IIJA provides opportunity for structural separation with state, regional wholesale open access fiber networks

With the enactment of the Infrastructure Investment and Jobs Act (IIJA), the federal government and the states have an opportunity to structurally separate advanced telecommunications infrastructure and Internet Protocol (IP) services delivered over it by funding state and regional government owned wholesale open access fiber networks. That would boost access and affordability, and by extension, support virtual knowledge work, learning and telemedicine -- all of which jumped amid public health measures put in place during the COVID-19 pandemic. These large scale entities would also enjoy vital purchasing power as demand for labor and materials to build fiber networks is taxing their availability.

The Telecommunications Act of 1996 contained a structural separation component, requiring telephone companies to offer wholesale access their network infrastructure to retail Internet Service Providers (ISPs) -- referred to as unbundled network elements (UNE). But this provision lacks regulatory incentive for telephone companies to modernize their legacy copper networks to fiber. They leased access to their central office switches and legacy twisted pair copper plant to ISPs via dialup and later, digital subscriber line (DSL) that due to technological limitations could not serve all customers. Moreover, the telephone companies lacked market incentive to upgrade to fiber since they could derive passive revenues by placing the copper in runoff mode without sacrificing profits and shareholder dividends to capital expenditures. Consequently, only about a third of U.S. homes are passed by fiber.

With the IIJA, the National Telecommunications and Information Administration and the states can utilize $43.45 billion in grants earmarked for advanced telecommunications infrastructure in the legislation to attain a superior form of structural separation that can yield far greater public benefit than the 1996 legislation. Unlike shareholder owned telephone and cable companies, government owned networks have incentive to pursue the positive externalities that come with increased access and affordability that don’t accrue to the balance sheets of investor-owned infrastructure. These broad-based benefits clearly outweigh more narrow interests of their shareholders. 

Policymakers should implement and if necessary, amend the IIJA to ensure the widest and most rapid deployment of state and regional government owned open access fiber networks.

Big incumbent telcos, cablecos should stop the zero sum game, partner with the public sector on open access infrastructure

Steven S. Ross of Broadband Communities magazine opines in the January/February 2015 issue that legacy incumbent telephone and cable companies should abandon their win/lose, zero sum, all or nothing attitudes toward telecommunications infrastructure and partner with the public sector on open access infrastructure:

"A well-built municipal system (or access to public assets in a public/private partnership) should be open to all carriers and to all content and service providers. They would get a chance to sell products and services with vastly higher revenue potential and much greater reliability than they would by nursing ancient infrastructure to drain a few extra years of cash out of hapless, captive customers."

Indeed.

Click here to read the full article.

Incumbent telcos, cablecos should reconsider shunning wholesale open access fiber networks

Incumbent telephone and cable companies that enjoy a natural monopoly over last mile Internet infrastructure connecting customer premises have been loath to offer services over open access, wholesale fiber to the premise (FTTP) networks like the Utah Telecommunications Open Infrastructure Agency (UTOPIA) system. In some states, they’ve even successfully supported legislation outlawing or making the creation of publicly operated open access networks difficult. As monopolies, they want control over both the “pipe” serving customer premises and the services provided over it. Having control over the premise connection is essential to this business model since it puts the incumbents in the dominant position with regard to selling their proprietary services.

But with a growing chorus of calls for competition for Internet service from the White House, members of Congress, the U.S. Federal Communications Commission and consumer advocates, the threat of federal antitrust litigation to break up the incumbents’ last mile monopolies has increased. 

Given that possibility, incumbents might want to reconsider their flat refusal to do business with wholesale open access fiber networks. If they chose to purchase access to wholesale networks to sell retail services to customer premises, they’d likely appear to be far less insular and monopolistic in the eyes of the government. Doing business with wholesale, open access fiber networks would also spare the incumbents –largely reliant on metal wire and cable last mile infrastructure – from the expense of having to upgrade their last mile plants to fiber in areas where these networks exist and allow them to reach customer premises outside their limited footprints.