States should partner with special districts, utility cooperatives to maximize reach of BEAD funds

A conflict between state and federal laws may delay the first distribution of funds to the states from the $42.5 billion program to expand internet access. Sixteen states bar or restrict municipally owned broadband – and nearly all of those states, according to an analysis by Route Fifty, appear unwilling to amend their laws as they finalize plans for how they will use their share of Broadband Equity, Access and Deployment, or BEAD, funds. That could put them at odds with the Biden administration, which supports having more cities and local governments offer broadband.

The 2021 infrastructure law requires that states allow local governments and utilities to receive BEAD funds to provide internet service. At the time the law was being crafted, the administration argued that local governments would be under “less pressure to turn profits” than broadband companies and, therefore, would likely offer internet access at lower prices.

https://www.cityandstatepa.com/policy/2023/12/pennsylvania-stands-alone-clarifying-bead-plan/392566/

This isn’t likely to cause any delay for the states. The Infrastructure Investment and Jobs Act (IIJA) language as Pennsylvania has apparently noticed is sufficiently open to allow BEAD funds to be granted to states that have laws restricting or barring municipally owned advanced telecommunications networks.

Per the IIJA, states “may not exclude cooperatives, nonprofit organizations, public-private partnerships, private companies, public or private utilities, public utility districts, or local governments from eligibility for such grant funds.” That language does not specifically bar states that have statutes limiting or banning these networks from participating in the BEAD grant funding as eligible entities.

The reference to public-private partnerships would theoretically allow states to form a partnerships between government units and the investor owned providers who lobbied for these state laws. The public entities would function as pass through entities for private subsidies as some local jurisdictions have done with American Rescue Plan Act funds earmarked for capital improvement projects.

A superior option better aligned with BEAD program guidance would be for states to partner with non municipal entities such as public utility authorities, special districts and utility cooperatives. Doing so comports with BEAD program guidance urging states to maximize their BEAD allocations to minimize their outlay and “extend the reach of the BEAD program funding and help to ensure that every unserved location and underserved location in the United States has access to reliable, affordable, high-speed internet.”

These entities would be better situated to do so since they operate with lower cost structures that don’t require them to generate profits or pay income taxes – constraints that brought about the nation’s crisis in deficient advanced telecommunications infrastructure that the IIJA seeks to address. To comply with the IIJA’s requirement that BEAD funds be distributed in “an equitable and nondiscriminatory manner,” those entities could partner with investor owned entities for network design, construction, and operation and to offer services as ISPs.

Failure to modernize copper to fiber reaches inflection point

Ensuring everyone can access modern broadband networks requires not only financial investments but also the support of forward-looking public policy. Unfortunately, the regulatory environment in some states, like California, is hindering these much-needed investments. Outdated regulations such as Carrier of Last Resort, or COLR, require providers to overlook the needs of the vast majority of consumers and prevent investments in modern networks. It’s worth noting Congress and many state legislatures have invested a historic number of resources towards high-speed broadband expansion in hard-to-serve areas; however, none of these programs are intended for preserving legacy voice services.

Today, public policies in California and states across the country should prioritize connecting as many households as possible and ensuring broadband access reaches underserved communities.

https://www.attconnects.com/how-broadband-networks-helped-create-21st-century-technology/

Some background here. AT&T California is petitioning the California Public Utilities Commission (CPUC) for geographically targeted relief from its Title II common carrier utility regulatory requirement to provide landline voice telephone service to any customer requesting a connection. It contends fixed prem wireless service served by its mobile wireless network will provide a reliable voice replacement in less densely populated areas where its isn’t deploying fiber to replace legacy copper POTS infrastructure.

Not everyone is convinced. Understandably so considering wireless is designed primarily for mobile use and can degrade in quality when too many users are using the system, particularly since these networks carry both voice and data. Wireless signals can also be less reliable in these areas that frequently feature hilly terrain and vegetation that can interfere with them.

AT&T contends the COLR requirement requires it to “wastefully” maintain “two duplicative networks:” the legacy copper POTS network as well as a “forward looking fiber” network. The problem with the tortured, ahistoric logic of this argument is AT&T and other large telecommunications companies have had decades to look ahead and modernize their copper POTS delivery infrastructure to fiber -- state of the art delivery infrastructure then and now. But because their investors are averse to this significant capital investment that cuts into earnings and shareholder dividends, the fiber future was cancelled in areas where the cost of building and operating it runs higher than others.

