USTelecom: Rescind #infrastructurebill grant guidance preferring networks built by municipalities, non-profits and electric co-ops

"Deployment is hard, complicated, and expensive work. It’s also not a ‘set it and forget it’ technology. Congress was clear: competition for these public funds should occur on a level playing field. Yet concerning rules have emerged from the Treasury and Agriculture Departments that encourage states to favor entities like non-profits and municipalities when choosing grant winners, despite their well-documented propensity to fail at building and maintaining complex networks over time. The unconnected—not to mention American taxpayers—can’t take that gamble. Experience should not be a mark against an applicant, but a strong attribute in their corner.

Source: A Blueprint for Government to Finally and Fully Connect Our Nation

USTelecom is right. Building advanced telecommunications infrastructure is challenging and complicated. And expensive. As the history of the past three decades has shown, too expensive for telephone companies to timely modernize their legacy copper analog plant that reaches nearly every American home, business and institution to fiber as about two thirds of homes lack fiber connections as 2022 begins. 

That's because the industry has adopted a business model of selling bandwidth by the price tier. Indeed, USTelecom dubs itself "The Broadband Association." That's not a template that favors infrastructure but rather capital investment only where bandwidth can be sold with the highest and fastest return on investment. Federal grant funding cannot remedy this structural issue.

USTelecom is also correct in asserting that experience counts. Its members know how to design, build, maintain and operate advanced telecommunications infrastructure. But that does not mean they should or have the right own it. Because telecom infrastructure is a natural monopoly and not amendable to market forces to ensure access, affordability and high quality service and support, it is best held by publicly owned utilities and consumer utility cooperatives whose purpose is to serve the public interest and not the more narrow interest of telephone company shareholders. The appropriate role for these companies to assure all Americans have access to affordable and high quality advanced telecommunications is contracting with these entities to perform these functions that leverage their expertise and experience.

Appropriate role for legacy telcos, cablecos in advanced telecom infrastructure: design, build, operate. But not own.

Finish the Job of Connecting Every American

From COVID relief to budget decisions, take bold and decisive action to finish the job of connecting every American home, business and anchor institution to U.S. broadband infrastructure. Particularly amid a global pandemic, the fact that an estimated 18 million American homes do not have broadband access is unacceptable. Working together—public resources alongside private expertise, technology and networks—this is the most solvable of our nation’s leading challenges. Resources + political will = universal connectivity.

— SPECIFIC 100-DAYS ACTIONS —

• Advance legislation to rapidly and fully invest in the broadband infrastructure programs required to quickly and permanently close the digital divide in America. USTelecom members are ready to immediately go to work with government partners to build these networks, including fiber investment deeper into all corners of America

 https://spark.adobe.com/page/KDnqM9tW5sAo7/#finish-the-job-of-connecting-every-american

The partnership proposed by the industry group USTelecom for the first 100 days of the incoming Biden administration needs clarification that to ensure public funds are appropriately used to build advanced telecom infrastructure and bring fiber to every American doorstep, it should be publicly owned. Subsidies given to legacy incumbent telephone and cable companies since the 1990s have not remedied America's advanced telecom infrastructure deficiencies. Repeating more of the same would be poor public policy. USTelecom members can indeed play a role in this public-private partnership: to design, build and operate. But not own.

Response to #USTelecom re pandemic and advanced telecom infra

Broadband & COVID-19: #TogetherApart: Twenty million Americans do not have an on-ramp to high-speed internet. The capacity exists for the government and broadband companies to relegate this fact to the history books in relatively short order. A surge now in federal funds to connect the final frontier — primarily unserved areas that are cost-prohibitive for businesses to serve on their own — can get us to the long-distant mountaintop of universal connectivity. Now is the time for our nation’s policymakers to think and act boldly and decisively about achieving — permanently — truly universal service for all Americans.

