The 3 big U.S. Internet infrastructure policy choices

The United States now has three major policy options on the build out of Internet infrastructure to serve all American homes, businesses and institutions:

1. Continuation of the status quo of investor-owned Internet infrastructure and associated private market failure that will leave significant numbers of premises lacking affordable Internet access over the long term and potentially permanently.
   
2. A well funded federal aid program including technical assistance grants for community fiber to the premise network construction projects, funded by existing programs such as the U.S. Department of Agriculture's Rural Utilities Service, a program jointly administered by multiple agencies or by a newly created, dedicated agency.  In addition, federal preemption of state laws barring local governments from constructing, owning or operating Internet infrastructure.
   
3. De-privatization of all Internet infrastructure (either immediately or over a period of years) combined with a fast track federal construction project to build out fiber to serve all U.S. premises, similar to the 1950s interstate highway project.

Please add your comments.  Which do you favor and why?

FTTN: An alternative Google fiber model to build out Internet infrastructure

Google has been getting a lot of attention lately over its current and planned fiber to the premise (FTTP) builds in Kansas City, Austin, Texas and potentially Provo, Utah. But Google is unlikely to expand that model to the outer suburban, exurban and rural areas of the United States anytime soon for the same reason the incumbent telephone and cable companies have declined to do so: too few potential subscribers to justify the business case for the sizeable investment.
 

However, Google may be able to make the numbers pencil better with a fiber to the node (FTTN) network in these unserved and underserved areas, mixing in aerial fiber cable plant where the cost of burying fiber conduit is overly expensive. Using the FTTN model described in this November 2008 white paper, Google would bring Internet “trunk” connections to neighborhood nodes.  Property owners could join together in a telecom cooperative – compared to a condominium in the paper -- to build the final fiber segment to bridge the gap from their premises to the neighborhood nodes.  The cost of the construction for those projects in rural areas can be financed by low cost, long term loan funding offered by the federal Rural Utilities Service.

The paper notes the property owners would economically benefit given research showing adding a fiber “tail” to a residential property increases its marketability, thereby allowing property owners to recoup and potentially profit from any upfront investment they would have to make to fund the cooperative and get wired up.

It’s worth noting that although disclaiming official representation of Google, the white paper titled Homes with Tails: What if you could own your Internet connection? is co-authored by Derek Slater, a Google policy analyst. Back when Slater wrote the paper, Google wasn’t in the fiber infrastructure business. Now that it is, Google management would be well advised to dust off Slater’s paper and give it another look.

FCC's gigabit goal will require significant public investment

FCC pushes for gigabit broadband in all 50 states by 2015 | Politics and Law - CNET News: The FCC hopes the Gigabit City Challenge will further these types of efforts. The FCC hasn't committed any funds to the "Gigabit Challenge," but the agency said it will help communities create an online clearinghouse of best practices to help educate local officials and local service providers on the most cost-effective ways to increase broadband deployments.

This will require the U.S. Department of Agriculture's Rural Utilities Service be sufficiently funded with grant and loan money to help communities meet the FCC's challenge with publicly and cooperatively owned fiber to the premises infrastructure.  Sharing best practices alone won't do the job considering the billions that will be needed to upgrade and replace America's obsolete copper cable infrastructure now being kept on life support with trash bags and baling wire.  In 2009, the FCC estimated it would take $350 billion to construct this needed infrastructure.

Suggested amendments to proposed Community Connect Broadband Grant program rules

Too many American communities lack adequate Internet telecommunications infrastructure, a situation President Barack Obama deplored in his 2012 State of the Union speech.  Lots of these communities would like to build their own fiber to the premises networks that can connect every home and business and provide fast, future proof service while keeping local dollars in the community.

A major stumbling block facing these communities is financing the cost of retaining engineers and consultants to do the necessary initial design and business planning work before any fiber infrastructure can be deployed.  The U.S. Department of Agriculture's Rural Utilities Service (RUS) is in a position to help with its Community Connect Broadband Grant program by creating provisions for technical assistance grants to defray these costs.