The delay in that crucial transition has now reached what AT&T properly characterizes as an inflection point, one that became painfully apparent during the public health measures taken during the COVID-19 pandemic stage. The issue lies not with CPUC’s COLR regulations but with AT&T’s shareholders whose interests don’t align with the broader public interest of modernizing the legacy copper POTS delivery infrastructure to fiber. The relevant public policy question is should the company's shareholders be rewarded for sitting on the sidelines for so long, leaving the nation years behind where it should be for advanced telecom?

Service providers likely relieved reporting requirement dropped from FCC anti-discrimination rules

Advanced telecommunications service providers are likely relieved that the Federal Communications Commission opted not to include an annual reporting requirement in its recently adopted rulemaking  Infrastructure Investment and Jobs Act: Prevention and Elimination of Digital Discrimination.

The rulemaking bars “policies or practices, not justified by genuine issues of technical or economic feasibility, that differentially impact consumers’ access to broadband internet access service based on their income level, race, ethnicity, color, religion, or national origin or are intended to have such differential impact.” It applies broadly to service providers, their contractors, entities facilitating or involved in the provision of service or maintaining and upgrading network infrastructure or other entities that otherwise affect consumer access.

The rulemaking implements section 60506 of the Infrastructure Investment and Jobs Act requiring the FCC adopt rules to facilitate equal access to broadband internet access service. Section 60506 states public policy that “insofar as technically and economically feasible— subscribers should benefit from equal access to broadband internet access service within the service area of a provider of such service.”
It defines equal access as “the equal opportunity to subscribe to an offered service that provides comparable speeds, capacities, latency, and other quality of service metrics in a given area, for comparable terms and conditions.”

The reporting requirement could have provided a detailed basis of comparison to a given provider’s other deployments and service offerings to build a case demonstrating intentional -- or unintentional discrimination based on disparate service offerings – among similarly situated areas. The reports would have required providers to report annually “a comprehensive picture of each major deployment, maintenance, and upgrade project completed or substantially completed for each state and territory within its service area or footprint.”

Those reports could have been utilized by state attorneys general, local governments and/or class action attorneys to demonstrate a pattern of discriminatory market conduct in contravention of public policy. Less densely populated exurban communities that have for years complained telephone and cable companies have redlined them while serving adjacent areas could comprise a class of similarly situated plaintiffs. Another potential plaintiff class is residents of low income urban communities alleging they pay more for inferior services than those offered in more affluent nearby communities. The rulemaking permits providers to justify decisions on deployment of infrastructure and services based on technical and economic considerations.

The potential for litigation is enhanced given FCC complaint handing procedures tend to result in summary dismissal of consumer complaints. Complaints are referred to the provider subject of the complaint. Unsurprisingly, providers typically rationalize or deny the complaint and the complaint is then closed.

Need for sell and buy side subsidies points up advantage of government, coop owned fiber networks

Testifying before Congress back in May, NTIA Administrator Alan Davidson confirmed that a failure to fund the ACP will negatively impact BEAD. "As we build out our broadband networks, we want providers to know that there's some certainty that they'll have customers, particularly in these rural areas, particularly in areas where there's lower-income Americans, they need to know that those Americans are going to be able to afford to get online. The ACP plays a major role there," he said.

How ACP negotiations might shake out

This statement clearly points up market failure and the need for a lower cost alternative model for advanced telecommunications infrastructure. Davidson is in effect saying without both seller subsidies -- delivery infrastructure subsidies such as the NTIA's Broadband Equity, Access and Deployment (BEAD) program and buy side subsidies based on household income (the Affordable Connectivity Program), market failure will result. In short, providers won't be able to to connect American homes and consumers won't be able to afford their monthly bills since providers have to price in a profit margin and allow for income taxes. Even then, it's hard to make it pencil out. Jeff Luong, AT&T’s vice president of network engineering, reportedly said at the recently held Fierce Telecom U.S. Broadband Summit that even with AT&T spending about $20 billion per year on infrastructure, “we cannot build out in all the areas we deem as economical.”

This situation clearly points up the need for lower cost alternative and one more likely to avoid the problem of uneven deployment by investor owned providers that must carefully segment where they build fiber that leaves many homes unconnected: fiber optic networks owned by governmental entities and consumer utility cooperatives. Neither must generate profits or pay income taxes.

