Massachusetts town case in point why federal government (and not state and local government) should finance telecommunications infrastructure

Montgomery voters reject high speed internet | WWLP.com: Monday night, more than 200 residents voted on whether to connect every Montgomery home to the World Wide Web as part of the “wired west movement.” Wired west is an initiative to connect all under-served Massachusetts communities to a high speed fiber. The state covers 35% of
the cost, with the town having to cover the rest.

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Only 140 people came out to vote on this issue last June, and it was rejected. A group of residents petitioned to hold another vote.

“It’s been difficult, for example I work at home, I’ve had problems with the speed of the internet. It’s actually affected my ability to run my business out of my home so that’s been a frustration,” said Sonia Ellis, a Montgomery resident.

128 people were for high speed internet while 103 were against it, but It required a two thirds majority. The project would have required the town to pay more than $600-thousand.

This is a case in point showing that relying on state and local government to finance the construction of universal fiber to the premise telecommunications infrastructure isn't good public policy. Many billions of dollars are needed to ensure every American home and small business has an FTTP connection that they should have had by 2010 but for the absence of sound policy and planning. As I argue in my recent eBook Service Unavailable: America's Telecommunications Infrastructure Crisis, it's a job that requires the federal government to fund like building roads and highways in the pre-Internet era.

Bath Twp. man battles for broadband connection | www.daytondailynews.com

Bath Twp. man battles for broadband connection | www.daytondailynews.com: Malogorski wants to be able to show photos and videos of his work to the world online, but he has been struggling to get reliable broadband internet service for himself and his neighbors for years.

“I can’t figure out why we’re living in this hub of technology for the Midwest — Wright-Patt is the most important employer around here, so it’s very technically oriented. It doesn’t make any sense that we don’t have it,” said Malogorski, who lives on Ohio 4 between Upper Valley Road and Bath Road.

“Wright-Patterson Air Force Base is right beyond the treeline across the four-lane highway,” he said as he stood in his front yard pointing to the base, then the utility pole on his property, with AT&T and Time Warner Cable lines clearly visible above him.

This is a common example of telecommunications infrastructure disparities in the United States. Oftentimes people are located close to existing infrastructure that doesn't extend to their neighborhoods, discrediting the notion that rural areas lack infrastructure. They do have infrastructure. It's just arrayed in an incomplete, vexing crazy quilt of small "footprints" of neighborhoods with landline service and those without. That situation remains unlikely to change given the U.S. Federal Communications Commission's lack of enforcement of its policy adopted in 2015 classifying Internet service as a common carrier utility and thus mandating providers fill in the unserved pockets.

Combining two flawed subsidy programs won’t build FTTP infrastructure

Fellow blogger Steve Blum of Tellus Venture Associates suggests coordinating the U.S Federal Communications Commission’s Connect America Fund (CAF) Internet telecom infrastructure construction subsidies with a state subsidy program administered by the California Public Utilities Commission to multiply the amount of money available for such projects. (See Blum's blog post here)

Combining two fundamentally flawed subsidy programs, however, won’t produce a beneficial result considering the underlying weakness of both. Each is primarily structured to subsidize bandwidth, not infrastructure. They do so by defining subsidy eligible areas based on existing low bandwidth levels supported and delivered by legacy infrastructure rather than subsidizing the construction of modern fiber to the premise (FTTP) infrastructure in high cost areas. If an incumbent provider is providing that minimum bandwidth level, the area is deemed ineligible. That furthers the goal of the legacy telephone and cable companies to preserve the status quo by making it more difficult for others to finance FTTP builds in their service territories.

This is a key shortcoming because the primary problem in California and the nation is outdated and inadequate telecom infrastructure that needs to be replaced with FTTP infrastructure. Also, incumbent local exchange carriers (ILECs) are not motivated to construct FTTP infrastructure in high cost areas regardless of the availability of subsidies. Their business strategy is to focus on more profitable mobile wireless services and on cherry picking high end private communities and parts of low cost, urbanized areas for very limited FTTP builds.

Blair Levin's "broadband competition" fantasy

Achieving Bandwidth Abundance: The Three Policy Levers for Intensifying Broadband Competition | ISOC-DC: The trial and many errors of my own work have led me to believe in the following bottom line: that the highest priority for government broadband competition policy ought to be to lower input costs for adjacent market competition and network upgrades. Today I will make the case for that bottom line and illustrate where I think the greatest opportunity is; to create a virtuous cycle of upgraded mobile stimulating low-end broadband to upgrade, which in turn causes an upgrade of high-end broadband which, by using its assets to enter mobile, accelerates the need for mobile to accelerate its upgrade further.

Blair Levin, a Brookings Institution fellow who drafted the U.S. Federal Communications Commission's National Broadband Plan issued in 2010, somehow believes boosting mobile wireless "competition" to offer greater bandwidth will generate synergistic "competition" among landline premise Internet service providers and result in "bandwidth abundance." 

It's utter hogwash for the simple fact that telecommunications infrastructure -- regardless of whether it supports mobile or premise service -- is not a competitive market. Never has been and never will be due to high cost barriers to entry and uncertain return on investment as a mathematical expression in Levin's presentation illustrates. 

Levin's fantasy scenario would have us believe that if Verizon deploys next generation 5G mobile service, that would somehow spur Comcast or AT&T, for example, to upgrade and build out fiber to the premise (FTTP) infrastructure in areas where Verizon has rolled out 5G mobile. It's wishful economic sophistry. Levin offers no explanation as to how or why that would occur.

Market forces cannot address U.S. telecom infrastructure needs -- because infrastructure is not a market

Lawmakers eye broadband deployment issues | TheHill: When asked about that contention, witness Deb Socia, Executive Director of NextCentury Cities, argued that broadband was essential enough that government should step in to improve access.

She said that she believe “we’re coming to the place where we need to think of it in the same way, that it is essential infrastructure and that we need all hands on deck.

“And if the market can’t solve the problem then we need to figure out how to solve the problem.”

Socia's point goes to the nub of America's telecommunications infrastructure problem. Telecom infrastructure is not a competitive market and never will be. Market forces therefore cannot offer a solution. Indeed, as I posit in my eBook Service Unavailable: America's Telecommunications Infrastructure Crisis, the nation's excess reliance on market forces has in fact brought about the issue of inadequate infrastructure wherein large numbers of Americans lack sufficient infrastructure to reliably deliver modern Internet-based telecommunications services to their homes and small businesses.

Tennessee cooperative official compares 1930s electrification to today's telecom infrastructure challenge

Officials Urged To Let Local Utilities Cooperate On Providing Broadband - Chattanoogan.com: Mike Knotts, director of government affairs, Tennessee Electric Cooperative Association, brought a somewhat different perspective to the conversation when he said, “Advanced telecommunications will be as important to the next 100 years of electric system operation as steam power was to the first 100 years.”

He said the number one barrier to providing adequate Internet access is “purely customer density” and suggested looking at the model of rural electrification in the 1930s. “What cured the problem of rural electrification was the ability to create nonprofit entities that were able to amortize those expenses over much, much longer periods (than private companies). That was the very simple magic that took, in 10 years, less than 10 percent of American farms being electrified to 100 percent — not much more in the secret sauce other than that.”

Actually, Mr. Knotts, there is a another ingredient that's missing today: capital. Unlike today, in the 1930s the federal government stepped up with significant funding and not just talk, window dressing and "funding leads."