RUS is currently soliciting comment on proposed rules governing the Community Connect Broadband Grant program.  As written, the proposed rules contain no provisions for technical assistance funding.   The proposed rules also fail to take into account the often spotty, hit or miss availability of wireline connectivity that exists in many of these poorly served areas. Communities have the opportunity to file comment in the rulemaking by January 15 and request these deficiencies be remedied.

Below is sample comment language communities can file with the RUS suggesting amendments to the proposed rules to allow for technical assistance grants.  This funding will help enable communities to move forward with these sorely needed projects to ensure their citizens and business owners have the 21st Century telecommunications infrastructure they need now and in the future.  Comments can be filed electronically by the January 15 deadline by clicking on the "Comment Now" button in the upper right hand part of the rulemaking proceeding page linked above.
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Sec.  1739.11  Eligible Community Connect Competitive Grant Project.

    To be eligible for a Community Connect competitive grant, the 

Project must:

        (a) Serve a PFSA in which Broadband Service does not currently 

exist. served by a telephone central switching office or similar facility where at least one premise is not 

offered wireline, facilities-based broadband service;

    (b) Offer service at the Broadband Grant Speed to all residential 

and business customers within the PFSA;

    (c) Offer free service at the Broadband Grant Speed to all Critical 

Community Facilities located within the PFSA for at least 2 years 

starting from the time service becomes available to each Critical 

Community Facility; and

    (d) Provide a Community Center with at least two (2) Computer 

Access Points and wireless access at the Broadband Grant Speed, free of 

all charges to all users for at least 2 years.

Comment: This amendment is necessary because broadband service is highly granular even in rural areas where availability of facilities-based, wireline service is spotty and can vary within communities and from premise to premise. 

Sec.  1739.12  Eligible grant purposes.

    Grant funds may be used to finance the following:

    (a) The construction, acquisition, or leasing of facilities, 

including spectrum, land or buildings, used to deploy service at the 

Broadband Grant Speed to all residential and business customers located 

within the Proposed Funded Service Area and all participating Critical 

Community Facilities, including funding for up to ten Computer Access 

Points to be used in the Community Center. Leasing costs will only be 

covered through the advance of funds period included in the award 

documents;

    (b) The improvement, expansion, construction, or acquisition of a 

Community Center and provision of Computer Access Points. Grant funds 

for the Community Center will be limited to ten percent of the 

requested grant amount;

    (c) The cost of providing the necessary bandwidth for service free 

of charge to the Critical Community Facilities for 2 years.

 (d) As technical assistance for the retention of consultants and experts for economic research and engineering and business planning and community outreach.

(e) Applications for technical assistance pursuant to Subsection (d) shall not be subject to Section 1739.17.

Comment: This amendment is necessary in order to assist communities cover initial diligence costs and to aid in the preparation of applications for Rural Utilities Service broadband loan and grant programs.  Proper diligence in the early stage of a project will help ensure the financial viability of planned projects and repayment of loan proceeds.

Sec.  1739.14  Matching contributions.

    (a) At the time of closing of the award, the awardee must 

contribute or demonstrate available cash reserves in an account(s) of 

the awardee equal to at least 15% of the grant. Matching contributions 

must be used solely for the Project and shall not include any financial 

assistance from federal sources unless there is a federal statutory 

exception specifically authorizing the federal financial assistance to 

be considered as such. An applicant must provide evidence of its 

ability to comply with this requirement in its application.

    (b) At the end of every calendar quarter, the award must submit a 

schedule to RUS that identifies how the match contribution was used to 

support the project until the total contribution is expended.

(c) No match shall be required for technical assistance funding pursuant to Section 1739.12(d)

Comment: This amendment is necessary because raising matching funding for diligence and planning purposes is considerably more difficult than for construction costs of deploying a project that has undergone diligence demonstrating its likely technical and financial feasibility.  It will help increase the likelihood of more community-based projects being undertaken and expanding the availability of broadband services.

Sec.  1739.15  Completed application.

