U.S. telecom subsidy policy reliant on one off grants for "broadband" bandwidth without universal service mandate

Baltimore Eyes Federal Funds for Municipal Broadband - Bloomberg:

For decades, the phone carriers and cable companies have collected billions in fees and federal funds aimed at subsidizing service to underserved areas like Johnston Square. And yet, the mission has fallen short of the goals, said Ali.“Will we be seeing the largest incumbents swoop down on state broadband offices and simply gobble up the money?” Ali said. “This is the one big shot. We cannot let history repeat itself. Otherwise we’re going to need another $65 billion in 10 years.

That would be Christopher Ali, associate professor of media studies at the University of Virginia. Ali adroitly points up a major flaw in U.S. telecommunications policy of heavily relying on one off grants to subsidize "broadband" bandwidth instead of a coordinated, unified subsidy program combined with a universal service mandate as with voice telephone service. Updated to specify a fiber to the premises (FTTP) infrastructure standard.

Will a Biden administration back publicly owned advanced telecommunications infrastructure as a means of attaining universal access and affordability?

Should former Vice President Joe Biden be deemed the winner of the presidency and a Biden administration installed early next year, the campaign’s policy positions on advanced telecommunications infrastructure reveal the outlines of how the new administration might proceed.

The overarching policy choice is between continuing the laisse faire policy of the past three decades of regarding Internet protocol-based telecommunications as a commercial market of “broadband” bandwidth. Or recognizing advanced telecommunications infrastructure as essential infrastructure like electric power and roads and highways.

Integral to the latter policy is recognizing the broad socio-economic benefits of advanced telecommunications infrastructure, known in economics as positive externalities. They are described as external because they lie outside the narrow interest of commercial investors to extract profits and rents from selling broadband bandwidth in a natural monopoly landline market. Those external benefits – and the lack thereof considering the nation’s substantial access and affordability challenges -- have become very apparent with the public health restrictions and social distancing accompanying the SARS-CoV-2 contagion that converted homes into offices, classrooms and clinics.

Key to attaining the broader external benefits of advanced telecommunications infrastructure is that it be universally accessible and affordable. As well as public ownership of advanced telecommunications infrastructure that eliminates the inherent conflict between the broader public interest and the narrow interest of investors to build it only where there’s a strong business case. What do the Biden campaign’s positions signal on these issues?

Biden’s campaign calls for “universal broadband access” as part of an initiative to modernize transportation and water infrastructure. Biden also recognizes the socio-economic benefit of universally accessible and affordable advanced telecommunications infrastructure:

“As the COVID-19 crisis has revealed, Americans everywhere need universal, reliable, affordable, and high-speed internet to do their jobs, participate equally in remote school learning and stay connected. This digital divide needs to be closed everywhere, from lower-income urban schools to rural America, to many older Americans as well as those living on tribal lands. Just like rural electrification several generations ago, universal broadband is long overdue and critical to broadly shared economic success.”

However, Biden does not explicitly call for publicly owned advanced telecommunications infrastructure as he has to improve access and affordability for non-group medical plans with a government operated “public option” plan. The Democratic Party campaign platform recommendations that Biden and Sen. Bernie Sanders jointly authored after Biden emerged as the Democratic Party presidential nominee calls for preempting state laws that prohibit municipalities and rural co-ops from building publicly-owned broadband networks and for increased federal support for municipally owned networks.

Should a Biden administration take office in January, it bears watching to what extent it supports publicly owned advanced telecommunications infrastructure as a means of attaining universal access and affordability.

Pandemic an inflection point for U.S. telecom policy

We Need Our Internet Access Networks to Be Something They Are Not: As the Covid-19 medical crisis is contained and Congress does what it can to recharge the economy, an important economic recovery question will be whether our political leaders will push huge stimulus dollars to Big Cable and Big Telecom companies under the premise that we need better networks and they are the logical choice for solving that problem. Giving big checks to the seven companies that control most of our internet infrastructure will mean we are doubling down on a system that should be overhauled. The Boards at the large incumbent ISP’s have their fingers crossed that Covid-19 doesn’t lead to a re-thinking of the current arrangement. To make sure the $500 Billion annual ISP annuity continues, an army of lobbyists is likely tasked with making sure the pandemic is not an inflection point for internet access and infrastructure.