Incumbent strategy post 1996: Buy time, protect service territories.

As policymakers dithered since the enactment of the 1996 Telecom Act, large incumbent telcos bought time to slow their copper to fiber transition match their business models that would permit only slow, incremental construction and to protect their nominal service areas from public and utility coop owned fiber. They limited their fiber builds to select high potential areas offering sufficient density of relatively affluent households most likely to meet their internal rate of return standards and generate strong ARPU.

This was accomplished by sleight of hand, keeping the U.S. Federal Communications Commission’s policy focus on boosting “broadband speed,” while keeping policymakers’ and the media's eyes off the larger challenge of modernizing the legacy copper telephone network to fiber. They also did so by apparently influencing policymakers to dole out piecemeal, highly restricted grants nominally aimed at expanding access since their own fiber builds were very limited, leaving Americans hungry for connectivity. The hunger became acute during the public health restrictions of the COVID-19 pandemic with the need for advanced telecommunications to work, school and obtain medical care at home. The goal is to keep the issue framed as "broadband" -- a discretionary information service -- versus an essential utility.

The biggest disruptive threat came with the Biden administration’s draft language of the Infrastructure Investment and Jobs Act (IIJA) of 2021. It was initially geared toward building fiber to every American doorstep as was achieved with copper to provide voice telephone service in the 20th century. Priority was to be afforded fiber to the premises (FTTP) infrastructure owned, operated by, or affiliated with local governments, non-profits, and co-operatives. It was a wise decision since telecom like other infrastructure is a high cost undertaking that favors size and economies of scale -- something AT&T put into practice in proposing to form regional operating companies as part of its 1983 settlement of the federal government’s anti-trust action leading to its divesture. As is noted, these providers operate without the need to generate profits for investors (as well as pay income taxes) and thus can be committed toward a goal of universal service.

However, instead of standing its ground and favoring this lower cost model that would have allowed taxpayer dollars to go farther, the Biden administration went along with new IIJA language creating the Broadband Equity, Access and Deployment (BEAD) subsidy program with generous subsidies for fiber construction and geared toward investor owned incumbents looking to incrementally edge out their existing “footprints.” Decisions on how BEAD subsidies are awarded will likely result in controversy and produce more delay. Disputes over proposed subsidized projects in California offer a preview. The incumbents are likely singing Time Is on My Side.

Infrastructure Investment and Jobs Act (IIJA) of 2021 marked start of fundamental shift in U.S. telecom policy

The Infrastructure Investment and Jobs Act (IIJA) of 2021 marked the beginning of a fundamental shift in how the United States regards what it termed in the 1996 Telecommunications Act as advanced telecommunications based on Internet protocol (IP). It’s evolving from a commercial information service as it’s currently regarded and lightly regulated by the Federal Communications Commission to critical infrastructure.

But not fully. It’s still referred to in the IIJA as “broadband:” the incremental evolution since 1998 in throughput from narrowband dialup and changing FCC definitions of it since then. With those definitions based on the business models of the large telephone and cable companies that market bandwidth in price tiered increments.

As might be expected with evolving public policy, it reflects both old and newer thinking. Current policy regards advanced telecommunications as critical infrastructure on one hand as expressed by the IIJA and as a commercial information service -- with access to information priced on the bandwidth of the connection to access it, i.e., “broadband by the bucket” on the other. 

Authorized by the IIJA, the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) subsidy program eligibility guidance increases the bandwidth base level from 1990s narrowband dialup to first generation ADSL (i.e. <25/3 with latency > 100ms) and explicitly favors fiber to the premises (FTTP). The latter is an infrastructure versus a throughput-based standard, although the IIJA continues to utilize a minimum coaxial cable throughput standard (100Mbps down/20Mbps up). Locations not offered that level of throughput are secondarily eligible for BEAD subsidization as “underserved.”

Notably, AT&T is urging states to allow it to qualify for BEAD subsidies for contiguous projects to upgrade both generations of copper delivered Digital Subscriber Line (DSL): first generation ADSL (as unserved) and VDSL (underserved). That’s because locations in AT&T’s service area fall into both categories and are often in proximity -- a function both of the limited technological range of each generation of DSL over decades-old legacy twisted pair copper as well as AT&T’s decisions on where it deployed DSL. 

