States should partner with special districts, utility cooperatives to maximize reach of BEAD funds

A conflict between state and federal laws may delay the first distribution of funds to the states from the $42.5 billion program to expand internet access. Sixteen states bar or restrict municipally owned broadband – and nearly all of those states, according to an analysis by Route Fifty, appear unwilling to amend their laws as they finalize plans for how they will use their share of Broadband Equity, Access and Deployment, or BEAD, funds. That could put them at odds with the Biden administration, which supports having more cities and local governments offer broadband.

The 2021 infrastructure law requires that states allow local governments and utilities to receive BEAD funds to provide internet service. At the time the law was being crafted, the administration argued that local governments would be under “less pressure to turn profits” than broadband companies and, therefore, would likely offer internet access at lower prices.

https://www.cityandstatepa.com/policy/2023/12/pennsylvania-stands-alone-clarifying-bead-plan/392566/

This isn’t likely to cause any delay for the states. The Infrastructure Investment and Jobs Act (IIJA) language as Pennsylvania has apparently noticed is sufficiently open to allow BEAD funds to be granted to states that have laws restricting or barring municipally owned advanced telecommunications networks.

Per the IIJA, states “may not exclude cooperatives, nonprofit organizations, public-private partnerships, private companies, public or private utilities, public utility districts, or local governments from eligibility for such grant funds.” That language does not specifically bar states that have statutes limiting or banning these networks from participating in the BEAD grant funding as eligible entities.

The reference to public-private partnerships would theoretically allow states to form a partnerships between government units and the investor owned providers who lobbied for these state laws. The public entities would function as pass through entities for private subsidies as some local jurisdictions have done with American Rescue Plan Act funds earmarked for capital improvement projects.

A superior option better aligned with BEAD program guidance would be for states to partner with non municipal entities such as public utility authorities, special districts and utility cooperatives. Doing so comports with BEAD program guidance urging states to maximize their BEAD allocations to minimize their outlay and “extend the reach of the BEAD program funding and help to ensure that every unserved location and underserved location in the United States has access to reliable, affordable, high-speed internet.”

These entities would be better situated to do so since they operate with lower cost structures that don’t require them to generate profits or pay income taxes – constraints that brought about the nation’s crisis in deficient advanced telecommunications infrastructure that the IIJA seeks to address. To comply with the IIJA’s requirement that BEAD funds be distributed in “an equitable and nondiscriminatory manner,” those entities could partner with investor owned entities for network design, construction, and operation and to offer services as ISPs.

Failure to modernize copper to fiber reaches inflection point

Ensuring everyone can access modern broadband networks requires not only financial investments but also the support of forward-looking public policy. Unfortunately, the regulatory environment in some states, like California, is hindering these much-needed investments. Outdated regulations such as Carrier of Last Resort, or COLR, require providers to overlook the needs of the vast majority of consumers and prevent investments in modern networks. It’s worth noting Congress and many state legislatures have invested a historic number of resources towards high-speed broadband expansion in hard-to-serve areas; however, none of these programs are intended for preserving legacy voice services.

Today, public policies in California and states across the country should prioritize connecting as many households as possible and ensuring broadband access reaches underserved communities.

https://www.attconnects.com/how-broadband-networks-helped-create-21st-century-technology/

Some background here. AT&T California is petitioning the California Public Utilities Commission (CPUC) for geographically targeted relief from its Title II common carrier utility regulatory requirement to provide landline voice telephone service to any customer requesting a connection. It contends fixed prem wireless service served by its mobile wireless network will provide a reliable voice replacement in less densely populated areas where its isn’t deploying fiber to replace legacy copper POTS infrastructure.

Not everyone is convinced. Understandably so considering wireless is designed primarily for mobile use and can degrade in quality when too many users are using the system, particularly since these networks carry both voice and data. Wireless signals can also be less reliable in these areas that frequently feature hilly terrain and vegetation that can interfere with them.

AT&T contends the COLR requirement requires it to “wastefully” maintain “two duplicative networks:” the legacy copper POTS network as well as a “forward looking fiber” network. The problem with the tortured, ahistoric logic of this argument is AT&T and other large telecommunications companies have had decades to look ahead and modernize their copper POTS delivery infrastructure to fiber -- state of the art delivery infrastructure then and now. But because their investors are averse to this significant capital investment that cuts into earnings and shareholder dividends, the fiber future was cancelled in areas where the cost of building and operating it runs higher than others.

The delay in that crucial transition has now reached what AT&T properly characterizes as an inflection point, one that became painfully apparent during the public health measures taken during the COVID-19 pandemic stage. The issue lies not with CPUC’s COLR regulations but with AT&T’s shareholders whose interests don’t align with the broader public interest of modernizing the legacy copper POTS delivery infrastructure to fiber. The relevant public policy question is should the company's shareholders be rewarded for sitting on the sidelines for so long, leaving the nation years behind where it should be for advanced telecom?

Service providers likely relieved reporting requirement dropped from FCC anti-discrimination rules

Advanced telecommunications service providers are likely relieved that the Federal Communications Commission opted not to include an annual reporting requirement in its recently adopted rulemaking  Infrastructure Investment and Jobs Act: Prevention and Elimination of Digital Discrimination.

The rulemaking bars “policies or practices, not justified by genuine issues of technical or economic feasibility, that differentially impact consumers’ access to broadband internet access service based on their income level, race, ethnicity, color, religion, or national origin or are intended to have such differential impact.” It applies broadly to service providers, their contractors, entities facilitating or involved in the provision of service or maintaining and upgrading network infrastructure or other entities that otherwise affect consumer access.

The rulemaking implements section 60506 of the Infrastructure Investment and Jobs Act requiring the FCC adopt rules to facilitate equal access to broadband internet access service. Section 60506 states public policy that “insofar as technically and economically feasible— subscribers should benefit from equal access to broadband internet access service within the service area of a provider of such service.”
It defines equal access as “the equal opportunity to subscribe to an offered service that provides comparable speeds, capacities, latency, and other quality of service metrics in a given area, for comparable terms and conditions.”

The reporting requirement could have provided a detailed basis of comparison to a given provider’s other deployments and service offerings to build a case demonstrating intentional -- or unintentional discrimination based on disparate service offerings – among similarly situated areas. The reports would have required providers to report annually “a comprehensive picture of each major deployment, maintenance, and upgrade project completed or substantially completed for each state and territory within its service area or footprint.”

Those reports could have been utilized by state attorneys general, local governments and/or class action attorneys to demonstrate a pattern of discriminatory market conduct in contravention of public policy. Less densely populated exurban communities that have for years complained telephone and cable companies have redlined them while serving adjacent areas could comprise a class of similarly situated plaintiffs. Another potential plaintiff class is residents of low income urban communities alleging they pay more for inferior services than those offered in more affluent nearby communities. The rulemaking permits providers to justify decisions on deployment of infrastructure and services based on technical and economic considerations.

The potential for litigation is enhanced given FCC complaint handing procedures tend to result in summary dismissal of consumer complaints. Complaints are referred to the provider subject of the complaint. Unsurprisingly, providers typically rationalize or deny the complaint and the complaint is then closed.