If Congress wants to stimulate the deployment of very reliable, low-cost networks that are designed to favor consumers, it should provide low-interest loans that allow municipalities, electric co-ops, and entrepreneurs to create non-profit, open access, fiber optic networks where the subscribers to the network own the infrastructure. If Congress made inexpensive capital available to build this infrastructure, the entire country would get reliable and robust networks over the next ten years and the next time we’re all forced to live life at a distance, we won’t have to worry if our networks will have the capacity and flexibility to meet the demands we place on them.

The incumbents have a real credibility issue now having built up a track record over the past two decades of taking billions of dollars in federal subsidies yet leaving lots of Americans with substandard advanced telecom infrastructure.

Policymakers have been punked by the incumbents into believing the issue is one of addressing a "broadband" bandwidth gap inherent in their scarcity, unit pricing based business models. When in fact as the author of the Medium post points out, the real issue is insufficient fiber to the premise #FTTP infrastructure. American consumer culture makes it easy for the incumbents to frame bandwidth as a "good, better, best" consumer commodity and price tiered accordingly. As long as policymakers see this as a consumer commodity, they'll continue to fly blind, chasing "broadband speeds" and have a difficult time properly seeing #FTTP as essential infrastructure.

Elizabeth Warren’s telecom policy: First FTTP infrastructure, then level of service standard

A major flaw in current U.S. telecom policy is that takes a completely backwards approach. Instead of first establishing an infrastructure standard – fiber to the premise (FTTP) – it begins with a level of service standard: bandwidth. That set the stage for years of unproductive debate over what constitutes an acceptable level of throughput for Internet service, mostly measured in bandwidth but also latency. At the same time, bandwidth demand doubles about every three years. What was deemed sufficient bandwidth not long ago soon becomes less than adequate. Policymakers end up chasing their tails, caught on the downside of the bandwidth growth curve and skating to where the puck was instead of where it’s going.

Unhappy with slow and congested bandwidth, Americans continually pressure their elected representatives for more bandwidth to support faster throughput, making it one of the top issues for their constituents. Nationwide, the politicians are listening. Hearing their constituent complaints, they proclaim the problem is poor “broadband speeds.” “Better broadband” is the obvious solution. But among them, only Sen. Elizabeth Warren seems to correctly understand the issue. She has put the chips in the correct order in her presidential campaign’s telecom policy. First, it sets forth an infrastructure standard, proposing generous federal grants to electricity and telephone cooperatives, non-profit organizations, tribes, cities, counties, and other state subdivisions to build FTTP reaching every American home. Second, it establishes a level of service standard: symmetrical bandwidth of at least 100 Mbps both directions.

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.

“Net neutrality” fight over nothing less than the future business and regulatory model of advanced telecommunications

The state vs. federal showdown over “net neutrality” is about far more than regulating ISPs’ ability to favor or “speed up” some advanced telecommunications services or slow or even block others. It’s a fight over nothing less than the future business and regulatory models of advanced telecommunications (ATC). Should ATC be bundled with services owned or procured by the ISP or be a common carrier “dumb pipe” in which the role of ISPs is primarily to provide connectivity?

Because Internet protocol enabled digital ATC can deliver far more services than the analog voice telephone service that preceded it, ISPs naturally see a gold mine in monetizing these services. An example is their push for “video everywhere” displayed on home TVs as well as personal devices and acquisitions of video content producers such as AT&T’s recent purchase of Time Warner.

This is the ATC as an information service regulatory approach favored by ISPs and expressed in current public policy wherein the U.S. Federal Communications Commission has reclassified ATC as an information service rather than a common carrier telecommunications utility as the FCC classified it in its 2015 Open Internet rulemaking.

The problem with treating ATC as a proprietary information service instead of a common carrier telecom utility is it will always have limited availability because the infrastructure to deliver it will only be built to serve “high potential” neighborhoods deemed sufficiently profitable by ISPs. The FCC’s now repealed Open Internet rules by contrast included a mandate on ISPs to make ATC available to any customer in their service territories making a reasonable request for service. As information service, that provision contained in Title II of the Communications Act doesn’t apply since information services are regulated under Title I of the statute.

