Wednesday, July 28, 2021

Telecom component of legislation implementing Biden administration's American Jobs Plan infrastructure initiative contains Title II-like universal service, anti-redlining provisions

Broadband internet is necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected. Yet, by one definition, more than 30 million Americans live in areas where there is no broadband infrastructure that provides minimally acceptable speeds – a particular problem in rural communities throughout the country. The deal’s $65 billion investment ensures every American has access to reliable high-speed internet with an historic investment in broadband infrastructure deployment, just as the federal government made a historic effort to provide electricity to every American nearly one hundred years ago.

The bill will also help lower prices for internet service by requiring funding recipients to offer a low-cost affordable plan, by creating price transparency and helping families comparison shop, and by boosting competition in areas where existing providers aren’t providing adequate service. It will also help close the digital divide by passing the Digital Equity Act, ending digital redlining, and creating a permanent program to help more low-income households access the internet.

The above is excerpted from a White House Fact Sheet issued today outlining the telecom infrastructure element of a legislative agreement with Congress to implement the Biden administration's American Jobs Plan. 

While the bill language hasn't been published, the fact sheet refers to a universal service nondiscrimination mandate like that contained in Title II of the Communications Act in the italicized portions. It also refers to what appears to be a separate bill -- The Digital Equity Act. The Act bars "digital redlining," defined as "discrimination by internet service providers in the deployment, maintenance, or upgrade of infrastructure or delivery of services. The denial of services has disparate impacts on people in certain areas of cities or regions, most frequently on the basis of income, race, and ethnicity." Title II requires providers honor all reasonable requests for service.

Noticeably absent from the fact sheet synopsis of the bill are references to nonprofit and publicly owned infrastructure, a stated preference expressed by the administration when the American Jobs Plan was unveiled earlier this year.

Thursday, July 22, 2021

Report: Draft legislation implementing telecom component of Biden administration infrastructure initiative shuns fiber infra standard

 — The draft is likely to fuel renewed advocacy from consumer groups and anyone else hoping for ultra-fast fiber optic buildout, as it instead opts for lower minimum broadband speed thresholds (100 Megabits per second download over 20 Mbps upload would count as "underserved" for the $40 billion tentatively slated to go to the Commerce Department’s state grants, less than the fiber-focused minimums some Democrats wanted).

The asymmetrical 100/20 throughput vs. fiber distribution infrastructure standard is mirrored in a California budget bill enacted this week appropriating $2 billion in grant funding.

Friday, July 16, 2021

Purpose of public option advanced telecom infrastructure is to ensure access and affordability

The half a dozen or so large telecom companies that provide internet service to most homes and businesses in the U.S. today have for years “cherry-picked” neighborhoods to maximize their profits. Although they’re returning record dividends to investors, they’ve also been helping themselves to billions from the feds over the years. And what does the taxpayer get in return? The U.S. still lags behind other countries in Europe and Asia in broadband deployment. Talk about a “risky” investment of taxpayer dollars! This has led to market failure as most localities in the U.S. are served by monopolies or duopolies.

Market failure in advanced telecom infrastructure is baked in because of high cost barriers to competitor entry and first mover advantage. As such, as Mr. Timmerman writes, it tends toward monopoly -- or duopoly at best. It's thus unreasonable to expect any meaningful degree of competition.

Public policymakers should think twice before describing public and consumer cooperative owned telecom infrastructure as envisioned in the Biden administration's American Jobs Plan as enhancing competition. Its essential purpose is to provide a public option to counter private market failure that exists in a natural monopoly market in order to ensure access and affordability.

Investor owned legacy telephone and cable companies complain public option infrastructure represents unfair competition. But as discussed, it is not intended to take market share from them. That's market competition. The better term is disruption of the status quo with only about a third of all American homes having access to modern fiber connections. And the disruptive goal is to ensure all Americans have affordable access when due to structural market issues that result in monopoly or duopoly, competitive market forces cannot.

Friday, July 09, 2021

Natural monopoly of telecom infrastructure fosters "capitalism without competition"

Biden added, “Let me be very clear: Capitalism without competition isn’t capitalism. It’s exploitation. Without healthy competition, big players can change and charge whatever they want and treat you however they want. And for too many Americans that means accepting a bad deal for things you can’t go without. So, we know we’ve got a problem, a major problem. But we also have an incredible opportunity.”

