Dialing Back Protections: The Battle for California's Lifelines - Episode 18 of Unbuffered

Christopher Mitchell (00:15)
All right, we're about to get Unbuffered! We're gonna we're gonna take the buffers out for this show, ⁓ which is ⁓ a show that's actually gonna be somewhat technical, but incredibly important. ⁓ and we don't know for who always, but we're gonna be talking about emergency communications, communications more generally, and who decides how people can use our various communications lines in the in the future. so I'm Chris Mitchell at the Institute for Local Self Reliance. I'm in Saint Paul, Minnesota.

And this is Unbuffered. ⁓ talking today with Harold Feld, who is the Senior Vice President at Public Knowledge. Welcome back to the show, Harold. Harold's been working on this issue for a long time, ⁓ focused on national issues. And we're bringing in from ⁓ a local champion, ⁓ Arturo Juarez, who is with Next Gen Policy, which is focused on California. Welcome, Arturo.

Harold (00:53)
Thank you.

Arturo Juarez (01:09)
Thanks, Chris. Happy to be here. Thanks for having me.

Christopher Mitchell (01:11)
I'm excited to have you. You've been working in broadband for a long time, working to advocate for folks at the local level, ⁓ in California to make sure that people aren't left behind by big decisions. And we kind of have a generational shift right now. So I'm gonna describe it briefly and then ⁓ we'll come back to you first, I think, Arturo, to talk about what exactly is happening in California. ⁓ but there is a national issue that has been going on ⁓ probably actually since I started working here nineteen years ago.

Arturo Juarez (01:22)
Mm-hmm.

Christopher Mitchell (01:39)
Which is that we recognize that there is a technological transition from copper lines to other technologies, fiber optics in in many cases, in other cases, perhaps wireless or or others. And some are trying to take advantage of a technological change to change how we regulate and how people are protected in terms of when they use services that will appear to them to be very similar to what they used to use. The underlying technology changes, and there's a question of whether.

Expectations should change over who gets service, whether it's affordable, what happens after a disaster. And I think about this a lot. We've had a few disasters that have ⁓ that have really made this clear. I I think of one in California. I'm sorry, I think of one in Florida, another large state, where Florida basically said, Hey, AT&T, you get to decide after a natural disaster if you want to rebuild and where. And they they signed this law. They said it was gonna be really smart and like, you know, it's gonna deregulate and it was gonna be great for people.

A hurricane comes through, wipes out telephone lines, and an AT&T is like, you know what? I don't think we're gonna rebuild those. And the governor says, This is atrocious, you can't do that. And I'm like, you literally gave them the power and bragged about giving them the power to make that decision. And so that is one of the scenarios that we're talking about here in this subject that we often call carrier of last resort, or it's sometimes said COLR, C-O-L-R.

Arturo Juarez (03:03)
Mm-mm.

Christopher Mitchell (03:04)
⁓ and in California, we have an interesting situation in which California is the loan holdout of major AT&T states. Twenty of twenty-one AT&T states have largely given AT&T the power to make these decisions ⁓ and and deregulated. so you don't necessarily have the right to a phone to having a phone, and you don't have the right to it being affordable and things like that in these other states. There's a patchwork. And I just want to throw one other thing out, which is that in Ohio.

When they did this, right? They did they basically ⁓ they gave AT&T carte blanche to decide where to invest. AT&T like never invested again in specific neighborhoods in Cleveland. ⁓ and we documented that. Bill Bill Callahan documented that with Angela Siefer years ago. And just entire entire like neighborhoods that happen to be very low income and often happen to be heavily black, ⁓ you know, they continue to pay and they get pay increases on their bills or have to pay more, but they never got better services. So

⁓ so that's the sort of thing that we're talking about here. and that's why it's important nationally, even though this conversation will focus on on California. So Arturo, can you set the stage for us with ⁓ what is happening in terms of in California? 'Cause it's immediate. This is not like something that's taking place over the next year necessarily. It's like right now.

Arturo Juarez (04:21)
Mm Yeah. Yeah. And thank you for that preview, Chris. It's appreciated. I think especially what you described at the end there is one of the things that we are primarily concerned about, right? If AT&T is allowed to disassociate itself or relieve itself from its sort of color service obligations in California, are we going to see the same sort of patterns that we've seen in other states like Ohio and in Florida? And I think the universal sort of sentiment around

advocates is yes, right? ⁓ For me, you know, if there are clear examples of how the company has operated in the past when it has been able to no longer meet its COLR service requirements, that is something that we do not want to see here in California, because as you said, it's those communities that are most vulnerable and historically are invested that are usually left out.

Christopher Mitchell (05:12)
Yeah, and and in California specifically, I remember reading a newspaper article. I read it 10 or 15 times over the years about how originally, ⁓ for a long time, basic telephone service was regulated at a at a rate, and AT&T and others were given the power to set that rate, and it was no longer regulated, and prices doubled. And, you know, we're often told that deregulation leads to innovation and lower prices and things like that. But the experience in California with AT&T and deregulation is that.

Arturo Juarez (05:15)
Mm-hmm.

Mm-hmm.

Mm-hmm.

Mm-hmm.

Christopher Mitchell (05:41)
People pay higher prices.

Harold (05:42)
I actually have to come in because I wrote about this back when it first started surfacing in the O's. And it's worse than that because what happens is they switch to bundled services because that makes much more money. So you have people go around and say, look, telephone rates have gone down because now I can get it real cheap. Well, you can only get it cheap if you pay for it as a bundle back then with cable and broadband.

Arturo Juarez (05:43)
Yes.

