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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

End of ACP could bring modfication of FCC Title II rulemaking to allow regulation of residential Internet services

The end of the Affordable Connectivity Act (ACP) sets the stage for the potential modification of the Federal Communication Commission’s recently adopted rulemaking classifying Internet protocol-based services as a common carrier utility under Title II of the Communications Act of 1934. The Biden administration encouraged the FCC to adopt the rulemaking in July 9, 2021 executive order to reverse a 2017 FCC rulemaking that classified IP services as lightly regulated information services under Title I of the statute.

While terming rate regulation “a hallmark of utility regulation,” the FCC’s rulemaking adopted April 25 forbears from giving state public utility commissions authority to regulate rates as they currently do for legacy voice telephone service. But it left the door open to do so in the future. “Although we adopt firm forbearance from all direct rate regulation, with respect to other provisions we forbear from here, we note that it also is within the Commission’s discretion to proceed incrementally,” the rulemaking notes.

The FCC could come under pressure from the White House to regulate rates after Congress rejected the Biden administration’s request to provide additional funding to extend the ACP to provide a $30 monthly subsidy to low-income households and $75 for those on tribal lands. The modification might particularly apply to rates for residential landline delivered services over copper, coaxial cable and fiber in order to reduce low income households' reliance on costly mobile wireless services, referred to as "smartphone dependency."

Such a move might be aimed at scoring points with voters in this election year as President Biden faces a tough re-election bid. It could also occur early in a second Biden term if the president is re-elected in November. Politically, it would align with voter sentiment that their interests have been subordinated to shareholders and lobbyists of large corporations, a "system is rigged against you" theme that was prominent in the 2016 presidential campaigns of Donald Trump and Bernie Sanders.

Key opponent of ACP extension claims subsidy will inflate prices

A primary failure of U.S. advanced telecommunications policy and its fraught evolution is fostering a commodity market of “broadband” bandwidth. Its roots date back to the early 1990s and sluggish dialup connections over screeching modems. Faster, always on connections like DSL were dubbed “broadband” or “high speed Internet.” Going on three decades later, the terms are used to describe a commodity market of bandwidth sold in price tiers. Low “broadband speed” tiers are bargain basement offerings while the higher tiers offer luxury connectivity for those who can afford it.

This marketplace of broadband bandwidth developed due to the failure to timely modernize legacy twisted pair copper voice telephone delivery infrastructure to fiber. Legacy metallic delivery infrastructure like cooper and coaxial cable has far more limited carrying capacity and upgradability than fiber. Consequently, bandwidth per customer must be rationed. 

That drives what economists call price elasticity. Higher prices for higher bandwidth drives down bandwidth demand and vice versa, thus preserving limited bandwidth. This dynamic between price and demand is behind opposition to expanding the Affordable Connectivity Program (ACP), now expired temporary subsidy for low-income households:

Opponents remain unconvinced of the ACP’s benefits, however. In his opening statement before a Senate subcommittee last week, Republican Sen. Ted Cruz, the Senate Commerce Committee’s ranking member, criticized the FCC’s recent survey, which found that only 22% of households who have benefited from ACP did not have broadband. He argued, alongside witness Paul Winfree, the president and CEO of the Economic Policy Innovation Center, that the ACP has had an inflationary effect on internet prices.

“History has shown that when the federal government starts subsidizing demand in higher education and agriculture, the subsidy gets capitalized, and prices go up,” Cruz said. “After all, why would corporations ever leave free money on the table? Well, those who received the subsidy may realize that immediate cost reduction, the market prices rise for everybody else. This rising price creates a call for more subsidies and higher taxes to fund those additional higher subsidies and eventually a government takeover of the internet to provide it for free.”

https://www.route-fifty.com/infrastructure/2024/05/only-three-weeks-go-lawmakers-weigh-ways-save-federal-internet-subsidy/396339/

Cruz is essentially arguing subsidizing bandwidth as a commodity creates demand by lowering the price for bandwidth. Price elasticity holds that in turn will boost demand which Cruz says will encourage Internet Service Providers (ISPs) to increase rates for unsubsidized households in demand-pull inflation.

