Tag Archives: CPUC

California Competition Study

The Public Advocates Office, which is part of the California Public Service Commission, undertook a a deep analysis of broadband pricing in the state, correlated with the level of competition. The study was conducted from August through October of 2025.

The study looked at four large markets in the state: San Mateo, Oakland, Los Angeles, and San Diego. By choosing these markets, the study encompasses the four largest ISPs in the state – AT&T, Comcast, Charter, and Cox. The study gathered information on available broadband plans by location, advertised speed tiers, and promotional prices. The study also overlaid household incomes from the Census across the data it gathered to explore if household income played a role in prices offered by the big ISPs. The markets are interesting because they not only vary by ISP, but each market has some neighborhoods where the only gigabit provider is the cable company, and other neighborhoods where there is also one or more fiber competitor.

The overall conclusion of the study won’t surprise anybody who follows the big ISPs – broadband prices vary by the level of competition. In aggregate, the study showed that the price for broadband in competitive neighborhoods across the four markets was around $51 per month, while prices in non-competitive markets were $15 to $40 higher per month for comparable services.

The study resulted in three major conclusions:

Gigabit Fiber Drives Lower Broadband Prices. The study demonstrated that price competition only kicked in for neighborhoods where there are multiple ISPs offering gigabit broadband. That means a cable company and at least one fiber provider. The study showed that when there is competition for gigabit broadband, the competition extends downward to slower speeds offered by the big ISPs.

The study demonstrates something that is probably obvious, in that pricing is trimmed even further when there are more than two gigabit providers in a neighborhood.

Sub-Gigabit Providers Do Not Reliably Constrain Price. This is an interesting finding. It says that when the only competition to a cable company is an FWA cellular provider or a fixed wireless ISP, the cable company does not engage in significant price competition to keep customers. The study showed that, in fact, some of the neighborhoods with this kind of competition see the highest prices from the big ISPs.

This doesn’t mean that cable companies never compete hard against 100 Mbps providers, but this finding makes a lot of sense. Customers are attracted to the low prices of the FWA providers, and both T-Mobile and Verizon have price options as low as $35 per month. Cable companies, at least in these four large markets, are not willing to drop prices to compete with those prices.

Income is Not a Primary Driver of Prices. This is a bit of a surprise, because there were previous studies that suggested that pricing was lower in neighborhoods with the highest household incomes. That may have been true five years ago, but the data now suggests that prices offered by the big ISPs are mostly related to the level of competition.

The study made some other interesting observations. One observation is that in competitive neighborhoods, promotional prices can vary by household, and somebody might be paying a significantly higher or lower price than their immediate neighbors.

The study is worth reading for anybody interested in how big ISPs compete. The study has a lot of detail about how big ISPs stratify addresses and pricing offers based on the presence of other gigabit providers, while not caring much about ISPs that compete with slower products.

What About Competition?

In comments made to the FCC in the recent docket looking at customer service practices, the California Public Utility Commission filed comments that said that big ISPs don’t focus on customer service because they don’t have to. The CPUC said that only 26% of California residents have a choice between two fast ISPs.

The federal government has been concentrating on making sure that homes have at least one fast option for broadband, and that’s an obviously good goal at a time when Internet access is considered by most households to be a necessity.

But the numbers cited by the CPUC are not unusual. Across the country there are still a lot of places where homes and businesses have only one fast ISP option.

There are real consequences for any neighborhood that has only one fast ISP. Such neighborhoods have no competitive options, and the one fast ISP is effectively a broadband monopoly in that community. There are clearly documented consequences of being served by an ISP that has a virtual monopoly.

The best way to think about that is to look instead at what happens when a community gets real competition between two or more ISPs that offer gigabit speeds.

  • Lower Prices. The conventional wisdom is that competition lowers prices by at least 15%. In today’s world of competing for customers with lower prices and specials, a lot of households are seeing much bigger discounts by playing two ISPs off against each other. As someone who has been in the industry for a long time, this reminds of the marketing battles in the 1990s by long distance companies. Customers learned they could get cheaper rates by calling and saying they got a better rate from another carrier.
  • Improved Customer Service. When a new competitor moves into an area that was previously a monopoly, it’s almost inevitable that the original monopoly ISP will step up its game. Improved customer service means the ISP will respond to customer outages and troubles more quickly. They may even show up on time for home visit appointments.
  • Technology Upgrades. ISPs operating in a competitive market tend to upgrade technology a lot sooner than in non-competitive markets. If nothing else, the original monopoly provider will usually tweak the network to work better. For example, every cable company can improve performance by tightening up frequency leaks in the network. When faced with competition, crews seem to suddenly find the time to do long-ignored maintenance.