Mm-hmm.

Harold (06:08)
So if

you're poor and you have to just afford the basic service, your price doubled or tripled. Whereas if you were wealthier, were true paying less for telephone. You were paying more overall. you get all these. No, no, the rates have gone down. It totally ignores the.

games that these guys play. I can assure you that I have never seen a case where deregulating a dominant company has led to lower prices.

Arturo Juarez (06:43)
Yeah, I would agree with that.

Christopher Mitchell (06:43)
And I'm I'm a super pro

market I'm a super pro market guy and like but I have my eyes are wide open on this stuff where there's like market abuses. So Arturo, ⁓ I interrupted you. Let's get back to what's happening in California.

Arturo Juarez (06:51)
Yes.

Yeah, no, and I would agree with you. I would just want to make set the record clear. We advocates are also very pro market, but just to set the stage as to what's happening here in California. We are at a place now where AT&T is basically doing everything that they can to end their COLR or obligation to the state, despite fierce opposition and resistance from residents, as well as labor, local governments, public safety groups and community organizations.

⁓ Today, ⁓ AT&T, well the state of California has 16 providers that service COLRs. AT&T is by far the largest. It provides 75 % of the state's ⁓ last resort phone service. And over the last several years, AT&T ⁓ at this point has led ⁓ a sort of ⁓ multi-front, ⁓ full-scale fight ⁓ to essentially do away with

its copper legacy network and its universal COLR or service obligations. ⁓ We are really concerned because right now AT&T is essentially trying to get out of their obligation in four key ways. ⁓ One is through legislation at the California legislature, which we have successfully been able to thwart and push back on over the past four years. The other is through an active ⁓ proceeding at the California Public Utilities Commission or CPUC. ⁓

The third is through ⁓ four different individual petitions at the FCC. And the latest and greatest, ⁓ and this is something that AT&T just filed, I believe it was a month ago, ⁓ was a lawsuit against the state of California, specifically against the AG and the CPUC. ⁓ And this lawsuit basically comes, ⁓ the basis for this lawsuit ⁓ comes from the ⁓ Network Modernization Order.

that the FCC issued in March of this year. AT&T is basically saying that that sort of, those guidelines in that order now preempts it entirely from having to ⁓ continue to serve as a COLR or as a carrier of laches in the state. ⁓ And so we now, I think it's as advocates who have sort of been involved in this process over the years.

understand that AT&T is really pursuing their objectives now with brute force, despite whatever damage may be done or resistance or continued resistance they get from Californians. And in my mind, ⁓ you know, there's a lot of different ways in which you could look at this issue. But for me, it really boils down to three, right? The first is basic access, right? ⁓ Yes.

Christopher Mitchell (09:40)
Can we actually can we pause there? Arthur,

if you don't mind. I so I but I want to come back to how to look at it. And but I want to ask Harold for the national context. And Harold, if you don't mind, like what is the the national context? And have we lost? I mean, I mentioned 20 out of 21 AT&T states. I think it's a ⁓ a strong majority of states have done something like this. Other companies are pursuing it. Just briefly, what is the national context on this?

Arturo Juarez (09:45)
Mm-hmm. Mm.

Harold (10:03)
Yeah, I mean, it was what happened.

is, first of all, we need to acknowledge there's a real technological change here. ⁓ And getting rid of copper is actually not a bad thing per se. Copper is increasingly difficult to maintain. There is copper theft. The equipment that helps, that makes voiceover copper ⁓ happen is no longer being manufactured. So it's older equipment.

Starting in 2010, 2011, we established we're going to have a national policy. It's been called the tech transition, the IP transition, whatever, to move all of our phone networks, which are now very complicated because they have so many different parts to it. We've got wireless. We've got different types of providers in there, plugged in, doing a lot of different things. And that's good because we had

this thing opened by law. The phone network is a common carrier. It works reliably. You can't be down for more than four hours without filing reports with the FCC. Think about your Internet service and imagine a law that says your Internet service can't be down for more than four hours without facing, I mean, ha ha ha. So this has been.

the basis of our communications network for 100 years. We've had it evolve a couple of times. It has to evolve again. The trick is that in previous times, we had very engaged states and we had a very engaged FCC all very dedicated to the idea that the mission is to make sure everybody in the country is served. And this was something we used to be proud of. had 97 %

phone penetration in this country, which is more than any other country on Earth, I believe, when we were at our peak. And this was the deal. What happened this time is that because these transitions take a very long time, AT&T and the other phone companies went state to state first, and the O's and T's and said, here's what you should do. You should pass a law.

taking yourself out of the game here because we'll invest if you deregulate in your state. But don't worry. The FCC is watching over all of this. We can't decommission our phone lines without getting permission from the FCC so you guys can just let the FCC do all the work. Then they went to the FCC and said, hey, FCC, all of these regulations are holding us back. And there's so much competition from wireless and from cable.

You know, most people use cell phones these days. Who the hell, you know, keeps their copper line except for old people or, you know. So they hit the FCC to start deregulating. Now, at the end of the Obama years, we actually had a very good set of regulations. had been, we had, you know, like reached a compromise deal with, you know, we, Public Knowledge, CWA, the unions.

Christopher Mitchell (13:26)
CWA is the Communication Workers, the unions that work for the big telephone companies.

Harold (13:30)
know,

folks from California like TURN, The Utility Reform Network, you know, there had been a big public interest in labor coalition on one side and we had the telephone guys on the other side and we had the Obama FCC in the middle and we came to a good set of rules and then Trump came in and

Christopher Mitchell (13:36)
Form network.

Arturo Juarez (13:51)
Hahaha

Harold (13:55)
The Trump-1 administration wiped out 90 % of the rules. And back in March, ⁓ Brendan Carr, Trump-2, wiped out most of the remaining rules, although not quite as bad as it could have been. But basically now,

When a company like AT&T applies to decommission their line and get rid of the copper, it's assumed that they're telling the truth that they can do this. And the burden is now effectively on the people in the community within 15 days of the filing to go to the FCC and persuade the FCC staff that you shouldn't approve this right away.

If nothing happens by the end of 30 days, the ⁓ company gets permission. It's deemed granted. ⁓ So AT&T and now other phone companies have been filing these applications. And time goes by. It's very hard to get people organized when the application is filed. It's very hard for staff to keep up. ⁓ And you really have to show something bad. ⁓

Christopher Mitchell (15:05)
Mm-hmm.

Harold (15:10)
So basically it becomes very easy for ⁓ these companies to get the FCC permission. with the states having taken themselves out of the game for the most part, that's it. Now California and New York, I think, are still very much in the game. But even there, there are problems that AT&T are trying to challenge.

Christopher Mitchell (15:35)
go ahead, Arturo.

Arturo Juarez (15:35)
really quick to that end, I will just say to sum up Harold's point, and we believe strongly in this too, right? We don't believe that the pursuit of voluntary carrier selected network modernization in already profitable areas should come at the expense of California's universal service commitments.

Harold (15:51)
Right

Christopher Mitchell (15:52)
Right. So I

mean, just to be clear, I mean we have we have a hundred year commitment to people being able to make phone calls. And that has led to ⁓ you know, I I think we we saw an estimate that there's a million emergency calls made over California's landlines every year, just the landlines. And and those are heavily in areas where you have unreliable mobile service. I mean, for people who aren't familiar, there's you know, a ton of people in Los Angeles County.

Arturo Juarez (16:07)
Mm-hmm.

Christopher Mitchell (16:18)
But like even in Los Angeles County, you have pockets where there's not good mobile service. To say nothing of my favorite Siskiyou County, way up there in the north where almost nobody lives. ⁓ you've got a real issue. And ⁓ but the I wanna I wanna get back to sort of that was to give you a sense of the national context. And and as we go back into California, I think it's important to note what California does will be important, and what New York does will be important because I think we will see other states.

coming back to recognizing they have to get back in the game in Harold's language. ⁓ and and so these these discussions are really important and hopefully in California we can do it without losing important protections along the way. Arturo, you were you were talking about how we should be looking at this in California.

Arturo Juarez (16:48)
Hmm.

Yeah, think ⁓ from a standpoint of what's at stake, think, so three things. I think the first is basic access, right? ⁓ Basic service, COLR Obligation enables all residents to have access to voice calls, toll free calls. It also ensures that Californians who have disabilities, ⁓ whether they're hearing impaired or visually impaired, ⁓ are able to have a reliable connection. ⁓ And then customer service support.

and protected from unwanted charges, operator services. ⁓ All of these aspects are key pieces of making sure that we maintain basic service and basic access. You mentioned the one million emergency calls that are made in California ⁓ each year. ⁓ California, ⁓ like the rest of the state, is not immune ⁓

disasters like wildfires, ⁓ earthquakes, or public emergencies. When those things happen, a lot of times folks who live in these areas that don't have reliable cell service, that copper network, that copper landline that they maintain is a literal lifeline to the outside world. We saw examples of people last year in the Palisades Fire when cell networks got overwhelmed with traffic.

saying, hey, the only reason why I knew to evacuate or the only reason I knew I had to leave for my home or my neighborhood was because of my copper landline, was because of that connection that I had to the outside world. So that's a real risk here. ⁓

Christopher Mitchell (18:30)
Yeah, in Marin

County several years ago, I think they actually had to cut the power to the cell towers. And the cell towers actually cut out when they ran out of the emergency, ⁓ the battery power, whatever they have as backups there. And so, you know, there's any number of things that could take down the the what might be our first choice being a mobile connection you have in your pocket for many of us. ⁓ but I just think it's really important to note 39 million people, a lot of retired folks living on fixed income. Not everyone has a phone, and even if you're in a city.

Arturo Juarez (18:36)
Mm-hmm.

Mm-hmm.

Christopher Mitchell (18:59)
Like I don't know how often how many basements in my city in Saint Paul can I make a phone call from? ⁓ you know, with my mobile phone. it's ⁓ you know, there's significant issues with like where this technology works. And I just think people get sucked in this mentality of well, it works works for me. Well, yeah, mo in most cases, but until you fall and break your hip and you know, if I can just get outside to make a nine one one call, well, that's not gonna happen.

Arturo Juarez (19:05)
Mm-hmm. Mm-hmm.

Mm-hmm.

Right, right. And I think it's important to note on that point that both the Palisades and Eaton fires, ⁓ which happened ⁓ early last year, ⁓ those fires were located in major metropolitan and urban areas, right, both in LA County. And again, folks experienced unreliable ⁓ self-service in those neighborhoods and in those areas where they were had to evacuate. And so I think it's very, very important ⁓ to just look at it through that lens as well. Now,

Obviously we understand that there are other rural parts of the state and wildfires have taken place there as well where the cellular service is just unreliable, notoriously unreliable. ⁓ And so our concern is, this concern is really, it's not just a rural issue, right? It's really an urban and rural issue as well, especially when we're talking about cases of natural emergency. ⁓

I think the last thing I was just going to say was that the third piece of this in our eyes, it comes down to state rights, quite frankly, right? ⁓ There's a lot of questions at play here. An AT&T's lawsuit against California ⁓ challenges. ⁓ What we see is largely an intrastate issue, right? It has been for a long time. ⁓ The FCC has long said that this is something that states have.

oversight and authority to regulate. ⁓ And now that's being called into question and we really just think that the legal basis for that is not.

