Commissioner Guzman Aceves is complaining about a delay in bringing service to Californians considering we have invested $7.2 billion in the state over the past three years," said AT&T Assistant Vice President-Public Affairs Benjamin Golombek. "This includes bringing broadband to more than 84,000 locations in California in hard to reach rural areas through the federal CAF-II program over the past two years. This stands in contrast to the CPUC’s track record of stalling important investment and consumer protection programs."

"Frontier has demonstrated significant improvement over the previous carrier’s results for service restoral and call-answer-time targets," a spokesperson emailed. "Rather than impose a financial penalty, the California PUC has provided a forward-thinking investment proposal that can deliver enhanced service quality to customers and add improvements to our telecommunications infrastructure." The legislature should regulate state policies over internet-based services, he said.