A lot of cities were disappointed when they learned that BEAD funds would be deployed almost entirely in rural areas and wouldn’t benefit cities. Early press releases made it sound like BEAD could be used to help neighborhoods served by old incumbent networks, but it quickly became clear that BEAD was not going to be allowed for that purpose.

Most cities are still acutely aware that technology differences in their city that are creating competition haves and have-nots. The consequences for neighborhoods with only a single legacy monopoly provider can be dire in a city where everybody else is served by both a cable company and a fiber overbuilder.

A lot of the competition gap will be fixed as ISPs continue to build fiber networks. AT&T and other largest ISPs have announced plans to build over 60 million fiber passings by the end of 2030. Not all of that is new passings since millions of fiber passings will compete with another fiber provider, but this construction will improve competition in many communities. Unfortunately, we’ll have to wait until 2030 to see who gets left behind.

Carrier of Last Resort is Still a Thing

I always find it interesting when old regulations bubble up into the news. As reported by Jon Brodkin in Ars Technica, an administrative law judge at the California Public Utilities Commission (CPUC) rejected a petition by AT&T to walk away from its carrier of last resort obligations for voice service.

For those unfamiliar with carrier of last resort, this was a regulatory principle that harkens back to 14th-century English law, where businesses were granted the ability to operate as long as they agreed to serve everybody. In this country, carrier of last resort was embedded into the rules when states started giving monopoly service areas to telephone companies. Carrier of last resort rules required telephone companies to build to reach every home that could be reasonably reached. While the cost to reach remote customers might be high, the quid pro quo is that carriers were allowed to achieve a guaranteed rate of return on investments they made.

In the petition in California, AT&T requested to be relieved of carrier of last resort obligations, which would give it the ability to stop providing telephone service in rural areas. The AT&T petition was met with a lot of protests from rural residents asking the CPUC to not let AT&T kill their telephone service.

The Administrative law judge rejected the AT&T petition. He ruled that he was unable to ignore the existing California rules that require carrier of last resort. He also ruled against the AT&T claim that California rules would require AT&T to keep copper. He noted that there is nothing in the California rules that would stop AT&T from decommissioning copper wires.

The ruling went on to point out that there are many examples where AT&T is replacing copper with fiber technology. The ruling notes that there is nothing in the California rules that would stop AT&T from replacing copper with fiber, wireless, or other technologies. The bottom line is that the ruling says that A&T is allowed to kill copper networks, but that carrier of last resort obligations require the company to provide an alternative technology that can bring voice service to households.

There are a lot of stories in the last few years of AT&T disconnecting working rural telephone lines without providing a technical alternative. The company has done this quietly in many parts of the country, and I’ve run across rural AT&T areas where there is no longer any working DSL.

This ruling can be made in California because the CPUC never dropped the carrier of last resort rules. In many states AT&T and other large telcos were able to eliminate these rules as part of the process of deregulating telephone rates. In most states, the decision to deregulate telephone rates involved telcos being able to walk away from a lot of regulatory rules for a promise to freeze residential telephone rates.

Unfortunately, one area of regulation that went out the door in this process was the obligation of  telcos to meet performance standards and to perform needed maintenance. Big telcos reacted to deregulation by cutting rural technicians and rural maintenance budgets to the point where maintenance meant only doing band-aids repair for customers who yelled the loudest.

To some degree, this ruling is too little, too late. It’s harder each year to keep copper networks limping along, and AT&T can probably still meet carrier of last resort obligations by keeping telephones just barely working. It’s likely that most of the areas covered by this ruling will be eligible for BEAD grants, so the issue probably will quietly die within five years as other carriers displace AT&T and other telcos who want to walk away from rural markets.

For me, this ruling is somewhat nostalgic. There were a lot of states fighting this battle a decade or two ago, and now only a few states are trying to keep the phones working in rural areas. We have to be nearing a time when there will be no more talk about carrier of last resort. Grant programs like BEAD require a grant winner to build to every home in a grant area – but they don’t require carrier of last resort obligations to build to new homes after the grant construction is completed. We’ll probably never stop hearing about rural residents who are quoted astronomical sums to bring a landline or broadband connection to their home.