Investor-owned providers make FTTP “land grab.”

Just a few years ago, it would have been hard to imagine investor owned legacy telephone and cable companies would consider a major push into fiber to the premise (FTTP) due to their extractive business model constraints averse to major capital expenditures. That tends to favor fiber builds in high end condominiums and select “fiberhoods” as a luxury amenity.

A recent roundup in Broadband Communities paints a picture of regime change in what an economist quoted in the article calls a fiber “land grab” even in historically less densely developed areas where ROI was too far out to justify investment in FTTP. Cable providers are abandoning coaxial cable and migrating to FTTP. Overbuilding incumbents with fiber – also previously unheard of – is occurring. The overall impression from the article is FTTP is busting out everywhere, albeit a generation late relative to the demand for Internet-based services. (Separately, even private equity -- impatient capital hardly a source for long term capital investment - is getting in on the fiber real estate rush, looking for a future profitable flip.)

What’s driving the change? A couple of likely factors. There’s first mover advantage: whichever provider gets fiber to the prem first gets a very sticky customer thanks to the terminating monopoly characteristic of these connections. It’s not as though they have multiple fiber connections and can chose among them. Nor is it economically feasible to provide them. Legacy providers may also be lengthening their investment timescale away from the traditional internal ROI standard in order to gain first mover advantage, knowing they’ll own the customer over the long term and the opportunity to sell services to them.

Second, to foster an impression of progress and momentum after years of minimal investment in FTTP fueling public policy discussion of the nation’s advanced telecommunications infrastructure deficiencies displayed in stark relief during the public health restrictions of the 2020 pandemic outbreak. Investor-owned providers probably know that they don’t appear to be making rapid progress to remedy them, support for public and consumer utility coop owned FTTP and appropriations to help fund them will grow despite plying elected officials with campaign contributions. That could also spark proposals to regulate commercial internet delivered services as common carrier public utilities. That would bring with it requirements to honor customer requests for FTTP connections and state rate regulation that are anathema to investor-owned providers.

Should BEAD green subsidize greenfield FTTH?

Legacy incumbent telephone and cable companies might conceivably seek state subsidies under the federal government’s Broadband Equity, Access and Deployment (BEAD) program is to edge out their footprints to serve new “greenfield” housing developments. These providers prefer new housing developments for multiple reasons. The homebuyer is going to need service and new homebuyers tend to be relatively higher income and generate good ARPU and ROI. Deals can be cut with homebuilders to bring fiber to each homesite. It’s easier to trench fiber in new and unoccupied housing developments as lots and streets are being finished.

From the service provider’s perspective, greenfields are  a better risk to extend fiber to the home (FTTH) than a brownfield development that is already generating revenues, often on non-FTTH delivery infrastructure, thus requiring households to upgrade to fiber or to overbuild an existing provider. In a greenfield development, every household can be connected to FTTH before the new homeowners move in.

Greenfields nominally qualify for BEAD subsidies because there’s not yet an existing provider offering service, thus meeting eligibility threshold of not less than 80 percent of broadband-serviceable addresses being unserved or underserved. BEAD guidance defines a “Broadband-Serviceable Location” as “a business or residential location … at which fixed broadband Internet access service is, or can be installed” (as with a new housing development).

Providers that have historically preferred greenfields as better risks might also be willing to pay higher BEAD match amounts than the minimum 25 percent, possibly 50 percent or more, given BEAD guidance that encourages states to incentivize proposed projects with higher match amounts.

Greenfield projects seeking BEAD subsidization could however raise digital equity concerns by federal and state BEAD administrators. They might conclude the use of subsidies for these lower risk builds does not comport with the legislative intent expressed in the Infrastructure Investment and Jobs Act (IIJA). The statute notes the “persistent ‘‘digital divide… disproportionately affects communities of color, lower-income areas, and rural areas”— populations that typically face affordability challenges to buy in new home developments and may resent adjacent neighborhoods being offered government subsidized FTTH when they are not served by it.

Relative advantages, disadvantages of public and private capital investment in FTTP

As the long running battle between public and private capital continues in the advanced telecommunications space amid what have described as a private capital “gold rush” to capture and own customers, here are the relative advantages and disadvantages of each. 

