Biden administration, Congress have more to do on advanced telecom infrastructure in 2022

The Biden administration and Congress should enact legislation in 2022 that specifically focuses on advanced telecommunications infrastructure (ATI) and targets sufficient funding to federal and state agencies with the goal of rapidly modernizing legacy telephone copper that reaches nearly every American doorstep to fiber.

The ATI components of Infrastructure Investment and Jobs Act (IIJA) enacted in November won’t achieve that. There isn’t enough funding to do the job. In California, for example, Sen. Alex Padilla estimates the IIJA would bring only $1 billion to the nation’s largest state for ATI. Much more – probably four times the total $45 billion appropriated – is needed for the nation as a whole.

In addition, the IIJA fails to specify an infrastructure-based standard for ATI which might be reasonably expected in an infrastructure measure. Instead, it sets a throughput-based service level standard that will create controversy and delay over how grant money the bill appropriates to the states is to be spent. That service level standard will leave many American homes with substandard infrastructure and render them ineligible for fiber projects able meet their future needs and to obtain maximum long-term value for taxpayer dollars. Cable TV and wireless internet service providers have provided a partial and temporary solution to fill fiber gaps -- but are just that.

The 2022 legislation should establish and fund federal-state regional ATI projects. These large scale government owned networks can bring the necessary purchasing power and economies of scale to speed construction of fiber ATI amid labor and material supply chain constraints. Only about one third of all American homes have access to fiber connections that should have reached all but the most remote by 2010.

These projects should build open access fiber networks and give large telephone companies that know how to design, build and operate fiber networks at scale opportunity to competitively bid for contracts to do the work. Government ownership of the networks avoids the inherent conflict of interest in directly funding these investor-owned firms that must place the interests of their shareholders ahead of the broader public’s when it comes to spending public dollars.

These companies and their employees would additionally benefit if the 2022 legislation established a national fiber corps and training programs to form a workforce to bolster the ranks of experienced technicians that have been depleted over the past two decades.

The bill should also contain elements to ensure rapid coordination of permitting needed across federal, state and local jurisdictions. As it stands now, multiple permits are required to construct ATI that can snarl and delay projects for years. The IIJA establishes an Interagency Infrastructure Permitting Improvement Center to implement reforms to improve interagency coordination and expedite projects relating to the permitting and environmental review of major transportation infrastructure projects. The 2022 legislation should expand its scope to include federal-state ATI projects.

IIJA challenge process sets stage for battles between WISPs and telcos

The advanced telecommunications infrastructure (ATI) component of the Infrastructure Investment and Jobs Act (IIJA) allows for challenges of proposed projects that request states award 75 percent grant subsidies appropriated for ATI in the bill. Challengers can claim a proposed project does not meet the funding eligibility standard of at least 80 percent of premises within the project scope as being “unserved." That's defined as being unable to obtain reliable service with a minimum throughput of 25 Mbps/3Mbps with latency sufficient to support real-time, interactive applications. The statute authorizes states to adjudicate challenges. The National Telecommunications and Information Administration can reverse state determinations and modify the challenge process.

The challenge process sets the stage for battles between fixed Wireless Internet Service Providers (WISPs) and telephone companies once the funding becomes available next year. Verizon, AT&T are looking at C-band spectrum as a cheaper alternative to building fiber to the home. Should these telcos seek IIJA grant subsidies to expand their fixed premise wireless presence using C-band spectrum as AT&T CEO John Stankey suggested this week, WISPs could conceivably contest proposed projects as ineligible because WISPs already offer service meeting the minimum throughput standard. WISPs could use the same rationale to challenge proposed telco fiber to the premise (FTTP) builds using IIJA subsidy funds. Either way, FTTP deployment – already decades behind where it should be in terms of modernizing legacy copper telephone lines and building capacity for future bandwidth demand – would be further delayed.

WISPs are likely to view both IIJA subsidized telco expansion scenarios as an existential threat to their business model. Telcos could easily undercut their relatively high monthly rates for fixed prem wireless service. Telcos also benefit from greater economies of scale and lower costs since they could deploy their own fiber backhaul circuits. And telco owned FTTP would decimate WISPs since most customers would quickly switch to telco fiber once it became available and at lower monthly rates than WISP service. 

The forthcoming fixed wireless fights -- and most importantly the prolonged delay of modernizing copper to fiber -- could be avoided if the IIJA was revised to establish an FTTP infrastructure subsidy eligibility standard rather than the throughput-based standard in the bill as enacted.

FTTP out in the middle of nowhere

If lawmakers don’t revisit the advanced telecommunications infrastructure (ATI) component of the Infrastructure Investment and Jobs Act (IIJA) in the new year and the law is implemented strictly as written, 75 percent grant subsidies for fiber to the premise (FTTP) projects would likely be available only for those in extremely remote areas of the country where the cost per premise passed exceeds $10,000. 

That because the law makes those subsidies available only to builds where at least 80 percent of the premises to be served lack existing infrastructure that can provide minimum throughput of 25 Mbps down and 3 Mbps up with latency sufficient to support real-time, interactive applications. Additionally, its funding formula favors projects in these “unserved” areas that have higher than average costs due to their remoteness, and sparse settlement and topography.

While the federal agency designated to implement that ATI component of the IIJA – the National Telecommunications and Information Administration -- has until May 15, 2022 to set up a program to administer the subsidies, U.S. Commerce Secretary Gina Raimondo has indicated funding would be limited to these highly remote areas. "We have to make sure we don't spend this money overbuilding" existing infrastructure, Raimondo was quoted as saying in this Reuters story.

