U.S. advanced telecom policy has produced highly fragmented infrastructure, wide access disparities

Before the National Broadband Plan, policy groups did not truly work together to create broadband implementation strategy, Baller said. The project in which he was involved helped establish that a national unified plan for expansion was necessary in order for internet access to actually increase.Groups did not “think how their interests and others worked together,” he said.

 

This unified approach still impacts the strategy behind implementation today of Congress’ 2021 bipartisan infrastructure bill, the Infrastructure Investment and Jobs Act. Further, his experiences consulting with Google’s Fiber for Communities project influenced how he has approached his work to ensure implementation of the bipartisan infrastructure bill.

 

The goal is to maximize the effect to close the digital divide. And the tool to do that, according to Baller, is to focus on local broadband deployments: Look at where incumbents lagging in their efforts to deploy higher capacity broadband.

 

https://discuss.broadband.money/c/get-broadband-grant-alerts-news/jim-baller-is-a-resolute-champion-of-municipalities-building-broadband

 

This assessment is way off the mark. The U.S. Federal Communications Commission's National Broadband Plan issued in 2010 hasn't produced a unified national approach to modernizing the nation's outdated copper-based telecommunications delivery infrastructure to fiber. Instead, it's highly fragmented with only about a third of all homes with access to fiber connections from a mix of investor-owned, utility cooperative and government owned infrastructure. In many areas, stopgap wireless technologies have been employed to fill the gaps. Nor does the Infrastructure Investment and Jobs Act (IIJA) set a unified national approach or infrastructure standard, instead allocating grants to the states based on the degree to which they fall short of an arbitrary minimum "broadband" throughput.

 

The local municipal focus advocated here has accentuated the fragmentation, with policymakers making patchwork efforts to increase "broadband throughput" instead of regarding advanced telecommunications infrastructure more widely in a regional and interstate context as universal telephone service was before it.

Infrastructure Bill "broadband mapping" timeline: The fighting begins this fall

Washington, March 31, 2022 – The chair of the Federal Communications Commission said Thursday that the improved broadband maps needed to adequately disburse billions in federal infrastructure dollars will come this fall. During a House Energy and Commerce Committee Oversight hearing Thursday, Chairwoman Jessica Rosenworcel said, “Absolutely, yes. We will have [complete] maps in the fall.”

Completed Maps Will ‘Absolutely’ Be Available This Fall, FCC’s Rosenworcel Says

That will start the clock on multiple rounds of disputes over the accuracy of the maps as well as proposed advanced telecom infrastructure projects whose eligibility for 75 percent planning and construction grant funding under the Infrastructure Investment and Jobs Act of 2021 (IIJA)  is linked to the maps. The maps will determine projects ineligible for funding because less than 80 percent of addresses are deemed under IIJA provisions as "unserved:" areas where no incumbent providers offer "broadband" service of at least 100 Mbps down and 20 Mbps up. 

Here's the timeline of how these battles will likely play out, assuming the maps are issued as projected by the fall:

Fall 2022: FCC releases maps for state input as to their accuracy.

Fall 2022-Spring/Summer 2023: States dispute maps accuracy claiming they overstate “served” areas as with prior FCC "broadband maps."

Fall 2023:  After FCC deems new maps accurate, states and incumbents/WISPs continue to disagree over their accuracy.

Late 2023-Early 2024: Incumbents/ WISPs file challenges of proposed projects with states, contending they cover “served” areas.

Summer/fall 2024: Incumbents/WISPs appeal state determinations to the National Telecommunications and Information Administration (NTIA) as allowed by the IIJA.

Early 2025: States and incumbents/WISPs appeal NTIA determinations to the courts.

IIJA language on “digital discrimination:” Happy talk with no real world impact.

Title V and specifically Section 60506 of the federal Infrastructure Investment and Jobs Act (IIJA) enacted in November 2021 contains provisions titled “digital discrimination.” They state federal policy that “insofar as technically and economically feasible— subscribers should benefit from equal access to broadband internet access service within the service area of a provider of such service.” Section 60506 defines ‘‘equal access’’ as “the equal opportunity to subscribe to an offered service that provides comparable speeds, capacities, latency, and other quality of service metrics in a given area, for comparable terms and conditions.”

