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Regulation - What is it Good For?

The White House Encourages Broadband Reform

President Joe Biden signed an executive order last week that covered 72 issues across a wide range of industries including healthcare, agriculture, transportation, technology, and broadband. In the broadband arena it’s hard to call this an executive order because nothing specific was ordered to change – instead, the White House is encouraging the FCC to take four specific steps:

  • It asks the FCC to limit excessive termination fees on customers who want to change Internet Service Providers.
  • The order asks the FCC to eliminate exclusive deals between landlords and ISPs in order to give renters more options for broadband, and in many cases to lower prices.
  • The executive order asks the FCC to revive efforts to require a ‘broadband nutrition label’ that would better inform consumers about the broadband they are buying and would enable the comparison of different broadband plans.
  • Finally, the order encourages the reinstatement of net neutrality.

The executive order doesn’t implement any of these changes, making this more of an executive wish list.

The odd thing about this request is that the FCC is not in a position to implement any of these changes. The primary reason is that the White House has yet to nominate a fifth FCC Commissioner to replace Ajit Pai, who retired at the start of the new administration. With an FCC deadlocked two to two along party lines, no controversial issues are going to pass in this FCC until a new Commissioner is added.

Even if a new Commissioner would start tomorrow, the FCC’s hands are tied for making any sweeping changes concerning broadband since the last FCC under Chairman Pai killed the agency’s Title II authority over broadband. The FCC can’t tackle topics like net neutrality without first reinstating Title II authority or something like it. The process of reinstating Title II authority will not be quick because the agency will have to run through its slow docket process first.

Of course, Congress could shortcut this process by giving the FCC implicit authority to regulate broadband. The agency doesn’t have that authority today because there hasn’t been a Telecom Act from Congress since 1996 and the days of dial-up Internet access. If Congress provides direct authority to regulate broadband we could stop the never-ending battle of changing the FCC’s rules with every change of party in the administration.

Perhaps this executive order is a signal that a new FCC Commissioner is on the way – but even that will take time since any nominee must go through the Senate confirmation process.

In my mind, the most important idea on this list is the broadband nutrition label. ISPs regularly mislead consumers about the broadband products they sell. The big ISPs never talk about the difference between marketing speeds and actual speeds and millions of rural customers receive broadband that is far lower than the speeds they were told they were going to get. Customers are also sold broadband with low special pricing and are only warned in the small print that prices will rise drastically at the end of the special period. It’s hard to think that any other major consumer products in the US are sold with as much deception as broadband and cable TV.

There is one important issue that is missing from the list. I’m surprised to not see data caps on this list. Data caps mostly penalize families that use the Internet in ways that it was intended to be used. ISPs that charge data caps are imposing outlandish fees that are far out of proportion with the extra broadband being delivered.

I’m sure the current FCC will put these issues onto a docket since the White House told them to do so. But it’s hard to envision any progress being made until a fifth FCC Commissioner is on board.

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Regulation - What is it Good For?

Grant Money Should Build for the Future

I filed comments with the Department of Treasury concerning the questions they asked about broadband speeds in the Interim Final Rules for how states, cities, and counties can spend the ARPA grant funds. The following is the gist of my comments.

Question 22: What are the advantages and disadvantages of setting minimum symmetrical download and upload speeds of 100 Mbps? What other minimum standards would be appropriate and why?

Treasury is asking the wrong question when asking about current speed requirements. Federal grant money should only be used to build technology that will be capable of meeting broadband demands at least a decade from now. A technology deployment built to meet today’s speed requirements starts being obsolete almost immediately after it’s constructed.

I think 100 Mbps download is an adequate definition of broadband in 2021, and I doubt that there will be many arguments against a 100 Mbps requirement since most currently deployed technologies can deliver this speed.

There will be a huge outcry against 100 Mbps upload speeds since major technologies like cable company HFC networks, fixed wireless, and fixed cellular can’t deliver fast upload speeds. Treasury can’t be swayed by this argument – grant money should only be used to deploy technology that meets public broadband demand both today and into the future. ISPs are free to use their own money to deploy any technology – but federal money is precious and should be held to a higher standard.

In looking out only a decade, and using a conservative 21% annual growth rate in broadband speeds, the definition of broadband a decade from now should conservatively be 600/200 Mbps. That’s what I recommend as a reasonable goal for federal grant funding.

Question 24: What are the advantages and disadvantages of setting a minimum level of service at 100 Mbps download and 20 Mbps upload in projects where it is impracticable to set minimum symmetrical download and upload speeds of 100 Mbps? What are the advantages and disadvantages of setting a scalability requirement in these cases? What other minimum standards would be appropriate and why?

