Monthly Archives: June 2024

Regulating via Grants

I’ve written about this topic before. Everywhere I look I see BEAD grant rules that are doing what I call regulating by grant. State Broadband Offices are creating grant rules that go far beyond adhering to NTIA guidelines. They are insisting on grant rules which are intended to achieve social policies.

Today I’m highlighting a few such items buried inside the BEAD rules for Iowa. Note that there is nothing extraordinary about Iowa’s requirements and there are similar requirements found in many other states.

The two requirements discussed today are listed in Notice of Funding Availability (NOFA #009). This is a document included as Appendix A of the Volume II grant rules. The NOFA clarifies some of the requirements of the grant listed in Volume II.

The first requirement is in paragraph 1.3.18 of the NOFA and concerns having a low-price option for low-income subscribers. The price required is $40, and an ISP must offer a speed of at least 100/20 Mbps with no data caps or other fees or taxes added to the $40 fee. The most extraordinary thing about the fee is that it must be fixed for three years and then only increased in the future by inflation as measured by the Consumer Price Index.

Other states are requiring, or strongly suggesting similarly low rates. But Iowa has gone beyond requiring a low rate for some just a few years and mandates a permanently low rate that can only be increased in the future by inflation. The kicker is that the ISP will be expected to eat any fees or taxes that a State or the Federal government might place on broadband in the future.

This is a textbook case of rate regulation, and Iowa, and other states are using the grant to mandate broadband rates. This example is for a low-income rate, but other states are setting a cap on the rate for gigabit broadband. This is a clear violation of the original Congressional language in the Infrastructure Investment and Jobs Act that contained the following language, “NO REGULATION OF RATES PERMITTED.—Nothing in this title may be construed to authorize the Assistant Secretary or the National Telecommunications and Information Administration to regulate the rates charged for broadband service.”

Another interesting provision of the Iowa grant rules is included in paragraph 1.6.3.5. of the NOFA. This requires any BEAD project that will be laying a fiber optic cable or conduit along a roadway must build either an extra conduit or else use at least a 2-inch conduit. The extra conduit or space inside the primary conduit are intended for, “interconnection by unaffiliated entities”.

This is an extraordinary provision. It adds tremendous cost to building a fiber network. It costs a lot more money to pull a second conduit when using boring. Cable plows are not set up to pull two conduits at the same time. It seems unlikely that this could be achieved with microtrenching. BEAD networks are expensive enough, but this provision adds tremendous cost to an already expensive network.

The worst thing about this provision is that it’s unnecessary. If Iowa’s intention is for BEAD networks to allow other carriers to pass through the networks at an affordable cost, it would be easy enough to mandate this for both aerial and buried fiber. ISPs can easily create an interconnection point almost anywhere in the network. Many other federal grants require grant recipients to provide affordable wholesale transport through grant-funded networks. This requirement seems to be requiring that grant recipients allow competitors into a BEAD network – funded by the grant recipient.

Again, this blog is not intended to highlight Iowa. Almost every state has BEAD rules that could be classified as trying to regulate ISPs through grant rules. I can imagine the conversations that led to these kinds of rules. “Broadband rates are too expensive, particularly for low-income households, and we have a chance to do something about it.”

I certainly understand the sentiment, and if I was in a State Broadband Office, I might be considering similar things. But it’s unfair to regulate BEAD grant recipients without applying the regulations to other ISPs in a State. The only way for regulations to be fair is to have them apply to all ISPs in a state, not just to the ISPs serving the most rural parts of the state – and regulators would never consider requiring such rules for everybody. I predict that some of the states trying to regulate through grants will find that ISPs won’t be interested in the BEAD funding. It’s already too complicated and expensive to comply with BEAD grant rules, and it makes no sense to layer on additional permanent regulations.

FCC’s Proposed Ban on Bulk Billing

FCC Chairwoman Rosenworcel proposed a highly controversial rule change that would ban bulk billing practices in MDUs (multi-dwelling units). The justification for the proposed ban is that residents are required to pay for broadband or cable TV service even if they don’t want to buy the service or would prefer to buy from somebody else. The FCC proposal would allow tenants to opt out of any bulk-billing arrangements.

For those not familiar with bulk-billed services, the typical arrangement is for the landlord to buy these services at wholesale rates and include cable TV or broadband in the rent. From interviews I’ve done with tenants, the charges for these services are often not identified and are just a component of rent.