It directs the Federal Communications Commission to take steps to ensure that “all people of the United States benefit from equal access to broadband internet access service” and adopt rules by November 2023 to facilitate equal access to broadband internet access service, “taking into account the issues of technical and economic feasibility presented by that objective, including— preventing digital discrimination of access based on income level, race, ethnicity, color, religion, or national origin and identifying necessary steps for the FCC to take to eliminate discrimination.”

That definition sounds in language similar to provisions of Title II of the Communications Act that regards telecommunications as a common carrier utility and mandates reasonable requests for service to be honored while barring neighborhood discrimination. The FCC’s Open Internet rulemaking adopted in 2015 applied Title II to Internet protocol-enabled advanced telecommunications services. It was repealed and replaced in 2018. The Biden administration in a July 2021 executive order urged the FCC to readopt the 2015 Open Internet rulemaking.

The IIJA also requires the FCC to report to Congress on the FCC’s options for improving its effectiveness in achieving the universal service goals. The report, due by August 15, “will focus on examining options and making recommendations for Commission and Congressional actions toward achieving those goals,” according to a proceeding the FCC opened to gather public comment.

The administration was more likely to move the nation toward universal service as it was initially inclined to do by subsidizing public sector and consumer cooperative owned advanced telecommunications infrastructure, aptly noting these entities don’t operate with the economic burden of earning profits for their shareholders. The administration abandoned that stance in negotiations leading up to the IIJA’s enactment last year.

While few would object to Section 60506’s provisions, they are essentially happy talk with no real world impact. In the predominant market-based U.S. telecommunications landscape, commercial providers have incentive to discriminate since their shareholders naturally object to serving neighborhoods that are less profitable. That’s why only about a third of American homes that should have been connected to modern fiber optic delivered advanced telecommunications infrastructure at least a decade ago are not and still have copper telephone connections.

Section 60506’s language while nominally barring “digital discrimination” gives commercial deployers an out with exculpatory language, applying only where “economically feasible.” Fiber connections simply aren’t economically feasible within the business models of investor-owned providers, an economic reality seemingly unacknowledged by Section 60506. Digital discrimination is baked into the market segmentation strategies of those business models that favor newer and more densely developed neighborhoods in urban and suburban areas. Additionally, commercial providers have and will continue to argue it’s not technologically feasible to deploy fiber connections to homes and businesses within their service territories citing challenging geography.

O'Rielly incorrect on IIJA advanced telecom infrastructure funding eligibility

Former FCC Commissioner O'Rielly Emphasizes 'Unserved' As Priority for Infrastructure Bill Funds : Broadband Breakfast:

WASHINGTON, March 15, 2022 – Setting the speed threshold too high for federal infrastructure funding will move money away from a focus on the unserved, said a former Federal Communications Commissioner.

Mike O’Rielly said on a Broadband Breakfast Live Online event late last month that the 100 Megabits per second download and 20 Mbps requirement for money from the Infrastructure, Investment and Jobs Act will see funding flow to better-connected areas, which cost less to update versus installing basic speeds in unserved areas. The argument is in-line with critics who say that speeds in some rougher and harder-to-reach areas require at least some connectivity at first, with gradual increases.

Just the opposite. The language of the legislation defines "unserved" areas as eligible for funding as those where no less than 80 percent of addresses are not offered service with throughput of at least 25 Mpbs down and 20 Mbps up.

Charter CEO: Focus on symmetrical speeds due to marketing, not need | Fierce Telecom

Charter CEO: Focus on symmetrical speeds due to marketing, not need | Fierce Telecom: Echoing comments made by Comcast CEO Brian Roberts earlier in the week, Rutledge dismissed the competitive threat from fixed wireless access technology, arguing it will fall by the wayside much like DSL has as bandwidth and speed demands rise.

Mettalic COAX cable TV distribution infrastructure won’t be able to keep up either. The U.S. should have started a massive transition to fiber to the premise (FTTP) advanced telecom infrastructure 30 years ago. Instead, it adopted a laissez faire policy of allowing a wild west, constrained commercial market in "broadband" bandwidth. That created perverse incentive for legacy telephone and cable companies to sell higher bandwidth tiers at a price premium rather than invest in FTTP that would effectively end the scarcity-driven "broadband" market created by their underinvestment in distribution infrastructure.

Now the nation is caught in a never ending game of catch up, attempting to keep the advanced telecom infrastructure sufficient to end user needs with the minimum possible investment. That's beneficial to shareholders of these companies. But despite their relatively much smaller number, national policy of the past three decades has accorded their interests far greater weight than the broader public's.

