Category Archives: Regulation – What is it Good For?

Big ISPs Hate the FCC’s Digital Discrimination Rules

The big ISPs certainly have their knickers in a knot over the adoption of digital discrimination rules by the FCC. The FCC was required to adopt some version of digital discrimination rules by language included in the Infrastructure Investment and Jobs Act. The IIJA Act says that the FCC needs to prevent discrimination based on income level, race, ethnicity, color, religion, or national origin.

The big controversy that has stirred the big ISPs is the definition of discrimination. The ISPs wanted discrimination to be defined as intentional discrimination where an ISP purposefully decides not to serve somebody. The trouble with that definition is that it would likely require a whistleblower with documentation from inside an ISP to prove intent. The FCC adopted intentional discrimination but also adopted what it calls disparate market impacts, which means the agency can consider discrimination that is obvious in the market without having to prove an ISP’s intent.

The ISPs have been screaming loudly against the FCC decision. Perhaps one of the best summaries of the ISP’s outrage comes from a recent editorial in the Wall Street Journal. I don’t provide links to articles behind paywalls, but a Wall Street Journal editorial warns that the new rules will weaken the Internet by giving the FCC the power to micromanage the industry. They roll out examples of how the FCC might abuse its new power.

“Marketing materials that feature too many white people could be ruled discriminatory. Companies could be forced to scrap credit checks that cause more minorities to be rejected for smartphone leasing plans. Providers could even be punished for charging the same prices to all customers since their rates might have a disparate financial impact on minorities. The FCC could likewise prohibit low-cost wireless plans that include data caps because these are selected more often by people with lower incomes. . . Wireless carriers might also be prohibited from building out 5G networks in suburbs and city downtowns before inner cities and rural areas.”

I have always enjoyed a good lobbying rant, and the above is a classic. We saw a lot of the same kind of overblown rhetoric from both sides during the process leading up to the net neutrality decision a few years ago.

It’s obvious that the Wall Street Journal has fully adopted the arguments being made by the giant ISPs. The reality is that big ISPs don’t want any regulatory rules or oversight. It’s laughable to think the FCC would be upset that an ISP charges everybody the same rates. That’s the very definition of non-discrimination. Discrimination is more likely going to be claimed due to practices like the study last year that uncovered that Charter was offering the highest prices in the poorest neighborhoods of Los Angeles.

The big ISPs are particularly distraught over the idea of the FCC monitoring digital discrimination since it is coupled with a likely vote to reintroduce Title II regulation of broadband. They are worried that the combination of the two sets of regulations will mean they won’t be free to do anything they like in the market. The unspoken worry that the big ISPs don’t want to talk about is the fear that regulators will put pressure on them to stop big annual rate increases. It’s hard to fathom the FCC ever deciding to directly regulate broadband rates, but it’s not hard to picture them putting public pressure on ISPs to keep rates affordable.

The Wall Street Journal is using the rhetorical trick of pointing out the most extreme ways that the new regulations could be used. But it’s rare for regulators to go to the extremes. The new regulations do not mean that the FCC is going to come down on the big ISPs with a hammer. The FCC didn’t do that the last time when Title II was the regulatory framework. But it does mean that the FCC is likely to call out some of the most obvious abuses by the big ISPs and possibly force them to cease the worst practices.

That’s what regulation is supposed to do. A handful of large ISPs have near-monopoly power in the broadband market, and the job of regulators is to balance that power by making sure that the general public still gets a fair shake. You’ll not hear the big ISPs talking about that.

In-kind Contributions for BEAD Grants

The process of winning BEAD grants is expensive, and grant applicants should do everything possible to lower out-of-pocket costs for winning the grant. Of the most interesting ways to lower the cost of accepting a grant is through the use of in-kind matches. In-kind contributions recognize non-cash benefits of property, goods, or services that will benefit a BEAD project. In-kind matches can be used as part of the process of calculating the matching funds being provided by a BEAD grant applicant, and many other grant programs also allow for in-kind matches.

To use a simple example, if a grant applicant must provide a 25% grant match, then any approved in-kind matches can be used to satisfy a portion of that match requirement. If a grant applicant can justify 5% of the cost of the project as in-kind contributions, then the cash matching in this example would be reduced to 20%.

The BEAD grant process explicitly allows for in-kind matches. The use of in-kind matches for any federal program is described in federal regulation § 200.306 – Cost Sharing or Matching. I must warn you that the federal rules for in-kind matches are confusing, even for accountants.