Landlord-provided broadband today often goes beyond just providing Internet  access inside units. Many apartment owners provide ubiquitous WiFi throughout a rental property. It’s also becoming common for landlords to use the ubiquitous WiFi to control smart devices of many kinds, including security cameras that can be seen by tenants, smart thermostats, utility meters, and smart devices to control building functions. It’s not clear how a tenant could somehow opt out of all broadband in such a building since many of the smart functions control everyday functions for tenants.

From a tenant perspective, it’s not hard to understand folks who would rather not pay for traditional cable TV as part of the rent. I have to think that a significant percentage of households that still subscribe to cable service are stuck in bulk-billing arrangements.

Broadband is trickier. A large majority of tenants want broadband, other than those who are happy using only their cellphones, or the small percentage of folks who never use broadband at home. But it’s easy to understand why some folks might be unhappy with underperforming broadband or want a different ISP. From a cost perspective, most landlords say that their charge for broadband is less than the rates of local ISPs, which is easy to believe when considering the prices of the large cable companies. But when landlords bury the cost of the broadband in the rent, tenants can only take their word for it.

ISPs who serve MDUs say this ruling could destroy their business. It’s generally costly to wire an MDU for broadband, and ISPs make a significant investment to get into a building. Their motivation for entering older and smaller buildings is greatly lessened if they can’t count on getting revenue from all tenants. Even scarier is the idea of having to market individually to tenants – often in buildings that don’t give easy access to outsiders.

There are already a lot of ISPs today that won’t serve MDUs because of the extra cost and work involved. There are ISPs saying that they won’t consider MDUs if bulk billing is no longer allowed. This ruling could make it harder for some DMDU tenants to get good broadband. A lot of ISPs have been writing to or meeting with the FCC to plead their case.

One area of particular worry concerns ISPs that serve low-income housing. As might be imagined, there is little profit in these situations, and many ISPs provide low-cost connections to provide a social good. These ISPs know they will go underwater if some tenants decide to eliminate broadband to save money.

Many landlords like the ease of dealing with one ISP, and many have no desire to take on the extra effort involved in opening their buildings to multiple ISPs. These landlords might have the courts on their side since there have been many legal rulings over the years that say that property owners have the ultimate say over what happens inside their buildings.

The biggest problem I see with the proposed rules is that the FCC wants to create a universal rule to apply to a widely divergent market. There are landlords who provide super-fast broadband at an affordable rate, and there undoubtedly are landlords who charge high rates for inferior broadband. There are no rules I can imagine that would satisfy all situations.

The ruling would be a mixed benefit for the public. Tenants who can save money by ditching unwanted services will love this ruling, but tenants who see their broadband rates double if they have to buy directly from a cable company will hate it. Unfortunately, any ruling will produce winners and losers for the public, landlords, and ISPs. I assume the FCC is trying to decide if the proposal will do more good than harm. I can’t imagine a way for them to do that math.

Appealing the Net Neutrality Order

On May 31, a group of major industry trade associations sued the FCC to block the recently enacted net neutrality rules. Petitions were filed in the U.S. Court of Appeals in the D.C. Circuit, Fifth Circuit, Sixth Circuit, and Eleventh Circuit. On the same day, a group of trade associations, including NCTA–The Internet and Television Association, CTIA, USTelecom, ACA Connects, WISPA, and others, petitioned the FCC asking for a stay of the order.

On June 7 the FCC refused to stay it’s order. The order will go into effect on July 22 unless it’s put on hold by an Appeals Court.

The case has been assigned to the Sixth Circuit Court of Appeals, using what is described as a random process. The tactic of suing a federal agency like the FCC in multiple jurisdictions is a form of judge shopping, where the carrier associations are hoping to end up in an appeals court where they think they have a better chance to win. The FCC also petitioned the Sixth Circuit Court of Appeals on June 7, and  asked for a change of venue to the D.C. Circuit – which is the Court that has heard all of the earlier versions of the net neutrality issue. Historically, it has been normal for the D.C. Circuit Court to hear cases related to federal agencies.

Carriers are banking their case on the recently popular major-questions doctrine. This is a legal argument that bars federal agencies from resolving questions of vast economic and political significance without clear statutory authorization. This has been used in recent cases like West Virginia v. EPA that limited the extent to which the EPA could regulate greenhouse gas emissions in the state. The Supreme Court said the EPA went too far past its Congressional mandate in its attempt to regulate power plant emissions.

