Michigan SB636 passed, allowing termination of landline phone service. Now what?

"Mr. Speaker and members of the House:

Today a disservice was done to the citizens of the State of Michigan. This bill hampers competition and allows a greedy large corporation to take advantage of some of the most vulnerable segments of our population. Senior citizens and lower income users deserve to be protected. In this case, they are not. I hope that in future votes my colleagues will take into consideration the long term effects of legislation that we pass."

– Rep. LaVoy, Michigan House Journal 27 of 2014

On 3/11/2014, Senate Bill 636, as amended, was passed in the State House of Representatives of Michigan. For my post on the original bill, click here. (Please note there is an important amendment I'll be discussing below.)

Not all is lost. Numerous news reports (many of them sympathetic to AT&T's position, but it raised attention regardless), 19,000+ hits to this blog, attention from many other blogs and websites, and  outcry from numerous public safety, consumers rights groups, and competitive providers managed to hold off this law for almost 3 months. In that time, something that passed the state Senate in 2 days with a final vote of 31 yeas, 4 nays, 2 excused, and 1 abstain ended up passing the state House in nearly 90 days, with 71 Yeas and 39 nays, and only after being amended.

What was the amendment, and what does it do? Are we safe?

It adds onto the section that allows a provider to withdraw as a telephone company entirely (as long as there was a workable solution for 911 emergency calling in the area),  a section binding the withdrawing carrier to the FCC IP Transition order, should they choose to withdraw.  (This would apply whether it's a formal FCC IP Transition trial or not, until federal regulations are passed codifying the IP transition nationwide, which would likely supersede any state laws we have on the topic anyway, so we're only losing so much here)

Regulation of interconnection, wholesale access, and consumer issues would remain the purview of the MPSC, using the FCC IP Transition trial rules until the FCC passes its own final rules for the IP transition.

Have no illusions – this isn't the best case scenario for Michigan consumers, or competitive providers. But it's much better for them than the original SB636. The FCC IP transition order provides some consumer protection (but not a lot) by requiring applicants to prepare reports on the impact of transition for many different types of things, such as credit card terminals, heart monitors, etc. And it allows wholesale access to legacy network elements, so competitive providers could decide to provide legacy TDM/POTS equivalent service if there is market demand for it (and obviously in many places, there would be).

What it doesn't do is compel the RBOC/ILEC to provide those legacy TDM/POTS equivalent services. The upside for consumers is that there are carriers who would happily take that business from the ILEC (including the carrier I work for), and theoretically anyway, we'd be able to do so using our own equipment and the ILEC's wires.

The downside is, many subsidies would not be available to provide same, and CLECs don't necessarily have the sunk cost to provide this service cheaply (some do, in some areas). This could have a disproportionate impact on low-income families and rural customers, where there are fewer customers (or mostly low income customers who are paying the bare minimum the plans would offer) to subsidize a network build to provide a replacement product.

The FCC IP trials state there has to be protection of low-income/elderly/disabled customers, but I'm not certain what that would ultimately mean. Where are the cutoffs for low-income and elderly? What kind of price increases would be okay?

Smarter people than I have summarized the IP trial orders here.

The bill, because of the amendments, has to go back to the senate, where it is expected to be passed immediately, and the governor is expected to sign it. Rumors say that the governor pushed hard for these changes, as he did not want the original bill to be passed as written – nobody wants to be the governor that took away phones from elderly people, and gave away state level oversight of the largest public utilities in their state. Well, at least no governor with common sense, anyway.

Time will tell if these changes are enough to protect everyone. I'm not sure anyone with experience in the industry can tell you at this point where things will be by 2017 on these issues. It's notable that the Michigan IP transition laws would kick in right after the current presidential administration term limits out, and a new administration will take its place roughly 20 days after the law kicks in. Part of me can't help but think that AT&T will have their claws dug deeply into the backs of the nominees of both parties.

So is this the end? Are we screwed now?