PUBLIC CAPITAL ADVANTAGES	PUBLIC CAPITAL DISADVANTAGES
Access to lower cost, more patient capital in public bond markets.	Lack of coherent, committed public policy and strategy for getting FTTP to most all doorsteps.
No need to earn profit or pay shareholder dividends.	Goal dilution; focus on ancillary benefits vs. universal FTTP connectivity.
Longer term commitment.	Slower capital allocation due to political decision-making process and tax & fee resistance/exhaustion. Private capital deals can be made within months vs. years.
Accountable to public interest and not just investor shareholders.	Subject to disinformation campaigns by private capital owners exercising First Amendment rights.

 

PRIVATE CAPITAL ADVANTAGES	PRIVATE CAPITAL DISADVANTAGES
Current dominance as legacy (telephone and cable company) providers. First mover advantage in natural (utility) monopoly that can slow end user acceptance of public owned open access FTTP.	Business model constraints that limit capex for deployment, misalignment between capex and ROI needs.
Unregulated “wild west” spawns “gold rush” for cherry picked FTTP archipelagos offering relative rapid ROI; no universal service mandate, rate regulation.	Negative public perception due to deployment of FTTP only in select neighborhoods and not most; poor customer support.
Established control of public narrative based on “broadband” as market commodity vs. FTTP as utility infrastructure.	High debt and shareholder dividend obligations.
Public policy path dependency recognizing private sector dominance of policymaking process.
Relatively rapid access to private capital markets, private equity.

“Business model agnostic” rating urged by legacy incumbent telco for BEAD subgrants

Investor-owned providers, anxious public policymakers might adopt a fiber to the premises (FTTP) infrastructure standard for advanced telecommunications infrastructure that would complicate their business models, for years urged public policymakers to instead embrace a “technology neutral” standard.

Policymakers at the state level who will distribute $42.5 billion in federal grant subsidies appropriated under the Infrastructure Investment and Jobs Act (IIJA) are now hearing a similar sounding plea – this time aimed at dissuading them from favoring publicly owned FTTP once the federal dollars arrive. Lumen Technologies is urging Oregon to adopt a “Business Model Agnostic” standard when evaluating subcontract awards to connect premises where the vast majority – 80 percent – are not offered throughput meeting what the Federal Communications Commission in 2015 deemed “broadband” or those deemed “underserved” and not offered throughput of at least 100Mbps for downloads and 20Mbps uploads.

In a PowerPoint presentation at the March 30 meeting of Oregon’s Broadband Advisory Council, Lumen cited an open access fiber build by the Kitsap County (Washington) Public Utility District as an example of the risk of not being business model agnostic that shows higher monthly and service drop fees than Lumen charges for its vertically integrated (connection and services) “Quantum” branded FTTP. Jim Farr, manager of Lumen’s Mass Markets Grant Team, also urged Oregon officials to score subgrant applications to favor those having low per premise passed cost to maximize the number of premises connected, which would likely leave less densely developed neighborhoods unconnected.

Lumen’s motivation is clearly to own the customer. Whoever owns the delivery infrastructure owns the customer in a natural monopoly market that characterizes utilities. The problem with that is it turns access to advanced telecommunications into a market commodity, with FTTP regarded as a premium product offering in highly segmented markets where there are sufficient premises and households most likely to generate the fastest return on investment and highest revenues.

That’s contrary to current federal policy expressed by the Biden administration to connect all Americans, highlighted this week by Commerce Secretary Gina Raimondo at an interview with Yahoo Finance. "The reality is, if we're going to connect every American, including the tens of millions of Americans who now don't have the internet, we're going to have to lay fiber all across this country,” Raimondo said.

There is another way to get there besides regarding advanced telecommunications as a binary choice between public and private capital. But in order to do so, U.S. telecom policy will have to shift away from the dominant private sector “own the customer” business model in which it has been mired for decades and is the major impediment to near universal access to affordable FTTP connectivity.

That means public (or consumer cooperative) ownership of the infrastructure and various levels of involvement of private capital to design, build, operate and deliver services over it. This eliminates the winner take all dynamic in which investor-owned providers must ensure their shareholders come out as winners. Consequently, the public has been losing for decades as shown by continuing issues with access and affordability. That calls for a more comprehensive, holistic policy instead of doling out one off grants as consolation prizes to the public when the public interest inevitably comes in second place.