For the last forty years, the courts have given deference to decisions made by federal agencies, using a ruling in the 1984 Chevron v. National Resources Defense Council case that said that regulatory agencies have the right to regulate based upon the general mandate to regulate given by Congress.

There has been a tug of war between regulators and regulated industries since regulatory agencies were created. Courts have sometimes ruled that regulators have gone too far, such as happened in the case of Brown & Williamson v. FDA where the FDA tried to halt the sale of tobacco and nicotine products to minors, and where the Supreme Court struck down the attempt.

The carrier lawsuits also regurgitate the arguments made in earlier net neutrality cases that say the FCC doesn’t have the authority to impose Title II regulations, which is what enables net neutrality. Courts have ruled several times on the ability of the FCC to declare broadband as a Title II service. Interestingly, courts relied on the same argument to say that the Ajit Pai FCC had the authority to decide that broadband is a Title I information service. The Courts basically said that the FCC has the authority to regulate this kind of question based on the law that created the agency.

It will be interesting to see if the case gets remanded to the D.C. Circuit Court. The FCC makes a strong argument that the D.C. Court has a long history of wrangling with the complexities of FCC regulation, which will mean a more efficient process. Another court will have to catch up and understand the long history of wrangling between the FCC and ISPs.

We’ll also have to see if a Court puts any or all of the net neutrality order on hold during the appeal process. In the lawsuit challenging the first net neutrality order, the Courts put much, but not all of the order on hold. A Court will have to act quickly to make this decision by July 22.

FCC Maps versus Broadband Labels

I have been complaining for years about the FCC mapping rule that allow ISPs to claim marketing speeds instead of something closer to actual speeds. That allows ISPs to report speeds that benefit them in some manner rather than being truthful to the public. There have been big consequences as a result of this FCC decision.

Historically, ISPs didn’t pay much attention to the FCC broadband maps. ISPs had to report speeds and coverage to the FCC, but since the maps weren’t used for much more than the FCC’s reports on broadband coverage to Congress, it didn’t matter what speeds ISPs claimed. The FCC certainly didn’t put any effort into verifying the maps, and the FCC got a lot of benefit out of FCC speed exaggerations since it allowed them to tell Congress that a lot more homes had good broadband than actually did.

But suddenly, the maps started to mean something. The USDA used the FCC maps in determining eligible locations for ReConnect grants – and in doing so made some colossal mistakes in denying some grant applications because of map errors. The first massive use of the maps came when the FCC used its own mapping data to determine the areas eligible for the CAF II reverse auction and RDOF. The crappy data in the maps created the disaster or the RDOF serving areas, which in many counties is best compared to Swiss cheese. Since the underlying speed data was bad, RDOF didn’t include Census blocks immediately adjacent to RDOF Census blocks which shared exactly the same ISPs and speed capabilities. If an ISP claimed that one customer in a Census block could receive 25/3 Mbps speeds – regardless of whether that speed was actually available – the Census block was excluded from RDOF.

The FCC had a great chance to fix this faulty rule when it decided to migrate to the new Broadband Data Collection (BDC) system of broadband mapping. Unfortunately, the FCC kept this same old horrible rule that let ISPs claim any marketing speed that benefits them. There is an uncanny number of rural ISPs today that are claiming a speed capability of exactly 100/20 Mbps – the exact speed needed to keep others from getting a BEAD grant in an area.

The FCC recently instituted the new Broadband Labels. ISPs with more than 100,000 customers were required to publish a label by April 10, 2024. All other ISPs have until October 10, 2024. The labels require an ISP to disclose its ‘typical’ download and upload speed and latency for each broadband product. If ISPs participate in the FCC’s Measuring Broadband America (MBA) program, they can disclose the speeds determined in that process. ISPs not participating in that program are supposed to report speeds based on actual internal network testing – not marketing speeds.

With this new rule for the labels, the FCC finally got it right. However, for this to mean anything, the FCC needs to audit the speed test data underlying the claims on the broadband labels. If ISPs know that the FCC is serious about the labels, then ISPs should become more truthful. In looking at the broadband labels published by big ISPs so far, I venture to say that almost none of them are reporting speeds accurately. Some are reporting the identical marketing speeds listed in the FCC maps (such as exactly 100/20 Mbps or exactly 1/1 gigabit). Many big ISPs are claiming on their labels that actual speeds are faster than marketing speeds – something that probably would be a huge surprise t0 most customers.