Some neighborhoods were never offered ADSL while others were, provided they were sufficiently close to telephone central offices and remote DSLAMs. Second generation VDSL is even more limited in range and was deployed to serve denser, cherry picked neighborhoods where cable is often also available. BEAD program rules would allow AT&T to propose projects comprised of a mix of "unserved" and "underserved" locations down to the individual address since the rules define an eligible project as one of just discrete number of addresses or even a single address.

In the not too distant future as advanced telecommunications becomes increasingly FTTP infrastructure-based, the notion of "broadband" bandwidth that bears relevance for legacy metallic landline delivery infrastructure will become obsolete.

Nearly 900 objections filed in California subsidy program

Nearly 900 objections have been filed with the California Public Utilities Commission (CPUC) protesting proposed projects requesting subsidies to construct advanced telecommunications distribution infrastructure. Under the FFA program rules, an objection must be based on an error of fact, or policy or statutory law. (Click here for a list of objections: PDF / Excel)

The CPUC’s Federal Funding Account (FFA) program received 484 grant applications for projects in every county totaling more than $4.6 billion -- more than double the $2 billion available. The funding is authorized by 2021 California legislation allocating federal funding appropriated by the federal American Rescue Plan Act (ARPA). The ARPA was enacted amid the COVID-19 public health emergency to provide support to state, local, and tribal governments including infrastructure investment.

Similar to the federal Broadband Equity, Access and Deployment (BEAD) program funded under the Infrastructure Investment and Jobs Act (IIJA) of 2021, eligibility is limited to “unserved” areas for which no landline service is offered to “an entire community” of at least 25 Mbps downstream and 3 Mbps upstream. The FFA program rules also take into consideration whether proposed projects would target areas prioritized by the CPUC based on demographic and digital equity information and analysis of the number of low-income households, median household income, disadvantaged community status, and digital equity.

The Golden State Connect Authority (GSCA), a joint powers authority of 40 counties authorized by the 2021 California legislation to build open access fiber to the premise distribution infrastructure, filed objections to 50 projects proposed by AT&T California. The GSCA contends the projects contravene FFA program guidance because they would merely upgrade its existing footprint of landline infrastructure without expanding to outlying locations.

“Additionally, in examination of the sheer number of projects proposed by AT&T statewide and commensurate funding requests, the cumulative request by AT&T for all its projects statewide indicates that the applicant will not have the financial, technical, or operational capacity to complete all the proposed projects within the timeframe required by the Last Mile FFA grant program,” wrote GSCA General Counsel Arthur J. Wylene. “This directly contravenes Last Mile FFA program requirements that an applicant must have the ‘financial, technical, and operational capacity’ to execute the projects for which it has applied within the required timeframes,” i.e. by 2027.

Notably, Jeff Luong, AT&T’s vice president of network engineering, reportedly said at last week’s Fierce Telecom U.S. Broadband Summit that even with AT&T spending about $20 billion per year on infrastructure, “we cannot build out in all the areas we deem as economical.”

According to the CPUC, staff will analyze applications, objections, and their responses and work with applicants and local stakeholders to select the applications most deserving of funding. No awards are expected until first quarter 2024 at the earliest.

Public bonds to finance publicly owned open access regional fiber

Private capital is recognizing the long-term asset value of fiber to the premises (FTTP) advanced telecommunications distribution infrastructure and its ability to generate long term revenue over its estimated 30 to 50-year lifespan. It also offers first mover advantage given FTTP functions as a terminating natural monopoly. The provider that makes the initial fiber connection is unlikely to face competition later from another fiber builder and will own the customer premise for decades.

That’s evidenced in the many private equity deals over the past year with investor owned FTTP players including a joint venture between BlackRock Capital Investment and AT&T. Fundamentally, this is a regime change, shifting away from the more constrained investment model of the large incumbent telephone companies. With their highly leveraged balance sheets and the need to pay large shareholder dividends, the short term value analysis has prevailed. Hence, FTTP deployment is deployed conservatively to areas where ROI and ARPU are projected to be the most favorable, leaving most without.

Now the public bond markets have the opportunity to similarly recognize the long term value and relative safety offered by FTTP networks. To spread risk and cost of deployment to gain economies of scale – particularly important amid labor and supply chain constraints and rising interest rates -- that investment would optimally be leveraged by regional public owned networks.