Publicly owned infrastructure: Lowering the cost bridge rather than raising the affordability river with household subsidies

Paul Winfree, president and CEO of the Economic Policy Innovation Center, an economic policy think tank, testified that the ACP monthly subsidies have led to increased costs for everyday consumers, as Internet service providers simply raise their rates to capture as much of the subsidy as possible. “Deregulation and competition have reduced [broadband] prices,” Winfree told the subcommittee, arguing for a more free market approach. “We have also learned that policies that subsidize demand, such as the Affordable Connectivity Program, tend to increase prices.”

But Jon Tester, a Democratic Senator from Montana, pushed back on this theory, saying broadband is not like groceries or other consumer goods where more supply brings down prices. “It is so damn expensive to lay broadband,” Tester remarked. “It’s just a different marketplace that somehow holds the consumer at a disadvantage.”

https://www.govtech.com/network/feds-discuss-acp-but-no-path-forward-emerges-from-hearing

Some distinguishing terminology needed here. Broadband is indeed marketed as a commodity service and sold by the bandwidth tier, even including federally mandated "nutrition labels." That's what's driving the calls for extending subsidies to low income households. 

What Sen. Tester is referring to is the capital and operating costs of advanced telecommunications infrastructure to deliver broadband services. All service providers need to cover those costs. Investor owned providers also need to price in profits and income taxes. Those are passed on to end users and can make service for lower income households difficult to balance tight household budgets. The ACP is essentially a means tested couponing program that supports the higher cost of investor owned delivery infrastructure.

Publicly owned infrastructure doesn't need profits nor is it subject to income taxation, providing a lower the cost bridge solution rather than raising the affordability river in the form of household subsidies.

Publicly owned FTTP deployment models: prioritizing low rural density versus favoring high suburban density

Among publicly owned fiber to the premise (FTTP) networks financed by public bonds, two opposite deployment strategies are emerging. One prioritizes low density rural areas where private market failure is deeply entrenched, making them unlikely to be fibered in the foreseeable future. The other prioritizes high density suburban areas where there’s presently a fiber gold rush on to gain the all-important first mover advantage.

It’s important because first to connect a premise with fiber creates an asset with long term value unlikely to be overbuilt later by a competing fiber network. That has generated political resistance and dark money PR campaigns likely funded by investor owned providers.

An example of the former is Vermont’s use of local government units known as communication union districts (CUDs) Click here for an excellent documentary on how they’ve been formed and their progress building fiber to residences that conventional wisdom holds FTTP is impossible.

Low density is prioritized in Vermont’s CUDs because nearly all settlement is rural. There’s no mindset among Vermonters in these CUDs that those who live in less settled areas should go to the back of the line (or move away as investor owned providers suggest) while those living in more densely settled areas should get connected first. Instead, a cooperative can do New England Yankee spirit prevails. We’re all rural and we’re all in this together recognizing investor owned providers are not going to meet our need for advanced telecommunications.

The latter example is represented by the Utah Telecommunication Open Infrastructure Agency (dba UTOPIA Fiber), owned by a consortium of 20 cities. UTOPIA is building FTTP in more densely developed suburban areas featuring gridline layouts rather than curvilinear, windy roads found in rural and exurban areas. (See recent UTOPIA “footprint” releases here and here).

The UTOPIA advised Golden State Connect Authority (GSCA) comprised of 40 nominally rural California counties plans to begin construction this year and is similarly prioritizing more densely settled areas of its member counties. It is doing so to accelerate network revenues needed for an aggressive financing schedule allowing servicing of bond debt soon after the fiber is built.

The takeaway here draws from history. Rural areas like those in Vermont’s CUDs formed electric utility cooperatives early in the 20th century when as with advanced telecommunications, it was apparent investor owned providers were not going to show up, favoring more profitable urban areas for their electrical infrastructure. That alters the density calculus and the motivation to connect premises least likely to be connected.

That history is absent in the case of Utah’s UTOPIA and California’s GSCA where residential settlement patterns are decidedly more mixed. While federal and state subsidies such as the Broadband Equity, Access, and Deployment (BEAD) Program target rural areas, areas too dense to be considered rural but too sparsely settled to be deemed suburban may potentially go unfibered as virtual knowledge workers move to these exurban metro fringes.

