The Infrastructure Bill is About More than Money | Benton Institute for Broadband & Society

The Infrastructure Bill is About More than Money | Benton Institute for Broadband & Society: it is now the policy of the United States that: Subscribers should benefit from equal access to broadband internet access service within the service area of a provider of such service; "Equal access" means the equal opportunity to subscribe to a service that provides comparable speeds, capacities, latency, and other quality of service metrics in a given area, for comparable terms and conditions; and The FCC should take steps to ensure that all people of the United States benefit from equal access to broadband internet access service.

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The Benton Institute is right. While the billions appropriated to the states in the advanced telecommunications infrastructure component of Infrastructure Investment and Jobs Act headed to President Biden's desk gets most media attention, the measure contains important expressions of telecommunications policy. How they ultimately end up being implemented will be crucial headed into 2022 and beyond.

The Benton Institute's call that the U.S. Federal Communications Commission act to ensure the "equal access" provision sounds in the Title II universal service and anti-redlining requirements enacted in the FCC's 2015 Open Internet rulemaking reclassifying Internet Protocol delivered services as a common carrier telecommunications utility.

In an executive order issued in July, President Biden called on the FCC to reinstate that rulemaking that was repealed in 2018 during the Trump administration that deemed IP services as optional information services under Title I of the Communications Act of 1934. The order also calls on the FCC to initiate a rulemaking to require service providers to regularly report price and subscription rates to the public in a useful manner to improve price transparency and market functioning. The infrastructure bill mandates the FCC convene a proceeding to determine how to achieve universal service and to recommend to Congress expand it “if the Commission believes such an expansion is in the public interest.”

Another key policy issue that will be addressed in the infrastructure bill's implementation is the role of public sector and nonprofit entities like consumer utility cooperatives. When the Biden administration issued its foundation for the infrastructure bill -- the American Jobs Plan -- it clearly favored them as more nimble and complete builders and operators of much needed infrastructure as shown in this paragraph from the plan:

Build high-speed broadband infrastructure to reach 100 percent coverage. The President’s plan prioritizes building “future proof” broadband infrastructure in unserved and underserved areas so that we finally reach 100 percent high-speed broadband coverage. It also prioritizes support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives—providers with less pressure to turn profits and with a commitment to serving entire communities.

The pressure private investor owned vertically integrated telephone and cable companies face to generate profits works against full deployment in their putative service territories. That has brought about longstanding, widespread gaps in landline connectivity to homes and small businesses, creating a pattern of Swiss cheese holes in delivery infrastructure in urban, suburban, exurban and rural areas with the latter two categories most severely affected.

Broadband mapping provision of House-passed infrastructure measure poses risk to timely disbursement of state funding

The Largest U.S. Investment in Broadband Deployment Ever | Benton Institute for Broadband & Society: Broadband Equity, Access, and Deployment Program (And the Need for Better Broadband Maps) The U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) has six months to create the Broadband Equity, Access, and Deployment Program to support projects to construct and deploy broadband networks. Congress has allocated $42.45 billion for the program which will prioritize expansion of broadband in rural areas and states that rank below other states on broadband access and deployment. A key element in the implementation of the program is broadband mapping taking place at the Federal Communications Commission. The FCC is in the process of updating its current broadband maps with more detailed and precise information on the availability of fixed and mobile broadband services.

The Broadband Deployment Accuracy and Technological Availability (DATA) Act, signed into law in March 2020, requires the FCC to change the way broadband data is collected, verified, and reported. Specifically, the FCC must collect and disseminate granular broadband service availability data (broadband maps) from wired, fixed-wireless, satellite, and mobile broadband providers. To do this, the FCC is required to establish the Broadband Serviceable Location Fabric (a dataset of geocoded information for all broadband service locations, atop which broadband maps are overlaid) as the vehicle for reporting broadband service availability data. Additionally, the FCC must put forth specified requirements for service availability data collected from broadband providers, and it must create a challenge process to enable the submission of independent data challenging the accuracy of FCC broadband maps.