Oregon audit reinforces BEAD direction to states on universal service

As states move to the forefront to provide affordable access to advanced telecommunications with the direction of the federal government’s Broadband Equity, Access and Deployment (BEAD) program to develop Five Year Action Plans for universal service, a recent State of Oregon audit report offers them some critical guidance.

It meshes well with the National Telecommunications and Information Administration’s use of the word “action” in the requirement states develop strategies to ensure universal service to all their residents in their Five-Year Action Plans. Those strategies must be actionable roadmaps and not serve as aspirational wish lists that gather dust after they’re issued. From the Oregon Audits Division report:

The (Oregon) Broadband Office published a strategic plan in January of 2020, prior to the COVID-19 pandemic. The plan is high-level and notes: “This plan is aspirational and designed to carry out the mission and directives charged to the Broadband Office. The scope of activities the Broadband Office will ultimately undertake will be enabled, or limited, by the resources available.”

The plan does not contain specific and realistic approaches, strategies, or appropriate KPMs for how these aspirations will be measured, reported, and achieved; nor does it identify what resources would be needed to undertake the scope of activities.

The biggest reason “broadband plans” over the past 15 to 20 years have been aspirational is they were conditioned on funding. That’s to be expected for a bet on the come financing strategy that relies on one off government grants. An action plan by contrast has a clearly identified funding source to ensure universal service and not one based on the hope that financing will someday become available.

The resulting lack of progress naturally angers people who’ve had their hopes for modern fiber connections to replace legacy metallic ones dashed for years amid piecemeal, incremental progress that never quite seems to reach them where they live and work despite promises from their elected representatives at all levels of government. A solid plan can help restore their trust in public officials to get the job done where the private market cannot.

The Oregon audit notes “Oregon’s broadband public policy needs to be focused on the future, be more aggressive, be more financially supportive, be more specific, and have a renewed sense of urgency.” (Emphasis added)

Being more financially supportive means Oregon (as well as other states) cannot continue to rely on one off, highly restrictive government grants to attain universal service. They need to develop ongoing organic funding for the both the construction and reliable operation of fiber to the premise (FTTP) advanced telecommunications infrastructure to every doorstep. Grants such as those available through BEAD can only do part of the job – implicit in BEAD’s Five-Year Action Plan requirement.

Amid fading federalism in U.S. telecommunications policy, states on deck to regulate

For Plain Old Telephone Service (POTS), federalism underpins a scheme of shared regulatory oversight between the federal government (the Federal Communications Commission specifically) and state public utility commissions. It operates under the framework of Title II of the Communications Act of 1934 that regards telecommunications networks as a natural monopoly. Accordingly, voice telephone service is regulated as a common carrier utility to ensure it is accessible (universal service) and affordable (rate regulation by state PUCs) given the absence of market forces and buy side market power to assure that it is.

This federalist regulatory scheme does not exist for advanced, internet protocol (IP) telecommunications. Since 2018, federal policy promulgated by FCC administrative law regards it as a lightly regulated information service under Title I of the Communications Act similar to dialup services like CompuServe and America Online that were widely used in the early 1990s. Congress has not weighed in on the matter of how IP telecom is to be regulated since the 1996 Telecommunications Act, which similarly adopted a light touch, wait and see stance. Recent court rulings have cleared the path for states to move forward.

In the absence of regulatory federalism for IP-based telecommunications, one leader state is considering legislation that would regard IP telecommunications as a common carrier utility. AB 1714 would amend California’s Public Utility Act to include “broadband service” offered by a corporation (defined in the statute as including a corporation, company, an association, and a joint stock association) within the definition of a public utility. “Broadband Internet access service is defined at California Civil Code Section 3100(b) as “a mass-market retail service by wire or radio provided to customers in California that provides the capability to transmit data to, and receive data from, all or substantially all Internet endpoints, including, but not limited to, any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service.”

“Just as the infrastructure of water and electricity grew at the end of the 19th century and led to the creation of regulation to make sure that these technologies were available to everyone, the internet has grown to a point that demands it be regulated as a public utility subject to the same regulatory process to make sure that everyone has access to this technology, moving us closer to digital equity,” said the bill’s author, Assemblymember Jim Wood in a news release. 

