1

Broadband in California and theDigital Infrastructure Video Competition

Act of 2006

Michael MorrisProgram Supervisor

Video Franchising and Broadband DeploymentFebruary 16, 2010

2

State Issued Video Franchises

The CPUC has issued a total of 102 Video Franchises to 23 companies.

The transition from locally issued video franchises to state issued franchises is well under way.Nearly 2/3 of all video customers in the state are

now served by state video franchise holders

3

Video Subscribers At year-end 2008, 7.1 million Households subscribed to video from state-

issued video franchise holders and their locally-franchised affiliates

This is an increase of 13% over the previous year

Video Subscribers by State and Local Franchise in 2007 and 2008

4,638,359

3,304,029

2,439,086

2,987,364

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2007 2008

Ho

use

ho

lds

State Franchise Local Franchise

Source: State Franchise Holders' Annual DIVCA Data as of December 31, 2007 and 2008

4

Video Competition

Under DIVCA, video competition has increased quickly AT&T and Verizon more than tripled the number of HHs to which they

offer video between 2007 and 2008

Video Deployment by AT&T and Verizon

0

1,000,000

2,000,000

3,000,000

2007 2008

Ho

use

ho

lds

Off

ered

Vid

eo

DIVCA’s Requirementsfor Companies with over 1,000,000

Telephone CustomersVerizon satisfied its second-year requirement to

offer video to 25% of the households in its telephone service area

AT&T’s third-year test requires it to offer video to 35% of its telephone households by April 1, 2010

AT&T and Verizon provide service at no cost to one community center for every 10,000 customers

Fifth-year build out requirement Verizon – 40% AT&T – 50%

5

More Upcoming Deadlinesfor AT&T and Verizon

Within three years of commencing service, 25% of homes offered video service must be low income households

Within five years of commencing service and thereafter, at least 30% of homes offered video service must be low income households

6

7

Broadband Availability and Subscribership

Under DIVCA, the CPUC gathers data on broadband availability and subscribership

The approaches to data sources has evolved Voluntary data from broadband industry to the

Governor’s Broadband Task Force (availability) CPUC has updated that data with information from

CASF and CETFDIVCA data by Census Tract (availability and

subscription)FCC data by Census Tract (subscription)

8

Broadband DataNTIA State Data & Development Program

The Recovery Act (ARRA) allocated $350 million for broadband mapping

CPUC designated by the governor as the entity eligible for a Mapping Grant in California

CPUC received $2.3 million dollar grant

9

Broadband DataNTIA State Data & Development Program

Collecting broadband availability data from all broadband providers in the stateData at census block level for small blocks and

“street segment” level for large blocksMuch more granular than census tracts

10,000 blocks in each tract

Creating a web-based broadband availability map, searchable by address

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All Broadband Connections in CA

All Wireline Broadband Connections in California (in millions) Source: FCC Form 477 Data

3.8

5.4

6.6

7.9

8.76 8.75

0

1

2

3

4

5

6

7

8

9

10

2003 2004 2005 2006 2007 2008

Mill

ion

s o

f B

B C

on

nec

tio

ns

(68% of CA HH)

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Broadband Penetration Growth (DIVCA Franchisees)

Residential Wireline Broadband Penetration Increased by 12.7% during 2008 in California (DIVCA Data)

2007Penetratio

n

2008Penetration

[1]

2007 - 2008

Growth Rate

ResidentialWireline

Broadband

55% 62%

(7,910,166 subs)

12.7%

Mobile Broadband Wireless

Service Plans[2]

6% 14% 133%

[1] Penetration = Number of Subscribers / 12,733,414 households[2] In some cases, wireless broadband is purchased by many of the same households that also purchase wireline broadband. However, the DIVCA data do not allow this to be quantified.

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Technologies Used to Deliver Broadbandby DIVCA Video Franchise Holders

Residential Broadband Subscribers by Technology 2008

Other Wireline0, 0%

Symmetric DSL 362,854

5%

Terrestrial Fixed Wireless

8790%

Cable Modem3,776,455

47%

Optical Carrier (fiber to the end user)

299,4574%

Asymmetric DSL3,470,521

44%

Source: State Franchise Holders' Annual DIVCA Data as of 12/31/2008Data does not include Terrestrial Mobile Wireless Technology

13

Technologies Used to Deliver Broadbandby State Video Franchise Holders

DSL 49% Cable Modems 47% Fiber to the Home 4%

Residential Broadband Subscribers by Technology 2008

Other Wireline0, 0%

Symmetric DSL 362,854

5%

Terrestrial Fixed Wireless

8790%

Cable Modem3,776,455

47%

Optical Carrier (fiber to the end user)

299,4574%

Asymmetric DSL3,470,521

44%

Source: State Franchise Holders' Annual DIVCA Data as of 12/31/2008Data does not include Terrestrial Mobile Wireless Technology

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Residential Broadband Download Speed

Residential Broadband Subscribers by Download Speed 2008

10 to < 25 Mbps442,091

6%

25 to < 100 Mbps2550%

200 to < 768 Kbps385,011

5%

>= 100 Mpbs0

0%

768 Kbps to < 1.5 Mbps1,635,905

21%

1.5 to < 3 Mbps1,285,488

16%

3 to < 6 Mbps2,296,307

28%

6 to < 10 Mbps1,865,109

24%Source: State Franchise Holders' Annual DIVCA data as of 12/31/2008Data does not include Terrestrial Mobile Wireless Technology

15

Residential Broadband Download Speed

58% of residential broadband connections (provided by DIVCA franchise holders) are more than 3 Mbps

30% of residential broadband connections (provided by DIVCA franchise holders) are more than 6 Mbps

Residential Broadband Subscribers by Download Speed 2008

10 to < 25 Mbps442,091

6%

25 to < 100 Mbps2550%

200 to < 768 Kbps385,011

5%

>= 100 Mpbs0

0%

768 Kbps to < 1.5 Mbps1,635,905

21%

1.5 to < 3 Mbps1,285,488

16%

3 to < 6 Mbps2,296,307

28%

6 to < 10 Mbps1,865,109

24%Source: State Franchise Holders' Annual DIVCA data as of 12/31/2008Data does not include Terrestrial Mobile Wireless Technology

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Video Franchise Employment DataPercent Change by Category

2007 Total

2008 Total

Total # Change

2007- 2008

Total Percent Change Category 

39 32 (7) -17.9% Exec / Senior

5,656 3,943 (1,713) -30.3% Officials / Managers

1,803 2,437 634 35.2% Professionals

7,498 6,412 (1,086) -14.5% Subtotal Managers & Professionals

6,290 5,655 (635) -10.1% Technicians

9,647 8,634 (1,013) -10.5% Sales / Associates

16,967 16,077 (890) -5.2% Office / Clerical / Associates

14,276 13,899 (377) -2.6% Skilled Crafts

1,015 990 (25) -2.5% Operations /Laborers / Service

63,191 58,079 (5,112) -8.1% Total

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Video Franchise Employment DataPercent Change by Company

  2007 2008 Change

AT&T 29,509 25,881 -12%

Charter 1,398 1,341 -4%

Comcast 7,167 7,290 2%

Cox 3,243 3,321 2%

Time Warner 7,321 7,900 8%

Verizon 8,110 7,070 -13%