Christopher Mitchell (20:56)
Yeah, Harold, I have to think that like this is one of those issues that causes you to to pull your hair out, which you've done. and it where you have the AT&T saying the FCC has absolutely no power to do anything on this issue, but on this issue it can overrule the states at will.

Harold (21:03)
noticeable.

Arturo Juarez (21:10)
Right.

Mm-hmm.

Harold (21:13)
Yeah,

yeah. And just a couple of things to build on what Arturo was saying. First of all, it's important to understand that the reason we had everybody served, the reason we had ⁓ phone that our copper networks worked in a particular way so that they could

operate self-powered during emergencies and they had these reliability standards that wireless don't are all a product of regulation. I mean, it doesn't just happen. People think the world is just, well, that's the way it is. My wireless phone is just different. Like, no, because we never regulated wireless phone in the same way. Some of that is technical, but a lot of that were policy choices. for us, and again, this was one of the things we worked so hard for in the Obama administration that then got

rolled back was we're like, we're going to repeat those policy choices. So yeah, we're going to insist on emergency power in the home as well as in the network center. So if you have a fiber connection there, it can actually blink lights back and get the signal ⁓ out and bring a signal in at least for some reasonable period of time so that you have that connection. Recognize that if you're going to do wireless, it has to meet the same

high standards of connectivity that wireline does and not just shrug your shoulders and say, well, it's wireless, so what are you going to do? But the big thing that Arturo was talking about and we were just talking about is this question of ⁓ the ⁓ preemption, where it's, again, kind of funny. On the one hand, the FCC is supposed to be not having the authority to regulate

except when we wanted to have the authority to regulate primarily in order to preempt state regulation. And, you know, it's a funny world. ⁓ It's not too surprising. I mean, I wish I had the same magic power that I could make the law apply to other people and not apply to me. But, you know, that's not how it's supposed to work. The way it's supposed to work is either you're outside the FCC

and therefore under state jurisdiction. Or you're under both jurisdictions, because there's nothing that says that you can't have the state regulate the local issues for the state. Or it's something that the FCC actually does have preemptive power over. There are some cases where Congress said, yes, we will give the FCC ⁓ authority. That was usually to break up monopolies where they were worried that

Arturo Juarez (23:32)
Mm-hmm.

Mm-hmm.

Harold (23:57)
Companies had gotten so cozy with regulators that they had laws that prevented competitors from moving in. So the FCC has an explicit rule that says, if a state has a law that prevents competition, you can come in and preempt them on that. The problem is when the FCC says, well, any law really preempts competition, so let's go use this to preempt any law that a state has.

Christopher Mitchell (24:27)
Yes, that's no good. so I want to talk about how this should move forward. And I'll just reiterate what Arturo had been mentioned, which is that AT&T is is fighting on four fronts. ⁓ AT&T is working in the California legislature ⁓ and and actually was having some success, but hopefully has been slowed down as people understand the gravity of the situation. but they're in the legislature. They have FCC petitions, there's a federal lawsuit.

And the fourth one is ⁓ is they're actually working within the California Public Utility Commission. That's the one that's appropriate, I think, right? That's where we think these decisions should be made.

Arturo Juarez (25:03)
Yes, and we wholeheartedly agree. This is why it's been a little bit disappointing because we have really tried to engage with AT&T ⁓ on a good faith basis. And at this point, I think it's pretty clear that they don't want to ⁓ engage with us or the CPUC or the state of California really on a good faith basis. can't.

simultaneously be saying that you are interested in finding a path forward for reforming COLR and undoing your obligation ⁓ as ⁓ an ETC while also then trying to sue the state and claim preemption based on ⁓ the FCC's network modernization order. ⁓

And that's been just incredibly disappointing for us as advocates because I think that for us, it's not about how we understand. And this is something that AT&T has made a point of before, COLR rules, I think we would all agree, are outdated. And that's why the proceeding at the CPUC that at this point, I think we're going into our fourth year, we felt appropriate.

venue, the appropriate platform from which to have this discussion, right? AT&T over the past three or four years has tried to ram through legislation at the state level to basically completely obliterate any sort of COLR or service obligations that it had. And we had to push hard. In fact, the state last year, they spent over, I believe, $5 million in lobbying.

just at the state capitol, which at that time was a record for them. And the legislation that they were trying to get through, ⁓ again, would have ⁓ endangered communities. And I think for us as advocates, ⁓ it doesn't make any sense. And this is something that think Harold talked about earlier, right? The FCC and the CPUC in the past has largely been a harbinger for maintaining

universal service access principles, right? And so why, in what world does it make sense to go backwards from that, right? We used to boast, as Harold said, a 97 % sort of coverage across the nation. I'm not sure what that number is in California, but why would we roll back access to communication services to people in California in 2026? That just doesn't make a whole lot of sense.

Christopher Mitchell (27:43)
No, it's it's particularly dangerous given the the way wildfires have increased and whatnot. But ⁓ so I think we agree on that. I suspect the listeners largely agree on that point. And so I think the question then is, is what are you asking for, Arturo? And I think you know, we can get from Harold also in terms of like, what are the best practices? What what should we be doing to manage this transition?

Arturo Juarez (27:44)
Right?

