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.