Localities, consumer utility coops could take default lead role in future distribution fiber construction

The United States continues to lack a unified advanced telecommunications infrastructure policy framework 25 years after the enactment of the Telecommunications Act of 1996. The law did not set forth standards governing physical infrastructure deployment. It merely directed the Federal Communications Commission to monitor the progress of the availability of advanced telecommunications. The FCC opted to measure that progress based on a sampling of throughput – not by the infrastructure being built to deliver it -- as advertised by providers in a given ZIP Code or census block and reported annually to the FCC.

Throughout most of this period and currently, the FCC chose to treat Internet delivered services as optional information services like those that existed in 1996 -- e.g. CompuServe and America Online -- instead of a telecommunications utility with a universal service mandate. Consequently, there was no regulatory incentive for telephone companies to reach all addresses within their service territories or to upgrade their legacy copper cable plants. They instead opted to provide DSL delivered services over copper only to homes that were technically serviceable due to DSL’s limited range. Seeing opportunity with the slow walking of fiber by telephone companies, cable companies revamped their coax cable networks to deliver IP services within their limited franchise “footprints.”

While large legacy telephone and cable companies are now the dominant providers, they are constrained by business models averse to capital investments. They have loads of debt on their balance sheets and investors expecting short term gains and dividends incompatible with the high costs and long term horizon of infrastructure investments. All of these factors led to only about a third of all American homes having fiber connections as the third decade of the 21st century begins.

Several hundred local governments and electric cooperatives stepped into the gap and have and are building fiber infrastructure. The question going forward is how these relatively small scale, disparate deployments created out of necessity will fit into the larger scheme going forward and their role in bringing fiber to every American doorstep. It’s a policy question inherent in the Infrastructure Investment and Jobs Act passed by the Senate this month.

The legislation would allow states to make the initial determination by giving them jurisdiction over how $42 billion allocated in the bill for infrastructure grants is spent, with oversight by the National Telecommunications and Information Administration. Local governments and cooperatives would also help decide themselves since they would have to put up a 25 percent match for new infrastructure. With the structural business model challenges facing the large legacy telcos and cablecos, localities and cooperatives could move into a default leadership position. One off grants can’t remedy the incumbents’ ongoing structural limitations.

While the bill allows states to determine where the funding goes for distribution infrastructure, it authorizes states as well as a broad range of eligible entities to seek grants with a 30 percent match to construct critical transmission or “middle mile” infrastructure. That component of the nation’s advanced telecommunications infrastructure is growing increasingly crucial to support the growth of fiber distribution infrastructure and the resultant bandwidth demand the legislation will spur if enacted. Commercial entities that already own most transmission infrastructure would likely be the primary recipients.

Biden administration telecommunications policy could move U.S. toward universal fiber connectivity

The Biden administration’s telecommunications policy points toward the goal of bringing fiber connections to nearly every American home, recognizing policy put in place 25 years ago with the 1996 Telecommunications Act will not achieve that objective with two thirds of homes still served by obsolete copper telephone lines in 2021.

That goal is not explicitly stated in the Infrastructure Investment and Jobs Act passed by the Senate this month, calling into question the administration’s “build back better” pledge. Many observers including this one viewed that as a capitulation to incumbent telephone -- and particularly cable companies -- and their legacy metallic delivery infrastructures. However, as noted here, the legislation contains language favoring fiber that would be subsidized with $42 billion appropriated to the states should the measure become law. Additionally, the administration is on record as favoring “future proof” infrastructure – essentially fiber – along with universal service.

The infrastructure bill would direct the Federal Communications Commission to convene a proceeding to determine how to achieve universal service and to recommend Congress expand universal service “if the Commission believes such an expansion is in the public interest.”

However, the administration in a July 9, 2021 executive order encouraged the FCC to reinstate its 2015 Open Internet rulemaking that classified Internet protocol delivered services as telecommunications and subject to Title II of the Communications Act of 1934. As such, the services would be regulated as a common carrier utility and a universal service mandate placed on providers that would be required to honor reasonable requests for connections.