Mm-hmm. Mm-hmm.

Well, I think one of the key things that I did want to just point out because this is something that AT&T ⁓ has continuously ⁓ stated both publicly and in regulatory comments and even in the lawsuit that it filed against California. ⁓ I just want to make clear this issue is not about copper landlines or maintaining plain old telephone service. Although AT&T again likes to repeatedly claim otherwise,

The COLR obligation is an obligation to just provide basic service. And this obligation is technology neutral. We simply want to ensure that the replacement technology is just as good as what's currently available. Right? Again, cell service is not ubiquitously ⁓ reliable across California and certain technologies can't interface with IP based networks. So seeking to discontinue services before adequate replacements are identified.

is going to disconnect and endanger an unknowable amount of people. ⁓ The obligation to COLR is one that's technology neutral. And I'll say this ⁓ very publicly, and I've said this privately in meetings with regulators and state lawmakers. We really do not care. We're technology agnostic, right? We just want to make sure that the service standards are maintained and that there is equivalent reliability. ⁓

And at this point, ⁓ it's just been, again, a little bit disappointing to see that AT&T ⁓ has continued to push this false narrative ⁓ forward ⁓ because it's a sort of consistent fallacy that for some reason has continued to grain traction. And I don't know what the shelf life is for peddling nonsense or falsehoods, but at some point you would think that this would kind of really permeate.

anymore.

Christopher Mitchell (30:03)
Well, I r I remember a conversation I had with Harold probably twelve, thirteen years ago when I was working on a coalition with AARP, and AARP has been really good on this across the country, ⁓ working to make sure that that service is appropriate for people. They're able to access it and they're not taking a step backward. We were meeting with CenturyLink in Minnesota at the time, and CenturyLink kept talking about how, like, our the other people in this industry are not regulated like us, you know, like the cable companies don't have to deal with these regulations.

Arturo Juarez (30:09)
Mm-hmm.

Mm-hmm.

Christopher Mitchell (30:32)
And I was talking to Harold about it. And Harold's like, well, yeah, but we give you money that we don't give to other people to do these things. And I just feel like you you know, sometimes when you hear half the story, it sounds pretty compelling. And you hear the other half. And you're like, okay, well, there's a reason that there may have been special regulations was that there were special benefits that came along with it. And we're not gonna keep giving out the benefits if there's not gonna be ⁓ if we're not getting the same benefits for the folks. So Harold, I don't know where where you want to jump in on that.

Arturo Juarez (30:39)
Right.

Harold (30:59)
Yeah, mean look, Arturo, I agree with just about everything Arturo said. And we used to describe this back at the beginning as the transition must be an upgrade for all, not an upgrade for some and a downgrade for others. ⁓ And there are a lot of points to be made here because this is very hard. People underestimate how really technically hard and how tricky this is.

Arturo Juarez (31:16)
Mm-hmm.

Harold (31:28)
The nonsense that I always hear is that, oh yeah, look, the market has made its choice because 90 % of people are already using cell phones and da, da, da, da, da, and I'm like, everything rides on this very complicated core that's just under the surface. And even in this proceeding on interconnection itself, T-Mobile, biggest wireless company that does not

also come from a landline company said, we still have to interconnect 18 % of our traffic through these copper, what they we call gateways, know, these TDM links, ⁓ because we can't get direct interconnection for our IP service. There's still stuff that has to go through the old network. And if you just yank everything out, then it kind of falls apart. And, you know, the FCC, I think has now

Just kind of, after literally 15 years of us saying this, because this first started with the national broadband plan in 2010, ⁓ a light bulb finally went off inside the FCC now that we are actually down to this point that it's like, yeah, this is hard. mean, there was, when you file at the, when there's an open proceeding at the FCC and you go in for meeting, you have to file something called an ex parte, there is a wonderful little ex parte before.

right before the FCC was going to propose to essentially deregulate pulling out all the copper that are the interconnection points where it was like every single the cable guys, the first responders, the wireless guys, basically everybody you could think of came in and said, no, you can't, you actually have to have rules in place for this. I agree also with one of the points that Arturo made, which is the old rules are outdated.

Arturo Juarez (32:58)
you

Harold (33:25)
And yes, one of the things that we were talking about when we were trying to actually have something that would be more fair would be how do you have a new system where the companies that haven't contributed to the cost of this now contribute to the cost of this so that, yeah, the AT&T and the rest are not left entirely paying for it. But frankly, the real problem for the big companies is not so much cost, but the stock market.

Arturo Juarez (33:52)
you

Harold (33:54)
because you are evaluated for your stock on something called ARPU, which means average revenue per unit. So if you are only in the big urban areas and in the wealthy part of the big urban areas, you have very high ARPUs, so your stock goes up. If you are forced to also serve these neighborhoods where people are poorer, or if you are forced to serve these rural areas that are poorer, your ARPU suffers, even if you're still making money.

So ⁓ there are a lot of reasons for why they actually would like to pull out of these markets. I always say, and I know, Chris, you wanted to say something, but I will just add, people say to me, why don't you trust the market? And I say, I trust the market absolutely. Profit-maximizing firms will try to profit-maximize, and those who have the power to make decisions will maximize their shareholder value. That's what they say.

Arturo Juarez (34:42)
you

Mm-hmm.

Harold (34:53)
The question is, how do you get them to do what the market won't do, but in a sustainable way?