The upshot is the $43.45 billion in grants earmarked for ATI would likely be spent to connect a relatively very small number of remote premises given the high cost of connecting them, leaving behind metro area exurban areas and small towns with numerous gaps in existing ATI.

IIJA provides opportunity for structural separation with state, regional wholesale open access fiber networks

With the enactment of the Infrastructure Investment and Jobs Act (IIJA), the federal government and the states have an opportunity to structurally separate advanced telecommunications infrastructure and Internet Protocol (IP) services delivered over it by funding state and regional government owned wholesale open access fiber networks. That would boost access and affordability, and by extension, support virtual knowledge work, learning and telemedicine -- all of which jumped amid public health measures put in place during the COVID-19 pandemic. These large scale entities would also enjoy vital purchasing power as demand for labor and materials to build fiber networks is taxing their availability.

The Telecommunications Act of 1996 contained a structural separation component, requiring telephone companies to offer wholesale access their network infrastructure to retail Internet Service Providers (ISPs) -- referred to as unbundled network elements (UNE). But this provision lacks regulatory incentive for telephone companies to modernize their legacy copper networks to fiber. They leased access to their central office switches and legacy twisted pair copper plant to ISPs via dialup and later, digital subscriber line (DSL) that due to technological limitations could not serve all customers. Moreover, the telephone companies lacked market incentive to upgrade to fiber since they could derive passive revenues by placing the copper in runoff mode without sacrificing profits and shareholder dividends to capital expenditures. Consequently, only about a third of U.S. homes are passed by fiber.

With the IIJA, the National Telecommunications and Information Administration and the states can utilize $43.45 billion in grants earmarked for advanced telecommunications infrastructure in the legislation to attain a superior form of structural separation that can yield far greater public benefit than the 1996 legislation. Unlike shareholder owned telephone and cable companies, government owned networks have incentive to pursue the positive externalities that come with increased access and affordability that don’t accrue to the balance sheets of investor-owned infrastructure. These broad-based benefits clearly outweigh more narrow interests of their shareholders. 

Policymakers should implement and if necessary, amend the IIJA to ensure the widest and most rapid deployment of state and regional government owned open access fiber networks.

States should use IIJA advanced telecommunications infrastructure funding for government owned networks

Starting in 2022, state governments are in line to receive $43.45 billion in grants earmarked for advanced telecommunications infrastructure appropriated under the Infrastructure Investment and Jobs Act (IIJA). As California recently opted to do by appropriating $2 billion for state-owned middle mile transmission infrastructure, states should use the funds to build their own projects with telecom authorities (instead of so-called "broadband offices.")

Doing so avoids a fundamental conflict of interest and gives states more control over what infrastructure gets built and how quickly. As experience over the past two decades has shown, investor-owned legacy telephone and cable companies must naturally place the interests of their investors first and ahead of the public interest. The result has been a Swiss cheese pattern of infrastructure deployment in cherry picked neighborhoods that meet the rapid return on investment their shareholders demand. That leaves many others without the possibility of being connected, particularly less densely developed areas.

State and local governments are far better situated to build advanced telecommunications infrastructure with the public benefit goal of increasing access and affordability. By virtue of their public service mission, they can focus on attaining these benefits as well as the concomitant positive externalities such as enabling virtual knowledge work, distance learning and telehealth visits. They can also make the federal dollars go farther since they don't need to produce profits for investors.

States should also fund public utility districts and consumer owned utility cooperatives. They too are free of the conflict of interest between shareholders and end users since the latter are also the former.

To speed advanced telecommunications infrastructure deployment, Congress should tweak infrastructure bill along lines of American Rescue Plan Act

When Congress returns from the year end holiday break next year, it should tweak the Infrastructure Investment and Jobs Act (IIJA) recently signed into law by President Biden as one of its first orders of business. As enacted, the statute’s provisions appropriating $42 billion in state grants for advanced telecommunications infrastructure set the stage for conflict and potential litigation that could add more years of delay to the already long overdue modernization of the nation’s telecommunications infrastructure.

Doug Dawson published a thought provoking blog post earlier this week laying out some of the potential pitfalls. The law needs immediate attention since the National Telecommunications and Information Administration (NTIA) is mandated by the IIJA to set up shop to disburse the funding during the first several months of 2022 as the ‘‘Broadband Equity, Access, and Deployment Program.”

The pitfalls stem from the IIJA’s retention of a throughput versus infrastructure standard and its reliance on the Federal Communications Commission’s “broadband map” (currently being updated) detailing what throughput is available for a given location. The map is a critical measure because funding eligibility is primarily targeted for projects where at least 80 percent of premises are “unserved,” defined by the bill as those not having any providers offering service with throughput of at least 25 Mbps down and 3 Mbps up. The FCC mapping process has been fraught with controversy over its accuracy since the FCC’s National Broadband Map debuted more than a decade ago. Tied to this is distrust of incumbent legacy telephone companies suspected of overstating available throughput in order to disqualify potential subsidization of construction by other entities in their nominal service areas.

As Dawson notes, some states could rely on their own map data, setting states against the federal government’s maps. These states might also prefer to award IIJA funding to public sector and nonprofit owned fiber to the premise infrastructure after years of little infrastructure modernization by incumbents despite state subsidies and persistent neighborhood redlining that limits access and affordability. These states could also opt to cover the 25 percent cost match required by the IIJA with their own funds. States would be on solid public policy ground since the IIJA funding does not require incumbent telephone companies to offer advanced telecommunications service to any customer reasonably requesting it or at affordable rates, leaving longstanding gaps.

