California Telecommunications Industry
CPUC Investigation on Market Competition
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:
in the retail and wholesale markets
reports and studies on price and availability of competing services across
diverse populations and geography
CPUC’s investigation will cover the spectrum of telecommunications
technologies and markets, including voice, broadband, wireless, and wholesale
supports the CPUC’s investigation of the state of competition in the
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
share, concentration, and market power in specific geographic areas
level of consumer choice in a geographic area
quality and customer service issues
of products and services to consumers
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.
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
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: