Charter CEO: Focus on symmetrical speeds due to marketing, not need | Fierce Telecom

Charter CEO: Focus on symmetrical speeds due to marketing, not need | Fierce Telecom: Echoing comments made by Comcast CEO Brian Roberts earlier in the week, Rutledge dismissed the competitive threat from fixed wireless access technology, arguing it will fall by the wayside much like DSL has as bandwidth and speed demands rise.

Mettalic COAX cable TV distribution infrastructure won’t be able to keep up either. The U.S. should have started a massive transition to fiber to the premise (FTTP) advanced telecom infrastructure 30 years ago. Instead, it adopted a laissez faire policy of allowing a wild west, constrained commercial market in "broadband" bandwidth. That created perverse incentive for legacy telephone and cable companies to sell higher bandwidth tiers at a price premium rather than invest in FTTP that would effectively end the scarcity-driven "broadband" market created by their underinvestment in distribution infrastructure.

Now the nation is caught in a never ending game of catch up, attempting to keep the advanced telecom infrastructure sufficient to end user needs with the minimum possible investment. That's beneficial to shareholders of these companies. But despite their relatively much smaller number, national policy of the past three decades has accorded their interests far greater weight than the broader public's.

Infrastructure Act gives FCC option to route around “broadband map” delays

The Infrastructure Investment and Jobs Act (IIJA) allocates $43.45 billion in grants to the states for the construction of advanced telecommunications infrastructure. The IIJA links the amount of that funding for a given state to geographic service availability data collected by the U.S. Federal Communications Commission as required by the 2020 Broadband Deployment Accuracy and Technological Availability (DATA) Act. That data is integral to determining eligible infrastructure projects for which the states can fund up to 75 percent of construction costs. The FCC announced this week announced data as of June 30, 2022 is due to the FCC by September 1, 2022.

However, final datasets are likely be delayed into 2023 and possibly beyond. Provisions of the DATA Act and FCC regulations implementing it authorizing state, local, and tribal governments and other entities or individuals to challenge their accuracy. The IIJA requires the FCC to timely resolve challenges within 90 days after the final response by a provider to a challenge.

States and local governments have complained for years FCC data overstates the availability of landline and mobile wireless advanced telecommunications availability. That historical point of tension between federal and state/local government will likely to be heightened given the large amount of funding the IIJA appropriates for advanced telecommunications infrastructure. Some states anxious to remedy infrastructure deficits magnified over the past two years by pandemic public health measures have developed their own data and suggested it should be utilized rather than the FCC’s for IIJA funding given the urgent funding need.

Additionally, the IIJA requires states to establish a process allow nonprofits, local governments and service providers to challenge grant awards. The IIJA also authorizes the National Telecommunications and Information Administration to modify the challenge process and overturn state determinations on challenges. Challenges to these IIJA funded projects are likely from incumbent commercial landline and wireless service providers claiming a proposed infrastructure project would “overbuild” their proprietary infrastructure and duplicate their advertised services as shown in availability data.

The IIJA provides the FCC the option to circumvent the service availability data-based eligibility standard and associated controversy and delay. Section 60102(a) of the IIJA defines project eligibility based on either the availability data being compiled by the FCC or for areas lacking access to “broadband service” as defined by the FCC’s 2018 Internet Freedom rulemaking “or any successor regulation.”

Such a regulation could be in the offing. In a July 2021 executive order, President Joe Biden encouraged the FCC to adopt new rules similar to the FCC’s superseded 2015 Open Internet rulemaking that classified Internet protocol delivered service as telecommunications utilities regulated under Title II of the Communications Act of 1934. This gives the FCC an opportunity to redefine “broadband service” using a utility delivery infrastructure definition and specifically fiber optic infrastructure.

Hope is not a strategy: America's aspirational and unrealistic advanced telecom infrastructure policy cannot attain universal access

It's been said that hope is not a strategy. The United States doesn't truly have a strategy to attain universal access to advanced telecommunications service for all Americans because its telecom policy of the past 25 years is largely aspirational. It's based on the hope that:

1. By having the telephone companies report annually on the broadband bandwidth they sell in a given census block, unspecified actions can be taken to increase competition notwithstanding that telecom infrastructure like other utilities is a natural monopoly.
2. Increased competition in turn will encourage investment in areas where the return on infrastructure is riskier, ensuring relative parity of access to advanced telecommunications among urban and less urbanized areas of the nation.
3. By creating "broadband maps" (based on #1) delineating levels of throughput offered by various wireless and landline technologies, the maps will guide early and efficient construction of advanced telecommunications infrastructure by showing where it’s needed in order to ensure universal access to advanced telecommunications.
4. The maps can be updated in 2022 to show where throughput is the lowest to guide federal grant subsidies to states to cover 75 percent of the cost of building advanced telecommunications distribution infrastructure at least comparable to that of existing cable TV providers.

PG&E undergrounding project could potentially benefit with co-location of distribution fiber conduit

Planting wires underground is one of the most expensive wildfire-risk strategies any utility can undertake — and it remains to be seen if the $25 billion estimate is high enough to cover the entire 10,000 miles that are to be placed underground in the areas deemed at most risk to wildfire across PG&E’s territory. The price tag is based on PG&E’s belief that it can do the job for $2.5 million per mile. Yet PG&E plans to spend $3.75 million per mile this year, when it expects to complete 175 miles of work. And in a white paper published four years ago, PG&E said underground work costs $3 million per mile.

Nonetheless, Chief Executive Patti Poppe said she’s confident that as the project ramps up, economies of scale and new technologies will bring costs into line. The utility expects to be planting 1,200 miles a year underground by 2026. “We can dramatically reduce our costs every year,” she said on a conference call with Wall Street investment analysts. “With scale, we can improve the unit costs.” 

CA utility PG&E says underground wire project will cost $25B | The Sacramento Bee

PG&E could potentially gain additional economies of scale by partnering with local governments, utility districts and consumer utility cooperatives to co-locate fiber conduit as it buries its electric lines. PG&E is prioritizing areas of its mostly Northern California service territory where wildfire risk is the highest. 

These areas also have major telecommunications infrastructure deficiencies. Residents and businesses would doubly benefit from both reduced risk of wildfires sparked by overhead electrical distribution lines as well as access to fiber delivered advanced telecom services.

Such a partnership would also potentially benefit PG&E by speeding up its burial of electric distribution lines, demonstrating good faith effort to regulators. The partners could also potentially tap into funding in the recently enacted federal Infrastructure Investment and Jobs Act that appropriates funds for electrical infrastructure improvements as well as advanced telecommunications infrastructure.

USTelecom: Rescind #infrastructurebill grant guidance preferring networks built by municipalities, non-profits and electric co-ops

"Deployment is hard, complicated, and expensive work. It’s also not a ‘set it and forget it’ technology. Congress was clear: competition for these public funds should occur on a level playing field. Yet concerning rules have emerged from the Treasury and Agriculture Departments that encourage states to favor entities like non-profits and municipalities when choosing grant winners, despite their well-documented propensity to fail at building and maintaining complex networks over time. The unconnected—not to mention American taxpayers—can’t take that gamble. Experience should not be a mark against an applicant, but a strong attribute in their corner.

Source: A Blueprint for Government to Finally and Fully Connect Our Nation

USTelecom is right. Building advanced telecommunications infrastructure is challenging and complicated. And expensive. As the history of the past three decades has shown, too expensive for telephone companies to timely modernize their legacy copper analog plant that reaches nearly every American home, business and institution to fiber as about two thirds of homes lack fiber connections as 2022 begins. 

That's because the industry has adopted a business model of selling bandwidth by the price tier. Indeed, USTelecom dubs itself "The Broadband Association." That's not a template that favors infrastructure but rather capital investment only where bandwidth can be sold with the highest and fastest return on investment. Federal grant funding cannot remedy this structural issue.

