Bountiful, Utah offers states business model for BEAD Five Year Action Plans

While states and local communities are gearing up for the disbursement of $42.5 billion from the federal BEAD program courtesy of the bipartisan infrastructure law, Bountiful joins a growing list of cities who have figured out a way to build a municipal broadband network without relying on grant funds, providing yet another example how publicly-owned, locally controlled networks can still be built and financed even without federal or state subsidies.

https://communitynets.org/content/garden-spot-utah-moves-build-bountiful-fiber-network-face-dark-money-campaign

The business model and financing scheme employed in Bountiful, Utah offers states a model to use in their planning for universal service mandated by the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program – part of the Infrastructure Investment and Jobs Act (IIJA). States must develop Five-Year Action Plans this year that 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 an estimated timeline and cost for universal service and planned utilization of federal, state, and local funding sources to pay for it.

In Bountiful’s model, the municipality finances and owns the distribution fiber. A separate entity – the Utah Telecommunication Open Infrastructure Agency (UTOPIA) -- was selected by a competitive bidding process to build, operate, and maintain the network. The city leases access to providers to deliver services over the open access network.

The city is issuing a $48 million bond to finance construction costs, with end user fees servicing the bond debt. While the project is municipal in scope, the business model is also employed on a regional basis like UTOPIA in Utah and by California’s Golden State Connect Authority. Regional entities -- similar to the bell operating companies formed in the 1980s offering analog voice and long distance service -- offer enhanced economies of scale beyond that of a single municipality or county. That's an important consideration to reduce costs and produce greater revenue to service bond debt obligations.

As the excerpted article above notes, this model provides a sustainable funding mechanism that does not depend on one off grant subsidies such as the BEAD grants allocated by the NTIA to states in June. Those funds are most likely to be awarded to large incumbent telephone and cable companies to selectively edge out their distribution infrastructure in less densely populated exurban and rural areas lacking wireline advanced telecommunications infrastructure or served by legacy ADSL over copper.

The Bountiful model could also be employed in less densely populated areas with state and federal grant subsidies used opportunistically for qualifying construction. It also comes with the cost advantages of not having to generate profits or pay income taxes unlike investor owned entities, making subsidy funding go farther. It also builds in a source of local funding that states can include in their Five-Year Action Plans.

U.S. Senator Michael Bennet: Federal infrastructure funding shouldn't subsidize big telecoms

Previous federal efforts to expand broadband infrastructure, totaling $50 billion by Bennet’s estimation, were ”in reality subsidizing the biggest telecom companies in America not to build that broadband out,” he said. The money instead went to expansion that left out rural America.

https://www.denverpost.com/2023/07/06/federal-beads-broadband-funding-program/

The problem with modernizing telecom infrastructure to fiber to the premises is there has been no well thought out, coordinated high cost area subsidization policy. Instead, it's been a series of highly restricted one off grants, treating advanced telecom infrastructure more as a special charity case instead of essential infrastructure. 

Moreover, subsidies have come without universal service obligations or rate regulation as existed for legacy voice plain old telephone service (POTS) under Title II of the federal Communications Act. Telecom utility infrastructure functions as a natural monopoly and requires regulation to protect the public interest in access and affordability.

Comcast is correct that public-private partnerships are the way forward. The public sector should own the infrastructure and competitively contract with private entities to design, build and operate it.

Metro fiber “overbuilder” SiFi Networks announces $350 million JV debt raise

SiFi Networks, an investor owned delivery fiber infrastructure company, announced its Future Fiber Networks LLC joint-venture with European pension fund APG raised $350 million of bank financing in its debut debt raise. The company said the financing will be used alongside APG’s $500 million equity investment in Future Fiber “to deliver future-proof FTTH connectivity and smart city solutions across the U.S. via its fiber wholesale business model.”

