What is ‘Light Touch’ Regulation?

The new FCC Commissioner Ajit Pai has made several speeches in the last month talking about returning to ‘light-touch regulation’ of the big ISPs. He is opposed to using Title II regulation to regulate ISPs and wants to return to what we had in place before that.

His argument is that the Internet has grown and thrived under the prior way that it was regulated. And he has a point – the Internet has largely been unregulated since its inception. And in many ways the industry has even received preferential regulatory treatment such as the way that Congress has repeatedly exempted broadband services from taxes.

It’s certainly hard to argue with the fact that the Internet has thrived. It’s a little harder to draw the conclusion that light regulation was the cause for this, as the Internet has primarily grown because people love the online content they find there.

But we are now at a different point in the broadband industry than we were when it was in its infancy. Consider the following:

  • The vast majority of homes now have broadband. While the industry is still adding customers there aren’t that many more households that can get broadband that don’t have it.
  • Look back just ten years ago and there was a lot more competition for broadband. In 2007 cable modems and DSL served roughly the same number of customers with similar products in terms of speed. But today cable broadband has become a near-monopoly in most markets.
  • One of the drivers towards implementing net neutrality was the explosive growth of video. Just a few years ago there were many reports of the big ISPs slowing down Netflix and other video traffic. The ISPs were trying to force video providers to pay a premium price to gain access to their networks.
  • While broadband prices have held reasonably stable for a decade, both the cable TV and voice products of the large ISPs are under fire and it’s widely expected that the ISPs will have to start raising broadband rates every year to meet earnings expectations.
  • The ISPs have changed a lot over the last decade and all of the big ones now own content and are no longer just ISPs. This gives them competitive leverage over other competitors.
  • The Internet has become a far more dangerous place for consumers. Hacking and viruses run rampant. And the ISPs and web services like Google and Facebook routinely gather data on consumers for marketing purposes.

I would be the first to agree that hands-off regulation probably contributed to the growth of the Internet. But this is no longer the same industry and it’s hard to think that any of the big ISPs or transport providers need any further protection. These are huge companies with big profits.

It seems to me that the Chairman’s use of the term ‘light-touch regulation’ is code for basically having no regulations at all. And since that was the state of the industry just a few years ago we don’t have to stretch the imagination very far to know what that means.

Before Title II regulation the FCC had almost no power over the big ISPs. The most they could do was to encourage them to do the right thing. Interestingly, in the two or three years leading up to the Title II order it was the threat of coming regulation that kept the ISPs in line more than anything else. The FCC tried to intercede in disputes between the ISPs and video providers and found that they had no leverage on the ISPs. The FCC also didn’t like data caps but they had no power to do anything about them. However, since the ISPs feared price regulation under Title II most of them raised data cap limits to defuse the public outcry over the issue.

So my recollection of the past five years is that it was the threat of coming regulation that kept the big ISPs in line. Because at the end of the day a big ISP could challenge the FCC on broadband issues in court and win every time. So the FCC’s best way to influence the ISPs was to hold the threat of regulation over their heads.

If we go back to that same regulatory place (which is what would happen if Title II is reversed) then there will no longer be any leverage at the FCC. ISPs will be free to do almost anything they want in the broadband arena. The FCC has already let them off the hook for consumer privacy, and that is just the beginning.

You can expect without regulation that the ISPs will do all of those things that net neutrality was supposed to protect against. They all say today that will never happen, and that they believe in the core tenets of net neutrality. But I think we all know that is public relations talk and that the big ISPs will pursue anything that will make them money. That means discriminating against traffic and demanding payments from video providers to get unimpeded broadcasts. It means the ISPs favoring their own content over content of others. And it means a return of price caps and broadband price increases with no fear of FCC intervention. I have a hard time thinking that ‘light-touch’ means anything other than ‘no-touch.’

Another Reversal of the FilmOn X Decision

In the continuing saga of looking for alternate ways to get programming to the home, the U.S. Court of Appeals for the Ninth Circuit reversed an earlier ruling that said that FilmOn X had a right to retransmit over-the-air television signals.

FilmOn is a global provider of internet-based programming. They carry over 600 channels of broadcast TV from around the world. They also carry a big library of movies and offer a few of their own theme-based channels (such as Shockmasters that specialize in Alfred Hitchcock movies and television shows).

I won’t go through the history of the company and its attempts to carry the major US networks like ABC, NBC, CBS and Fox. The company was granted the right to carry this content several times in various courts and then had those decisions reversed by other courts. This case marks the third time that the company has been told it doesn’t have the right to retransmit these networks.

The company has tried several ways of delivering these networks to customers. They originally just grabbed the signals out of the air and put them on the internet. When told this wasn’t allowed by the courts they then set up satellite farms to wirelessly send individual signals to customers in a manner similar to Aereo.