The problem is not all segments of the economy are competitive markets, defined as those having many sellers as well as many buyers with both sellers and buyers having relatively equal access to information on cost and quality. Telecommunications infrastructure because of its high costs of competitor entry, protracted return on investment and first mover advantage is one of those. It functions as a natural monopoly like other utilities. 

Many wish it to be a competitive market and offer more choices and lower costs. But that's unrealistic, wishful thinking. A presidential executive order cannot change the underlying economic structure. It won't end rent seeking market conduct by investor owned providers that tends to arise in natural monopolies -- capitalism without competition.

This is why fiber to the premise infrastructure owned by entities under less pressure to generate profits is needed as a public option since market forces cannot ensure it reaches every American doorstep at affordable costs -- a component of the Biden administration's proposed American Jobs Plan.  

Sunday, July 04, 2021

Limiting publicly owned advanced telecom infrastructure to high cost areas isn't the answer to access and affordability challenges

Doug Brake and Alexandra Bruer of the Information Technology and Innovation Foundation write the excerpts below from an article contending local governments are ill suited to provide advanced telecommunications service.

However, municipal or otherwise nonprofit broadband should be limited to those areas that are legitimately high cost and do not support investment of more than one provider. Municipal broadband advocates often attempt to define broadband at unreasonably high speeds in an attempt to define away competition existing in the market. They know that many providers have no desire to provide broadband speeds far in excess of what the market actually demands, and so by providing networks with more capacity than is needed, they hope to make the case for municipal networks. While flat bans on any municipal broadband do not make sense, they should be reserved for narrow cases wherein market options are extremely limited and private providers are unwilling to provide service, even with subsidies offered.

Sounds sensible in theory. But advanced telecom infrastructure is very unevenly deployed and highly granular, making it difficult to define these high cost areas and attain the economies of scale the authors discuss with contiguous infrastructure. One need only glance at those crazy quilt, checkerboard "broadband maps" to see it graphically -- the accuracy of which are subject of continuous debate. 

High cost area subsidies proved effective for ensuring universal telephone service. However, high cost subsidies have historically not motivated investor owned providers to build advanced telecom infrastructure absent regulatory incentive to offer service to all premises requesting it (such as Title II of the U.S. Communications Act that governs voice telephone service) and better opportunities elsewhere that offer faster and higher return on investment such as mobile wireless.

Some neighborhoods deemed sufficiently profitable have fiber to the premises infrastructure while others adjacent do not. Or there may be fiber to the prem deployed for business customers but not for residential service. That's why publicly and consumer cooperative owned fiber passing every American doorstep is needed to ensure access and affordability.

There are variety of different models for what a municipality’s level of partnership with broadband providers can look like. If municipalities that believe they fit in that narrow category should generally avoid providing retail service, and instead provide an open-access fiber network wherein the retail service and the electronics are left to the private sector. In an open-access provider, municipalities offer the use of their broadband networks at wholesale for various providers to leverage in order to sell broadband services. In a retail provider model, a municipality both owns the broadband network and offers broadband services directly to customers. The government can take on the most static parts of the network—ideally providing just open conduit or dark fiber—and allow the private sector to continue to innovate with the electronics on either end.

This is clearly a superior role for the private sector instead of the current dominant model wherein investor owned providers own the infrastructure and must also regularly refresh the electronics that make it run. As the authors point it, the latter role is far more suited to the private versus public sector. The private sector can fulfill that function without having to own the infrastructure outright and battle continued public and regulatory pressure to build out fiber infrastructure to reach more homes and keep rates affordable.

Thursday, July 01, 2021

Biden administration correct in framing advanced telecom as national vs. local infrastructure issue

June 30, 2021–Congress should allow the states authority over where and how to invest broadband dollars, experts said on a panel Tuesday.  The panel discussed the problem with federal agencies restricting states to only use funds for a distinct purpose, as opposed to allowing them to decide where the money can best be spent.

Federal agencies tend to focus on accessibility, affordability, and future-proofing broadband, but states all have different immediate needs, according to the panelists hosted by America’s Communications Association (ACA) on Tuesday. The panelists were discussing the $65-billion allocated to broadband as part of the infrastructure package announced by President Joe Biden last week.

This is self serving propaganda from small investor owned advanced telecom providers seeking to influence American Jobs Plan funds so that they are more likely to flow to them. Affordable, accessible access to fiber to the home isn't a local issue. It's a broad-based national issue affecting every state, region and county of the United States. The Biden administration is correct in framing this critical national infrastructure as it has in its proposed American Jobs Plan. Telecom infrastructure like roads and highways is by definition interstate.