Christopher Mitchell (34:59)
And that's that's the point I just wanted to to really reinforce. I think it's really important. I suspect, Arturo, when you're talking to people in the legislature, there's this sense of like, well, like AT&T doesn't want to leave people behind. AT&T wants to find a solution. And what Harold just said is really important is that AT&T can succeed without connecting everyone. Not everyone actually contributes to AT&T's stock value. And that's what AT&T's executives want.

Arturo Juarez (35:00)
Yes.

Mm-hmm.

Mm-hmm.

Mm-hmm.

Christopher Mitchell (35:26)
⁓ and so it's really important to understand that issue on the average revenue per unit or per user, ⁓ because ⁓ that's how they're making their decisions. And if they walk away from substantial parts of rural California or parts of Oakland or whatever, ⁓ they can actually do better. And and I just feel like policymakers don't understand that always.

Arturo Juarez (35:49)
Yeah, no, I mean, I think you hit the nail on the head there. I think it's clear that AT&T is using all their money and political influence to be free to serve only the most profitable neighborhoods ⁓ in the state of California. are okay with leaving low income and rural communities behind because it doesn't necessarily bolster or serve their bottom line ⁓ as ⁓ handsomely as other parts of the state.

So AT&T wants to limit who they serve and who will bring in the most profit without having to abide by service quality or reliability requirements. And I think, yeah.

Christopher Mitchell (36:26)
That last bit I think is really key. I mean, I just I I

would hit on that and that they may be willing to offer a product, but like they don't wanna actually make the effort to make it as good, right?

Arturo Juarez (36:31)
Mm-hmm.

Mm-hmm.

Harold (36:36)
got to add something, and this is where rules help. Because when we had rules in place, and the rules that were in place until last March, that you had to offer an adequate replacement. So push to the wall. AT&T started to work on this in order to, and they built

Arturo Juarez (36:36)
Yep.

Christopher Mitchell (36:46)
Twenty seventeen.

Arturo Juarez (36:52)
Mm-hmm.

Harold (37:01)
what turned out to be a good product. And now they want to sell it because it turns out you can make money doing this because you can actually make, but they don't want to be required. They want to still have that choice. So, and Chris, you have, you know, the famous story of fiber and, you know, which are the incumbents was it that went bankrupt? ⁓ I'm blanking on what they are now. They're now Lumen, Century Link, think, right?

Arturo Juarez (37:04)
Mm-hmm.

Mm-hmm.

Christopher Mitchell (37:29)
Century link, yep.

Harold (37:31)
kept saying, we're not going to do fiber, we're not going to do fiber. Then they went bankrupt and they discovered, like, hey, fiber turns out to be so much better. People are very bad at making it actually. The people are supposed to be the geniuses about this. Because they think so short term, they don't actually recognize. I always say that the five stages of regulation are r-

Christopher Mitchell (37:38)
Frontier, I think as well. Yeah.

Harold (37:55)
disbelief, anger, false bargaining, real bargaining, and realization that you can actually make a profit.

Christopher Mitchell (38:03)
Yeah, I'm just the I mean i the classic line that always comes back to my mind is the reaction of Hollywood to the beta max ⁓ recording system, which was going to be Jack the Ripper of of the industry. And boy were they wrong. The industry folks, ⁓ you know, they have a narrow set of skills and it doesn't always translate and they're not always good at those skills either. So Arturo, ⁓ please jump back in.

Arturo Juarez (38:25)
Yeah, and I just wanted to say really quick on the last point and on the point that you and Harold were making. This isn't speculation. We know that the company is driven by their corporate interests to shed their...

billion annual costs of maintaining or updating its current network of copper landlines because they have said so as much in investor calls. They've stated this publicly. ⁓ So this isn't speculation on our end. AT&T also ⁓ likes to say that the company ⁓ spends about one billion dollars a year to maintain an outdated or unnecessary legacy copper network. What they don't tell you, though, conveniently, is that

this segment of their business is still profitable. They said as much during their 2025 earnings calls. Has it been a declining source of revenue for them over the past few years? Sure, 100%. But if you're still net positive, right, on what was in the past a largely government subsidized investment, then it isn't necessarily about losses. It's about retiring a part of their business that isn't necessarily as profitable as others. ⁓

And I just want to note just some really quick statistics here, right? Just some highlights of the great year that AT&T had last year. They reported earnings of $125 billion in revenue, over $24 billion in operating income. They paid their shareholders $12 billion in dividends and in share repurchases. And they stated that they expect to provide another $45 billion to shareholders and similar stock dividends and buybacks alone over the next two fiscal years.

Christopher Mitchell (40:00)
Yeah, and that's I mean, that's money that they're basically saying the best use of this money is to go back rather than investing in new technologies, research or other things. I mean, this is this is one of those challenges. I mean, it's a whole other show in terms of some of the problems with how we've designed the economic system in that case. ⁓

Harold (40:18)
I will

Arturo Juarez (40:18)
Mm-hmm.

Harold (40:19)
defend

AT&T a little bit and say that ⁓ part of what's going on here is...

They don't mind doing it if they see a way to bigger profit. But now that they have this product, they're like, OK, great. We're decommissioning wire centers in Oklahoma, where it's nice and big and flat, and therefore the wireless technology works much better. And now we found we can sell tens of thousands of these units, because all of the people who are more comfortable with their home phone or who need ⁓ access devices that are designed to work with their road

Arturo Juarez (40:33)
Mm-hmm.

Yes.

Harold (40:56)
landline phone, you know, and that's great. What they want is to not be required to do it so that when they move from the flatlands of Oklahoma to the mountains of California, ⁓ they can say, well, that was too hard, so we're not going to do it here, even though we did it over here. And that's why, you know, the regulation is so important, because it's like, look, generally, the private sector will take care of about 80%.