In-kind matches can be contributed by the grant applicant or by a third party like the local government. The Frequently Asked Questions for BEAD provides a list of examples of costs that might be considered as an in-kind match:

  • Employee or volunteer services
  • Equipment
  • Supplies
  • Indirect costs (this one has me scratching my head)
  • Computer hardware and software
  • Use of facilities
  • Access to rights-of-way
  • Pole attachments
  • Conduits
  • Easements
  • Access to other types of infrastructure

How might an in-kind match work? Here are a few examples.

  • There might already be empty conduits in the BEAD grant area that can be used by the BEAD grant winner to save money on construction. If the BEAD grant winner or some other owner of the conduit, like a local government, doesn’t charge for the use of the conduit, a value can be calculated for the benefit from the conduit and used as an in-kind match.
  • A grant applicant might have already obtained rights-of-ways inside the BEAD grant area. Or perhaps a local government is willing to provide the rights-of-ways for free to encourage the construction of fiber. Some of that past or current value of contributed rights-of-way can be recognized as an in-kind contribution.
  • A grant applicant might have made a significant investment in mapping or engineering software in the past. If it can use that software for the BEAD process without a new large charge, then some portion of the value of the software might be considered as an in-kind contribution.
  • A local government might provide free permitting, location services, or traffic control as a way to encourage the construction of a fiber network. The imputed value of those services at market rates can be an in-kind contribution.
  • An ISP might have multiple reels of fiber already in inventory. The cost of that fiber can be used as an in-kind contribution as long as it is not also billed as material for the construction process.

I must note that these examples are all subject to being approved by the State Broadband Office that will be administering a given BEAD grant. No in-kind contribution is automatic, and the normal process is to negotiate the use and the value of each in-kind contribution with the party awarding the grant. But since it looks like State Broadband Offices are going to be rushing the grant application process, it’s worth claiming as many legitimate in-kind matches as possible to help with the initial grant scoring.

Calculating in-kind contributions is worth pursuing because almost every BEAD grant project will benefit from some existing assets or services that can be classified as in-kind contributions. Every dollar recognized as an in-kind contribution reduces the cash contribution needed for the grant matching.

I’ve also note that there are a number of states that are giving extra grant scoring points for applicants who have local contributions towards a BEAd project. Many local governments will be unable to make cash contributions towards BEAD projects, but it’s well worth talking to them now about contributing in-kind matches.

Canada Unbundles Fiber Networks

In an interesting move, the CRTC (Canadian Radio-television and Telecommunications Commission) is forcing large telephone company fiber networks to open their fiber networks to competition. The press release from the CRTC says that change is being made to increase choice and affordability for high-speed Internet service.

The proceeding that led to this decision began in March as the CRTC investigated if it makes sense to allow smaller ISPs to use the big company networks on an interim basis. This was a major proceeding at the CRTC, with over 300 parties filing comments.

The change was prompted by a significant decline in competition across the country. In Ontario and Quebec, ISPs other than the telephone companies lost 47% of their customers over the last two years. That decline is not due entirely to customers changing to the big telco fiber networks but also comes as the big companies have been buying smaller competitors. The big concern of the CRTC is that this drop means that customers are quickly losing choice when looking for an ISP and that the big telcos are increasingly gaining monopoly power.

The big telephone companies have built most of the fiber in the country and provide fiber technology to 60% of Canadian homes and businesses. Other fiber providers cover only 5% of the households and businesses in the country.

The big telcos have been given six months to implement the order and to allow competitors to gain access to their networks. The order creates what we refer to in the U.S. as open-access networks. The big telcos will have to figure out how to allow access to competitors and how to bill for the new services.

This is an extraordinary ruling in that it forces networks that the telcos have privately funded to be opened to competition. The big telcos have all said that they will probably not build new fiber after this ruling, and they probably shouldn’t.

The U.S. tried this with the Telecommunications Act of 1996, which forced the big telcos here to unbundle their copper networks and allow competitors to buy copper loops. But that decision was different because the copper networks were already old and largely depreciated. The telephone companies had already recovered the cost of the copper networks several times over.

Even so, Congress completely missed the boat with the 1996 Act. The purpose of the Act was to promote telephone competition. As the Act was being drafted in 1995, there was not much of a broadband industry other than T1s on copper and a few folks using dial-up to reach the brand-new Internet. Little did Congress realize that soon after the Act was passed the broadband industry would explode due to AOL finding a way to make dial-up usable for the average person. This was quickly followed by the introduction of DSL on copper and early cable modems that created the broadband industry we know today. The Act would have been written very differently had Congress understood it was standing on the threshold of broadband.

The Canadian decision really bothers me. Canada is forcing the telcos that have invested billions to build new fiber networks to share them with the competition. There is no way that the telcos could have planned for this, and this has to destroy their business plans.

I’m a big fan of open-access when somebody builds a network to intentionally be open. But forcing this on existing networks feels like confiscation. The telcos have done the right thing and invested in fiber and are being punished for doing too well. It’s hard to think that this won’t slow or stop anybody else from building fiber, which is bad news for the 40% of Canadians who don’t have it. I’ll be the first to admit that I don’t understand the nuances of the Canadian broadband market, but I’ve read summaries of all of the comments in this proceeding, and I have a hard time seeing the justification for the decision.

The Definition of Upload Speed

The FCC is in the process of increasing the definition of broadband from today’s paltry 25/3 Mbps to 100/20 Mbps. This blog looks at the FCC’s decision to consider 20 Mbps as the definition of upload.

We know where the 20 Mbps number comes from. Early discussions of the BEAD grant rules considered that grant-eligible areas would be anywhere that customers don’t have the option to purchase broadband with speeds of at least 100/100 Mbps. But cable companies and the wireless industry went ballistic, and there was furious lobbying to lower the BEAD coverage definition to 100/20 Mbps. The reason for this was obvious since both technologies at the time could meet the 100 Mbps download speed but could not meet a 100 Mbps upload speed requirement.

This means that the 20 Mbps definition is a political compromise that has nothing to do with the broadband speeds that households and businesses need. Interestingly, technology in those two industries is changing quickly, and cable companies and WISPs are on the verge of being able to meet 100 Mbps uploads if they upgrade to the latest technology.

Several of the big cable companies are currently implementing mid-split technology upgrades that I’ve seen reported as delivering from 100 Mbps to 300 Mbps upload speeds depending upon the local conditions in a cable company network. The big cable companies have all said that they intend to implement DOCSIS 4.0 upgrades that will enable gigabit upload speeds. But cable companies will likely continue to fight to keep the 20 Mbps definition because they will not want to upgrade their networks in smaller and non-competitive markets.

We’re also on the verge of big changes in fixed wireless technology. As WISPs implement the newest radios, and particularly when they integrate 6 GHz spectrum, the networks will be able to deliver much faster speeds. Wireless network technology is interesting in that the ISP can determine the amount of upload and download speed to offer – and as overall speeds get faster, WISPs will be able to deliver 100 Mbps speeds if they elect to do so.

We’re also seeing speed increases from FWA cellular wireless. Verizon recently reported the ability to deliver much faster speeds with the introduction of C-Band spectrum into towers. If they choose, Verizon and the other carriers using C-Band could also meet a 100 Mbps upload speed.

The FCC should consider a faster definition of broadband just because of the changes in technology. There is no reason to set a low definition of 20 Mbps upload that only rewards ISPs that want to stick with older technology. To do so is reminiscent of past FCC decisions that protected DSL long after it was obsolete.

What I find puzzling is that in the NOI, the FCC argued for a faster definition of upload speeds. They mention a study by the Consortium School Network (CoSN) that says that a single student working at home should have a 12 Mbps connection and a 20 Mbps connection is not sufficient to allow multiple students to work from home. The FCC also acknowledges that there are a lot of uses of broadband today that need faster connections. For example, the NOI cites that a 25 Mbps connection is needed for 4K video conferencing, telehealth, and remote learning. The FCC cites that graphics-intensive work can require a 45 Mbps connection. And they acknowledge what millions of gamers will tell you, which is that a 20 Mbps connection is far from adequate. Keeping a 20 Mbps definition of broadband is a regulatory decision that says that these faster uses of broadband are not important or needed.

We also can’t forget that the definition of broadband is not just for households. Cable company networks that offer 20 Mbps upload to businesses are massively inadequate. Businesses have migrated a lot of functions to the cloud, and I could list fifty ways that businesses want to use upload broadband – and many can’t due to slow technologies.

You might think that the definition of broadband is not important – but it says that any ISP connection slower than the definition is not really broadband. If the FCC considers a faster upload speed it will provide an incentive for ISPs to upgrade technology to meet a faster definition – since customers will demand speeds that are considered to be broadband.

