Interest Rates and BEAD

I’ve recently been working with ISPs who are getting worried about what high interest rates might mean for the upcoming BEAD grants. Interest rates keep creeping upward to levels we haven’t seen in decades. Just last week, I saw that home mortgages are now at 8% – and infrastructure loans are only a little less expensive.

For any ISP that was going to borrow most of the BEAD matching funds, the increase in interest rates can be devastating. When BEAD was first announced in 2021, I had clients getting infrastructure loans at 4% or less. There are banks now talking 6% to 7%, with a good possibility that the rates will be even higher next year when it’s finally time to make the final go/no go decision to participate in BEAD.

Except for some exceptions for high-cost areas, most BEAD grants will be capped at 75% of the cost of the infrastructure. However, the NTIA has given instructions to states to stretch BEAD dollars by rewarding applicants who will accept less than a 75% grant. This means that many BEAD applicants will be borrowing to cover more than 25% of the cost of the infrastructure.

BEAD applicants also have to finance other costs that are not covered by the BEAD grants. BEAD grants only pay for broadband-related infrastructure. The grants don’t pay for vehicles, computers, furniture, and any other similar assets. BEAD also doesn’t cover expenses, and a BEAD applicant must cover the labor and other start-up costs for launching a new market. These expenses must be supported by the ISP until revenues grow to cover operational expenses.

It’s hard to stress the importance of interest rates on the viability of a rural business plan. The areas where BEAD will be built are rural, by definition, and will not generate a lot of monthly cash, even when completed and mature. Many of the business plans I’ve reviewed barely cash flow with a 75% grant and the interest rates we saw in 2021. In many business plans, interest expense is one of the major expenses in the early years of the roll-out.

There is another BEAD issue that is also dependent on the interest rate. The guaranteed letter of credit will be more expensive as interest rates increase. For ISPs that will borrow the matching funds, the base loan and letter of credit are a double whammy.

ISPs have a tough choice to make. It seems likely that interest rates will not stay at the high levels we see today. Interest rates may still rise as the Federal Reserve continues the fight against inflation. But historically, high interest rates have always returned to lower levels eventually. It doesn’t seem likely that interest rates are going to drop as low as what we’ve seen in the last decade, since for much of that period the interbank lending rate was near zero.

The hard question for an ISP who is borrowing at high rates is if and when interest rates will drop and if they will be able to refinance BEAD loans. I’ve lived through periods in the past where borrowers faced this same dilemma. Borrowers need to be prognosticators and make some guesses about the future of interest rates. If an ISP believes that rates won’t drop enough to ever be affordable, it’s time to pass on taking grant funding. But if future refinancing seems likely, a borrower has to guess when rates may drop and become affordable.

Interest rates are another of the many BEAD issues that are going to force some ISPs to think twice about taking the grants. Higher interest rates don’t directly affect ISPs that are planning on using equity, but even that’s not entirely true since equity investors consider market financial conditions as part of deciding where to invest.

There couldn’t have been a worse time for the still-increasing interest rates for anybody considering BEAD. The hardest question to answer is what the interest rates might look like in 2025 and 2026 when most of the money will be drawn to pay for construction. If rates start to return to sane levels by then, then the situation will not be as dire as discussed above. But who has the crystal ball that will predict interest rates over the next three years?

The Three Broadband Gaps

One of the three traditional legs of the digital divide is broadband availability. I think there are three distinct broadband gaps that together define the broadband availability gap – the rural broadband gap, the urban affordability gap, and what I call the competition gap.

Everybody knows about the rural broadband gap. I don’t need to say a lot about this because the whole industry is currently fixated on solving the lack of rural broadband through the various major grant programs.

There is also an urban affordability gap where large numbers of homes and entire neighborhoods in cities don’t have a good broadband option that people can afford. While there has been increasing attention to this problem, we are a long way from addressing the issue. There has been a lot of recent attention about the possible demise of the Affordable Connectivity Program (ACP), which gives discounts that are supposed to help solve this gap. But even if the ACP continues, it’s just a band-aid that cannot solve the urban affordability gap – prices from cable companies and other ISPs have grown out of reach of too many households, even with a subsidy.

