Revamped Opportunity Zone Financing

Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act and provided an opportunity for equity investors to defer and reduce capital gains taxes when they reinvested profits from an existing project into qualified projects located in targeted and defined low-income Census Tracts. The Opportunity rules got a lot of play in some parts of the country for projects like urban renewal and renewable energy projects, but for various reasons, this never caught on for very many broadband projects.

Some of the shortfalls of the original rules have been modified by changes included in the One Big Beautiful Bill Act (OBBBA), These new rules are generically being referred to as OZ 2.0. The new rules will be effective on January 1, 2027, and States and Treasury are working to have the new rules and revised Opportunity Zones in place by then. These rules are a lot friendlier to investors and could be used as part of the funding stack for projects that include building fiber.

Following are the key changes in the OZ 2.0 rules:

  • Permanent Extension. The new rules are now permanent. The old rules expired at the end of 2026, meaning that in recent years, there was a diminished value in trying to take advantage of the benefits.
  • Rolling 5-Year Deferral. Investors can now defer capital gains for five full years from the date of an investment.
  • 10% Basis Step-Up. An investor who holds a Qualified Opportunity Fund (QOF) investment for 5 years receives a 10% step-up in basis, which means an increase in deferred gains.
  • 10-Year Gain Exclusion. If a QOF investment is held for at least 10 years, the investor gains a permanent exclusion from federal taxes for any new gains.
  • Extra Rural Benefit. Investments made through New Qualified Rural Opportunity Funds (QROFs) for projects in rural areas will earn a 30% basis step-up (instead of 10%) for a 5-year hold. Rural investment properties also face a lower substantial improvement threshold, reduced from 100% to 50% of the acquisition basis.
  • 30-Year Rule: Investments held for 30 years or longer are eligible for a basis step-up to fair market value without needing to dispose of the asset.

The new rules require redrawing the Opportunity Zone Map of eligible areas. Governors play a key role in the process, and communities that want to be included as Opportunity Zones should be lobbying their Governor to be included. An area can only be designated as an Opportunity Zone if median household incomes are less than 70% of the area-wide incomes (the old rules was 80%).

The new rules also come with increased reporting. Anybody using Opportunity Zone funding will have to file an annual report that describes the economic impact of the project as well as employment and investment data. There are defined penalties for non-compliance.

There is a lot of nonpartisan support for the new rules since they are aimed at attracting investments in both urban and rural low-income areas.

The original Opportunity Zone rules were commonly used as a way to get local investors to invest in local projects. Most large equity investors, like high-value individuals or family offices, who routinely experience capital gains from investments, and the Opportunity Zone rules allowed those gains to be deferred by investing in projects with local impact. It’s hopeful that the new rules will make it even easier to attract some equity investments into projects in low-income areas.

Starlink Adds Tiered Pricing

Starlink is in the industry news so often that it feels like I ought to have a recurring blog just for Starlink updates. The company recently made an interesting announcement that should make waves in the broadband industry. The company announced tiered pricing, with prices varying by speed, and starting at $50 per month in some selected markets.

This is something Starlink has always been able to do, and perhaps they are doing this because the company is profitable and has landed 2 million U.S. customers with its standard $120 price. It’s clear that the company’s network is gaining capacity at a steady pace as the company launches additional and better satellites. At the beginning of February, the company had over 9,300 working satellites in orbit out of 9,600 total satellites. The company is on track to reach its first constellation goal of having 12,000 satellites in orbit by the end of this year. The company will soon be introducing its next generation of satellites which will have significantly greater broadband capacity.

The new products announced by Starlink include:

  • Residential 100 Mbps. $50 per month. Speeds up to 100 Mbps.
  • Residential 200 Mbps. $80 per month. Speeds up to 200 Mbps.
  • Residential Max. $120 per month. New customers also get a mini kit that can be used for traveling or camping.

The 100 Mbps product comes with a warning that it’s not available everywhere, so we’ll have to wait for feedback from the public to see what that means. Having a $50 broadband product everywhere would be a big deal.