USTelecom is also correct in asserting that experience counts. Its members know how to design, build, maintain and operate advanced telecommunications infrastructure. But that does not mean they should or have the right own it. Because telecom infrastructure is a natural monopoly and not amendable to market forces to ensure access, affordability and high quality service and support, it is best held by publicly owned utilities and consumer utility cooperatives whose purpose is to serve the public interest and not the more narrow interest of telephone company shareholders. The appropriate role for these companies to assure all Americans have access to affordable and high quality advanced telecommunications is contracting with these entities to perform these functions that leverage their expertise and experience.

Private and public financing schemes emerge to finance fiber telecom infrastructure

In the absence of an aggressive federal initiative to timely replace obsolete, decades-old copper telephone lines that reach every doorstep with fiber, local U.S. governments are looking to connect homes, schools and small businesses lacking fiber connections or unable to afford them and to promote economic development.

A major stumbling block is they lack the financial resources to build their own networks. Despite low interest rates, they are reluctant to issue bonds to cover construction costs and more specifically, to secure the debt. With taxpayers reluctant to support new tax levies, politicians are leery of asking voters to approve them. In addition, local government officials -- still scarred by the penury of the 2008 financial crisis -- aren’t inclined to pledge their general funds as security.

Private and public financing schemes have emerged to try to help localities secure fiber construction bonds. One private scheme is being utilized by a telephone company, Consolidated Communications. The local government issues a bond and retains full or majority ownership of the network infrastructure. The telco secures the bond until it’s retired in 20 to 30 years and then assumes control of the network assets. By which time equipment replacement and updates will likely be needed. But the telco gets network revenues both during the bond term and afterwards and doesn’t have to commit as much capex up front, offset by the muni bond proceeds. That meets telcos’ need to avoid capex that suppresses earnings as well as incurring more debt load given already overburdened balance sheets among investor-owned telcos.

Another private financing method utilizes European pension fund investment capital. Under that scheme, the local government does not own the network, which remains under the control of a private sector operator. The model provides more patient capital than shareholder owned telephone and cable companies. But like the investment capital of those companies, it is risk averse and aimed at densely populated urban areas.

A public bond securitization method is under development in California. Legislation enacted in 2021 authorizes the California Public Utilities Commission (CPUC) to annually loan funds from its advanced telecommunications infrastructure subsidy program to a loan loss reserve fund. The current state budget appropriated $750 million to seed the fund. It will cover costs of debt issuance, obtaining credit enhancement and funding of reserves for the payment of principal and interest on debt incurred by local government and nonprofit organization projects.

The CPUC is in the process of developing eligibility requirements, financing terms and conditions and allocation criteria for advanced telecommunications infrastructure projects as mandated by the legislation. According to the Golden State Connect Authority, a multi-county joint powers authority formed in 2021 to construct advanced telecommunications infrastructure and provide technical assistance, the legislation authorizes a joint powers authority to issue revenue bonds supported by the loan loss reserve fund.

Infrastructure bill mandates FCC report to Congress on universal service

The Infrastructure Investment and Jobs Act (IIJA) requires the U.S. Federal Communications Commission to deliver a report to Congress on the FCC’s options for improving its effectiveness in achieving the universal service goals. The report, due by August 15, “will focus on examining options and making recommendations for Commission and Congressional actions toward achieving those goals,” according to a proceeding the FCC opened to gather public comment.

The IIJA mandated report also requires the FCC to determine whether expanding current universal goals is in the public interest. The goals are:

• Preserve and advance universal availability of voice service;
• Ensure universal availability of modern networks capable of providing voice and broadband service to homes, businesses, and community anchor institutions;
• Ensure universal availability of modern networks capable of providing advanced mobile voice and broadband service;
• Ensure that rates for broadband services and rates for voice services are reasonably comparable in all regions of the nation; and
• Minimize the universal service contribution burden on consumers and businesses.

The FCC defines universal service as “the principle that all Americans should have access to communications services,” noting the Telecommunications Act of 1996 expanded that to include Internet protocol-based advanced telecommunications services “for all consumers at just, reasonable and affordable rates.” The 1996 statute states “access to advanced telecommunications and information services should be provided in all regions of the Nation.” Advanced telecommunications capability is defined as “without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology.”

