A "free market ethos" does not apply to advanced telecom infrastructure

Online school forces America to confront the digital divide: What went wrong over the years? How did the birthplace of the internet become a nation where broadband is unavailable to large chunks of the population, keeping students from taking part fully in modern education and their parents from taking advantage of the modern economy? Big investments have been made in the internet in the U.S., but not uniformly or with an eye to expanding connectivity as far as possible. It’s not a task that private industry cares to take on, nor is it one that the public sector can solve on its own—not in a country with such a strident free-market ethos. (Emphasis added)

This is a false dichotomy. Advanced telecommunications infrastructure tends toward natural monopoly and not a robust competitive market. As much as some would like it to be, high cost barriers to entry and first mover advantage don't permit that to be the case.

Looking back a generation shows still unrealized U.S. policy vision

Excerpted from Service Unavailable: America’s Telecommunications Infrastructure Crisis (2015):

U.S policymaking on Internet infrastructure began shortly before the Internet was decommissioned as a government-run network in the mid-1990s. In 1993, the Clinton administration issued a policy framework titled The National Information Infrastructure: Agenda for Action.[i] It called for the construction of an “advanced National Information Infrastructure (NII),” described as “a seamless web of communications networks, computers, databases, and consumer electronics that will put vast amounts of information at users’ fingertips.” Development of the NII, the document stated, “can help unleash an information revolution that will change forever the way people live, work, and interact with each other.” For example:

· People could live almost anywhere they wanted, without foregoing opportunities for useful and fulfilling employment, by “telecommuting” to their offices through an electronic highway;

· The best schools, teachers, and courses would be available to all students, without regard to geography, distance, resources, or disability;

· Services that improve America’s health care system and respond to other important social needs could be available on-line, without waiting in line, when and where you needed them.

Among its nine principles and goals, the policy called for extending the universal service concept to ensure that information resources are available to all at affordable prices. “Because information means empowerment, the government has a duty to ensure that all Americans have access to the resources of the Information Age,” the policy declared.

In addition to this policy document, the Clinton administration sponsored legislation championed by then Vice President Al Gore, who foresaw the coming role Internet-based telecommunications would play in the future. The Telecommunications Infrastructure Act of 1993 created a framework for its integration with the Communications Act of 1934.[ii] The legislation, which was not enacted and died in Congress, included several findings. The first three findings stated that:

(1) it is in the public interest to encourage the further development of the nation’s telecommunications infrastructure as a means of enhancing the quality of life and promoting economic development and international competitiveness;

(2) telecommunications infrastructure development is particularly crucial to the continued economic development of rural areas that may lack an adequate industrial or service base for continued development;

(3) advancements of the nation’s telecommunications infrastructure will increase the public welfare by helping to speed the delivery of new services, such as distance learning, remote medical sensing, and distribution of health information.

[i] The National Information Infrastructure: Agenda for Action, September 15, 1993, https://archive.org/stream/04Kahle000911/04Kahle000911_djvu.txt

[ii] Senate Bill 1086 (103rd Congress, introduced June 9, 1993), https://www.govtrack.us/congress/bills/103/s1086.

A hybrid model of medical care would also be good for telecommunications

Health Care Spending In The US And Taiwan: A Response To <em>It’s The Prices, And A Tribute To Uwe Reinhardt</em> | Health Affairs: Uwe Reinhardt And Taiwan’s Single-Payer Health System

In 1989, as a high-level government adviser to Taiwan when it was planning to implement universal health insurance, Uwe boldly recommended a single-payer system. Taiwan’s government accepted this recommendation in 1990 and implemented its single-payer National Health Insurance (NHI) in 1995.
Uwe based his recommendation on three policy considerations. First, a single-payer system is effective in controlling cost; this was a major policy goal of the government as health spending in Taiwan was growing rapidly. Second, a single-payer system is equitable: coverage is universal and all insured are treated equally regardless of ability to pay or preexisting conditions. Third, a single payer system is administratively simple and easy for the public to understand. The NHI has achieved all three policy goals. Uwe also suggested that Taiwan retain its predominantly private delivery system. He believed that the private sector has an important role to play in a nation’s health care system. As long as financing and payment were within the purview of government, a mixed delivery system of private and public providers could work well within a single-payer framework. Taiwan’s experience has shown this to indeed be the case. (Emphasis added)

As with health care, the Americans pay more and get less value than other nations for telecommunications services. In a parallel with advanced telecom services, many Americans find needed medical care inaccessible or unaffordable. The late health care economist Uwe Reinhardt's prescription for Taiwan was putting the government in charge of the financial side of medical care while allowing the private sector to do what it does best: providing care.