Nobody is talking about what I call the competition gap. Most places in the U.S. have only one ISP that can deliver fast broadband of speeds greater than 100/20 Mbps. Why does this matter? It is becoming clear that the majority of people and businesses nationwide want relatively fast broadband. OpenVault reported that in June 2023, only 11% of broadband users in the country are subscribing to broadband products with speeds under 100 Mbps. Only 27% are subscribing to broadband products with speeds under 200 Mbps. Almost 32% of homes nationwide are now subscribed to gigabit broadband. This represents a huge shift, and as recently as June 2021, 20% of broadband users were buying speeds under 100 Mbps, and 68% of homes were buying speeds under 200 Mbps. In June 2021, less than 11% of homes were buying gigabit broadband.

It’s clear that residential customers are willing to buy products with faster speeds. There will be a few ISPs who respond to this blog with the observation that the quality of broadband connection matters more than speed – but that is clearly not what the public thinks. An ever-increasing number of residential customers are willing to pay a premium price to get faster broadband.

The only widespread gigabit broadband technologies available are hybrid fiber-coaxial networks operated by cable companies or fiber. There are a few other fast broadband technologies like the fiber-to-the-curb technology that Verizon operates as 5G Home Plus. There are other technologies that are faster than 100/20 Mbps but which don’t deliver the gigabit speeds that people want. The relatively new FWA cellular broadband is capable today of delivering speeds of between 100 and 300 Mbps within a mile or so from a cellular tower. Some WISPs are upgrading to newer radios that can deliver speeds far in excess of 100/20 Mbps, although most WISP networks still use older technology.

The bottom line is that in most of the country, the only place with real broadband competition is where an ISP with fast technology overbuilt a cable company. There is a lot of fiber construction underway, and the number of neighborhoods with two choices of fast broadband is growing. But it’s still not unusual to find entire counties where nobody has a choice of two fast ISPs. The majority of people in the country still have little or no real competition.

Many ISPs will dispute the lack of choice and say that most folks have multiple choices of ISPs. This is backed up by the FCC broadband maps. If you look at most homes and businesses in the FCC maps, there are multiple ISPs claiming to be able to serve almost every address. I’m sure that the FCC will issue a new broadband report to Congress one of these days, bragging about how great the broadband choice is across the country. The FCC maps show that I have a choice of ten ISPs at my home. But the options available to me are mostly not viable. Most of my choices are DSL, satellite broadband, and cellular broadband – and from that list, only Viasat claims 100 Mbps download speed.

There are real consequences of having only one fast ISP in a city or a neighborhood. When there is only one fast ISP, that company holds a virtual monopoly. There are clearly documented consequences of being served by ISPs that have a virtual monopoly. We know that monopoly providers tend to have higher prices, less than stellar customer service, and technology that is not as up-to-date as competitive neighborhoods.

I know that the competition gap is real since my consulting firm conducts a lot of broadband surveys. In every survey we’ve done for many years, at least half of respondents say they want increased competition – which for most people means a choice of a second fast ISP. Far too many households and businesses lament that they only have one practical choice of broadband.

I hear from communities every day that are served by a cable company but want faster broadband. Regardless of what the FCC says or ISPs claim, folks are unhappy to live in communities with no broadband choice. The competition gap is real and is going to become more apparent over time as county seats see the rural areas around them getting fiber while they are stuck with an older coaxial network.

Google Moonshot Delivering Wireless Backhaul

You may recall a number of years ago when Google experimented with delivering broadband from balloons in an effort labeled Project Loon. The project was eventually dropped, but a remnant of the project has now resurfaced as Taara – broadband delivered terrestrially by lasers.

Project Loon functioned by beaming broadband from dirigible to receivers on the ground, and Taara sprung out of the idea of using those same lasers for terrestrial broadband. Taara claims to be able to beam as much as 20 gigabits for 20 kilometers (12 miles). While that is impressive, the important claim is that the hardware is affordable and easy to install and align.

The Taara effort came out of the effort by Google founders Larry Page and Sergey Brin to form a division to work on moonshots – ideas that are futuristic sounding, but that could someday make the world a radically better place. This resulted in the creation of X, the parent of Taara, which is the laboratory in charge of the moonshot ideas.

Taara sees this technology as a way to increase broadband access in areas with little or no broadband access. This is also envisioned as a technology that can provide better backhaul to cell towers and ISP hub sites. The most promising use of the technology is to bring a high-speed connection to the many small villages around the world that aren’t connected to broadband.