The 1996 Act also employs a dynamic definition of universal service as “an evolving level of telecommunications services that the Commission shall establish periodically … taking into account advances in telecommunications and information technologies and services.”

America mired in telecom infrastructure incrementalism due to misaligned incentives, lack of commitment and lowered expectations

Three decades into the 21st century and a digital socio-economy, the United States remains unlikely to timely modernize its legacy copper telephone lines that reach nearly every American doorstep to fiber to the premises (FTTP). Instead of world class advanced telecommunications infrastructure, the nation is mired in incrementalism amid a patchwork of isolated pockets of fiber connecting only a third of all U.S homes. The nation will likely remain that way for the foreseeable barring a major change in public policy.

These are the root causes:

1. The issue is defined by its primary symptom – insufficient “broadband” bandwidth – instead of the lack of FTTP infrastructure that constrains bandwidth.
   
   
2. Overreliance on vertically integrated, investor-owned providers lacking both incentive and adequate resources to build out FTTP. They lack incentive because there is no regulatory requirement like that for legacy voice telephone service to provide service to customers requesting it. Internet protocol-based telecommunications are not regulated as a common carrier utility but rather an elective information service like a cable TV package. They lack capital expansion funds because their shareholders are averse to spending them and expect an ongoing stream of high earnings and dividends. They also lack the ability to finance new infrastructure due to balance sheets already overburdened with debt.
   
   
3. Localities have incentive to build fiber to serve their residents and promote economic development. But they lack resources to do so and the ability to raise tax dollars to finance its construction due to tax resistance/exhaustion. Consequently, some planning is done but most don’t proceed or are undertaken as limited scope "pilot projects." Federal and state governments reinforce limited local infrastructure by awarding grants for builds in "unserved" and "underserved" areas as determined by advertised throughput claims of commercial providers. (See #1).
   
   
4. Finally, lowered expectations of progress, even on the part of those who advocate for it. The fatalistic thinking is significant progress on infrastructure cannot be had because large vertically integrated telephone and cable companies determine telecom policy and favor a conservative approach due to #2. Progressives settle for limited local builds as small victories, further locking in incrementalism.

Biden administration, Congress have more to do on advanced telecom infrastructure in 2022

The Biden administration and Congress should enact legislation in 2022 that specifically focuses on advanced telecommunications infrastructure (ATI) and targets sufficient funding to federal and state agencies with the goal of rapidly modernizing legacy telephone copper that reaches nearly every American doorstep to fiber.

The ATI components of Infrastructure Investment and Jobs Act (IIJA) enacted in November won’t achieve that. There isn’t enough funding to do the job. In California, for example, Sen. Alex Padilla estimates the IIJA would bring only $1 billion to the nation’s largest state for ATI. Much more – probably four times the total $45 billion appropriated – is needed for the nation as a whole.

In addition, the IIJA fails to specify an infrastructure-based standard for ATI which might be reasonably expected in an infrastructure measure. Instead, it sets a throughput-based service level standard that will create controversy and delay over how grant money the bill appropriates to the states is to be spent. That service level standard will leave many American homes with substandard infrastructure and render them ineligible for fiber projects able meet their future needs and to obtain maximum long-term value for taxpayer dollars. Cable TV and wireless internet service providers have provided a partial and temporary solution to fill fiber gaps -- but are just that.

The 2022 legislation should establish and fund federal-state regional ATI projects. These large scale government owned networks can bring the necessary purchasing power and economies of scale to speed construction of fiber ATI amid labor and material supply chain constraints. Only about one third of all American homes have access to fiber connections that should have reached all but the most remote by 2010.

These projects should build open access fiber networks and give large telephone companies that know how to design, build and operate fiber networks at scale opportunity to competitively bid for contracts to do the work. Government ownership of the networks avoids the inherent conflict of interest in directly funding these investor-owned firms that must place the interests of their shareholders ahead of the broader public’s when it comes to spending public dollars.

