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.

IIJA provides opportunity for structural separation with state, regional wholesale open access fiber networks

With the enactment of the Infrastructure Investment and Jobs Act (IIJA), the federal government and the states have an opportunity to structurally separate advanced telecommunications infrastructure and Internet Protocol (IP) services delivered over it by funding state and regional government owned wholesale open access fiber networks. That would boost access and affordability, and by extension, support virtual knowledge work, learning and telemedicine -- all of which jumped amid public health measures put in place during the COVID-19 pandemic. These large scale entities would also enjoy vital purchasing power as demand for labor and materials to build fiber networks is taxing their availability.

The Telecommunications Act of 1996 contained a structural separation component, requiring telephone companies to offer wholesale access their network infrastructure to retail Internet Service Providers (ISPs) -- referred to as unbundled network elements (UNE). But this provision lacks regulatory incentive for telephone companies to modernize their legacy copper networks to fiber. They leased access to their central office switches and legacy twisted pair copper plant to ISPs via dialup and later, digital subscriber line (DSL) that due to technological limitations could not serve all customers. Moreover, the telephone companies lacked market incentive to upgrade to fiber since they could derive passive revenues by placing the copper in runoff mode without sacrificing profits and shareholder dividends to capital expenditures. Consequently, only about a third of U.S. homes are passed by fiber.

With the IIJA, the National Telecommunications and Information Administration and the states can utilize $43.45 billion in grants earmarked for advanced telecommunications infrastructure in the legislation to attain a superior form of structural separation that can yield far greater public benefit than the 1996 legislation. Unlike shareholder owned telephone and cable companies, government owned networks have incentive to pursue the positive externalities that come with increased access and affordability that don’t accrue to the balance sheets of investor-owned infrastructure. These broad-based benefits clearly outweigh more narrow interests of their shareholders. 

Policymakers should implement and if necessary, amend the IIJA to ensure the widest and most rapid deployment of state and regional government owned open access fiber networks.

States should use IIJA advanced telecommunications infrastructure funding for government owned networks

Starting in 2022, state governments are in line to receive $43.45 billion in grants earmarked for advanced telecommunications infrastructure appropriated under the Infrastructure Investment and Jobs Act (IIJA). As California recently opted to do by appropriating $2 billion for state-owned middle mile transmission infrastructure, states should use the funds to build their own projects with telecom authorities (instead of so-called "broadband offices.")

Doing so avoids a fundamental conflict of interest and gives states more control over what infrastructure gets built and how quickly. As experience over the past two decades has shown, investor-owned legacy telephone and cable companies must naturally place the interests of their investors first and ahead of the public interest. The result has been a Swiss cheese pattern of infrastructure deployment in cherry picked neighborhoods that meet the rapid return on investment their shareholders demand. That leaves many others without the possibility of being connected, particularly less densely developed areas.

State and local governments are far better situated to build advanced telecommunications infrastructure with the public benefit goal of increasing access and affordability. By virtue of their public service mission, they can focus on attaining these benefits as well as the concomitant positive externalities such as enabling virtual knowledge work, distance learning and telehealth visits. They can also make the federal dollars go farther since they don't need to produce profits for investors.

States should also fund public utility districts and consumer owned utility cooperatives. They too are free of the conflict of interest between shareholders and end users since the latter are also the former.

To speed advanced telecommunications infrastructure deployment, Congress should tweak infrastructure bill along lines of American Rescue Plan Act

When Congress returns from the year end holiday break next year, it should tweak the Infrastructure Investment and Jobs Act (IIJA) recently signed into law by President Biden as one of its first orders of business. As enacted, the statute’s provisions appropriating $42 billion in state grants for advanced telecommunications infrastructure set the stage for conflict and potential litigation that could add more years of delay to the already long overdue modernization of the nation’s telecommunications infrastructure.

Doug Dawson published a thought provoking blog post earlier this week laying out some of the potential pitfalls. The law needs immediate attention since the National Telecommunications and Information Administration (NTIA) is mandated by the IIJA to set up shop to disburse the funding during the first several months of 2022 as the ‘‘Broadband Equity, Access, and Deployment Program.”