This latest ruling said specifically that FilmOn is not eligible to call itself a cable company and to demand that local stations sell them content. That ruling hinged upon testimony provided by the US Patent office that said that such authority for internet-based retransmission was not clear. This differed from an earlier US Supreme Court ruling in the Aereo case that said that internet retransmission was equivalent to cable retransmission.

What’s really at the heart of this case is the definition of who is eligible to retransmit signals from the major over-the-air networks. Congress, through various laws, has given the right (and usually also the obligation) for landline-based cable companies to carry the major networks. Cable companies are obligated to carry those stations that are within certain distances from their customer base.

But over the years those that have been allowed to carry local programming has grown. Within the last decade the satellite cable companies began carrying local stations in many markets. I lived in the Caribbean for many years and some of the cable providers in Puerto Rico and the Virgin Islands somehow obtained the rights to carry some New York City local stations. Today there are a number of OTT providers like Sling TV and Playstation Vue that are carrying local network stations.

But the current rules draw a firm distinction between those that must carry local programming and everybody else. And this gives the flexibility to local stations to decide if they will sell their signal to those without the automatic rights. The big networks have decided to provide programming to Sling TV, but not to FilmOn or Aereo.

Originally both FilmOn and Aereo captured the broadcast signals from the air and put them onto their own networks. That obviously angered the big networks and they got that ruling reversed. But then these providers refused to sell their signal to these two companies. One has to think that was partly done to punish these companies for challenging them, and perhaps partly due to the cable companies who lobbied against competition.

This ruling could really stifle new OTT providers. It seems one part of the OTT appeal is the ability to deliver local network programming as part of their packages. This ruling gives local stations the ability to choose who can or cannot buy their signal, and to thus pick winners and losers in the competitive OTT battlefield.

It’s hard to think that this makes any sense. But Congress or the FCC could clarify this issue if they cared to tackle it. Just over two years ago the FCC put out a Notice for Proposed Rulemaking asking about this exact topic. The FCC wanted to clarify the rights for internet-based programmers to buy content, and in that docket the FCC had suggested that anybody ought to be allowed to buy programming if they agree to pay the market rates for it. But the FCC has never acted in that docket which has led to today’s situation where some providers are given programming and others not. The have-nots aren’t just companies like FilmOn and Aereo, and it’s been reported for years that Apple has been unable to get programming rights.

At some point this needs to be clarified. The last companies we want deciding who can or cannot offer programming services are the major networks, especially since some of them are owned by cable companies. I have no idea if the FCC will address this, but they need to.

Regulating Broadband

I’ve often hear it suggested that we ought to regulate broadband like a utility. The proponents of this idea say that this is the only way to make sure that everybody gets broadband and to make sure, over the long haul, that broadband stays affordable. But it’s never been entirely clear in hearing these arguments if people mean we should regulate the physical networks that carry broadband or the broadband products that ride on any network (or both).

Obviously in the current environment where the big ISPs have gained the favor of both the FCC and Congress regulation of this sort is not going to happen. But governments change, and so the time could come when such regulation is possible. But even if we had a pro-regulation government, I see all sorts of issues that would make such regulation hard to implement and still remain fair. Consider the following issues:

Size of ISP. Any regulation might only need to be applied to the biggest ISPs. A few companies like Comcast, AT&T, Charter (Spectrum), Verizon and CenturyLink together sell over 80% of the broadband connections in the country (and more if you count cellular data as broadband). Smaller ISPs have little market power, and some of them, like the smaller independent telephone companies, would tell you that they are already regulated to a large degree.

Incentive to Deploy New Technology. One of the reasons that historic telephone regulation worked so well was that the technology used to deliver traditional telephone service was expected to live out its full economic life, meaning that telcos could make an investment and know that they would recover the cost of doing so. But that is no longer the case. We now live in a world where there are dizzying new technologies developed all of the time that are faster, cheaper and better at delivering broadband. The large ISPs are not keeping up with technology improvements today in a fully deregulated environment where they can charge enough to recover their costs – it’s hard to imagine that regulations would do anything but slow down the rate of technology upgrades.

What gets Regulated? Today’s fiber networks are not as simple as older TDM networks. A lot of new fiber construction is being done for purposes other than serving residential customers. For example, Verizon just announced that they were ordering over $1 billion of fiber cable – but I think most of this fiber is going to be used to replace leased transport to cellular towners and is not going to be used to bring broadband to customers. It’s going to be hard in a complex network to define regulated and non-regulated assets.