But that surge in federal funds should NOT go directly into the coffers of investor owned telephone and cable companies but instead create a “public option” of fiber to the premise #FTTP infrastructure. These companies should be limited to designing, building, maintaining and offering services over it -- but not ownership. The past 25 years have shown universal connectivity – a public interest – conflicts with the private interest of investors to limit capital expenditures on infrastructure. That’s what created the service gap to which the writer refers. Members of USTelecom also oppose regulating Internet connectivity as a common carrier utility under Title II of the Communications Act because doing so would mandate universal service and prohibit neighborhood redlining.

In the meantime, additional funds should be made available immediately to quickly create a nationwide broadband map that can identify with pinpoint accuracy every last unserved home and business in America. This will allow for the expedited and highly targeted deployment of resources to connect them.

Utter rubbish. USTelecom members know exactly where unserved homes and businesses are. They deliberately redlined neighborhoods they deemed unable to provide the rapid return on their infrastructure investments their investors demand. Calling for better mapping is a disingenuous delaying tactic intended to protect their service territory monpolies. It's time to place this propaganda in the trash heap where it belongs.

FCC RDOF subsidy rules: USTelecom has no legitimate complaint

USTelecom on RDOF Impact: When the ILEC is No Longer the Carrier of Last Resort - Telecompetitor: The upshot is that while the CAF II auction diverted a relatively small portion of subsidies that would normally have gone to the price cap carriers to other entities, the RDOF has the potential to trigger a more dramatic shift away from the price cap carriers. As the report authors, note, “[c]ompletely shutting off access to federal universal service support to an incumbent in favor of a competitor is a new frontier in the evolution of the support mechanism.” As subsidies for price cap territories go to companies other than the incumbents, “the ILEC should be relieved of all federal and state obligations to provide service in such areas,” the authors argue. (Emphasis added)

USTelecom has nothing to complain about here. Incumbent Local Exchange Carriers have no obligation to provide advanced telecom service (ATS) to all premises in their service territories -- only voice telephone service. That's thanks to the U.S. Federal Communications Commission's 2018 repeal of the previous Obama era FCC's Open Internet rulemaking in 2015 classifying ATS as a telecommunications utility under Title II of the federal Communications Act and thus subject to universal service and non-discrimination mandates. The current FCC instead opted to classify ATS as an information service under Title I of the statute, turning the calendar back to 1990 and the days of CompuServe and AOL.

Incumbent legacy telcos, cablecos don't fear "net neutrality." Title II monopoly regulation is the real concern.

Net Neutrality and Broadband Investment for All - Morning Consult: A wise Federal Communications Commission chairman noted that “the best decision government ever made with respect to the internet was … NOT to impose regulation on it.” Who said that? Republican Chairman Ajit Pai? Republican Chairman Kevin Martin? No, it was Bill Kennard, the Democratic chairman appointed by President Bill Clinton. Kennard’s smart, future-focused, pro-innovation and pro-consumer philosophy — followed by chairmen of both parties for two decades — established an investment-friendly regulatory climate that resulted in more than $1.5 trillion in broadband network investment, and with it, America’s world-changing internet technologies, applications and services. Kennard’s words remain as true today as they did in 1999. Pai’s plan to unwind the 2015 Open Internet Order, which regulated broadband service like an early 20th century telephone monopoly, is the right start.

The thing is telecommunications infrastructure is a natural monopoly regardless of whether it's plain old telephone service (POTS) over copper or based on Internet communications protocol delivered over fiber to the premise (FTTP). It's simple microeconomics. Infrastructure a labor intensive, high cost proposition and as such will never attract many sellers due to the high cost barriers to entry. While some degree of redundancy is beneficial to ensure network reliability, it would make no sense and be uneconomic to have many providers installing multiple infrastructures to serve communities and customer premises.

The above item by the president and CEO of the telecom industry trade group USTelecom shows the industry isn't as concerned about so-called "net neutrality" rules requiring all Internet protocol traffic be afforded equal carriage. Rather, the real fear is monopoly regulation.