Infrastructure Act gives FCC option to route around “broadband map” delays

The Infrastructure Investment and Jobs Act (IIJA) allocates $43.45 billion in grants to the states for the construction of advanced telecommunications infrastructure. The IIJA links the amount of that funding for a given state to geographic service availability data collected by the U.S. Federal Communications Commission as required by the 2020 Broadband Deployment Accuracy and Technological Availability (DATA) Act. That data is integral to determining eligible infrastructure projects for which the states can fund up to 75 percent of construction costs. The FCC announced this week announced data as of June 30, 2022 is due to the FCC by September 1, 2022.

However, final datasets are likely be delayed into 2023 and possibly beyond. Provisions of the DATA Act and FCC regulations implementing it authorizing state, local, and tribal governments and other entities or individuals to challenge their accuracy. The IIJA requires the FCC to timely resolve challenges within 90 days after the final response by a provider to a challenge.

States and local governments have complained for years FCC data overstates the availability of landline and mobile wireless advanced telecommunications availability. That historical point of tension between federal and state/local government will likely to be heightened given the large amount of funding the IIJA appropriates for advanced telecommunications infrastructure. Some states anxious to remedy infrastructure deficits magnified over the past two years by pandemic public health measures have developed their own data and suggested it should be utilized rather than the FCC’s for IIJA funding given the urgent funding need.

Additionally, the IIJA requires states to establish a process allow nonprofits, local governments and service providers to challenge grant awards. The IIJA also authorizes the National Telecommunications and Information Administration to modify the challenge process and overturn state determinations on challenges. Challenges to these IIJA funded projects are likely from incumbent commercial landline and wireless service providers claiming a proposed infrastructure project would “overbuild” their proprietary infrastructure and duplicate their advertised services as shown in availability data.

The IIJA provides the FCC the option to circumvent the service availability data-based eligibility standard and associated controversy and delay. Section 60102(a) of the IIJA defines project eligibility based on either the availability data being compiled by the FCC or for areas lacking access to “broadband service” as defined by the FCC’s 2018 Internet Freedom rulemaking “or any successor regulation.”

Such a regulation could be in the offing. In a July 2021 executive order, President Joe Biden encouraged the FCC to adopt new rules similar to the FCC’s superseded 2015 Open Internet rulemaking that classified Internet protocol delivered service as telecommunications utilities regulated under Title II of the Communications Act of 1934. This gives the FCC an opportunity to redefine “broadband service” using a utility delivery infrastructure definition and specifically fiber optic infrastructure.

Hope is not a strategy: America's aspirational and unrealistic advanced telecom infrastructure policy cannot attain universal access

It's been said that hope is not a strategy. The United States doesn't truly have a strategy to attain universal access to advanced telecommunications service for all Americans because its telecom policy of the past 25 years is largely aspirational. It's based on the hope that:

1. By having the telephone companies report annually on the broadband bandwidth they sell in a given census block, unspecified actions can be taken to increase competition notwithstanding that telecom infrastructure like other utilities is a natural monopoly.
2. Increased competition in turn will encourage investment in areas where the return on infrastructure is riskier, ensuring relative parity of access to advanced telecommunications among urban and less urbanized areas of the nation.
3. By creating "broadband maps" (based on #1) delineating levels of throughput offered by various wireless and landline technologies, the maps will guide early and efficient construction of advanced telecommunications infrastructure by showing where it’s needed in order to ensure universal access to advanced telecommunications.
4. The maps can be updated in 2022 to show where throughput is the lowest to guide federal grant subsidies to states to cover 75 percent of the cost of building advanced telecommunications distribution infrastructure at least comparable to that of existing cable TV providers.

PG&E undergrounding project could potentially benefit with co-location of distribution fiber conduit

Planting wires underground is one of the most expensive wildfire-risk strategies any utility can undertake — and it remains to be seen if the $25 billion estimate is high enough to cover the entire 10,000 miles that are to be placed underground in the areas deemed at most risk to wildfire across PG&E’s territory. The price tag is based on PG&E’s belief that it can do the job for $2.5 million per mile. Yet PG&E plans to spend $3.75 million per mile this year, when it expects to complete 175 miles of work. And in a white paper published four years ago, PG&E said underground work costs $3 million per mile.