That could set the stage for lawsuits by investor-owned telephone, cable and fixed wireless incumbents contending states are unfairly disfavoring them in contravention of the IIJA’s provisions. They would likely exercise their right to challenge proposed build areas as allowed by the IIJA, fly specking them and arguing they are not “unserved” areas or that states are directing funding to “underserved” areas (where per the IIJA service isn’t available to 80 percent of locations at 100/20 Mbps) before ensuring there are no more “unserved” areas as required by the legislation.

To avoid these potential risks that could delay badly needed advanced telecommunications infrastructure, Congress should amend the IIJA’s advanced telecommunications infrastructure grant provisions along the lines of the American Rescue Plan Act (ARPA) enacted earlier this year. That measure appropriates $10 billion to state, local and tribal governments for capital projects including advanced telecommunications infrastructure.

The ARPA is more favorable to a fiber to the premises (FTTP) infrastructure modernization standard by specifying projects provide symmetrical throughput of 100/100 Mbps or be scalable to it. The ARPA also recognizes the need for rapid deployment by affording “significant discretion” to state, local and tribal governments to identify eligible projects without having to rely on federal “broadband maps” and not including a process for incumbents to challenge proposed projects as “overbuilding.”

Cable giants, electric co-ops battle over federal broadband dollars - Mississippi Today

But Mayo Flynt, president of AT&T Mississippi, told lawmakers: “We do think this is a job for the private sector and not the government sector to do … Scale is your friend, you’re going to get more return for your dollar, and this is a scale business … We believe that a competitive process or (requests for proposals) is going to help you get the best bang for your buck. Competition is a good thing. We are in the game and are competing.”

In 2019, the Mississippi Legislature passed a law allowing electric cooperatives to provide internet service — an effort to expand broadband access in a poor, rural state where an estimated 40% of the state lacked access. The effort has been likened to providing electricity to rural Mississippi in the 1930s. Proponents said large cable and telecom companies were failing to expand service into rural areas because it wasn’t profitable enough. But cable and telecom providers say they have spent millions in private funds expanding internet service in Mississippi, and that they shouldn’t be cut out of government funding for expansion.

 Source: Cable giants, Mississippi electric cooperatives battle over federal broadband dollars 

AT&T's Flynt is right. Telecommunications infrastructure like most infrastructure due to the high cost of constructing and maintaining it benefits from economies of scale. But that's not an argument against public ownership for which the American Rescue Plan Act targets funding. Rather, it helps make the case that the federal and state government should take a regional approach to ensuring fiber optic connections reach every home, school and small business to attain optimal economies of scale and purchasing power. Especially given constraints in the supply of materials and labor that can add further delay to badly overdue deployments.

There are roles for legacy telephone and cable companies in this important task. They have experience and expertise in designing, building, operating and maintaining telecommunications infrastructure. Since their business model constraints do not allow them to provide universal fiber to the premises service and instead build in areas where they can garner the most rapid return on investment, these functions rather than vertically integrated ownership of infrastructure and services is the best public policy here. These players can get some of the federal dollars but should do so as contractors on regional open access FTTP projects undertaken by the public sector and consumer utility cooperatives.

FCC set to move into key role on universal advanced telecommunications service

Within one month following the enactment of the Infrastructure Investment and Jobs Act President Biden will sign into law next week, the Federal Communications Commission must commence a proceeding to determine how the FCC should achieve universal advanced telecommunications service. The measure mandates the FCC report to Congress by next August options for “improving its effectiveness in achieving the universal service goals” taking into account the bill and other legislation addressing the goal of universal service. Universal service was attained for voice telephone service in the previous century. The report gives the FCC authority to make “recommendations for Congress on further actions the Commission and Congress could take to improve the ability of the Commission to achieve” universal service.

Notably, the infrastructure bill emphasizes the FCC report “may not in any way reduce the congressional mandate to achieve the universal service goals.” But it gives the FCC an opportunity to weigh in as to whether it “believes such an expansion is in the public interest.”

The infrastructure bill’s enactment comes as the administration looks to put its mark on the FCC by nominating FCC member Jessica Rosenworcel to serve as chair and Gigi Sohn as a member of the panel. In an executive order issued in July, President Biden called on the FCC to reinstate Obama administration regulations repealed during the Trump administration that would mandate universal service by classifying IP delivered services as common carrier telecommunications under Title II of the Communications Act of 1934.

Biden administration signals incumbents likely to be favored in challenges of proposed state FTTP builds under infrastructure bill

Federal grant money for advanced telecommunications infrastructure that would flow to states appropriated in the Infrastructure Investment and Jobs Act prioritizes projects in areas determined by maps under development by the Federal Communications Commission (FCC) that would serve premises where at least 8 of 10 prems cannot order advanced telecommunications service providing minimum throughput of 25/3 Mbps.

Under the bill expected to be signed into law next week, states receiving the funding can award up to 75 percent of the project’s capital cost as subgrants. The measure specifies states first fund builds that would serve these “unserved” premises. States can then award grant funds to projects where at least 80 percent of prems in a proposed project are “underserved,” which as defined in the bill means those that cannot order service providing minimum throughput of 100/20 Mbps and with latency sufficient to support real-time, interactive applications.

But in order to do so, states must first certify to the Department of Commerce’s National Telecommunications and Information Administration (NTIA) that the bill authorizes to oversee the grants there are no “unserved” premises in the state.

Combined, these provisions stringently proscribe the scope of state sponsored projects in most states.