The pitfalls stem from the IIJA’s retention of a throughput versus infrastructure standard and its reliance on the Federal Communications Commission’s “broadband map” (currently being updated) detailing what throughput is available for a given location. The map is a critical measure because funding eligibility is primarily targeted for projects where at least 80 percent of premises are “unserved,” defined by the bill as those not having any providers offering service with throughput of at least 25 Mbps down and 3 Mbps up. The FCC mapping process has been fraught with controversy over its accuracy since the FCC’s National Broadband Map debuted more than a decade ago. Tied to this is distrust of incumbent legacy telephone companies suspected of overstating available throughput in order to disqualify potential subsidization of construction by other entities in their nominal service areas.

As Dawson notes, some states could rely on their own map data, setting states against the federal government’s maps. These states might also prefer to award IIJA funding to public sector and nonprofit owned fiber to the premise infrastructure after years of little infrastructure modernization by incumbents despite state subsidies and persistent neighborhood redlining that limits access and affordability. These states could also opt to cover the 25 percent cost match required by the IIJA with their own funds. States would be on solid public policy ground since the IIJA funding does not require incumbent telephone companies to offer advanced telecommunications service to any customer reasonably requesting it or at affordable rates, leaving longstanding gaps.

That could set the stage for lawsuits by investor-owned telephone, cable and fixed wireless incumbents contending states are unfairly disfavoring them in contravention of the IIJA’s provisions. They would likely exercise their right to challenge proposed build areas as allowed by the IIJA, fly specking them and arguing they are not “unserved” areas or that states are directing funding to “underserved” areas (where per the IIJA service isn’t available to 80 percent of locations at 100/20 Mbps) before ensuring there are no more “unserved” areas as required by the legislation.

To avoid these potential risks that could delay badly needed advanced telecommunications infrastructure, Congress should amend the IIJA’s advanced telecommunications infrastructure grant provisions along the lines of the American Rescue Plan Act (ARPA) enacted earlier this year. That measure appropriates $10 billion to state, local and tribal governments for capital projects including advanced telecommunications infrastructure.

The ARPA is more favorable to a fiber to the premises (FTTP) infrastructure modernization standard by specifying projects provide symmetrical throughput of 100/100 Mbps or be scalable to it. The ARPA also recognizes the need for rapid deployment by affording “significant discretion” to state, local and tribal governments to identify eligible projects without having to rely on federal “broadband maps” and not including a process for incumbents to challenge proposed projects as “overbuilding.”

Cable giants, electric co-ops battle over federal broadband dollars - Mississippi Today

But Mayo Flynt, president of AT&T Mississippi, told lawmakers: “We do think this is a job for the private sector and not the government sector to do … Scale is your friend, you’re going to get more return for your dollar, and this is a scale business … We believe that a competitive process or (requests for proposals) is going to help you get the best bang for your buck. Competition is a good thing. We are in the game and are competing.”

In 2019, the Mississippi Legislature passed a law allowing electric cooperatives to provide internet service — an effort to expand broadband access in a poor, rural state where an estimated 40% of the state lacked access. The effort has been likened to providing electricity to rural Mississippi in the 1930s. Proponents said large cable and telecom companies were failing to expand service into rural areas because it wasn’t profitable enough. But cable and telecom providers say they have spent millions in private funds expanding internet service in Mississippi, and that they shouldn’t be cut out of government funding for expansion.

 Source: Cable giants, Mississippi electric cooperatives battle over federal broadband dollars 

AT&T's Flynt is right. Telecommunications infrastructure like most infrastructure due to the high cost of constructing and maintaining it benefits from economies of scale. But that's not an argument against public ownership for which the American Rescue Plan Act targets funding. Rather, it helps make the case that the federal and state government should take a regional approach to ensuring fiber optic connections reach every home, school and small business to attain optimal economies of scale and purchasing power. Especially given constraints in the supply of materials and labor that can add further delay to badly overdue deployments.