The United States should do the same for another essential and high cost service: telecommunications. Let the telecom providers do what they do best -- planning, building and operating networks -- and relieve them of the burdens of infrastructure finance and ownership. Their weaknesses here have led to widespread infrastructure deficiencies, market failure and poor value service offerings. Hybrid models get around the winner take all, win-lose dynamics and allow providers and consumers to both benefit.

Jonathan Chambers on overcoming U.S. telecom infrastructure deficiencies

Overbuilding, aka Competition, is the American Way – Conexon

The following is a non-comprehensive list of rural broadband overbuilders that have announced over the past two years plans to build rural networks:

1. AT&T. Announced Project AirGig to send data over powerlines.
2. Google. Announced Project Loon to use balloons traveling at the edge of space to bring internet access to rural areas.
3. Facebook. Announced conducted tests to use drones to deliver rural broadband.
4. Microsoft. Announced trials to use TV whitespaces for rural broadband.
5. SpaceX/OneWeb. Announced plans to deploy thousands of low-earth orbiting satellites to deliver internet access to rural areas.
6. New T-Mobile. Announced its intention of 5G for all, extending 5G to rural areas.
7. Rural Electric Cooperatives. Dozens of fiber-to-the-home networks under construction.
   
   Which of these initiatives should the government favor?

Only No. 7. It's the only proven technology with headroom to accommodate bandwidth demand that's doubling every few years. And because federal funding of utility cooperatives has a successful record of constructing needed infrastructure in areas not sufficiently profitable for investor-owned providers.

If your answer is the government should not favor any one company or technology, then perhaps you also agree that the government shouldn’t favor telephone companies with their copper networks.

I would agree with the second part of the question. The existing Connect America Fund is regressive and wasteful in that it allows funding of legacy copper telecommunications networks. It's main purpose is to preserve the service area hegemony of legacy telephone companies, not improve infrastructure.

As a small first step, I propose that anywhere one of the overbuilders has already overbuilt a telephone company’s network without any public funding, the government should cease its funding in that area.

Yes, if overbuilt with fiber to the premise, option No. 7 above.

To make the government policy easy to execute, I propose that where 100% of the households in a census block have access to Gigabit service by a company that is not receiving a subsidy in that area, then the government shouldn’t fund any company in that area. That simple policy change would save the public hundreds of millions of dollars,
money that could be used where it is needed.

Let's dispense with the term "Gigabit service." Keep it simple. Fiber to the premise.

 As a second small step, I propose that all future funding follow individual consumer decisions. The telephone companies can continue to get their legacy support, except where a household chooses another carrier with a minimum of 100 Mbps service. In that case, the overbuilder should receive support that is equal to the funding being provided on a per household basis to the telephone company. Such a program should be limited in time, no more than a decade, in order to encourage overbuilders to move quickly and incumbents to improve their networks.

Again, keep it simple. Fiber to the premise infrastructure. That's the real network improvement. Don't fall into the incumbent created trap of focusing on "broadband speed."

Trump administration proposes federal funding for infrastructure including advanced telecommunications

The Trump administration today issued an outline of its proposed legislative initiative to fund improvements to the nation’s aging infrastructure. While the proposal does not specifically set aside funding for advanced telecommunications infrastructure, the three components below authorize its funding. President Trump talked up the funding for advanced telecommunications infrastructure in remarks today to state and local officials at the White House. Trump said “it’s been very unfair what’s happened with broadband in terms of the Midwest and in terms, really, of rural areas.” At least four officials emphasized the need to fund it including Wisconsin Gov. Scott Walker and Virginia Gov. Ralph Northam. Northam termed it “very, very important” to his state. (Link to remarks here)

A proposed Rural Infrastructure Program would provide $50 billion for capital investment in rural infrastructure projects. Policy objectives would be to:

· Expand access to markets, customers, and employment opportunities with projects that sustain and grow business revenue and personal income for rural Americans;

· Enhance regional connectivity through public and private interregional and interstate rural projects and initiatives that reduce costs for sustaining safe, quality rural communities; and

· Increase rural economic growth and competitiveness by closing local infrastructure gaps in development-ready areas to attract manufacturing and economic growth to rural America.

