Now or Never for Big Broadband Funding. There is a huge tug-of-war going on right now behind the scenes for how the new administration ought to meet its goal to spend a trillion dollars on infrastructure. Nowhere is this battle more apparent than with broadband. On the one hand there are bills being proposed in Congress that would hand out broadband grants in much the same manner as was done during the stimulus a few years back. On the other extreme is the idea that this spending should be done only through public / private partnerships, and thus infrastructure spending will be prodded through tax incentives and perhaps even a National Infrastructure Bank.
The direct grant approach could promote the construction of a lot of new fiber by small carriers and communities. As I’ve written before, tax incentives are not likely to promote much investment in rural fiber. And private money is still going to want to chase only those projects with demonstrated low risks – and rural fiber does not meet that requirement. It will probably be clear by the end of the first quarter which of these approaches we might actually see, but my money is on the tax incentive path.
Rural Copper Will Come Tumbling Down. Verizon and AT&T are going to leap on the opportunity of a weakened FCC and will be tearing down rural copper as fast as they can. There has been a leak from inside AT&T that discussed reducing staff by tens of thousands in the coming year and that is only going to be possible by eliminating swaths of copper networks. Both companies will offer much more expensive wireless options to replace the copper. This will open up opportunities for those able to compete in the areas losing copper.
Big Carriers Will Get More Aggressive. The talk at the federal level is all about reducing regulation. In real life that is going to translate into the big telcos and cable companies being emboldened to use their resource advantages to try to squash competition. This could mean price wars with small fiber-overbuilders or a slew of new laws being passed to make it hard or impossible for municipalities and other fiber start-ups to compete with them.
Broadband Price Increases Begin. While the FCC has promised that Title II regulation was not going to be used to regulate prices, the big ISPs saw the FCC looking hard at practices like data caps and zero-rating. As Title II regulation is reversed, or the FCC weakened, I think we will see the big ISPs feeling free to start raising data rates in the same manner they used to raise cable TV rates. Some of this will be direct rate increases, but you can expect to see indirect revenues coming from ancillary fees that look like they might be taxes or from data overage plans for data caps. This may open upm the possibility for data rate increases for small carriers.
No Assurance of Future Subsidies. Subsidies for telephone companies have been drastically pared over the last decade. But there is still significant funding from access charges, the Universal Service Fund and other forms of subsidy that I think are now at risk. I expect a major reexamination of the whole concept of Universal Service and that could mean anything from a total re-write on how the funds are spent or even the elimination of USF, something a number of members of Congress have always supported. If you rely on subsidies, this is the year to create a plan for living without them.
Speed, Speed, Speed. Customer demand for speed and total utilized bandwidth is still growing at a torrential pace and is not likely to slow down. Carriers should have plans for eliminating bottlenecks in your network to make sure you can deliver what customers want. And you should be considering across-the-board speed increases if your current data product speeds are below market expectations.