However, the bill affords the NTIA a fair degree of discretion. It authorizes it to fund “priority broadband projects” that provide advanced telecommunications service that meets throughput and quality of service standards as determined by the NTIA. As well as those that would “easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services.” That could reasonably be interpreted as a fiber to the premises (FTTP) infrastructure standard.

A likely scenario is states and particularly those wishing to fund publicly and consumer cooperative owned FTTP projects will face push back from incumbent investor-owned telephone, cable and fixed wireless operators challenging their funding under the bill, contending they already provide 25/3 Mbps or 100/20 Mbps throughput to at least 80 percent of prems where FTTP is proposed to be built – what they term as “overbuilding.”

States must establish a “transparent, evidence-based, and expeditious challenge process” in which advanced telecommunications providers can contest a proposed project’s eligibility and whether a particular prem within the proposed project is unserved or underserved. States would have 60 days to resolve challenges. The bill authorizes the NTIA to modify the challenge process and overrule state determinations of challenges.

A question as the bill is implemented is to what extent the NTIA will exercise its discretion as permitted under the bill to favor publicly or cooperatively owned FTTP projects. Or side with commercial incumbents bringing challenges to proposed state projects. Department of Commerce Secretary Gina Raimondo offered a clue the Biden administration may be inclined to side with incumbents on challenges. "We have to make sure we don't spend this money overbuilding," Raimondo was quoted as saying in this November 9, 2021 Reuters story.

The Infrastructure Bill is About More than Money | Benton Institute for Broadband & Society

The Infrastructure Bill is About More than Money | Benton Institute for Broadband & Society: it is now the policy of the United States that: Subscribers should benefit from equal access to broadband internet access service within the service area of a provider of such service; "Equal access" means the equal opportunity to subscribe to a service that provides comparable speeds, capacities, latency, and other quality of service metrics in a given area, for comparable terms and conditions; and The FCC should take steps to ensure that all people of the United States benefit from equal access to broadband internet access service.

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The Benton Institute is right. While the billions appropriated to the states in the advanced telecommunications infrastructure component of Infrastructure Investment and Jobs Act headed to President Biden's desk gets most media attention, the measure contains important expressions of telecommunications policy. How they ultimately end up being implemented will be crucial headed into 2022 and beyond.

The Benton Institute's call that the U.S. Federal Communications Commission act to ensure the "equal access" provision sounds in the Title II universal service and anti-redlining requirements enacted in the FCC's 2015 Open Internet rulemaking reclassifying Internet Protocol delivered services as a common carrier telecommunications utility.

In an executive order issued in July, President Biden called on the FCC to reinstate that rulemaking that was repealed in 2018 during the Trump administration that deemed IP services as optional information services under Title I of the Communications Act of 1934. The order also calls on the FCC to initiate a rulemaking to require service providers to regularly report price and subscription rates to the public in a useful manner to improve price transparency and market functioning. The infrastructure bill mandates the FCC convene a proceeding to determine how to achieve universal service and to recommend to Congress expand it “if the Commission believes such an expansion is in the public interest.”

Another key policy issue that will be addressed in the infrastructure bill's implementation is the role of public sector and nonprofit entities like consumer utility cooperatives. When the Biden administration issued its foundation for the infrastructure bill -- the American Jobs Plan -- it clearly favored them as more nimble and complete builders and operators of much needed infrastructure as shown in this paragraph from the plan:

Build high-speed broadband infrastructure to reach 100 percent coverage. The President’s plan prioritizes building “future proof” broadband infrastructure in unserved and underserved areas so that we finally reach 100 percent high-speed broadband coverage. It also prioritizes support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives—providers with less pressure to turn profits and with a commitment to serving entire communities.

The pressure private investor owned vertically integrated telephone and cable companies face to generate profits works against full deployment in their putative service territories. That has brought about longstanding, widespread gaps in landline connectivity to homes and small businesses, creating a pattern of Swiss cheese holes in delivery infrastructure in urban, suburban, exurban and rural areas with the latter two categories most severely affected.

Broadband mapping provision of House-passed infrastructure measure poses risk to timely disbursement of state funding

The Largest U.S. Investment in Broadband Deployment Ever | Benton Institute for Broadband & Society: Broadband Equity, Access, and Deployment Program (And the Need for Better Broadband Maps) The U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) has six months to create the Broadband Equity, Access, and Deployment Program to support projects to construct and deploy broadband networks. Congress has allocated $42.45 billion for the program which will prioritize expansion of broadband in rural areas and states that rank below other states on broadband access and deployment. A key element in the implementation of the program is broadband mapping taking place at the Federal Communications Commission. The FCC is in the process of updating its current broadband maps with more detailed and precise information on the availability of fixed and mobile broadband services.

The Broadband Deployment Accuracy and Technological Availability (DATA) Act, signed into law in March 2020, requires the FCC to change the way broadband data is collected, verified, and reported. Specifically, the FCC must collect and disseminate granular broadband service availability data (broadband maps) from wired, fixed-wireless, satellite, and mobile broadband providers. To do this, the FCC is required to establish the Broadband Serviceable Location Fabric (a dataset of geocoded information for all broadband service locations, atop which broadband maps are overlaid) as the vehicle for reporting broadband service availability data. Additionally, the FCC must put forth specified requirements for service availability data collected from broadband providers, and it must create a challenge process to enable the submission of independent data challenging the accuracy of FCC broadband maps.

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This provision of the Infrastructure Investment and Jobs Act that passed the U.S. House of Representatives late this week and expected to be quickly signed into law is the largest risk factor to the measure's timely implementation. 