Big ISPs naturally prefer Title I information service regulation because it supports their vertically integrated business models favoring proprietary content delivered to end users over proprietary infrastructure. That supports their top lines. And not having to serve “low potential” neighborhoods reduces capital and maintenance costs, benefitting their bottom lines. It’s a lopsided winner take all scheme in which the ISPs win big and consumers lose.

Asking for meaningful competition in telecom infrastructure is asking for the impossible

These Minnesotans Are Fed Up With Frontier | community broadband networks: Speaker after speaker pointed out that they recognize the root of the problem is lack of competition. In addition to their description of specific issues, almost every attendee expressed a desire to give their business to some other company but they had no other option for Internet access provider — none. Folks in Wyoming feel they’ve been mistreated because Frontier doesn’t have to worry about losing their business. The people in Wyoming are right and Frontier isn’t the only company with the same attitude. Big cable and telecom companies have divided up America’s geography in to slices of monopoly pie, creating an environment in which subscribers can be neglected or even abused. With no other option for Internet access and our dependence on connectivity, subscribers face a tough choice between paying for horrible Internet access or having no connection at all.

It's natural for consumers to want more competition and choice when the market isn't providing the service, value and choice they expect. The problem is asking for more competition in telecom infrastructure is asking for the impossible. There can be no meaningful market competition because telecom infrastructure is very costly to build and maintain. Those high costs typically torpedo the business case for a new player to offer services -- something Google Fiber found out the hard way.

Consequently, the economics of telecom premise landline infrastructure make it feasible for only one or two providers. And as this post points out, providers can gouge and provide poor value service because they can. Consumers have no real alternative. This is the unfortunate consequence of telecom policy that has left advanced telecom infrastructure largely to investor owned providers whose first loyalty is to their shareholders, not their customers. Only public ownership of telecom infrastructure can serve the public interest and provides a needed solution to the failure of market forces in a natural monopoly market. That's not to say there's no role for the private sector. Investor owned companies have the know how and experience to build and operate advanced telecom infrastructure and deliver services over it.

Google, Netflix, YouTube, Facebook responsible for funding advanced telecom infrastructure, telco asserts

As net neutrality repeal nears, WV providers say internet won't change | Business | wvgazettemail.com: Frontier, West Virginia’s largest internet service provider and often the only option in rural areas of the state, sent a letter to the FCC in July applauding the commission’s proposed repeal, saying the regulations are outdated. In the letter, Frontier said it has a core commitment to “treating all Internet traffic the same regardless of content.” “Indeed, the combination of competition in the broadband market and consumer expectations would significantly discipline any company that sought to micromanage a user’s content,” the letter said. “The fundamental Internet freedoms will remain as strong as ever, whether or not they are backed by outdated Title II regulation.”

According to Frontier, internet service providers aren’t the problem when it comes to the issue of net neutrality — it’s major content providers such as Google, Netflix, YouTube and Facebook that need to be looked at. Frontier complained these companies don’t “help fund the upgrades their traffic is requiring,” adding that current FCC rules prevent negotiations relating to that from happening. The company claimed this issue prevents it from investing further in rural broadband access.

Frontier's position mirrors the that of then AT&T CEO Ed Whitacre who proclaimed in 2005 that content providers like Google, Netflix, YouTube and Facebook shouldn't be able to ride over "my pipes" without paying. Naturally AT&T like other legacy telephone and cable companies would prefer a business model based on a two sided market: assessing consumers monthly service charges for voice, video and data services on the delivery side and content providers like the aforementioned for access to their "pipes" as Whitacre put it.

That two-sided market is the fully vertically integrated business model telcos and cable companies desire because of the obvious revenue enhancement possibilities. Since telecom infrastructure is a naturally monopolistic offering, the prospect of telcos and cable companies abusing their monopoly power to exploit those opportunities concerns advocates of retaining the U.S. Federal Communications Commission's 2015 Open Internet rulemaking that regards Internet-delivered telecommunications services as a common carrier utility open to all content providers free of charge. 

