Big cable’s influence, potential benefit reflected in infrastructure measure pending in Senate

The influence of big cable TV companies like Comcast and Charter Communications is reflected in the massive omnibus infrastructure bill pending before the U.S. Senate. A major indication is the proposed legislation’s requirement that some $42 billion in grant funding it would allocate to state governments be used to provide IP connectivity of at least 100 Mbps down and 20 Mbps up with latency that sufficient to allow “reasonably foreseeable, real-time, interactive applications.” That’s perfectly aligned with the current throughput offered by cable TV providers over hybrid coaxial copper and fiber cable and the Data Over Cable Service Interface Specification (DOCSIS).

The measure’s emphasis on prioritizing funds to high-cost areas with poor connectivity options points to largely benefit big cable. Consider cable TV’s history. It developed in the 1950s to serve rural areas too distant to reliably receive over the air signals from TV transmitters in cities, serving homes with cables distributed from signal amplifiers connected to large “community antenna” arrays to boost the signal.

If the bill becomes law, cable lobbyists could mount a full court press on statehouses like that of the mid-2000s when they worked to shift authority over their local municipal franchises to state public utility commissions in order to avoid universal service demands from the locals. The case they might present to policymakers: give us the funds to build out our footprints in our traditional rural areas without good connectivity just as they lacked access to urban TV signals in the past.

Cable would benefit by attaining a monopoly position in more sparsely populated rural and exurban areas where telephone companies have abandoned their legacy copper telephone lines and have not offered residential services delivered over fiber. There, cable would not have to share a duopoly market with telephone companies in more densely developed areas where the telcos are offering symmetric fiber services instead of cable’s asymmetric 100/20 Mbps throughput.

Infrastructure measure pending in Senate would condemn America to another generation of waiting for replacement of legacy copper telephone lines with fiber, universal service.

The U.S. Senate made public enabling legislation for the Biden administration’s American Jobs Plan infrastructure initiative this week, titled the ‘‘Infrastructure Investment and Jobs Act.” The bill is disappointing insofar as it fails to define a physical fiber standard for advanced telecommunications infrastructure. Instead, it prioritizes funding telecommunications infrastructure that “can easily scale speeds over time to meet the evolving connectivity needs of households and businesses.” That’s generally viewed as fiber – the “future proof” goal expressed in the American Jobs Plan. But it’s not explicitly referenced in the proposed legislation.

The measure continues the incrementalist doctrinaire view put in place by the 1996 Telecommunications Act that boosting throughput is the paramount policy goal. Furthered by the faulty economic reasoning that market competition despite telecommunications infrastructure being a natural monopoly like other utilities will help achieve that objective. The asymmetric throughput-based standard as stated in the measure retains the classic 1990s-era delineations of premises as being served, underserved and unserved relative to throughput offered by providers serving them. 

That reflects a collective cognitive bias known as anchoring. Dialup -- state of the art connectivity in the 1990s -- is the anchor. All progress is measured by improvements from the anchor as higher "broadband speeds." That cognitive bias has set the tone for the entire telecom policy debate rather than infrastructure. It's thus no surprise to see a nominal infrastructure bill frame the issue as one of supporting higher throughput in areas where it's lagging.

Should the bill become law as written, it will condemn the United States to another generation of waiting to modernize its legacy copper telephone lines built for analog voice telephone service in the 20th century to fiber to support internet protocol-based digital services in the 21st century.

These are some of the other major problems with the proposed bill language:

The proposed legislation does not affirmatively prioritize publicly and nonprofit owned infrastructure as originally envisioned in the American Jobs Plan, allowing investor-owned entities that operate with an inherent conflict of interest between investors and consumers to apply for infrastructure projects. The projects would be funded with $42 billion allocated to state governments with a 25 percent match.

In one of the biggest missed opportunities for a massive infrastructure measure, the bill does not achieve advanced telecommunications universal service as was attained with landline voice telephone service. The bill would require the U.S. Federal Communications Commission to convene a proceeding to determine how to achieve universal service and to recommend to Congress expand the universal service “if the Commission believes such an expansion is in the public interest.”

Funding eligibility 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. The offer of service is 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.

The determination of whether an area is “underserved” is based on maps of throughput offered by providers maintained by the FCC. The maps have proven notoriously controversial and inscrutable and subject to provider abuse of overstating service offerings. The FCC is in the process of revising the methodology to improve them, but that process will likely generate further disagreement and delay that serves only the interests of legacy incumbent providers.

Telecom component of legislation implementing Biden administration's American Jobs Plan infrastructure initiative contains Title II-like universal service, anti-redlining provisions

Broadband internet is necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected. Yet, by one definition, more than 30 million Americans live in areas where there is no broadband infrastructure that provides minimally acceptable speeds – a particular problem in rural communities throughout the country. The deal’s $65 billion investment ensures every American has access to reliable high-speed internet with an historic investment in broadband infrastructure deployment, just as the federal government made a historic effort to provide electricity to every American nearly one hundred years ago.

The bill will also help lower prices for internet service by requiring funding recipients to offer a low-cost affordable plan, by creating price transparency and helping families comparison shop, and by boosting competition in areas where existing providers aren’t providing adequate service. It will also help close the digital divide by passing the Digital Equity Act, ending digital redlining, and creating a permanent program to help more low-income households access the internet.

The above is excerpted from a White House Fact Sheet issued today outlining the telecom infrastructure element of a legislative agreement with Congress to implement the Biden administration's American Jobs Plan. 