Unfortunately, the FCC will likely adopt the 20 Mbps definition, and millions of homes, and particularly businesses, will continue to suffer with inadequate upload speeds for the next five years until the FCC looks again at the definition of broadband. This is a chance for the FCC to implement a policy change that will have real market implications. But the FCC probably doesn’t want to face the ISP lobbying effort to keep an inadequate definition of broadband – even as ISPs are already making upgrades that can meet a faster definition.

Fifty States – Fifty Different BEAD Grants

When the NTIA suggested BEAD grant rules, a lot of industry folks assumed that states would largely follow the NTIA suggestions and that there would be a lot of similarity in the BEAD grant rules between states. It turns out that the opposite is happening, and many State Broadband Offices are taking unique approaches. In this blog, I compare the BEAD grant rules for Georgia and Illinois. I picked these states only because these are the two most recent rules I’ve read – but every other state plan I’ve read is also different than these two. It looks like fifty states means fifty different BEAD grant programs. Following is a high-level comparison of the two states:

Overall Approach. Georgia will only accept grants in the first round that offer to build fiber – other technologies will only be considered in a subsequent grant round if there isn’t enough money or grant requests for bringing fiber. The Georgia rules also strongly reward ISPs who propose to build an entire county.

Illinois has at least a two-step grant program. The first grant round will only accept proposals to build high-cost areas (that are designated as such by the state). The second round is for everything else. This is an odd approach since ISPs will fear winning high-cost areas but then not winning the nearby areas that together would constitute a coherent study area.

Most Important Scoring Metrics. Georgia gives 50 out of 100 points based on the amount of grant requested per location. Since everybody will be proposing fiber, the costs should be similar, so an applicant can grab the most grant points by offering the greatest percentage of matching funds. An ISP willing to contribute 40% of the cost of building will likely beat somebody who wants to contribute the minimum 25% matching. But this like RDOF, and an ISP is only competing against those that bid for the same County.

Illinois will award 25 of 100 points based strictly on the amount of matching offered. An ISP offering less than a 30% match will win 0 points. An ISP must cover 60% of the cost of the project to get the full 25 points. Illinois awards another 25 points for the cost of the grant award per passing compared to a not-yet-published suggested reference cost per location calculated by the state. By definition, this approach strongly favors lower-cost technologies like wireless.

Broadband Rates. Georgia will award 15 points to an ISP that promises that symmetrical gigabit prices will always be lower than the rates for the service in Metropolitan areas of Georgia.

Illinois will award 20 points for ISPs to meet specific price targets (5 points for each): $30 for 100/20 Mbps. $50 for 100/100 Mbps. $80 for 500/1000 Mbps. $100 for symmetrical gigabit.

Local Support. Georgia will award up to 9 points based on the volume and strength of the support from local communities.

Illinois will award 4 points for breadth and depth of local support and another 4 points if local community members or organizations make a verified financial commitment to the grant.

Other Grant Points

 Georgia:

  • 10 points for compliance with fair labor laws
  • 8 points for broadband speeds
  • 5 points for speed of network construction and deployment
  • 2 points for having been an ISP in Georgia for at least three years
  • 1 point for having a headquarters in Georgia

Illinois

  • 5 points for compliance with fair labor laws
  • 6 points for broadband speeds
  • 6 points for offering open-access
  • 3 points for speed of network construction and deployment
  • 2 points for working in a community that has participated in the Accelerate Illinois program.

My Summary. If I didn’t know these are both BEAD grants, I would never guess these are from the same funding source. The scoring emphasizes drastically different priorities.

Georgia. It will be interesting to see if the NTIA will allow the state to shut out other technologies. The scoring benefit from bidding for entire counties might violate the Congressional edict that grants can be as small as a single location. The emphasis on whole-county bids will make it hard for ISPs that want to edge out from existing networks or electric coops that only want to build in their own territory.

Illinois. The scoring benefit for meeting specific prices for specific products seems to violate Congressional intent that specified that BEAD should not set or influence rates. The huge amount of matching required to get grant points seems to not recognize that BEAD areas are extremely rural, by definition. I’ve never seen a rural fiber business plan that can tolerate 40% to 60% equity contributions – that’s why nobody has built these areas. The grant points from comparing actual costs to some target cost set by the state means these grants are going to heavily favor lower-cost wireless technology. The points for open-access are a head-scratcher since it’s almost impossible to successfully operate a rural open-access network unless it can serve 20,000 or more customers.