It will be interesting to see the actual speeds delivered for each product. Each of the three products is being advertised as ‘up to’ speeds. Starlink recently issued a report to customers that said that its average download speed at the end of 2025 was 170 Mbps, so it will be interesting to see the speeds that are delivered to subscribers of the 200 Mbps tier. Ookla issued a report last year that said that Starlink’s median speed was 104.7 Mbps at the end of the first quarter of 2025, meaning half of the speeds were faster, and half were slower than that number. There is no mention by Starlink in its announcement about upload speeds. The Ookla report showed that the median upload speed was 14.8 Mbps at the end of the first quarter of 2025.

I work in a lot of rural areas where many people either can’t or won’t pay $120 per month for broadband. Starlink could get huge market traction with a $50 product. A $50 price for 100 Mbps broadband would put huge pressure on WISPs, which generally have rates higher than that. A $50 product would also be an affordable alternative to the many rural fiber networks being built by grants.

A $50 rate also would play well in cities. That rate competes well against the low-cost options in cities from DSL or FWA wireless. Most big telcos have raised DSL rates to the range of $65 per month. The FWA carriers have list rates of around $60, but customers can get it for less by bundling with a cellphone plan and agreeing to autopay. I can’t see Starlink cleaning up in cities with a $50 rate, but it would get a lot more customers than it has today in those markets.

In other pricing news, Starlink increased the monthly data cap on its Roam product to 100 gigabytes per month. This product is also $50 per month and is aimed at RVs and hikers. The average U.S. home uses around 700 gigabytes, but this will be attractive to homes that aren’t big broadband users. Starlink significantly chokes speeds after the monthly cap is reached.

Financial Limitations on Growth

I’ve worked with rural counties across the country, and one of most common recurring themes is a hope from elected officials that local ISPs will step up and build fiber and solve the broadband gaps in the area. County officials often beg local ISPs to pursue grant funding. Far too many times, local ISPs are unable to expand to provide what they are being asked to do.

Only rarely have I ever heard a small ISP admit to local leaders the real reason it can’t solve the broadband gaps. The primary reason that ISPs can’t expand at will is the natural limits on financing for growth. I can’t recall ever hearing an ISP tell a County government that they are unable to borrow the needed funding. I think this is because they think it will diminish them in the eyes of the local officials and make them sound like a small business.

The market reality is that every ISP has a ceiling on the amount of money it can borrow. This limit is not set by the ISP – it’s set by lenders. I’ve often been asked by ISPs to quantify their borrowing limit, but it’s never an easy question to answer. When banks make loans, they look at obvious things like the ability of cash flow to cover debt payments, and at the ratio of debt and equity at a given business. There are also a lot more subtle issues involved in the decision for a bank to make loan, like the bank’s own overall equity and cash holdings, the national trend of interest rates, and the lender’s mix of different types of loans. Just like an ISP doesn’t want to publicly disclose its ability to borrow, banks rarely tell an ISP the real reasons they don’t qualify for a loan.

County officials often assume that it’s easier to find the needed funding if part of a project is funded by a grant. If anything, grant funding can make it harder to borrow, because the borrower has to satisfy the future requirements of the grant agency as well as the requirements of the bank.

This problem is not unique to ISPs, and every kind of business has a natural borrowing limit, just like every family has a limit on the amount of money they can borrow to buy a new home. We tend to think that broadband expansion projects are different because they are loans to build long-term infrastructure, but building a broadband network is not a lot different than building a new factory or a new retail location.

One unique category of ISP is startups. These are new ISPs, or ones that have only a few customers. With rare exceptions, new ISPs are unable to get loans until they have somehow self-funded enough to reach a size and a balance sheet that a bank will even consider.

Having a natural borrowing limit is not unique to small ISPs. Altice, which recently rebranded to Optimum, is in financial hot water because it looks like it is facing a huge challenge to refinance its outstanding debt that is coming due in a large balloon payment. One of the factors that convinced EchoStar to abandon the facility-based cellular business was the challenge of borrowing more to meet its existing debt payments.

The only realistic alternative to borrowing for most ISPs is to accept equity funding. Small ISP owners are generally reluctant to accept equity because it means giving up control of the business. One of the biggest benefits of being a small ISP is that the owners can carve their own path and do things their own way. That freedom quickly ceases when an ISP accepts any significant equity funding.