The X website includes several case studies of the technology. In the Congo, the radios were used to beam broadband across the Congo River to make a connection between Brazzaville and Kinshasa. This was a 4.8 kilometer radio hop that is far less expensive than building a fiber route by road of almost 400 kilometers. Within the first 20 days after the connection, the backhaul connection through Taara carried almost 700 terabytes of data.

Taara has already been deployed in thirteen countries, and Taara is working with major players to quickly expand the use of the technology. This includes deals with the Econet Group and its subsidiary Liquid Telecom in Africa, the ISP Bluetown in India, and Digicel in the Pacific Islands. Taara is also now working with Bharti Airtel, one of the largest telecom providers in India to ramp up distribution. India has hundreds of thousands of small villages that could be candidates for the technology.

In Africa, the roll-out of the technology started in Kenya, working with Liquid Telecom and the Econet Group. The radios are perceived as the best way to build backhaul in places where it is challenging or dangerous to build fiber networks, such as across rivers, across national parks, or in post-conflict zones.

There are still 2 billion people on the planet who are not connected to the Internet, and in most cases, one of the primary impediments to expanding Internet services is the lack of affordable and reliable backhaul. The Taara lasers seem like a solution to bring broadband to a huge number of places that have lacked connectivity.

Fairness in Broadband Prices

I recently read a report about broadband prices in California from the Public’s Advocate’s Office (Cal Advocates), that is part of the California Public Utilities Commission. Cal Advocates has a mandate to look at regulatory issues from the viewpoint of the public. Cal Advocates conducted a similar rate study in 2019.

The study found that households paying the highest prices for broadband are those who are buying the slowest speeds. While that might sound counterintuitive, it appears that some ISPs in California are soaking customers who live outside of the reach of big landline ISPs.

The study found that prices for bottom-tier broadband have increased dramatically since 2019. Particularly hard hit are speed tiers of 10-25 Mbps, 25-50 Mbps, and 50-100 Mbps. The study notes that in the past, these tiers were the least expensive due to low rates for DSL. The study notes that since the pandemic, there are a lot of expensive broadband alternatives introduced in the slower speed tiers.

I’ve seen the same trend nationwide. Homes without a lot of broadband options were forced to buy expensive broadband during the pandemic from fixed wireless ISPs, cellular hot spots, and satellite providers.

The report cites some examples. In comparing the range of prices for 25/3 Mbps broadband, the study found the following: Race Communications has the lowest monthly price at $25-$35. The big telcos have DSL prices between $45-$55. Customers living outside metropolitan areas pay a lot more. Small telco prices ranged from $72.50 for TDS to $150 for Ponderosa. Customers using other fixed wireless and satellite technologies are seeing prices between $70 and $229 per month.

I’ve seen this same phenomenon around the country. High-orbit satellite and cellular hot spot broadband can get extremely expensive due to the tiny monthly data caps. I interviewed families during the pandemic who were seeing monthly bills over $500 to support working from home or schoolwork.

The study also found that some ISPs offer a range of speeds but don’t deliver the faster speeds. The study specifically cites the DSL pricing of AT&T which is $55 regardless of the speed. AT&T will sell customers a DSL broadband product that barely works.

The study also found that some of the biggest carriers, like AT&T instantly raised prices in reaction to the launch of the $30 monthly ACP subsidy. AT&T had a low-income product priced at $20 before the pandemic, which appears to have been set to provide free broadband to households using the FCC’s Lifeline discount. AT&T and other carriers raised the price for the low-income product to $30 to collect the full amount of subsidy from the ACP.

The report also cites a statewide survey that showed that a majority of low-income households don’t know that they are eligible for a broadband subsidy discount. Also, only 24% of homes that know they can get a discount have enrolled in a low-income program.

I see similar pricing issues around the country. It’s going to be interesting to see what happens with prices for in BEAD grant areas. State broadband offices are walking a tightrope when it comes to rates since the IIJA law said that states are not allowed to dictate rates for BEAD grant recipients. Some of the early state plans clearly mandate specific rates and also ask ISPs to guarantee rates for five to ten years.

Another Challenge to FCC Authority

There is a new legal challenge that could alter the way that the FCC and other federal agencies regulate industries. The issue was highlighted in an article by John Eggerton in Multichannel News.

The Supreme Court has agreed to hear the case of Relentless Inc. et al v. Department of Commerce, et al. The specifics of the case are about the ability of the National Oceanic and Atmospheric Administration (NOAA) to regulate fishing. Specifically, fishermen have to pay for the cost of having NOA monitor their herring catches. There is a lot of speculation that the Court is open to weakening the ability of regulatory agencies to make new regulations.