What About Competition? Regulation works best with monopolies, which is why there is still regulation for electric and water companies. But the ISP world is a maze of differing levels of competition. There are cities – or neighborhoods of cities – that are competitive and areas where there are virtual monopolies – and this can differ block by block in larger cities. It’s hard to think of a regulatory scheme that somehow accounts for such differences.

Regulating Parts of Businesses. The big ISPs are no longer just ISPs, and in fact most of them make a most of their profits elsewhere. I just wrote a blog a week ago discussing how complex Comcast has become with their mix of cable networks and other businesses like television networks, sports teams, and soon cellular wireless. It’s incredibly challenging to regulate companies of this complexity because they have the ability to manipulate the books of the regulated entity to show any level of earnings they want. They could shift costs to make a regulated entity perform as well or as poorly as needed to satisfy regulators.

Realities of Wall Street. Rate regulation has always meant setting a reasonable return on investments for the regulated entity. The return for telephone companies that are still under rate regulation is being phased-down to just over 9%. To those of us who wish we had a bank account that could earn that much it might sound like a high rate of return. But the realities of Wall Street are that capital investments must earn more than that. If we put that kind of cap on new fiber investment for the big ISPS, I think the result would be a massive cut back in building new fiber. Wall Street would punish ISPs for investing capital at returns that low. And if the big companies stop building the rest of the industry including equipment vendors come to a screeching halt.

Challenges of Re-regulation. I’ve tried to work through the idea of how to take companies like Comcast and somehow regulating them. Putting the politics and the chances of this happening aside, I’m not sure how you can take assets that were built during a time of no regulation and somehow start regulating them. The court cases against that effort would probably stretch for a decade.

My conclusion from all of this is that it’s an interesting idea and thinking about it is a great mental exercise. But I can’t envision how you could somehow shove today’s unregulated companies back into a regulated environment. Even was the government determined to do so it might be too hard to do without causing more harm than good.

How Much Does Title II Regulation Matter?

We’ve known since January that new FCC Chairman Ajit Pai has intended to somehow roll back net neutrality. And now he’s started the process and says that he wants the Commission to undo regulation of broadband using Title II rules. I’ve been thinking about this for a while, and today I ask the question if this rollback means the end of the open Internet as a lot of press would have you believe.

It’s not an easy answer. Let me start with a quick review of the history of Title II regulation. The FCC has wanted to somehow regulate some aspects of broadband for a long time. They took a stab at this back in 2010 that established six principles that became known as net neutrality. But the courts eventually said that the FCC didn’t have the authority to enforce these rules. The court order that reversed the FCC interestingly suggested that they only path they saw to accomplish the FCC’s goals was to invoke Title II regulation.

Title II regulation derives from various acts of Congress that were developed in the last century to regulate telephone companies. When these regulations started back in the 1930s, the primary nationwide telephone provider was Ma Bell (AT&T) and the FCC used the new rules to heavily regulate the company. But those old rules don’t really fit broadband and so in the net neutrality order the FCC chose to invoke only the parts of the old rules that applied to broadband – and that is what made the big ISPs the most nervous. This feared that a future FCC could unilaterally elect to invoke other of the old title II rules, including the ability to regulate rates.

So, in a second try at net neutrality the FCC elected Title II regulation and then layered on some new concepts that are referred as bright line rules, which includes no blocking of broadband traffic, no throttling of content and no paid prioritization of traffic. These are the rules that proponents of net neutrality care about, and so the key question going forward is if the FCC can find some way to enforce the bright line rules if they get rid of Title II authority.

Frankly, it will be hard. If net neutrality is reversed we’ll be back to the regulatory regime that was in place before 2015. The FCC largely regulated broadband for a number of years by pressuring ISPs to be good citizens – but the FCC didn’t have the legal authority to make most things stick. Any time a big ISP didn’t like an FCC directive they knew they could take it to court and win due to lack of FCC authority. Everything I have read suggests that without Title II regulation that we’d back to that same place – where the FCC would have no real authority over most issues affecting broadband.

There is only one path that would codify the bright line rules, and that is if Congress would pass legislation requiring the bright line rules. The whole reason that the FCC has no clear authority over broadband is that numerous Congresses have refused to grant it to them. I can remember at least half a dozen attempts by earlier Congresses to create the needed new rules, but there has never been enough support to pass the laws and to overcome any potential vetoes by presidents.

I certainly don’t have any political crystal ball and I have no idea if this Congress or some future one might tackle this issue with legislation. A faction of the current Congress has been making noise about having a new telecom act, and this could be done as part of that effort. But that doesn’t seem likely from the current Congress. Here at the beginning of their new session they appear to favor big corporations like Comcast and AT&T over the public on these issues. It’s probably worth noting that most smaller ISPs already follow the bright line rules and it’s only a handful of the largest companies that create all of the problems.