A model potential path ahead lies in Vermont. In that state, one regional network comprised of 31 towns formed under state law as a Communications Union District (CUD) obtained a BB rating for its $7.53 million 2023 Series A bonds from S&P Global, the nation’s preeminent credit rating agency. “This is a historic moment,” said Stan Williams, ECFiber’s municipal finance advisor. “For the first time, a CUD will be issuing a rated bond, which means that many more investors will be competing to buy those bonds, lowering the interest rate.”

That financing could potentially be expanded significantly if the nine CUDs operating in the state jointly issued a bond to fund their expansion. That could also enhance end user affordability with the financing costs spread over a much larger base.

Doing so would help ensure Vermont can meet its goal of getting FTTP to every location connected to the electrical grid by the end of 2028, particularly given a state audit report earlier this year that identified uncertainly associated with federal grant funding as a risk to attaining it, pointing out the need to identify other funding sources. The audit also noted CUDs have not been partnering for procurement of goods and services, risking higher costs and inferior outcomes.

California proposes to regard areas served by DSL and FWA as potentially eligible for BEAD subgrants

The California Public Utilities Commission (CPUC) has developed a framework to guide eligibility for the state’s $1.86 billion allocation under the federal government’s Broadband Equity, Access and Deployment (BEAD) program. The framework would regard areas served by DSL and fixed wireless service as potentially eligible for BEAD subgrants. The framework is part of a proposed rulemaking issued November 7.

Under BEAD and its authorizing legislation, the Infrastructure Investment and Jobs Act (IIJA), the primary scope of proposed projects eligible for state subgrants is where at least 80 percent of serviceable addresses are not offered service with throughput greater than 25Mbs for downloads and 3Mbps for uploads at latency of less than 100ms, designated “unserved.” Those where at least 80 percent are not offered 100Mbps/20Mbps are deemed “underserved.” 

“The CPUC will treat locations that the National Broadband Map shows to have available qualifying broadband service (i.e., a location that is “served”) delivered via DSL as ‘underserved.’" The CPUC's proposed framework is consistent with BEAD program guidance that acknowledges that in some cases, DSL does not provide consistent access to advertised speeds. "To the extent a particular location is identified on the Broadband DATA Maps as served by DSL at speeds that warrant treatment of that location as 'served' or 'underserved' but is not in fact reliably served at such speeds, this would be a proper basis for challenging the relevant location’s service status during the challenge process created by the Eligible Entity," the guidance states.

The CPUC notes this "will better reflect the locations eligible for BEAD funding because it will facilitate the phase-out of legacy copper facilities and ensure the delivery of ‘future-proof’ broadband service, the proposed framework states. “This designation cannot be challenged or rebutted by the provider.”

Additionally, the CPUC will presume 5,829 locations the National Broadband Map shows “underserved” by DSL as “unserved” for reported speeds that are lower than 30/5, for which there is supporting evidence that speeds consistently deliver below 25/3 service. “Considering the low prospects of providers investing in maintenance of legacy copper plant, low speed DSL should be replaced as soon as feasible with more future-proof infrastructure. This modification will better reflect the locations eligible for BEAD funding because it will facilitate the phase-out of legacy copper facilities and ensure the delivery of ‘future-proof’ broadband service,” the CPUC concluded.

“Due to the possibility of California’s BEAD allocation being fully committed to deploying service to unserved locations, this modification will also ensure that locations served by low-speed DSL are not excluded from eligibility for this critical investment,” citing AT&T’s application for relief from its landline voice telephone service carrier of last resort obligation in rural areas of the Golden State under Title II of the federal Communications Act.

The proposed rulemaking would also regard 36,887 locations that the National Broadband Map shows as “underserved” delivered over Licensed Fixed Wireless (LFW) as “unserved” for reported speeds that are lower than or equal to 30/5 Mbps:

"As a technical matter, fixed wireless speeds fluctuate heavily,” the framework notes. “Given this, speeds that barely qualify as underserved will likely be below 25/3 service during peak usage times. This is especially true of older fixed wireless deployments that struggle to reach higher speeds and mitigate interference and line of sight issues. In fixed wireless networks, service performance can be affected by a customer’s proximity to a base station, the capacity of the cell site, the number of other users connected to the same cell site, the surrounding terrain, and radio frequency interference. Additionally, fixed wireless networks require a clear line-of-sight. Therefore, obstructions, such as trees, can block radio signals and impact the reliability of fixed wireless networks. Poor weather conditions, including rain, can affect the availability and quality of a customer’s fixed wireless service.”