The proposed legislation comes as AT&T California petitioned the California Public Utilities Commission to relieve it of its POTS universal service obligations as carrier of last resort in parts of the state where there are alternatives such as VOIP (Voice Over Internet Protocol) or mobile wireless.

Private activity bonds could fund regional open access fiber networks

Nearly all U.S. airports are owned by state or local governments, mandated by the federal government to be as self-sustaining as possible, and thus receive little or no direct taxpayer support, according to the Airports Council International-North America (ACI-NA), an industry association representing local, regional and state governing bodies that own and operate commercial airports in the United States and Canada.

Over the past decade, according to the ACA-NA website, about 60 percent of bonds issued to finance airport capital projects were issued as private activity bonds, a type of municipal bond that is issued to finance a facility that serves a public purpose for the benefit of a private user – in this case airline companies. “Private activity bonds used for airport construction and renovation—are the most cost-efficient form of infrastructure financing available today,” the ACA-NA states.

Section 80401 of the Infrastructure Investment and Jobs Act (IIJA) amended Section 142(a) of the Internal Revenue Code of 1986 to specifically include advanced telecommunications infrastructure as an eligible use of private activity bond proceeds. Specifically, for “qualified broadband projects.”

On its face, the eligibility definition is more generous than the IIJA’s Broadband Equity, Access and Deployment (BEAD) program providing grant funding of up to 75 percent of infrastructure deployment costs. Basic BEAD eligibility is limited to builds where at least 80 percent of serviceable addresses lack access to infrastructure providing throughput of at least 20Mbps for downloads and 3Mbps for uploads with latency below 100ms. There is no definition of the minimum number of addresses that must be included. Projects could be as small as a handful of addresses or even a single address.

Eligibility for private activity bond funding is available for projects in one or more census block groups in which more than 50 percent of residential households do not have access to fixed, terrestrial broadband service which delivers at least 25Mbps downstream and at least 3Mbps upstream. Funded projects must provide access with at least 100Mbps for downloads and 20Mbps megabits for second for uploads.

That appears looser than the basic BEAD “unserved” eligibility standard of at least 80 percent of serviceable addresses unserved. But then it gets tighter with an additional qualification, unfortunately creating ambiguity. Private activity bond funding is available “only if at least 90 percent of the locations provided such access under the project are locations where, before the project, a broadband service provider— (i) did not provide service, or (ii) did not provide service meeting the minimum speed requirements.”

In another unfavorable provision, the IIJA amendment to the Internal Revenue Code opens this financing mechanism to potential incumbent gaming and stalling, further requiring existing providers be notified of a planned project and its intended scope and given at least 90 days to provide information on their ability to deploy, manage, and maintain a network capable of providing access at gigabit speeds – essentially fiber to the premises (FTTP).

The aeronautical analogy easily translates to publicly owned regional open access fiber network such as the Utah Telecommunication Open Infrastructure Agency (UTOPIA). Kimberly McKinley, UTOPIA’s chief marketing officer, described its partnership with an open access FTTP network rolling out in Bozeman, Montana as similar to city or state construction financing for airports, according to a recent article in the Bozeman Daily Chronicle.

UTOPIA is also partnering with the Golden State Connect Authority, a joint powers authority of 40 less densely developed California counties to build publicly owned open access FTTP. Its chair, Calaveras County Supervisor Jack Garamendi, compared it to a regional airport authority in a 2022 interview with the Electronic Frontier Foundation.

States will likely need additional federal funding to attain universal service under BEAD Five-Year Action Plans

The National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program – part of the Infrastructure Investment and Jobs Act (IIJA) – requires states that received planning grants in 2022 to develop “Five-Year Action Plans” in 2023 that will inform their requests for $42.5 billion in grants to subsidize advanced telecommunications infrastructure.

The plans must include “a comprehensive, high-level plan for providing reliable, affordable, high-speed internet service throughout the (state) including the estimated timeline and cost for universal service.” Additionally, the plans must include planned utilization of federal, state, and local funding sources to pay for it.

As with any infrastructure, it won’t come cheap. Hence the $42.5 billion BEAD allocates to states to subsidize construction costs. But BEAD also requires states to "rigorously explore ways to cover a project’s cost with contributions outside of the BEAD program funding." In developing their Five-Year Action Plans, states will have to determine to what extent they will have to cover shortfalls by, for example, issuing long term bonds to finance construction. 