No. Though many of these issues move to various other states, and the federal level. (AT&T often uses Michigan as a model for legislation in other places – HB4314 was used to prove that if similar legislation was passed in other states, they too would benefit from increased deployment of AT&T's U-Verse product, for example, and from increased investment in their state. AT&T expanded U-Verse deployment, and located more employees in Michigan as a reward for passing HB4314)

Additionally, with Network Neutrality changes, broadband data caps, and the consolidation of major industry players any ability to offer services over the broadband connection of a third party (such as Vonage, Aereo, Skype, Youtube, Hulu, and Netflix) is severely threatened. More independent carriers would let the free market figure out network neutrality, but with consolidation and things like SB636 (at least in its original incarnation, though we don't know what this new incarnation will really bring for certain) we impact the ability for new entrants to create proper competitive pressure. (Each of those links contains more information, and on most, an opportunity to voice your opinion).

As for the FCC's IP Transition policies, you still have an opportunity to lend your voice. DoctorOhhnoes points out in an earlier post that there is still an opportunity to comment on the transition with the FCC.

Numerous groups are working on things such as privacy from the NSA, SOPA censorship, overreaching copyright law, broadband data caps and lots of other things.

What would solve this entirely?

In short, what they call "Structural Separation" – this is when companies are split up between the side that maintains the outside plant infrastructure, and the company that provides voice and data services. The outside plant company would only care what customer belongs to whom as a technical necessity (ie: Where does this customer's wire, fiber optic cable, etc get hooked to in the central office? To AT&T's switch, or to another carrier?). They would own all the buildings, structures, and wires.

This company would be legally separate from any company providing data or voice services, much like AT&T long distance was broken off from the Bell system in 1984, but in this case we're taking it a step further – separating phone companies from the outside wires. AT&T would pay rent to be in the buildings under the same terms and conditions that competing carriers do, and be subject to the same outside plant conditions that the other carriers would.

Any improvements to the outside plant would be cost averaged across the combined customer base, and would affect all carriers equally. AT&T wouldn't benefit unduly from having a large embedded base (except from the usual economies of scale with billing, support, IP transport, and telephone service), and any carrier could roll out any technically possible service at any time.

The outside plant company would have an incentive to come up with better quality loops, better fiber optic penetration, better everything because carriers would demand that of them (and would work out a way to pay for it collectively, if necessary), and they would all benefit equally from the deployment. The outside plant company may even come up with better products to offer – for example, a wholesale VDSL2 DSLAM setup in the neighborhoods that any carrier could pay to use with their equipment to extend the reach. This would allow nearly any carrier to roll out a U-Verse like service overnight. Economies of scale would be spread across all market participants – Currently if 4 companies in a business park want service from 4 different carriers, each has to run their own fiber to the customer's building all the way back to a central point. A structural separated provider could run one 48 count cable to the business park, and hand all 4 carriers their own set of strands to each building. If a customer wanted to change carriers, or add a second, they'd be able to hook up unused capacity, or even swap a cable over from one carrier to another in the central office. This means the entire business park could benefit from that scale, and bringing the other buildings into the fold would be simplified, no matter what carrier they want to use.

It may sound utopian, but several countries are doing this today.

Imagine if your house had access to fiber optic services from 4-6 companies. Do you think people would still be talking about net neutrality and bandwidth caps? Heck no, because if one of those carriers sold capless products that worked well with everything, people could switch in a heartbeat to them. There's no sunk costs and no startup time. The company that tried to limit their customers unnecessarily would be out of business in a heartbeat.

TL;DR

Too much to read? Summary: AT&T managed to get their bill passed with some change due to consumer and citizen outcry. The changes are good, but not as good as not having the law at all.

While the future is uncertain, you still have influence, and there are many battles other than this one that can have similar impact on you, no matter who you buy your services through. I strongly urge you to weigh in on them with those who are in power (and many of them are actually listening, as this isn't a particularly partisan issue, and affects everyone!). I strongly urge people to pressure their legislators, and their friends, to become educated on the topics I mentioned above, and to push people to have positions on them, much like people do about things like abortion, gun control, social security, and other stuff. Almost everyone in the US uses a telephone or the internet daily, and what happens to these services matters a lot.

