Getting Access to Poles

PoleGoogle Fiber is having problems getting onto poles in many parts of the Bay Area and the issues they are having make for a good primer on the very confusing rules for regulating different kinds of entities.

Google Fiber has only publicly announced that they are bringing service to parts of San Francisco. But they have also been talking to Palo Alto, Santa Clara, San Jose, Mountain View and Sunnyvale. Google has no significant pole issues in Palo Alto where the poles are owned by the City, nor in Santa Clara where the poles are mostly owned by the City and a few by AT&T.

The problems come in the other cities. In California a lot of poles are owned by what is called the Northern California Joint Pole Association which is owned by Comcast, Time Warner and AT&T. That group is disputing Google’s right to get on their poles.

The issue is purely a regulatory one. Google claims they are a cable TV company. The kind of company you are matters when it comes to poles. Many years ago the FCC and the industry worked out very specific rules for attachments to poles. Poles are divided into specific zones where various kinds of companies can place cables. The telephone incumbent has the lowest space. At the top is the power company, and historically the cable company fit between telco and power lines. Anybody else who gets on a pole has to fit somewhere in the middle, and in different parts of the country this is sometimes between the cable company and the power company and sometimes between the telco and the cable company.

The first problem Google faces is that by declaring themselves as a cable company, the pole rules only assume that there is one such company. So they can’t claim the ability to get into the cable space, which in all of these cities is already taken by an incumbent cable provider.

Google has always said that they don’t want to register as a CLEC, or competitive telephone company. And until the company announced a trial for voice service a few weeks ago they didn’t offer voice anywhere. But from a regulatory perspective, if Google was a CLEC they would have the right under law to connect to poles, which was guaranteed in the Telecommunications Act of 1996. But I don’t believe there is any similar law that would provide a second cable company the same right, and that has to be the basis for the pole owners to deny access to Google.

Of course, the companies in the association have a very vested interest in delaying Google Fiber from getting into their markets, so it’s only natural they would fight this. It’s actually somewhat rare for cable companies to own any substantial number of poles, but in this consortium two of the owners are cable companies.

AT&T has argued to the California PUC that they don’t believe that Google Fiber qualifies as a cable company and is using that distinction to deny Google access to these poles. There are generally two ways for a company to become certified as a cable company. They have to register with the FCC, which is a very rubber-stamp process, or they have to get a local cable TV franchise from the city where they want to provide service.

But California added a twist to that process. In 2006 the legislature passed a bill that allows companies to get a statewide cable franchise, which is the reason that the California PUC is involved in this dispute. That original law was passed for the benefit of Verizon and AT&T, so that they could provide a competitive cable TV alternative to the incumbents. Under the statewide rules a company only needs to notify a city 10 days before they first are going to offer cable TV service and there are no more regulatory requirements at the city level. A competitive cable TV provider has no obligation to serve an entire community and can serve only where they choose.

Early indications are that the California PUC is siding with the pole owners and might not be buying Google Fiber as a cable company. But even if they are a cable company I don’t know that this gets them access to poles. When AT&T and Verizon became statewide cable providers they already had access to poles. If Google Fiber was a CLEC they would automatically have the right to pole access, but Google apparently doesn’t want to take on the other obligations that come with being a CLEC. The dispute is going to be resolved in one of two ways – either a court will decide this if Google wants to pursue it, or Google will just walk away from those markets and pursue some of the other hundreds of markets that want their fiber.

State Commissions and Broadband

California PUCFrontier and the California commission have been negotiating a deal that lays out the terms that will allow Frontier to buy a pile of California customers from Verizon. Basically, as will be detailed below, the CPUC will require Frontier to upgrade broadband for over a third of the customers it has in the state as part of the deal.

Occasionally, state commissions get the chance to come down on the side of broadband, mostly during these times of mergers, sales, and acquisitions. There are a handful of state commissions, such as California, New York, Illinois and a few others, that have always been aggressive in these circumstances. There are a whole lot of other commissions who seem to be friendlier to the big carriers and let these kinds of deals slide through without much comment.

It’s good to see commissions take an aggressive stand to improve broadband. But looking back on some similar past deals one has to wonder how effective such arrangements really are. For example, I recall an arrangement between the Pennsylvania commission and Verizon in 1993 that freed Verizon from rate-of-return regulation as long as Verizon would bring DSL to hundreds of rural communities. But Verizon never built that DSL and rural Pennsylvania today still has some of the worst broadband in the country.

There also have been deals made by other government entities and carriers that have not brought any results. For instance, dozens of eastern cities gave Verizon franchise agreements to sell cable TV for an agreement that the company would bring FiOS fiber to their whole city. Verizon never built that extra fiber in any of these communities and earlier this year finally admitted that it was never going to expand FiOS fiber any further.

The FCC just made a deal with AT&T to greatly expand their fiber product as part of the agreement to buy DirecTV. We’ll have to wait and see if the company meets this obligation, and most of the industry is still trying to figure out if AT&T is serious about fiber.

So these deals sound great, but one has to wonder how much teeth they have. In this case, if Frontier doesn’t come through over time it’s not like the California commission can undo the purchase of the Verizon properties. There really is not a lot that any regulatory commission can do these days with a carrier that chooses not to comply with such an agreement. There was a time when commissions held a lot of power over carriers. They controlled rate increases and had many other levers to influence carrier behavior. But in a world where all three of the triple play products are largely deregulated there is only so much that any government agency can do to a rogue carrier.

Back to the details of the Frontier deal. The agreement, which is still to be signed by the California commission, would have Frontier do the following:

  • Provide 25 Mbps downstream and 2-3 Mbps upstream to an additional 400,000 households in California by December 31, 2022.
  • Provide 10 Mbps downstream and 1 Mbps upstream to an additional 100,000 unserved households beyond its CAF II commitments by December 31, 2020
  • Deploy 10 Mbps downstream and 1 Mbps upstream to 77,402 households in accordance with the CAF II requirements in the census blocks identified by the FCC
  • Deploy 6 Mbps downstream and 1 to 1.5 Mbps upstream to an additional 250,000 households in California

Altogether this would bring better broadband to over 800,000 California homes. But I feel sorry for the homes that are being upgraded to 6 Mbps. This will likely be their last upgrade before their copper gets torn down in the not-too-distant future.