Michael O’Rielly’s Vision of Broadband Expansion

FCC_New_LogoA whole lot of the telecom industry is anxiously watching the news to see if there will be a federal program to expand rural broadband. We’ve already had new FCC Chairman Pai come out in favor of closing the digital divide and bringing broadband to everyone. And there are those in Congress pushing for money to expand rural broadband.

Last week FCC member Michael O’Rielly entered the fray with a blog post about funding rural broadband expansion. There are things in that blog I heartily agree with, and others that I disagree with (as you might expect).

O’Rielly warns that the government should not shovel money at a rural solution in such a way as to drastically overspend to get a solution. I completely agree and I wrote a series of blogs last year (1, 2, 3, and 4) that make the same point. The government wasted a lot of money when handing out stimulus grants in the past and I’d hate to see them make the same mistakes again. There is a long list of things that were done poorly in that grant program, but a lot of this was because it was cobbled together quickly. Hopefully, if we give out new federal money to help deploy broadband we can take the time to get it right.

O’Rielly suggests that any rural broadband expansion program be handled through the Universal Service Fund. No matter which part of government tackles this there will be a need to staff up to implement a major broadband expansion program. But I agree it makes more sense to hand this to an existing program rather than to hand it to somebody like the NTIA again.

He stated one thing that has me scratching my head. He stated that he has heard of ‘countless’ examples of where stimulus middle-mile fiber routes hurt commercial providers. I have hundreds of clients, most of them commercial ISPs, and I have never once heard anyone complain about this. Many of my clients instead are enjoying lower-cost rural transport on the BTOP networks. These complaints have to be coming from AT&T and Verizon who don’t like lower-cost alternatives to their massively overpriced special access. Special access transport is one of the biggest killers of rural business plans.

It’s clear that O’Rielly has a bias towards having commercial solutions for broadband rather than government ones. I don’t know anybody that disagrees with that concept. But by now it’s pretty obvious that the big commercial ISPs are never going to invest in rural America and it’s disingenuous to keep pretending that if government funds rural broadband that it will somehow harm them. The big ISPs have been working hard to withdraw from rural America and the providers that are left – the independent telcos, cooperatives, and rural governments – are the ones we should trust to deploy the broadband we know is needed.

I take major exception to his contention that “ultra-fast residential service is a novelty and good for marketing, but the tiny percentage of people using it cannot drive our policy decisions.” This statement has two glaring omissions. First, there are many households that need fast speeds today for home-based businesses, education, and reasons beyond just watching videos or playing games. When 10% of homes in the US don’t have broadband those homes are excluded from participating in the benefits of the digital economy. It’s hard to put a dollar value on what that is costing our economy – but it’s huge.

But second – and more importantly – this ignores the inevitable increase in demand over time. US households have been doubling their need for speed and the amount of total download every three years since 1980 – and there is no sign that growth in demand is over. This means any network that is just adequate today is going to feel obsolete within a decade – and this also means you don’t make policy for today’s demands, but for demands that we already know will be here in another decade. This is why there has to continue to be a focus on fiber first. As much as O’Rielly might hate some of the worst practices of the stimulus grants, his FCC approved the disastrous giveaway of billions to the big telcos to expand rural DSL in the CAF II program. We can’t take that path again.

Finally, O’Rielly says that the government should not be picking broadband winners and losers. That sounds like a great political sentiment, but if the government is going to supply funding to promote rural broadband that money has to go to somebody – and by definition that is picking winners. But O’Rielly does temper this statement by saying that funding shouldn’t just go to the ‘well-connected’. I hope he really means that and gets behind a plan that doesn’t just hand federal broadband funding to AT&T, Verizon and CenturyLink.

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