While the bill language hasn't been published, the fact sheet refers to a universal service nondiscrimination mandate like that contained in Title II of the Communications Act in the italicized portions. It also refers to what appears to be a separate bill -- The Digital Equity Act. The Act bars "digital redlining," defined as "discrimination by internet service providers in the deployment, maintenance, or upgrade of infrastructure or delivery of services. The denial of services has disparate impacts on people in certain areas of cities or regions, most frequently on the basis of income, race, and ethnicity." Title II requires providers honor all reasonable requests for service.

Noticeably absent from the fact sheet synopsis of the bill are references to nonprofit and publicly owned infrastructure, a stated preference expressed by the administration when the American Jobs Plan was unveiled earlier this year.

Report: Draft legislation implementing telecom component of Biden administration infrastructure initiative shuns fiber infra standard

 — The draft is likely to fuel renewed advocacy from consumer groups and anyone else hoping for ultra-fast fiber optic buildout, as it instead opts for lower minimum broadband speed thresholds (100 Megabits per second download over 20 Mbps upload would count as "underserved" for the $40 billion tentatively slated to go to the Commerce Department’s state grants, less than the fiber-focused minimums some Democrats wanted). 

https://www.politico.com/newsletters/morning-tech/2021/07/21/bidens-trustbuster-streak-continues-with-kanter-pick-796632?utm_source=sendgrid&utm_medium=email&utm_campaign=Newsletters

The asymmetrical 100/20 throughput vs. fiber distribution infrastructure standard is mirrored in a California budget bill enacted this week appropriating $2 billion in grant funding.

Purpose of public option advanced telecom infrastructure is to ensure access and affordability

The half a dozen or so large telecom companies that provide internet service to most homes and businesses in the U.S. today have for years “cherry-picked” neighborhoods to maximize their profits. Although they’re returning record dividends to investors, they’ve also been helping themselves to billions from the feds over the years. And what does the taxpayer get in return? The U.S. still lags behind other countries in Europe and Asia in broadband deployment. Talk about a “risky” investment of taxpayer dollars! This has led to market failure as most localities in the U.S. are served by monopolies or duopolies.

https://www.sltrib.com/opinion/commentary/2021/07/15/roger-timmerman-open/

Market failure in advanced telecom infrastructure is baked in because of high cost barriers to competitor entry and first mover advantage. As such, as Mr. Timmerman writes, it tends toward monopoly -- or duopoly at best. It's thus unreasonable to expect any meaningful degree of competition.

Public policymakers should think twice before describing public and consumer cooperative owned telecom infrastructure as envisioned in the Biden administration's American Jobs Plan as enhancing competition. Its essential purpose is to provide a public option to counter private market failure that exists in a natural monopoly market in order to ensure access and affordability.

Investor owned legacy telephone and cable companies complain public option infrastructure represents unfair competition. But as discussed, it is not intended to take market share from them. That's market competition. The better term is disruption of the status quo with only about a third of all American homes having access to modern fiber connections. And the disruptive goal is to ensure all Americans have affordable access when due to structural market issues that result in monopoly or duopoly, competitive market forces cannot.

Natural monopoly of telecom infrastructure fosters "capitalism without competition"

Biden added, “Let me be very clear: Capitalism without competition isn’t capitalism. It’s exploitation. Without healthy competition, big players can change and charge whatever they want and treat you however they want. And for too many Americans that means accepting a bad deal for things you can’t go without. So, we know we’ve got a problem, a major problem. But we also have an incredible opportunity.”

https://gizmodo.com/heres-whats-in-joe-bidens-sweeping-executive-order-on-c-1847262645

The problem is not all segments of the economy are competitive markets, defined as those having many sellers as well as many buyers with both sellers and buyers having relatively equal access to information on cost and quality. Telecommunications infrastructure because of its high costs of competitor entry, protracted return on investment and first mover advantage is one of those. It functions as a natural monopoly like other utilities. 

Many wish it to be a competitive market and offer more choices and lower costs. But that's unrealistic, wishful thinking. A presidential executive order cannot change the underlying economic structure. It won't end rent seeking market conduct by investor owned providers that tends to arise in natural monopolies -- capitalism without competition.

This is why fiber to the premise infrastructure owned by entities under less pressure to generate profits is needed as a public option since market forces cannot ensure it reaches every American doorstep at affordable costs -- a component of the Biden administration's proposed American Jobs Plan.  

Limiting publicly owned advanced telecom infrastructure to high cost areas isn't the answer to access and affordability challenges

Doug Brake and Alexandra Bruer of the Information Technology and Innovation Foundation write the excerpts below from an article contending local governments are ill suited to provide advanced telecommunications service.

However, municipal or otherwise nonprofit broadband should be limited to those areas that are legitimately high cost and do not support investment of more than one provider. Municipal broadband advocates often attempt to define broadband at unreasonably high speeds in an attempt to define away competition existing in the market. They know that many providers have no desire to provide broadband speeds far in excess of what the market actually demands, and so by providing networks with more capacity than is needed, they hope to make the case for municipal networks. While flat bans on any municipal broadband do not make sense, they should be reserved for narrow cases wherein market options are extremely limited and private providers are unwilling to provide service, even with subsidies offered.

Sounds sensible in theory. But advanced telecom infrastructure is very unevenly deployed and highly granular, making it difficult to define these high cost areas and attain the economies of scale the authors discuss with contiguous infrastructure. One need only glance at those crazy quilt, checkerboard "broadband maps" to see it graphically -- the accuracy of which are subject of continuous debate. 

High cost area subsidies proved effective for ensuring universal telephone service. However, high cost subsidies have historically not motivated investor owned providers to build advanced telecom infrastructure absent regulatory incentive to offer service to all premises requesting it (such as Title II of the U.S. Communications Act that governs voice telephone service) and better opportunities elsewhere that offer faster and higher return on investment such as mobile wireless.

