Public policy likely to shift to regard IP-based advanced telecommunications as a utility, aligning with public expectations

Internet Service Providers have historically regarded their “broadband” offerings as luxury upgrades to basic narrowband dialup service introduced in the early 1990s. Consequently, they upgraded their “last mile” delivery infrastructures to support a range of Internet protocol supported services such as high quality data, video, voice only in select areas where they believed a sufficient number of households would opt for their high end offerings. The working assumption was significantly fewer than half would do so. Hence to hedge their risk, ISPs favored areas with the highest density single family housing and multiple dwelling units (MDUs) to increase the likelihood their investment in upgraded infrastructure would produce a decent return over a relatively short duration in order to satisfy their investors.

Nearly three decades later, ISPs continue to follow this deployment strategy at the same time IP-based advanced telecommunications is increasingly seen as a basic utility service. In the United States, current regulatory policy is aligned with the ISPs “broadband” service-as-luxury business models. ISPs are free of universal service obligations like those that governed voice telephone service of the pre-Internet era, predicated on the policy principle that in a natural monopoly, market forces cannot assure all households requesting service will have their requests honored. That’s consistent with the current public policy that regards advanced telecommunications as luxury and not basic utility service. Why require ISPs to provide service to all requesting it when after all, it’s a luxury? Similarly as a luxury, regulating what ISPs can charge isn’t appropriate. Let them charge what the market will bear. (It will bear quite a lot for a service that consumers see less as a luxury than a basic service.)

The tension between the basic versus luxury service paradigm has been building in recent years and will soon reach a breaking point. As constituent complaints of infrastructure deficits grow more strident, policymakers of every stripe are increasingly describing advanced telecommunications as an essential utility like electric power and water service. Sooner rather than later, public policy will come into alignment with this view. Concurrently, expect a shift away from subsidizing investor-owned ISPs to build the necessary infrastructure to a publicly-led effort. It will be necessary in order to build rapidly enough to cover the persistent infrastructure gaps and to gain a greater degree of control and accountability than has existed in limited subsidy programs for advanced telecommunications infrastructure.

Schumer: Broadband is a Utility That May Require Price Caps | DSLReports, ISP Information

Schumer: Broadband is a Utility That May Require Price Caps | DSLReports, ISP Information: Senate Democratic leader Chuck Schumer uttered some words this week that likely terrified lobbyists and executives for AT&T, Verizon and Comcast. During his floor argument for a Congressional Review Act resolution that would restore net neutrality, Schumer stated that he believes that broadband should be viewed as an essential utility, and that we may need to eventually explore price caps to prevent monopolies from over-charging for services thanks to limited competition.

Schumer's right. And when it's an essential service, the potential for abusive price gouging is enormous.

Democrats and Republicans alike have traditionally avoided price caps on broadband service, in large part because deep-pocketed campaign contributors in the telecom sector have viciously opposed the idea for obvious reasons.  Even when former FCC boss Tom Wheeler reclassified ISPs as common carriers under Title II of the Telecom act he was careful to "forbear" from applying rate regulation onto ISPs.

But Schumer appeared to re-open the conversation of price caps on an uncompetitive broadband market during discussions about net neutrality, even though the likelihood of him actually following through with that isn't particularly likely given historical precedent. "You know, people say, well, let a private company do whatever it wants, let them charge whatever they want," Schumer argued. "But in certain goods which are essential we don't do that. Utilities, highways. The same thing now applies to the internet. It's a necessity and we have to have protections for average folks, for small businesses, for working families." 

Spot on. It's time to end the delusion that a utility market can be a competitive market. After all, how many electric, water and natural gas companies are competing for customers?

Jonathan Chambers on overcoming U.S. telecom infrastructure deficiencies

Overbuilding, aka Competition, is the American Way – Conexon

The following is a non-comprehensive list of rural broadband overbuilders that have announced over the past two years plans to build rural networks:

1. AT&T. Announced Project AirGig to send data over powerlines.
2. Google. Announced Project Loon to use balloons traveling at the edge of space to bring internet access to rural areas.
3. Facebook. Announced conducted tests to use drones to deliver rural broadband.
4. Microsoft. Announced trials to use TV whitespaces for rural broadband.
5. SpaceX/OneWeb. Announced plans to deploy thousands of low-earth orbiting satellites to deliver internet access to rural areas.
6. New T-Mobile. Announced its intention of 5G for all, extending 5G to rural areas.
7. Rural Electric Cooperatives. Dozens of fiber-to-the-home networks under construction.
   
   Which of these initiatives should the government favor?

Only No. 7. It's the only proven technology with headroom to accommodate bandwidth demand that's doubling every few years. And because federal funding of utility cooperatives has a successful record of constructing needed infrastructure in areas not sufficiently profitable for investor-owned providers.

If your answer is the government should not favor any one company or technology, then perhaps you also agree that the government shouldn’t favor telephone companies with their copper networks.