I guess the bottom line of this discussion is that communities have to have a realistic expectation for small ISPs in the area. These companies would probably love to expand and serve everybody, and if they are not doing so, there is a good chance that they can’t raise the funding needed to expand. Very few ISPs are going to say this in public, but don’t read the fact that they won’t expand to mean they wouldn’t love to.

FCC Robocall Filing Due for All Voice Providers

The FCC adopted new rules for voice providers that are part of the FCC’s effort to curtail robocalls. The new rules apply to every voice provider that sells a retail voice product to end-user customers, along with other categories of providers like voice wholesalers and international providers. The new rules were effective on February 5.  The key new rules include the following:

  • Every voice service provider (VSP) has to register in the Robocall Mitigation Database (RMD) by March 1. Any VSP that is already in that database must update its information by that date.
  • The FCC issued a stern warning to any VSP that doesn’t register as required. There are fines of as much as $10,000 for not registering or for submitting false or inaccurate information to the RMD. The FCC also established a $1,000 fine for any late registrations or updates.
  • VSPs will also now need to renew the registration annually.
  • Finally, VSPs must update the FCC within 10 business days any time they make a change that affects their information in the FCC’s CORES database.

The mechanics of the new rules are that every VSP must have a unique token that gets associated with the call records that identifies the VSP. In past filings, a lot of VSPs simply reported that they rely on the tokens from another upstream provider. The new rules make it clear that every company that sells voice needs to have its own token.

These new rules are going to catch a lot of ISPs and CLECs off guard. It’s likely that most companies that still operate a voice switch knew about these rules in the past – and if they didn’t, the FCC plans to hunt down non-compliant carriers through the databases.

But the big change is that this applies to ISPs that buy wholesale VoIP and repackage it to their customers. These VSPs must comply with the new rules.

The FCC plans to implement an annual $100 filing fee to accompany the annual certification. However, that hasn’t been implemented yet, and VSPs can file for free right now.

The CCG team can help with any aspect of these filings, so contact me at blackbean2@ccgcomm.com if you need help.

A Three Nines World?

FierceNetwork recently published a thought-provoking article by Steve Saunders that asks, “is four nines the new five nines?”  That’s a question that only network engineers will understand, but it is a shorthand way to talk about the reliability of our networks.

The phrase five nines refers to having a goal for a network to be in service 99.999% of the time. That’s an incredible level of uptime, and a five nines network is expected to not be out of service more than five minutes in a year. A four nines network would have the goal of not being out of service more than 53 minutes per year, and three nines would lower the goal to 526 minutes, or just under nine hours per year.

I have a lot of clients who have signed contracts with large data customers to meet four or five nines of reliability. The only way to make that guarantee is to have a lot of redundancy. That would mean physically redundant fiber routes to protect against fiber cuts. It would mean self-healing electronics that quickly adapt to fiber outages or the loss of a key set of electronics. It means having software that can quickly be reset as needed.

In the last few years, we’ve seen network outages of major proportions. The latest outage by Verizon knocked a lot of customers out for half a day. There have been multiple regional and national outages due to problems in the Amazon AWS data centers. The breadth and magnitude of these regional outages is making it hard for any ISP to guarantee that networks will be reliable due to problems cause upstream by larger industry players.

As Saunders points out, the culprit of most of the big outages is software. The software that controls the Internet has grown increasingly complex. Sanders says the communications networks have grown as complex as the systems that operate a nuclear submarine.

The article points to the complexity associated with the recent big Verizon outage. The problem was something that affected the standalone 5G core network. Verizon’s core network includes electronics and software from five vendors  – Case Systems, Ericsson, Nokia, Oracle, and Red Hat / OpenShift. – along with Verizon’s own software.

Saunders says the issue is structural. While Verizon network engineers are elite, they are expected to operate networks that have grown to a level of complexity that is beyond the ability of technicians to fully understand everything. I’m sure Verizon still has an internal goal of five nines, but the company can no longer realistically understand the complexity of its network and the interplay of the many diverse components.