California like rest of nation suffers from poor advanced telecom service

The Social Cost of Weak Broadband Competition in California: Over the last 8 years, California has spent more than $200M funding projects and subsidizing service to close the broadband digital divide. While the intent is good, the results are limited given that home broadband subscriptions are unchanged today from 2010. It is clear that California cannot subsidize its way out of the digital divide. Despite the claims of Sosa and the Big 5, California’s uncompetitive fixed broadband service hurts everyone. The answer is to either promote retail competition or regulate the Big 5’s monopolies like we do in the energy sector.

California like the rest of the nation has the worst of all worlds: a naturally monopolistic advanced telecommunications market but no monopoly regulation as is done for electric power and natural gas utilities. The U.S. Federal Communications Commission nominally recognized advanced telecommunications as a natural monopoly utility in 2015, placing it under Title II of the Communications Act that regulated basic telephone service before it with rate regulation and a universal service requirement. "Nominally" because this regulatory scheme was put in place on paper only and not enforced.

The author is correct in noting we cannot extricate ourselves from this unfortunate circumstance with subsidies because they don't fundamentally alter it.

Why Title II regulation is anathema to legacy telephone and cable companies

POTs and PANs | Pretty Advanced New Stuff from CCG Consulting: Until recently I always wondered why the ISPs are fighting so hard against Title II regulation. All of the big companies like Comcast, AT&T and Verizon have told stockholders that their initial concerns about Title II regulation did not materialize. And it’s obvious that Title II hasn’t changed the way they invest in their own companies.

That's because the Federal Communications Commission's Open Internet rulemaking is not being enforced since it took effect in June 2015. No enforcement = no material impact.

But recently I saw an article and wrote a blog about an analyst who thinks that the ISPs are going to drastically increases broadband prices once Title II regulation is gone. Title II is the only tool that the government can use to investigate and possibly act against the ISP for rate increases and for other practices like data caps. If true, and his arguments for this are good ones, then there is a huge motivation for the big ISPs to shed the only existing regulation of broadband.

That's exactly the issue -- and NOT "net neutrality" as the Open Internet rulemaking has been unfortunately dubbed as if the rulemaking only prohibits telecom providers from blocking and throttling content. The main reason the legacy telephone and cable companies dislike Title II regulation is that it is predicated on a natural monopoly market. That requires prices to be regulated because market forces won't act to control them as well as universal service obligations. Both are anathema to these entities because they naturally prefer an unregulated monopoly market that affords them full freedom to cherry pick and redline and charge whatever they choose, placing end users at a distinct advantage to their shareholders.

A concise summary of poor state of American telecom

The FCC Is Leading Us Toward Catastrophe – Backchannel: Adding a little internet-y flavor to basic, physical telecommunications lines makes zero difference to the economics of building these essential connections. Because the upfront costs of building communications lines — very physical things, lots of labor costs involved — are high, because no one needs two lines to their house, and because it was cheaper to upgrade the cable systems to higher speeds than to dig up copper wires and replace them with fiber, we have ended up with a country subject to geographically divided markets, private, unconstrained monopolies, and big holes where internet access is rare and expensive where it exists at all. In urban areas, local cable monopolies generally wield tremendous power and charge as much as they like. Rural places, meanwhile, are often relegated to inadequate connections over copper phone lines.

Susan Crawford provides an concise summary of the poor state of American telecommunications borne out of misguided and excessive reliance on market forces to modernize and build out the nation's telecom infrastructure in a natural monopoly market where market forces don't work.

Kovacs is right: FCC reclassification of Internet as telecommunications service creates uncertainty. And it's about time.

Kovacs: D.C. Circuit's net neutrality ruling poses danger to edge providers - FierceTelecom: The D.C. Circuit's affirmation of the FCC's Open Internet Order creates enormous uncertainty for companies in all parts of the internet, not just for access providers. It invites edge providers to contort their services to attempt to evade classification under Title II. Thus, it threatens innovation and investment throughout the internet ecosystem.