And whether they will legislatively mandate universal service, requiring existing investor owned providers honor connectivity requests at serviceable addresses as proposed California legislation would do by deeming Internet service a public utility and establishing state policy of digital equity as a right of access. Or to fund public or consumer utility cooperative owned fiber to the premise (FTTP) infrastructure as a means of ensuring digital inclusion and equity as required by BEAD given challenges faced by investor owned providers that frequently scale back deployment plans to accommodate their business model constraints.

It's likely states could conclude that in order to attain universal service, they will need additional federal funding. That is evidently contemplated in BEAD. As part of their Five-Year Action Plans, states must detail technical assistance and “additional capacity needed for successful implementation of the BEAD Program.”

1996 Telecom Act, IIJA reflect America’s slow transformation and progress toward digital socio-economy

The United States innovated most of the information and communication technologies (ICT) that over the past 40 years that are transforming an analog socio-economy into a digital one. But the nation has lagged in the transition. Much of its existing telecommunications infrastructure is designed for an analog 20th century world of voice telephone service over twisted pair copper and premium television channels over coaxial cable.

America’s slow modernization of its legacy copper telephone system to fiber reflects the prolonged transition from an analog-based socio economy to a digital one in the 21st century. Related to this is that many Americans do not utilize ICT to allow their “full participation in the society and economy of the United States” according the Infrastructure Investment and Jobs Act (IIJA) of 2021.

At the close of the 20th century, the Telecommunications Act of 1996 foresaw the digitization of the telecommunications as the mass market Internet was taking off and some regional telephone companies filed plans with state regulators to offer two way video over fiber. But because the Internet as a means of communication was new, its drafters believed market competition would bring about reliable and affordable Internet connectivity as well as Internet-enabled devices and applications and online content.

The market competition will float all boats theory failed to reflect reality relative to Internet connectivity. A quarter century after the law was enacted, millions of Americans lack reliable and affordable connectivity, creating a “digital inclusion” challenge as it is described in the IIJA. Instead, market forces led to market segmentation, leaving lots of locations unconnected. The reason is making those connections isn’t that different from other utilities. Like voice telephone service, those copper cables that delivered it every home and business voice telephone service function as a natural terminating monopoly that doesn’t operate as a competitive market due to high cost barriers to competitor entry and first mover advantage.

That fundamental flaw in the 1996 Telecom Act left the nation further behind than where it should be for deployment of robust digital infrastructure with the old analog copper twisted pair telephone connections replaced with fiber reaching most every doorstep by 2010 at the latest. Over the interim, substandard and less reliable substitutes were employed such as Digital Subscriber Line (DSL) over copper and fixed and mobile wireless and satellite technology.

The IIJA while nominally an infrastructure measure that allocates federal dollars to states to build out advanced telecommunications infrastructure, like the 1996 Telecom Act, it doesn’t affirmatively  specify fiber to the premises (FTTP) infrastructure. However, the National Telecommunications and Information Administration (NTIA), charged with administrating the federal funds to the states, states a clear preference for FTTP. In that regard, public policy is slowly advancing into the digital age.

ICT access as industrial policy

The United States currently lacks public policy assuring every American home is able to connect to landline Internet service as it did for voice telephone service in the 20th century under Title II of the Communications Act of 1934. It is instead an aspirational goal rather than affirmative public policy.

According to the U.S. Federal Communications Commission, the Telecommunications Act of 1996 “expanded the traditional goal of universal service to include increased access to both telecommunications and advanced services …for all consumers at just, reasonable and affordable rates.” In the nearly three decades since the law was enacted, the nation continues to struggle to meet that goal with numerous proscribed subsidy programs despite many billions of dollars spent.

In 2021, the Infrastructure Investment and Jobs Act (IIJA) adopted an expanded view of access to advanced telecommunications service, including it in a broader context as access to “affordable information and communication technologies (ICT) such as reliable fixed and wireless broadband internet service.” That definition – titled “digital inclusion” -- acknowledges a long term shift from an analog, industrial age 20th century economy to a 21st century digital economy. It encompasses internet-enabled devices, applications and online content designed to enable and encourage self-sufficiency, participation, and collaboration” as well as access to digital literacy training, quality technical support, awareness of measures to ensure online privacy and cybersecurity.

