Regulation - What is it Good For?

Should Grant-funded Networks be Open-Access?

There was an interesting political effort in the Washington legislature recently to expand the use of open-access networks. There was language included in the Substitute House Bill 1147 that would require that any network funded from BEAD grants must become open-access and available to other ISPs.

Open-access has been a topic in Washington for many years. There was a long-time prohibition against Public Utility Districts (PUDs) from offering retail broadband. These county-wide government-owned utilities wanted to bring better broadband and settled by building open-access networks. Over the last few decades, a number of PUDs have launched open-access fiber networks, some of them with tens of thousands of fiber customers.

For those not familiar with open-access, it is a network where multiple ISPs can buy access to reach customers. This provides customers with the choice of using multiple ISP on the same network. All reports are that customers like the extra choices they get. Every broadband survey my firm has ever conducted has shown a huge public preference preference for choice.

The legislature finally relaxed the prohibition for PUDs last year, but in a bizarre fashion. The legislature passed two conflicting bills that allow PUDs to provide retail broadband services. Rather than choose between the two bills, the Governor signed both simultaneously (a pen in each hand) so that both bills went into effect. As might be imagined, this created as much confusion as clarity over the issue.

I doubt that anybody will be surprised that the biggest ISPs in the state vehemently opposed this legislation. The big cable companies have always immediately fought any suggestion that they allow other ISPs to use their networks. The big telcos were forced to sell unbundled copper loops starting with the Telecommunications Act of  1996, but that requirement continues to wane as the amount of copper keeps shrinking. The telcos started fighting against the unbundling rules as it was enacted, and over the years succeeded in greatly weakening the ability of outsiders to use their copper.

I don’t think anybody will be surprised to find out that the big ISPs in Washington succeeded in killing this idea. The big ISPs threatened to not pursue any grant funding if this proposal becomes law. Some even made veiled threats to stop investing in the state if this became law.

But it’s an interesting concept. The BEAD grant rules have a clear preference for open-access networks, and any carrier promising an open network will get extra points on a grant application. But the open-access preference is only a suggestion and not a requirement – something the big ISPs in Washington all pointed out.

Requiring open-access is not a far-fetched idea because open-access is required on all of the middle-mile networks that were announced this week as recipients of NTIA grants. But the whole point of the NTIA middle-mile networks is to build networks to places where backbone connections are unavailable or unaffordable. Requiring the grant recipient to sell affordable connections to everybody is a good use of federal grant dollars.

But this raises a much larger question. I know there are a lot of open-access proponents in the country who think that any network funded with government dollars ought to be made open-access to provide the most value to the taxpayers who are funding it. That is exactly what was suggested in Washington, but it didn’t take very long for the big ISPs to kill the idea.

Many industry folks want to take this idea even further. I don’t think I’ve seen a thread on this topic that doesn’t include somebody who thinks government should own all grant-funded fiber infrastructure, which should then be made available to all ISPs that want to use it. Obviously the BEAD grant rules weren’t written that way, and with the sway that big ISPs hold in D.C. it probably never will happen. But is something that Congress could do if they ever have the will to enact it. We’re starting to see cities who are adopting this idea, so we’re going to keep seeing new open-access networks coming to life. I have to think that the citizens in every city close to an open-access network is going to be asking why they can’t have the same thing.

3 replies on “Should Grant-funded Networks be Open-Access?”

Yes. I’ve been saying this for years. When you subsidize something, you get more of it. Using tax dollars to subsidize monopolies just makes bigger monopolies and a more expensive product for consumers.

Absolutely. I run an small ISP. What I see is that the government tends to fund a first-come first-serve model that is most quickly accessed by big money (ie, staff that writes grant proposals and lobbies). It’s anti-competative.

I would prefer the individual subsidy model. If you can serve a customer in a grant targetted area, you can get a subsidy so long as they are a customer.

Business has risk. The big providers are in a position that the government has removed almost all risk for them. Risk of expanding into a new area is absolved because they are all but guaranteed to be the monopoly.

I think it’s an interesting paradox many people face. Most people can be readily convinced that public dollars should fund things that serve the public, so open access networks should seem an ‘easy win’ for the populace. However, many of those same people (myself included) don’t think that government is very good and these things so worry that these networks will be bloated and expensive and likely unreliable. Even when these networks are private networks with some government enforced rules requiring open access, those rules are often poorly written so the loop holes are aplenty. I’m not offering a solution as I’ve yet to find a way that the public+privaty beaurocracy can be finagled into compliance with the best interests of the public.

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