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This provision of the Infrastructure Investment and Jobs Act that passed the U.S. House of Representatives late this week and expected to be quickly signed into law is the largest risk factor to the measure's timely implementation. 

Given the nation's fraught history of broadband mapping, that key provision of the funding eligibility formula and the development of procedures to challenge their accuracy is likely to set off time consuming controversy between investor owned providers, consumer interest and state and federal regulators, bogging down federal disbursements for months and possibly years. The billions of dollars at stake provide impetus for these groups to file challenges and raise questions over the accuracy of the maps, neighborhood by neighborhood.

Eligibility for up to 75 percent grant funding for advanced telecom infrastructure builds is prioritized to “unserved areas,” defined as those where at least 80 percent of premises are unserved – those not having any providers offering service with throughput of at least 25 Mbps down and 3 Mbps up. That's open to gaming by fixed wireless providers who could conceivably claim offers of service meeting or exceeding the throughput minimum but at exorbitant rates.

“Underserved” areas – defined those lacking access to “reliable broadband service” with no providers offering service with throughput of at least 100 Mbps down and 20 Mbps up are secondarily eligible. For both categories, funding eligibility is limited to areas where least 80 percent of premises are unserved or underserved. Neighborhoods failing to meet the 80 percent threshold would be out of luck and continue to potentially suffer redlining by incumbent providers serving only select parts of them.

In potential model for nation, California poised to scale up open access fiber

California is poised to adopt a model of open access fiber infrastructure. The state is initially focusing on “middle mile” transmission infrastructure but could later extend the model that structurally separates end user services from the fiber that delivers them to “last mile” distribution infrastructure connecting customer premises.

The model, financed by a current state budget allocation of $3.5 billion for state owned transmission infrastructure and a similar amount for distribution infrastructure in the form of grants and loan securitization, dovetails with the current federal regulatory regime put in place in 2018 that regards the service layer as distinct from infrastructure, regulating IP services as information services under Title I of the Communications Act of 1934.

It also emerges one year after the U.S. Federal Communications Commission conditionally repealed rules put in place by the 1996 amendment to the act requiring incumbent telephone companies to sell wholesale access to its proprietary infrastructure to competitive local exchange carriers -- CLECs. That heightens the need for open access transmission infrastructure such as that being planned in California.

Both federal policies also pave the way for non-incumbents/CLECs including public sector entities and consumer telecom cooperatives to more widely build out and operate open access fiber distribution networks. Incumbent telcos and CLECs are limited by their business models requiring rapid returns on investment and relatively high ARPU. Consequently, these investor-owned companies offer limited distribution fiber in select neighborhoods most likely to meet those requirements, leaving the majority of homes without fiber connections as legacy copper telephone infrastructure has become obsolete as demand for quality, reliable connectivity rises rapidly.

Instead of mitigating risk by cherry picking select neighborhoods, the open access model separates end user services from infrastructure. It thus spreads the risk of areas that are costlier to build fiber to all doorsteps by aggregating demand across a broad customer base, cross subsidizing the high-cost areas from revenues generated by businesses and institutions. That’s how the Electronic Frontier Foundation (EFF) explained it in comments filed with the California Public Utilities Commission (CPUC) this month. In addition, the EFF recommends the CPUC develop a new license category for transmission infrastructure. In order to obtain licensure, the infrastructure would have to be offered on an open access basis to distribution infrastructure operators at affordable rates and offering sufficient capacity.

Telcos, Comcast target fiber upgrades to business customers -- not residences

Two legacy telephone companies and the nation's biggest cable TV company are upgrading their legacy metallic delivery infrastructures to fiber for business customers. Not targeted for the upgrades are residential users.

Residential voice telephone service was cross subsidized by business customers. There isn't a similar situation when it comes to advanced digital telecommunications. That's because under current U.S. regulatory policy, it's classified like the information services of the 1990s dialup era, AmericaOnline and CompuServe, and not as telecommunications services. 

Information services -- regulated under Title I of the Communications Act of 1934 -- are considered optional, discretionary services and not utilities. Hence, they are not subject to universal service and anti-redlining requirements, providing no regulatory incentive for telcos and cablecos to offer fiber connections to residences.