The biggest fear of ISPs of all size is that telecom issues have become a political ping-pong ball that will bounce back and forth as we change future administrations or future Congresses. That kind of uncertainly plays havoc with creating new products and policies. I think even the largest ISPs would rather keep net neutrality regulated if the alternative was to see the rules radically changed every few years.

There are market forces that could have some impact on net neutrality. One is competition. For example, if one of the large wireless carriers adopts practices that violate net neutrality and that customers don’t like, then one or more of the other carriers will likely compete by promising products that the public wants.

And the public is likely to to have a big influence on combatting bad ISP behavior. Recall that the FCC received far more comments from the public on the net neutrality docket than anything else they had ever considered. And also remember that it was public outcry that stopped companies like Comcast from imposing draconian data caps. There is not a ton of competition in many broadband markets – but there usually is some. As new wireless products eventually come onto the market there will be even more competition. In this new day of social media we’ve started to see that the public can be stirred up to react in strong ways against big companies that have practices they don’t like. So perhaps an engaged customer base and growing competition will work over time to somewhat keep the big ISPs in line. As an ISP customer I’d much rather have firm regulations in place that prohibit bad ISP behavior – but I guess we’ll have to take whatever we can get.

FCC Loosens Regulation of Special Access

The FCC voted last week to eliminate any price controls on special access in about 90% of the markets in the US. The vote to implement this was 2-1 with Mignon Clyburn, a Democrat, issuing a detailed dissent that is worth the read. I can’t lay out the arguments against this deregulation in a short blog as well as she has done.

The order largely refers to what has been historically been called special access as BDS – Business Data Service. This refers to broadband connections sold by incumbent telephone companies using TDM (time division multiplexing) technology. This is technology that is based upon T1s (1.54 Mbps) or multiples of T1s. Techies I know that live in urban areas are surprised to find out how much of this TDM technology is still left in the world.

But a lot of businesses in the country still rely on this technology. There are still a surprising number of businesses that are not connected to fiber. And away from urban areas there are still a lot of business districts that have never been connected to a cable company network. And this means there are a lot of businesses that have special access as their only real broadband option. Further, the Telecommunications Act of 1996 forces special access interconnection onto competitors of the big telcos unless they own fiber directly into the large tandem hubs of the telcos.

The deregulation rules largely look at competition by county and are as follows:

  • Price caps will be eliminated in a county if 50% of the potential customers are within a half mile of a location served by a competitive provider.
  • A county would be considered as competitive if 75% of Census blocks have a cable provider.

That’s one of the more bizarre definitions of competition I can recall. Consider the typical county seat in most rural counties in the US. That is typically the town where most of the businesses for the county are located. If a handful of the businesses in the town get broadband from the cable company then the whole county is likely to be considered as competitive, removing any price caps on BDS services.

But I know from working in rural America that many of these county seat towns are anything but competitive. Often the cable companies in these towns are older and outdated systems that don’t offer fast cable modem service. And it’s not untypical for the cable networks to have been built years ago to only residential neighborhoods before cable systems were capable of delivering data – and since then the cable companies likely have not invested in expanding the network to business parks.

The prices charged by the telcos in these situations is already gigantic. I was working with a rural county in Minnesota last year where a company that makes upscale kitchen cabinets was paying well over $150,000 per year to get a less-than-adequate broadband connection. Had that town had real competition it’s likely that they could buy the speeds they need for a tiny fraction of that price. This business is considering relocating just to avoid the draconian broadband costs – and that would pull good-paying jobs out of a rural county.

The half-mile rule is also an odd measure of competitiveness. I have heard from hundreds of businesses over the years that have been quoted astronomical prices from the incumbent telco if they wanted to get a fiber connection. I’ve seen price quotes as high as almost $100,000 for a mile of fiber construction. A business that is a half-mile, or even a quarter mile from fiber might as well be 100 miles away.

The opponents of this FCC order all believe that AT&T, Verizon and CenturyLink will use this as an excuse to raise rates on special access. And that is the heart of this order. There is no way that this can be justified. The old incumbent telco networks are old and their costs have been recovered many times over. But as these big telcos have lost residential DSL customers to competition they have leaned more heavily on businesses buying special access. This is still a gigantic money-maker for the telcos.

I think Commissioner Clyburn summarized this order well. She said that she was not surprised by the order because this is industry consolidation month at the FCC. By that she means that recent FCC actions have all been aimed at helping the biggest companies in the industry rather than consumers. In this case it’s the schools, libraries, small businesses and governments in rural America that will pay the price so that the large incumbent telcos can maintain their high profits.