The problems and the outages are likely to grow worse as we continue to convert to software-defined networks, and as big companies consolidate network operations and eliminate technicians as a cost savings. We are also increasingly using AI to write complex software, which is reducing our ability to fully understand and debug problems during a crisis.

Saunders points to another issue, which is the erosion of the separation between LAN and WAN. For decades, businesses have been secure behind firewalls since they ran different software inside the company than what was used to communicate outside the company. But that distinction has become blurred as a lot of software now reaches across that barrier.

The article’s conclusion is that we are probably going to have to learn to live with big outages. The day of expecting to be connected to super-safe networks is gone. The Verizon outage shows that we might already be living in a three nines world, something that makes every network engineer cringe.

Winning the 6G Race

In December, the White House issued a short Presidential Memorandum titled “Winning the 6G Race”. The document states that 6G technology will be “foundational to the national security, foreign policy, and economic prosperity of the United States. 6G will play a “pivotal role in the development and adoption of emerging technologies like artificial intelligence, robotics, and implantable technologies. 6G will also provide faster, more resilient, and more secure communication networks that can be utilized for national security and public safety purposes.”

The report begins with an interesting statement, “It is the policy of the United States to lead the world in 6G development.” This memorandum suggests that the path for the U.S. to achieve this goal is to play a significant role in the development of international standards and to identify a significant volume of spectrum that can be harmonized for 6G networks internationally.

The memorandum goes on to direct several federal agencies to make sure the U.S. gets involved in the development of standards. This is something that U.S. scientists and engineers routinely participate in. Congress already ordered the FCC to begin looking for 800 MHz of midrange spectrum to put to auction. This is the sweet spot for cellular traffic, and it seems likely that cellular companies will buy most of any such spectrum that hits an auction.

What I find most interesting about the memorandum is the use of the phrase ‘6G Race’. This brings back memories of the same rhetoric being used to tout the introduction of 5G. In looking back, I see that the term 5G race entered the vernacular in 2018. It was a phrase introduced by the big cellular carriers as part of a massive lobbying campaign to get the FCC to hold auctions for cellular spectrum. The 5G race was supposedly between the U.S. and China to become the leader in 5G technology.

The lobbying effort was intense, and you couldn’t go to any sizable industry event without being bombarded by discussions about the U.S. winning the 5G race. I wrote several blogs on the topic at the time, and there were articles in the industry press about the 5G race on a weekly basis. This reached such a fever pitch that by 2020, there was talk of the U.S. government buying either Nokia or Ericsson so that the U.S. would own a 5G company.

What’s funny is that there was no 5G race then, and there is no 6G race now. That’s not how technology advances. For both 5G and 6G, scientists and engineers from around the world first create the standards for a new technology. Once those standards are published, vendors begin seriously developing marketable technologies to sell.

Every vendor strives to make technology that meets the standards so that it can be used worldwide. Vendors like Huawei from China and Nokia from Finland want the cellular technology they develop to be able to communicate with cellphones manufactured around the world. While there are differences between vendors, the differences are fairly minor, and over time, any development touted by any one vendor will be picked up by the other vendors. The whole purpose of standards is to make sure that a new technology is compatible around the world.

What’s particularly funny is that the U.S. is a minor player in the development of cellular technologies. The vendors ultimately decide which features of a new technology get stressed and developed first. If there were a 5G or 6G race, it would be between China and Europe – but I’ve never seen competition between the vendors referred to as a race.

I think the term 6G race is just more rhetoric from the marketing folks at the big U.S. cellular carriers. While they already won half of the battle by getting Congress to require that the FCC find more cellular spectrum, the lobbying effort is to make sure that happens in a timely manner before Congress or the FCC has a change of heart.

So, in case you are late to the game, welcome to the 6G race. It’s a drama-free race, and there is no finish line. But if the cellular companies get what they are asking for, the phrase will disappear as quickly as it appeared.

California Competition Study

The Public Advocates Office, which is part of the California Public Service Commission, undertook a a deep analysis of broadband pricing in the state, correlated with the level of competition. The study was conducted from August through October of 2025.