County's public-private partnership with telco looks more like a pass through federal subsidy and not a PPP

AT&T Takes the Public-Private Broadband Partnership Plunge - Telecompetitor: This AT&T public-private project still needs final funding approval from the County, which will trigger finalization of a contract between the two parties. No terms have been disclosed. Public-private partnerships are growing in momentum, as cities, towns, and localities look to ensure their communities have the adequate broadband infrastructure and are willing to put up funds to accomplish it. Increasingly, incumbent carriers like AT&T are interested in partnering.

But is this truly a public private partnership? Per the story below, it looks more like a pass through federal subsidy for a proprietary closed access network in which the county would have no partnership interest.

EVANSVILLE, Ind. — Unincorporated Vanderburgh County will now be the focus of a nearly $40 million investment into broadband service provided by AT&T. 

AT&T was selected following its response to a Vanderburgh County request for proposal and unanimously approved Tuesday by the Vanderburgh County Commissioners. Four companies responded to the request, a jump from the county’s previous broadband project, which had one response. 

The total investment will be $39.6 million, of which $9.9 million is public money through the American Rescue Plan Act and $29.7 million is investment by AT&T.

Treasury Department guidance on American Rescue Plan Act funding for state and local government fiber projects raises questions on throughput standard

The U.S. Treasury Department has updated guidance on the use of $10 billion in American Rescue Plan Act grant funding to state, local and tribal governments for capital projects to construct advanced telecom infrastructure. The text below is excepted from the guidance:

Broadband Infrastructure Projects. The construction and deployment of broadband infrastructure projects (“Broadband Infrastructure Projects”) are eligible for funding under the Capital Projects Fund program if the infrastructure is designed to deliver, upon project completion, service that reliably meets or exceeds symmetrical download and upload speeds of 100 Mbps. If it would be impracticable, because of geography, topography, or excessive cost, for a Broadband Infrastructure Project to be designed to deliver services at such a speed, the Project must be designed so that it reliably meets or exceeds 100 Mbps download speeds and between 20 Mbps and 100 Mbps upload speeds and be scalable to a minimum of 100 Mbps symmetrical for download and upload speeds. Treasury encourages Recipients to focus on projects that will achieve last-mile connections. Recipients considering funding middle-mile projects are encouraged to have commitments in place to support new and/or improved last-mile service.

This guidance favors fiber to the premises projects providing symmetrical throughput, something fiber can easily support. What's curious is the highlighted text. It begs the question of how "geography, topography, or excessive cost" (and what would be excessive?) would allow projects providing asymmetric throughput to qualify if those specific qualifications are met. It makes no sense because none of those factors would reasonably affect whether the delivered throughput is symmetric or asymmetric for a fiber to the premises project. Treasury clearly has some more explaining to do.

Biden administration’s delayed FCC appointments suggests telecom policy strategy overhaul in the works

Telecom policy wonks fretted and info tech press have scratched their heads for months over the Biden administration’s delay in fully staffing the Federal Communications Commission and naming a permanent chair. Affording the administration the benefit of the doubt, it’s likely the new administration has been taking its time developing a wholistic two-pronged telecommunications strategy.

Here’s how it might be playing out. The goal of the first part is to address the nation’s accumulated advanced telecommunications infrastructure deficits built up over the past two decades and bring robust connectivity to as many American doorsteps as quickly as possible. That element of the strategy is expressed in the administration’s “build back better” American Jobs Plan infrastructure initiative, now legislation pending in the House. It appropriates $42 billion to the states for advanced telecommunications infrastructure.

The second strategy prong would have a longer timeline with the goal of establishing a durable regulatory and subsidy regime to ensure Americans can get connectivity no matter where they live, with reliable service at affordable rates. It’s linked to the first prong: The infrastructure measure would require the FCC to conduct an inquiry on universal service and make policy recommendations to Congress.

Given the broad and long-term implications of that component, the administration would naturally want to move at a deliberate pace in nominating FCC members as well as naming a permanent chair. The administration would want to ensure its nominees are fully on board with its broader strategy and able to implement it.