Bottom line: Georgia obviously favors fiber to the exclusion of other technologies. My best guess is that the big scoring related grant dollars per passing will favor big ISPs over small ones. For Illinois, I’m not sure if it’s intentional, but WISPs are going to score far better than anybody proposing to build fiber. Georgia could get border-to-border fiber while Illinois could get border-to-border wireless.

Again, these two plans were not chosen because they are extreme examples. These two plan just demonstrate the wide variance of state philosophies behind BEAD. I must note that these are proposed plans that might get changed before being sent to the NTIA. It will be interesting to see how pressure from ISPs and the public influence the final rules. The NTIA also will have to approve these plans.

I also have to wonder if State political leaders understand the direction that their State Broadband Offices are taking – because the grant scoring rules are going to largely define who has a chance of winning in each state – both the technology that is favored and the size of ISPs that are likely to win.

Is Carrier of Last Resort Dead?

The concept of common carrier stretches back to the 14th century in English law, where businesses were granted the exclusive right to be in business as long as they were willing to serve everybody. The term common carrier came into use to describe the obligation of businesses like coaches, ferries, etc. that were required to serve anybody who asked to be transported. The concept was carried over to businesses that were given a franchise to serve a local area, and businesses like blacksmiths and innkeepers were required to serve anybody who wanted service. This concept still applies to businesses today, like railroads, which are not allowed to selectively refuse to carry freight.

Carrier of last resort (COLR) is a version of common carriage that has been applied to businesses that operate large networks like telephone companies, electric companies, water companies, and gas companies. Federal or State rules have always required such businesses to serve anybody inside of the franchise area who requests service.

In exchange for being granted a franchise area, COLR for telephone companies has always come with specific obligations. A COLR is expected to serve everybody in the franchise area, even if that means extending facilities. A COLR needs regulatory approval to withdraw from serving customers. A COLR is expected to operate the business with care, skill, and honesty and to charge fair and reasonable prices.

The concept of carrier of last resort for telephone companies started to weaken with the passage of the Telecommunications Act of 1996. This Act allowed for local telephone competition, and some legislators or regulators granted relief for telephone companies from some of the carrier of last resort obligations. For example, some states have eliminated COLR obligations as part of deregulation. Some regulators have eliminated most COLR obligations for specific telephone companies for the same reason. But even in most cases where the COLR obligations have been weakened, regulators still usually require a telco to ask for permission to withdraw from a market.

While some COLR obligations were weakened, others were expanded. For example, some states have required CLECs (competitive telephone companies) to accept COLR obligations in exchange for participating in subsidy programs. Cities have often only agreed to give a franchise agreement to CLEC or ISP that agrees to serve everybody. In many cases, this obligation is no longer explicitly called COLR, but uses terms like “duty to serve” or “obligation to serve” but refers to obligations similar to COLR.

The COLR issue has come to the forefront for broadband because of broadband grants and subsidies. Some state and local broadband grants have included an obligation to serve everybody in a grant area. The largest subsidy program to require 100% coverage is the Rural Digital Opportunity Fund (RDOF). ISPs that accept this funding are expected to offer service to 100% of homes and businesses in the covered Census blocks by the end of the six-year deployment period. It’s not entirely clear if the upcoming BEAD grants will require 100% coverage, and that final determination will likely be included in each State’s final grant rules.

Is the agreement to serve customers that is obligated through a grant or subsidy program the same as a carrier of last resort obligation? I expect not. For example, will an RDOF winner be expected in the future to extend the network to newly constructed homes?

There are clearly going to be households in RDOF areas that are not offered service. For example, many of the RDOF winners use fixed wireless technology, and there are always homes in any area that can’t be reached with the technology for some reason. In hilly and heavily wooded areas, this might be a large percentage of households.

Does a home that is not covered by RDOF have a reasonable remedy to get service? In the past, a customer could complain to State regulators if a telco was refusing to serve them. It’s hard to imagine an individual homeowner opening an expensive and complicated FCC proceeding to complain about being missed by RFOF.

Technology is also creating havoc in rural areas for traditional telephone company obligations. When I was recently upgrading my cellphone in an AT&T store, I overheard the AT&T representative tell a customer that they would soon be losing their telephone copper and would be moved to FWA cellular wireless.  My county is extremely hilly and wooded, and there is a major lack of rural cell towers. There is a good chance that this customer is not within reach of the offered cellular broadband. It sounds like the end of carrier of last resort obligations if a telco can cut the copper wires and move customers to a cellular service that doesn’t work at their home.

In circling back to the question asked at the beginning of this blog, are there many places left where a regulator will step in and demand that an ISP built infrastructure to reach an unserved household? I think the chances of that happening are getting increasingly remote.

