Big Government and Broadband

Capitol_domeOne of the platforms of Hillary Clinton’s campaign is to create a 5-year $275 billion infrastructure plan that would, among other things, foster faster broadband for rural America. The plan would also pay for crumbling roads and bridges and other infrastructure. I’ve seen estimates that as a country we have a several trillion dollar infrastructure deficit, and so this plan would be the proverbial drop in the bucket towards bringing our infrastructure back to where it needs to be. But it’s a start and is better than doing nothing.

This plan leads me to speculate on the role that big government might be able to play in solving our broadband needs. What might the US government do with billions of dollars aimed at improving broadband?

We’ve seen two previous big federal broadband programs and the results have not been very good. First was the billions that were part of the broadband stimulus package. This money was used mostly to create middle mile fiber – that is fiber that stretches between communities. Some of that fiber has been used to get better broadband to the last mile, but the vast majority of that investment has not benefitted a whole lot of people other than the cellular companies who use that fiber to get cheaper access to cell towers.

The stimulus money also put a lot of emphasis on getting fiber to ‘anchor institutions’ which it defined as schools, libraries, city halls, and other government institutions. So we ended up with rural fiber networks that serve only a handful of these anchor institutions, but not to the neighborhoods surrounding these locations. As I’ve written many times, bringing fiber only to anchor institutions is actually a disincentive to get fiber everywhere because it removes these large bandwidth customers from being potential customers of locally built fiber networks.

To give the federal government a little credit, the stimulus money popped onto the scene with no notice and there was no plan in place or even people in place to review the various grant proposals. There were some last mile networks financed from the stimulus money and I’m sure those communities are thrilled to have been the lucky few that benefitted from the many billions in spending.

More recently we have seen the FCC throw billions of dollars at the large telcos with the CAF II funding. They have given Frontier, AT&T, and CenturyLink billions of dollars to improve rural DSL broadband to 10 Mbps. And gave them six years to get it done. This is such a bad idea on so many levels that you’ll have to go and read my other rants on this. But this is mostly the equivalent of pouring money onto the ground and it going to bring no real broadband to anybody. This is a classic case of a government boondoggle that spends a lot of money and accomplishes almost nothing useful.

So what might the feds do if they were to give out more billions? One thing they will probably do is to overspend on broadband like was done with the stimulus money. Those grants included rules that inflated the cost of building fiber. The companies taking the money had to do expensive environmental and historical studies, something that makes no sense for fiber that is placed into pre-existing road rights-of-ways. And they required the contractors building the networks to use prevailing wages, which mostly meant paying large city wages for projects that could have normally been done in rural areas for a lot less. Altogether these extra requirements probably added 15% – 20% to the cost of the projects.

What is scary is that in order to shovel the money out the door quickly the federal government might either give the money to the incumbents as corporate welfare or else end up backing projects like more middle mile that largely build fiber to nowhere.

The most cost effective way to use federal money would be to give it to local groups in some sort of matching arrangement. This would stretch the federal money the farthest and would also enable communities to find the best local broadband solution. Some communities might tackle this directly using bond money for the match, while many others would seek out public/private partnerships with local carriers. And the small telcos and coops around the country could use this money to extend their fiber networks – many of them have already showed us how to bring fiber to remote places.

I have no idea if there will even be another big pile of federal money aimed at broadband – it’s a long way from a campaign platform to reality. But if this does happen I hope that this time they have a better plan that would use the money to build last mile fiber to rural communities – the only permanent solution to closing the rural broadband gap. I hope they take the time to listen to the industry and this time that they do it right – or at least better.

7 thoughts on “Big Government and Broadband

  1. You are spot on in your criticism that simply throwing money at the issue of telecommunications infrastructure deficiencies is a poor approach. That’s why I propose in my recently published eBook “Service Unavailable: America’s Telecommunications Infrastructure Crisis” that a federally chartered National Telecommunications Infrastructure Agency undertake an initiative to construct fiber optic telecom infrastructure connecting every American home and business by 2020. It must be a crash program to make up time lost due to multiple missteps that have delayed this critical infrastructure such as poor management and oversight and inadequate funding.

    • It’s an interesting idea, but I would have to know who was going to actually operate the networks and businesses before I could support that plan. The idea of a national agency helping to get fiber built doesn’t sound too bad if done well. But the idea of the feds having anything to do with actually managing the broadband businesses sounds like an absolutely nightmare.

      My other reservation comes with an observation I’ve made over the years that the bigger the government entity building something, the more the cost overruns. I fear that a federal fiber plan would waste a lot of money while local initiatives with some federal funding support are more likely to build things right. Of course, the key is doing it right. One of the problems with the stimulus broadband was that companies were created just to take advantage of that money – and many of them have not turned out to be good operators.

      But at the end of the day, more federal money could bring a whole lot more broadband. Too bad the FCC so badly screwed up with the CAF money.

      • From Chapter 3 of “Service Unavailable”:

        • The NTIA would conduct separate regional bidding processes for network contractors to provide network electronics, network operations center, maintenance, and repairs.
        • Contracts would be awarded on 10-year renewable terms to operate network as open-access infrastructure.
        • Contractors would guarantee to meet specified connectivity and quality-of-service standards over the life of the contracts.
        • Contracts would be subject to cancellation and rebidding by NTIA for breach and for poor customer service with 90-day notice to remedy deficiencies, working in coordination with state public utilities commissions.
        • Contracted network operators would be required to operate the network as open-access infrastructure and would be subject to Title II requirements such as those prohibiting redlining and discrimination against geographical areas as well as slowing or blocking legal content or paid prioritization per the FCC’s Protecting and Promoting the Open Internet order and rulemaking of 2015.

  2. Completely agree: re-Stimulus $ were very disappointing. CAFII appears to have little oversight. Doubt much will become of it. Love the idea of matching grants to local communities. 3 Things to remember:
    1. No one size fits all
    2. All solutions are local
    3. it does NOT cost millions to bring broadband to even the most remote community.

    • You are absolutely right that not one size fits all. I have done several hundred fiber business plans and I have yet to see two markets that are the same. Local conditions always affect what can be done in a given community. Things like demographics, density, geography, presence or absence of potential partners, the conditions of the poles, the local issues with burying fiber, availability of a fiber backbone and a host of other factors always results in a different solution. Even after doing so many studies I still sometimes am surprised by the answers I get. And of course, the availability of funding is key, something that a big national plan could help to fix.

  3. Great forum!!! Thanks!!! Can you direct me to a description of a successful example of fiber reaching “rural” areas with bandwidth increases that would meet the needs of todays rural household internet access??

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