It’s also possible the administration is mulling over the respective roles of the FCC and National Telecommunications and Information Administration relative to advanced telecommunications as part of a broader restructuring that could end up as a legislative proposal later in the administration. The NTIA will develop rules and oversee the telecom infrastructure funding allocated in the pending infrastructure bill.

Americans have a strong public interest group on advanced telecommunications policy: themselves. And they’ve been lobbying hard for two decades.

It has been postulated that America’s advanced telecommunications infrastructure deficits are largely attributable to the lack of public interest representation in public policymaking. There’s no equivalent of the Sierra Club for environmental policy in the case of telecommunications policy as Christopher Mitchell, Director of the Institute for Local Self Reliance’s Community Broadband Networks Initiative, observed in a recent Background Briefing with Ian Masters (@10:18).

That’s not entirely true. For years, Americans have been barraging their elected representatives at all levels of government with complaints and pleas for action to remedy lack of connectivity, high costs and poor customer service. When people are vexed to see neighbors just down the road or around the bend with landline connections but not available at their address and don’t get a satisfaction from providers, their next calls are often to their elected representatives and the news media. It’s been going on two decades now. It began in the early 2000s when DSL service didn’t quite extend to their homes and calls to telephone companies for connections were rebuffed or service promised “soon” that never arrived as the years crept by. Meanwhile, many were forced to turn to substandard, poor value wireless options.

During the COVID-19 pandemic and accompanying public health measures that turned homes into offices, classrooms and medical clinics, their predicament grew more dire and the calls to elected representatives for action more desperate as household members dealt with sluggish, unreliable and costly connectivity. In 2020, some elected representatives noted the subject had become the top issue in constituent communications with their offices.

When people don’t see their situations improving year after year despite their petitions to elected officials and only lip service from them, they naturally begin to wonder if they are really being heard. They grow disillusioned and angry and receptive to corrosive political messaging that the “system is rigged against them.”

A reinforcing perception that has become something of self-fulfilling prophecy is the big telephone and cable companies are the only voices that truly count. People can petition their elected representatives all they want, but their supplications don’t really mean anything in the end because the companies will always get their way and investors’ interests outweigh those of the public. It’s a variation on testimony by the then president of General Motors at a 1953 Senate hearing suggesting that what’s good for GM is good for America.

The comparison doesn’t apply to AT&T and Comcast today. While most Americans could buy an affordable car in the 1950s, many cannot get a landline advanced telecommunications connection at most any price or at an affordable monthly rate for those that can.

Federally backed credit facilities needed to fund fiber expansion

The Infrastructure Investment and Jobs Act passed by the Senate provides a strong infusion of grant funding for fiber advanced telecommunications infrastructure builds. Particularly for public and consumer cooperative owned fiber distribution infrastructure connecting homes, businesses and institutions. As President Biden suggested when he put forth his outline for the bill as the American Jobs Plan, building this critical infrastructure to reach all premises is more likely to occur when funding prioritizes networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives. Providers Biden noted, with “less pressure to turn profits and with a commitment to serving entire communities.” With that reduced financial burden and tax-exempt status, these entities can make funding go further than legacy telephone and cable companies.

Grant funding under the bill is a kick starter. More money will be needed given the high capital as well as operating costs involved. That’s where federal government-backed credit facilities could prove most useful while at the same time encouraging the use of fiber. It’s “future proof” technology as called for in the American Jobs Plan and has a life span of decades, corresponding to long term loan payback periods. The use of credit facilities is also more likely to appeal to fiscal conservatives than grant funding.

The Infrastructure Investment and Jobs Act would give tax exempt status to state issued bonds used for telecom infrastructure. But the bill language limits their use to areas where more than half of addresses that would be served in a census block group lack access to throughput that later generation DSL or fixed terrestrial wireless can provide. That’s not fiber, potentially leaving some premises with outdated, inadequate and poor value options.