Now that the labels are in place for the big ISPS and will soon be in place for other ISPs, the FCC has a perfect opportunity to get this right in the labels and the maps. ISPs should be required to report the same speeds for the FCC maps that it puts on the broadband labels. The speeds on the labels should be based on actual speed testing and not on a speed cooked up by a marketing or regulatory department. ISPs will only be serious about getting this right if the FCC periodically audits ISPs and asks to see the underlying speed testing data – and fines ISPs that have exaggerated speeds.

I don’t have much hope that the FCC will do the right thing. If rural ISPs suddenly start to tell the truth about speeds on the FCC maps, we’d instantly see all of the places that the BEAD grants will not be covering. I’m sure the FCC understands this, and it has never wanted to see a story from ISPs that shows a greater number of unserved locations.

ISPs Response to the End of ACP

The press is suddenly full of articles talking about how some ISPs are offering affordable rates to low-income homes now that the ACP monthly subsidy has died. I discussed some of these plans in a recent blog. Some ISPs are extending the $30 discount for a limited time, while others are offering more affordable broadband plans than in the past. Other ISPs are only making a nod towards affordable broadband and some aren’t giving any discounts to low-income households.

Today’s blog ponders the wide response we’re seeing to the end of the ACP. I’ve talked to some ISPs that didn’t put any effort into ACP because they recognized that the plan was temporary. ACP was funded by Covid funding, and ISPS foresaw correctly that the fund wouldn’t be renewed when it ran dry. I think many of these ISPs would have been more enthusiastic about ACP if it had been established from the start as a permanent program with a guaranteed source of funding. A lot of folks in the industry have been lobbying to make ACP permanent by rolling it into the FCC’s Universal Service Fund. There are other ways that ACP funding could be guaranteed. One idea that has gotten recent traction is to divert proceeds from FCC spectrum auctions to fund ACP.

Some ISPs were put off by the paperwork, the cost, and the downside risks. The paperwork needed to enroll in the plan was hard to navigate and not friendly for smaller ISPs. ACP also requires ISPs to make costly efforts to enroll people, with no compensation other than a reimbursement of the customer discount. ISPs would like ACP more if there was a small additive each month to cover the cost of operating the plan. ACP also came with periodic audits, and ISPs feared doing their best and still failing these audits. To some ISPs, ACP felt like a program with more potential public downsides than upsides.

Some ISPs did the math and saw it was too expensive to enroll and connect ACP customers. Cable companies have a relatively easy path to connect an ACP household. Their coaxial networks have been in communities since the 70s or 80s, and that means a large percentage of homes already have a coaxial drop. If a home had cable service at some point over the last forty or fifty years, there is a good chance that the drop cable is still in place. That means a low cost to add most ACP households.

Fiber ISPs have a more expensive effort and had to install a fiber drop for most new ACP customers. Most fiber providers claim an overall cost of $1,000 or more to add a new home to the network. No ISP wants to make that kind of capital investment without a reasonable expectation that new customers will stay long enough to pay back the initial investment. Many fiber ISPs were leery about making the investment for an ACP home because of the high cost, slow payback, and lack of guarantee that ACP would last.

Some ISPs like Charter embraced ACP, and New Street Research says that Charter enrolled more than 4 million households in the program. This is likely the primary reasons over the last year why Charter was still showing customer growth while other big cable companies were losing customers each quarter. There are also ISPs working in low-income neighborhoods and tribal areas that fully embraced ACP and built a business plan based on the ACP discount. One has to think that Charter will pay a price for having embraced ACP – a lesson that other big ISPs will notice and learn from. Smaller ISPs that built a business plan based on the ACP discount are now in shambles.

A lot of ISPs only paid lip service to ACP. They only enrolled customers who asked for the discount, but didn’t advertise ACP or aggressively seek ACP customers. Some of the ISPs getting praise for having an affordable ACP replacement product didn’t pursue ACP customers and likely won’t push the new low-price plans.

There is still a chance that ACP will be funded sometime this year. The folks in Congress looking at restarting ACP should realize that many ISPs are going to shun ACP if the funding mechanism has to be reauthorized by Congress every few years.  If Congress brings back ACP, then bring it with a permanent funding source – or don’t bother.

FCC Clarifies the Fast Lane Prohibition

The FCC made some changes to the recent Net Neutrality Order between the version that got approved on April 25 and the final version that was released to the Congressional record. One of the most interesting changes was to clarify rules pertaining to carriers creating fast lanes.