Some neighborhoods deemed sufficiently profitable have fiber to the premises infrastructure while others adjacent do not. Or there may be fiber to the prem deployed for business customers but not for residential service. That's why publicly and consumer cooperative owned fiber passing every American doorstep is needed to ensure access and affordability.

There are variety of different models for what a municipality’s level of partnership with broadband providers can look like. If municipalities that believe they fit in that narrow category should generally avoid providing retail service, and instead provide an open-access fiber network wherein the retail service and the electronics are left to the private sector. In an open-access provider, municipalities offer the use of their broadband networks at wholesale for various providers to leverage in order to sell broadband services. In a retail provider model, a municipality both owns the broadband network and offers broadband services directly to customers. The government can take on the most static parts of the network—ideally providing just open conduit or dark fiber—and allow the private sector to continue to innovate with the electronics on either end.

This is clearly a superior role for the private sector instead of the current dominant model wherein investor owned providers own the infrastructure and must also regularly refresh the electronics that make it run. As the authors point it, the latter role is far more suited to the private versus public sector. The private sector can fulfill that function without having to own the infrastructure outright and battle continued public and regulatory pressure to build out fiber infrastructure to reach more homes and keep rates affordable.

Biden administration correct in framing advanced telecom as national vs. local infrastructure issue

June 30, 2021–Congress should allow the states authority over where and how to invest broadband dollars, experts said on a panel Tuesday.  The panel discussed the problem with federal agencies restricting states to only use funds for a distinct purpose, as opposed to allowing them to decide where the money can best be spent.

Federal agencies tend to focus on accessibility, affordability, and future-proofing broadband, but states all have different immediate needs, according to the panelists hosted by America’s Communications Association (ACA) on Tuesday. The panelists were discussing the $65-billion allocated to broadband as part of the infrastructure package announced by President Joe Biden last week.

https://broadbandbreakfast.com/2021/06/congress-should-give-states-more-authority-over-broadband-priorities-experts-say/

This is self serving propaganda from small investor owned advanced telecom providers seeking to influence American Jobs Plan funds so that they are more likely to flow to them. Affordable, accessible access to fiber to the home isn't a local issue. It's a broad-based national issue affecting every state, region and county of the United States. The Biden administration is correct in framing this critical national infrastructure as it has in its proposed American Jobs Plan. Telecom infrastructure like roads and highways is by definition interstate.

Legacy telephone companies’ power isn’t so much lobbying as controlling the narrative

Conventional wisdom holds the United States is unable to timely modernize its legacy copper telephone infrastructure to fiber reaching every doorstep because of the lobbying power of big legacy telephone companies. They want to protect their natural monopolies against interlopers and deploy fiber only where it produces a rapid return on investment to select neighborhoods at highly profitable, unregulated prices.

But their more formidable power isn’t so much their armies of lobbyists and campaign contributions to public policymakers. It’s that they’ve established and controlled the narrative built around a single word: broadband. They were so successful that they even managed to get public interest-oriented officials and advocates to adopt the term, creating a decades-long obsession with chasing “broadband” bandwidth instead of concentrating on advanced telecommunications infrastructure that delivers that bandwidth. It also serves as a great distraction since fiber technology has been around for decades and was being considered by telephone companies as early as the 1980s for two-way video communications.

It began with the enactment of the Telecommunications Act of 1996, at a time when Americans used screeching modems to connect to online services such as CompuServe and America Online. The statute defined progress as advancing from that narrowband dialup service to “always on” broadband. It largely left it to the private market to set the course instead of stating industrial policy establishing fiber as the universal infrastructure standard as twisted pair copper was before it. As well as establishing a timeline so that fiber reached nearly all homes by 2010. Instead, more than a decade later, only about one third of all U.S. homes can get a fiber connection. Baked into the 1996 Act is a cognitive bias known as anchoring. Dialup -- state of the art connectivity at the time it was enacted -- is the anchor. Any technology offering incrementally greater throughput came to be valued more highly than modernizing legacy copper telephone lines to fiber.

Lacking a fiber infrastructure standard, in the quarter century since the 1996 Telecommunications Act was enacted, America has found itself bogged down in incrementalism, debating the definition of broadband and even trying to map its location. Elected officials have been dogged by constituent complaints over spotty, poor and unaffordable Internet access, priced at whatever the market will bear. Those complaints grew more strident as time went on and especially during the COVID-19 pandemic that turned homes into offices, classrooms and medical clinics.

With telephone companies dragging their feet on transitioning to fiber in order to accommodate their short term oriented business models, cable TV companies leveraged their coaxial cable to provide Internet access in the decade since the Act was signed into law. Since they have not been regulated as telecommunications carriers with universal service mandates and price controls, they too can -- and do -- charge whatever the market will bear. And bear it the market must since cable has taken a dominant role, putting it in a controlling position.

Seeing that fiber was being slow walked at the same time people grew more desperate for connectivity, various wireless technologies and even satellite services came about to fill the fiber voids. The sad consequence is the nation once seen as a world leader in telecommunications no longer is.

AT&T's Stankey misrepresents true high cost component of fiber to the home

AT&T CEO John Stankey yesterday called President Biden's plan to fund municipal broadband networks "misguided" and said the US shouldn't pay for any broadband deployment in areas that already have networks. But as AT&T and other ISPs lobby against public networks and government-funded competition, Stankey said he is confident that Congress will steer legislation in the more "pragmatic" direction that AT&T favors.