This may sound like is not relevant to the FCC, but the case could impact all federal agencies that enact regulations that have not been specified by Congress. Agencies feel empowered to make regulatory rulings based on the Chevron doctrine. This doctrine comes from a strong ruling by the Supreme Court in 1984 in the case of Chevron U.S.A., Inc. v. Natural Resources Council, Inc. The lawsuit involved a challenge from Chevron that challenged the ability of the government to create and enact environmental rules that were not specifically ordered by Congress. Chevron also comes into play whenever there are conflicting laws from Congress – agencies get to interpret any conflicts.

Chevron is considered a landmark case where the Supreme Court gave substantial deference to the ability of government agencies to enact regulations. The Supreme Court ruling looked specifically at cases where agencies enact regulations that were not specified by Congress. The Court, in Chevron, looked instead at the intent of Congress when it gave agencies the power to enact regulations. A simplified explanation of Chevron is that the Court ruled that regulators are allowed to regulate as long as agencies stay within the overall framework of responsibilities given to them by Congress when the agency was created.

The Chevron doctrine has already been used by the Supreme Court related to the FCC in the 2005 case of NCTA v. Brand X Internet Services. The Court relied on the Chevron doctrine in ruling that the FCC had the authority to classify broadband as an information service that is not subject to common carrier regulation. This same ruling was used as subsequent FCCs reimposed Title II regulation and then reverse that decision a second time.

The issue is certainly going to arise again if FCC Chairwoman Jessica Rosenworcel goes through with her recently announced intention to reclassify broadband as a telecommunications service. The reason that Chevron was needed in the 2004 Brand X case is that Congress has been moot on the topic of regulating broadband. The last major related ruling from Congress was the Telecommunications Act of 1996, which preceded the explosion of the Internet. While there have been attempted bills introduced in Congress over the years to formally regulate broadband, Congress has apparently never had the necessary votes to enact broadband regulation.

Overturning Chevron would result in regulatory chaos since every regulatory agency makes rules that are not specifically spelled out by Congress. This would mean lawsuits challenging both new rulings by regulatory agencies but also older decisions. This also will likely results in the confusion that will come when courts issue conflicting opinions on the same topic.

Ending Chevron would mean that regulatory agencies will lose more court fights concerning new regulations, making it harder to create or modify regulations. Chaos will also abound since challenges to new regulations will result in a long delay as regulations are argued in court. This could mean a lot more delays, and for a longer time, for any new regulations not specifically required by Congress. Of course, Congress could avoid all of this by enacting explicit laws for regulations it cares about – but I don’t think anybody expects that.

The FCC Plan for Better Rural Cellular Coverage

The FCC recently released a Notice of Proposed Rulemaking (NPRM) that restarts an initiative to improve rural cellular coverage. The proposed FCC funding is for $9 billion to create a 5G Fund to subsidize the construction of rural 5G cell sites. These funds would be paid out over multiple years from the Universal Service Fund.

I’ve been working around the country with rural counties, and the lack of cellular coverage is often on par as a local issue with the lack of broadband. Huge numbers of people don’t have cell coverage at their homes and don’t have the outdoor cell coverage that everybody else takes for granted.

The FCC first proposed this in 2020, but the initiative came to a sudden halt when it became obvious that the large cellular carriers had provided maps that substantially overstated where they have coverage. It might seem counterintuitive for the big cellular carriers to overstate coverage for a program that wants to pay to build cell towers, but smaller cellular carriers said the purpose of the overstatements was to lock them out of the FCC funding. The FCC largely agreed and killed plans for the program until it got better maps.

Cellular carriers must now participate in the twice-annual broadband mapping that is required for ISPs. The FCC must believe that the maps are now better.

The NPRM starts by asking if the original concept of using a reverse auction to award the funding is the best approach. This is a case where a reverse auction might make a lot of sense. A cellular carrier that asks for the least amount of funding for a given rural tower location would get the funding. I assume that most winners are going to welcome other wireless carriers to use the towers, so it might not be that important who wins each location.

The bidding is going to be more complicated than a simple subsidy per location. The FCC is asking if it should consider factors like the miles of roads and the number of homes and businesses around each proposed site. The FCC is also asking how they might aggregate bids for multiple cell sites in a region rather than having bids required for each cell site.