The original order included language that prohibited paid prioritization, which is generically referred to as fast lanes. The original rules largely prohibited ISPs from slowing Internet traffic for some customers but not others, which is the same language that was included in the original net neutrality order first passed by the Commission in 2015.

But there were numerous comments made in the docket expressing concern about ISPs offering fast service to some customers for an additional fee, which is basically the definition of a fast lane. The final FCC rules prohibit fast lanes where some customers selectively get a better broadband connection than somebody else, even if the faster connection is made at no charge.

The draft FCC language did not specifically prohibit fast lanes but instead reserved the right for the FCC to judge each case that arose in the market. The revised final language pivoted to a straight prohibition against throttling some customers to slower speeds or boosting others to faster speeds.

This is one of the aspects of net neutrality that have been controversial with the public since the topic was first raised years ago. For example, gamers who hear this discussion assume it means they can’t get a faster connection. The fact is that they can if their ISP does it in a way that doesn’t create a fast lane. It is not a violation of fast lane rules for an ISP to offer a faster broadband connection. ISPs already do that today, and offering gigabit or faster broadband speeds is not a violation of the fast lane principle as long as the faster products are available to everybody.

The fast lane prohibition stops ISPs from giving a customer a priority or a benefit that comes at the cost of degraded service for others. For example, the fast lane rules would stop an ISP from making a deal to give Netflix customers a more reliable video stream than Amazon Prime customers.

One of the concerns that might have convinced the FCC to tighten the fast lanes language was a lot of comments made about network slicing. This is a technology that allocates different amounts of bandwidth on a 5G network according to the needs of the customer. A customer who is only making a voice call needs a small amount of bandwidth, and in a network equipped with fully functional 5G network slicing, a voice customer would only be provided a small portion of one channel. However, somebody playing a video game on the cellular network might be given the bandwidth from several channels. Using network slicing would not automatically create a fast lane for gamers, but it can be construed to do so if a cellular carrier promises that gamers will get a higher priority than everybody else – a claim that’s not hard to imagine. Ericsson was quoted by the FCC saying that it is not hard to imagine a cellular carrier charging $10.99 more per month to gamers for a guaranteed priority connection.

The FCC warned ISPs not to disguise regulated broadband products to look like enterprise or wholesale services in an attempt to avoid the fast lane prohibition. I have to imagine that the latest FCC language is causing some consternation in ISP departments working on new products.

The flip side of prohibiting fast lanes is that ISPs can’t purposefully throttle or slow some customers in a way to favor others. It’s not hard to imagine an AI-controlled network that could give higher priority to subscribers who pay the highest price for broadband. It’s almost inevitable that somebody will bring such a complaint within the next decade.

Carrier of Last Resort is Still a Thing

I always find it interesting when old regulations bubble up into the news. As reported by Jon Brodkin in Ars Technica, an administrative law judge at the California Public Utilities Commission (CPUC) rejected a petition by AT&T to walk away from its carrier of last resort obligations for voice service.

For those unfamiliar with carrier of last resort, this was a regulatory principle that harkens back to 14th-century English law, where businesses were granted the ability to operate as long as they agreed to serve everybody. In this country, carrier of last resort was embedded into the rules when states started giving monopoly service areas to telephone companies. Carrier of last resort rules required telephone companies to build to reach every home that could be reasonably reached. While the cost to reach remote customers might be high, the quid pro quo is that carriers were allowed to achieve a guaranteed rate of return on investments they made.

In the petition in California, AT&T requested to be relieved of carrier of last resort obligations, which would give it the ability to stop providing telephone service in rural areas. The AT&T petition was met with a lot of protests from rural residents asking the CPUC to not let AT&T kill their telephone service.

The Administrative law judge rejected the AT&T petition. He ruled that he was unable to ignore the existing California rules that require carrier of last resort. He also ruled against the AT&T claim that California rules would require AT&T to keep copper. He noted that there is nothing in the California rules that would stop AT&T from decommissioning copper wires.

The ruling went on to point out that there are many examples where AT&T is replacing copper with fiber technology. The ruling notes that there is nothing in the California rules that would stop AT&T from replacing copper with fiber, wireless, or other technologies. The bottom line is that the ruling says that A&T is allowed to kill copper networks, but that carrier of last resort obligations require the company to provide an alternative technology that can bring voice service to households.