In an interview with The Economic Club of Washington, DC, (video), Stankey was asked, "Do you support the president's proposal to have municipalities own broadband facilities?" Stankey responded, "I think actually the president's proposal is probably a bit misguided in that regard." "It would be a shame that we take taxpayer money or ask local governments to go into a business that they don't run today," Stankey said. "You know, their job is to deliver water, patch streets, things like that, not be in a capital-intensive technology business that requires constant refresh and constant management." (Emphasis added)

https://arstechnica.com/tech-policy/2021/06/att-ceo-seems-confident-industry-can-kill-bidens-municipal-broadband-plan/

Actually, the most capital intensive element is constructing fiber to homes -- largely labor costs -- not equipment refreshes and management. This is where AT&T can play a role since public sector and nonprofit entities like consumer telecom cooperatives could benefit from an operator with AT&T's experience managing fiber.

Neither AT&T nor any other legacy telephone company can afford to own, build, maintain and manage fiber on a scale America needs considering every doorstep should have had fiber connections no later than 2010. The lack of those connections with only about a third of homes having them became painfully apparent during the social distancing public health requirements in response to the COVID-19 pandemic that turned homes into offices, classrooms and clinics.

To Fix America's Infrastructure, Start Here

Such has been the state of infrastructure in the U.S. for decades — fixes get put off until they’re absolutely necessary, and U.S. airports, roads and public transportation draw frequent comparisons to those in nations with far fewer resources. Meanwhile, countries in Europe, Asia and the Middle East have leapt ahead with so-called smart cities, high-speed trains and eco-friendly buildings. In 2019, the U.S. ranked 13th in the world in a broad measure of infrastructure quality — down from fifth place in 2002, according to the World Economic Forum’s Global Competitiveness Report.

Source: How to Fix America's Infrastructure

When it comes to advanced telecommunications, it's even worse. Progress has been impeded for decades because it hasn't even been regarded as critical infrastructure but rather a commercial service of providing "broadband" bandwidth and service bundles to qualifying households. That's changing with the Biden administration's proposed infrastructure investment plan, the American Jobs Plan, that regards telecom as critical infrastructure and as such, it cannot be left to the private market to build it.

As the administration makes a long overdue shift of the policy discussion from broadband to infrastructure, it must be careful not to allow legacy investor owned telephone and cable companies to continue to control the narrative by focusing on broadband bandwidth as they have for the past quarter century. (Or that the problem is largely confined to rural areas when only one third of U.S. homes are passed by fiber.) It's evident in their complaints that publicly or consumer cooperative owned fiber to the home would be wasteful "overbuilding" arguing their limited deployments provide sufficient bandwidth. 

Similarly, consumer advocates and public policymakers should avoid falling into the bandwidth trap by calling for more and better "broadband maps" showing what bandwidth is offered in a given neighborhood. The goal should be fiber connections to nearly every American doorstep, a goal the private sector cannot achieve quickly enough relative to the need that has been heightened during the public health restrictions accompanying the COVID-19 pandemic.

Verizon, AT&T look to wireless, C-band spectrum as cheaper alternative to building fiber to the home

That expanded opportunity is thanks to adding 4G fixed wireless access to the equation, as well as the addition of C-band spectrum to Verizon’s spectrum portfolio. C-band spectrum provides a broader reach. Initial 5G Home service was based on short range mmWave spectrum.

Verizon has suggested it will go on the offense with fixed wireless, hoping to take on cable company dominance in residential broadband access in major markets. Outside of its fiber footprint in the Northeast, Verizon has little wireline broadband assets to take on cable.

AT&T CEO John Stankey also shared some views on fixed wireless at the J.P Morgan conference yesterday. AT&T has not been a recent advocate of broad use of fixed wireless, but the company has a very limited fixed wireless offering for rural markets funded through the CAF program. It appears the company may try to build on that.

Stankey now says fixed wireless will play a larger role in the company’s future, although the strategy looks to be very different than Verizon’s take. AT&T appears to be looking to fixed wireless as a way to retire DSL in its non-fiber markets, rather than go on the offense in urban areas. The company has already stopped taking new orders for DSL.

 Verizon CEO: Verizon Fixed Wireless is Key to Monetizing 5G

 

Both big telcos are apparently hoping to utilize C-band radio spectrum -- Verizon over its mobile wireless infrastructure -- to provide advanced telecommunications services to homes as a cheaper alternative to building fiber connections to them. For AT&T, it's a replacement strategy for its obsolete DSL over copper technology being discontinued.

Memo to Biden administration on telecom infra component of infrastructure initiative

As the Biden administration negotiates with Congress on the advanced telecommunications infrastructure component of its American Jobs Plan infrastructure initiative, here are some points it should bear in mind. Some should alleviate concerns of fiscal conservatives who are leery of the amount of the funding proposed and how it will be financed.

• Don’t cut the funding below the $100 billion originally proposed. Consider that a partial amount for what will ultimately be required to provide a public option of fiber connections reaching every American doorstep. It’s likely at least twice that amount will be necessary.
• Allocate 90 percent of the funding to long term, low interest loans and 10 percent to technical assistance grants targeted to public sector and nonprofit entities as prioritized in the initiative.
• Factor in future income tax revenues from enhanced economic activity ubiquitous fiber will enable.
• Avoid framing this infrastructure component as promoting market competition. It’s a nonstarter as telecom infrastructure like other utilities is a natural monopoly where no meaningful market competition (many sellers and buyers) can exist. The goal should be to provide public option open access fiber infrastructure, not to compete with legacy telephone and cable companies.
• Similarly, avoid framing this infrastructure element as addressing “unserved” or “underserved” or “rural” households and falling into the speed trap of debating what constitutes “broadband” and where it’s offered. An estimated two thirds of U.S. homes are not passed by fiber and can be found in urban, suburban and exurban as well as rural areas. Public option open access fiber infrastructure will not only help them gain access to modern telecommunications service, but also boost affordability for those households that are passed by fiber.