The NPRM also asks about several technical issues, such as if the 5G Fund should favor the deployment of open radio access network (O-RAN) technology.

The FCC is also asking if the availability of landline broadband should be considered. This makes a lot of sense because of the huge amount of money being spent on BEAD and other broadband grants that will mean a proliferation of rural fiber that can provide backhaul to newly constructed towers. This fund should not be used to construct fiber if it’s already built or is soon coming.

It will be interesting to see if the FCC opens the 5G Fund to local governments and not just to companies in the cellular or tower industries. I know several counties that have built towers hoping to expand broadband and cellular coverage, and there are many other county governments that see the lack of towers as vital to their economic success.

There is a tool that might help rural areas qualify for the funding. The FCC is gathering cellular speed tests to document where coverage is poor. The speed tests can only be done using the FCC’s speed test app. Unfortunately, this app requires a lot of speed tests in a given neighborhood before the FCC will even consider the results. Local governments should or motivated individuals should consider undertaking an effort to collect many speed tests with the app in the areas with the worst coverage.

Is Broadband Essential?

There is an easy way to simplify the upcoming battle between the FCC and big ISPs over Title II regulation and net neutrality. The public expects government to regulate industries that are essential. That’s the reason we regulate electric companies and drinking water quality. It’s the reason we regulate meat and drug safety. Governments also eventually regulate companies or industries that gain monopoly power since monopolies inevitably engage in practices that harm the public or unfairly compete in the marketplace to drive out competition. Monopolies that deliver essential services should get the most regulatory scrutiny.

Now that the FCC has formally started the process of placing some regulations on ISPs, we’re going to hear a lot of reasons from big ISPs why they don’t need to be regulated. They are going to march out testimonials telling us what wonderful corporate citizens they are. Big ISPs will tell us how the prices they charge us are fair and are even getting less expensive over time. They will attack the regulators and say that attempts to regulate them are only for political reasons. They will publicize opinions by industry experts who will say that regulation isn’t needed (with many of the experts on the big ISP payroll). They will swear that they don’t do anything that requires regulation. They will cry wolf and say that regulation will drive up prices. And they will deflect any conversation about regulation using red herrings to make the discussion about something else. I’ve already seen all of these tactics in just the last few weeks.

Big ISPs will do everything possible to avoid having an open discussion about why big ISPs should be regulated. If explained in the simplest terms, almost everybody would agree that big ISPs should be regulated since they deliver essential services and have monopoly power.

The monopoly power of the big ISPs is easy to prove. The four biggest ISPs – Comcast, Charter, AT&T, and Verizon serve nearly 75% of all broadband customers in the country. All four also sell cellular broadband and collectively control the large majority of that market as well. Any industry where four companies control the large majority of the market is clearly under the sway of monopoly power.

It’s not hard to make an argument that broadband is essential and growing more so each year. Most people would agree that agriculture, water, housing, energy, healthcare, and banking are the most essential industries for daily life. In the short 25-year history of broadband, it has grown to join this list.

Like banking, broadband is now an industry that supports every other industry. While many of us still know a few small businesses that don’t use broadband, even those businesses benefit from the broadband that is essential to the logistics for the raw materials and products that support them.

But broadband is not only essential to other industries; it is essential in the daily lives of people. A recent U.S. News and World Report survey showed that 85% of Americans now go online every day. A lot of us have jobs that wouldn’t exist without broadband. Broadband is essential for education. The broadband industry is at the heart of how we communicate with each other. I could easily write multiple blogs to list the ways that people have become reliant on broadband – and that long list would clearly demonstrates that broadband has become essential.

A society that doesn’t regulate essential industries is at risk of falling prey to companies that abuse consumers who must buy the services. The danger to the public only gets worse when the companies that control essential services are also monopolies. All of the other essential industries I’ve listed above are regulated, and not just in the U.S., but in all of other industrialized nations.

Big ISPs can’t make the argument that they don’t harm the public. Broadband prices have already grown out of the reach of many families, and the affordability gap is climbing. Big ISPs dissemble and claim that their prices have grown slower than inflation, but that is demonstrably not so. In 2005, the price of cable broadband and DSL from the biggest ISPs was around $40 per month. Price increases to keep up with inflation would have that price today around $63. The two big cable companies now have prices for basic broadband between $85 and $100.