I would agree with the second part of the question. The existing Connect America Fund is regressive and wasteful in that it allows funding of legacy copper telecommunications networks. It's main purpose is to preserve the service area hegemony of legacy telephone companies, not improve infrastructure.

As a small first step, I propose that anywhere one of the overbuilders has already overbuilt a telephone company’s network without any public funding, the government should cease its funding in that area.

Yes, if overbuilt with fiber to the premise, option No. 7 above.

To make the government policy easy to execute, I propose that where 100% of the households in a census block have access to Gigabit service by a company that is not receiving a subsidy in that area, then the government shouldn’t fund any company in that area. That simple policy change would save the public hundreds of millions of dollars,
money that could be used where it is needed.

Let's dispense with the term "Gigabit service." Keep it simple. Fiber to the premise.

 As a second small step, I propose that all future funding follow individual consumer decisions. The telephone companies can continue to get their legacy support, except where a household chooses another carrier with a minimum of 100 Mbps service. In that case, the overbuilder should receive support that is equal to the funding being provided on a per household basis to the telephone company. Such a program should be limited in time, no more than a decade, in order to encourage overbuilders to move quickly and incumbents to improve their networks.

Again, keep it simple. Fiber to the premise infrastructure. That's the real network improvement. Don't fall into the incumbent created trap of focusing on "broadband speed."

U.S. doesn’t have a definitive “rural broadband” problem; it’s all about service area “footprints” and redlining

In the first part of the 20th century, U.S. policymakers appropriated funding to cooperatives and local governments to bring electrical and telephone service to rural America. As the century got underway, these utilities were offered only in cities – where investor-owned providers deemed them sufficiently profitable to build the necessary distribution infrastructure.

Many similarly describe the nation’s advanced telecommunications infrastructure deficiencies as a rural issue as it was for these utilities. It’s not that simple. True, the deficits tend to be greater in rural areas. But it’s not purely a matter of rural geography as it was many decades ago. Back then, entire rural regions lacked electric power and telephone infrastructure.

The situation today is different and more nuanced. Legacy telephone and cable companies first began offering always on “broadband” services using existing infrastructure starting in the late 1990s and early 2000s. It was offered not as a general telecommunications service, but as a premium “high speed” add on service in highly localized “footprints” in urban, suburban, exurban and rural areas compatible with their business models. Those models generally require capital build costs to be recovered in five years or less.

These highly granular "footprints" and the redlined areas outside of them -- passed over due to long durations to ROI and insufficient profit potential relative to the cost of building out infrastructure – cannot be compared to the large rural regions that lacked electrical and telephone service in the early 20th century. Consequently, building out advanced telecommunications infrastructure in the 21st century cannot be undertaken with a 1920s or 1930s perspective, framing it simply as a “rural broadband” issue.

Hence, the inability of “rural broadband” subsidy programs to close the gaps. Rural electrification and telephone subsidy programs were the right approach for their time. But that context does not easily translate to the complexities of modern advanced telecommunications infrastructure. Other factors beyond rurality come into play such as the number of occupied premises per mile of landline infrastructure and average income levels. The former trumps the latter as many high income homeowners in exurban areas without access to landline service can attest.

Legacy incumbent phone companies propaganda canard: Describing a duopoly as "intensely competitive"

Broadband Deployment & Competition Growing: Dedicated Federal Funding Needed to Close Digital Divide | USTelecom: U.S. Broadband Deployment Is Intensely Competitive. Our analysis also examines broadband deployment from the perspective of competition, which is not a focal area for the FCC’s legislatively mandated deployment analysis. U.S. providers have been deploying broadband infrastructure using a range of technologies for more than two decades. As a result, basic underlying competitive infrastructure from multiple providers is available in the vast majority of the country. On top of this foundational infrastructure, broadband providers invest tens of billions of dollars annually to upgrade networks with enhanced technologies, driving a competitive process of ever-expanding network capabilities The data indicate that competitive deployment is strong and growing, even at higher speeds. As of year-end 2016, 97 percent of Americans had at least one wired broadband network platform available to them and 86 percent had at least two wired options. Competitive availability – defined narrowly as at least two wired providers – at 25 megabits per second (mbps) download (DL) and 3 mbps upload (UL) was 50 percent at year-end 2016, up from 31 percent at year-end 2014 and 25 percent at year-end 2012. (Emphasis added).

Claiming that having a choice among two sellers constitutes an "intensely competitive market" is ludicrous. But that assertion is not to be taken literally on its face. The true intent of this propaganda from legacy incumbent telephone companies is to drive a perception that the line delivering telecommunications service to customer premises is somehow fundamentally different from the line that delivered voice telephone service decades before. True, advanced digital telecommunications can deliver data and video as well as voice. But that capability does not fundamentally alter the fact that a single line of fiber can deliver them all just as a copper one did for voice as well as optional custom calling services that came later.