SiFi Networks is one of several non-incumbent fiber players targeting metro markets in the U.S. including most prominently Google Fiber and Ting Internet. Sonic, currently in Northern California, is another among what incumbent telephone and cable companies describe as “overbuilders” within their nominal service territories.

Access to advanced telecom isn't a human right. But it is essential utility infrastructure.

The White House on Monday announced more than $42 billion in new federal funding to expand high-speed internet access nationwide and ensure even the most rural communities can reap the economic benefits of the digital age.

In an interview with TIME after the plan was unveiled, Commerce Secretary Gina Raimondo, whose department will oversee the new funding, said that high-speed internet is no longer a luxury but a “basic human right” as modern life becomes more digitized. Her comment echoes a sentiment from President Joe Biden, who on Monday reaffirmed his pledge that every household in the nation would be connected to the internet by 2030.

https://time.com/6290366/gina-raimondo-internet-access-us-interview/ 

It's an overstatement to describe affordable access to advanced telecommunications services as a basic human right. But in any advanced nation like the United States with a well developed information socio-economy, it should be regarded as essential infrastructure and treated as basic utility. As such, it should not require any given community to advocate for it.

That requires reconnoitering telecom policy that has since the 1990s treated it as privately owned market commodity sold based on throughput measured in megabits per second and latency. The Biden administration's Infrastructure Investment and Jobs Act of 2021 is a good first step in this redefinition. And the administration is remedying a defect in the law that retained the market commodity framework by favoring fiber to the premise (FTTP) infrastructure for some $43 billion in grants to the states authorized by the Act to subsidize its long overdue construction. 

The administration and Congress should look to regional public entities to provide FTTP as that essential utility, much like regional airports to use a metaphor offered by the president of one such entity, the Golden State (California) Connect Authority.

Handful of states draft BEAD Five-Year Action Plans

A handful of states have drafted Five-Year Action Plans required 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). The Action Plans due this year 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.”

Montana estimates universal service between 2026 and 2029, cautioning several factors could delay universal service including a labor gap, supply chain issues and industry participation. “In keeping with the BEAD NOFO, Montana has analyzed the estimated amount of subsidy needed to serve all unserved and upgrade all underserved in Montana with fiber,” the plan states. It notes the state is not anticipated to have sufficient funding to connect all unserved and underserved locations with fiber but does not address how the funding shortfall will be bridged. The state estimates it would need an estimated subsidy allocation of $628-754M to serve all unserved locations. Montana was awarded $629M in BEAD funds this week by the NTIA.

Utah “will ultimately make broadband adoption universal for all Utahns by December 31, 2028, based on the expected funding amounts from the BEAD program as well as an assumption that the other funding programs maintain their historical investment levels in Utah.” The plan calls for fixed wireless or alternative solution to serve 4,000+ locations beyond the extremely high cost per location threshold. No cost estimate for universal service was provided in the Beehive State’s plan.

“Barring significant variation between actual deployment costs and initial estimates, Ohio is therefore estimated to reach universal service by the conclusion of BEAD in 2030, according to the Buckeye State’s draft plan. “When all funds – both allocated and modeled – for unserved and underserved locations are combined, the estimated deployment cost of reaching universal service in Ohio ranges between ~$1.142 billion and ~$1.612 billion.” The plan estimates the cost of extending fiber connections to all unserved and underserved locations would range from $515 million to $830 million. Ohio was awarded $794 million in BEAD funding by the NTIA.

AT&T apparently hoping for BEAD subsidies to replace DSL over copper with FTTP

AT&T is apparently hoping for BEAD subsidies to replace its legacy DSL services delivered over twisted pair copper with fiber to the premise (FTTP). States should take a flexible approach in subgranting the subsidies allocated by the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program to afford “ISPs flexibility to identify project areas to include a mix of unserved and underserved locations will allow for the most efficient use of limited funds,” suggested Erin Scarborough, president, Broadband and Connectivity Initiatives in an April blog post. In a blog post this week, Scarborough stated that would allow providers to “identify project areas that combine unserved and underserved locations to enable the most effective and efficient deployments.” For AT&T, those would be locations served by legacy ADSL and VDSL, respectively.