So writes Anna-Maria Kovacs, a financial analyst and consultant affiliated with the Georgetown Center for Business and Public Policy. Kovacs has a valid point. Classifying Internet as a telecommunications service under Title II of the Communications Act is a major shift in regulatory policy. But the real uncertainty was sown by the FCC in 2002 when as then-FCC Commissioner Michael Copps recently noted, the FCC chose to classify Internet service as an information rather than telecommunication service.

How so? At that point in time, the Internet was well along the way toward becoming a de facto telecommunications service and on a global scale. Yet the 2002 FCC turned rolled the calendar of progress back a decade and kept it there for 13 years until the FCC reclassified in 2015. That created a enormous collision between the natural progression of telecommunications and federal regulatory policy.

Of course that's going to foster uncertainty for legacy telephone and cable providers and disrupt their business models based on the 1990s strategy of selling "broadband" as a premium add on to legacy voice telephone and cable service. That strategy can still be seen in 2016 as they and other ISPs continue to market "broadband" rather than telecommunications service with price tiers tied to bandwidth.

Pleas for more competition make case for public option in telecom infrastructure

America’s telecommunications infrastructure crisis is fundamentally a microeconomic problem. Vertically integrated Internet service providers and consumers have difficulty transacting on mutually agreeable terms that consumers regard as offering good value. And about one of five American homes and small businesses can’t purchase landline Internet connections at all because none are offered to them.

Many consumer advocates and commentators frame the economic problem as one of insufficient competition. If there were only more providers offering services, then more consumers would be offered service and at superior value over that sold by legacy telephone and cable companies. After all, that’s how the competitive market works for other consumer services such as home improvement, landscaping, and housecleaning. Offer good service at reasonable value, you’re competitive. If you don’t, you’re not and could end up run out of business by the competition. The same rules should apply to “broadband” since it too is a service, the thinking goes. Consumers want the freedom to ditch their service provider and choose another offering better value.

It doesn’t work that way for telecommunications services including Internet because they are vertically integrated services – typically delivered by the same providers that own the infrastructure to deliver them. Due to the high cost of building and maintaining that infrastructure, there will only be one or two providers. Adding more competitors to build alternate “pipes” to compete with these providers isn’t an option because these high capital and operating costs discourage new entrants. Choice A is the telephone company. Choice B is the cable company. If they both suck on service and value – which they often do -- you’re out of luck.

But there is an alternative – the “public option” as it was termed in the recent policy discussion on health insurance reform: publicly owned infrastructure. That disintermediates ownership of telecommunications delivery infrastructure from the services offered over it like voice, data and video. In doing so, it eliminates the potential for abuse of the monopoly market power of the vertically integrated legacy providers to hold consumers hostage. The potential for abuse is substantial because a home or business must “subscribe” to their connections. Without a subscription to the hookup, none of these services are available. Having ownership of the infrastructure allows them to call all the shots. It doesn’t have to be that way.

There is only one entity in the United States that has the economic capacity to construct publicly owned, modern fiber optic telecom infrastructure that connects all American homes, businesses and institutions: the federal government. I discuss in detail in my recent eBook, Service Unavailable: America’s Telecommunications Infrastructure Crisis.

Modernizing telecom infrastructure too big of a job to be left to cities

101 US Cities Have Pledged to Secure High Speed Internet | Motherboard: The US has a big and rather complicated internet speed problem. Its broadband infrastructure is woefully behind in speed and price compared to a broad swath of other countries, and much of this has to do with its tenacious commitment to maintaining the status quo: that is, giving big telecommunications companies a lot of our money without being able to demand a fair amount in return. But here’s a change: 101 cities are have agreed to band together to bring their residents gigabit-speed internet connections, even if they have to build it themselves.

Municipal governments are justifiably concerned that not having modern fiber to the premise telecommunications infrastructure adversely affects their economies, making them less than desirable destinations for residents and businesses considering locating there. The problem is constructing and maintaining it isn't in the budgets of local governments still reeling in the aftermath of the 2008 economic crisis. Other infrastructure such as streets, public buildings and water and sewer systems are at the end of their useful lives, competing for any dollars that could be directed toward building telecommunications infrastructure. Local governments nationwide are also strapped with enormous public pension obligations.