Keeping Track of BEAD

The NTIA has a great dashboard for tracking the status of the last several steps needed before States can receive BEAD grant funds. The dashboard seems to be regularly updated to allow you to track the state or states you are interested in.

This dashboard tracks the progress of each state’s specific BEAD grant plans. The NTIA has split the BEAD action plan from states into two volumes that address specific issues.

BEAD Volume I covers the following issues:

  • Status of current grant funding that has already been used in a state to bring broadband to unserved and underserved locations.
  • A list identifying the remaining unserved and underserved locations.
  • A list of the community anchor institutions that don’t yet have good broadband
  • A description of the state’s final upcoming challenge process where local governments and ISPs will be able to challenge the accuracy of the broadband maps to define areas eligible for BEAD grants.

BEAD Volume II is the core of how the BEAD grants will work and covers the following topics:

  • The specific objectives of a state’s BEAD grant plan.
  • A description of how a state assisted local, tribal, and regional broadband planning efforts
  • A description of the local coordination process where a state was supposed to reach out to all corners of the state to get feedback on the BEAD grants.
  • The specific plan of how the BEAD grant process will be structured. This includes defining the grading scale that will be used to choose grant winners.
  • A description of how some BEAD funds will be used for non-deployment purposes, and how grant winners will be selected. Non-deployment uses of BEAD includes grants for activities like cybersecurity training, promoting telehealth, improving digital literacy skills, etc.
  • Description of how a state will monitor the implementation of grants.
  • Description of how a state will track the jobs created by the grants
  • Description of how the BEAD grants will be use a diverse and highly skilled workforce
  • Description of how the funding process will give priority to minority and women-owned businesses.
  • Description of the steps a state has taken to reduce the cost and the barriers to infrastructure construction and deployment.
  • Description of how a state will assess the impact on climate by the projects
  • Description of the requirements for ISPs to offer low-income rate plans
  • Description of how a state will make sure that ISP rates are affordable for the middle class.
  • Descriptions of how a state will use the first 20% of BEAD funding
  • Description of any waivers that a state plans to use for situations where state laws conflict with BEAD requirements, such as not allowing grants to be awarded to local governments.

If anything, this list of requirements shows that states have more to do than just award grants. States must track a wide range of related issues and must satisfy the NTIA that the state will meet all of the obligations required in the NTIA BEAD rules.

There is a link at the end of the first paragraph of the dashboard that takes you to the Public Notice Posting of State and Territory BEAD and Digital Equity Plans/Proposals. This page includes the key documents that have been created by each State. This includes links to:

  • 5-Year Action Plans. Each state must file a plan to describe the goals and priorities for making sure that everybody gets access to broadband. It appears to me that in the haste to get BEAD grants awarded that the 5-year plans are not being given a lot of attention. It’s something that states need to complete, but the plans I’ve read so far are pretty generic.
  • Digital Equity Plans. These are plans to provide digital equity grants that are separate from the $42.5 billion allocated to last-mile broadband.
  • Volumes I and II of each state’s BEAD proposals.
  • The two NTIA NOFOs that describe the specific requirements for the digital equity and BEAD grants.

FCC Considers New Definition of Broadband

On November 1, the FCC released a Notice of Inquiry that asks about various topics related to broadband deployment. One of the first questions asked is if the definition of broadband should be increased to 100/20 Mbps. I’ve written about this topic so many times over the years that writing this blog almost feels like déjà vu. Suffice it to say that the current FCC with a newly installed fifth Commissioner finally wants to increase the definition of broadband to 100/20 Mbps.

The NOI asks if that definition is sufficient for the way people use broadband today. Of most interest to me is the discussion of the proposed 20 Mbps definition of upload speed. Anybody who follows the industry knows that the use of 20 Mbps to define upload speeds is a political compromise that is not based upon anything other than extreme lobbying by the cable industry to not set the number higher. The NOI cites studies that say that 20 Mbps is not sufficient for households with multiple broadband users, yet the FCC still proposes to set the definition at 20 Mbps.

There are some other interesting questions being asked by the NOI. The FCC asks if it should rely on its new BDC broadband maps to assess the state of broadband – as if they have an option. The answer to anybody who digs deep into the mapping data is a resounding no, since there are still huge numbers of locations where speeds claimed in the FCC mapping are a lot higher than what is being delivered. The decision by the FCC to allow ISPs to report marketing speeds doomed the maps to be an ISP marketing tool rather than any accurate way to measure broadband deployment. It’s not hard to predict a time in a few years when huge numbers of people start complaining about being missed by the BEAD grants because of the inaccurate maps. But the FCC has little choice but to stick with the maps it has heavily invested it.

