Oregon audit reinforces BEAD direction to states on universal service

As states move to the forefront to provide affordable access to advanced telecommunications with the direction of the federal government’s Broadband Equity, Access and Deployment (BEAD) program to develop Five Year Action Plans for universal service, a recent State of Oregon audit report offers them some critical guidance.

It meshes well with the National Telecommunications and Information Administration’s use of the word “action” in the requirement states develop strategies to ensure universal service to all their residents in their Five-Year Action Plans. Those strategies must be actionable roadmaps and not serve as aspirational wish lists that gather dust after they’re issued. From the Oregon Audits Division report:

The (Oregon) Broadband Office published a strategic plan in January of 2020, prior to the COVID-19 pandemic. The plan is high-level and notes: “This plan is aspirational and designed to carry out the mission and directives charged to the Broadband Office. The scope of activities the Broadband Office will ultimately undertake will be enabled, or limited, by the resources available.”

The plan does not contain specific and realistic approaches, strategies, or appropriate KPMs for how these aspirations will be measured, reported, and achieved; nor does it identify what resources would be needed to undertake the scope of activities.

The biggest reason “broadband plans” over the past 15 to 20 years have been aspirational is they were conditioned on funding. That’s to be expected for a bet on the come financing strategy that relies on one off government grants. An action plan by contrast has a clearly identified funding source to ensure universal service and not one based on the hope that financing will someday become available.

The resulting lack of progress naturally angers people who’ve had their hopes for modern fiber connections to replace legacy metallic ones dashed for years amid piecemeal, incremental progress that never quite seems to reach them where they live and work despite promises from their elected representatives at all levels of government. A solid plan can help restore their trust in public officials to get the job done where the private market cannot.

The Oregon audit notes “Oregon’s broadband public policy needs to be focused on the future, be more aggressive, be more financially supportive, be more specific, and have a renewed sense of urgency.” (Emphasis added)

Being more financially supportive means Oregon (as well as other states) cannot continue to rely on one off, highly restrictive government grants to attain universal service. They need to develop ongoing organic funding for the both the construction and reliable operation of fiber to the premise (FTTP) advanced telecommunications infrastructure to every doorstep. Grants such as those available through BEAD can only do part of the job – implicit in BEAD’s Five-Year Action Plan requirement.

Biden administration telecommunications policy could move U.S. toward universal fiber connectivity

The Biden administration’s telecommunications policy points toward the goal of bringing fiber connections to nearly every American home, recognizing policy put in place 25 years ago with the 1996 Telecommunications Act will not achieve that objective with two thirds of homes still served by obsolete copper telephone lines in 2021.

That goal is not explicitly stated in the Infrastructure Investment and Jobs Act passed by the Senate this month, calling into question the administration’s “build back better” pledge. Many observers including this one viewed that as a capitulation to incumbent telephone -- and particularly cable companies -- and their legacy metallic delivery infrastructures. However, as noted here, the legislation contains language favoring fiber that would be subsidized with $42 billion appropriated to the states should the measure become law. Additionally, the administration is on record as favoring “future proof” infrastructure – essentially fiber – along with universal service.

The infrastructure bill would direct the Federal Communications Commission to convene a proceeding to determine how to achieve universal service and to recommend Congress expand universal service “if the Commission believes such an expansion is in the public interest.”

However, the administration in a July 9, 2021 executive order encouraged the FCC to reinstate its 2015 Open Internet rulemaking that classified Internet protocol delivered services as telecommunications and subject to Title II of the Communications Act of 1934. As such, the services would be regulated as a common carrier utility and a universal service mandate placed on providers that would be required to honor reasonable requests for connections.

While the order is a strong suggestion and not administrative law at this point, the administration can almost certainly implement it when it nominates a candidate to fill the current vacancy on the FCC panel. The administration would most likely select a nominee inclined to implement the order and reinstate the Title II-based rulemaking.

That would set the stage for a policy debate on universal service in the Senate confirmation process. The nominee would conceivably be asked at their confirmation hearing where they stood on universal service considering the Senate’s version of the infrastructure bill would require the FCC to conduct an inquiry on universal service and policy recommendations to Congress.

If the administration is successful in seating a nominee inclined to reinstate the 2015 Open Internet rulemaking, the FCC could preempt Congress on the issue. That is unless Congress chooses to act expeditiously considering the FCC has been unable to conclusively determine whether IP-based services are telecommunications or information services as per their current classification under Title I of the Communications Act.

The significant funding that would be allocated to states by the infrastructure bill as well as that currently provided by the American Rescue Act would provide a sizable initial infusion to help cover capital costs in high-cost areas in order to help attain universal service. However, with a universal service requirement under a Title II regulatory scheme, there would need to be a viable ongoing high-cost area subsidy for both capital and operating costs that does not currently exist as it does for legacy voice telephone service. In the absence of a permanent high-cost subsidy mechanism, federal and state policymakers have defaulted to piecemeal one time grants.

Telecom infrastructure is interstate; crash federal modernization program needed

Senator Wants Transparency in Federal Broadband Grants: King sent the letter after his office was contacted by several rural Maine residents who want to know if their neighborhoods will receive broadband service or if their existing service will be upgraded as a result of the subsidies. He didn’t have an answer for them.

“High-speed broadband is a gateway to opportunity in the 21st century, but today, too many people in rural Maine lack adequate access – and that’s not fair to them or to our state’s economic future,” King said Monday. “The FCC’s Connect America Fund can help change this, but to be successful, every dollar must be spent efficiently, effectively and in a transparent way.”

As long as the United States limits its thinking to discrete neighborhoods and "rural and community broadband," modernizing and building out its telecommunications infrastructure will prove to be a frustratingly slow and inscrutable process as Senator King's constituents are experiencing.

Telecommunications is interstate and so is the infrastructure that delivers it. Instead of tinkering at the edges, the nation should instead engage in its signature big thinking and undertake a bold crash program to ensure every American home, small business and vital institution has a fiber optic connection to the Internet. Senator King's constituents and those of every other American representative have waited long enough.

Sprint Chairman Masayoshi Son: A New Visionary In Our Midst?

IVP Capital TMT Advisory - SpectralShifts Weekly

I'm skeptical of Son's assertion that wireless is the solution to the U.S. premises fiber Internet infrastructure deficit. What's surprising is the incumbent telcos have been trying to sell this canard to divert attention away from their own wireline premise shortfalls. That's hardly disruptive or visionary.

What would impress me is breakout, actionable thinking that offers a functional alternative business model that would enable rapid build out of universal fiber to the premise.