Eighty percent of the funds would be distributed as state block grants to be used for rural infrastructure needs with 20 percent of the funds reserved for performance grants. A portion of the funds would be set aside for tribal and territorial infrastructure, with the remainder available to states. States would be required to delineate criteria for administering the funding for specific types of projects including telecommunications infrastructure. States would be required to publish a comprehensive plan demonstrating how the projects align with the evaluation criteria in the infrastructure incentives program, including state, local and private sector investment in eligible projects.

A Transformative Projects Program would provide $20 billion in funding for “ground-breaking project ideas that have significantly more risk than standard infrastructure projects, but offer a much larger reward profile.” The primary policy goal is to advance projects that significantly improving performance from the perspective of availability, safety, reliability, frequency, and service speed; substantially reduce end user costs for services; introduce new types of services; and improve services.

To ensure greater accountability and control over this category of projects, funding would be linked to terms and conditions of the award including achieving project milestones. Most of the funding (up to 80 percent) would be set aside for capital construction costs. Half could be used to cover project planning costs and up to 30 percent for proof of concept projects. Projects that utilize capital construction funding would be required to partner with the federal government to share the value of completed projects, based on the characteristics of project and its projected revenues. Technical assistance would be available from the federal government or funded by this program.

Expanded eligibility for Private Activity Bonds to fund public purpose infrastructure projects to include telecommunications infrastructure projects provided they are owned by state or local governments. Privately owned infrastructure may be funded, but must be available for public use and would be subject to state or local governmental regulatory or contractual control or approval.


The administration’s infrastructure proposal comes on the heels of a continuing budget resolution enacted the previous week that had reportedly appropriated $20 billion for infrastructure including telecommunications infrastructure in rural areas. The appropriation was not included in the enacted measure, H.R. 1892.

Since the administration’s infrastructure spending proposal specifically references “rural broadband” to identify eligible projects, a key question is how federal and state entities that would administer the funds define those words. The Rural Infrastructure Program defines “rural” as “areas with populations of less than 50,000.” How those areas are specifically defined takes on significance since in the United States, some exurban and even suburban areas lack advanced landline telecommunications infrastructure serving end user premises, redlined by legacy telephone and cable companies.

Ditto the term “broadband.” Legacy providers have defined the term based on the throughput of the connection serving end user premises rather than by delivery infrastructure. That in turn has led to more than a decade of disagreement among providers, consumers and regulators over what premises are deemed having adequate service to support high quality voice, data and video services. To ensure the best use of taxpayer funds, the federal government should fund only fiber optic infrastructure be connected to customer premises since only it can easily accommodate ever increasing bandwidth demand and isn’t prone to near term obsolescence.

The Kafkaesque consequences of America's piecemeal approach to telecom infrastructure

City of Orr: Not enough fiber? | The Timberjay: The problem at this point really isn’t lack of fiber. There are multiple fiber conduits already in the ground, notes Long, but it’s getting the service out to customers that’s been the hurdle. He notes that Bois Forte tribal offices have exceptional broadband capacity, thanks to the middle-mile fiber project initiated by the Northeast Service Cooperative. But the private partners on that project, who were supposed to utilize that backbone to extend faster connections to residential and commercial customers, have been slow to deliver. “We have more capacity here at the government center than we know what to do with,” said Long. “But no one else can jump on board.”

This is the sad consequence of adopting a piecemeal, segmented view of telecommunications infrastructure: building part of it thinking someone else will come along to construct the rest to connect the end users. Of course, it doesn't always work out that way in America's Keystone Cops method of planning and deploying telecom infrastructure that produces Kafkaesque outcomes such as this suffered by the good folks of Orr, Minnesota.

Both legacy incumbents and consumers are wrong about competition in landline delivered advanced telecom service

Legacy incumbent telephone and cable companies and consumer and public interest advocates describe advanced telecommunications landline infrastructure as a competitive market. The former argue that it’s robustly competitive, affording consumers plenty of choices particularly in dense, urban areas. The latter complain there’s little or no competition in most areas where it’s a market duopoly at best. The choice is between either a legacy telephone company or a cable company. Oftentimes there is no choice at all, with only one of the two -- or neither -- offering service.

They’re both off base. Telecommunications infrastructure like that of other utilities delivering electric power, natural gas, water and sewer service to homes and businesses is a natural monopoly. Its inherent microeconomics don’t allow for a competitive market, one that by definition has many sellers and buyers with relatively equal access to information on price and quality.