The FCC’s Plan for Net Neutrality

This is already stacking up to be the most disruptive year for telco regulations that I can remember in my career. While 1996 and the Telecom Act brought a lot of changes, it looks like it’s possible that many of the regulations that have been the core of our industry for a long time might be overturned, re-examined or scrapped. That’s not necessarily a bad thing – for example, I think a lot of the blame for the condition of the cable TV market for small providers can be blamed on the FCC sticking with programming rules that are clearly obsolete. 

We now know for sure that one of our newest regulations, net neutrality, is going to largely be done away with at the FCC. FCC Chairman Ajit Pai has now told us about his plans for undoing net neutrality. His plan has several components. First, he proposes to undo Title II regulation of ISPs. Without that form of regulation, net neutrality naturally dies. It took nearly a decade for the FCC to find a path for net neutrality, and Title II was the only solution that the courts would support to give the FCC any authority over broadband.

However, Pai says that he still supports the general concepts of net neutrality such as no blocking of content and no paid priority for Internet traffic. Pai proposes that those concepts be maintained by having the ISPs put them into the ISP’s terms of service. Pai also doesn’t think the FCC should be the one enforcing net neutrality and wants to pass this responsibility to the Federal Trade Commission.

It’s hard to know where to start with that suggested solution. Consider the following:

·         I’m concerned as a customer of one of the big cable companies that removing Title II regulation is going to mean ever-increasing broadband rates, in the same way we’ve seen with cable rates. While the FCC said they didn’t plan to directly regulate data rates, they’ve already put pressure on the big ISPs over the last few years to ease up on data caps. Since the big ISPs have tremendous pressure from Wall Street to always make more, they have little option other than increasing data rates as a way to increase the bottom line.

·         Unless some federal agency proscribes specific and unalterable net neutrality language, every ISP is going to come up with a different way to describe this in their terms of service. This means that the topic can never really be regulated. For example, if somebody was to sue an ISP over net neutrality, any court ruling would be specific to only that ISP since everybody else will be using different language. Regulation requires some level of consistency and if every ISP tackles this in a different way then we have a free for all.

·         Probably the most contentious issue that brought about net neutrality was the big fights between ISPs and companies like Netflix over the interconnection of networks. I recall the FCC saying during some of those cases that they were one of the most challenging technical issues they had ever tackled. It’s hard to think that the FTC is going to have the ability to intercede in disputes of this complexity.

·         The proposed solution presupposes that the FTC will have the budget and the staff to take on something as complex as net neutrality. From what I can see it’s more likely that most federal agencies are going to have to deal with smaller budgets in coming years. And we know from long experience that regulations that are not enforced might as well not exist.

Interestingly, the big ISPs all say that they are not against the general principles of no paid priority and no blocking of content. Of course, they have a different interpretation of what both of those things mean. For example, now that a lot of the big ISPs are also content providers they think they should be able to offer their own content on a zero-rating basis. But overall I believe that they were okay with the net neutrality rules. They don’t like the Title II regulation because they fear rate regulation, but I think they mostly see that an open Internet benefits everybody, including them.

The one thing that big ISPs have always said is that the thing they want most from regulation is consistency and predictability. All of the changes that the FCC are making now are largely due to a change in administration – and in the long run the ISPs know this is not to their benefit. Of course, they have always complained about whatever rules are in place, and frankly that’s part of the industry game that has been around forever. But the last the thing the big ISPs want is for the rules to swing wildly back the other way in a future administration. That creates uncertainty. It’s hard to design products or to devise a 5-year business plan if you don’t know the rules that govern the industry.

Leasing Rural Cellular Spectrum

I don’t write often about potential legislation since there are numerous bills submitted to Congress every year that never make it out of committees. But there is a recently proposed bill that could create both an opportunity to expand rural broadband and also a threat to those already serving rural areas.

The bill is H.R. 1814 the Rural Spectrum Accessibility Act.  It has been introduced as a bipartisan bill by Congressmen Adam Kinzinger (R-IL) and Dave Loebsack (D-IA). It’s a very short bill, with the full text here. The bill is currently being considered by the House Energy and Commerce Committee.

The bill proposes to encourage owners of cellular wireless spectrum to partition or disaggregate their spectrum for use in rural areas and to lease the spectrum to small carriers. In this case a small carrier is defined as any carrier that has fewer than 1,500 employees (which most of the folks reading this blog would consider as a pretty large carrier!).

The bill would instruct the FCC to extend the license for three years for any wireless license holder that agrees to lease spectrum under this new law. That is a major boon to wireless spectrum holders and one would imagine that many of them would look for opportunities to take advantage of this offer.

The leased spectrum could only be used in rural areas, which is defined in the normal definition used for most other regulatory purposes as towns or with populations less than 20,000 and all areas that we think of as rural.