Will FCC Title II rules provide relief for local officials besieged with chronic complaints over poor Internet access?

Say you're a local elected official. One of the biggest issues your constituents bring to your attention for assistance is poor Internet access. Those who held office before you fielded calls and emails on this subject for years, seeing them spike in 2020-22 during the COVID pandemic.

Flummoxed and frustrated constituents tell you they see homes and small businesses not far way or even just down the road being offered service, but none is available to them despite repeated requests. Often, they may live just outside of town limits in unincorporated county jurisdiction. They try to make do with hard to afford satellite service or smartphone hot spots. Or fixed wireless that offers minimal connectivity at a high price.

Since Internet access was only briefly regulated as a public utility between 2015 and 2018, referring your constituents to the state public utilities commission (PUC) or the FCC won’t be able help them other than recording their complaint and sending them to the same provider that has repeatedly declined their requests for service. 

That could potentially change this year if the FCC adopts regulations next week classifying Internet service as a telecommunications utility under Title II of the federal Communications Act. That would regulate Internet access like landline voice telephone service before it under a federal-state framework between the FCC and state PUCs. That means providers would be required to honor reasonable requests for service and would be prohibited from refusing service to a particular area.

This has significant implications since much of the nation’s existing landline deployment looks like a Swiss cheese with providers cherry picking higher density and income areas likelier to generate more revenues and greater profits for their investors. Homes and small businesses in the holes on the periphery are left without connections.

Assuming the FCC regulation becomes law, local elected officials should keep an eye on how it will be enforced when, for example, a constituent complains they have asked for service and been refused connectivity or told they’d have to come with thousands of dollars for a connection.

One of the main tasks that regulators will face is determining which provider must honor the request for service. While the language of the proposed regulation includes refers to where providers have built infrastructure and offer advanced telecommunications services which they refer to as their “footprint,” federal law (47 U.S.C. 214(e)(5)) affords state PUCs and the FCC authority to develop providers’ geographic parameters for the purpose of Title II’s universal service mandate requiring providers to offer service to all serviceable addresses within their service areas. One possibility is states could utilize state video franchise areas to designate carriers of last resort.

Additionally, the FCC regulation would give regulators authority to sanction discriminatory conduct under 47 U.S.C. 202 barring “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.” The statute allows for fines of $6,000 for each violation and $300 daily penalties for ongoing violations.

FCC reclassification of Internet access as Title II utility likely to have little impact on affordability

When the U.S. Federal Communications Commission votes to reclassify Internet access as a common carrier utility under Title II of the Communications Act of 1934 as expected April 25, it’s unlikely to increase affordable access. The primary reason is the FCC is forbearing rate filing and regulation in the joint federal-state framework with state public utility commissions that regulate rates for as they do for legacy voice telephone service under Title II authority.

While Title II would subject Internet service providers (ISPs) to Title II’s universal service and nondiscrimination provisions requiring reasonable requests for service be honored, without rate regulation ISPs could charge exorbitant rates difficult for households and small businesses to afford.

For example, an ISP could tell a group of households and small businesses that they’ll honor requests for fiber to the premises (FTTP) service. But given the area’s characteristics such as density of fewer than 15 premises per road mile, old utility poles in need of replacement and distance from middle mile backhaul, extending fiber connections would require a connection fee of $1,000 per prem and $250 per month for service.

With the FCC’s forbearance, these end users also would lack the ability to claim the rates constitute discriminatory conduct under 47 U.S.C. 202, titled Discrimination and Preferences. This provision makes it unlawful for common carriers engage in “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.” (Emphasis added)

An ISP could also contend that this pricing would not constitute a discriminatory practice per the FCC’s recently adopted Preventing Digital Discrimination rulemaking because those charges are needed for reasons of economic and technical feasibility in order to extend service. The abovementioned pricing could well become common for new FTTP service reflecting the growth in labor and material costs.

