States must designate providers, service areas under FCC reclassification of Internet delivered services as telecommunications utility.

A key task facing states following the Federal Communication Commission’s adoption of its Open Internet rulemaking April 25 classifying Internet protocol communications as a telecommunications utility under Title II of the Communications Act is designating service areas of providers for the purpose of determining the law’s universal service obligations and support mechanisms. The relevant statute is at 47 USC § 214(e)(5):

(5) “Service area” defined: The term “service area” means a geographic area established by a State commission (or the Commission under paragraph (6)) for the purpose of determining universal service obligations and support mechanisms. In the case of an area served by a rural telephone company, “service area” means such company’s “study area” unless and until the Commission and the States, after taking into account recommendations of a Federal-State Joint Board instituted under section 410(c) of this title , establish a different definition of service area for such company.

The task is complicated by a FCC rulemaking issued in 2019 (DA/FCC #: FCC-19-80) that bars states from regulating most non-cable services including Internet access service offered over a cable system by an incumbent cable operator. That FCC rulemaking concluded the federal Cable Communications Policy Act of 1984 preempts state and local governments from regulating Internet and VOIP services under their video franchising authority. The FCC’s reclassification of Internet delivered services as telecommunications services under its Open Internet rulemaking effectively abrogates this component of its 2019 rulemaking.

Cable TV franchises effectively became Internet service areas in the 2000s as cable companies began offering Internet connectivity and VOIP service in addition to video, putting them on a par with telephone companies’ Internet and VOIP services. That led a shift in regulatory policy, creating "video franchises."

A 2020 report prepared by the Congressional Research Service describes the history and rationale of the shift to states of local government video franchising authority in order to get out from under local government requirements that franchisees connect all addresses within their jurisdictions as constituent demand for Internet connectivity rose in the 2000s:

As the LECs (telephone companies) sought to enter the video distribution market, they pursued statewide reforms to speed their entry, rather than seeking franchises in individual municipalities. The LECs’ competitors, the incumbent cable operators, contended that state-level franchising would present new entrants with fewer obligations than cable companies had faced when they entered the market, specifically the obligation to build networks serving all parts of a community.  

Pending California legislation (AB 1826) demonstrates the need for common carrier utility regulation of IP services. It states legislative findings that despite 2006 legislation that shifted video franchising authority to the California Public Utilities Commission from local governments predicated on the questionable rationale it would increase competition to improve access and affordability, thousands of Golden State households lack access to video or broadband service, including households that are within the service territories of video franchise holders.

Utility coop exec, industry association leader warns of middle mile infrastructure deficits

As the United States is poised to begin subsidizing the capital cost of building last mile or distribution advanced telecommunications infrastructure targeting rural areas, it won’t be enough warns a utility cooperative executive and industry association leader. The reason according to Sachin Gupta is insufficient transmission infrastructure that connects end user premises to the Internet backbone, commonly known as middle mile since it connects these two parts of the larger network.

Gupta is director of government business and economic development at Centranet, a subsidiary of Central Rural Electric Cooperative. Gupta also serves as on the board and policy committee of the Fiber Broadband Association and represents the National Rural Electric Cooperatives Association (NRECA) on the Federal Communications Commission’s Technical Advisory Council.

The problem manifests in multiple ways, Gupta explained in a Fiber Broadband Association podcast. First is middle mile infrastructure largely connects cities and lacks points of presence along the way for less densely populated areas of the nation to connect.

Another main problem is edge content providers don’t have data centers near these areas. That leads to high latency since data must travel over hundreds of miles instead of tens of miles, producing delays that make low latency applications unusable.

Supply and demand also come into play, creating lack of affordable access. Last mile networks create demand, but where there’s too little middle mile points of presence to provide backhaul, investor owners can demand and get “an arm, leg and kidney and a liver” for access, Gupta explains.

The Infrastructure Investment and Jobs Act (IIJA) of 2021 contains findings by Congress that “Access to affordable, reliable, high-speed broadband is essential to full participation in modern life in the United States” and a “persistent ‘digital divide’ is “a barrier to the economic competitiveness of the United States and equitable distribution of essential public services, including health care and education.” 

Gupta said that divide will remain despite what he estimates will be $100 billion spent in rural areas over the next four years to reduce it. The IIJA appropriated only $1 billion for middle mile subsidies compared to $42.5 billion for last mile distribution infrastructure subsidies. 

Gupta noted many states are consequently looking to build their own organic middle mile networks. However, given the high cost, states may not be able to shoulder it including very large states with substantial economic resources. This week, California deferred $1.5 billion that had been allocated to that state’s middle mile network due to a large budget deficit.

While it’s essential infrastructure, middle mile has received less attention from policymakers. That reflects the nation's hyper localized focus on advanced telecommunications infrastructure deficits since Americans experience them at their homes, schools and businesses. Policymakers should view the entire infrastructure wholistically since all segments are interdependent.

Public ownership of all middle mile infrastructure could provide a rapid, long term solution to this imminent crisis. The root cause is structural: middle mile is essentially a collection of privately owned fiefdoms operating a series of toll roads, free to provide access to whomever they wish at prices of their choosing.

For example, the federal government could form 501(c)(1) government chartered and regionally administered nonprofit to acquire and build out the nation’s middle mile infrastructure and contract for design, construction and operational services and develop standards for redundancy, uptime, restoration, and network security.

Big incumbent providers oppose public ownership of advanced telecom infrastructure, but happily accept government subsidies.

For years cable operators such as Comcast, Charter and Cox have fought hard against municipal broadband projects, always crying that it’s wrong for taxpayer dollars to compete against their private investments. But now, the competitive landscape is shifting. There’s a lot of taxpayer money available through government programs such as ARPA and most significantly through the Broadband Equity, Access and Deployment (BEAD) program.

https://www.fierce-network.com/broadband/comcast-does-public-private-broadband-projects-across-footprint?utm_medium=email&utm_source=nl&utm_campaign=FT-NL-FierceTelecom&oly_enc_id=6444G7875712B4A

This story lacks so much context it's misleading. Giving money to large incumbent ISPs like Comcast isn't truly a public-private partnership as it's described here and in other media but rather a government subsidy. 

What large incumbent providers historically oppose is government ownership; they are more than happy to accept government subsidies. Especially when there's no quid pro quo that they provide connections to all premises within a given local jurisdiction. 

Also lacking is transparency in the use of public funds. The story notes Comcast declined to say how much the project cost in total and how much, if any, Comcast spent for the project.