The NOI asks if the FCC should set a longer-term goal for future broadband speeds, like 1 Gbps/500 Mbps. This ignores the more relevant question about the next change in definition that should come after 100/20 Mbps. According to OpenVault, over 80% of U.S. homes already subscribe to download speeds of 200 Mbps or faster, and that suggests that 100 Mbps download is already behind the market. The NOI should be discussing when the definition ought to be increased to 200 or 300 Mbps download instead of a theoretical future definition change.

Setting a future theoretical speed goal is a feel-good exercise to make it sound like FCC policy will somehow influence the forward march of technology upgrades. This is exactly the sort of thing that talking-head policy folks do when they create 5-year and 10-year broadband plans. But I find it impossible to contemplate that the FCC will change the definition of broadband to gigabit speeds in the next decade, because doing so would be saying that every home that doesn’t have a gigabit option would not have broadband. Without that possibility, setting a high target goal is largely meaningless.

The NOI also asks if the FCC should somehow consider latency and packet loss – and the answer is that of course they should. However, they can’t completely punt on the issue like they do today when FCC grants and subsidies only require a latency under 100 milliseconds and set no standards for packet loss. Setting latency requirements that everybody except high-orbit satellites can easily meet is like having no standard at all.

Of interest to rural folks is a long discussion in the NOI about raising the definition of cellular broadband from today’s paltry 5/1 Mbps. Mobile speeds in most cities have download speeds today greater than 150 Mbps, often faster. The NOI suggests that a definition of mobile broadband ought to be something like 35/3 Mbps – something that is far slower than what a urban folks can already receive. But talking about a definition of mobile broadband ignores that any definition of mobile broadband is meaningless in the huge areas of the country where there is practically no mobile broadband coverage.

One of the questions I find most annoying asks if the FCC should measure broadband success by the number of ISPs available at a given location. This is the area where the FCC broadband maps are the most deficient. I wrote a recent blog that highlighted that seven or eight of the ten ISPs that claim coverage at my house aren’t real broadband options. Absolutely nobody is analyzing or challenging the maps for ISPs in cities that claim coverage that is either slower than claimed or doesn’t exist. But it’s good policy fodder for the FCC to claim that many folks in cities have a dozen broadband options. If it were only so.

Probably the most important question asked in the NOI is what the FCC should do about the millions of homes that can’t afford broadband. The FCC asks if it should adopt a universal service goal. This question has activated the lobbyists of the big ISPs who are shouting that the NOI is proof that the FCC wants to regulate and lower broadband rates. The big ISPs don’t even want the FCC to compile and publish data that compares broadband penetration rates to demographic data and household incomes. This NOI is probably not the right forum to ask that question – but solving the affordability gap affects far more households than the rural availability gap.

I think it’s a foregone conclusion that the FCC will use the NOI to adopt 100/20 Mbps as the definition of broadband. After all, the FCC is playing catchup to Congress, which essentially reset the definition of broadband to 100/20 Mbps two years ago in the BEAD grant legislation. The bigger question is if the FCC will do anything meaningful with the other questions asked in the NOI.

A Peek Inside the FCC

I write a lot about the FCC, but I would imagine that a lot of the folks who read this blog don’t realize the many functions handled by the agency. Like any regulatory agency, the FCC staff and Commissioners have been tasked by Congress with a wide range of responsibilities.

The public gets to formally hear from the FCC once each month when the agency has its public meeting. These meetings are where the Commissioners vote on various issues. The monthly meetings operate much like a city council meeting, with items on a public agenda coming up for discussion or a vote.

In the November open meeting, the FCC will be voting on a wide range of issues.

  • The Commissioners will vote on a proposal that is supposed to identify and prevent digital discrimination. The FCC was required to examine this issue by November 15 in the Infrastructure Investment and Jobs Act.
  • The Commission will consider rules to help victims of domestic violence by helping survivors separate service from their abusers and also protect the privacy of calls made to domestic abuse hotlines.
  • The FCC will debate opening an investigation into the threats posed by artificial intelligence in the generation of robocalls and robotexts.
  • They’ll be looking at rules to thwart cell phone fraud by scammers who take over victims’ cell phone accounts by covertly swapping SIM cards to a new device or porting phone numbers to a new carrier.
  • They will consider rules to modernize ham radio by allowing operators to use digital tools.
  • They will look at a specific case that will reduce regulation in the rural long-distance market.
  • And while not on the listed agenda, the FCC is looking at resetting the definition of broadband to 100/20 Mbps.