There are a lot of stories in the last few years of AT&T disconnecting working rural telephone lines without providing a technical alternative. The company has done this quietly in many parts of the country, and I’ve run across rural AT&T areas where there is no longer any working DSL.

This ruling can be made in California because the CPUC never dropped the carrier of last resort rules. In many states AT&T and other large telcos were able to eliminate these rules as part of the process of deregulating telephone rates. In most states, the decision to deregulate telephone rates involved telcos being able to walk away from a lot of regulatory rules for a promise to freeze residential telephone rates.

Unfortunately, one area of regulation that went out the door in this process was the obligation of  telcos to meet performance standards and to perform needed maintenance. Big telcos reacted to deregulation by cutting rural technicians and rural maintenance budgets to the point where maintenance meant only doing band-aids repair for customers who yelled the loudest.

To some degree, this ruling is too little, too late. It’s harder each year to keep copper networks limping along, and AT&T can probably still meet carrier of last resort obligations by keeping telephones just barely working. It’s likely that most of the areas covered by this ruling will be eligible for BEAD grants, so the issue probably will quietly die within five years as other carriers displace AT&T and other telcos who want to walk away from rural markets.

For me, this ruling is somewhat nostalgic. There were a lot of states fighting this battle a decade or two ago, and now only a few states are trying to keep the phones working in rural areas. We have to be nearing a time when there will be no more talk about carrier of last resort. Grant programs like BEAD require a grant winner to build to every home in a grant area – but they don’t require carrier of last resort obligations to build to new homes after the grant construction is completed. We’ll probably never stop hearing about rural residents who are quoted astronomical sums to bring a landline or broadband connection to their home.

Our Balkanized Broadband Leadership

Congress inserted an interesting requirement into the bill that reauthorizes the funding for the National Telecommunications and Information Administration (NTIA). Both the House and Senate added language that would require that a national broadband plan be created that would try to put the FCC, the NTIA, USDA, and other agencies on the same page. This legislation makes sense, because it’s clear that the three agencies do not coordinate in trying to solve broadband gaps – if anything they are competing and trying to one-up each other.

The House version of the new legislation was sponsored by Reps. Tim Walberg (R-MI.) and Annie Kuster (D-NH). The Senate version of the language was sponsored by Sens. Roger Wicker (R-Miss.), Ben Ray Luján (D-NM), John Thune (R-SD), and Peter Welch (D-VT.).

The genesis of the plan came from a GAO report from 2022 that said that there was a balkanized approach to federal funding programs aimed at solving the rural digital divide. That is putting it mildly. The three agencies seems to be stepping over each other trying to get headlines.

Just consider the last year. The NTIA has been working on getting the BEAD grant program going (at a pace that has been widely criticized as being far too slow and meticulous). Immediately after the NTIA announced the amount of BEAD funding that was to be allocated to each State, the FCC announced the new EA-CAM subsidy program for small telephone companies that covered many of the same locations that are eligible for BEAD. There is no conceivable excuse for the two agencies not to have coordinated this – and had the FCC announcement been considered, the BEAD funding would have been allocated differently to States.

The USDA also recently closed a new round of ReConnect grants on the eve of States getting ready to finally launch BEAD grants. This puts State Broadband Offices in a quandary with how to treat areas with a pending ReConnect grant – they won’t be able to make any grant awards for these area until Reconnect is resolved.

The GAO’s use of the word balkanized is now my favorite word for describing the federal broadband effort. The FCC’s RDOF program was a disaster from the beginning. A third of awarded RDOF subsidies ended up being canceled by the FCC or turned back in by ISPs. There are still ISPs defaulting on BEAD several years later, with recent announcements by Charter and Altice walking away from some RDOF areas. Even where RDOF was awarded, it butchered the rural landscape by creating a checkerboard (or Swiss cheese) in many counties of places covered and not covered by RDOF – making it incredibly hard to design a broadband solution for the remaining unserved pockets. The FCC also gave ISPs far too long to implement an RDOF solution – in some cases until 2028 – and a huge number of counties are still wondering today if the ISPs that won RDOF in their county will show up.

All of the grant and subsidy programs suffer by relying on faulty FCC broadband maps. I would rate the maps used to allocated RDOF as maybe a 2 out of 10. The FCC knew these maps were faulty but blazed ahead with a subsidy program that pretended the maps were perfect. It’s impossible in many cases to see any difference between areas included in RDOF and neighboring Census blocks.

