New eBook: U.S. Telecom Infrastructure Crisis: America’s botched modernization of copper to fiber -- and the path forward

 

In 2020 as public health restrictions due to the coronavirus pandemic suddenly converted millions of American homes into offices, classrooms and medical clinics, the nation’s accumulated deficits in advanced telecommunications infrastructure and related challenges of access and affordability that had been in place for years reached a crisis point.

The root of the problem is a failure of planning and policy over the past quarter century to ensure decades old copper telephone lines that reach every American doorstep were modernized with fiber optic lines to support Internet delivered digital telecommunications. The nation lacks a comprehensive, coordinated transition plan and relies on various underfunded, piecemeal efforts.

The cause of the failure: public policymakers focused on the wrong thing: incremental gains in “broadband” speed instead of replacing the copper with fiber beginning a generation ago. With the enactment of the 1996 Telecommunications Act, policymakers erred in assuming fiber would be just one of several technologies that would compete with copper rather than pursuing a deliberate policy to ensure the timely replacement of copper with fiber.Consequently, fiber reaches less than a third of American homes in 2020. That’s far short of the goal of the Federal Communications Commission’s National Broadband Plan prepared for Congress in 2010 that called for 100 million homes to have affordable fiber-level connections a decade later.

U.S. telecommunications policy primarily serves the needs of for profit companies that lack incentive to rapidly speed construction of fiber to solve America’s advanced telecommunications infrastructure deficits. There’s an inherent conflict between their investors’ focus on short term earnings and the broader public interest of having universally accessible and affordable fiber connections.

This book describes how the crisis is affecting Americans, the factors that brought it about and prolong it, the outlook for its resolution and a framework for the path forward: publicly owned, open access fiber infrastructure passing reaching every home as telephone service did in the mid-20th century.

The audience for this book is public policymakers, telecommunications regulators and the general public. Members of these groups acknowledge the essential nature of advanced telecommunications infrastructure as a utility. That recognition has grown more urgent over time and especially so with the 2020 coronavirus pandemic and sharply increased reliance on home connectivity and working from home.

The book is currently available here on Amazon Kindle and will soon be available though all eBook retailers.

America's haphazard, fragmented approach to telecom infrastructure modernization: Filling in "broadband" potholes

SC begins small broadband internet expansion in 23 counties | The State: More than $50 million worth of broadband expansion projects will start this month in 23 counties around the state to help close the internet service gap exposed by the COVID-19 pandemic. The shovel-ready projects are being made possible, in part, with funding from the CARES Act, federal coronavirus aid that must be spent by the end of the year. The dollars will help internet providers expand service to areas where it may take longer to turn a profit. The broadband projects are a good start, but also a drop in the bucket toward closing the state’s broadband access gap. There are 650,000 South Carolinians and 180,000 households in the state without high-speed internet access.

States have been struggling to adequately fund advanced telecommunications infrastructure needs years before the start of the current SARS-CoV-2 pandemic earlier this year. Public health measures put in place to slow the spread of the contagion have made widespread infrastructure deficits painfully apparent as Americans work and school at home.

States are now rushing to try to address the problem with very little time and money allocated by the federal government via COVID-19 relief funds (CARES Act) that must be expended by the end of 2020. It's emblematic of the nation's short term policy approach of treating the deficits like potholes needing to be filled in.

There's never enough policy and resource commitment to properly pave the roads. Motorists complain incessantly about bad roads and a bumpy ride on Al Gore's circa 1990s "information highway." Federal and state governments respond with a little money for a short term fix for some of the potholes. Drivers continue to complain and the cycle repeats year after year. It will continue until there's a policy commitment to replace the legacy copper telephone connections that reach every home, small business and school with fiber.

Hopes for patient capital investment in open access advanced telecom infrastructure may prove unfeasible

Private Investment in Community Digital Infrastructure: Gaps will continue until localities and investors find viable solutions that better align community needs with investors’ returns on their investments. The critical first step is to pivot to a digital infrastructure approach in which the long-term economic benefits to community growth and business success accrue to the network deployers, leading to a virtuous cycle that increases network revenue opportunities and returns
on investment.

The author, Michael Curri of Strategic Networks Group, correctly identifies a major reason behind advanced telecom infrastructure deficiencies that have plagued the United States for many years. Investor owned companies build infrastructure where it generates the biggest and fastest returns on investment. They lack business or regulatory incentive to do so outside of their discrete "footprints" of cherry picked neighborhoods. 

That private interest to reward shareholders does not align with the broader public interest in having the infrastructure reach all premises. Localities hoping for infrastructure gains by partnering with private providers run the risk of replicating the problem of unconnected neighborhoods since they too require rapid returns on investment and thus are inclined to prioritize only limited areas to attain the fastest return on their dollars.

The solution, Curri argues, is substituting more patient capital held by pension funds and private infrastructure capital firms that doesn't require a return in five years or less. The risk/reward tradeoff is infrastructure is there for the long run and will generate solid returns for many years. Additionally, investment in open access infrastructure will provide broader benefits for their economies and residents  -- what economists refer to as externalities -- that are of little or no interest to investor owned providers.

Curri correctly points out the presence of incumbent investor owned incumbent providers poses a challenge to the ubiquitous infrastructure needed to attain those externalities. Those incumbents have already grabbed those neighborhoods that spin off the most revenues, complicating obtaining sufficient revenues to attract patient investment capital.

The essential problem for Curri is his concept requires premises to subscribe to services, emulating the subscription-based business model of the incumbents other than it calls for open versus closed access infrastructure. Subscription revenue would be supplemented by charges to service providers to offer services over the open access infrastructure as well as mobile wireless backhaul and "specific value-added services and smart-community services."

Potential patient capital investors may well see the presence of incumbent providers who will seek to protect their private monopolies as a key risk factor that would outweigh the many positive aspects of Currie's concept. Unless in the unlikely event those incumbent providers signal a withdrawal, it may prove unfeasible.