Push back on public option fiber based on fallacious argument utility infrastructure a competitive market

North Carolina considers loosening municipal broadband regulations: In May, Gov. Roy Cooper announced $9.8 million for broadband expansion to rural areas as part of a $35 million initiative to improve internet access across the entire state. Municipal broadband, however, has a troubled history in North Carolina and beyond.The bill cleared the North Carolina House State and Local Government Committee on Wednesday and will move to the chamber’s Finance Committee for a second vote, but industry officials are opposed. Spectrum’s senior director of government relations, Brian Gregory, said the increased competition from public entities would backfire.

“It’s especially troubling for us because our employees and our companies are going to be taxed to have competition against us, and that competition on top of that is also our regulator,” Gregory told WRAL, the NBC affiliate in Raleigh.

The thing is, advanced telecom infrastructure is NOT a competitive market. In fact, it's arguably a failed market because so many people who want better landline connections to their homes and small businesses and are willing to pay for them aren't able to buy them. Investor owned telephone and cable companies must also deal with inherent limitations on what they can invest in modernizing their infrastructures to fiber to the premise. Investors naturally push back when it comes to sacrificing profits and dividends to capital expenditures.

U.S. needs universal FTTP telecom infrastructure as public utility standard

The Benton Foundation has pulled together policy positions of several Democratic presidential candidates in a blog post, 2020 Candidates Offer Plans to Extend the Reach of Broadband. Of these candidates, only Elizabeth Warren offers a plan for universal fiber to the premise (FTTP) advanced telecommunications infrastructure as a public utility. It’s a position recognizing:

1. It’s what’s needed to rapidly modernize the nation’s legacy metal cable built for the pre-digital era of telephone and cable TV service to provide the capacity to handle rapidly growing bandwidth demand;
2. There isn’t and will likely never be a viable business case for private sector investment alone to achieve this in the foreseeable future due to the high labor costs of building utility infrastructure, and;
3. There’s an inherent conflict of interest between private investment and public interests when it comes to modernizing the nation’s telecommunications infrastructure. The public interest is clearly for modernizing to FTTP to enable economic activity, education, medical care and civic engagement. The private investor interest priority isn’t necessarily modernization of telecommunications infrastructure and its positive effects but instead to offer premium, higher margin service offerings based on throughput speed tiers. Warren’s proposal includes throughput speed (symmetric 100Mbs) but only as basic service quality standard.

The goal of universal FTTP as a public utility properly establishes an infrastructure-based standard for the nation considering only a small portion of the country has FTTP connections. That’s far behind where the United States should be in 2019 given that it should have achieved near universal FTTP at least a decade ago.  It’s the right goal for where the nation is now. Not a geographic or bandwidth-based goal of extending “rural broadband” or “improving broadband maps.” Broadband and specifically the lack thereof isn't a solution but rather the primary symptom of the lack of FTTP infrastructure and the consequent weaknesses of existing metallic infrastructure. If it reached nearly every American doorstep, "broadband" speeds and maps wouldn't even be part of the lexicon.

A public option: U.S. Senator, presidential candidate Elizabeth Warren proposes $85 billion grant program to bring publicly owned fiber to every American home

U.S. Senator Elizabeth Warren proposes a "public option" bringing fiber connectivity to every American home if elected president. Warren's plan would create a new federal office to provide $85 billion in grants covering 90 percent of construction costs. Five billion dollars would be allocated to grants covering 100 percent of construction costs for middle and last mile fiber builds on Native American lands.
Grant applicants would be be subject to a universal service mandate and be required to offer at least one plan with symmetric 100 Mbps service and one discount plan for low-income customers with a prepaid feature or a low monthly rate. Warren, who is seeking the Democratic Party's nomination as its 2020 presidential candidate, is specifically excluding investor owned companies, making grants available only to electricity and telephone cooperatives, non-profit organizations, tribes, cities, counties, and other state subdivisions. Warren is critical of existing federal infrastructure subsidy programs, complaining they have "shoveled billions of taxpayer dollars to private ISPs" while much of the nation continues to suffer with deficient advanced telecommunications infrastructure and subpar service.

"This ends when I’m President. I will make sure every home in America has a fiber broadband connection at a price families can afford. That means publicly-owned and operated networks — and no giant ISPs running away with taxpayer dollars."

Warren's plan does resemble existing federal and state subsidy programs in that it targets grant funding to "unserved" and "underserved" areas that have historically been defined based on maps of current providers' advertised "broadband speeds" -- and not whether fiber to the premise infrastructure is in place. Warren calls for more accurate maps, voicing the concern of many public policymakers they significantly overstate what's on the ground in a given community or address.

Warren should steer clear of this "broadband speed" trap and avoid the sticky wicket of "broadband mapping" which has largely served to protect the service area "footprints" of legacy incumbent telephone and cable companies by creating controversy and delay. In order to create a true public option, all areas of the nation should be eligible for the grants. Particularly given that the vast majority of households lack fiber connections, with an only an estimated 11 million households out of 126 million having them and 75 percent of the nation's census blocks without them. A nationwide public fiber option would cost considerably more than the $85 billion Warren would ask Congress to appropriate. But it's a good start.