Telecommunications service is like other utilities because it provides essential, necessary services for modern life. Thus it will always have many buyers but not a lot of sellers. That’s because the costs of installing and maintaining its delivery infrastructure are so high they deter other providers from entering the space. Would be providers are also deterred because it's inherently difficult to lure away customers from a well established incumbent since consumers don’t frequently go shopping for a new utility provider like they might for furniture, clothing or personal electronics. Hence, for most utilities there is only one provider or as noted earlier, perhaps two for advanced landline telecommunications service.

Both sides nevertheless continue to delude themselves and attempt to convince others they are right. The legacy incumbent phone and cable companies do so because they want to keep policymakers and regulators off their backs. They contend landline delivered advanced telecommunications is a competitive industry and thus requires only “light touch” regulation to protect consumers since market forces will adequately do the job.

Consumers believe the legacy providers have them over a barrel. They redline their neighborhoods and refuse to offer service on a par with that sold to nearby neighbors. Or they offer service, but with poor quality and reliability and exorbitantly priced. As they do with other services, the first inclination of consumers is to call for more competition. If telecommunications were a competitive retail market, they believe, then they could choose among a variety of providers clamoring for their business. The reality of course is far from that and complaints of shoddy customer service are rampant.

Both sides also mischaracterize public sector initiatives to build fiber optic infrastructure as market competition. Public sector entities aren’t out to compete for market share with incumbent legacy telephone and cable companies with the hope of driving them out of business as is the case with true market competition. They build advanced telecom infrastructure to facilitate economic development and achieve community goals.
 
Consumers want a competitive market for advanced telecommunications infrastructure, viewing it as a tonic for better quality service and value. It cannot and never will be a competitive market. The incumbent providers argue it's already a competitive market. It isn’t. It’s time to end the nonsense from both camps and their delusions of market competition in advanced landline telecommunications infrastructure and put ownership of it firmly in the public sector since it cannot function as a truly competitive market.

Misconceptualizing advanced landline telecommunications: not a competitive local market

America’s advanced telecommunications infrastructure gaps are not an inherently local problem. They occur all over the United States – in urban, suburban, exurban and rural areas. It is a nationwide issue requiring a national solution. A major impediment to addressing this issue from a national or regional perspective is telecommunications is typically conceived of as a local service offering rather than infrastructure that links localities to other localities, regions and states and nations – the way long distance telephone service did for decades. The root of this conceptualization has both old and new origins.

The older one is cable TV service. It got its start in the 1950s as definitively local service, serving localities that for reasons of distance and terrain could not reliably receive over the air television signals. Cable providers erected large community antennae to pick up and amplify the signals, delivering them over cables to customer premises. Hence its designation as CATV service -- Community Antenna Television. Local governments saw CATV – later fed with satellite delivered TV programming – as a local service and issued franchises to cable operators. Cable thus became to be thought of as a local service that varied from locality to locality.

The newer conceptualization of telecommunications as a local service comes courtesy of legacy telephone companies that delivered voice phone service over twisted pair copper for many decades starting early in the last century. Around 2000, telephone companies began providing Internet connections via Digital Subscriber Line (DSL) service. This technology is hyper local because of its limited range, able to serve customer premises only within about two and a half miles of phone company central office facilities. Consequently, localities ended up with some neighborhoods able to get DSL service while others too far from the central offices could not. That further reinforced the conception of advanced telecommunications as a highly localized service.

Then around 2005, cable providers began offering Internet protocol-based voice and data services. They realized local governments could require them to upgrade and build out their infrastructures to offer these advanced telecommunications services to all customer premises in a given local jurisdiction. Wanting to avoid the capital expenditures entailed with that, the cable companies championed legislation that took franchising authority away from the locals and transferred it to state public utility commissions. Consequently as with phone company DSL service, some neighborhoods are served while others not in cable companies’ desired service area “footprint” remain unserved.

Viewing advanced telecommunications as a local service offering – priced, advertised and sold in service bundles – naturally leads to an unrealistic expectation that it should be a competitive market like other widely advertised services. If Company X won’t serve my neighborhood, then I should be able to go to Company Y or Company Z. If Provider A doesn’t offer the service bundle at the price I can afford, then I should be able to shop Providers B, C and D for an alternative offer.