Given the nation's fraught history of broadband mapping, that key provision of the funding eligibility formula and the development of procedures to challenge their accuracy is likely to set off time consuming controversy between investor owned providers, consumer interest and state and federal regulators, bogging down federal disbursements for months and possibly years. The billions of dollars at stake provide impetus for these groups to file challenges and raise questions over the accuracy of the maps, neighborhood by neighborhood.

Eligibility for up to 75 percent grant funding for advanced telecom infrastructure builds 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. That's 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 serving only select parts of them.

In potential model for nation, California poised to scale up open access fiber

California is poised to adopt a model of open access fiber infrastructure. The state is initially focusing on “middle mile” transmission infrastructure but could later extend the model that structurally separates end user services from the fiber that delivers them to “last mile” distribution infrastructure connecting customer premises.

The model, financed by a current state budget allocation of $3.5 billion for state owned transmission infrastructure and a similar amount for distribution infrastructure in the form of grants and loan securitization, dovetails with the current federal regulatory regime put in place in 2018 that regards the service layer as distinct from infrastructure, regulating IP services as information services under Title I of the Communications Act of 1934.

It also emerges one year after the U.S. Federal Communications Commission conditionally repealed rules put in place by the 1996 amendment to the act requiring incumbent telephone companies to sell wholesale access to its proprietary infrastructure to competitive local exchange carriers -- CLECs. That heightens the need for open access transmission infrastructure such as that being planned in California.

Both federal policies also pave the way for non-incumbents/CLECs including public sector entities and consumer telecom cooperatives to more widely build out and operate open access fiber distribution networks. Incumbent telcos and CLECs are limited by their business models requiring rapid returns on investment and relatively high ARPU. Consequently, these investor-owned companies offer limited distribution fiber in select neighborhoods most likely to meet those requirements, leaving the majority of homes without fiber connections as legacy copper telephone infrastructure has become obsolete as demand for quality, reliable connectivity rises rapidly.

Instead of mitigating risk by cherry picking select neighborhoods, the open access model separates end user services from infrastructure. It thus spreads the risk of areas that are costlier to build fiber to all doorsteps by aggregating demand across a broad customer base, cross subsidizing the high-cost areas from revenues generated by businesses and institutions. That’s how the Electronic Frontier Foundation (EFF) explained it in comments filed with the California Public Utilities Commission (CPUC) this month. In addition, the EFF recommends the CPUC develop a new license category for transmission infrastructure. In order to obtain licensure, the infrastructure would have to be offered on an open access basis to distribution infrastructure operators at affordable rates and offering sufficient capacity.

Telcos, Comcast target fiber upgrades to business customers -- not residences

Two legacy telephone companies and the nation's biggest cable TV company are upgrading their legacy metallic delivery infrastructures to fiber for business customers. Not targeted for the upgrades are residential users.

Residential voice telephone service was cross subsidized by business customers. There isn't a similar situation when it comes to advanced digital telecommunications. That's because under current U.S. regulatory policy, it's classified like the information services of the 1990s dialup era, AmericaOnline and CompuServe, and not as telecommunications services. 

Information services -- regulated under Title I of the Communications Act of 1934 -- are considered optional, discretionary services and not utilities. Hence, they are not subject to universal service and anti-redlining requirements, providing no regulatory incentive for telcos and cablecos to offer fiber connections to residences.

County's public-private partnership with telco looks more like a pass through federal subsidy and not a PPP

AT&T Takes the Public-Private Broadband Partnership Plunge - Telecompetitor: This AT&T public-private project still needs final funding approval from the County, which will trigger finalization of a contract between the two parties. No terms have been disclosed. Public-private partnerships are growing in momentum, as cities, towns, and localities look to ensure their communities have the adequate broadband infrastructure and are willing to put up funds to accomplish it. Increasingly, incumbent carriers like AT&T are interested in partnering.

But is this truly a public private partnership? Per the story below, it looks more like a pass through federal subsidy for a proprietary closed access network in which the county would have no partnership interest.

EVANSVILLE, Ind. — Unincorporated Vanderburgh County will now be the focus of a nearly $40 million investment into broadband service provided by AT&T. 

AT&T was selected following its response to a Vanderburgh County request for proposal and unanimously approved Tuesday by the Vanderburgh County Commissioners. Four companies responded to the request, a jump from the county’s previous broadband project, which had one response. 

The total investment will be $39.6 million, of which $9.9 million is public money through the American Rescue Plan Act and $29.7 million is investment by AT&T.

Treasury Department guidance on American Rescue Plan Act funding for state and local government fiber projects raises questions on throughput standard

The U.S. Treasury Department has updated guidance on the use of $10 billion in American Rescue Plan Act grant funding to state, local and tribal governments for capital projects to construct advanced telecom infrastructure. The text below is excepted from the guidance:

Broadband Infrastructure Projects. The construction and deployment of broadband infrastructure projects (“Broadband Infrastructure Projects”) are eligible for funding under the Capital Projects Fund program if the infrastructure is designed to deliver, upon project completion, service that reliably meets or exceeds symmetrical download and upload speeds of 100 Mbps. If it would be impracticable, because of geography, topography, or excessive cost, for a Broadband Infrastructure Project to be designed to deliver services at such a speed, the Project must be designed so that it reliably meets or exceeds 100 Mbps download speeds and between 20 Mbps and 100 Mbps upload speeds and be scalable to a minimum of 100 Mbps symmetrical for download and upload speeds. Treasury encourages Recipients to focus on projects that will achieve last-mile connections. Recipients considering funding middle-mile projects are encouraged to have commitments in place to support new and/or improved last-mile service.