So tune out the non-stop red herrings and misdirection you are going to see from the big ISPs for the rest of this winter. They have been extremely successful in shedding regulation, and they will now fight tooth and nail to keep regulation at bay. Don’t buy their many arguments about why regulation isn’t necessary. The big ISPs deliver an essential commodity and have monopoly powers – it would be a travesty not to regulate them.

Starlink Promising Satellite Cellular Service

Starlink recently launched a new webpage that advertises the future ability to deliver text, voice, and data to 4G cell phones via satellite.

The texting service is supposed to be available in 2024 with voice and data coming in 2025. The service will require a user to have a view of the open sky. I would also guess that a user will have to be stationary and not in a moving vehicle. The service is likely going to be aimed at people who spend a lot of time outdoors, in places out of reach of cell towers. There is no talk yet about price, but this seems like a premium service and will probably be priced accordingly.

T-Mobile’s service will be able to connect through any of its many satellites, and reports have said that speeds will be relatively slow, at perhaps only a few Mbps.

Starlink says that users of the service will be able to connect to users in cellular networks that participate in the program. The initial list of network partners includes T-Mobile in the U.S., Rogers in Canada, Optus in Australia, One NZ in New Zealand, Kodi in Japan, and SALT in Switzerland.

There is already an early version of satellite texting. Apple provides texting to 911 through a satellite connection to those using an Apple 14  or newer iPhone. The text connection to 911 is slow and takes about 15 seconds to complete a transaction. The service allows very limited follow-up texts between public safety and the person initiating the 911 call. Apple is providing this service for free today but will eventually likely charge for using it.

AT&T claims to have made the first broadband connection with an unmodified cell phone and a satellite in September. The company used AT&T’s 5G spectrum and a Samsung Galaxy S22 to connect a caller from a dead cellular zone in Maui, Hawaii to one in Madrid, Spain. This test was done in conjunction with AST SpaceMobile. The first test achieved a download speed to the phone in Maui of 10 Mbps, but AST has subsequently been able to boost the speed to 14 Mbps. AST plans to launch five BlueBird satellites in the first quarter of 2024 to support the cellular satellite effort.

It’s unlikely that any of these services are going to be competing with mainstream cell phone connectivity. The speeds will be slower, and the satellite constellations will not be equipped to process the amount of data associated with normal cellphone service. There is no need to pay extra to use a satellite connection for anybody in reach of a cell tower or a WiFi connection.

I’m not sure if most people appreciate how much of the land mass of the U.S. has little or no cell service. Practically every county I’ve worked in has large dead cellular zones. Providing even rudimentary cell coverage in remote areas is a valuable new service for the many people who work in remote places. I can picture that farmers, park rangers, and anybody who spends a lot of time in unconnected areas will want this service as soon as it is available. I envision the satellite companies and cellular companies generating good revenue while filling this needed market niche.

New Privacy Law in California

The State of California often leads the country in addressing regulatory issues. This makes sense since the State has a population of nearly 40 million and an economy that would be the fifth largest in the world if California were a separate country.

There was a new law enacted on the last day of the California Legislature was signed by Governor Gavin Newson this month. The bill makes it easier for people who want to scrub information about themselves from the Internet. The State passed privacy legislation in 2018 that gives people the right to ask companies to remove personal information from the Internet or databases. However, it turns out that the process of extracting one’s identity from the Internet is a lot of work, and in many cases is nearly impossible.

One of the main problems is that there is now a huge industry of companies that make a living selling and reselling personal data. One of the provisions of the California privacy law in 2018 was that data brokers had to register with the State if they sell information on California citizens. Over 500 companies are now registered as data brokers on the California Attorney General’s website. Some are well-known companies like credit bureaus, but most are companies that the public has never heard of. Many data brokers are specialists who work for marketing companies, politicians, large corporations, or law enforcement.

The new law is Senate Bill 362 – Data Broker Registration: Accessible Deletion Mechanism, and was sponsored by Senator Josh Becker of Menlo Park. The purpose of the law is to make it easier for folks to decouple from the Internet. The new law would allow consumers to make a single request to be removed from the Internet and databases – a web version of the Do Not Call List for telephone calling. Data brokers would have to respond quickly to such a request and would have to recheck their databases every month to make sure that personal information isn’t reposted.

Privacy advocates are calling this a landmark law that gives rights to the public to take control of their own data and to stop other companies from monetizing data about them.