Aside from these financial challenges, legacy incumbent telephone and cable companies regard their service areas as sovereign territories, deploying armies of lawyers and lobbyists to defend them from local governments hoping to build fiber to the premise infrastructure to remedy service deficits and access disparities. Thus far, no munis appear inclined to assert their jurisdictional authority by exercising inverse condemnation powers and/or creating Internet telecommunications franchises. Even if they did, it would likely result in costly litigation that would delay construction for years if not decades at a time when telecom infrastructure modernization is already a generation late.

These circumstances do not bode well for municipal telecom infrastructure efforts. Given the billions needed to upgrade the nation's legacy telecom infrastructure in order to bring fiber connections to every American home, school and business, a national telecommunications infrastructure modernization initiative is clearly needed. Telecom infrastructure doesn't serve only cities. It connects cities to their states, states to other states and the nation to the world. It supports interstate commerce and is fundamentally interstate in nature, not just urban or rural as it is often mischaracterized. Building interstate infrastructure is a national undertaking that can't be left to local governments to accomplish.

America’s winter of telecom discontent calls for strong, unified federal intervention to bring the spring

The United States faces a long, dark winter of telecommunications discontent if it continues to rely upon the tender monopolistic mercies of the legacy telephone and cable companies. If the light of spring is to come and comprehensive construction undertaken to address the nation’s accumulated telecom infrastructure deficits and build fiber optic connections serving all American homes, schools and businesses, the federal government must take a predominant role relative to its funding and construction. So argues Susan Crawford, who urges a dual pronged strategy utilizing federally subsidized bonds paired with a program to fund and oversee regional infrastructure builds.

Crawford and I are on the same general page here. In my recent eBook, Service Unavailable: America’s Telecommunications Infrastructure Crisis, I call for a federal telecommunications infrastructure initiative to fund universal fiber optic infrastructure as a fully federally funded public works project, not unlike the federal highway construction initiative of the 1950s. Crawford proposes something similar, but also harnessing private investment capital via a regionally administered federal telecom infrastructure development and finance agency, funded by federally subsidized bond proceeds.

Crawford and I agree fiber is the only option for ensuring the nation has the telecom infrastructure it needs now and for the future. We can’t get there trying to subsidize yesterday’s “broadband” speeds or hoping that somehow the laws of physics can be overcome and wireless and satellite will magically offer a cheap workaround. We also agree a unified, federal strategy is needed that also takes a regional approach. 

“[T]o avoid waste and inefficiency, we need to get it right from the beginning — and not just hope we’ll get there with our current patchwork quilt of federal, state, and local government agencies and private utility planners, each with different goals and motivated by different incentives,” Crawford writes. She couldn’t be more correct on that point.

At start of new year, U.S. faces worst of all worlds on federal telecom modernization policy

As 2016 dawns, the United States faces the worst of all worlds when it comes to federal policy on telecommunications infrastructure modernization to ensure all American homes and small businesses have access to landline Internet connections.

In early 2015, the nation adopted policy classifying Internet service as a common carrier telecommunications service. Under the Federal Communications Commission’s Open Internet Order, Internet service is subject to the Communication Act’s universal service requirement, mandating service be provided upon request and barring neighborhood redlining by Internet service providers. Nevertheless, a year later, millions of U.S. premises that attempt to order service will -- as they have for more than a decade -- continue be turned away by ISPs because the FCC is not enforcing these provisions.

Absent regulatory action ensuring compliance with these requirements and frustrated by technologically outmoded, spotty and overpriced Internet telecommunications service, state and local governments are naturally concerned over the adverse economic impacts. Consequently, they’re looking to build their own modern infrastructure. But given the billions of dollars needed to build it, they’ll need substantial financial backing from the federal government. Since none exists or appears to be forthcoming, pressure for strong policy action at the federal level will grow this year.

Comcast's and AT&T's "unfair competition" complaints unfounded

Marion County cities call for broadband extension | Times Free Press: Telecommunications providers such as Comcast and AT&T have lined up solidly against allowing municipal providers to expand. They say it's unfair for government-owned services to compete against private industry.