U.S. at telecom infrastructure crossroads, needs a public option

Biden’s plan is one step toward imagining a new social contract that guarantees universal broadband services. Incentivizing municipal broadband to challenge corporate ISPs’ political and commercial hegemony, the plan is a strong start. But municipal broadband initiatives tend to be highly localized and fragmented, with many communities unable to build their own networks. The federal government needs to coordinate and scale these efforts to build publicly owned Internet networks to ensure that all Americans have access to a “public option” for their broadband services. 

*   *   *

Today we find ourselves at a crossroads. For too long, we’ve tinkered at the margins instead of confronting the corporate capture of the pipes, wires, and other infrastructure powering the Internet. Now we must take a firm stand: We can either have a democratic Internet that includes reliable and affordable access to all or a highly commercialized Internet that delivers profits to a few enormous corporations. We cannot have both.

https://www.thenation.com/article/politics/broadband-infrastructure-biden/

 

Public option open access fiber provides much needed alternative to commercial “broadband.”

A major benefit of public option open access residential fiber connectivity offered by a regional or local governmental entity or consumer telecommunications cooperative is it provides an accessible and affordable alternative to commercial “broadband” service sold in multiple incrementally priced speed tiers offered in select neighborhoods.

Most residential users don’t know what their throughput level is. They are only aware of throughput when there’s a functional issue such as websites taking a long time to load, choppy video and/or audio on calls, or video streams that pixelate or buffer too much and produce the dreaded “spinner.”

Instead of a speed tiers used by commercial broadband ISPs, open access fiber service can instead offer a single national throughput service level standard. Starting out, that should be the 100 Mbps symmetrical standard proposed in the telecom infrastructure component of the Biden administration’s American Jobs Plan. Over time, the standard would be increased to accommodate continued growth in bandwidth demand generated by devices and application services. VOIP should be included for those households that want voice telephone service rather than relying on commercial mobile wireless service.

Along with a single throughput standard, there should be a flat monthly rate, similar to that offered when Google Fiber made its debut in a few U.S. metros a decade ago. Ideally, that should be around $45 a month with a $20 lifeline rate for qualifying low-income households.

Revised California state budget proposes $7 billion investment over 3 years to enhance advanced telecom access and affordability

A revised budget for the State of California’s fiscal year beginning July 1 calls for spending $7 billion over three years to enhance advanced telecom access and affordability. According to a budget summary issued today, slightly more than half of state residents have access to infrastructure providing fiber level service. “Service at speeds below 100 Mbps is not enough for households who are juggling the demands of distance learning, telework, and accessing health care on-line,” the summary states. “These numbers are an indication of lack of access, lack of quality infrastructure, and lack of affordability.”

The budget would also appropriate state funds to supplement federal American Rescue Act funds to construct a statewide transmission network. “The statewide network will incentivize providers to expand service to unserved and underserved areas by substantially reducing their upfront infrastructure costs, creating new opportunities for municipal fiber networks, and promoting affordability for consumers,” the summary states. “This essential backbone infrastructure is a foundational step towards the entire state having access to broadband. Moreover, the generational investment will create tens of thousands of quality jobs to help the state’s economy recover from the pandemic.”

The proposed budget would also establish a $500 million Loan Loss Reserve Account to help local governments, tribes and non-profits secure private financing for fiber infrastructure. “These last-mile networks require large upfront investments but the return to customers, communities, and California is significant,” the summary notes. The budget also proposes to supplement an existing high-cost area subsidy program managed by the state public utility commission with $500 million in federal American Rescue Act funds.

The state Legislature must approve the proposed budget by June 15. Separately, lawmakers are considering submitting a bond measure (AB 34) to state voters that would raise $10 billion for grants to local governmental entities and Indian tribes for advanced telecommunications infrastructure and services.

Biden admin telecom infrastructure policy: Rural vs. urban not just a false choice. It's a false dichotomy.

For now, at least, the debate over the Biden broadband plan has mostly broken down along party lines, with familiar divisions emerging between those working to close the broadband availability gap in rural America and those working to close the access and affordability gap in cities. To Jonathan Chambers, a partner with the rural fiber-connectivity company Conexon, the Biden plan risks diverting funding to cities, when it ought to go toward building out networks in rural America, where it's more costly to build and where a sparse population makes it harder to recover costs through subscription fees. "I'm in favor of spending money on infrastructure, but unless you identify the problem first and target the money toward the problem, you're just going to perpetuate the problem," said Chambers, who previously worked for both the Senate and the FCC. Chambers worried that the Biden plan is motivated by "the folks in the Biden administration want[ing] to support their constituency, which are cities." Proponents of the Biden plan view the rural-urban divide as a false choice. "We have a real challenge in connecting both rural and urban populations," said Mitchell. "To the extent that we have to choose between them, I think we're doing something wrong." (Emphasis added)

https://www.protocol.com/policy/biden-broadband-plan

Mitchell's right. Not only is this a false choice, it's a false dichotomy. When it comes to telecommunications infrastructure policy, too many discuss the issue as if it were still 1950 and there were largely two Americas, one urban and one rural. 