This guidance favors fiber to the premises projects providing symmetrical throughput, something fiber can easily support. What's curious is the highlighted text. It begs the question of how "geography, topography, or excessive cost" (and what would be excessive?) would allow projects providing asymmetric throughput to qualify if those specific qualifications are met. It makes no sense because none of those factors would reasonably affect whether the delivered throughput is symmetric or asymmetric for a fiber to the premises project. Treasury clearly has some more explaining to do.

Biden administration’s delayed FCC appointments suggests telecom policy strategy overhaul in the works

Telecom policy wonks fretted and info tech press have scratched their heads for months over the Biden administration’s delay in fully staffing the Federal Communications Commission and naming a permanent chair. Affording the administration the benefit of the doubt, it’s likely the new administration has been taking its time developing a wholistic two-pronged telecommunications strategy.

Here’s how it might be playing out. The goal of the first part is to address the nation’s accumulated advanced telecommunications infrastructure deficits built up over the past two decades and bring robust connectivity to as many American doorsteps as quickly as possible. That element of the strategy is expressed in the administration’s “build back better” American Jobs Plan infrastructure initiative, now legislation pending in the House. It appropriates $42 billion to the states for advanced telecommunications infrastructure.

The second strategy prong would have a longer timeline with the goal of establishing a durable regulatory and subsidy regime to ensure Americans can get connectivity no matter where they live, with reliable service at affordable rates. It’s linked to the first prong: The infrastructure measure would require the FCC to conduct an inquiry on universal service and make policy recommendations to Congress.

Given the broad and long-term implications of that component, the administration would naturally want to move at a deliberate pace in nominating FCC members as well as naming a permanent chair. The administration would want to ensure its nominees are fully on board with its broader strategy and able to implement it.

It’s also possible the administration is mulling over the respective roles of the FCC and National Telecommunications and Information Administration relative to advanced telecommunications as part of a broader restructuring that could end up as a legislative proposal later in the administration. The NTIA will develop rules and oversee the telecom infrastructure funding allocated in the pending infrastructure bill.

Americans have a strong public interest group on advanced telecommunications policy: themselves. And they’ve been lobbying hard for two decades.

It has been postulated that America’s advanced telecommunications infrastructure deficits are largely attributable to the lack of public interest representation in public policymaking. There’s no equivalent of the Sierra Club for environmental policy in the case of telecommunications policy as Christopher Mitchell, Director of the Institute for Local Self Reliance’s Community Broadband Networks Initiative, observed in a recent Background Briefing with Ian Masters (@10:18).

That’s not entirely true. For years, Americans have been barraging their elected representatives at all levels of government with complaints and pleas for action to remedy lack of connectivity, high costs and poor customer service. When people are vexed to see neighbors just down the road or around the bend with landline connections but not available at their address and don’t get a satisfaction from providers, their next calls are often to their elected representatives and the news media. It’s been going on two decades now. It began in the early 2000s when DSL service didn’t quite extend to their homes and calls to telephone companies for connections were rebuffed or service promised “soon” that never arrived as the years crept by. Meanwhile, many were forced to turn to substandard, poor value wireless options.

During the COVID-19 pandemic and accompanying public health measures that turned homes into offices, classrooms and medical clinics, their predicament grew more dire and the calls to elected representatives for action more desperate as household members dealt with sluggish, unreliable and costly connectivity. In 2020, some elected representatives noted the subject had become the top issue in constituent communications with their offices.

When people don’t see their situations improving year after year despite their petitions to elected officials and only lip service from them, they naturally begin to wonder if they are really being heard. They grow disillusioned and angry and receptive to corrosive political messaging that the “system is rigged against them.”

A reinforcing perception that has become something of self-fulfilling prophecy is the big telephone and cable companies are the only voices that truly count. People can petition their elected representatives all they want, but their supplications don’t really mean anything in the end because the companies will always get their way and investors’ interests outweigh those of the public. It’s a variation on testimony by the then president of General Motors at a 1953 Senate hearing suggesting that what’s good for GM is good for America.

The comparison doesn’t apply to AT&T and Comcast today. While most Americans could buy an affordable car in the 1950s, many cannot get a landline advanced telecommunications connection at most any price or at an affordable monthly rate for those that can.

Federally backed credit facilities needed to fund fiber expansion

The Infrastructure Investment and Jobs Act passed by the Senate provides a strong infusion of grant funding for fiber advanced telecommunications infrastructure builds. Particularly for public and consumer cooperative owned fiber distribution infrastructure connecting homes, businesses and institutions. As President Biden suggested when he put forth his outline for the bill as the American Jobs Plan, building this critical infrastructure to reach all premises is more likely to occur when funding prioritizes networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives. Providers Biden noted, with “less pressure to turn profits and with a commitment to serving entire communities.” With that reduced financial burden and tax-exempt status, these entities can make funding go further than legacy telephone and cable companies.

Grant funding under the bill is a kick starter. More money will be needed given the high capital as well as operating costs involved. That’s where federal government-backed credit facilities could prove most useful while at the same time encouraging the use of fiber. It’s “future proof” technology as called for in the American Jobs Plan and has a life span of decades, corresponding to long term loan payback periods. The use of credit facilities is also more likely to appeal to fiscal conservatives than grant funding.

The Infrastructure Investment and Jobs Act would give tax exempt status to state issued bonds used for telecom infrastructure. But the bill language limits their use to areas where more than half of addresses that would be served in a census block group lack access to throughput that later generation DSL or fixed terrestrial wireless can provide. That’s not fiber, potentially leaving some premises with outdated, inadequate and poor value options.

