California Telecommunications Industry
CPUC Investigation on Market Competition

Background 

In November 2015, the CPUC opened an Investigation to assess the state of the telecommunications market in California. The purpose of the proceeding is for the CPUC to collect data on:   

  1. Competition in the retail and wholesale markets 
  2. Existing reports and studies on price and availability of competing services across  diverse populations and geography 

The CPUC’s investigation will cover the spectrum of telecommunications technologies and markets, including voice, broadband, wireless, and wholesale services.   
 

  

ORA Position

ORA supports the CPUC’s investigation of the state of competition in the telecommunications market.  

Framework to Assess Competition 

On March 15, 2016, ORA served Testimony addressing the framework the CPUC should use to assess competition in the telecommunications market (including VoIP and broadband services) and how to assess if prices are just and reasonable. ORA recommends a “Structure-Conduct-Performance” framework to perform its analysis, which is the industry standard in the field of Industrial Organization Economics used to assess market competition. Key elements to consider in assessing market competition include:   

  • Market share, concentration, and market power in specific geographic areas  
  • The level of consumer choice in a geographic area 
  • Service quality and customer service issues 
  • Pricing of products and services to consumers  
     

See ORA’s: 

August 12, 2016 Opening Brief.

 March 15, 2016 Testimony with its full Report.  

 On June 1, 2016, ORA expects to submit its analysis of the extent of competition in California for both voice and broadband services.     

Competition Analysis  

ORA’s Competition Analysis of consumer choice by geographic market in California found that there is insufficient competition in California, based on its review of:  

  • Voice Services 
  • Broadband Services  
  • Pricing 

ORA's review found:  

  • Mobile Broadband: is not a substitute to Fixed Wireline Broadband, but is a complementary service as declared by the FCC.
     
     
  • Fixed Wireless Broadband: is not a substitute to Fixed Wireline Broadband due to its limited availability, technological and geographical constraints, and substantially higher price. 
       
  • Service Quality: Nationwide customer satisfaction surveys show that poor service quality from voice and Internet service providers is a symptom of lack of competition.
     

    • The largest carriers subject to the CPUC’s service quality metrics (serving the vast majority of traditional wireline voice customers) consistently violated the minimum standard related to repair of service outages.  
        
    • For many voice consumers in California, the time it takes to repair service outages is measured in days, not hours.    
     

ORA recommends policies to address insufficient competition: 

  • Enforce specific performance targets for issues such as service quality, time to repair, customer service, and impose monetary penalties for failure to comply. 

  • Enforce specific service availability targets, and impose monetary penalties for failure to comply. 
      
  • Reintroduce some form of price and earnings regulation such as the FCC is currently exploring with price-cap regulation for Business Data Services. 
      
  • Adopt specific structural remedies, such as separation of wholesale and retail services similar to those adopted by Ofcom in the UK. 
      
  • Pursue public broadband infrastructure initiatives such as the establishment of a public wholesale broadband network. 

 See ORA's June 1, 2016 Testimony on its Competition Analysis:  

 See ORA's July 15, 2016 Rebuttal Testimony regarding:  

Proceeding Docket 

See the Proceeding Docket