The maps being used for BEAD have probably improved to a 5 out of 10. The biggest flaw in the BEAD maps is the inexplicable decision of the FCC to still allow ISPs to claim marketing speeds rather than something closer to actual speeds. There is a large number of rural ISPs that miraculously claim a speed of exactly 100/20 Mbps in the FCC maps, which blocks others from pursuing BEAD grants. The FCC thinks they have accounted for this problem by allowing for a map challenge process, without realizing that the counties that have the biggest broadband gaps are also the ones with barely any staff or budget – so the places that should have undertaken map challenges are doing nothing. The NTIA piled on top of the situation by creating a map challenge process for BEAD that is so technical and obscure that even well-funded counties can’t come close to putting up a decent challenge for places that everybody agrees don’t have good broadband.

Local governments are increasingly irate with all three agencies tackling broadband. The word balkanized doesn’t come close to describing the behavior of each agency that not only ignores what the other agencies are doing but seems hell-bent on sticking a thumb in each other’s eyes.

I have very little faith that the broadband coordination proposed by Congress will do the slightest bit of good. When President Biden came into office, he ordered the three agencies to coordinate efforts, which obviously fell on deaf ears. The only way to make the three agencies work together would be to put them under the same boss – and that’s not likely to happen.

I’ve predicted for quite some time that BEAD is going to miss millions of homes that should be classified as unserved and underserved. I have to think the federal agencies are already planning on how to blame each other when BEAD doesn’t work as promised.

Who is Using Faster Broadband

There was an interesting paper published in May – Who is  using the internet at faster speeds? The authors are Roberto Gallardo, the vice President for Engagement at Purdue University and Brian Whitacre, a Professor and the Jean & Patsy Neustadt Chair in the department of Agricultural Economics at Oklahoma State University.

The paper highlights some interesting observations that are contrary to conventional wisdom about broadband. The studies showed that the higher the percentage of Black non-Hispanics and Hispanics in a community, the higher the average download broadband speed. Conversely, the higher the percentage of White non-Hispanics, the lower the average broadband speeds.

The team had originally done a study based on 2021 speed tests that had shown this result. They were surprised by the results and wondered if the pandemic had some impact on 2021 data that might have skewed the findings. In a second study they looked at 2019 speed tests from before the pandemic as well as 2022 speed test data which is past the worst periods of the pandemic.

The second study confirmed the original findings. When the percentage of Black non-Hispanics and Hispanics increased by one percentage point, the average download speeds increased by roughly 5 Mbps in 2019 and rose to almost 7 Mbps and 12 Mbps in 2022, respectively.

The study also correlated factors like race and the presence of children in a home. There was a significant increase across the board in broadband speeds between 2019 and 2022 for all households with children. The study found that the impact was greater for the three years for Black non-Hispanics (almost 18 Mbps faster) compared to White non-Hispanics and Hispanics (roughly 14 Mbps faster for both groups).

Their overall conclusions were as follows:

  • Rural, older, and poorer groups are on the wrong side of the digital divide.
  • Having children in the home correlates with having faster broadband speeds than neighboring homes with no children.
  • There was a big difference before and after the pandemic in the broadband speeds in homes where people worked at home.
  • Higher education correlated with faster Internet use, particularly for upload speeds.
  • White non-Hispanics seem to be increasingly on the wrong side of the digital divide.

The team acknowledged that understanding the broadband landscape is complex and in all populations there were 20% to 30% of speed tests that could not be explained by the findings. The analysis also had no way to distinguish between households that were able to choose their broadband speed from multiple ISP options versus homes where there was a limited number of ISP options.

Like most academic papers, the team did not speculated on the reasons behind their findings, and just reported the statistics they uncovered. My firm has been doing broadband surveys and detailed interviews with residents for many years, and some of these results were not a surprise to me.

For example, I’ve heard many stories from homes with children who sacrifice to buy faster broadband speeds for their children. I was also not surprised to hear that those working from home have faster broadband speeds – because that is a prerequisite for landing such jobs. I’ve run across many stories of folks who have moved to where broadband is faster in order to work from home (or who moved away from areas with poor broadband).