Saturday, June 12, 2021

Legacy telephone companies’ power isn’t so much lobbying as controlling the narrative

Conventional wisdom holds the United States is unable to timely modernize its legacy copper telephone infrastructure to fiber reaching every doorstep because of the lobbying power of big legacy telephone companies. They want to protect their natural monopolies against interlopers and deploy fiber only where it produces a rapid return on investment to select neighborhoods at highly profitable, unregulated prices.

But their more formidable power isn’t so much their armies of lobbyists and campaign contributions to public policymakers. It’s that they’ve established and controlled the narrative built around a single word: broadband. They were so successful that they even managed to get public interest-oriented officials and advocates to adopt the term, creating a decades-long obsession with chasing “broadband” bandwidth instead of concentrating on advanced telecommunications infrastructure that delivers that bandwidth. It also serves as a great distraction since fiber technology has been around for decades and was being considered by telephone companies as early as the 1980s for two-way video communications.

It began with the enactment of the Telecommunications Act of 1996, at a time when Americans used screeching modems to connect to online services such as CompuServe and America Online. The statute defined progress as advancing from that narrowband dialup service to “always on” broadband. It largely left it to the private market to set the course instead of stating industrial policy establishing fiber as the universal infrastructure standard as twisted pair copper was before it. As well as establishing a timeline so that fiber reached nearly all homes by 2010. Instead, more than a decade later, only about one third of all U.S. homes can get a fiber connection. Baked into the 1996 Act is a cognitive bias known as anchoring. Dialup -- state of the art connectivity at the time it was enacted -- is the anchor. Any technology offering incrementally greater throughput came to be valued more highly than modernizing legacy copper telephone lines to fiber.

Lacking a fiber infrastructure standard, in the quarter century since the 1996 Telecommunications Act was enacted, America has found itself bogged down in incrementalism, debating the definition of broadband and even trying to map its location. Elected officials have been dogged by constituent complaints over spotty, poor and unaffordable Internet access, priced at whatever the market will bear. Those complaints grew more strident as time went on and especially during the COVID-19 pandemic that turned homes into offices, classrooms and medical clinics.

With telephone companies dragging their feet on transitioning to fiber in order to accommodate their short term oriented business models, cable TV companies leveraged their coaxial cable to provide Internet access in the decade since the Act was signed into law. Since they have not been regulated as telecommunications carriers with universal service mandates and price controls, they too can -- and do -- charge whatever the market will bear. And bear it the market must since cable has taken a dominant role, putting it in a controlling position.

Seeing that fiber was being slow walked at the same time people grew more desperate for connectivity, various wireless technologies and even satellite services came about to fill the fiber voids. The sad consequence is the nation once seen as a world leader in telecommunications no longer is.

Friday, June 11, 2021

AT&T's Stankey misrepresents true high cost component of fiber to the home

AT&T CEO John Stankey yesterday called President Biden's plan to fund municipal broadband networks "misguided" and said the US shouldn't pay for any broadband deployment in areas that already have networks. But as AT&T and other ISPs lobby against public networks and government-funded competition, Stankey said he is confident that Congress will steer legislation in the more "pragmatic" direction that AT&T favors.

In an interview with The Economic Club of Washington, DC, (video), Stankey was asked, "Do you support the president's proposal to have municipalities own broadband facilities?" Stankey responded, "I think actually the president's proposal is probably a bit misguided in that regard." "It would be a shame that we take taxpayer money or ask local governments to go into a business that they don't run today," Stankey said. "You know, their job is to deliver water, patch streets, things like that, not be in a capital-intensive technology business that requires constant refresh and constant management." (Emphasis added)

Actually, the most capital intensive element is constructing fiber to homes -- largely labor costs -- not equipment refreshes and management. This is where AT&T can play a role since public sector and nonprofit entities like consumer telecom cooperatives could benefit from an operator with AT&T's experience managing fiber.

Neither AT&T nor any other legacy telephone company can afford to own, build, maintain and manage fiber on a scale America needs considering every doorstep should have had fiber connections no later than 2010. The lack of those connections with only about a third of homes having them became painfully apparent during the social distancing public health requirements in response to the COVID-19 pandemic that turned homes into offices, classrooms and clinics.