While the order is a strong suggestion and not administrative law at this point, the administration can almost certainly implement it when it nominates a candidate to fill the current vacancy on the FCC panel. The administration would most likely select a nominee inclined to implement the order and reinstate the Title II-based rulemaking.

That would set the stage for a policy debate on universal service in the Senate confirmation process. The nominee would conceivably be asked at their confirmation hearing where they stood on universal service considering the Senate’s version of the infrastructure bill would require the FCC to conduct an inquiry on universal service and policy recommendations to Congress.

If the administration is successful in seating a nominee inclined to reinstate the 2015 Open Internet rulemaking, the FCC could preempt Congress on the issue. That is unless Congress chooses to act expeditiously considering the FCC has been unable to conclusively determine whether IP-based services are telecommunications or information services as per their current classification under Title I of the Communications Act.

The significant funding that would be allocated to states by the infrastructure bill as well as that currently provided by the American Rescue Act would provide a sizable initial infusion to help cover capital costs in high-cost areas in order to help attain universal service. However, with a universal service requirement under a Title II regulatory scheme, there would need to be a viable ongoing high-cost area subsidy for both capital and operating costs that does not currently exist as it does for legacy voice telephone service. In the absence of a permanent high-cost subsidy mechanism, federal and state policymakers have defaulted to piecemeal one time grants.

Knowledge workers relocating to exurbs will encounter suboptimal advanced telecom infrastructure

Fringe outlying communities of major metropolitan regions were prized for their extreme privacy or more affordable housing before the pandemic, but were typically much less wealthy than the denser cities and affluent suburbs they surrounded.

The Great Reshuffling will likely make these far-flung exurbs richer and denser. The median household income across U.S. exurbs was $74,573 as of 2019, according to data from The American Communities Project. That likely ticked up over the last year as city dwellers in major job centers such as San Francisco and New York relocated to exurbs for the same or similar salaries.

The ‘Great Reshuffling’ Is Shifting Wealth to the Exurbs - WSJ

This population shift has implications for advanced telecommunications infrastructure that's often spotty in the exurbs. Knowledge workers relocating to the exurbs will often be in for a shock over the lack of fiber to the home connections where exurbanites are forced to get by with first generation DSL over aging copper phone lines or wireless connectivity.

“I’m done playing the game. It's time for blunt, factual reality. No more promises not kept."

In Clark County, in central Wisconsin, economic development director Sheila Nyberg has proposed a partnership with an electric cooperative to get broadband to the entire county. Revenue from the system would be used to pay off a startup loan, similar to the way electricity was brought to the countryside nearly a century ago. Clark County is one of the least connected counties in the state, and it showed when schools closed for COVID-19 and students didn’t have home internet access. 

For more than a decade, Nyberg said, federal money has gone to large internet service providers that have done little to improve coverage in areas where it's needed the most. 

"I'm tired of pretending that the big dog is the best dog in the room," she said. Nyberg said some type of local control, such as an electric cooperative, would be a better alternative. “I’m done playing the game," she said. "It's time for blunt, factual reality. No more promises not kept."

https://www.jsonline.com/in-depth/news/2021/08/12/u-s-needs-future-proof-approach-getting-high-speed-internet-all-broadband-wisconsin/7298391002/

Nyberg's comment raises an excellent point. Despite incumbents claiming to have invested upwards of $80 billion annually to improve America's advanced telecommunications infrastructure supplemented by billions in government grants and subsidies, it's still not enough to bring fiber connections to most every American doorstep. As Nyberg states, it's time for a new paradigm of publicly and consumer cooperative owned infrastructure. Investor owned providers have clearly shown they are not up to the task.

Explicit fiber to the prem FTTP telecom infrastructure standard absent in infrastructure measure. But it contains language favoring it.