Nonetheless, Chief Executive Patti Poppe said she’s confident that as the project ramps up, economies of scale and new technologies will bring costs into line. The utility expects to be planting 1,200 miles a year underground by 2026. “We can dramatically reduce our costs every year,” she said on a conference call with Wall Street investment analysts. “With scale, we can improve the unit costs.” 

CA utility PG&E says underground wire project will cost $25B | The Sacramento Bee

PG&E could potentially gain additional economies of scale by partnering with local governments, utility districts and consumer utility cooperatives to co-locate fiber conduit as it buries its electric lines. PG&E is prioritizing areas of its mostly Northern California service territory where wildfire risk is the highest. 

These areas also have major telecommunications infrastructure deficiencies. Residents and businesses would doubly benefit from both reduced risk of wildfires sparked by overhead electrical distribution lines as well as access to fiber delivered advanced telecom services.

Such a partnership would also potentially benefit PG&E by speeding up its burial of electric distribution lines, demonstrating good faith effort to regulators. The partners could also potentially tap into funding in the recently enacted federal Infrastructure Investment and Jobs Act that appropriates funds for electrical infrastructure improvements as well as advanced telecommunications infrastructure.

USTelecom: Rescind #infrastructurebill grant guidance preferring networks built by municipalities, non-profits and electric co-ops

"Deployment is hard, complicated, and expensive work. It’s also not a ‘set it and forget it’ technology. Congress was clear: competition for these public funds should occur on a level playing field. Yet concerning rules have emerged from the Treasury and Agriculture Departments that encourage states to favor entities like non-profits and municipalities when choosing grant winners, despite their well-documented propensity to fail at building and maintaining complex networks over time. The unconnected—not to mention American taxpayers—can’t take that gamble. Experience should not be a mark against an applicant, but a strong attribute in their corner.

Source: A Blueprint for Government to Finally and Fully Connect Our Nation

USTelecom is right. Building advanced telecommunications infrastructure is challenging and complicated. And expensive. As the history of the past three decades has shown, too expensive for telephone companies to timely modernize their legacy copper analog plant that reaches nearly every American home, business and institution to fiber as about two thirds of homes lack fiber connections as 2022 begins. 

That's because the industry has adopted a business model of selling bandwidth by the price tier. Indeed, USTelecom dubs itself "The Broadband Association." That's not a template that favors infrastructure but rather capital investment only where bandwidth can be sold with the highest and fastest return on investment. Federal grant funding cannot remedy this structural issue.

USTelecom is also correct in asserting that experience counts. Its members know how to design, build, maintain and operate advanced telecommunications infrastructure. But that does not mean they should or have the right own it. Because telecom infrastructure is a natural monopoly and not amendable to market forces to ensure access, affordability and high quality service and support, it is best held by publicly owned utilities and consumer utility cooperatives whose purpose is to serve the public interest and not the more narrow interest of telephone company shareholders. The appropriate role for these companies to assure all Americans have access to affordable and high quality advanced telecommunications is contracting with these entities to perform these functions that leverage their expertise and experience.

Private and public financing schemes emerge to finance fiber telecom infrastructure

In the absence of an aggressive federal initiative to timely replace obsolete, decades-old copper telephone lines that reach every doorstep with fiber, local U.S. governments are looking to connect homes, schools and small businesses lacking fiber connections or unable to afford them and to promote economic development.

A major stumbling block is they lack the financial resources to build their own networks. Despite low interest rates, they are reluctant to issue bonds to cover construction costs and more specifically, to secure the debt. With taxpayers reluctant to support new tax levies, politicians are leery of asking voters to approve them. In addition, local government officials -- still scarred by the penury of the 2008 financial crisis -- aren’t inclined to pledge their general funds as security.

Private and public financing schemes have emerged to try to help localities secure fiber construction bonds. One private scheme is being utilized by a telephone company, Consolidated Communications. The local government issues a bond and retains full or majority ownership of the network infrastructure. The telco secures the bond until it’s retired in 20 to 30 years and then assumes control of the network assets. By which time equipment replacement and updates will likely be needed. But the telco gets network revenues both during the bond term and afterwards and doesn’t have to commit as much capex up front, offset by the muni bond proceeds. That meets telcos’ need to avoid capex that suppresses earnings as well as incurring more debt load given already overburdened balance sheets among investor-owned telcos.