Separate legislation pending in the House but thus far not advancing, H.R. 7302, would provide for low cost loan term loan guarantees and lines of credit for advanced telecommunications infrastructure administered by the federal Department of Commerce. Long term loans could cover up to 49 percent of capital costs and lines of credit up to 33 percent. The Department of Commerce would select eligible projects in areas lacking access download speed of at least 100 megabits per second and upload speed of at least 20 megabits per second and with latency that is sufficiently low to allow real-time, interactive applications. That could potentially rule out areas served by existing cable TV providers. While open access networks are specifically preferred under the bill language, fiber is not per a “technology neutrality” provision.

Localities, consumer utility coops could take default lead role in future distribution fiber construction

The United States continues to lack a unified advanced telecommunications infrastructure policy framework 25 years after the enactment of the Telecommunications Act of 1996. The law did not set forth standards governing physical infrastructure deployment. It merely directed the Federal Communications Commission to monitor the progress of the availability of advanced telecommunications. The FCC opted to measure that progress based on a sampling of throughput – not by the infrastructure being built to deliver it -- as advertised by providers in a given ZIP Code or census block and reported annually to the FCC.

Throughout most of this period and currently, the FCC chose to treat Internet delivered services as optional information services like those that existed in 1996 -- e.g. CompuServe and America Online -- instead of a telecommunications utility with a universal service mandate. Consequently, there was no regulatory incentive for telephone companies to reach all addresses within their service territories or to upgrade their legacy copper cable plants. They instead opted to provide DSL delivered services over copper only to homes that were technically serviceable due to DSL’s limited range. Seeing opportunity with the slow walking of fiber by telephone companies, cable companies revamped their coax cable networks to deliver IP services within their limited franchise “footprints.”

While large legacy telephone and cable companies are now the dominant providers, they are constrained by business models averse to capital investments. They have loads of debt on their balance sheets and investors expecting short term gains and dividends incompatible with the high costs and long term horizon of infrastructure investments. All of these factors led to only about a third of all American homes having fiber connections as the third decade of the 21st century begins.

Several hundred local governments and electric cooperatives stepped into the gap and have and are building fiber infrastructure. The question going forward is how these relatively small scale, disparate deployments created out of necessity will fit into the larger scheme going forward and their role in bringing fiber to every American doorstep. It’s a policy question inherent in the Infrastructure Investment and Jobs Act passed by the Senate this month.

The legislation would allow states to make the initial determination by giving them jurisdiction over how $42 billion allocated in the bill for infrastructure grants is spent, with oversight by the National Telecommunications and Information Administration. Local governments and cooperatives would also help decide themselves since they would have to put up a 25 percent match for new infrastructure. With the structural business model challenges facing the large legacy telcos and cablecos, localities and cooperatives could move into a default leadership position. One off grants can’t remedy the incumbents’ ongoing structural limitations.

While the bill allows states to determine where the funding goes for distribution infrastructure, it authorizes states as well as a broad range of eligible entities to seek grants with a 30 percent match to construct critical transmission or “middle mile” infrastructure. That component of the nation’s advanced telecommunications infrastructure is growing increasingly crucial to support the growth of fiber distribution infrastructure and the resultant bandwidth demand the legislation will spur if enacted. Commercial entities that already own most transmission infrastructure would likely be the primary recipients.

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.

Knowledge workers relocating to exurbs will encounter suboptimal advanced telecom infrastructure

Fringe outlying communities of major metropolitan regions were prized for their extreme privacy or more affordable housing before the pandemic, but were typically much less wealthy than the denser cities and affluent suburbs they surrounded.

The Great Reshuffling will likely make these far-flung exurbs richer and denser. The median household income across U.S. exurbs was $74,573 as of 2019, according to data from The American Communities Project. That likely ticked up over the last year as city dwellers in major job centers such as San Francisco and New York relocated to exurbs for the same or similar salaries.

The ‘Great Reshuffling’ Is Shifting Wealth to the Exurbs - WSJ

This population shift has implications for advanced telecommunications infrastructure that's often spotty in the exurbs. Knowledge workers relocating to the exurbs will often be in for a shock over the lack of fiber to the home connections where exurbanites are forced to get by with first generation DSL over aging copper phone lines or wireless connectivity.