Problem is these service offers aren’t available because the other providers aren’t necessarily in the market, their advertising notwithstanding. The fine print in the ads from the legacy telephone and cable providers notes that service “may not be available in all areas.” That’s because in much of their nominal service areas, it costs too much and is too economically risky to support those other options under the dominant business model where the provider owns the infrastructure connecting customer premises that pay using recurring monthly subscriptions. The risk is not enough premises will subscribe or too many that do will close their accounts to justify the investment in high cost infrastructure. Any new providers who might compete with the incumbent providers face that risk and more since they would have to woo away customers from the incumbents as well as get their own.

That business case risk is unlikely to change if advanced landline telecommunications remains largely unregulated on a de facto basis and left to large, investor-owned legacy telephone and cable companies. They’re not promoting their ability to connect more and more customer premises and there is no enforced national regulatory policy that compels them to do so. Lately, their ads promote sports and entertainment content -- for the premises they choose to serve with landline infrastructure -- and mobile devices.

Insanity defined: The continuing call for more competition in telecom infrastructure

FCC doesn't know enough about competition, or lack thereof, says GAO: The Federal Communications Commission needs better information about broadband competition, according to a report by the federal government accountability office. Existing data shows that 51% of U.S. residents only have access to one provider that offers at least a minimum level of broadband service, which the GAO defines using the FCC’s own advanced services standard of 25 Mbps download and 3 Mbps upload speeds.

That the majority of Americans have only a single advanced telecom services landline provider shouldn’t surprise anyone. If the Government Accountability Office conducted a similar study of other utilities – which is how the Federal Communications Commission classifies this service – it would find most Americans have only one water, electric power or natural gas utility serving them.

What makes advanced telecom service any different? Is it reasonable to expect multiple advanced telecom providers to make connections to customer premises when the economics of the dominant investor-owned business model leave many consumers with no options whatsoever let alone multiple choices? For inexplicable reasons, analysts ignore the microeconomics of telecom infrastructure where high cost barriers to entry make market competition – defined as many sellers competing for many buyers-- impossible. 

Americans hold the large investor owned telephone and cable companies that dominate a market that tends toward monopoly or duopoly in low regard. The misguided belief is more competition will up their game and force them to provide better value and customer service. Problem is that solution is only viable in a competitive market. Telecom infrastructure isn’t one and calling for more competition won’t make it so.

The farce of measuring "broadband speeds" and market competition

For Broadband Connections, How Fast is Fast Enough? | WIRED

Who would have thought policymakers would be engaged in a seemingly endless debate over what constitutes "broadband" and the ridiculous, pointless exercise of assessing the level of market competition in a natural monopoly marketplace that is telecom infrastructure?

The explanation: They're being punked. It's a farce and distraction to serve the "fight the future" agenda of legacy telephone and cable companies that cannot keep up with the shift to Internet protocol-based telecommunications and the ever growing demand for more bandwidth. The controversy over "broadband speeds" is becoming a technological version of the argument over how many angels can dance on the head of a pin. Meanwhile, the United States falls further behind in the task of modernizing its legacy metallic telecom infrastructure to fiber optic to the premise.

In 2017 America, there is no collective “we” or “our” when it comes to telecom infrastructure

In 2017 America, being served by landline digital telecommunications infrastructure isn’t about where we live, with nearly all homes served by water, electrical power and other utilities. There is no collective we. It’s all about where you live. Especially when landline infrastructure ends just down the road, over the hill or around the bend. You and more specifically your home are in the wrong spot and that’s too bad for you.

Case in point is a direct mail satellite Internet service provider advertisement offering “AFFORDABLE, HIGH-SPEED INTERNET + DISH that’s “AVAILABLE WHERE YOU LIVE.” That’s because the target market is premises redlined for landline by legacy incumbent telephone and cable companies.

Despite widespread agreement telecommunications is a utility that should be available to all and a network we all share and use, it is far from that in a nation where landline telecom infrastructure availability is spotty, comparable to a Swiss cheese full of holes.

"Middle mile" and America's incomplete, balkanized telecom infrastructure

On broadband internet availability | Kenbridge Victoria Dispatch: Mid-Atlantic Broadband was created with an investment by the Tobacco Commission and a matching investment from the federal government 15 years ago. It was created as a non-profit company to connect the tobacco region to the major internet centers around the world. It has been extremely successful in providing connections for the data centers in Mecklenburg (H-P Enterprises and Microsoft) as well as other companies in the region. Mid-Atlantic was not established to provide services to households, but rather to be a partner with providers who would hopefully provide the “last mile” to your house or business. Regrettably, those last-mile providers have not been as aggressive as we had hoped. (Emphasis added)

That last sentence illustrates the usually unfounded belief that building advanced telecommunications fiber trunk lines will stimulate the deployment of infrastructure to customer premises. Even though the logical purpose of so-called "middle mile" infrastructure is to feed infrastructure serving those very premises.