There are roles for legacy telephone and cable companies in this important task. They have experience and expertise in designing, building, operating and maintaining telecommunications infrastructure. Since their business model constraints do not allow them to provide universal fiber to the premises service and instead build in areas where they can garner the most rapid return on investment, these functions rather than vertically integrated ownership of infrastructure and services is the best public policy here. These players can get some of the federal dollars but should do so as contractors on regional open access FTTP projects undertaken by the public sector and consumer utility cooperatives.

FCC set to move into key role on universal advanced telecommunications service

Within one month following the enactment of the Infrastructure Investment and Jobs Act President Biden will sign into law next week, the Federal Communications Commission must commence a proceeding to determine how the FCC should achieve universal advanced telecommunications service. The measure mandates the FCC report to Congress by next August options for “improving its effectiveness in achieving the universal service goals” taking into account the bill and other legislation addressing the goal of universal service. Universal service was attained for voice telephone service in the previous century. The report gives the FCC authority to make “recommendations for Congress on further actions the Commission and Congress could take to improve the ability of the Commission to achieve” universal service.

Notably, the infrastructure bill emphasizes the FCC report “may not in any way reduce the congressional mandate to achieve the universal service goals.” But it gives the FCC an opportunity to weigh in as to whether it “believes such an expansion is in the public interest.”

The infrastructure bill’s enactment comes as the administration looks to put its mark on the FCC by nominating FCC member Jessica Rosenworcel to serve as chair and Gigi Sohn as a member of the panel. In an executive order issued in July, President Biden called on the FCC to reinstate Obama administration regulations repealed during the Trump administration that would mandate universal service by classifying IP delivered services as common carrier telecommunications under Title II of the Communications Act of 1934.

Biden administration signals incumbents likely to be favored in challenges of proposed state FTTP builds under infrastructure bill

Federal grant money for advanced telecommunications infrastructure that would flow to states appropriated in the Infrastructure Investment and Jobs Act prioritizes projects in areas determined by maps under development by the Federal Communications Commission (FCC) that would serve premises where at least 8 of 10 prems cannot order advanced telecommunications service providing minimum throughput of 25/3 Mbps.

Under the bill expected to be signed into law next week, states receiving the funding can award up to 75 percent of the project’s capital cost as subgrants. The measure specifies states first fund builds that would serve these “unserved” premises. States can then award grant funds to projects where at least 80 percent of prems in a proposed project are “underserved,” which as defined in the bill means those that cannot order service providing minimum throughput of 100/20 Mbps and with latency sufficient to support real-time, interactive applications.

But in order to do so, states must first certify to the Department of Commerce’s National Telecommunications and Information Administration (NTIA) that the bill authorizes to oversee the grants there are no “unserved” premises in the state.

Combined, these provisions stringently proscribe the scope of state sponsored projects in most states.

However, the bill affords the NTIA a fair degree of discretion. It authorizes it to fund “priority broadband projects” that provide advanced telecommunications service that meets throughput and quality of service standards as determined by the NTIA. As well as those that would “easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services.” That could reasonably be interpreted as a fiber to the premises (FTTP) infrastructure standard.

A likely scenario is states and particularly those wishing to fund publicly and consumer cooperative owned FTTP projects will face push back from incumbent investor-owned telephone, cable and fixed wireless operators challenging their funding under the bill, contending they already provide 25/3 Mbps or 100/20 Mbps throughput to at least 80 percent of prems where FTTP is proposed to be built – what they term as “overbuilding.”

States must establish a “transparent, evidence-based, and expeditious challenge process” in which advanced telecommunications providers can contest a proposed project’s eligibility and whether a particular prem within the proposed project is unserved or underserved. States would have 60 days to resolve challenges. The bill authorizes the NTIA to modify the challenge process and overrule state determinations of challenges.

A question as the bill is implemented is to what extent the NTIA will exercise its discretion as permitted under the bill to favor publicly or cooperatively owned FTTP projects. Or side with commercial incumbents bringing challenges to proposed state projects. Department of Commerce Secretary Gina Raimondo offered a clue the Biden administration may be inclined to side with incumbents on challenges. "We have to make sure we don't spend this money overbuilding," Raimondo was quoted as saying in this November 9, 2021 Reuters story.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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