And maybe with just subsidies, you'd get another five or 10%. That last 10%, which I remind you in a country as big as the United States, it's 35 million people, know, takes rules so that you're gonna have to get a little less profit in exchange for making sure that 100 % of people are served.

Arturo Juarez (41:49)
Mm-hmm.

Christopher Mitchell (41:51)
So what is the

next likely step, Arturo? I mean, like the I feel like legislation in California should be resolved sometime soon, certainly this year, but likely a lot sooner. There's deadlines and things like that. you know, do you have a sense of of do we is the CPUC moving ahead regardless of the ⁓ the federal lawsuit and things like that? Or are things paused? Like is everything working in parallel? I don't have really have a sense of that.

Arturo Juarez (42:00)
Thanks

you

Yeah, everything is working in parallel simultaneously. So this is why it's been especially difficult for advocates. I will say NextGen Policy is a co-convener of the California Alliance for Digital Equity, also known as CADE. And we formed that coalition as a counterweight to industry because five, five, 2026, what is it? Five, six years ago when COVID happened, we realized that there really wasn't a sort of organized and

and collaborative ⁓ counterweight to industry ⁓ in the building, meaning Sacramento. ⁓ And so we have worked really hard over the past few years to engage ⁓ industry, to engage lawmakers, to engage regulators on these different issues ⁓ that are very complex, right? We recognize that and multifaceted. ⁓ And so right now we are fighting that battle at the CPUC.

We are also ⁓ engaging ⁓ the FCC ⁓ as well and AT&T's petition there to ⁓ do away with its COLR obligation through that avenue. ⁓ the lawsuit that AT&T recently filed ⁓ with the... ⁓

against the state of California, the AG and the CPUC. ⁓ That's something that partners of ours ⁓ are also looking into ways in which to potentially petition for intervener status and engage in that process as well. ⁓ At the legislature, ⁓ right now, ⁓ the bill that was introduced earlier this year, again, to ⁓ absolve AT&T of its COLR obligations is essentially put on hold, has been put on hold.

And I think that is by and large due to ⁓ the sort of ⁓ coordinated and tactical efforts ⁓ of ⁓ the coalition and of our other ⁓ over 100 partners, again, statewide, ⁓ who really advocated hard ⁓ at the Capitol last year to say, we don't necessarily ⁓ believe that ⁓ the current COLR rules, we agree with AT&T that the current COLR rules are outdated, right?

What we don't agree with though is that they can just ⁓ do away with this obligation without there being either ⁓ another provider that can come in to make sure that they are again upholding those universal service principles ⁓ or that they just simply work with us to upgrade their network. Because again, we are technology agnostic. We do not care ⁓ how the service is provided. We just care that universal service.

and reliability requirements and affordability requirements, frankly, ⁓ continue to be met. ⁓ So we've succeeded ⁓ at the state legislature ⁓ in pushing back against AT&T. And right now, we're continuing to just engage on these other fronts ⁓ as well, ⁓ which is difficult, right? Because we don't have neither the resources nor the manpower ⁓ that... ⁓

a company like AT&T ⁓ has. ⁓ But what we do have, right, and we feel ⁓ very strongly in this is, ⁓ and Harold mentioned this a little bit ago, right, ⁓ our conviction in maintaining ⁓ universal ⁓ access for everybody. Why we would go back from that ⁓ makes absolutely no sense to me. It's in the public interest, and there are rules, there are regulations that maybe don't necessarily...

Christopher Mitchell (45:49)
Mm-hmm.

Arturo Juarez (45:56)
directly contribute or allow a company to maximize their returns or maximize their profits. But we have them nonetheless. Why? Because they're in the public interest.

Christopher Mitchell (46:08)
Can I let me throw one thing out there that I think we can deal with pretty quickly, which is I think some people, well, Starlink's out there. Why why why aren't we doing that? And to that I would say Starlink is ⁓ as the reliability is improving. And I can imagine in five or ten years a service like that may very well be sufficient and we may have the confidence in it. I can imagine that scenario. but the pricing is all over the place. And like depending on where you are, you might have to pay six or seven hundred bucks of a surcharge just to get service.

Arturo Juarez (46:29)
Mm-hmm.

Christopher Mitchell (46:38)
The pricing has been usually in like on the hundred and twenty dollars per month range for like a reliable high quality service. but it's constantly changing and on all over the place. And and so that's my quick answer. I'm not sure ⁓ how Arturo and let's go Har Harold first and then back to Arturo.

Harold (46:53)
I

get this question, and usually not as a question, but as a statement all the time. it is one of these things where Starlink is good for what it is. It's not designed to be a phone. Particularly, it's really not designed to reach 911 reliably every time you call.

First of all, there are actually places where it doesn't work. You're in a steep valley. You're someplace that is covered. You're just not going to have the clear view to those constellations. mean, Starlink is great in Low Earth Orbit. It cuts down on the lag that was the killer for the ⁓ traditional satellites. And because there are so many of them, the idea is that you'll always have something in view. But if you live in a particular place, and we can't predict in advance where that's going to be, because

it tends to be kind of like weird associated with the geography, you know, a landline is going to reach you, a cell tower at the top of the mountain might reach you, but of

Arturo Juarez (47:50)
you

Harold (47:57)
Tens of dozens of satellites whizzing overhead just don't see you for long enough for you to have a connection. Plus, you have to pay for the phone service on top of the broadband. Starlink is not a phone service. We have a lot of things in order to be a trusted phone service with these.