Digital inclusion in turn supports “digital equity,” defined in the IIJA as “the condition in which individuals and communities have the information technology capacity that is needed for full participation in the society and economy of the United States.” Accordingly, universal access to advanced telecommunications service is now framed in the larger context of access to ICT and the broad social and economic benefit of all Americans having access to and being able to use it.

In that regard, the IIJA states access to advanced telecommunications infrastructure as industrial policy – subsidizing and expanding access in order to promote social and economic benefit. This is an important development because it reframes public policy on advanced telecommunications infrastructure and access beyond the traditional market commodity based “broadband” offering.

However, the IIJA retains broadband service as a metric to determine eligibility for allocating $42.5 billion in grants to the states to subsidize advanced telecommunications infrastructure, with priority afforded to fiber to the premises (FTTP). Subsidies are largely targeted to areas where “broadband” – defined as 25Mbps down and 3Mbps – is not marketed to most serviceable addresses.

Industrial policy by definition calls for a broad and sustained effort. The National Telecommunications and Information Administration (NTIA) is charged with administrating the IIJA advanced telecommunications infrastructure subsidy dollars. It describes that appropriation as representing only the beginning. According to a fact sheet, the NTIA’s subsidy program represents an “historic investment will lay critical groundwork for the infrastructure needed to connect everyone, from big cities to small towns and everything in between.” 

Another provision of the IIJA at Title VI that expresses industrial policy calls for the creation of an interagency federal working group to develop recommendations to address the workforce needs of the telecommunications industry and provide guidance to the states. In a report to Congress in January, the working group recommended measures to support the recruitment and retention of telecommunications workers.

States face major challenge to develop plans for universal FTTP access

Given America’s highly fragmented, piecemeal deployment of fiber to the premises (FTTP) over the past few decades that continues in the current one, states are confronting a significant challenge to develop plans to ensure it reaches most every doorstep.

Last year, all states and territories received planning grants under the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program – part of the Infrastructure Investment and Jobs Act (IIJA).

That funding requires states to develop Five-Year Action Plans in 2023 that will inform their requests for $42.5 billion in grants to subsidize advanced telecommunications infrastructure, with priority afforded to FTTP. The plans must include “a comprehensive, high-level plan for providing reliable, affordable, high-speed internet service throughout the (state) including the estimated timeline and cost for universal service.” 

This comes amid a rapid increase in FTTP deployment that some have likened to a land grab in order to obtain first mover market advantage. Conditions are ripe. FTTP is a virtually unregulated natural monopoly with strong demand, present and future. That makes it attractive to investor-owned companies where those factors combined with sufficiently high development density and household incomes support the business case. Private equity has even gotten in on gold rush, hoping to flip fiber assets in the future to large providers looking to expand their footprints without investing their own capital by rolling up smaller players.

Local governments that have for years heard complaints from residents and businesses about poor Internet access that grew louder during the public health restrictions of the pandemic that turned homes into places to work and study are handing over their federal pandemic relief dollars to incumbent providers to build FTTP.

Some local governments are building their own. Others have banded together to form regional telecommunications authorities to deploy FTTP where the business case is weak for investor owned providers. In rural areas, electric utility cooperatives are getting into the telecommunications business with FTTP.

Since the U.S. regards Internet protocol (IP) telecommunications as an information service and not a utility (that could change in California under proposed legislation), none of these providers are required to extend FTTP to any home or business that requests service. The result is disparate deployment in discrete areas, leaving a lot of holes in the FTTP Swiss cheese.

Consequently, states face significant challenges to attain a goal of universal FTTP access and developing a meaningful plan that closes the gaps with insufficient market or regulatory incentive for the various aforementioned providers to fill them amid a tight labor market for FTTP technicians and installers.

The $42.5 billion in grants to subsidize advanced telecommunications infrastructure appropriated in the IIJA is intended to help achieve that under the NTIA’s Internet for All initiative, allowing states to contract with providers to build infrastructure and cover up to 75 percent of the capital cost of deployment.

