CPUC's Proposed Comcast/TWC Decision Receives Criticism From Most Parties

The CPUC’s proposed conditions related to broadband services in California “contravene state and federal law, are factually erroneous, and wrongly intrude into matters that are properly and exclusively before the FCC,” Comcast and associated telcos said. The telcos have long objected to the CPUC’s decision to investigate the implications that Comcast/TWC would have on broadband services in California on grounds that the commission doesn’t have authority to regulate broadband services under state law. The CPUC’s decision to investigate broadband aspects of Comcast/TWC was seen in August to indicate the commission would conduct a “very thorough” review of the deal (see report in the Aug. 18, 2014, issue). The broadband conditions would impose common carrier-level regulations on broadband services even though the CPUC has made clear it would be in violation of Telecom Act Section 706 if it regulated broadband providers as common carriers, the telcos said. Conditions that would require Comcast to expand its Internet Essentials low-cost broadband program in California would also violate Section 706, the telcos said.

Other conditions in the proposed decision exceed the CPUC’s authority, including requirements to maintain LifeLine coverage in areas of California currently served by TWC or require a VoIP provider like Comcast to offer LifeLine service in the state, which isn’t a requirement under current CPUC rules, Comcast and associated telcos said. Comcast already meets California diversity rules, but diversity conditions included in the CPUC’s proposed decision are unlawful, the telcos said. Conditions on Comcast website information and free or at-cost backup batteries are beyond CPUC authority, the telcos said. Conditions requiring Comcast to allow the use of Roku and similar video programming platforms and meet customer complaint reporting privacy requirements also exceed CPUC authority, the telcos said. Conditions requiring Comcast to connect or upgrade service to unserved and underserved public schools and libraries and not interfere with voice services are unnecessary because Comcast already voluntarily meets those conditions, the telcos said.

The CPUC’s Office of Ratepayer Advocates (ORA) said the proposed decision’s set of conditions constitutes “legal error,” noting that Comcast and associated telcos “have failed to show by a preponderance of the evidence that they are entitled to approval of this merger. That is the legal standard and that failure should be the end of the matter.” ORA said the proposed decision erred in its view of the CPUC’s authority under Section 706, saying the commission can take “expansive” action under the statute to regulate both broadband and VoIP services. ORA objected to how the proposed conditions were vetted, noting that they “were never considered by the parties” until CPUC Administrative Law Judge Karl Bemesderfer released the proposed decision Feb. 13.

The Utility Reform Network (TURN) urged the CPUC “not to be seduced by the siren call” beckoning the commission “to trust that a possible condition-related reduction in the digital divide could outweigh the likely harms of the proposed merger.” TURN said it repeatedly has indicated it vastly prefers outright CPUC rejection of Comcast/TWC but early on proposed conditions the CPUC needed to include if it decided, “contrary to our recommendation, to approve the proposed merger.” The CPUC’s set of proposed conditions is flawed because “it lacks enforcement mechanisms and because it fails to acknowledge that enforcement (though necessary) would be time-consuming, costly, and burdensome for the Commission, consumers, and competitors,” TURN said. The group also urged the CPUC to give “little evidentiary weight” to statements given by pro-Comcast community groups at the Feb. 25 meeting. “None of those speakers presenting on behalf of Comcast connected their statements to the actual issue at hand,” instead talking about Comcast’s “laudable” community partnerships.

The Greenlining Institute and Consumers Union said the proposed decision lacks analysis of the transfer of licenses between Comcast and Charter Communications in connection with Comcast/TWC, which would give CPUC another reason to deny Comcast/TWC. That lack of analysis “renders that decision’s ruling defective to the extent that the” proposed decision approves the license transfers, Greenlining and Consumers Union said. Comcast/TWC opponents have said the transfers “would eliminate a company that provides better customer service than Comcast -- that unlike Comcast, for example, tracks broadband outages and has formalized systems for assessing and improving service quality.”

Media Alliance noted that the proposed conditions would “largely sunset after a five year period” and the decision doesn’t contain “an analysis of the reduced public interest harms projected to exist approximately five years from now and whether the enforcement of the proposed twenty-five conditions for the mandated five year period would result in a permanent reduction of all or some of the projected public interest harms or merely a temporary reduction for the period of time they would be in effect.” The proposed decision also doesn’t include conditions that would mitigate the effects of Comcast/TWC on edge providers, even though the proposed decision recognizes the issue as a serious problem,” Media Alliance said.

The California Association of Competitive Telecommunications Companies (CALTEL) recommended that the CPUC “establish more effective and transparent mechanisms for monitoring and enforcing Comcast’s compliance with all of the adopted conditions” if the commission approves Comcast/TWC. “Given the complexity of these wholesale product offerings, and the relatively long length of time that these proposed conditions will be in place, the Commission may not be able to monitor or assess compliance with these conditions without input from wholesale customers of the merged entity,” CALTEL said. The CPUC should adopt a mechanism other than filing formal complaints to gather that input, and should create a separate proceeding to monitor Comcast’s compliance with the merger conditions, CALTEL said. Comcast should be required to file periodic compliance reports and parties should have the opportunity to file informal complaints about compliance, the group said.

The California Emerging Technology Fund (CETF) said it supports the CPUC’s proposed decision so long as it continues to include the requirement for Comcast to expand its offering of the Internet Essentials program to all low-income families. CETF recommended that CPUC adjust the condition to require Comcast to offer Internet Essentials to households that meet LifeLine eligibility requirements and are at 200 percent of the federal poverty level.