The public meetings are only one small piece of what the FCC routinely tackles. Here are a few of the other ongoing functions of the FCC:

  • Is in charge of spectrum policy and use. Decides exactly how each slice of spectrum can be used and who can use it. Was in charge of wireless spectrum auctions – but this is now on hold.
  • Issues licenses to users of services the agency regulates. This includes radio and TV stations. This includes spectrum licenses, such as microwave links. It includes authority for companies to engage in international long-distance.
  • Approves communications devices before they hit the U.S. market. This includes a long list of electronics like computers and peripherals, power adapters, Bluetooth devices, remote control devices, IT equipment, WiFi and other wireless equipment, cellphones and telephones, radio transmitters, garage door openers, etc.
  • Approves and regulates satellite companies that will engage in communications.
  • Oversees the Universal Service Fund through an arrangement with USAC.
  • Participates in a Joint Board with state regulators looking at universal service policies and regulations.
  • Tackles ad hoc issues, like the current push to try to control and eliminate robocalling and spam calls. Another interesting, current effort involves examining how to improve communications for precision agriculture.
  • Is in charge of issuing telephone numbers.
  • Makes certain that those with disabilities have access to communications systems.
  • Oversees disputes from companies that engage in areas the agency regulates. Courts often remand lawsuits filed in the court back to the FCC.
  • Issues fines to companies that break its regulatory rules.
  • Accepts and sometimes tries to mitigate consumer complaints about regulated companies.
  • Coordinates with regulators around the world on issues of common interest, like spectrum usage and device compatibility.

Tackling Junk and Hidden Fees

The Federal Trade Commission recently proposed rules that would stop businesses from charging hidden fees. The agency estimates that junk fees cost consumers tens of billions of dollars per year.

The new rules would prohibit companies from jacking up bills with hidden and bogus fees and instead require that businesses clearly disclose their fees to customers. The new rules would also allow the FTC to order full refunds to consumers for any business that continues to bill the prohibited fees.

Specifically, the new rules ban the following practices by businesses:

  • Many companies advertise a low price and then spring hidden fees on customers at the time of purchase. Companies would be required to advertise the true cost of their products or services.
  • Companies would also be forbidden from using bogus fees, which are fees that seemingly have no purpose other than jacking up the price.

Hidden fees are a problem in numerous industries. Recently, several of the large ticket companies agreed to eliminate hidden fees after a loud public outcry after the sale of Taylor Swift tickets. Some hotel chains and airlines layer on extra fees that drive up the costs far above the advertised price.

Other federal agencies are joining the fight against these fees, including the FCC, The Consumer Financial Protection Bureau (CFPB), the Department of Housing and Urban Development (HUD), and the Department of Transportation (DOT).

The FCC proposed rules in June that would stop cable and satellite companies from charging hidden fees for cable TV service. The hidden fees for cable TV have grown so large that they sometimes exceed the advertised price of the cable product. Customers don’t generally find out about the hidden fees until they have signed a contract for the low advertised price and get the first bill. The FCC is tackling hidden fees for cable since it’s an industry that the agency still regulates. Hidden fees on cable have been outrageous for years, and it’s a fair question to ask why the FCC never addressed the issue in the past.

There are some hidden fees on broadband, but for now, the FCC can’t address these since broadband isn’t regulated – so I guess these fall under the FTC’s purview. The biggest such fees are mandatory modems, which some ISPs now charge as much as $15 per month. Another big hidden fee for some families is data caps that hit when customers use more than some arbitrary amount of broadband in a month. There are also smaller hidden fees like Frontier’s $1.99 fee for an Internet Infrastructure Charge – a bogus fee for which there is no specific underlying cost.

The initiative to eliminate hidden and bogus fees comes from prodding from the White House. President Biden made it clear to federal agencies a year ago that he expects them to tackle the issue.

This is something that has been badly needed for a long time. It’s too bad that the FTC is the agency doing this. The FTC typically only brings proceedings against specific companies, so compliance with this rule is going to be hit or miss. Smaller companies might continue to use the practice in the hope that they are small enough to stay under the FTC’s radar. But perhaps the FTC will levy large fines while also ordering full refunds against a few companies that don’t comply and scare most companies into compliance.