The Opportunity. The opportunity would be a new way for rural carriers to provide broadband. Numerous rural carriers are now offering wireless point-to-multipoint broadband using unlicensed spectrum. But the range of coverage with this technology is relatively short with the strongest signals only carrying for a few miles. Unlicensed spectrum is subject to interference by foliage or any physical barrier like a hill.

But cellular spectrum carries up to three times further when used for point-to-multipoint data. Depending upon the density and the number of customers to serve, this spectrum could be used to deliver fairly robust broadband. I’ve talked to customers on the new point-to-multipoint service offered by AT&T that receive data bursts as fast as 30 Mbps. But in really rural areas with a handful of customers, speeds could be considerably faster than that. I’d note that AT&T apparently only offers the faster speed in short burst, but a rural carrier could establish that as a permanent speed. In addition to greater distance, the cellular spectrum also travels well through foliage, through walls at homes, and even bounces over hills fairly well.

The opportunity is for rural carriers to be able to bring data services to customers at a greater distance from a tower, but probably most importantly would offer a wireless option for carriers operating in heavily wooded areas like Appalachia or the Pacific Northwest. Unlicensed spectrum is a poor alternative in those places.

The Threat. Of course, there also exists a threat to every existing rural carrier in that some other carrier can now compete with them in rural areas. The bill says that the spectrum would be available to any small ‘carrier’ and that generally means anybody that is certified by states – meaning not only ILECs, but competitive CLECs.

If this becomes law I would envision rural CLECs asking to lease spectrum. I also envision carriers like WISPs becoming carriers in order to use this spectrum.

It certainly is an interesting idea. Wireless license holders have always had the ability to lease spectrum in rural areas. I have three clients who have been able to lease cellular spectrum from Sprint, for example. But for the most part it’s always been difficult to get the attention of rural spectrum owners, and I know several clients have been unable to lease spectrum from any of the existing license holders. For the most part the cellular license holders aren’t interested in dealing with small carriers. This legislation would still not guarantee that spectrum would be made available, but it would add an incentive for license holders to make such leases.

Can ‘Dig Once’ Work?

There is a lot of discussion on Capitol Hill of implementing a national ‘dig once’ policy that would require that empty conduit be placed whenever anybody builds new roads or sidewalks or upgrades existing ones.

This is an idea that has been around for a while. President Obama tried to require this as part of an executive order in 2012 for all federal road projects. But this never was implemented when the road projects didn’t have specific funds allocated for the conduit and labor. Rep Anna Eschoo (D-CA) has been proposing legislation for this annually since 2009. And a number of cities around the country have adopted dig once rules of various types.

It seems like this is an idea that has wide bipartisan interest now on Capitol Hill and so there has been a lot of talk about a dig once bill being implemented. Rep Marsha Blackburn (R-TN) put the latest bill from Representative Eschoo onto the agenda for the House Communications and Technology Subcommittee. A number of legislators from both sides of the aisle have announced support for the bill.

But today I want to examine if a dig once policy will be effective in helping to build more broadband. Certainly in the long run it seems like a good idea – if every street in the country already had empty conduit today we’d be a lot further along in getting broadband everywhere. This would be particularly true in rural areas where the cost of burying conduit (or of getting onto poles) is the major hurdle for building new fiber networks. But like anything that involves infrastructure, there are right and wrongs ways of implementing such a policy that could limit the usefulness of conduit it is done poorly.

Speed of Deployment. The number one issue that I foresee is the slow speed of deployment of conduit under this policy. Most streets and roads are engineered to be replaced on a 30 to 50 year cycle depending upon the use of the road and local weather conditions. There are also huge miles of unpaved rural roads that may not be excavated for even longer, if ever. What this means from a practical perspective is that it’s going to be a long time until there is enough conduit in place to make a difference. Since America needs broadband now, I have concerns about a policy that won’t provide any significant amount of conduit for decades to come. I fear that the time to implement this was twenty years ago and that it might be too late for this to have any practical impact on building fiber that is needed now.

Access to Local Connections. A bigger concern is the issue of access to fiber. Consider a conduit that is laid with the dig once rules along a few miles of a busy business district. If that conduit was not constructed with the needed access – handholes and manholes – then the fiber will be largely unusable for delivery of fiber to the businesses along that street. It can be nearly as expensive to come back and add access to a conduit than it is to build new fiber.

Having empty conduit make a lot of sense along stretches of highway that will be used for for middle mile fiber to connect towns. By definition, middle mile fiber is built without many access points since the primary purpose of the fiber is to connect to adjoining communities. I think it was the access issue that stopped the federal highway department from implementing President Obama’s executive order. It’s one thing to put a conduit into an empty ditch, but it’s something very different to spend the engineering dollars needed to decide where access points are needed during road construction and to then pay for the access points.