The Infrastructure Investment and Jobs Act passed out of the Senate this week falls short of the Biden administration’s “build back better” pledge by failing to establish an explicit fiber to the premises FTTP advanced telecommunications infrastructure standard to replace outmoded 20th century copper telephone lines.

Instead, the bill establishes a throughput-based service level standard inconsistent with the administration’s goal of building “future proof” telecom infrastructure. It’s a much-needed objective. The past four decades have shown that throughput-based standards tend to become quickly outdated as end user bandwidth demand inexorably grows. Only fiber infrastructure has the headroom to accommodate that demand well into the future.

However, language in the legislation indirectly favors fiber. It requires the National Telecommunications and Information Administration prioritize infrastructure funded by $42 billion of grants to states to “ensure that the network built by the project can easily scale speeds over time to meet the evolving connectivity needs of households and businesses.” Not a direct fiber infrastructure specification. But a good operational definition that could influence the NTIA to promulgate rules on funding eligibility and awards that favor a de facto fiber standard.

Additionally, the measure defines a “reliable” service standard that fits well with fiber. It’s “service that meets performance criteria for service availability, adaptability to changing end-user requirements, length of serviceable life, or other criteria, other than upload and download speeds, as determined by the NTIA in coordination with the Federal Communications Commission. (Emphasis added) It would also require the NTIA to develop and incorporate best practices “for ensuring reliability and resilience” of the infrastructure funded by the measure.

Infrastructure measure pending in Senate would allow incumbents to challenge proposed projects

Similar to the Obama administration’s American Recovery and Reinvestment Act of 2009, the massive omnibus infrastructure pending in the Senate would allow incumbent providers to challenge the award of federal grant funds for advanced telecommunications infrastructure.

A provision of the bill requires states receiving the funding to establish procedures governing challenges by service providers as well as local governments and nonprofits. The challenges could be filed contending locations within a proposed project area fail to meet the project requirement of at least 80 percent of premises being “unserved” (“reliable” service with a minimum throughput of 25 Mbps/3Mbps (“unserved”) and 100 Mbps/20 Mbps (“underserved”) with latency sufficient to support real-time, interactive applications.

As a practical matter, the provision would also potentially allow wireless providers offering at least the “unserved” service level – regardless of end user cost -- to challenge a proposed project that would deliver service to prems over fiber or coaxial cable infrastructure where none presently exists.

The provision is apparently included to address concerns by incumbents that proposed projects would “overbuild” within their service areas – a key concern in heavy incumbent lobbying of the bill. The measure authorizes the National Telecommunications and Information Administration to reverse state determinations of challenges and to modify the challenge process.

Big cable’s influence, potential benefit reflected in infrastructure measure pending in Senate

The influence of big cable TV companies like Comcast and Charter Communications is reflected in the massive omnibus infrastructure bill pending before the U.S. Senate. A major indication is the proposed legislation’s requirement that some $42 billion in grant funding it would allocate to state governments be used to provide IP connectivity of at least 100 Mbps down and 20 Mbps up with latency that sufficient to allow “reasonably foreseeable, real-time, interactive applications.” That’s perfectly aligned with the current throughput offered by cable TV providers over hybrid coaxial copper and fiber cable and the Data Over Cable Service Interface Specification (DOCSIS).

The measure’s emphasis on prioritizing funds to high-cost areas with poor connectivity options points to largely benefit big cable. Consider cable TV’s history. It developed in the 1950s to serve rural areas too distant to reliably receive over the air signals from TV transmitters in cities, serving homes with cables distributed from signal amplifiers connected to large “community antenna” arrays to boost the signal.

If the bill becomes law, cable lobbyists could mount a full court press on statehouses like that of the mid-2000s when they worked to shift authority over their local municipal franchises to state public utility commissions in order to avoid universal service demands from the locals. The case they might present to policymakers: give us the funds to build out our footprints in our traditional rural areas without good connectivity just as they lacked access to urban TV signals in the past.