The study looked at four large markets in the state: San Mateo, Oakland, Los Angeles, and San Diego. By choosing these markets, the study encompasses the four largest ISPs in the state – AT&T, Comcast, Charter, and Cox. The study gathered information on available broadband plans by location, advertised speed tiers, and promotional prices. The study also overlaid household incomes from the Census across the data it gathered to explore if household income played a role in prices offered by the big ISPs. The markets are interesting because they not only vary by ISP, but each market has some neighborhoods where the only gigabit provider is the cable company, and other neighborhoods where there is also one or more fiber competitor.

The overall conclusion of the study won’t surprise anybody who follows the big ISPs – broadband prices vary by the level of competition. In aggregate, the study showed that the price for broadband in competitive neighborhoods across the four markets was around $51 per month, while prices in non-competitive markets were $15 to $40 higher per month for comparable services.

The study resulted in three major conclusions:

Gigabit Fiber Drives Lower Broadband Prices. The study demonstrated that price competition only kicked in for neighborhoods where there are multiple ISPs offering gigabit broadband. That means a cable company and at least one fiber provider. The study showed that when there is competition for gigabit broadband, the competition extends downward to slower speeds offered by the big ISPs.

The study demonstrates something that is probably obvious, in that pricing is trimmed even further when there are more than two gigabit providers in a neighborhood.

Sub-Gigabit Providers Do Not Reliably Constrain Price. This is an interesting finding. It says that when the only competition to a cable company is an FWA cellular provider or a fixed wireless ISP, the cable company does not engage in significant price competition to keep customers. The study showed that, in fact, some of the neighborhoods with this kind of competition see the highest prices from the big ISPs.

This doesn’t mean that cable companies never compete hard against 100 Mbps providers, but this finding makes a lot of sense. Customers are attracted to the low prices of the FWA providers, and both T-Mobile and Verizon have price options as low as $35 per month. Cable companies, at least in these four large markets, are not willing to drop prices to compete with those prices.

Income is Not a Primary Driver of Prices. This is a bit of a surprise, because there were previous studies that suggested that pricing was lower in neighborhoods with the highest household incomes. That may have been true five years ago, but the data now suggests that prices offered by the big ISPs are mostly related to the level of competition.

The study made some other interesting observations. One observation is that in competitive neighborhoods, promotional prices can vary by household, and somebody might be paying a significantly higher or lower price than their immediate neighbors.

The study is worth reading for anybody interested in how big ISPs compete. The study has a lot of detail about how big ISPs stratify addresses and pricing offers based on the presence of other gigabit providers, while not caring much about ISPs that compete with slower products.

The Challenge of Adding Fiber to Poles

On February 5, the FCC issued a Memorandum and Order related to a pole attachment dispute between Comcast and Appalachian Power Company (APCO). The Order was issued under the authority of section 224 of the Telecommunications Act, which gives the FCC the authority to “regulate the rate, terms, and conditions for pole attachments to provide that such rates, terms , and conditions are just and reasonable”. This order highlights the nuances of regulations that can make it a challenge to build new fiber. This particular case provides a cautionary tale that shows why it can be so hard to get on poles when working with an uncooperative pole owner.

Before discussing the FCC decision, let me review existing FCC pole attachment rules and processes that an ISP must follow to get onto a pole. Just starting the process of getting on a pole requires a well-defined step-by-step paperwork-heavy process that obligates both the pole owner and the attacher to take steps within specified time frames.

  • The ISP must formally request access to a pole. Every pole owner has a unique set of forms needed to make such a request. The request must be detailed and specifically describe the changes that are wanted, and the attacher often includes drawings showing the desired connection.
  • The pole owner then conducts a survey to determine if there are any issues involved in meeting the request. Some pole owners invite the attacher to participate in a physical survey.
  • If the pole owner accepts the request, it must provide an estimate of the ‘make-ready’ costs needed to accommodate the request.
  • If the attacher accepts the estimate, it must pay the make-ready costs upfront, and the make-ready work proceeds.
  • Finally, if the pole owner finds that the actual cost was higher than the estimate, the attacher can request a detailed invoice showing all of the costs.