And if you haven't seen what the other side is capable of, I strongly suggest checking out my earlier post about AT&T's involvement with Astroturf groups here. Other sites discuss this in greater detail.

And to steal a line from Dr Seuss: "Unless someone like you cares a whole awful lot, Nothing is going to get better. It's not."

How green is the astroturf over there?

A recent article in Fierce Telecom titled "Special access, end of PSTN no secret to wireline marketplace" , written by Bruce Mehlman was a response to an article written by Bruce Kushnick, who is no friend of the incumbent telephone companies, for sure.

But who is Bruce Mehlman and the organization he co-founded, the "Internet Innovation Alliance"? Good question.

The tone of the article would imply that they're an advocacy group for broadband by any means necessary – they want speed and don't care under what terms and conditions it's available, as long as it's "cheap".  Seems fair and innocent enough, from the "cheap, fast, good, pick two" – they chose cheap and fast. I disagree with this strategy, but more power to them.

But wait – what they're advocating is exactly what AT&T is trying to carry out with SB636 in Michigan. I can't help but think that's a bit odd, so I dig a bit to see what the story is with this "Internet Innovation Alliance" that I've never heard of before. What I found was interesting.

With some digging, I found their list of members.

I'll reproduce it here:

 

1 Economy Incorported Donor Supported by AT&T and Verizon
American Council of the Blind Donor AT&T and Verizon are major sponsors of their event.
The American Conservative Union Ideological Not specifically related to AT&T. Generally supports elimination of government regulations.
Applied Optoelectronics Supplier Supplier for AT&T and Verizon's FTTP products
Alcatel-Lucent Supplier/Common Origins One of AT&T's largest suppliers. Lucent was a spinoff of Bell Labs, which was at one time AT&T.
Americans for Tax Reform Ideological Not specifically related to AT&T. Generally supports elimination of government regulations.
AT&T Self The phone company. The people the organization speaks highly of in the op-ed.
B-Tech Supplier AT&T Supplier – AT&T's logo is right on their front page.
Berry Test Sets Supplier AT&T Supplier – Ironically provides premier test equipment for that "obsolete network" that they're trying to get rid of. Their techs carry this tool a lot.
Communications Technology Solutions / CBM of America Supplier AT&T Vendor
Ciena Supplier AT&T Vendor
Condux Supplier AT&T Vendor
CompTIA Indeterminate Not specifically related to AT&T, but AT&T is a large sponsor of theirs.
Connected Nation  AT&T related AstroTurf group Astroturf group heavily funded by AT&T. Even performs research for AT&T.
Corning Supplier Major AT&T Supplier of Fiber Optic Cable
United States Cattleman's Association Indeterminate, likely donor The site doesn't mention sponsors at all, but the cattlemen's association goes out of its way to file FCC comments all the time in support of various AT&T initiatives.
FiberControl Indeterminate Probably an AT&T supplier. Very niche equipment supplier.
GoFoton Supplier CTO worked at AT&T for 30 years, likely an AT&T supplier as well.
National Grange of the Patrons of Husbandry Indeterminate, likely donor Outspoken advocate of AT&T's policies. Major donors not mentioned on their homepage.
American Homeowners Grassroots Alliance Indeterminate, likely a front group AHGA and AHF Privacy Policy- AHGA and AHF will not disclose any information whatsoever about their members,
customers, or supporters to any other parties under any circumstances. – Advocate of AT&T policies in the past.
Hispanic Telecommunications and Technology Partnership Indeterminate, likely a front group Promotes many AT&T initiatives, ties to the NTCA and USTA. All positions seem to be related to AT&T initiatives.
Hispanic Leadership Fund Indeterminate, likely ideological Unknown, no public webpage, no known policy statements.
Independent Technologies Inc Supplier Supplier, ironically, of equipment for AT&T's "Obsolete" POTS/TDM network.
Independent Women's Forum Donor/Ideological AT&T is a donor to the IWF.  Generally supports elimination of government regulations.