Cable would benefit by attaining a monopoly position in more sparsely populated rural and exurban areas where telephone companies have abandoned their legacy copper telephone lines and have not offered residential services delivered over fiber. There, cable would not have to share a duopoly market with telephone companies in more densely developed areas where the telcos are offering symmetric fiber services instead of cable’s asymmetric 100/20 Mbps throughput.

Infrastructure measure pending in Senate would condemn America to another generation of waiting for replacement of legacy copper telephone lines with fiber, universal service.

The U.S. Senate made public enabling legislation for the Biden administration’s American Jobs Plan infrastructure initiative this week, titled the ‘‘Infrastructure Investment and Jobs Act.” The bill is disappointing insofar as it fails to define a physical fiber standard for advanced telecommunications infrastructure. Instead, it prioritizes funding telecommunications infrastructure that “can easily scale speeds over time to meet the evolving connectivity needs of households and businesses.” That’s generally viewed as fiber – the “future proof” goal expressed in the American Jobs Plan. But it’s not explicitly referenced in the proposed legislation.

The measure continues the incrementalist doctrinaire view put in place by the 1996 Telecommunications Act that boosting throughput is the paramount policy goal. Furthered by the faulty economic reasoning that market competition despite telecommunications infrastructure being a natural monopoly like other utilities will help achieve that objective. The asymmetric throughput-based standard as stated in the measure retains the classic 1990s-era delineations of premises as being served, underserved and unserved relative to throughput offered by providers serving them. 

That reflects a collective cognitive bias known as anchoring. Dialup -- state of the art connectivity in the 1990s -- is the anchor. All progress is measured by improvements from the anchor as higher "broadband speeds." That cognitive bias has set the tone for the entire telecom policy debate rather than infrastructure. It's thus no surprise to see a nominal infrastructure bill frame the issue as one of supporting higher throughput in areas where it's lagging.

Should the bill become law as written, it will condemn the United States to another generation of waiting to modernize its legacy copper telephone lines built for analog voice telephone service in the 20th century to fiber to support internet protocol-based digital services in the 21st century.

These are some of the other major problems with the proposed bill language:

The proposed legislation does not affirmatively prioritize publicly and nonprofit owned infrastructure as originally envisioned in the American Jobs Plan, allowing investor-owned entities that operate with an inherent conflict of interest between investors and consumers to apply for infrastructure projects. The projects would be funded with $42 billion allocated to state governments with a 25 percent match.

In one of the biggest missed opportunities for a massive infrastructure measure, the bill does not achieve advanced telecommunications universal service as was attained with landline voice telephone service. The bill would require the U.S. Federal Communications Commission to convene a proceeding to determine how to achieve universal service and to recommend to Congress expand the universal service “if the Commission believes such an expansion is in the public interest.”

Funding eligibility is prioritized to “unserved areas,” defined as those where at least 80 percent of premises are unserved – those not having any providers offering service with throughput of at least 25 Mbps down and 3 Mbps up. The offer of service is open to gaming by fixed wireless providers who could conceivably claim offers of service meeting or exceeding the throughput minimum but at exorbitant rates.

“Underserved” areas – defined those lacking access to “reliable broadband service” with no providers offering service with throughput of at least 100 Mbps down and 20 Mbps up are secondarily eligible. For both categories, funding eligibility is limited to areas where least 80 percent of premises are unserved or underserved. Neighborhoods failing to meet the 80 percent threshold would be out of luck and continue to potentially suffer redlining by incumbent providers.

The determination of whether an area is “underserved” is based on maps of throughput offered by providers maintained by the FCC. The maps have proven notoriously controversial and inscrutable and subject to provider abuse of overstating service offerings. The FCC is in the process of revising the methodology to improve them, but that process will likely generate further disagreement and delay that serves only the interests of legacy incumbent providers.