That would comport with the BEAD program rules spelled out in the NTIA’s Notice of Funding Opportunity (NOFO). It permits states to subgrant up to 75 percent of construction costs to builds “constituting a single unserved or underserved broadband-serviceable location, or a grouping of broadband-serviceable locations in which not less than 80 percent of broadband-serviceable locations served by the project are unserved locations or underserved locations.” The NOFO defines “unserved” locations as those not marketed connectivity with throughput of less than 25/3 Mbps and latency exceeding 100ms. “Underserved” locations are those not offered at least 100/20 Mbps. That would encompass premises served by AT&T’s legacy DSL offerings delivered over obsolete twisted pair copper initially designed to support voice telephone service.

Whether states will have sufficient BEAD funding to subgrant subsidies for underserved locations remains to be seen after the NTIA announces state allocations next week. The BEAD NOFO requires states to award subgrants “that ensures the deployment of service to all unserved locations within the Eligible Entity’s jurisdiction.” These unserved locations are likely to be in lower density areas lacking wireline connections, requiring higher capital construction costs and subsidization.

Affordable Connectivity Fund uncertainty reveals key breakdown point in market-based advanced telecom policy

WASHINGTON, June 20, 2023 – Experts are pushing Congress to extend the funding available to the Affordable Connectivity Program or else it will hamper efforts to build out infrastructure in other parts of the country.

The essence of the argument is that the $14.2-billion ACP, which provides a $30- and $75-per month subsidies to low-income Americans, is helping internet service providers with revenues used to build more infrastructure in underserved areas. But experts are warning that the ACP – which currently enrolls about 18.5 out of 48 million eligible Americans – could run out of money as soon as early 2024, which observers have said could affect private investment in broadband deployment.

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“This is the first time we’re seeing these deployment grants make a specific requirement for recipients to actually include and participate in an affordability program,” said Kathryn. “They are trying to stabilize revenue for internet service providers who are connecting areas that might not offer a high return on investment.”

This funding from the ACP would provide the groundwork for a decade-long investment in internet infrastructure, according to Jonathan Cannon, technology policy counsel at think tank R Street Institute.

https://broadbandbreakfast.com/2023/06/lack-of-affordable-connectivity-fund-money-could-hobble-broadband-deployment-experts/

This is a critical point of breakdown in the current market-based policy for modernizing legacy metallic telecom infrastructure such as copper to support analog telephone service to fiber for advanced telecom services.

Legacy telephone service has high cost area and low income customer subsidies. But they were properly paired with a universal service/non discrimination mandate and state utility rate regulation under Title II of the Communications Act. By contrast, advanced telecom is not subject to Title II and instead is lightly regulated as an optional information service under Title I of the statute. 

Negative manifestations of market-based vs. publicly owned advanced telecommunications infrastructure policy

• Lack of coordinated federal advanced telecommunications infrastructure policy. 
• Highly fragmented deployment of fiber only where most profitable, highest ARPU.
• Advanced telecommunications marketed as “broadband” and sold in individually priced speed tiers.
• Widespread complaints and media coverage of poor access, “slow speeds” high monthly cost, very expensive connection fees quoted by cablecos.
• Localities adversely impacted by advanced telecommunications infrastructure deficits, attempt to address on their own with federal and state grants amid constituent tax/fee resistance due to adverse demographics/socioeconomics. Spawns cottage industry of consultants conducting feasibility studies and high level estimates. Vast majority result in no infrastructure construction or commitment to serve all addresses.
• One time, highly restricted federal and state grant programs instead of permanent high-cost subsidy mechanism.
• No federal or state policy of universal service. Universal service legislation does not advance. Years of dashed political promises of universal service. Sloganeering in lieu of actionable policy.
• Issue muddling, deflection/distraction from infrastructure to secondary issues:
• "Broadband adoption"
• Digital equity/digital skills
• Net neutrality
• Incumbent protectionism via broadband mapping, inflated service area and throughput claims, “ground truthing” speed tests.
• Reliance upon interim technology (DSL over copper) wireless technologies (fixed and mobile wireless, satellite) vs. FTTP.
• Capitulation to investor-owned incumbent provider control of telecom policy. Influence dominates over merits of policy that allow minority shareholder interests to prevail over broader public interest.
• Misapprehension: Complaints of market “monopolies” that fail to recognize telecom infrastructure like other utilities functions as natural monopoly. Feeds into privately owned provider paradigm that advanced telecommunications infrastructure a competitive market and government should therefore not own advanced telecommunications infrastructure.