Today, it's not as binary. Americans have also settled in suburbs, small towns and expanding exurbs at the edges of metropolitan areas. Advanced telecom infrastructure deployment is very unevenly deployed in these areas, where people have moved to escape congested and costly urban areas. The public health restrictions of the past year or so have accelerated that trend. The Biden administration's American Jobs Plan that would allocate $100 billion to building public option open access fiber to the home advanced telecom infrastructure offers a substantial start to meet this need.

Argument that public option open access fiber is unnecessary "overbuilding" misses the point

Cable companies' argument against municipal broadband is not new. Cable, they say, already blankets the country. Why build more capacity where it already exists when there are still parts of the country with no capacity at all? Besides, they argue, it's not the government's place to interfere with private competition. "The belief that municipalities deserve some type of preference in the distribution of funds and that that somehow is going to lead to some greater consumer benefit? We don't think that's true or that there's any real evidence," said James Assey, executive vice president of NCTA. That argument has gotten cable companies their way in state after state, including in Tennessee, where AT&T fought efforts by Chattanooga's successful municipal network to expand in 2016. And it's gaining ground among lawmakers in Congress too. "The proposal today would prioritize, unfortunately, inefficient government-run networks, at the expense of private networks, and create arbitrary speed thresholds that favor fiber-only projects with no restrictions to prevent overbuilding in areas where broadband already exists," Republican congresswoman Cathy McMorris Rodgers said during a hearing of the House Energy and Commerce Committee last week.

https://www.protocol.com/policy/biden-broadband-plan

The "overbuilding" argument misses the point. Building open access fiber to the home infrastructure provides a badly needed public option (and NOT market competition given telecom infra is a natural monopoly) to ensure access to and affordability of advanced telecommunications. Investor owned companies answer first to their shareholders and have no public obligation to ensure those exist. By contrast, the Biden administration's telecom infrastructure plan proposed as part of the American Jobs Plan serves the American people whose interests undoubtedly outweigh those of shareholders.

The timing of the proposed public option is propitious. Legacy telephone and cable companies lack the financial capacity to take on the job and can only invest where they can be assured of a rapid return on investment. Private capital investment is too risk averse, like the legacy providers favoring dense residential "communities" such as planned unit and multi-family development.

Public option open access fiber holds promise of ending unproductive "broadband mapping"

First and foremost, the FCC, Congress, local government, community groups, and existing service providers need to work together to create accurate broadband maps. Without an understanding of where broadband infrastructure actually exists, we won’t know which communities lack access to the Internet and which are served.

Risks and Rewards of the U.S. Broadband Funding Boom | Internet Society

While on the surface, this appears to be a rational starting point, in reality it's retrogressive and not a step forward. "Broadband mapping" originates from the Telecommunications Act of 1996 that gave the U.S. Federal Commission authority to define advanced telecommunications based on throughput. The FCC determines what constitutes "broadband" level throughput. Providers are required to report annually to the FCC where they are selling it. Efforts to map this data have resulted in decades of unproductive gaming and wasteful controversy among regulators, policymakers, service providers and public interest advocates over the accuracy and utility of the reports.

The Biden administration's proposed American Jobs Plan properly regards advanced telecommunications as critical infrastructure rather than "broadband" as a service. It defines a level of throughput that makes it a de facto fiber to the home infrastructure standard. It would also create a public option by prioritizing networks owned by public sector and nonprofit entities such as consumer cooperatives.

Instead of mapping "broadband speed," what policymakers should do first is identify existing public sector and nonprofit entities that currently operate fiber networks. The American Jobs Plan and other potential sources of federal funding should be directed to them to expand and strengthen their networks. Where these networks are absent, funding should be allocated to enable regional public sector and nonprofit operators to design and build open access fiber as a much needed public option to remedy widespread gaps in access and affordability.

Cable Firms Fear Being Left in Dust in Biden Broadband Quest

(Bloomberg) -- The Biden administration’s multitrillion-dollar infrastructure proposal includes $100 billion to bring high-speed broadband to every American, an idea that might be expected to win applause from those who provide the service.

But cable companies such as Comcast Corp. and Charter Communications Inc. that connect about two-thirds of U.S. homes that have broadband service fear the plan’s specific call for “future-proof” technology could leave them facing subsidized competitors.

That’s because the traditional coaxial lines that cable companies still use to serve most of their subscribers don’t handle the upload speeds that consumer advocates say should be required to receive federal infrastructure aid. Many say subsidies should go only to systems that can download and upload traffic at speeds of at least 100 megabits per second.

Cable Firms Fear Being Left in Dust in Biden Broadband Quest

A few observations here:

• Cable isn’t in the residential telecommunications business. It’s in the video entertainment and live spectator sports business, selling various video and sports packages.
• Cable companies only got into the IP-delivered services such as data and VOIP because of an accident of history when telephone companies didn’t upgrade their copper to fiber and instead opted for DSL. Cable offered better throughput than DSL.
• As they were getting into IP services in mid 2000s, cable companies lobbied successfully to create new state laws establishing “video franchises” regulated by state public utility commissions to neuter the power of local governments -- the traditional issuer of cable franchises -- to require service be made available to all addresses. For those households not passed by their cable, they demand thousands and even hundreds of thousands of dollars in connection fees to extend their cable down the road or cul de sac to establish service.
• Cable service is pricey (consistent with its positioning as a discretionary consumer service rather than a utility) and poor customer service is legendary.
• All that being said, there is a future for this industry: as a video content provider in a public option open access fiber ecosystem.

 

Biden administration’s American Jobs Plan: Reframing telecommunications as infrastructure policy

America’s hodge podge of unevenly deployed residential fiber optic connections that reach only about one third of all homes can be traced back to public policy expressed in the 1996 Telecommunications Act.