To some extent this requires highway builders to have a crystal ball – where will the potential customers be along a conduit route fifteen or twenty years in the future? Failure to provide access to the conduit where it will eventually be needed will result in numerous future holes being dug in the street when somebody tries to use the conduit for local access.

There is even a simpler issue that be a problem with empty conduit. Consider a fiber that is built down one side of a busy highway. It can be an expensive effort to later tunnel under the highway to serve people on the opposite side of the highway. This means that using the empty conduit might cost more than alternate construction methods like building on overhead pole lines for distribution. Having empty conduit available does not always mean saving money. Do we mandate putting empty conduit on both sids of a new road?

I’ve already seen the practical consequences of having a patchwork of empty conduit in place. I’ve had clients try to build fiber in towns that had some empty conduit, and in some cases the hassle of trying to integrate existing conduit into an engineering plan was more work and cost than it was worth to these clients.

Uniform Rules of Use. It’s likely that dig once rules will apply to anybody that digs up streets. This might mean that over time there will be numerous different entities placing empty conduit in a City like the street department, the gas company, the water company and anybody else that digs up streets. Who is responsible for keeping track of the specific location of the empty conduit? How do you coordinate somehow connecting conduit that is built at different times, at different depths and on various different sides and parts of streets? Who is responsible for maintaining the conduit – for example, what happens when somebody cuts an empty conduit? I could easily make a list of dozens or practical issues that must be considered to make this work.

Without specific local rules I envision a hodgepodge of conduit built that doesn’t connect into a coherent network. I also have worked with numerous communities that do a poor job of record keeping and I picture losing track of conduit placement and creating an engineering and paper nightmare for a future fiber builder.

Competition. This may sound like an odd concern, but I can also picture dig once rules being a disincentive to build new fiber. Consider a situation where somebody is contemplating building fiber today along a route to get to a cell site of a subdivision. Companies that build fiber understand that the payback takes many years, and that factors into financing the new construction. If  fiber builder knows that a given stretch of road is going to be excavated five years from now they might not want to spend the money today to build fiber there. For example, would it make sense to spend the money to build fiber to a rural cellular site if five years from now the cell site owner will be able to bypass you using ‘dig once’ conduit? It would be ironic if this rule leads to less fiber being built – but I can picture cases where that might be the result of the rule.

Other issues. I can think of other kinds of issues that should be addressed with a dig once policy. For example, what will be the cost to use conduit built in this manner and who decides what fair compensation is? Can a new fiber overbuilder by forced to use empty conduit even if it’s more expensive than some alternative form of construction? How do you deal with the numerous jurisdictional issues since there are widely different ways that state, local and private roads are built and paid for around the country.

Dig once is one of those ideas that instantly sounds like a good idea to anybody that hears it. But like most things that sound simple but which are really complex – if its done right it could do a lot of good, and if done poorly it could waste a lot of money and result in conduit that is never used. I’d hate to see this turn into another federal mandate that ends up building ‘bridges to nowhere’.

The Latest on Federal Broadband Infrastructure

There is a lot of talk in DC of working towards a federal infrastructure funding plan this year. So today I’m going discuss some of the latest news about infrastructure, particularly as it affects broadband funding.

Shovel Ready Projects. A few weeks ago the White House said that they only favored funding ‘shovel-ready’ projects. meaning those projects that have already had enough engineering and financial work done to understand the costs and benefits. The President said that he didn’t want to fund projects that would then take ten years to get started, something that is not that unusual for highway projects.

Size of the Funding. US Transportation Secretary Elaine Chao last week said that the administration’s infrastructure plan would be for $1 trillion spread over ten years. That’s the first time we’ve heard any specific numbers and time frame. There is no telling at this point whether the funding would be spread evenly over the years. Secretary Chao said the details of the plan would be released later this year.

Including Broadband? Secretary Chao said that that “the proposal will cover more than transportation infrastructure, it will include energy, water and potentially broadband and veterans hospitals as well.” This certainly tells us that broadband funding is not a sure thing at this point.

Probably Not Outright Grants. Secretary Chao also reiterated what the administration had said earlier that any funding was going to favor public-private partnerships and was not likely to directly fund projects. This has always been expected, but this doesn’t tell us anything about the nature of the support. There was talk during the transition of the infrastructure plan to heavily favor using tax credits, meaning that it would favor and induce large companies to invest in infrastructure.

I suspect the idea of public private partnerships for roads tells us to expect a lot of new tolls roads. Advisers to Trump have said they would rely on federal tax credits and public-private partnerships rather than federal spending to pay for a new infrastructure program. The concept of public-private partnership is a bit puzzling when it comes to broadband in that there are many states where local governments can’t participate in broadband or are severely restricted from doing so.