Cellular fixed wireless will similarly undergo critical scrutiny when determining whether an area is deemed eligible as underserved:

“The CPUC has observed that some fixed wireless operators report 25/3 or 100/20 speeds on the National Broadband Map even where their networks frequently reach those speeds only under optimal circumstances and have not been replicated in other testing environments, such as the CPUC’s own CalSPEED process. User agreements for leading providers of cellular fixed wireless indicate that users will be deprioritized during periods of network congestion, decreasing the likelihood that service delivered to consumers will meet the claimed thresholds, especially in future years as network utilization increases.”

The CPUC explained its rationale as due to the possibility of California’s BEAD allocation being fully committed to deploying service to unserved locations. “This modification will also ensure that locations served by low-speed and unreliable cellular fixed wireless are not excluded from eligibility for this critical investment.”

The CPUC said it will treat locations that the National Broadband Map shows to be “underserved” or “served” as “unserved” if rigorous speed test methodologies show otherwise. “This modification will better reflect the locations eligible for BEAD funding because it will consider the actual speeds of locations, leveraging the extensive data collection already conducted by the CPUC and reducing the administrative burden on challengers, providers, and CPUC staff to process challenges for locations already successfully challenged using equivalent evidence to that required for BEAD challenges.”

Concurrent FCC rulemakings would bar redlining for Internet service

One month after proposing a rulemaking to classify Internet protocol-based advanced telecommunications as a common carrier utility subject to universal service and non-discrimination mandates, the U.S. Federal Communications Commission will take up a similar rulemaking. The FCC’s proposed rulemaking Preventing Digital Discrimination is set for a vote at its November 15 meeting. It is primarily intended to remedy disparate impact (versus intentional) discrimination by providers that affects neighborhoods based on their demographics: income level, race, ethnicity, color, religion and national origin.

According to the FCC, the rulemaking implements section 60506 of the Infrastructure Investment and Jobs Act of 2021. It states federal policy that “insofar as technically and economically feasible— subscribers should benefit from equal access to broadband internet access service within the service area of a provider of such service.” Section 60506 defines equal access as “the equal opportunity to subscribe to an offered service that provides comparable speeds, capacities, latency, and other quality of service metrics in a given area, for comparable terms and conditions.”

Since IP telecom is currently classified as lightly regulated optional information service under Title I of the Communications Act, providers are free to deploy delivery infrastructure wherever they wish and at rates of their choosing. They naturally prefer denser, higher income neighborhoods that will produce faster return on capital investment (ROI) and where households are less price sensitive and more inclined to subscribe to higher priced services, thereby maximizing average revenue per unit (ARPU).

The proposed rulemaking gives providers an out by allowing them to defend deployment and pricing decisions based on technical and economic feasibility. They could conceivably argue that they must be more conservative in building infrastructure in lower income neighborhoods and charge more for comparable services than those offered in higher income communities in order to feasibly meet their ROI and ARPU targets. The higher rates in turn would be out of reach of some lower income households, making them less likely to sign up for services and perpetuating an unvirtuous cycle. Similarly, they could argue middle mile infrastructure isn’t adequate to serve a given community, thus making delivery infrastructure deployment technically unfeasible. It's entirely logical to segment markets and pricing in a market-based scheme under Title I regulation. Disparate market impact will be a natural outcome. Additionally, providers choosing to build fiber in higher income areas but not in lower income areas could be seen as intentional discrimination based on income, i.e. disparate treatment.

The proposed rulemaking apparently contemplates a comparison of deployment activity to help regulators establish a pattern of market conduct demonstrating discrimination. That assessment would be based on a mandate on providers annually report on their deployment activities:

We propose that each annual report must address the following components to provide a
comprehensive picture of each major deployment, maintenance, and upgrade project completed or substantially completed for each state and territory within its service area or footprint: (1) the nature of each project completed or substantially completed in the calendar year immediately preceding the submission of the report (i.e., deployment, upgrade, maintenance, or a combination thereof); (2) the number of housing units affected by the project (i.e., the number of housing units whose broadband availability or quality is positively impacted by the project) by census tract (utilizing the system presently used in the BDC); and (3) a narrative description of the project and of the areas served by the project, to allow for greater precision and clarity regarding what the project is designed to accomplish and what communities are served by the project. 

