Infrastructure measure pending in Senate would condemn America to another generation of waiting for replacement of legacy copper telephone lines with fiber, universal service.

The U.S. Senate made public enabling legislation for the Biden administration’s American Jobs Plan infrastructure initiative this week, titled the ‘‘Infrastructure Investment and Jobs Act.” The bill is disappointing insofar as it fails to define a physical fiber standard for advanced telecommunications infrastructure. Instead, it prioritizes funding telecommunications infrastructure that “can easily scale speeds over time to meet the evolving connectivity needs of households and businesses.” That’s generally viewed as fiber – the “future proof” goal expressed in the American Jobs Plan. But it’s not explicitly referenced in the proposed legislation.

The measure continues the incrementalist doctrinaire view put in place by the 1996 Telecommunications Act that boosting throughput is the paramount policy goal. Furthered by the faulty economic reasoning that market competition despite telecommunications infrastructure being a natural monopoly like other utilities will help achieve that objective. The asymmetric throughput-based standard as stated in the measure retains the classic 1990s-era delineations of premises as being served, underserved and unserved relative to throughput offered by providers serving them. 

That reflects a collective cognitive bias known as anchoring. Dialup -- state of the art connectivity in the 1990s -- is the anchor. All progress is measured by improvements from the anchor as higher "broadband speeds." That cognitive bias has set the tone for the entire telecom policy debate rather than infrastructure. It's thus no surprise to see a nominal infrastructure bill frame the issue as one of supporting higher throughput in areas where it's lagging.

Should the bill become law as written, it will condemn the United States to another generation of waiting to modernize its legacy copper telephone lines built for analog voice telephone service in the 20th century to fiber to support internet protocol-based digital services in the 21st century.

These are some of the other major problems with the proposed bill language:

The proposed legislation does not affirmatively prioritize publicly and nonprofit owned infrastructure as originally envisioned in the American Jobs Plan, allowing investor-owned entities that operate with an inherent conflict of interest between investors and consumers to apply for infrastructure projects. The projects would be funded with $42 billion allocated to state governments with a 25 percent match.

In one of the biggest missed opportunities for a massive infrastructure measure, the bill does not achieve advanced telecommunications universal service as was attained with landline voice telephone service. The bill would require the U.S. Federal Communications Commission to convene a proceeding to determine how to achieve universal service and to recommend to Congress expand the universal service “if the Commission believes such an expansion is in the public interest.”

Funding eligibility is prioritized to “unserved areas,” defined as those where at least 80 percent of premises are unserved – those not having any providers offering service with throughput of at least 25 Mbps down and 3 Mbps up. The offer of service is open to gaming by fixed wireless providers who could conceivably claim offers of service meeting or exceeding the throughput minimum but at exorbitant rates.

“Underserved” areas – defined those lacking access to “reliable broadband service” with no providers offering service with throughput of at least 100 Mbps down and 20 Mbps up are secondarily eligible. For both categories, funding eligibility is limited to areas where least 80 percent of premises are unserved or underserved. Neighborhoods failing to meet the 80 percent threshold would be out of luck and continue to potentially suffer redlining by incumbent providers.

The determination of whether an area is “underserved” is based on maps of throughput offered by providers maintained by the FCC. The maps have proven notoriously controversial and inscrutable and subject to provider abuse of overstating service offerings. The FCC is in the process of revising the methodology to improve them, but that process will likely generate further disagreement and delay that serves only the interests of legacy incumbent providers.

Biden administration’s infrastructure initiative must reorder roles and responsibilities for advanced telecommunications

If the United States is to rapidly modernize its outdated copper telephone infrastructure to fiber optic lines reaching every American doorstep – the need for which became painfully apparent with pandemic public health restrictions that turned homes into offices, classrooms and clinics – it’s imperative the Biden administration’s infrastructure revitalization initiative reallocate roles and responsibilities in order to make that happen.

A major impediment has been expecting too much of legacy telephone companies. For the past three decades, advanced telecommunications policy has placed the burden on them to do it all: own, finance, design, build and operate. They simply lack the capacity to take on all five functions, even with subsidies to make financing easier. Subsidies haven't worked because unlike legacy voice telephone service where companies must provide connections to all homes requesting them, there is no regulatory incentive to utilize them.

Infrastructure requires billions of dollars. Investors in these companies aren’t willing to make those major investments unless they generate returns in five to six years. That limits them to dense urban and suburban neighborhoods and greenfield and multifamily developments, leavings others unfibered for the foreseeable. These companies also have highly leveraged balance sheets that limit their ability to finance construction even if their investors were more favorably inclined and willing to wait longer for financial paybacks or accept lower shareholder dividends.

These circumstances demand a reallocation of the five functions between the public and private sectors to get the nation to where it needs to be in the 21st century of digital, Internet protocol powered advanced telecommunications. The public sector and utility consumer cooperatives will have to take on finance and ownership and leave it to the investor-owned companies to do what they can reasonably be expected do and do best: design, build and operate -- and not own and finance. As the Biden administration introduces its proposed infrastructure revitalization program, this reordering of roles and responsibilities will be an essential component.

Summers urges infrastructure construction to revitalize torpid economy. How about fiber to the premise?

The Perpetual Bubble Economy - NYTimes.com: “A strategy that relies on interest rates significantly below growth rates for long periods of time virtually guarantees the emergence of substantial bubbles and dangerous build-ups in leverage,” Mr. Summers wrote recently. “The idea that regulation can allow the growth benefits of easy credit to come without the costs is a chimera.”

A better route, Mr. Summers argued, would be to run deficits, perhaps indefinitely, even during economic good times. To help the economy right now, for instance, he argued for huge infrastructure spending, especially since money is cheap and so many construction workers are out of a job.

In addition to bridges and highways, water distribution systems and other public infrastructure, why not a public works project to bring fiber optic telecommunications service to every American home and business premise? Especially when 20 to 30 percent of them are left off the Internet grid?