Consortium to bring fiber to every American doorstep

EMBARGOED UNTIL 4/1/2024

A consortium of fiber network and edge providers has announced a massive deal to rapidly build fiber to every American doorstep and acquire all existing fiber transmission and distribution infrastructure in the United States.

According to informed sources, the deal is being led by fiber infrastructure owners AT&T, Verizon, and Alphabet along with edge providers Meta and Amazon along with limited participation from Netflix.

Cable companies, publicly owned and coop networks and smaller fiber network owner/operators will be offered buy outs of their existing footprints on highly favorable but time limited acquisition terms, according to sources close to the negotiations leading up to the deal.

The consortium will finance fiber construction and operations with cash contributions and long term bonds backed by the consortium members along with participation private equity firms. State and local governments and railroads will be offered fiber connectivity at no cost in exchange for right of way access and waiver of all permitting.

To alleviate potential federal anti-trust concerns, the consortium will be organized into five independent regional companies closely aligned with the service territories of the Regional Bell Operating Companies (RBOCs) formed after the 1982 breakup of AT&T.

“In 2005, then AT&T CEO Ed Whitacre said no one should ride the pipes for free. He’s right. That’s why we’re buying all the pipes and will bring long overdue fiber connections to most every American doorstep,” the consortium said in a statement. “Doing so is consistent with the public policy intent of 1996 Telecommunications Act to timely bring advanced telecommunications capability to all Americans.”

The consortium – called Fiber Everywhere -- noted that policy goal remains unrealized nearly three decades later. “We recognize the difficult incremental trajectory the nation has been on for the last two decades that is unlikely to attain this goal anytime soon and bring American households from 20th century copper and coax built for analog voice telephone and cable TV services to fiber for 21st century Internet protocol-based advanced telecommunications.” 

Fiber Everywhere will request Congress reallocate $42.5 billion appropriated in the Infrastructure Investment and Jobs Act of 2021 for advanced telecommunications infrastructure directly to the consortium regional operating companies to replace deteriorated utility pole infrastructure and install underground conduit.

The consortium said the deal obviates the need for an alphabet soup of dozens of federal and state subsidy programs and will bring an end to unproductive and fractious fighting over what constitutes “broadband” and where it’s available as plotted federal and state “broadband maps.”

“Maps are meant to serve as a road map to a destination,” Fiber Everywhere stated. “With this deal, the consortium offers the United States a true road map to a bright digital future.”

DISCLAIMER: The foregoing is occurring in a parallel universe under the multiverse concept of theoretical physics. Universal fiber service not available in all areas in the current universe.

Yesterday, today and tomorrow in FTTP

 2000-2020

• Incumbents slow walk, cherry pick FTTP buildout; business models cannot accommodate capex need.
• Publicly owned FTTP emerges as lower cost business model alternative, built by some municipalities in densely settled areas and handful of private operators and utility coops in rural areas.
• Some limited interest by private infrastructure funds (Macquarie) and Euro pension funds as sources of more patient capital to finance FTTP construction.

2020-2030

• COVID public health measures spotlight need for more FTTP as knowledge work, education, medicine and retail increasingly virtualize online. Investment community realizes incumbents unable to meet demand and seriously explore investment opportunities.
• Increased interest on part of private infrastructure funds (e.g. BlackRock joint venture with AT&T), private equity firms and Euro infrastructure funds in investing in privately held FTTP. They provide more patient and copious capital with 8-10 year time horizon than incumbent capex with ROI standard of 5-7 years. High existing debt loads also severely limit in house debt financing. These alternative investment sources have stronger motivation to invest vs. incumbents with risk premium payday opportunity at end of 8-10 year investment cycle when consolidator buys their stakes.
• Interest in public bond debt financing also growing with publicly owned regional FTTP players looking for bond capital to finance growth (i.e. UTOPIA, ECFiber and other Vermont CUDs, Golden State Connect Authority.)
• Both private and public investment will be limited to urban and suburban areas with some limited investment in exurban greenfields and PUDs. But more capital available for private investment, drawn by shorter investment cycle (10 vs. 20+ year public bond maturity).
• BEAD will facilitate some rural FTTP but will be largely limited to incremental edge outs by large telcos and cable companies.
• With limited FTTP investment in rural areas, LEOs will assume dominant position. WISPs will struggle to survive over next 8-10 years, unable to compete with LEOs.