Separate legislation pending in the House but thus far not advancing, H.R. 7302, would provide for low cost loan term loan guarantees and lines of credit for advanced telecommunications infrastructure administered by the federal Department of Commerce. Long term loans could cover up to 49 percent of capital costs and lines of credit up to 33 percent. The Department of Commerce would select eligible projects in areas lacking access download speed of at least 100 megabits per second and upload speed of at least 20 megabits per second and with latency that is sufficiently low to allow real-time, interactive applications. That could potentially rule out areas served by existing cable TV providers. While open access networks are specifically preferred under the bill language, fiber is not per a “technology neutrality” provision.

Localities, consumer utility coops could take default lead role in future distribution fiber construction

The United States continues to lack a unified advanced telecommunications infrastructure policy framework 25 years after the enactment of the Telecommunications Act of 1996. The law did not set forth standards governing physical infrastructure deployment. It merely directed the Federal Communications Commission to monitor the progress of the availability of advanced telecommunications. The FCC opted to measure that progress based on a sampling of throughput – not by the infrastructure being built to deliver it -- as advertised by providers in a given ZIP Code or census block and reported annually to the FCC.

Throughout most of this period and currently, the FCC chose to treat Internet delivered services as optional information services like those that existed in 1996 -- e.g. CompuServe and America Online -- instead of a telecommunications utility with a universal service mandate. Consequently, there was no regulatory incentive for telephone companies to reach all addresses within their service territories or to upgrade their legacy copper cable plants. They instead opted to provide DSL delivered services over copper only to homes that were technically serviceable due to DSL’s limited range. Seeing opportunity with the slow walking of fiber by telephone companies, cable companies revamped their coax cable networks to deliver IP services within their limited franchise “footprints.”

While large legacy telephone and cable companies are now the dominant providers, they are constrained by business models averse to capital investments. They have loads of debt on their balance sheets and investors expecting short term gains and dividends incompatible with the high costs and long term horizon of infrastructure investments. All of these factors led to only about a third of all American homes having fiber connections as the third decade of the 21st century begins.

Several hundred local governments and electric cooperatives stepped into the gap and have and are building fiber infrastructure. The question going forward is how these relatively small scale, disparate deployments created out of necessity will fit into the larger scheme going forward and their role in bringing fiber to every American doorstep. It’s a policy question inherent in the Infrastructure Investment and Jobs Act passed by the Senate this month.

The legislation would allow states to make the initial determination by giving them jurisdiction over how $42 billion allocated in the bill for infrastructure grants is spent, with oversight by the National Telecommunications and Information Administration. Local governments and cooperatives would also help decide themselves since they would have to put up a 25 percent match for new infrastructure. With the structural business model challenges facing the large legacy telcos and cablecos, localities and cooperatives could move into a default leadership position. One off grants can’t remedy the incumbents’ ongoing structural limitations.

While the bill allows states to determine where the funding goes for distribution infrastructure, it authorizes states as well as a broad range of eligible entities to seek grants with a 30 percent match to construct critical transmission or “middle mile” infrastructure. That component of the nation’s advanced telecommunications infrastructure is growing increasingly crucial to support the growth of fiber distribution infrastructure and the resultant bandwidth demand the legislation will spur if enacted. Commercial entities that already own most transmission infrastructure would likely be the primary recipients.

Biden administration telecommunications policy could move U.S. toward universal fiber connectivity

The Biden administration’s telecommunications policy points toward the goal of bringing fiber connections to nearly every American home, recognizing policy put in place 25 years ago with the 1996 Telecommunications Act will not achieve that objective with two thirds of homes still served by obsolete copper telephone lines in 2021.

That goal is not explicitly stated in the Infrastructure Investment and Jobs Act passed by the Senate this month, calling into question the administration’s “build back better” pledge. Many observers including this one viewed that as a capitulation to incumbent telephone -- and particularly cable companies -- and their legacy metallic delivery infrastructures. However, as noted here, the legislation contains language favoring fiber that would be subsidized with $42 billion appropriated to the states should the measure become law. Additionally, the administration is on record as favoring “future proof” infrastructure – essentially fiber – along with universal service.

The infrastructure bill would direct the Federal Communications Commission to convene a proceeding to determine how to achieve universal service and to recommend Congress expand universal service “if the Commission believes such an expansion is in the public interest.”

However, the administration in a July 9, 2021 executive order encouraged the FCC to reinstate its 2015 Open Internet rulemaking that classified Internet protocol delivered services as telecommunications and subject to Title II of the Communications Act of 1934. As such, the services would be regulated as a common carrier utility and a universal service mandate placed on providers that would be required to honor reasonable requests for connections.

While the order is a strong suggestion and not administrative law at this point, the administration can almost certainly implement it when it nominates a candidate to fill the current vacancy on the FCC panel. The administration would most likely select a nominee inclined to implement the order and reinstate the Title II-based rulemaking.

That would set the stage for a policy debate on universal service in the Senate confirmation process. The nominee would conceivably be asked at their confirmation hearing where they stood on universal service considering the Senate’s version of the infrastructure bill would require the FCC to conduct an inquiry on universal service and policy recommendations to Congress.

If the administration is successful in seating a nominee inclined to reinstate the 2015 Open Internet rulemaking, the FCC could preempt Congress on the issue. That is unless Congress chooses to act expeditiously considering the FCC has been unable to conclusively determine whether IP-based services are telecommunications or information services as per their current classification under Title I of the Communications Act.