FCC’s Position. FCC Chairman Ajit Pai said recently that any broadband funding ought to be handled through the Universal Service Fund mechanisms since it already has the processes in place to handle such funding. The Chairman came out heavily in favor of significant broadband funding for rural areas as well as funding what he calls Gigabit Opportunity Zones that would provide tax incentives for serving low income areas.

Bipartisan Support for Broadband. In early February 48 US Senators from both parties sent a letter to the President supporting the idea that any infrastructure plans should include funding for broadband. My guess is that this is due to the complaints that all politicians are hearing these days from those without adequate broadband.

Democratic Alternative. And of course, since this is Washington DC, there is also an alternate infrastructure plan. Senate Democrats unveiled an alternative $1 trillion plan that would more directly fund infrastructure with mostly outright grants. Their plan includes not only roads and bridges, but also broadband networks, hospitals run by the Department of Veterans Affairs, and schools. In general there is a lot of Democratic support for broadband funding and the plan allocated $20 billion for broadband. I guess the trillion dollar question will be if this is a topic that might find some bilateral agreement.

What are the Odds? When it comes to Washington and politics I don’t have any better crystal ball than anybody else. But it does look like there is bipartisan support for doing something with infrastructure and even more bipartisan support to make sure that broadband is included in any funding package. It’s probably a good time for small service providers to make sure that your DC representatives hear from you. And it’s a good time for those without broadband to yell even louder.

The End of Robocalls?

The FCC took action recently to block certain kinds of robocalls. These are the automated calls we are all familiar with where you hear a recording when you pick up the phone. The FCC estimates that there are over 2.4 billion robocalls per month. If you read the news articles that came out after the FCC order you would assume that this order means the end of all robocalls – but it doesn’t.

The FCC action is intended to eliminate robocalls that come from spoofed sources. Spoofing is when the caller hides their phone number or changes the originating number for caller ID. Callers have numerous reasons to spoof calls. Some spoofers are scammers and use robocalls to initiate fraud. For example, the IRS says that over $26 M in fraud is done each year from robocalls posing as tax collection calls. Other callers use spoofing to avoid the Do-Not-Call rules which is supposed to prevent solicitation calls to people who have elected to not receive them. If the number that shows up on caller ID is wrong, then there is no way for the FCC to catch or fine a caller from violating those calling rules.

The FCC accepted a proposal from a ‘strike force’ of large companies like AT&T, Google, Apple and Comcast to tackle the issue. Some spoofed calls will be relatively easy to block, like when spoofers use numbers that can’t be real such as 000-000-0000. But spoofers also use disconnected or unused numbers and these will be more challenging to find. A spoofer could use a legitimate number for a short time and abandon it before being blocked. Spoofing is similar to computer hacking in that it’s a game of cat and mouse – and you’d expect spoofers to figure ways around any schemes to catch them. It will be interesting to see how effective the strike force is at blocking spoofed calls.

But it’s important to remember that a lot of robocalls are legitimate and will continue. First, anybody is allowed to make a legitimate robocall to people who are not on the Do-Not-Call list. But even if you are on that list, all sorts of entities are allowed to call you. For example, any merchant like a bank, credit card, insurance company, cell phone provider, etc. is allowed to call their own customers. Government are allowed to call citizens and that means that political robocalls are legitimate as well as calls from other parts of the government. Certainly nobody is against localities that send out robocalls to warn of tornados, flooding or hurricane evacuations.

And some robocalls are useful. For example, the high school where our daughter goes calls once a week to tell us about things going on at the school. For the most part these are things that you would never hear about from your child.

There is no doubt that robocalls are a huge issue. The FCC says they are by far the number one type of complaint they get. I haven’t had a landline in twenty years, but the last time I spent a few days at my mother-in-law’s house, who still has a landline, I was amazed at the number of solicitation calls she got per day – both robocalls and from live callers. She’s on the Do-Not-Call list and still gets 5 – 10 calls per day.

I think a lot of people will be surprised to find that the FCC’s action won’t stop legitimate robocalls – and that has to be a huge percentage of the calls made. Your bank and other vendors that call you are doing so legitimately and do not try to hide who they are when they call. And I think that when that sinks in that the public they will be disappointed. That fault lies with the many misleading news articles declaring the end of robocalling. The FCC was clear in its own declaration that this was an action taken to try to eliminate scam calls. But if history has taught us anything it is that scammers will always find a way to do what they do. This order may slow scammers down, but they will find other ways to scam people – including figuring out how to still call using robocalls. I hope the strike force can find a way to stop this, but my guess is they will just slow it down, at best.