Core issue before FCC's proposed Title II rules: regulating advanced telecom as a common carrier utility

Conventional economic theory distinguishes a public utility from a supplier of goods and services in a market by identifying whether the good in question is a monopoly. In many parts of urban and rural California, internet services are indeed a monopoly—or at best a duopoly.

The common policy response to the monopoly is to either place the service provider into public hands or use a regulatory framework to curtail the ability of the provider to exploit a monopoly position. Once in the public hands, the service provider can be compelled to prioritize social outcomes, such as equity of access, affordability, or similar—exactly from which our California communities stand to benefit since many currently lack equitable access to affordable, reliable broadband internet.

https://20mm.org/2024/03/19/over-100-years-after-electrification-will-california-lead-way-internet-as-a-public-utility/

While the context here is California, this is the core issue before the U.S. Federal Communications Commission with its proposed Safeguarding and Securing the Open Internet rulemaking that would reclassify IP telecom as a common carrier utility under Title II of the Communications Act.

It's controversial because some policymakers paradoxically regard this service as a competitive market of price tiered "broadband" bandwidth, in diametrical opposition to the public utility framework described above that does not. Hence, their rationale is the interests of market makers and those who invest in it should take priority over the broader public interest. It's a black and white debate that over the past three decades has favored the former over the latter, making the investors winners and the public losers. 

The fundamental challenge for public policymakers is to alter this win/lose dynamic and develop a scheme where all interests can win. It's politically possible given access to advanced telecommunications is a nonpartisan issue widely seen as broadly beneficial for all aspects of society.

California legislation would adopt definition of digital discrimination

Proposed California legislation would codify in state law a definition of “digital discrimination of access.” AB 2239 would define it as “policies or practices, not justified by genuine issues of technical or economic feasibility, that differentially impact consumers’ access to broadband internet access service based on their income level, race, ethnicity, color, religion, or national origin, or that are intended to have a differential impact.”

That mirrors the Federal Communications Commission’s Preventing Digital Discrimination rulemaking adopted in November as mandated by section 60506 of the Infrastructure Investment and Jobs Act of 2021 (IIJA). 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.”

The FCC’s Preventing Digital Discrimination rulemaking is predicated on the notion that business decisions on where to deploy infrastructure and offer advanced telecommunications services can disadvantage households based on these demographic factors, even if not intentional. But Section 60506 gives deployers the ability to defend their infrastructure and service offerings based on technical and economic feasibility. That can easily trump any claim of discriminatory impact -- intentional or not -- in the nation’s market-based and predominately investor owned advanced telecommunications infrastructure.

Since IP telecom is currently classified as lightly regulated optional information service under Title I of the Communications Act and not as a common carrier utility, providers are free to deploy delivery infrastructure wherever they wish and at rates of their choosing. Naturally, they are going to prefer denser, higher income neighborhoods that will produce faster return on capital investment (ROI) and where households are less price sensitive and more inclined to subscribe to higher priced services, thereby maximizing average revenue per unit (ARPU).

Notably, California’s Digital Equity Bill of Rights that took effect in January, states public policy that “to the extent technically feasible, broadband internet subscribers benefit from equal access to broadband internet service within the service area of a broadband provider.”(Emphasis added) Notably, that omits the economic feasibility defense of the FCC’s Preventing Digital Discrimination rulemaking and proposed by AB 2239. 

That's an important difference from AB 2239 because technical feasibility is a far broader term comparable to the federal government's definition of a "broadband serviceable location" as “a business or residential location in the United States at which fixed broadband Internet access service is, or can be, installed." That definition is used in the National Telecommunications and Information Administration's Broadband Equity, Access, and Deployment (BEAD) subsidy program. A location may be serviceable. But building infrastructure to serve it may not be economically feasible if the business case justifying deployment isn't present.

Like private investor owned providers, revenue bond financed publicly owned fiber networks seek urban and suburban density.