10-digit numbers that work internationally through this more than 100-year-old treaty organization called the International Telecommunications Union, where the service works so well that people have forgotten or just take it for granted as if it's a law of nature. I tell people as we're tearing up this and tossing away that, this is like a big pile of Janga sticks. You can pull one out, nothing happens. Pull one out, nothing happens. But you keep pulling.

Arturo Juarez (48:33)
you

Harold (48:46)
eventually the whole thing is gonna come crashing down all at once and you're gonna be like, why did that happen?

Christopher Mitchell (48:53)
I only pulled one out. Arturo, quick your quick file follow up.

Arturo Juarez (48:57)
Yeah, just to quickly on this. So two things. think one, there's a real concern just from a public safety standpoint too, right? When you, through copper landlines, when I call it, if I live in a rural area in California and I call 911, there's a physical address stored in a database. I think it's through the automatic location identification system, something like that, where the dispatcher can immediately see the physical address associated with that phone number. So they know exactly where it is that I am. You don't get that with the...

with satellite or with wireless. And then the other piece of this is that affordability aspect that you mentioned, right? We advocate ⁓ for ubiquitous broadband all the time, right? Broadband equity is one of the key pieces of our sort of policy portfolio. One of the main reasons why we have been unable to bridge that sort of gap in broadband access is because of cost, right?

Quite frankly, we have the highest prices of broadband of any modern nation in the world. And so there are just communities across California where broadband is something that they would like to have, but they just can't afford it. And those low income communities or folks in rural areas who simply couldn't afford these other higher prices, that's something that we're concerned about as well, right? You take away this very reliable alternative and you say, well, you know there's satellite or there's wireless, but if those prices are so exorbitant and unreliable,

then it really doesn't make sense. People are not gonna plug into those services and then you essentially box people out. They don't have access, right? You can say they have access. That doesn't equate to access, I guess, is how I would leave it. Yeah.

Christopher Mitchell (50:38)
Right.

Harold (50:38)
Yeah. The other question

I always get is, well, what about WhatsApp and Zoom and all that? And I'm like, yeah, you know what? Let me explain to you that those are actually their own little private networks. So we're using an app right now, which is managed over the Internet by the company that makes it. there's a

Arturo Juarez (50:51)
Mm-hmm.

Harold (50:58)
Virtual private network that takes care of the quality of service. even then, we could occasionally have problems. But there's actually a single company that is providing all of the work over the Internet to make this happen. And nobody else can call us. So if we want a world where if you're on Verizon, you can't call anybody but people who are on Verizon. And if you're on the

T-Mobile, you can't call anybody except for people who are on T-Mobile. Great, let's do the Internet thing. It'll work exactly like WhatsApp and Zoom, where you can't just say, I'm going to call my friend who's using a different app. I can only talk to the people who are on this network. That's why we created a phone network with mandatory interconnection to go along with all of this last mile to the home stuff, because we needed to make sure that everybody could talk to each other. It's what makes us. ⁓

Christopher Mitchell (51:26)
Mm-hmm.

Arturo Juarez (51:53)
Mm-hmm.

Harold (51:55)
Part of the social contract, what makes us one country, is we can all talk to each other when we have to.

Arturo Juarez (51:59)
you

Christopher Mitchell (52:02)
And then I would just wrap up by saying that people do that. This is incredibly important. It's important for emergency services. It's important because a thing that distinguishes us from other creatures on this planet is that we are super social. And I know the bees are too, but like it is core to our identity that we communicate with each other. And so even if it wasn't just the 911 stuff, it would still be very important. So ⁓ this is crucial. It's important that California gets it right. Arturo, I really appreciate.

Arturo Juarez (52:06)
Mm-hmm.

you

Christopher Mitchell (52:29)
You coming on to share what's happening there and giving people a sense of of what's happening next and what can what can be done.

Arturo Juarez (52:36)
Yeah, no, thank you, Chris. Really appreciate the time.

⁓ Always ⁓ fun talking about this topic and different ways in which we can continue to just advocate ⁓ for the community, right? For folks who ⁓ stand to lose a lot, right? If we don't get this right. ⁓ We want to make sure that people aren't abandoned. And again, I think you and Harold said it best. It's about just maintaining ⁓ that connection, right? That base level sort of foundation of, hey, no matter where it is that you live,

matter what zip code you occupy in the state of California or in this great big country of ours, I can pick up a phone, I can pick up a landline, or I can pick up a phone and at some point I know that I'm going have a reliable connection on the other end and be able to talk to somebody.

Christopher Mitchell (53:26)
Yes. And Harold, it's it's wonderful seeing you again. Thank you for coming on.

Harold (53:30)
It's great for being here and just to illustrate your point because it's right before the Sabbath. I'm going to call my 86 year old father with Parkinson's up in Boston who needs to have his landline with the big keys.

Christopher Mitchell (53:44)
All right. Thank you all.

Arturo Juarez (53:44)
There it is.

Thank you.

Jordan Pittman (53:48)
Thanks for listening to this episode of the Unbuffered Podcast. We have transcripts for this and other episodes available at ILSR.org/podcast. While you're there, check out our other podcasts from ILSR, including Building Local Power, Local Energy Rules, and the Composting for Community Podcasts. Email us at [email protected] with your ideas for the show. Follow us on Bluesky. Our handle is @communitynets.

You can catch the latest research from all of our initiatives by subscribing to our monthly newsletter at ILSR.org While you're there, please take a moment to donate. Your support in any amount helps keep us going. Unbuffered is produced by Christopher Mitchell with editing provided by me, Jordan Pittman. Until next time, thanks for listening.