Sell side market failure typically results when hopes for those connections are based on a vertically integrated, investor owned business model. The return on investment for such entities is too long to make the business case for connecting premises other than so-called "anchors" such as schools, libraries and business parks. It's part and parcel of America's widespread pattern of balkanized, incomplete telecom infrastructure and disparate access.

Until America musters will to fund crash program to build modern, government owned fiber telecommunications infrastructure to every doorstep

Until America musters the national will to fund a crash program to build modern, government owned fiber optic telecommunications infrastructure to every doorstep, it will continue to experience:

• Neighborhood infrastructure redlining and unregulated pricing by legacy incumbent telephone and cable companies exploiting the natural monopoly that is telecom infrastructure; 

• Poor connectivity and customer service;  

• Underfunded, incremental efforts by states and localities to build fiber to the premise telecom infrastructure.

Not just a rural issue: gaps in telecom infrastructure widespread in metro areas

Despite billions of public dollars, some rural residents slog through slow internet | Madison Wisconsin Business News | host.madison.com: Donovan Wright lives in a small subdivision in the town of Pleasant Springs near Stoughton, just 12 miles from the center of Wisconsin’s second-biggest city, but he is among more than an estimated 232,000 state residents who cannot tap a wired network to get online at any speed. It means his children access the web using unreliable and sluggish cellular service to do their homework. He can’t file his tax returns online. And streaming Netflix? Not a chance.

Michael Bridgeman, of the town of Roxbury in northwest Dane County, goes to a local library or the UW-Madison campus, a half-hour’s drive away, to do just about anything more internet-intensive than checking email. His slow connection hampers the occasional consulting work he does. Jane Leverance of the town of Oregon wants to enjoy some of the conveniences other people with internet access have enjoyed for years, including paying bills online. But even with a cellular-powered Wi-Fi hot spot to get online, the connection and speed are unreliable.

When it comes to advanced telecommunications infrastructure, what constitutes "rural" America isn't locales in sparsely populated agricultural industry counties deep in the nation's heartland. In this context, "rural" means where there are gaps in landline infrastructure, leaving premises within a mile or two of existing infrastructure with no or minimal service options or forced to get by on mobile wireless service.

As a map of service availability in the Madison, Wisconsin metro accompanying this article illustrates, those gaps appear in metro areas, forming a crazy quilt pattern of areas with service meeting minimum U.S. Federal Communications Commission standards and those without. The pattern repeats all over the United States, making the issue a national rather than local one.

The adverse socioeconomic impact of deficient telecom infrastructure

Rural America Is the New ‘Inner City’ - WSJ: Just two decades ago, the onset of new technologies, in particular the internet, promised to boost the fortunes of rural areas by allowing more people to work from anywhere and freeing companies to expand and invest outside metropolitan areas. Those gains never materialized.

The primary cause: poor public policy and planning a generation ago neglected to build universal digital telecommunications infrastructure to succeed universal voice telephone service. 

Deficient telecom infrastructure isn’t limited to deep rural areas. It also plagues outer suburban, exurban and quasi-rural areas redlined by legacy incumbent telephone and cable companies. Consequently, the adverse socioeconomic outcomes described in this article could also befall those areas.

The adverse impact of deficient telecommunications infrastructure

Municipal Broadband | POTs and PANs: Local governments are finding that nobody wants to buy homes without broadband if there is a nearby community with broadband. Worse, communities are seeing businesses move away or bypass them when considering new locations. Lack of broadband puts school kids at a definite disadvantage and there are still a lot of households that drive kids daily to public hotspots just to do homework. And lack of broadband takes away all the opportunities for working at home – probably the biggest area of job growth in rural America. I see small communities – even down to really small sizes like townships with 700 residents – trying to find ways to build a broadband network. I’ve read a few hundred RFPs from rural communities over the last few years, and probably not more than 5% want to become an ISP. But they will do so if they can’t find a commercial company willing to do it. Rural communities largely favor of public-private partnerships. More and more of them are willing to kick money into a building a network if an ISP will invest in their community and operate a broadband network. I believe that within a decade we are going to start seeing broadband ‘deserts’ where communities without broadband start withering – just as happened in the past to communities that didn’t get electricity, or that were bypassed by railroads or interstate highways. It’s hard to think that a community today can keep their kids at home without broadband – and this is starting to scare local governments.