It’s harder to understand why some of the other findings are true, such as the one that showed that the greater the percentage of Black non-Hispanics and Hispanics, the faster the broadband speeds. I’ve encountered counties with a big difference in the overall desire to have good broadband. For example, I’ve studied a few rural counties where a lot of residents took pride in not connecting to the Internet, while other counties in the same state had similar residents that were begging to get faster rural broadband. I haven’t the slightest idea how to correlate such widely different behavior with the national trends spotted by Gallardo and Whitacre, but I hope they keep digging to help folks like me understand the incredibly complex broadband landscape.

The New FCC Maps

Mike Conlow was amazingly quick as usual and assembled a quick comparison of the new fourth version of the FCC broadband map to the previous third version. The new map reflects data as of December 2023.

The big change since the third version of the map is a big decrease in unserved and underserved locations. Mike’s count shows that total unserved and underserved locations on the map are now 8.8 million, down from 10.1 million. If true, this is a huge change in the rural broadband landscape.

There are a lot of factors that could impact a change of this magnitude. Before discussing these issues, here are the net changes between the third and fourth FCC broadband maps:

  • Total passings increased by 388,222.
  • Served passings increased by 1,644,756.
  • Underserved passings (25/3 Mbps to 100/10 Mbps) decreased by 157,132.
  • Unserved passings (under 25/3 Mbps) decreased by 1,099,402.

The change varies widely by state. For example, Nevada and North Dakota show over a 40%  drop in unserved locations, while nine states saw a drop of unserved locations under 5%. Arizona saw an increase of 8,925 unserved locations. The biggest drops in unserved locations were in Texas (-143,669), Missouri (-59,576), Michigan (-59,384), and California (-58,957).

The big question that must be asked is if these changes make any sense. Let’s start with a list of reasons why passings would change between the third to the fourth FCC maps.

Total passings should increase to reflect new homes being built. I’ve always wondered how CostQwest (the keeper of the FCC mapping fabric) is able to keep up with new home construction by address.

Total passings for a state can also increase or decrease due to corrections in the mapping fabric. In my own investigations, I’ve encountered a lot of homes that are not in the mapping fabric, locations in the fabric where there is no real-world building, and locations like barns that are not an addressable broadband location. I would hope that CostQuest is fixing these over time as they find better data sources. Changes can also come from individual challenges to the FCC maps for folks who complain their home isn’t listed in the fabric.

The biggest change to unserved and underserved passings probably comes directly from ISPs that have changed the way they are reporting in the FCC map. There are a number of reasons why an ISP might change its FCC reporting.

  • An ISP might have built new infrastructure and is properly reporting locations that now have a new source of broadband. New broadband construction might have been funded by state and local grants, RDOF, ReConnect, or other sources. Some ISPs are self-funding broadband expansion.
  • An ISP might have upgraded technology. A WISP might have upgraded radios and speeds. A cable company might have upgraded from DOCSIS 2.0 or 3.0
  • ISPs might have arbitrarily reported faster speeds. In looking at broadband mapping data in different places around the country, I’ve encountered a suspiciously large number of places where an ISP claims exactly 100/20 Mbps capability. That’s a speed that categorizes a location as served and makes it ineligible for BEAD grants and many other grants. I’ve seen the 100/20 Mbps speed claimed for DSL, fixed wireless, and cellular fixed wireless.

Recall that the FCC mapping rules only require ISPs to report marketing broadband speeds. If an ISP markets to customers with speeds ‘up to 100/20 Mbps’ it is not breaking FCC rules to make that claim in the maps – even if it only delivers 30/5 Mbps to a location. This FCC rule to allow marketing speeds instead of some approximation of actual speeds has made a travesty out of the maps.

Is it believable that 1.3 million fewer unserved locations in the country got upgraded to faster technology in a six-month period? Almost by definition, most of the unserved and underserved locations are rural. While there is a lot of fiber construction underway due to broadband grants, it’s hard to picture that grants covered that many new rural locations during a six-month period. Consider the amount of investment that would have required. If the average cost per upgrade was $6,000, this would have meant completing $7.8 billion of construction in the second half of last year in rural areas. It’s hard to think even half of that was spent in a six month period.

That is not a believable number. It seems a lot more likely that ISPs are changing the areas they claim to cover and the speeds they are claiming to provide.

Seeing these big mapping swings while States are trying to launch the BEAD grants is one more sign that BEAD will be a mess. Some states have already gone through the early stages of the BEAD map challenge, and these new changes will not have been reviewed or challenged by anybody. It seems more likely with every big mapping swing that more places will fall through the crack and that deserving locations will get skipped by BEAD.