The dispute in this Order arose over poles that APCO said needed to be replaced in order to accommodate Comcast. Comcast claims that many of the poles had preexisting violations of safety and engineering standards, and because of that, Comcast wanted to pay nothing for APCO to replace the poles. APCO wanted Comcast to pay the full cost of replacing the poles, which would mean that Comcast would be paying to fix problems caused in the past by other attachers.  As an aside, Comcast would be required to pay the full cost to replace a pole that didn’t have any safety violations, as long as the only reason for having to replace a pole is that there isn’t enough room to add the new fiber.

Comcast filed a formal complaint with the West Virginia Public Service Commission in May 2025. The Commission ruled in favor of Comcast and said that APCO unlawfully assigned costs to Comcast and also delayed the pole attachment process. Rather than comply with that decision, APCO appealed the case in July to the FCC’s new Rapid Broadband Assessment Team (RBAT). This was the first FCC case processed under the new RBAT appeal system. The parties entered into mediation, but failed to reach an agreement.

In September, APCO issued new rules across its pole network that require any attacher to pay 100% of the cost for a poles replacement, even when a pole has preexisting violations.  At the end of November, Comcast filed a complaint with the FCC that resulted in this Order. The FCC sided with Comcast and said that its rules had been clear for twenty years that an attacher is only responsible for the incremental cost of moving to a new pole when an existing pole is in violation of safety or engineering standards.

You might read this and view it as a victory for Comcast, but it’s really not. This process delayed Comcast by nine months, and this is one of the faster regulatory resolutions of a pole dispute I can remember. This case shows the challenge that any attacher faces when a pole owner elects not to follow existing pole attachment regulations. In this case, APCO wanted to charge Comcast incorrectly at the time of the application. APCO then ignored an order from the State PUC and took the issue to FCC arbitration, where it failed to come to a mediated agreement. Finally, Comcast had to appeal to the FCC for a resolution.

Most ISPs don’t have the budget or the legal resources to fight an issue like this through this maze of steps. A smaller attacher with a similar situation would likely either have to agree to meet the conditions of the pole owner, and pay far too much for the attachment, or it might instead elect to bury fiber to bypass the poles, also at an increased cost.

Most attachers also worry about getting into formal disputes with pole owners who can retaliate by making it more difficult or costly for other desired attachments. The FCC and States can pass as many rules and regulations as they want, but the pole owner still has the ultimate power to make life costly and miserable for an attacher. I don’t know if any amount of regulations can fix that.

The Telecom Act Turns 30

February 8 is the thirtieth anniversary of the Telecommunications Act of 1996. The legislation brought sweeping changes to the industry and was the impetus for me to start my consulting company in 1997. This blog includes some of my thoughts about the impact of the Act.

The Act was both overdue and premature. It was overdue because market forces had been creating pressure for rule changes since the divestiture of AT&T into the Baby Bell companies in 1984. The divestiture brought long-distance competition, but it was clear that the public wanted broader competition for voice service instead of only being bombarded by companies offering cheaper long-distance rates. The Act held out the possibility of real competition for voice services to the majority of the country.

In my opinion, the Act never unleashed the competition for telephone services envisioned by the authors of the bill. The Act did create a giant flurry of competitive activity as CLECs immediately sprang into life to compete for voice services. Unfortunately, most of these new competitors ether resold telephone company products or relied on using unbundled network elements from telephone company networks to cobble together telephone services. I had an office near the DC Beltway, and in 1999, I probably had a dozen competitors visit my office trying to sell me an integrated T1 that combined voice and data that completely relied on the telco network. As might have been expected, the big telcos quickly adapted to the new rules and were highly successful in complicating the process for anybody trying to compete with them.

I say the Act was clearly premature because it did not anticipate the explosion of residential broadband that began only a few years after the ink was dry on the new law. The public interest in the Internet quickly swamped any public interest in voice competition. The bundled T1 product being sold to businesses became quickly obsolete when DSL and cable modems brought faster broadband for a much lower price. The introduction of cheap broadband was a major factor in the collapse of the giant voice CLECs, which crashed and burned in the big tech collapse that peaked in 2001.

Because the Act did not anticipate broadband, the launch of DSL and cable modems was almost totally unregulated because Congress didn’t have an appetite for tackling the complexities of an update to the Act so soon after the 1996 Act. The giant broadband providers quickly solidified behind the concept of light-touch regulation to stave off any attempt to regulate the new broadband industry.