I agree with the writer that the impact of not having advanced telecommunications infrastructure in the 21^st century will indeed have negative consequences just as the lack of electrical distribution and transportation infrastructure did in the 20^th. But the analogy isn’t directly comparable what’s happening on the ground. Electrical distribution and transportation infrastructure deficiencies
(and railroads in the 19th) affected large regions of the nation in early in the previous century. The lack of advanced telecommunications service on the other hand is better equated to neighborhood redlining associated with mortgage lenders and insurance companies. It’s far more granular. A household can be served by advanced landline telecommunications infrastructure while another just down the road, over the hill or around the bend is not. This post at Steve Blum's blog as well as any number of “broadband maps” paint a crazy quilt of served and unserved areas that looks like this:

And as unfortunate members of those unserved households will attest, their pleas for service have fallen on deaf ears for more than a decade now or have been met with vague promises of service. Someday. Maybe. But mostly likely not because they don’t fit the business models of investor-owned providers that is incompatible with high cost, long term investment required for infrastructure
projects. 

Senate to Look at Infrastructure Challenges | Broadcasting & Cable

Senate to Look at Infrastructure Challenges | Broadcasting & Cable: The Senate Commerce Committee has scheduled a hearing for Wednesday, March 1, on the telecom and transportation infrastructure challenge. The Donald Trump Administration has pledged a trillion-dollar infrastructure upgrade, which is expected to include broadband infrastructure. In addition, there are legislative efforts to spur infrastructure buildouts, and FCC chairman Ajit Pai has backed making broadband part of that effort as well.

“With a national discussion on federal infrastructure investment underway, it’s worth remembering that many Americans live far away from the highest-ticket projects their tax dollars are asked to fund,” said Sen. John Thune (R-S.D.), chairman of the committee, in announcing the hearing. “This hearing will look at how wise infrastructure investment decisions can ensure that all Americans benefit from improvements to national transportation and digital networks.”

It's great to see Sen. Thune recognizing that digital telecommunications infrastructure is also important 21st century infrastructure. Yes, 20th century transportation infrastructure is also need of investment. But it shouldn't come at the expense of telecom infrastructure that like roads and highways has also been neglected for decades.

Had proper planning and policies been put in place a generation ago as I write in my recent ebook Service Unavailable: America's Telecommunications Infrastructure Crisis, nearly all American homes, schools and businesses would have fiber optic connections by 2010 rather than relying on the failed investor owned corporate business model that has caught the nation up short. That leaves millions of Americans unable to access modern advanced telecommunications services or served by poor value and sluggish metallic connections that can't accommodate the growing bandwidth demand of today and tomorrow's digital economy.

The digital economy requires the capacity to handle the efficient movement of ideas, products and services just as 20th century transportation infrastructure did for people, goods and services. Telecom infrastructure thus should be properly regarded as interstate infrastructure as is transportation infrastructure.

FCC’s O’Reilly defends unacceptable status quo in U.S. telecom infrastructure

As federal policymakers consider addressing America’s telecommunications infrastructure deficit as part of a broad national infrastructure modernization plan, Federal Communications Commissioner Michael O’Reilly has written a blog post clearly intended to lower expectations and preserve an unacceptable status quo. It comes at a time when the United States by 2010 should have had modern, fiber optic-based telecommunications infrastructure deployed serving every home, small businesses and public institution instead of the legacy metallic telephone and cable company infrastructure he wants to preserve. Not to mention the national embarrassment of third world satellite Internet and dialup serving too many American homes where landline telecom connections – metallic or fiber – are nonexistent.

Instead of a robust federal telecommunications infrastructure program, O’Reilly seeks to protect the incumbent telephone and cable companies by preserving their emphasis on “broadband speeds” and the related and increasingly outdated, tail chasing debate over how much speed is sufficient. That fits nicely with the legacy incumbents’ outdated metal cable connections to premises since those lack the capacity of fiber to serve burgeoning bandwidth demand. In his points about geography and population density, O’Reilly also lends support to incumbents’ redlining market practices based on premise density in violation of the FCC’s 2015 Open Internet rulemaking making Internet a universally available common carrier telecommunications utility. That speed-based versus fiber to the premise (FTTP) metric comports with the FCC’s weak subsidy program that funds incumbents’ deployment of obsolete infrastructure on a par with circa 2005 DSL.