The real goal of this cynical propaganda is to deceive public policymakers into thinking America's telecommunications infrastructure deficiencies can be solved by market forces. That may be true in a competitive market defined as one with many sellers and buyers with relatively equal access to quality and costs. It's certainly not the case for telecommunications infrastructure. Moreover, if market forces truly operated in telecommunications infrastructure, they would drive down deployment costs, making it more widely available on favorable terms to the millions of customers who use it and eliminate persistent infrastructure deficits.

ACA Summit: Pai: Open Internet Order Was 'Galling Regulatory Onslaught’ | Multichannel

ACA Summit: Pai: Open Internet Order Was 'Galling Regulatory Onslaught’ | Multichannel: U.S. Federal Communications Commission Chairman Ajit Pai praised smaller cable operators for broadband deployment and as a competitive force, and renewed his attacks on edge providers in the network neutrality rule debate. Pai took aim at edge providers he said had pushed Title II on ISPs large and small. Those edge providers are an increasingly familiar target in Washington in conversations about power over internet content.

"Silicon Valley tech giants with market caps in the hundreds of billions of dollars demanded that the FCC regulate small companies like yours more heavily than they were!," he said. "That’s right... [T]hey claimed that small broadband providers like Spencer Municipal Utilities and Laurens Municipal Utilities were anticompetitive monopolists who posed a greater threat to a free and open Internet than companies like Google, Facebook, and Twitter."

The thing is Mr. Chairman, telecommunications infrastructure is a natural monopoly. It doesn't matter whether it's owned by big players like Charter and AT&T or small cable companies. It thus requires a regulatory scheme predicated on that monopolistic reality. The FCC's 2015 Open Internet rulemaking does so in treating it as a common carrier utility as basic telephone service was in the pre-Internet era under Title II of the Communications Act.

U.S. can't solve its telecom infrastructure deficiencies until it accurately defines the problem

Senate Kicks Off Series of Infrastructure Hearings With Focus on Broadband | Broadcasting & Cable: The Senate Commerce Committee kicked off a series of infrastructure hearings Tuesday with one focused on broadband, including a big focus on collecting accurate date about where broadband is, and more importantly, isn't. Sen. Roger Wicker (R-Miss.) presided, saying he was greatly encouraged by the President's support for programs to increase broadband infrastructure in rural areas. While the President said getting broadband to farmers was a priority, he didn't actually earmark any funds for broadband in his infrastructure plan, though he did say that $50 million would be going to rural infrastructure, with states free to use all or part of that for broadband. Congress is currently weighing the best way to deploy that service. Democrats like to factor cost and underserved communities in the equation, while Republicans -- and ISPs -- want the money targeted to the unserved, rather than overbuilding existing private investment with public money.

The adage that a problem cannot be solved until it's properly defined certainly applies here. America doesn't have a problem of communities being "underserved" by advanced telecommunications. The real problem is that it has failed to put in place policy and planning over recent decades to support the timely modernization of legacy metallic telephone and cable company infrastructure designed to support analog voice telephone service and cable TV to digital fiber optic infrastructure connecting all the nation's homes, businesses and institutions for the Internet era.

It's not accurate to describe the problem as one of entire "underserved communities." The real issue is existing public policy that does not support universal service but rather the redlining of discrete neighborhoods and even parts of roads and streets by landline ISPs in both rural and non-rural areas of the nation.

FCC Chair Pai falsely characterizes satellite Internet as innovative telecom technology

REMARKS OF FCC CHAIRMAN AJIT PAI
AT THE SATELLITE INDUSTRY ASSOCIATION’S
21ST ANNUAL LEADERSHIP DINNER
WASHINGTON, DC
MARCH 12, 2018

Next-generation satellites are bringing new competition to the broadband marketplace and new opportunities for rural Americans who have had no access to high-speed Internet access for far too long. That’s why the FCC under my leadership has moved quickly to give a green light to satellite innovators.

Here, U.S. Federal Communications Commission Chairman Ajit Pai falsely characterizes satellite delivered Internet connectivity as innovative. It is not. It's been around since the 1990s as a forced option for Americans who needed better than glacial dialup Internet access over legacy copper telephone lines but weren't offered DSL or later by cable companies.

We’ve also made satellite broadband providers eligible for our upcoming Connect America Fund Phase II reverse auction, which will provide up to $2 billion over ten years to expand broadband deployment in rural America. To be sure, I understand that the satellite industry disagreed with some of the decisions that the FCC made in developing rules for the reverse auction. We are forging new ground with this first-of-its-kind auction, and in doing so we had to make some hard choices. But, I nonetheless hope that satellite companies will study this opportunity closely and choose to participate in the reverse auction. 

This is an incredible waste of subsidy funding. With satellite, the FCC is subsidizing a substandard and kludgy form of connectivity subject to high latency and bandwidth usage caps. Subsidies should instead go to deploying fiber to the premise connections that offer far superior connectivity and aren't as subject to obsolescence.