However, as currently structured under the IIJA, those subsidies aren’t targeted to underwriting FTTP. Much of it could end up being requested by cable companies to incrementally edge out their existing coax footprints since the NTIA rules on BEAD funding allow awards for projects of a small number of serviceable addresses and even a single address. Moreover, the NTIA’s BEAD eligibility requirements bar subsidization where a mobile wireless provider using licensed spectrum also advertises fixed premise service meeting minimum throughput standards.

The luxury connotation of advanced telecom -- why it’s still called “broadband.”

Three decades ago, the United States failed to put in place a transitional process to modernize twisted pair copper telephone infrastructure designed in the 20th century for analog voice telephone service to fiber for digital Internet protocol (IP) services that emerged in the late 1980s and early 1990s. It should have been seen as a natural evolution of telecommunications technology.

Instead, the legacy copper infrastructure was kept in place and advanced telecommunications was framed as an enhanced service under the name “broadband.” Basic service was dialup -- relatively inexpensive and affordable to most households and small businesses. By contrast, broadband was always on and allowed end users to access digital voice, web pages, images and video that dialup could not. That distinguished it a premium luxury service providing a far richer amount of information and content.

Broadband was a natural for Cable TV – an enhanced, premium service over television signals broadcast on the public airwaves. Cable companies got into the broadband business in a big way and are now the dominant providers of advanced telecommunications connectivity.

Hence, “broadband” connoted a luxury upgrade over narrowband dialup. As with any luxury, it comes at a price premium and is marketed to select households likely to upgrade. The more broadband, the higher the price.

The term “broadband” is so widely used today it’s become shorthand for advanced telecommunications capability. The luxury connotation has stuck. It’s fundamental to the challenges the nation faces with access and affordability now that advanced telecommunications like the voice telephone service before it has become a basic utility and not a luxury.

Francella Ochillo, Executive Director, Next Century Cities, reinforced the point at the annual Silicon Flatirons conference earlier this month:

“We could hide behind the internet's new and it's really a luxury. And it was really very strategic to even use that language to call it a luxury, because then it made it OK if everybody didn't have it. And I'm not saying that that's intentional. I'm saying that that's just real. And whether or not it's intentional, that was the impact. And so when we're in a moment where we have to start questioning structures, and thinking about why have we been doing it that way for that long.”

It was intentional however to the extent the framers of the 1996 Telecom Act also saw IP powered advanced telecommunications as new. Because it was novel, the thinking went, let’s keep policy technology neutral and see how market competition will evolve to deliver it to homes, schools and businesses. And not establish fiber to as the advanced telecommunications delivery infrastructure standard even though it predates the emergence of IP telecommunications by two decades.

Then as now, fiber was a proven technology for delivering advanced telecommunications services that wasn’t going to be obsoleted by another technology anytime soon. That’s seen in 2023 as public policymakers at all levels of government look to speed fiber connections to nearly every American doorstep, making them as ubiquitous as copper telephone line connections.

States could designate ISPs as public utilities as strategy to attain universal service

The National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program guidance spelled out in its Notice of Funding Opportunity (NOFO) requires states as part of their Five Year Action Plans to develop “a comprehensive, high-level plan for providing reliable, affordable, high-speed internet service throughout the (state) including the estimated timeline and cost for universal service.”

A potential component of these plans could be legislation deeming companies providing advanced telecommunications as common carrier public utilities and thus mandated to offer universal service to all of a state’s serviceable addresses. These are defined in the BEAD NOFO as “a business or residential location in the United States at which fixed broadband Internet access service is, or can be, installed.”

California legislation introduced this month (AB 1714) would designate these providers as common carrier public utilities. Other states could take a similar route in developing the universal service component of their Five Year Plans due to the NTIA this year.

Voice telephone service is regulated as a common carrier public utility under Title II of the Communications Act of 1934. Per the law, "It shall be the duty of every common carrier engaged in interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request therefor..." It also bars them from “unjust or unreasonable discrimination” in “charges, practices, classifications, regulations, facilities, or services.”

The federal government has declined to regulate providers of advanced telecommunications as such, instead opting to regulate them as “information services” under Title I of the statute. Since information services are not classified as common carrier utilities, they are not subject to the universal service and non-discrimination mandates. That has led to substantial problems with access and affordability with advanced telecommunications that BEAD aims to remedy.