USTelecom is right -- and wrong -- on public telecom infrastructure

Survey: Most Americans cities to build, sell Internet plans: Proponents of independent Internet networks argue that a "public option" for Internet access could help drive down the price of broadband and increase speeds. Opponents say the expense of building new networks represents an unacceptable financial risk for many local governments. "Municipal broadband networks too often end up failing and costing taxpayers millions," said USTelecom, a trade association representing Internet providers and telecom companies.

USTelecom is right. Modernizing telecommunications infrastructure rapidly enough to meet the nation's needs in an era of Internet protocol-based services will indeed cost tax dollars. It simply has to because infrastructure costs billions to build. That high price is not compatible with the short term business models of private investor owned legacy telephone and cable companies. That's why they're confined to piecemeal build outs and bandwidth rationing that leave many existing and putative customers in their service territories unserved and undeserved and complaining about lousy, poor value service. Even conservatives are waking up to the fact of this market failure, recognizing that market forces don't work well when it comes to high cost infrastructure. And it's about time.

USTelecom is also correct that local governments face significant financial risk due to the large sums involved. That's why I propose in my eBook Service Unavailable: America’s Telecommunications Infrastructure Crisis a federal "public option" since only the federal government -- and not state and local government -- can shoulder the burden.

Where USTelecom as well as those who support local government telecom infrastructure modernization projects are wrong is claiming these projects represent market competition with legacy incumbent telephone and cable companies. They do not and cannot. Local governments are responding to market failure, not any desire to compete in the telecommunications industry. They are looking to meet their needs to support economic development in the digital economy and address their citizens' complaints about crappy service from the incumbents. That situation has occurred because telecommunications infrastructure by definition is a natural monopoly and not a competitive market characterized by many sellers and buyers. Thus market forces fail, too weak to provide incentive for incumbent telephone and cable companies to provide better service.

US Telecom head fundamentally misstates key obstacle to telecom infrastructure

The Next National Infrastructure Push Must Be Powered by Broadband - Morning Consult: Clarity. Broadband companies have invested more in America’s infrastructure over the last two decades than any other sector of our economy – $1.5 trillion and counting. Yet these same companies in recent years have suffered a case of Washington whiplash. On one hand, heady (and wholly accurate) talk about broadband’s importance to all citizens. On the other, increasingly regressive policy decisions that undermine that potential and are widely credited with 2015’s decline in capital investment in U.S. broadband networks. We need to reverse this troubling trend by establishing policies that encourage investment in new and better broadband.

This opinion from Jonathan Spalter,  president and CEO of the trade association USTelecom, is remarkable in that it fundamentally misstates what is a business problem as a public policy problem for telecommunications companies. The biggest obstacle facing the industry when it comes to investing in telecommunications infrastructure is its own business model. It's out of sync with the long term return on capital that comes with high cost telecom infrastructure, seeking lower risk short term gains. That's not public policy. That's just plain microeconomics.

Telco business model -- not regulation -- curtails infrastructure investment

FCC Forbearance Vote a Welcome First Step | USTelecom: “While more remains to be done to update communications regulation to reflect the realities of today and to level the playing field among wireline, wireless and cable competitors, we applaud Chairman Wheeler for recognizing the importance of giving wireline companies greater freedom to compete, innovate and invest their capital efficiently in modern networks. We urge the full commission to adopt the reforms proposed, and to continue to eliminate antiquated requirements that distort the market, ultimately to the detriment of consumers.”

The legacy telephone company lobby oddly continues to blame regulation for chilling its investment in landline telecommunications infrastructure. The real reason is telcos simply lack a business model that can support extensive, long term capital investment. Regulation or the lack thereof doesn't fundamentally alter the equation.

USTelecom makes case for Title II common carrier regulation of Internet

Consumers Continue Shift Away From Landline – Regulations Are Behind | USTelecom

This telecom industry article helps make the case for regulating consumer Internet services as common carrier telecommunications services under Title II of the Communications Act. As the article notes, the existing common carrier regulations are designed for a bygone era of analog voice telephone service delivered over copper that is becoming increasingly outdated as landline technology shifts to fiber optic that can deliver voice and other services using Internet transmission protocols.