CPUC Lacks Good Reason to Increase Telecom Regulation, Says Industry

Commenters reviewed CPUC reports on AT&T and Frontier Communications network outages. The CPUC also received comments on information the FCC requires in its automated reporting management information system (ARMIS) and possible changes to a 2016 enforcement framework under General Order 133-D, which lets telcos avoid paying fines by promising to invest twice the amount in their network.

The CPUC report "is uncorroborated hearsay, and therefore does not constitute ‘substantial evidence’ that can sustain the findings needed to impose the new regulation,” AT&T complained. Carriers didn't get a "full opportunity" to challenge its findings and recommendations, receiving “less than full data and other information" on the Network Report and no chance for follow-up discovery or to cross-examine the document’s author, Lee Selwyn of Economics and Technology. Selwyn "harbors a disqualifying bias" as a "well-known opponent" of ILECs, AT&T added.

The California network reports "are based entirely on outdated and incomplete data and cannot under California law be used as a basis for prospective service quality rules for the services examined, let alone used as a basis to extend those or similar rules to unregulated intermodal services that were not examined,” commented Frontier Communications.

Network examiners mostly focused on the period before Frontier acquired Verizon's California landlines in 2016, Frontier said. When considering the period after that, the report "attributes alleged service quality deficiencies for [plain old telephone service] to Frontier’s then-financial condition, including what it characterizes as a heavy-debt load." But that was before the company’s bankruptcy restructuring, approved by the CPUC in April 2021, which eliminated about $10 billion in debt and $1 billion in annual expenses, it said. "The causes of the claimed deficiencies relied on by the auditor have been eliminated, and … have been followed by extraordinary investments,” which will continue through 2024, said Frontier. "A factual predicate to a finding where the predicate no longer exists is not a substantial or indeed, any lawful basis, on which to support prospective rules and if pursued, will be reversed on appeal.”

The CPUC analysis got support from the agency’s independent Public Advocates Office (PAO) and a group including Communications Workers of America (CWA) and consumer advocates The Utility Reform Network (TURN) and Center for Accessible Technology (CforAT). The CPUC's current penalty system hasn't motivated providers to meet service quality standards, said TURN, CforAT and CWA. "The Commission should not only increase penalties … but should implement similar penalty mechanisms for wireless and VoIP service providers."

The CPUC should quickly extend service-quality metrics to wireless, VoIP and broadband, since those services are essential to health and safety, said PAO: Though the report looked only at AT&T and Frontier, its conclusions can apply to all voice service providers.

Wireless and cable industries sharply disagreed that metrics should be applied more broadly. The CPUC's outages report “pertained only to wireline networks," so "no recommendation or conclusion of the network exam report is relevant or should be applied to wireless service providers," said CTIA. Wireless is competitive and receiving large investments, it said. Much data on wireless services is already available, said CTIA: The CPUC’s “lack of authority to adopt service quality regulations for wireless services calls into question what purpose reporting would even serve.” Verizon said ARMIS reporting, which the FCC applied only to ILECs for rate-regulation purposes and has since mostly eliminated amid a transition to price-cap regulation, isn't needed or appropriate for "a competitive non-rate regulated industry such as the wireless industry.”

Don't impose "unnecessary and burdensome reporting regulations" on VoIP, including "antiquated" ARMIS-style reporting requirements, said the California Cable and Telecommunications Association. CPUC findings on copper networks don’t apply to other voice technologies, said CCTA: No problems were shown with VoIP. Adopting rules would add costs that "would likely be passed on to consumers without any countervailing benefit and disregard the legal landscape designed to prevent such unwarranted regulation,” it said.

Don't adopt industrywide policy "based on arguable trends applicable to two carriers,” said Consolidated Communications: All the reports showed was that "network investment in some rural areas lags" for AT&T and Frontier. Investment by the wider industry "is creating robust competition and reliable service for the significant population of the state living outside rural areas," said Consolidated. The carrier noted it must compete with videoconference services like Zoom, which the CPUC can't regulate. "Incurring the costs of penalties and regulatory compliance while these other services do not face such costs would undermine Consolidated’s ability to effectively compete," it said.

Reports on two carriers can’t “be the prism through which to view an entire industry or make assumptions about the need for changes to current rules,” agreed CalTel and other small rural ILECs.

Many of the CPUC's conclusions apply to other voice providers, including VoIP and wireless, countered TURN, CforAT and CWA. "The current communications ecosystem promotes an industry-wide lack of network redundancy (diverse routing), prioritization of network upgrades and maintenance in wealthier communities, and disinvestment in network infrastructure in lower income communities." Also, AT&T and Frontier networks' condition "create competitive disincentives for other providers to improve their own service quality,” the advocates said.