In sum, O’Reilly’s position is all about incrementalism and buying more time for these legacy incumbent providers. Public policymakers have already allowed them to buy a quarter century of delay as American has fallen ever further behind in the 21^st century, when modern telecommunications infrastructure is as critical as roads and highway were in the previous century. It’s time for that to end.

Finally, O’Reilly -- like former FCC Chairman Tom Wheeler before him --miscasts telecommunications infrastructure as a competitive market. If it were, there would be lots of service providers to choose from and sufficient capital to finance their ventures. The fact that there are not reflects simple microeconomics. High cost endeavors like infrastructure erect natural barriers to new providers. In telecommunications infrastructure, incumbents also exert a chilling effect with their natural monopolies since new providers are reluctant to take on the risk of overbuilding them – a primary reason for Google Fiber’s recent retrenchment.

Federal government must take lead on U.S. telecom infrastructure modernization

Under Trump, look to cities and metros to power America forward | Brookings Institution: As Republicans begin to exercise relatively unchecked executive and legislative power, it remains to be seen how they will interact with core tenets of our country’s federalist arrangement. The Trump administration and the Republican legislature should recognize that many essential public functions can only realistically be provided by the federal government. Washington must lead in promoting American interests overseas, providing a safety net for the elderly and disadvantaged, protecting civil rights, maintaining environmental and regulatory standards, and funding basic science and research. If the Republican-led federal government relinquishes these responsibilities, our country will undoubtedly suffer.

But on many other matters that determine our country’s future prosperity and shared growth—the vitality of our businesses, the education of our children, the quality of our infrastructure, the vibrancy of our public spaces, and the skills of our workers—Washington is a junior investor and partial decider. Of every public dollar spent on K-12 education and transportation infrastructure, for example, the federal government invests only 12 cents and 25 cents, respectively. These small contributions are also likely to decline further as our nation’s elderly population grows and spending on healthcare and retirement programs rises.

Relying on local governments to fill in the innumerable gaps in modern fiber optic telecommunications infrastructure is folly. State and local government budgets were decimated in the 2008 economic crisis and it's taking years to fully recover. They also have a pressing need to modernize other aging infrastructure such as roads, schools, and sewer and water systems. Not to mention the enormous burden of health care benefits and public employee pension obligations.

Telecommunications infrastructure is fundamentally interstate and international and not municipal. Replacing yesterday's metallic infrastructure designed to support voice telephone and cable television service with fiber optic infrastructure to support today's Internet-based telecommunications requires many billions of dollars of investment state and local governments cannot fund. The federal government -- not state and local government -- must take the lead as the senior investor.

AT&T official rejects comparison between today's telecom infrastructure gaps and electric power disparties of 1930s

Arkansas Cooperatives Apply Rural Electrification Model to Internet Access | Arkansas Business News | ArkansasBusiness.com: Cooperatives around the country, he said, are comparing providing broadband to bringing electricity to rural residents in the 1930s, calling it the next necessity for rural America. For-profit providers disagree with the rural electrification analogy. Ed Drilling, president of AT&T’s Arkansas Division, said internet is different because there was a guarantee in the 1930s that every resident would buy electricity and pay a usage-based price for it, while only 30 percent might buy broadband access and pay a fixed-rate price for it.

There is a clear parallel here to another failed market: individual health insurance. The Patient Protection and Affordable Care Act employs a similar guarantee -- the individual shared responsibility mandate that everyone have some form of health coverage -- in exchange for health plan issuers agreeing to provide coverage to whomever applies for it without medical underwriting. That is intended to remedy market failure on both the sell and buy sides by effectively forcing sellers and buyers together.

The AT&T official stops short of suggesting a requirement that every premise take service in exchange for halting current market practice by AT&T and other investor-owned telecom providers that cherry picks some areas while redlining others within their nominal service territories -- market conduct that's now illegal under the U.S. Federal Communications Commission's 2015 Open Internet rulemaking.

AT&T is correct that the electrical distribution infrastructure deficits of the early 20th century differ from the telecommunications infrastructure gaps of 2016. Back then, electrical distribution infrastructure was largely concentrated in urban areas, leaving entire rural regions unserved and in the dark. A major difference is today's Internet-based telecommunications infrastructure is deployed in rural areas but in a very granular and arbitrary manner that leaves one neighborhood or even part of a road or street unserved or poorly served while an adjacent one has decent access.