U.S. telecom subsidy policy reliant on one off grants for "broadband" bandwidth without universal service mandate

Baltimore Eyes Federal Funds for Municipal Broadband - Bloomberg:

For decades, the phone carriers and cable companies have collected billions in fees and federal funds aimed at subsidizing service to underserved areas like Johnston Square. And yet, the mission has fallen short of the goals, said Ali.“Will we be seeing the largest incumbents swoop down on state broadband offices and simply gobble up the money?” Ali said. “This is the one big shot. We cannot let history repeat itself. Otherwise we’re going to need another $65 billion in 10 years.

That would be Christopher Ali, associate professor of media studies at the University of Virginia. Ali adroitly points up a major flaw in U.S. telecommunications policy of heavily relying on one off grants to subsidize "broadband" bandwidth instead of a coordinated, unified subsidy program combined with a universal service mandate as with voice telephone service. Updated to specify a fiber to the premises (FTTP) infrastructure standard.

Lacking fiber to the prem #FTTP infrastructure standard, report highlights folly of U.S. grant funding policy to boost broadband speed

GAO calls for cohesive federal strategy to curb fragmented broadband funding | Fierce Telecom:

The GAO further added minimum required broadband deployment speeds vary among programs and continue to change. In 2016 for instance, recipients of USDA’s Rural Utilities Service (RUS) Community Connect program were required to deploy broadband speeds of at least 10/1 Mbps. That required speed increased to 25/3 Mbps by 2018.

Meanwhile, the FCC’s High Cost Connect America Fund Phase II program, which ran from 2015 through 2020, maintained the 10/1 threshold. And under FCC’s Rural Digital Opportunity Fund Phase 1 auction, 25/3 Mbps was the benchmark for areas to be considered unserved and thus eligible for funding.

The report's findings indicate agencies are still figuring out what the standard for broadband service should be. The FCC’s long-anticipated, revamped broadband maps are set to be released sometime this fall, and they may help more precisely allocate broadband funds where they’re needed.

Advanced telecommunications fraught with heightened political peril with enactment of infrastructure bill

Due to excessive reliance on privatized advanced telecommunications infrastructure and weak regulatory and market incentives, the United States is many years behind where it should be when it comes to replacing ubiquitous copper telephone lines built for an era of voice telephone service with fiber for today’s Internet-protocol enabled services. That became painfully apparent with public health social distancing measures during the COVID-19 pandemic that made households very reliant on advanced telecommunications for work, education, purchasing goods and services, virtual medical care and entertainment. Impatience with lack of reliable, affordable access -- present pre-pandemic -- reached a boiling point.

The enactment of advanced telecommunications infrastructure subsidies in the Infrastructure Investment and Jobs Act last November has raised expectations of rapid relief after years of dashed political promises by elected officials to address the issue. The billions in subsidies set aside for advanced telecommunications infrastructure has been characterized as a once in a lifetime investment to finally put it to rest.

But the legislative provisions of the subsidies to be granted states as well as recently issued rules governing the grants will likely introduce additional delay even before any infrastructure is built. Expect months if not years of delays as incumbent investor-owned telephone and cable companies battle states, smaller upstarts and publicly owned projects over eligibility rules governing the subsidies and how they can be used.

Unlike transportation infrastructure such as roads, highways and airports that are expected to take many years to plan and build, voters may well have far less patient expectations. They’ll want to see fast, tangible progress when it comes to advanced telecommunications infrastructure. Especially with neighbors just down the road or around the bend who have fiber connections, envious while they try to get by on DSL over aged copper and wireless workarounds. Or fiber on a nearby utility pole but no affordable residential service in the case of Vermonter Claudia Harris. They’ll naturally think since they’ve been waiting for years for fiber, all those billions in federal subsidies should easily bridge the gap to their homes in short order. When it doesn’t quickly materialize, elected officials at all levels of government could face angry blowback from voters. They are well aware of the high level of concern among their constituents, noting complaints about Internet access and affordability are among the top issues raised by them.