The Act didn’t address two issues that still plague the telecom industry today. The first is market concentration. The Act hoped to create an environment that fostered widespread facility-based voice competition. The advent of broadband made the whole industry forget about voice competition. It became quickly clear that the largest telcos and cable companies were going to snag the vast majority of broadband customers in the country. Competition between telcos and cable companies started on an even footing in 2000, but as cable company technology advanced faster than DSL technology, the cable companies became virtual monopoly broadband providers in their markets, and used that strength to force customers to buy bundles of broadband, cable TV, and telephone. Only after several decades are we finally seeing fiber overbuilders and FWA cellular broadband bringing true competition to cable company monopolies.

The Act also did nothing to tackle the second issue that has plagued the broadband industry since the beginning – the uneven and inequitable distribution of broadband technology. Rural areas fell behind urban broadband almost immediately. We still haven’t brought broadband to a lot of low-income MDUs in cities. While the FCC was tasked by the Act to make sure that rural markets had the same opportunities as urban markets, the agency has never done more than pay lip service to that obligation.

Perhaps one of the biggest failures of the 1996 Act is that it implicitly assumed that specific services are closely linked to specific infrastructure. This led to the bizarre situation where voice over copper remained regulated while VoIP over other technologies was not. Cable TV over coax stayed regulated, while streaming video over other technologies was not.

You’ll probably be seeing a bunch of articles that look at different consequences of the 1996 Act. In my mind, the Act was a success in that it shook up the heavily regulated and staid incumbent telephone companies. But the Act was also a failure since it allowed telephone companies to easily do end runs around the rules create by the Act. Ultimately, the Act fell far short of the intent the goals for those who wrote it.

Who Uses the Internet?

Pew Research Center released the results of a major survey that asked how Americans use the Internet, about smartphone ownership, and about the digital divide. There were over 5,000 completed surveys conducted in the first half of 2025.

Home Broadband

About 78% of respondents live in a home that has a broadband subscription. That’s an interesting statistic since there have been past FCC reports that say that as many as 88% of homes have broadband. I wrote a blog once about the difficulty of counting homes in the US. It’s not obvious how to account for second homes and abandoned homes, as we’ve seen in the FCC fabric. But Pew’s results are based on the number of people and not homes. Some of the differences between Pew and FCC data would include large groups of people like the unhoused and members of the military who don’t live in a home.

The Pew survey shows that there is still a big difference in broadband penetration related to household incomes. 94% of those in households with an annual household income over $100,000 have a broadband subscription, while only 54% of those with household incomes under $30,000 have broadband. This highlights the essence of the still prevalent digital divide. There was a lot of hope that the federal ACP plan that provided a $30 monthly subsidy would help millions of households afford broadband, but the ACP experiment ended not long after it started.

There is also a difference depending on where people live. The broadband subscription rate is 84% in suburbs, 75% in urban areas, and 71% in rural areas.

There is also a difference by age. 87% of those between 30 and 49 have broadband, while only 70% of those over 65 have a subscription. Surprisingly, only 71% of those between 18 and 29 have broadband, which is down from 78% from a survey released in 2023, but about the same as a survey from 2021. It’s hard to know if this represents a trend such as a migration to cellphones, or if this is a group that changes a lot based on factors like jobs and the economy.

For those that love statistics, Pew has a separate report that trends these results over time.

Smartphone Usage

According to the Pew Survey, 16% of adults are “smartphone dependent”. Meaning they rely on a smartphone for broadband access and don’t subscribe to home broadband. When added to those with a home broadband subscription, 94% of adults subscribe to some form of broadband.

Smartphone usage also varies by income, in relationships that are the opposite of home broadband subscriptions. 27% of those living in homes with incomes under $30,000 reach the Internet only through a smartphone, while only 4% of those with household incomes over $100,000 rely completely on a smartphone.

The same relationship to home broadband applies when looking at age. 27% of those between 18 and 29 only reach the Internet through a smartphone, while only 11% of those between 30 and 39 do so.

Pew notes that the percentage of those who rely on a smartphone only to reach the Internet has doubled from 8% in 2013.