These companies and their employees would additionally benefit if the 2022 legislation established a national fiber corps and training programs to form a workforce to bolster the ranks of experienced technicians that have been depleted over the past two decades.

The bill should also contain elements to ensure rapid coordination of permitting needed across federal, state and local jurisdictions. As it stands now, multiple permits are required to construct ATI that can snarl and delay projects for years. The IIJA establishes an Interagency Infrastructure Permitting Improvement Center to implement reforms to improve interagency coordination and expedite projects relating to the permitting and environmental review of major transportation infrastructure projects. The 2022 legislation should expand its scope to include federal-state ATI projects.

IIJA challenge process sets stage for battles between WISPs and telcos

The advanced telecommunications infrastructure (ATI) component of the Infrastructure Investment and Jobs Act (IIJA) allows for challenges of proposed projects that request states award 75 percent grant subsidies appropriated for ATI in the bill. Challengers can claim a proposed project does not meet the funding eligibility standard of at least 80 percent of premises within the project scope as being “unserved." That's defined as being unable to obtain reliable service with a minimum throughput of 25 Mbps/3Mbps with latency sufficient to support real-time, interactive applications. The statute authorizes states to adjudicate challenges. The National Telecommunications and Information Administration can reverse state determinations and modify the challenge process.

The challenge process sets the stage for battles between fixed Wireless Internet Service Providers (WISPs) and telephone companies once the funding becomes available next year. Verizon, AT&T are looking at C-band spectrum as a cheaper alternative to building fiber to the home. Should these telcos seek IIJA grant subsidies to expand their fixed premise wireless presence using C-band spectrum as AT&T CEO John Stankey suggested this week, WISPs could conceivably contest proposed projects as ineligible because WISPs already offer service meeting the minimum throughput standard. WISPs could use the same rationale to challenge proposed telco fiber to the premise (FTTP) builds using IIJA subsidy funds. Either way, FTTP deployment – already decades behind where it should be in terms of modernizing legacy copper telephone lines and building capacity for future bandwidth demand – would be further delayed.

WISPs are likely to view both IIJA subsidized telco expansion scenarios as an existential threat to their business model. Telcos could easily undercut their relatively high monthly rates for fixed prem wireless service. Telcos also benefit from greater economies of scale and lower costs since they could deploy their own fiber backhaul circuits. And telco owned FTTP would decimate WISPs since most customers would quickly switch to telco fiber once it became available and at lower monthly rates than WISP service. 

The forthcoming fixed wireless fights -- and most importantly the prolonged delay of modernizing copper to fiber -- could be avoided if the IIJA was revised to establish an FTTP infrastructure subsidy eligibility standard rather than the throughput-based standard in the bill as enacted.

FTTP out in the middle of nowhere

If lawmakers don’t revisit the advanced telecommunications infrastructure (ATI) component of the Infrastructure Investment and Jobs Act (IIJA) in the new year and the law is implemented strictly as written, 75 percent grant subsidies for fiber to the premise (FTTP) projects would likely be available only for those in extremely remote areas of the country where the cost per premise passed exceeds $10,000. 

That because the law makes those subsidies available only to builds where at least 80 percent of the premises to be served lack existing infrastructure that can provide minimum throughput of 25 Mbps down and 3 Mbps up with latency sufficient to support real-time, interactive applications. Additionally, its funding formula favors projects in these “unserved” areas that have higher than average costs due to their remoteness, and sparse settlement and topography.

While the federal agency designated to implement that ATI component of the IIJA – the National Telecommunications and Information Administration -- has until May 15, 2022 to set up a program to administer the subsidies, U.S. Commerce Secretary Gina Raimondo has indicated funding would be limited to these highly remote areas. "We have to make sure we don't spend this money overbuilding" existing infrastructure, Raimondo was quoted as saying in this Reuters story.

The upshot is the $43.45 billion in grants earmarked for ATI would likely be spent to connect a relatively very small number of remote premises given the high cost of connecting them, leaving behind metro area exurban areas and small towns with numerous gaps in existing ATI.