In Colorado, municipally-owned Pulse was able to fund its network through revenue bonds which were backed by the Loveland electric utilities enterprise fund. A revenue bond is a type of municipal bond typically used to fund projects that are expected to generate revenue, like public utilities. Unlike general obligation bonds, which are backed by the taxing power of the issuing government, revenue bonds are supported by the income generated from the project they are financing.

https://www.fiercetelecom.com/broadband/communities-gain-diy-network-guide-despite-public-broadband-skeptics

This type of financing is feasible when the d (density) factor is sufficient such that bond underwriters are willing to underwrite knowing the density equates with sufficient revenues to service the debt. A locality like Loveland offers that with a population of 2,219 per square mile according to 2020 U.S. Census data. As the linked blog post above notes, it’s difficult to meet that underwriting standard in less densely populated exurban areas. That’s where publicly owned fiber to the premise (FTTP) advanced telecommunications infrastructure is most needed since the return on investment isn’t there for investor owned companies.

The unrealized policy goal of universal internet access

2000 Democratic Party Platform on "Bridging the Digital Divide"

Democrats believe that every American - regardless of income, geography, race, or disability - should be able to reach across a computer keyboard, and reach the vast new worlds of knowledge, commerce, and communication that are available at the touch of a fingertip.

That is why Democrats fought for the e-rate to wire every classroom and library to the Internet. In the next four years, we must finish connecting the job and then go further.

We must launch a new crusade - calling on the resources of government, employers, the high-tech industry, community organizations, and unions - to move toward full Internet access in every home, for every family, all across the United States. We must make sure that no family or community is left out. We must not rest until Internet access is universal.

Bush calls for universal broadband by 2007

Reaching back to revive an idea promoted by the man he beat for the White House, President Bush urged Friday that affordable high-speed Internet access be available to all Americans by 2007, saying it was essential to the nation’s economic growth.

Bush traveled to the Southwest largely to promote home ownership but spoke briefly about Internet access in remarks reminiscent of 2000 Democratic presidential nominee Al Gore’s call for an “information superhighway” available to all Americans. 

State of the Union address, President Barack Obama, January 24, 2012

"We’ve got crumbling roads and bridges; a power grid that wastes too much energy; an incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.”

The logical flaw in AT&T's claim copper telephone landlines no longer needed

"AT&T said in a statement that input and feedback from community stakeholders, including comments in public hearings held and planned “is a critical part of the process of upgrading customers from outdated copper lines to more advanced, higher speed technologies like fiber and wireless, which consumers are increasingly demanding.” (Emphasis added)

https://www.mercurynews.com/2024/02/28/opposition-mounts-to-atts-plan-to-stop-landline-service-in-most-of-bay-area/

There is a logical flaw in this reasoning that suggests modernizing the legacy copper voice telephone lines to fiber to the premises (FTTP) has and is occurring because customers demand it. Hence, the logic goes, there is no need to keep the copper landlines. 

The issue isn't customer demand but rather FTTP availability. It's absent in much if not most of AT&T's service territory because AT&T and other telcos instead of replacing it with FTTP kept it in place for decades for dialup and digital subscriber line (DSL) internet. If there had been a timely and orderly transition to FTTP from copper, the issue of whether to keep copper landlines in place wouldn't be an issue.

AT&T might reasonably argue the copper wasn't replaced with FTTP because the business case -- meeting internal ROI requirements -- wasn't there. That calls for a lower cost business model such as a consumer utility cooperative or public ownership that doesn't have to generate profits for investors and pay income taxes.  

Update 4/18/24: AT&T California offered the self evident solution: replace the copper with fiber:

[W]e are working with communities across California to upgrade our older copper networks to more resilient, advanced technologies like fiber. For rural communities, upgrading our network not only helps narrow the digital divide, but it also means improving network resiliency, which helps networks withstand and recover from natural disasters and severe weather events.