The significant funding that would be allocated to states by the infrastructure bill as well as that currently provided by the American Rescue Act would provide a sizable initial infusion to help cover capital costs in high-cost areas in order to help attain universal service. However, with a universal service requirement under a Title II regulatory scheme, there would need to be a viable ongoing high-cost area subsidy for both capital and operating costs that does not currently exist as it does for legacy voice telephone service. In the absence of a permanent high-cost subsidy mechanism, federal and state policymakers have defaulted to piecemeal one time grants.

Knowledge workers relocating to exurbs will encounter suboptimal advanced telecom infrastructure

Fringe outlying communities of major metropolitan regions were prized for their extreme privacy or more affordable housing before the pandemic, but were typically much less wealthy than the denser cities and affluent suburbs they surrounded.

The Great Reshuffling will likely make these far-flung exurbs richer and denser. The median household income across U.S. exurbs was $74,573 as of 2019, according to data from The American Communities Project. That likely ticked up over the last year as city dwellers in major job centers such as San Francisco and New York relocated to exurbs for the same or similar salaries.

The ‘Great Reshuffling’ Is Shifting Wealth to the Exurbs - WSJ

This population shift has implications for advanced telecommunications infrastructure that's often spotty in the exurbs. Knowledge workers relocating to the exurbs will often be in for a shock over the lack of fiber to the home connections where exurbanites are forced to get by with first generation DSL over aging copper phone lines or wireless connectivity.

“I’m done playing the game. It's time for blunt, factual reality. No more promises not kept."

In Clark County, in central Wisconsin, economic development director Sheila Nyberg has proposed a partnership with an electric cooperative to get broadband to the entire county. Revenue from the system would be used to pay off a startup loan, similar to the way electricity was brought to the countryside nearly a century ago. Clark County is one of the least connected counties in the state, and it showed when schools closed for COVID-19 and students didn’t have home internet access. 

For more than a decade, Nyberg said, federal money has gone to large internet service providers that have done little to improve coverage in areas where it's needed the most. 

"I'm tired of pretending that the big dog is the best dog in the room," she said. Nyberg said some type of local control, such as an electric cooperative, would be a better alternative. “I’m done playing the game," she said. "It's time for blunt, factual reality. No more promises not kept."

https://www.jsonline.com/in-depth/news/2021/08/12/u-s-needs-future-proof-approach-getting-high-speed-internet-all-broadband-wisconsin/7298391002/

Nyberg's comment raises an excellent point. Despite incumbents claiming to have invested upwards of $80 billion annually to improve America's advanced telecommunications infrastructure supplemented by billions in government grants and subsidies, it's still not enough to bring fiber connections to most every American doorstep. As Nyberg states, it's time for a new paradigm of publicly and consumer cooperative owned infrastructure. Investor owned providers have clearly shown they are not up to the task.

Explicit fiber to the prem FTTP telecom infrastructure standard absent in infrastructure measure. But it contains language favoring it.

The Infrastructure Investment and Jobs Act passed out of the Senate this week falls short of the Biden administration’s “build back better” pledge by failing to establish an explicit fiber to the premises FTTP advanced telecommunications infrastructure standard to replace outmoded 20th century copper telephone lines.

Instead, the bill establishes a throughput-based service level standard inconsistent with the administration’s goal of building “future proof” telecom infrastructure. It’s a much-needed objective. The past four decades have shown that throughput-based standards tend to become quickly outdated as end user bandwidth demand inexorably grows. Only fiber infrastructure has the headroom to accommodate that demand well into the future.

However, language in the legislation indirectly favors fiber. It requires the National Telecommunications and Information Administration prioritize infrastructure funded by $42 billion of grants to states to “ensure that the network built by the project can easily scale speeds over time to meet the evolving connectivity needs of households and businesses.” Not a direct fiber infrastructure specification. But a good operational definition that could influence the NTIA to promulgate rules on funding eligibility and awards that favor a de facto fiber standard.

Additionally, the measure defines a “reliable” service standard that fits well with fiber. It’s “service that meets performance criteria for service availability, adaptability to changing end-user requirements, length of serviceable life, or other criteria, other than upload and download speeds, as determined by the NTIA in coordination with the Federal Communications Commission. (Emphasis added) It would also require the NTIA to develop and incorporate best practices “for ensuring reliability and resilience” of the infrastructure funded by the measure.

Infrastructure measure pending in Senate would allow incumbents to challenge proposed projects

Similar to the Obama administration’s American Recovery and Reinvestment Act of 2009, the massive omnibus infrastructure pending in the Senate would allow incumbent providers to challenge the award of federal grant funds for advanced telecommunications infrastructure.

A provision of the bill requires states receiving the funding to establish procedures governing challenges by service providers as well as local governments and nonprofits. The challenges could be filed contending locations within a proposed project area fail to meet the project requirement of at least 80 percent of premises being “unserved” (“reliable” service with a minimum throughput of 25 Mbps/3Mbps (“unserved”) and 100 Mbps/20 Mbps (“underserved”) with latency sufficient to support real-time, interactive applications.

As a practical matter, the provision would also potentially allow wireless providers offering at least the “unserved” service level – regardless of end user cost -- to challenge a proposed project that would deliver service to prems over fiber or coaxial cable infrastructure where none presently exists.

The provision is apparently included to address concerns by incumbents that proposed projects would “overbuild” within their service areas – a key concern in heavy incumbent lobbying of the bill. The measure authorizes the National Telecommunications and Information Administration to reverse state determinations of challenges and to modify the challenge process.