NTIA chief's comments on subsidizing non-fiber telecom infrastructure as "escape hatch" raises questions

Do the BEAD rules mean satellite and other non-fiber services won’t be eligible for funding?

Again, no. It’s true the NTIA in its BEAD rules said it will count areas covered only by satellite broadband or service based on unlicensed spectrum as unserved and also expressed a preference for fiber. However, Davidson said he expects satellite and other non-fiber technologies will receive plenty of funding.

“This is an infrastructure project that’s designed to last for years. And we do put our thumb on the scale on the most resilient, future-proof technologies that we can,” he said. But NTIA knows “there has to be an escape valve for states. And for the really high-cost areas we fully expect that there will be states who have significant portions of other technologies.”

Source: NTIA chief answers 5 burning broadband funding questions

Alan Davidson, the NTIA administrator, didn't elaborate in this piece as to what those other non-fiber to the premise (FTTP) technologies will be. States can authorize Broadband Equity, Access, and Deployment (BEAD) Program grant funding for up to 75 percent of project costs in high cost areas, with the 25 percent match waivable. These are defined in the rules as areas with higher than average construction costs for projects where at least 80 percent of homes and businesses cannot order service with minimum throughput of 25Mbps down and 3Mbps up.

Davidson is quoted as specifying satellite as one of the fiber alternatives. But satellite has been around for years in these areas, calling into question why it would need subsidization to expand it. Moreover, it's a substandard, costly option that no one really wants to rely upon for connectivity. Satellite is also omitted from the BEAD rules as a form of reliable service where it is the only service option.

The other possible technology is fixed terrestrial wireless. The BEAD rules implicitly allow funding of fixed wireless using licensed spectrum or a mix of licensed and unlicensed spectrum as they recognize it as "reliable" service. As with satellite, fixed wireless has been around for many years in areas of the nation as a stopgap until FTTP can be deployed, calling into question the need to subsidize its expansion. It's best suited to areas of the nation with relatively flat terrain and modest tree growth since it utilizes frequencies that require a clear line of sight to end users -- areas because of these attributes are also likely to be less costly to build FTTP.

Administration favors fiber advanced telecom infrastructure for IIJA funding. Law could advantage governments and utility cooperatives.

Bipartisan Infrastructure Law-funded networks should be built to stand the test of time and be fast enough to accommodate current and future needs. Given current demand and evolving technologies, Bipartisan Infrastructure Law programs should prioritize the fastest speeds possible and require a minimum of at least 100/20 Mbps. Relatedly, Bipartisan Infrastructure Law funding should prioritize fiber-to-the-home wherever practical to future-proof the infrastructure. At the same time, respondents expressed the need for states to have flexibility to utilize both fixed and wireless technologies to fully reach all Americans and called for the ability to substitute fixed wireless and satellite options where fiber is not cost-effective or where no provider is willing to offer fiber. (Emphasis added)

The administration today clearly affirmed its preference for fiber optics for advanced telecom delivery infrastructure funded by the Infrastructure Investment of Jobs Act of 2021 (IIJA), shifting away from the technology neutral policy of the 1996 Telecom Act.

The IIJA prioritizes grant funding for up to 75 percent of capital costs of deploying advanced telecommunications infrastructure for projects where at least 80 percent of the premises to be served are not advertised landline or wireless connectivity of at least 25 Mbps for downloads and 3 Mbps for uploads.

But capital project construction is only part of the overall cost. The fiber infrastructure must also be maintained and repaired. Field electronic equipment must be updated and replaced every several years. These additional costs may deter a commercial entity that must earn a profit for its investors from building fiber in the sparsely populated areas deemed "unserved" under the IIJA and prioritized for funding. That would favor governmental operators and consumer utility cooperatives that operate without the burden of generating profits and paying income taxes, particularly if the federal government deems that grants awarded under the IIJA are taxable income.

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.