How U.S. telecom policy derailed in early 1990s in slow motion train wreck

Excerpted from Service Unavailable: America’s Telecommunications Infrastructure Crisis

U.S policymaking on Internet infrastructure began shortly before the Internet was decommissioned as a government-run network in the mid-1990s. In 1993, the Clinton administration issued a policy framework titled The National Information Infrastructure: Agenda for Action. It called for the construction of an “advanced National Information Infrastructure (NII),” described as “a seamless web of communications networks, computers, databases, and consumer electronics that will put vast amounts of information at users’ fingertips.” Development of the NII, the document stated, “can help unleash an information revolution that will change forever the way people live, work, and interact with each other.” For example:

• People could live almost anywhere they wanted, without foregoing opportunities for useful and fulfilling employment, by “telecommuting” to their offices through an electronic highway;
• The best schools, teachers, and courses would be available to all students, without regard to geography, distance, resources, or disability;
• Services that improve America’s health care system and respond to other important social needs could be available on-line, without waiting in line, when and where you needed them.

Among its nine principles and goals, the policy called for extending the universal service concept to ensure that information resources are available to all at affordable prices. “Because information means empowerment, the government has a duty to ensure that all Americans have access to the resources of the Information Age,” the policy declared.

In addition to this policy document, the Clinton administration sponsored legislation championed by then Vice President Al Gore, who foresaw the coming role Internet-based telecommunications would play in the future. The Telecommunications Infrastructure Act of 1993 created a framework for its integration with the Communications Act of 1934. The legislation, which was not enacted and died in Congress, included several findings. The first three findings stated that:

(1) it is in the public interest to encourage the further development of the nation’s telecommunications infrastructure as a means of enhancing the quality of life and promoting economic development and international competitiveness;

(2) telecommunications infrastructure development is particularly crucial to the continued economic development of rural areas that may lack an adequate industrial or service base for continued development;

(3) advancements of the nation’s telecommunications infrastructure will increase the public welfare by helping to speed the delivery of new services, such as distance learning, remote medical sensing, and distribution of health information.

The legislation envisioned Internet telecommunications services being offered over the existing telephone network and would have required telephone companies to provide access to their networks for these services on a nondiscriminatory basis and on reasonable terms and conditions.

Like the NII Agenda for Action policy document preceding it, this legislation reinforced the principle of universal service. It would have required telecommunications carriers contribute to the preservation and advancement of universal service and states to act in coordination with the Federal Communications Commission to “ensure the preservation and advancement of universal service.”

This Clinton administration policy framework, its proposed Telecommunications Infrastructure Act of 1993, as well as 1996 legislation updating the Communications Act of 1934 enacted during the administration were predicated on the convergence of legacy voice telephone service and Internet communications. A foundational policy principle was the belief that competitive market forces could be relied upon to further this convergence and expansion of Internet telecommunications services, making Internet service universally available to all Americans as voice telephone service had been for decades before.

A generation later, it is painfully apparent that it didn’t play out that way. As discussed earlier in this chapter, the high cost of constructing new infrastructure to deliver Internet-based telecommunications services prompted telephone and later cable companies to selectively deploy new infrastructure only in densely populated and relatively affluent areas in order to satisfy shareholder demands for rapid return on investment and high profits and stock dividends. Everyone else was essentially left off the new telecommunications “grid” of the Internet.

The universal Internet service goals of the Clinton administration initiatives went unfulfilled in large part because the administration failed to take into account basic economics: the high costs of constructing and operating new advanced telecommunications infrastructure that create a natural barrier to competition. Markets can only be competitive when barriers to entry are low enough to allow for the entry of new players. Without new entrants, markets cannot meet the fundamental economic definition of a competitive market: one that has many sellers and buyers. Due to these high costs, telecommunications infrastructure functions more as a natural monopoly or a duopoly. Many buyers but few sellers do not a competitive market make.

Instead of relying on market competition, the Clinton and subsequent administrations and Congresses should have put in place a plan to fund universal FTTP. Had the United States chosen that policy direction instead of relying on market forces alone, every home business and institutional premise would likely have fiber connections in 2015.


The National Information Infrastructure: Agenda for Action, September 15, 1993, http://clinton6.nara.gov/1993/09/1993-09-15-the-national-information-infrastructure-agenda-for-action.html.

Senate Bill 1086 (103rd Congress, introduced June 9, 1993), https://www.govtrack.us/congress/bills/103/s1086.