Comcast and AT&T would have a valid complaint if telecommunications infrastructure was a competitive market. Their problem is it's not. It functions as a natural monopoly due to high cost barriers to entry that keep private competitors out. Natural monopolies lend themselves to direct government provision of services (such as as highways) or government granted franchises such as the old Bell Telephone system and local cable franchises. If AT&T and Comcast want to compete, they should get into the grocery, airline or automobile industries.

Reps. Huffman, Thompson, and Nolan Introduce the Rural Broadband Infrastructure Investment Act | Congressman Jared Huffman

Reps. Huffman, Thompson, and Nolan Introduce the Rural Broadband Infrastructure Investment Act | Congressman Jared Huffman: Washington, DC – Congressmen Jared Huffman (D-CA), Mike Thompson (D-CA), and Rick Nolan (D-MN) today introduced the Rural Broadband Infrastructure Investment Act, which would unlock new opportunities for broadband deployment on California’s North Coast and in rural communities across America. The bill would make North Coast communities eligible for $670 million in federal broadband financing; promote regional broadband solutions by allowing the Rural Utility Service (RUS) to offer broadband grants in addition to loans and loan guarantees; and increase overall RUS broadband investment to $50 million annually from $25 million. The legislation builds on the successful legacy of the Rural Electrification Act, which brought power and telephone service to rural communities across America during the New Deal.

This is a well intended but grossly underfunded bill. Too little, too late. As Fletcher Kittredge, chief executive officer of Great Works Internet and a member of the Maine Broadband Coalition put it earlier this year, "[t]his is not a million-dollar problem. It is far larger.”

Allocating millions isn't going to build telecom infrastructure the runs in the billions to build. Constructing fiber to serve every premise in the City of Santa Cruz, California, for example, would cost an estimated $30 million -- a major chunk of the $50 million the federal bill would appropriate to the RUS for the entire United States. (h/t to Steve Blum's Blog).

Lifeline Internet access first requires universal service -- and FCC not enforcing

L.A. County backs plan to ensure Internet access for seniors and the poor - LA Times: Undergirding the county leaders' support for expanding the lifeline programs is the increasing prevalence of digital technology in the economy and social programs.

"Technology is a key component of our economy, and it is unconscionable that so many county residents lack access to broadband," said Supervisor Hilda Solis, who co-wrote the motion passed Tuesday by the board. "These individuals are being marginalized and ignored."

The policy expressed here is Internet service is now as vital as telephone service was before it. Hence per the position adopted by the county, it too requires a "lifeline" rate subsidy for lower income households to ensure universal access. However, before there can be universal access, there must be universal service.

Early this year, the U.S. Federal Communications Commission adopted its Open Internet rulemaking classifying Internet service as a common carrier telecommunications utility service like telephone service. That legal classification under the Communications Act includes a universal service obligation on providers to offer Internet service to any household requesting it. But thus far, the FCC has shown no inclination to enforce the rule, which became effective in June.

Massachusetts town case in point why federal government (and not state and local government) should finance telecommunications infrastructure

Montgomery voters reject high speed internet | WWLP.com: Monday night, more than 200 residents voted on whether to connect every Montgomery home to the World Wide Web as part of the “wired west movement.” Wired west is an initiative to connect all under-served Massachusetts communities to a high speed fiber. The state covers 35% of
the cost, with the town having to cover the rest.

*  *  *

Only 140 people came out to vote on this issue last June, and it was rejected. A group of residents petitioned to hold another vote.

“It’s been difficult, for example I work at home, I’ve had problems with the speed of the internet. It’s actually affected my ability to run my business out of my home so that’s been a frustration,” said Sonia Ellis, a Montgomery resident.

128 people were for high speed internet while 103 were against it, but It required a two thirds majority. The project would have required the town to pay more than $600-thousand.

This is a case in point showing that relying on state and local government to finance the construction of universal fiber to the premise telecommunications infrastructure isn't good public policy. Many billions of dollars are needed to ensure every American home and small business has an FTTP connection that they should have had by 2010 but for the absence of sound policy and planning. As I argue in my recent eBook Service Unavailable: America's Telecommunications Infrastructure Crisis, it's a job that requires the federal government to fund like building roads and highways in the pre-Internet era.