States should use BEAD mandated coordination with localities to build support for bond funding for universal FTTP, rapid permitting

The National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program requires states to "rigorously explore ways” to cover the cost of advanced telecommunications infrastructure builds eligible for BEAD subsidies with other sources of funding. BEAD also charged states with developing strategies to ensure universal access as part of their required Five-Year Action Plans due this year.

"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,” said U.S. Department of Commerce Secretary Gina Raimondo, whose department oversees the NTIA and BEAD. While the Infrastructure Investment and Jobs Act (IIJA) of 2021 appropriates $42.5 billion for advanced telecommunications infrastructure, it won’t achieve this alone. As BEAD guidance notes, states and regions within them are going to have to come up with additional funding strategies such as long term bonds to cover the capital construction costs and potentially initial operating costs of publicly owned fiber in order to ensure universal, affordable access and further digital equity. Publicly owned fiber is particularly needed given the reduced likelihood private, investor owned providers will be able to profitably offer service affordable to lower income households.

States will also have to gain the cooperation of local governments to ease permitting of advanced telecommunications infrastructure. “Eligible Entities and their political subdivisions are strongly encouraged to remove time and cost barriers associated with BEAD projects, including by expediting permitting timelines and waiving fees where applicable, where doing so does not undermine other critical policy goals,” the BEAD Notice of Funding Opportunity (NOFO) states.

GAO: U.S. lacks national strategy for deployment of advanced telecommunications infrastructure, calls for presidential leadership

In a statement this week, the U.S. General Accountability Office (GAO) underscored a report it issued in May 2022 finding the United States lacks a national strategy to guide the deployment of advanced telecommunications infrastructure. Instead, the report found, there are numerous, uncoordinated subsidy programs administered by multiple federal agencies.

The GAO statement once again called for presidential leadership. The Executive Office of the President should develop and implement a unified national strategy, noting as of May 2023, the recommendation has not been implemented. “[A] national strategy could guide the efforts of states and localities implementing programs in coordination with the federal government,” the GAO said. “The roles of states have become even more important as they receive and then distribute funds from new federal broadband programs administered by NTIA and the Department of the Treasury,” it added. The NTIA’s Broadband Equity, Access and Deployment (BEAD) program has charged states with developing strategies to ensure universal access as part of their required Five Year Action Plans due this year.

However, $42.5 billion BEAD allocates to states to subsidize up to 75 percent of the cost of constructing advanced telecommunications infrastructure in areas where it is lacking could run into complications. That’s because eligibility is based on highly granular areas – that could be as small as a few premises -- that might be ineligible for BEAD subsidies because those locations received subsidization from one of many fragmented and overlapping federal programs. Not to mention various state subsidy programs.

We identified at least 133 funding programs—administered across 15 agencies—that can be used to support broadband access, including support for planning and deploying infrastructure, making service affordable, providing devices, and building digital skills. Some of these programs support broadband as their main purpose or one possible purpose, and others can be used for multiple purposes related to broadband. Eligible recipients for these programs range widely and include: internet providers; other private sector entities; nonprofits; tribal, state, and local governments; education agencies; and healthcare providers. Through these programs, federal agencies invested at least $44 billion in broadband-support activities from fiscal years 2015–2020, according to our analysis of agencies’ data.

