Will Congress Fund Rural Broadband?

Members of Congress seem to be competing to sponsor bills that will fund rural broadband. There are so many competing bills that it’s getting hard to keep track of them all. Hopefully, some effort will be made to consolidate the bills together into one coherent broadband funding bill.

The latest bill is the Accessible, Affordable Internet for All Act, introduced in the House of Representatives. This is part of a plan to provide $1.5 trillion of infrastructure funding that would include $100 billion for rural broadband. $80 billion of the funding would be used to directly construct rural broadband. It’s worth looking at the details of this bill since it’s similar to some of the other ideas floating around Congress.

The bill focuses on affordability. In addition to building broadband it would:

• Require ISPs to offer an affordable service plan to every consumer
• Provide a $50 monthly discount on internet plans for low-income households and $75 for those on tribal lands.
• Gives a preference to networks that will offer open access to give more choice to consumers.
• Direct the FCC to collect data on broadband prices and to make that data widely available to other Federal agencies, researchers, and public interest groups
• Direct the Office of Internet Connectivity and Growth to conduct a biennial study to measure the extent to which cost remains a barrier to broadband adoption.
• Provide over $1 billion to establish two new grant programs: the State Digital Equity Capacity Program, an annual grant program for states to create and implement comprehensive digital equity plans to help close gaps in broadband adoption and digital skills, and the Digital Equity Competitive Grant Program which will promote digital inclusion projects undertaken by individual organizations and local communities
• Provide $5 billion for the rapid deployment of home internet service or mobile hotspots for students with a home Internet connection.

This bill also guarantees the right of local governments, public-private partnerships, and cooperatives to deliver broadband service – which would seemingly override the barriers in place today in 21 states that block municipal broadband and the remaining states that don’t allow electric cooperatives to be ISPs.

This and the other bills have some downsides. The biggest downside is the use of a reverse auction.  There are two big problems with reverse auctions that the FCC doesn’t seem to want to acknowledge. First, a reverse auction requires the FCC to predetermine the areas that are eligible for grants – and that means relying on their lousy data. Just this month I was working with three different rural counties where the FCC records show the entire county has good broadband because of over-reporting of speeds by a wireless ISP. In one county, a WISP claimed countywide availability of 300 Mbps broadband. In another county a WISP claimed countywide coverage of 100 Mbps symmetrical broadband coverage, when their closest transmitter was a county and several mountain ranges away. Until these kinds of mapping issues are fixed, any FCC auctions are going to leave out a lot of areas that should be eligible for grants. The people living in these areas should not suffer due to poor FCC data collection.

Second, there are not enough shovel ready projects ready to chase $80 billion in grant funding. If there is no decent ISP ready to build in a predetermined area, the funding is likely to revert to a satellite provider, like happened when Viasat was one of the largest winners in the CAF II reverse auction. The FCC also recently opened the door to allowing rural DSL into the upcoming RDOF grant – a likely giveaway to the big incumbent telcos.

This particular bill has a lot of focus on affordability, and I am a huge fan of getting broadband to everybody. But policymakers have to know that this comes at a cost. If a grant recipient is going to offer affordable prices and even lower prices for low-income households then the amount of grant funding for a given project has to be higher than what we saw with RDOF. There also has to be some kind of permanent funding in place if ISPs are to provide discounts of $50 to $75 for low-income households – that’s not sustainable out of an ISP revenue stream.

The idea of creating huge numbers of rural open-access networks is also an interesting one. The big problem with this concept is that there are many places in the country where there a few, or even no local ISPs. Is it an open-access network if only one, or even no ISPs show up to compete on a rural network?

Another problem with awarding this much money all at once is that there are not enough good construction companies to build this many broadband rural networks in a hurry. In today’s environment that kind of construction spending would superheat the market and would drive up the cost of construction labor by 30-50%. It would be just as hard to find good engineers and good construction managers in an overheated market – $80 billion is a lot of construction projects.

Don’t take my negative comments to mean I am against massive funding for rural broadband. But if we do it poorly a lot of the money might as well just be poured into a ditch. This much money used wisely could solve a giant portion of the rural broadband problem. But done poorly and many rural communities with poor broadband probably won’t get a solution. Congress has the right idea, but I hope that they don’t dictate how to disperse the money without talking first to rural industry experts, or this will be another federal program with huge amounts of wasted and poorly spent money.