Another private financing method utilizes European pension fund investment capital. Under that scheme, the local government does not own the network, which remains under the control of a private sector operator. The model provides more patient capital than shareholder owned telephone and cable companies. But like the investment capital of those companies, it is risk averse and aimed at densely populated urban areas.

A public bond securitization method is under development in California. Legislation enacted in 2021 authorizes the California Public Utilities Commission (CPUC) to annually loan funds from its advanced telecommunications infrastructure subsidy program to a loan loss reserve fund. The current state budget appropriated $750 million to seed the fund. It will cover costs of debt issuance, obtaining credit enhancement and funding of reserves for the payment of principal and interest on debt incurred by local government and nonprofit organization projects.

The CPUC is in the process of developing eligibility requirements, financing terms and conditions and allocation criteria for advanced telecommunications infrastructure projects as mandated by the legislation. According to the Golden State Connect Authority, a multi-county joint powers authority formed in 2021 to construct advanced telecommunications infrastructure and provide technical assistance, the legislation authorizes a joint powers authority to issue revenue bonds supported by the loan loss reserve fund.

Infrastructure bill mandates FCC report to Congress on universal service

The Infrastructure Investment and Jobs Act (IIJA) requires the U.S. Federal Communications Commission to deliver a report to Congress on the FCC’s options for improving its effectiveness in achieving the universal service goals. The report, due by August 15, “will focus on examining options and making recommendations for Commission and Congressional actions toward achieving those goals,” according to a proceeding the FCC opened to gather public comment.

The IIJA mandated report also requires the FCC to determine whether expanding current universal goals is in the public interest. The goals are:

• Preserve and advance universal availability of voice service;
• Ensure universal availability of modern networks capable of providing voice and broadband service to homes, businesses, and community anchor institutions;
• Ensure universal availability of modern networks capable of providing advanced mobile voice and broadband service;
• Ensure that rates for broadband services and rates for voice services are reasonably comparable in all regions of the nation; and
• Minimize the universal service contribution burden on consumers and businesses.

The FCC defines universal service as “the principle that all Americans should have access to communications services,” noting the Telecommunications Act of 1996 expanded that to include Internet protocol-based advanced telecommunications services “for all consumers at just, reasonable and affordable rates.” The 1996 statute states “access to advanced telecommunications and information services should be provided in all regions of the Nation.” Advanced telecommunications capability is defined as “without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology.”

The 1996 Act also employs a dynamic definition of universal service as “an evolving level of telecommunications services that the Commission shall establish periodically … taking into account advances in telecommunications and information technologies and services.”

America mired in telecom infrastructure incrementalism due to misaligned incentives, lack of commitment and lowered expectations

Three decades into the 21st century and a digital socio-economy, the United States remains unlikely to timely modernize its legacy copper telephone lines that reach nearly every American doorstep to fiber to the premises (FTTP). Instead of world class advanced telecommunications infrastructure, the nation is mired in incrementalism amid a patchwork of isolated pockets of fiber connecting only a third of all U.S homes. The nation will likely remain that way for the foreseeable barring a major change in public policy.

These are the root causes:

1. The issue is defined by its primary symptom – insufficient “broadband” bandwidth – instead of the lack of FTTP infrastructure that constrains bandwidth.
   
   
2. Overreliance on vertically integrated, investor-owned providers lacking both incentive and adequate resources to build out FTTP. They lack incentive because there is no regulatory requirement like that for legacy voice telephone service to provide service to customers requesting it. Internet protocol-based telecommunications are not regulated as a common carrier utility but rather an elective information service like a cable TV package. They lack capital expansion funds because their shareholders are averse to spending them and expect an ongoing stream of high earnings and dividends. They also lack the ability to finance new infrastructure due to balance sheets already overburdened with debt.
   
   
3. Localities have incentive to build fiber to serve their residents and promote economic development. But they lack resources to do so and the ability to raise tax dollars to finance its construction due to tax resistance/exhaustion. Consequently, some planning is done but most don’t proceed or are undertaken as limited scope "pilot projects." Federal and state governments reinforce limited local infrastructure by awarding grants for builds in "unserved" and "underserved" areas as determined by advertised throughput claims of commercial providers. (See #1).
   
   
4. Finally, lowered expectations of progress, even on the part of those who advocate for it. The fatalistic thinking is significant progress on infrastructure cannot be had because large vertically integrated telephone and cable companies determine telecom policy and favor a conservative approach due to #2. Progressives settle for limited local builds as small victories, further locking in incrementalism.