Given the current lack of an overarching, coordinated strategy ensure universal service, “most of the agency officials and more than half of the nonfederal stakeholders we interviewed said a new national strategy would be helpful,” the GAO stated.

BEAD funding fight between private, public sectors joined

With the naming of former U.S. Federal Communications Commission nominee and staffer Gigi Sohn as the first executive director of the American Association for Public Broadband, the battle between the public and private sectors over $42.5 billion in advanced telecommunications infrastructure funding has been joined.

The AAPB’s mission is to “build a diverse membership of public broadband networks from around the country, and advocate in support of municipal broadband and local choice at the federal, state, and local levels.” Sean Gonsalves of the Institute for Local Self Reliance’s Community Networks reports from the Broadband Communities Summit held in Houston this week where Sohn announced her new role after withdrawing as the Biden administration’s nominee to fill a vacant FCC seat amid strong opposition from telephone and cable companies:

When (Sohn) officially takes the reins at AAPB beginning in June, she said her top priorities would be to increase AAPB membership beyond its current “handful of members,” advocate for municipal broadband and other public entities to have access to the $42.5 billion in broadband deployment funds forthcoming from the Infrastructure Investment and Jobs Act (IIJA) – “at least on an equal basis as private providers” – and to tell the positive stories that will “make public broadband a thing that towns and communities want to have.”

Those companies also hope to snag some of the funds once they are allocated to the states as federal block grants later this year under National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program. Like the AAPB, they too will claim they deserve an equal shot at the funds. One recently urged Oregon state officials to adopt a “business model agnostic” stance in awarding subgrants, a talking point likely to be repeated in other states. But that could run into local opposition as states do their community and outreach and engagement as required by BEAD from residents and businesses that for years complained of redlining and poor service by the legacy providers.

Federal, state legislation that would regulate Internet as common carrier telecom utility stalls

H.R. 8573, proposed legislation that would subject internet service to regulation as a common carrier telecom utility under Title II of the Communications Act has stalled in Congress. A similar measure introduced in the California legislature, AB 1714, is also not advancing. Neither bill has been set to be heard in committee.

FCC’s seesawing stance on regulation of internet services could soon end

The two-decade-long back and forth at the U.S. Federal Communications Commission over whether internet access should be regulated as a common carrier telecommunications utility under Title II of the Communications Act or as an Information Service under Title I of the law could soon end.

That’s the likely upshot if the U.S. Supreme Court as predicted by legal pundits overturns its 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984). That ruling -- which established the doctrine of judicial deference to agency administrative law interpretations of statutes when they could be construed ambiguously -- will be revisited by the high court in Loper Bright Enterprises v. Raimondo, granted review this week.

If the court abandons the Chevron doctrine as expected, the question of how internet service is to be regulated would be left to Congress and the courts rather than administrative agencies like the FCC. That could have major implications for the FCC’s current policy expressed in its 2018 Restoring Internet Freedom order, classifying internet service as an information service under Title I. Accordingly, providers are not required to honor reasonable requests for connections or subject to rate regulation by state public utility commissions had they would if classified as telecommunications providers under Title II.

Should that order come back before the Supreme Court should it overturn the Chevron doctrine, it could also be invalidated along with the court’s decision in National Cable & Telecommunications Association, et al. v Brand X Internet Services, et al. 545 US 967 (2005). Supreme Court Justice Clarence Thomas, who wrote the decision for the majority, has expressed misgivings over it. In that case, the high court ruled the FCC’s determination that internet service provided by cable companies should be regulated under Title I was a reasonable interpretation of ambiguous provisions of the 1996 Telecom Act under the Chevron doctrine. In the 18 years since the Brand X ruling, cable companies have become the dominant provider of internet connectivity in the United States.