Japanese American Citizens League Donor "Website made possible by the generous sponsorship of AT&T" (search in page for that string)
LCLAA Trade Union Trade Union group (Trade unions that deal with AT&T tend to support AT&T policy in exchange for promises to include their laborers in new initiatives)
LULAC
Donor/Ideological
AT&T is part of their "Corporate Alliance"
Intertribal Agriculture Council  Likely Donor Recently, the Intertribal Agricultural Council has been involved in many non-agricultural things, such as the AT&T and T-Mobile merger, and the Sirius XM merger. Why? Who knows.
MetroTel Corp  Supplier AT&T Supplier
Minerva Networks Potential Supplier Minerva sells IPTV middleware that controls IPTV set top boxes. AT&T uses Microsoft MediaRoom, but given that Microsoft has no interest in continuing that line, I suspect AT&T is working with Minerva at this point to replace MediaRoom.
National Assocation for Female Executives  Likely Donor Both NAFE and AT&T pat each other on the back a lot.
National Association of Neighborhoods  Likely Donor NAH has spoken heavily in favor of previous AT&T initiatives.
National Coalition on Black Civic Participation AT&T and CWA staff on board of directors
National Health IT Collaborative for the underserved Likely Donor They do not appear to have made any public statements in favor of AT&T initiatives, and appear to be otherwise legitimate.
National Black Chamber of Commerce Donor The AT&T Foundation has donated thousands to this group, if not more.
National Puerto Rico Coalition Donor AT&T is a primary sponsor.
National Spinal Cord Injury Association Likely Donor They do not appear to have made any public statements in favor of AT&T initiatives, and appear to be otherwise legitimate.
OASIS Institute Donor AT&T donated half a million dollars to this group.
National Utility Contractors Association Supplier Consortium of AT&T suppliers
Prysmian Cables and System Supplier Manufacturer of fiber optic cable
Small Business Entrepreneurship Council Ideological Possibly supported by AT&T, definitely ideologically opposed to government regulation.
Suimitomo Lightwave Supplier Fiber optic manufacturer
Sheyenne Dakota, Inc Likely Supplier They manufacturer wiring harnesses.
SeniorNet Donor AT&T and Verizon are sponsors.
SNC Manufacturing Supplier AT&T supplier of high voltage isolation equipment
Suttle Supplier Supplier of various telecommunications cabling and connectors. (Many punchdown blocks are made by Suttle)
Telesync Supplier Ironically, most of their products are for those old, evil POTS services they're trying to get rid of.
TechAmerica Consortium AT&T is a member
USIIA Consortium AT&T is involved with this group. Verizon has an employee on the board of directors. They have a history of speaking in favor of all AT&T initiatives, all the way back to the bell south merger.
Women Impacting Public Policy AT&T employees part of advisory board / Ideological Corporate Advisory Board has AT&T (and Comcast, who does not oppose these laws) members. Several.  Generally supports elimination of government regulations.
Asian Women in Business  Donor AT&T heavily sponsored this group

Now, to be clear, I don't think that taking a single dollar of AT&T's money taints you. But when you're part of a public policy group that is unrelated to your mission (What does this have to do with Indian agriculture, or cattlemen?), and you take money from AT&T, your opinion may be not as independent as you make it sound.

The thing with nonprofits is, they don't have an inherent means of self support. They rely on donors. If you get a big donor that seems awesome at first, it opens a lot of doors for you. When they ask for your support, and it doesn't seem completely unreasonable (just sign your name to this, it's going to pass anyway and we could really use your help, as we've helped you in the past) – few organizations can afford to say no, especially if it doesn't harm their constituency directly or go against their stated goals. It puts them in the unenviable position of either giving a large donor a hand over something inconsequential to their members/beneficiaries/whatever, or taking an unnecessary stand to say "This is tangential to our mission" and risk a pay cut.