While the language of the proposed rulemaking includes providers’ more proscriptive term to describe where they have built infrastructure and offer advanced telecommunications services , i.e. “footprint,” should the FCC reclassify Internet protocol telecommunications as a utility under Title II of the Communications Act as proposed in a separate notice of proposed rulemaking issued September 28, 2023, Safeguarding and Securing the Open Internet, 47 U.S.C. 214(e)(5) affords state public utility commissions and the FCC authority to develop their own geographic parameters for the purpose of Title II’s universal service mandate requiring providers to offer service to all serviceable addresses within the service area:

(5) “Service area” defined

The term “service area” means a geographic area established by a State commission (or the Commission under paragraph (6)) for the purpose of determining universal service obligations and support mechanisms. In the case of an area served by a rural telephone company, “service area” means such company’s “study area” unless and until the Commission and the States, after taking into account recommendations of a Federal-State Joint Board instituted under section 410(c) of this title, establish a different definition of service area for such company.

Similar to the FCC’s Preventing Digital Discrimination rulemaking, reclassification of IP services under Title II would give regulators additional statutory authority to sanction discriminatory conduct under 47 U.S.C. 202, titled Discrimination and Preferences. While FCC is forbearing rate regulation in the proposed Title II reclassification rulemaking, this provision makes it unlawful for common carriers engage in “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.” The statute allows for fines of $6,000 for each violation and $300 daily penalties for ongoing violations.

"Community broadband" sounds great in concept. Paying for it is another matter.

Schaffer is a firm advocate for communities taking ownership – literal ownership – of their broadband network: bringing “a high-quality, universal service” to everyone – “not for profit, but for service.”

There’s a cost to that, of course, but the community then can make decisions about how to lower that cost, she said. “When you take the profit margin out of it, it allows you to serve more people” at a reasonable price.

https://dailyyonder.com/a-rural-calling-peggy-schaffer/2023/10/25/

Or whether communities are willing bear any cost whatsoever that would incur bond debt and new taxes to service it. It's a hard sell for many with ongoing concerns over public and personal finances, an aging population and resistance to new taxes for infrastructure. That's why private ownership along with its attendant problems of limited access and affordability will remain predominant in the United States.

Sohn avoids mention of FCC Title II rules in recent speech

In a speech last week, Gigi Sohn, executive director of the American Association for Public Broadband, conceded that advanced telecommunications infrastructure will largely remain in the hands of private sector investors. Sohn has also questioned the notion of private sector market competition as the means to ensure advanced telecommunications infrastructure reaches all American doorstep.

It’s a logical conclusion since telecommunications like other utilities tends toward monopoly. Companies aren’t going to compete to bring multiple proprietary fiber connections to a given address because it’s economically inefficient and favors those that make the first connection. One might gain customers by bringing in a second fiber line, taking them from the provider of the first. But the return on investment rapidly diminishes with additional lines. This is not a competitive market defined by many sellers and many buyers. Many buyers, yes, but there won’t be many sellers. 

Sohn’s declaration that advanced telecommunications will remain in private hands as a service that naturally tends toward monopoly has powerful implications since market forces aren’t going to balance for buyers’ interests in access and value. Strong, meaningfully enforced regulation is needed to ensure universal and affordable access. Without it, providers are free to offer fiber connections available wherever they want at whatever price they choose.

It is thus striking that Sohn in her remarks voiced no support whatsoever for the Federal Communications Commission's (FCC) proposed readoption of regulations that would classify advanced telecommunications under Title II of the Telecommunications Act of 1934. That would make advanced telecom service a common carrier utility where reasonable requests for service – i.e., serviceable addresses – must be honored. No cherry picking and no neighborhood redlining.

It’s even more striking that Sohn didn’t refer to Title II given she promulgated the same regulations while on the staff of the FCC in 2015. The FCC in a split vote opened comment reviving the Title II regulations just two days after Sohn’s speech. As it did in 2015, however, the FCC is setting aside granting state public utility commissions authority over rates charged end users to help ensure affordable access.