Add new subsection (m) as follows:    

(m) Applications for technical assistance funding pursuant to Section 1739.12(d) shall include only 

those items delineated at subsections (a) and (b)(1) through (3).

California PUC conditionally funds start up cooperative's middle mile project

The California Public Utilities Commission has demonstrated its support of start up telecom cooperatives -- entities this blogger believes play a crucial role in the rapid expansion of advanced telecommunications infrastructure in areas that are not sufficiently profitable for incumbent providers.

In a resolution adopted earlier this week, the CPUC agreed to fund 19 percent of the California Broadband Cooperative's planned open access wholesale middle fiber project along 448 miles of Highway 395 in the Golden State's Eastern Sierra area including the counties of Mono, Inyo, Eastern Kern and San Bernardino. Coop membership is open to local governments, institutions and Internet Service Providers.

The 19 percent funding level is beyond the 10 percent level the CPUC established in July in an effort to utilize its $100 million California Advanced Services Fund (CASF) to leverage $7.2 billion in federal subsidies for broadband telecommunications infrastructure allocated in the American Recovery and Reinvestment Act (ARRA). The CASF funding is contingent on the project being approved for ARRA funding.

In the initial round of ARRA broadband funding that closed in August, the National Telecommunications and Information Administration's (NTIA) Broadband Technology Opportunities Program (BTOP) generally required project grant applicants to put up a 20 percent funding match. In an effort to get more California projects funded, CASF kicked in half the match amount, bringing total project funding up to 90 percent. That left it to applicants to come up with the remaining a 10 percent match.

However, the California Broadband Cooperative noted as a start up nonprofit with no financial history it would find it all but impossible to come up with the 10 percent match for its proposed $101.4 million project under grant and loan subsidies for broadband infrastructure construction under the BTOP and the USDA's Rural Utilities Service (RUS) program.

Kudos to the California PUC for recognizing that alternative, nonprofit business models like cooperatives are needed in the quest to close the digital divide in California and that these entities face unique and substantial start up funding challenges. As the NTIA and USDA draw up new rules governing an upcoming and final round of funding for broadband infrastructure projects early next year, the agencies should keep the California PUC's action in mind.

Report: Flood of comments on broadband stimulus requests indicate "significant incumbent challenges"

Telecompetitor is reporting Mary Campanola, outreach coordinator for the Rural Utilities Service, told a panel at the Telco TV annual conference and expo Nov. 12 that the agency has received 11,000 comments for the 2,200 applications it received for funding through its Broadband Initiatives Program (BIP). BIP provides grants and low cost loans as part of $7.2 billion set aside for broadband infrastructure subsidies in the American Recovery and Reinvestment Act of 2009.

Telecompetitor quotes Campanola as saying 80 percent of all applications received at least one comment, which according to the interactive blog reveal "significant incumbent challenges" of proposed deployments aimed at providing broadband to areas designated as unserved or underserved.

Since RUS must check out each incumbent challenge, the BIP stimulus dollars will flow slowly. Campanola reportedly said just 18 applications that were due three months ago made it past the initial review phase. Those projects selected for funding will be announced starting in December with award notifications made on a rolling basis well into 2010, Campanola was quoted as saying.

Telco trade calls for more targeted funding by Rural Utilities Service

“The RUS broadband program is an important resource to ensure that high-speed Internet services reach as many rural areas as possible,” said USTelecom President and CEO Walter B. McCormick Jr. “Unfortunately, the RUS’ recently proposed rules don’t sufficiently target the areas that need help most. We strongly urge the RUS to revise these critical rules to ensure that the program maximizes its important goal of helping to provide broadband service in unserved areas.”

Broadband boondoggle: Congressional committee peeved over misdirection of USDA funding

Members of the House Agriculture Committee are unhappy with the administration of the U.S. Department of Agriculture's Rural Utilities Service after learning the program to expand broadband Internet services to rural communities has missed many unserved areas while channeling millions to broadband providers in places where service already exists.

The Washington Post has been looking into the program, which provides grants, loans and loan guarantees to expand housing, small business, water and sewer, electricity and telecommunications services in rural areas.