Although fiber optic technology was available when the law was enacted, the drafters of the statute instead charted a future course based on legacy twisted pair copper telephone lines for dialup and its irregularly deployed successor, DSL. That in turn created path dependency on twisted pair copper to deliver Internet-based services to homes even though it’s technically substantially inferior to fiber given it was designed to deliver analog voice and not digital services.

The fundamental problem with the Act is it viewed telecommunications as a market much like the hot 1990s personal computer market. Its basis is “light touch” market regulation, hoping to encourage market competition that would spur innovation, lifting all boats and creating relative parity in service availability and quality across the nation. PCs are a commodity market whereas telecommunications is not. It’s infrastructure and requires infrastructure policy.

The Biden administration’s infrastructure proposal, the American Jobs Plan, is an opportunity to make a much overdue course correction and establish policy that treats telecommunications as the essential infrastructure it is.

Deloitte white paper points up flawed U.S. policy of chasing throughput versus modernizing copper to fiber

Despite more than $107 billion in federal subsidies between 2010 and 2020 to boost throughput outside of densely populated metro centers, the United States hasn't obtained appreciable and durable benefit, concludes a recently issued white paper by the consulting firm Deloitte.

Optimism over the past 10 years that billions of private and public investment in underserved geographies for broadband access and adoption would help close the digital divide has waned as outcomes have often disappointed. Previous programs increased the number of people with access to the FCC’s definition of broadband by less than 1% (<1%; 1.6 million people) between 2014 and 2019, partially as a result of the changing definition of broadband.

Unless the nation changes course on telecommunications policy and stops chasing "broadband" throughput and instead replaces copper telephone lines reaching nearly every American home with fiber, the paper suggests, it will continue the wasteful cycle and reap less than optimal economic advantage. 

The Biden administration's proposed infrastructure plan offers an opportunity to do that by prioritizing fiber built by public sector and nonprofit corporations that don't carry the burden of generating profits that disincentivizes investing in fiber and only doing so proscribed neighborhood deployments that potentially offer the most favorable return on investment. A big advantage of building public option fiber is it ends the broadband speed chase since fiber can easily accommodate expected growth in bandwidth requirements. That necessitates dispensing with the "technology neutral" standard of the 1996 Telecommunications Act that gave rise to unending debates over what constitutes broadband and the related issue of net neutrality, as described in the Deloitte paper:

Since 1996, the US government has set minimum speed requirements to define broadband service, with the hopes of keeping pace with the exponential growth in consumption. These minimum performance expectations have changed as applications require increasing amounts of bandwidth. From 2011 to 2014, the FCC definition of broadband was 4 Mbps uplink and 1 Mbps downlink. In 2015, the FCC updated its definition of broadband to speeds of 25 Mbps downlink and 3 Mbps uplink. The 2015 broadband definition, which persists today, was more suitable to support new applications. Now, pandemic induced requirements for streaming, videoconferencing, and the promise of further innovation make the FCC’s 2015 broadband definition of 25/3 the topic of ongoing debate at both the state and federal levels.

As policymakers consider potential major FTTH expansion, U.S. confronts labor and supply chain constraints.

As the United States confronts the need to rapidly ramp up deployment of fiber to the home (FTTH) advanced telecommunications infrastructure, it faces a major labor and supply chain challenges. There are only so many qualified people who know how to design, build, operate and maintain FTTH networks. Over the past two decades or so, field technicians were laid off by investor-owned telephone companies that limited FTTH construction as their legacy copper outside plant was placed in run off mode and deteriorated. Others have retired or are about to, but aren’t being replaced by younger journeymen, notes industry observer Doug Dawson.

Additionally, there is a limited capacity to manufacture fiber optic cable and electronic equipment that controls the photons that carry the bits and bytes of information that power high quality digital voice, video and data.

In a recent podcast interview, Dawson said these constraints disadvantage the small community fiber projects that have sprung up to fill the many potholes in America’s FTTH infrastructure that currently passes only a third of all homes. Due to their limited purchasing power, these smaller builds will go to the back of the line, particularly if they– as is the case with many – lack a “shovel ready” construction plan. Waiting for years for FTTH, they’ll face yet further delay as they are out competed by larger projects and those able to pay higher labor rates – estimated to comprise about 70 percent of construction costs.

These circumstances point to the need for solutions, particularly as federal policymakers contemplate a major fiber infrastructure expansion under the Biden administration’s American Jobs Plan. In this context, it’s properly framed as a jobs plan since the nation will need to raise a large corps of workers to construct the enormous amount of fiber needed to bring it to where it needs to be at present and going forward. It might well be a modified 21st century version of the infrastructure oriented 1939 Works Progress Administration with a digital infrastructure component.

Infrastructure funding might also target projects of a broader regional scope in order to compete for labor and equipment and invest more efficiently due to enhanced market power and economies of scale.

As part of or to supplement the American Jobs Plan, policymakers should also consider industrial policy that would provide incentives to rapidly expand the supply of needed fiber optic cable and electronics and establish temporary capacity to ramp up production.

Public option FTTH infrastructure offers potential advantage of ending FCC back and forth over regulation of IP delivered services

With public option fiber to the home (FTTH) advanced telecom infrastructure proposed in the Biden administration’s infrastructure package, a key advantage would be a potential end of the shifting back and forth policy positions of the Federal Communications Commission regarding how to regulate Internet protocol delivered services.