Of course, the data brokers had a long list of reasons why the law shouldn’t be enacted. They say that this would slow down the process of people being verified when they go to a new website. They claim this would starve non-profits by cutting them off from databases of likely donors. They claim that it would make it harder for law enforcement to investigate people. They warn that people who ask to be removed from the lists won’t like the consequences.

Obviously, the legislators thought differently. In the discussions leading to the passage of the bill, there were discussions about how companies can now buy tracking data from our cellphones to keep track of where we are, what we do, and where we shop. They say that the databases allow people to stalk others, including the possibility that folks with strong political views can track their opponents.

Some data about all of us is already public. Things like voting registration, home ownership, and other interfaces with governments are public. What a lot of folks find troubling is that data brokers also buy information from credit card companies, ISPs, telephone companies, and other sources of information that most people do not want to be openly shared.

Generally, laws that start in California eventually get discussed and considered elsewhere. I’m guessing that this is something that the public will really like. I’ll be honest – just knowing that there are over 500 data brokers sharing our data makes me uneasy.

Reinventing ReConnect

Your guess is as good as mine about whether Congress will ever pass the draft annual Agriculture Reauthorization Bill as written. It’s my understanding that the legislation includes new money for the ReConnect grant program that is administered by the Rural Utility Service (RUS), which is part of the Department of Agriculture.

This has been a successful grant program, and I know of quite a few rural projects that have been funded through these grants. The ReConnect grants only fund areas that are remote and include a test that gives priorities to grant areas that are the farthest distance from towns and cities.

There have been changes in the broadband industry that have made it harder each year to define a ReConnect grant area. The RUS grant rules favor grant requests that cover large contiguous areas. You can cobble together grant service areas that include multiple different geographic pockets of homes and businesses, but this involves a lot more paperwork.

It’s getting quickly harder to find big contiguous unserved areas. This started with the CAF II reverse auction and really came to fruition with the Rural Digital Opportunity Fund (RDOF). That subsidy program awarded subsidies by Census blocks, often widely scattered across a county. When I saw the first RDOF map, I quickly started thinking of RDOF as the Swiss cheese program. RDOF often chops rural areas into small pieces and leaves behind scattered pockets of homes that are not easy to aggregate into a grant like ReConnect.

This chopping up of grant areas continued as States and counties have been awarding broadband grants, often for grant areas that cherry pick the densest pockets of homes. This not only breaks the remaining unserved areas into more Swiss cheese, but it also makes it harder to justify somebody asking for a grant to serve the areas that are left over.

It’s going to get hard to find grant areas after BEAD grants start being awarded. The BEAD grants are supposed to bring broadband to all unserved locations in each state and hopefully also to the underserved. But I think everybody who understands the industry knows this will not happen as planned. There are already states that are saying that BEAD funding won’t cover everybody. There will be ISPs that don’t build everything they promised. There will be ISPs using technologies that won’t reach everybody as promised. There will be ISPs that financially fail and don’t finish the grant projects. And this won’t just be for BEAD – there are going to be plenty of areas supposedly covered by RDOF that won’t get the broadband they have been promised.

The biggest pile of places that won’t get broadband from BEAD are the millions of places that are still incorrectly identified on the FCC maps as served but which aren’t. These places won’t start to become apparent until after the BEAD grants are awarded and mapped and people living in areas with no good broadband start to make noise.

It’s very unlikely that the locations that get missed by RDOF and BEAD will easily fit into the current ReConnect grant template. ReConnect might be the only major ongoing grant program, and if ReConnect is going to reach the places left over from other federal grants, the RUS is going to have to make some significant changes.

First, it has to become easier to ask for funding for small pockets of homes. The RUS has purposefully given out a small number of large grants in each grant cycle to reduce its burden of monitoring the grant construction. But there are even more significant changes needed. For example, the RUS requires a substantial pledge of other assets to get an RUS grant. Unless somebody is already an RUS borrower, they are not likely to accept draconian collateral pledges for small grants.

Currently, the ReConnect grant is totally reliant on the FCC maps, and that has to change as well – because many of the places that will be missed with broadband will be incorrectly labeled as served by the FCC. The ReConnect process is complicated, it’s a challenge to input grant requests that must tie to penny while doing so in financial formats that nobody outside of the RUS understands.

In a post-BEAD world, any future grants are going to have to be creative, nimble, and able to bring solutions to small grant areas without a huge amount of paperwork. Unless the RUS is willing or able to change how it awards grants, this could be a grant program with very few future takers – and that would be a shame.