Since they would be delivered on the service layer of FTTH infrastructure owned by public entities and consumer cooperatives, they would conform to the current FCC regime of treating them as lightly regulated information services falling under Title I of the Communications Act. It would also be consistent with the administration’s policy to promote competition in advanced telecommunications services. Information service providers would compete on a relatively level playing field if affordable fiber connections built to a national infrastructure quality standard reached nearly every American doorstep.

Biden administration telecom infrastructure policy objective is universal access and affordability, not enhancing competition

The broader problem is that U.S. government policy does nothing to promote competition. According to the FCC’s flawed broadband maps, 28 million households have only one internet service provider offering at least the minimum broadband speed. Many of the supposed competitors are phantoms. And the number of households in areas with more than one ISP offering gigabit speed service is paltry. Only two million households have that choice, or maybe many fewer—the FCC doesn’t really know at any granular level.

Biden Proposes Government Actually Try to Create Broadband Competition

The fundamental problem with this assessment is telecom infrastructure is a natural monopoly. Enhancing competition is undoubtedly good public policy in a competitive market with many sellers and buyers. However, utility infrastructure isn't and cannot practically be a competitive market due to high cost barriers to entry and first mover advantage. That's why we don't see electric and water utilities fighting to win customers by running multiple lines to households.

Since market forces cannot function well in a natural monopoly market to benefit consumers, the Biden administration's policy to create a public option -- infrastructure owned by public sector and cooperative entities -- is the best policy to ensure infrastructure reaches every American home and not just the estimated one third currently passed by fiber. That's not a pro-competition policy, but rather one aimed at expanding infrastructure capacity to better ensure access and affordability.

It's critical the administration's policy be framed as such. Casting it as enhancing competition gives incumbent telephone and cable companies ammunition to claim government is unfairly competing with them on an unlevel playing field, arguments that will resound with conservative policymakers.

The administration's plan can promote competition by establishing a strong national fiber to the premise telecom infrastructure standard as a quality benchmark to assure reliability and durability against obsolescence. As well as creating incentives for rapid completion and deployment given the nation is at least a decade behind where it should be relative to this critical infrastructure.

No need for maps of existing advanced telecom infrastructure with "public option" fiber reaching nearly every American home.

According to Sherry Lichtenberg, deputy director at the National Regulatory Research Institute, having a big sum of money with which to attack the digital divide will be important, but the key issue may actually be figuring out where to spend it all. “We still don’t really have a good map that shows where things are available,” she said. “It’s important to know who’s got service, who doesn’t have service, where service could be provided if somebody asked for it, and where people are really getting it even if they are asking for it because of the way the rules are written.”

 It Will Take a Lot More Than Money to Fix the Digital Divide

There is no need for maps of existing advanced telecom infrastructure provided the Biden administration's proposed infrastructure plan offers affordable "public option" fiber connections to nearly every American home. It's already known that only about one third of U.S. homes are passed by fiber, most of it built by investor owned providers that limit construction to cherry picked neighborhoods. 

That's unlikely to change anytime soon since their business models demanding rapid returns on capital investment drive them to target dense MDU and greenfield development. They also charge a price premium for fiber throughput, marketing it as high end "gigabit" service that makes higher income areas a priority for fiber infrastructure deployment.

Enabling legislation of Biden administration’s infrastructure plan should ensure fiber built to nearly every American home

The advanced telecommunications infrastructure component of the Biden administration’s proposed American Jobs Plan (AJP) will be more clearly fleshed out when it is drafted into legislation. For now, it’s fine for the AJP to broadly outline a goal of building “future proof” infrastructure. But this is a subjective term, leaving it open to debate and the introduction of present bias as the language is negotiated. The draft legislation should instead definitively establish a fiber to the home infrastructure standard.

The AJP proposes to build infrastructure to “unserved and underserved areas so that we finally reach 100 percent high-speed broadband coverage.” The enabling legislation should avoid the use of “unserved and underserved areas” as well as “broadband” – terms that have sparked years of protracted debate over how they are defined as infrastructure deficits grew. Instead, it should ensure fiber is built to 100 percent of American homes over the near term to replace outdated copper telephone lines, with the exception of homes located in extremely remote areas of the nation.

Biden administration's telecom infrastructure plan effectively says, "Time's up. We have to turn a new page. History demands it."

Former FCC Chairman Ajit Pai said Thursday that the allocation of $100 billion to expand broadband networks in the U.S. under the Biden administration will only serve to hurt consumers and stifle innovation. 

AJIT PAI: The FCC alone already has in the pipeline almost $40 billion to help close that digital divide and ensure that Americans have access to the internet that serves their needs. That’s before any of this $100 billion plan that the President proposed even comes to the table and so that’s part of the concern that many have is that there are already plans to attack this problem.

Moreover, the plan itself seems to suggest that they want to overbuild private networks with public funds and have governments own or operate or even micromanage how those networks are going to be constructed and operated.

Biden's $100B internet overhaul will hurt consumers, stifle innovation: Former FCC chairman | Fox News: 

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Pai's right in that there will be some overlap of public option fiber infrastructure in neighborhoods where investor owned providers have deployed fiber to homes, comprising about a third of all U.S. homes. Implicit in the telecom component of the Biden administration's American Jobs Plan is these providers have gone as far as they can over the past three decades modernizing legacy copper telephone lines built for analog voice communications in the 20th century to fiber for the 21st century's digital services. 

They've harvested the low hanging fruit and will struggle to build out to the remaining two thirds of American homes in a timely manner given their lack of patient investment capital relative to the need and their debt burdened balance sheets. The experience of the current pandemic has demonstrated modernization to fiber is far behind where it should be at the start of the new century's third decade. The Biden administration's plan effectively says, "Time's up. We have to turn a new page. History demands it."