As described earlier, I think federal grant funding ought to be used to support a network that will still be viable a decade from now. My best guess of the upload requirement for a family of four today is between 30 Mbps and 40 Mbps. In looking forward a decade, that means upload speed requirement for a federal grant should be between 200 Mbps and 270 Mbps.

I think there are ISPs using major technologies like cable HFC networks, fixed wireless networks, and fixed cellular networks that are going to suggest that the proper upload speed for a grant should be 20 Mbps or less. Our vast experience of conducting broadband surveys all over the country during the pandemic showed us that a 20 Mbps upload path is already not always adequate today for a home with multiple people working or schooling from home at the same time. If Treasury sets the definition as low as major industry players are likely to suggest, then those networks will launch as already inadequate and will become badly obsolete as time goes by.

Question 25: What are the advantages and disadvantages of focusing these investments on those without access to a wireline connection that reliably delivers 25 Mbps download by 3 Mbps upload? Would another threshold be appropriate and why?

I think Treasury has identified one of the biggest problems with previous federal broadband grants by now saying that the test for grant eligibility is that an ISP can “reliably” deliver at least 25/3 Mbps. The reality is that much of the technology that is reported to the FCC today as being capable of 25/3 Mbps delivers far slower speeds.

We need to talk about real-life networks using three different definitions of speed – maximum speed, minimum speed, and marketing speed. The maximum speed is the fastest speed that a given technology can achieve in ideal conditions. But network conditions are rarely ideal, except perhaps when a single home is using a node at 3:00 AM – and even then, there could be slowdowns from node congestion outside of the neighborhood.

Minimum speeds are something we’ve always referred to as actual speeds. These are the speeds we see on speed tests, and they rarely equal the maximum speed.

Marketing speeds are something else altogether, and some ISPs advertise numbers close to actual speeds while others advertise purely fictional speeds that are greater than the maximum speeds. Unfortunately, the FCC allows ISPs to report marketing speeds, and this is one of the big contributors to the lousy FCC mapping data.

Areas should qualify for federal grant funding based upon the minimum speeds actually delivered to customers and should not use the maximum theoretical speed or the advertised marketing speeds.

My full comments are here: CCG Consulting Comments on Broadband Speeds.

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Regulation - What is it Good For?

The Looming Battle over Upload Speeds

By next week we’re going to see the opening shots in the battle for setting an official definition of upload broadband speeds. You might expect that this is a topic that would be debated at the FCC, but this battle is coming as a result of questions asked by the U.S. Department of Treasury as part of defining how to use the grant monies from the American Rescue Plan Act. Treasury has oddly been put in charge of deciding how to use $10 billion of direct broadband grants and some portion of the gigantic $350 billion in funding that is going directly to counties, cities, and towns across the country.

Treasury asked for comments through a series of questions about the broadband speeds of technologies that should be supported with the grant funding. The questions ask for a discussion of the pros and cons of requiring that grant dollars are used to built technologies that can achieve speeds of 100/20 Mbps versus 100/100 Mbps.

Treasury is not likely to see many comments on the requirement that grant deployments must meet 100 Mbps download speeds. All of the major broadband technologies will claim the ability to meet that speed – be that fiber, cable company hybrid-fiber networks, fixed wireless provided by WISPs, or low-orbit satellites. The only industry segment that might take exception to a 100 Mbps download requirement is fixed cellular broadband which can only meet that kind of speed for a short distance from a tower.

But asking the difference between upload speeds of 20 Mbps versus 100 Mbps has already set off a firestorm of comments around the industry. There are only a few technologies that can reasonably meet 100 Mbps upload speeds – fiber, fiber-to-the-curb as being deployed by Verizon, and wireless mesh networks that bounce millimeter wave spectrum from building to building. Setting the definition of upload bandwidth at 100 Mbps will exclude major technologies such as cable company broadband, fixed wireless, and fixed cellular. Both speed definitions happily put DSL out to pasture for receiving grant funding. We’ve already seen opponents of a 100 Mbps definition of upload speed start publicly making the arguments against symmetrical bandwidth.

A recent blog on the WISPA website argues that argues for upload speeds of 5 Mbps to 10 Mbps. The blog argues that it costs more to build 100/100 Mbps networks (as a way to remind that fixed wireless costs a lot less than fiber).

We know the cable industry is going to come out hard against any definition up upload speed greater than 20 Mbps – since that’s what most cable networks are delivering. In a show of solidarity with the rest of the cable industry, Altice recently announced that it will lower current upload speeds of 35 – 50 Mbps down to 5 – 10 Mbps. This is clearly being done to allow the cable industry to have a united front to argue against faster upload speeds. This act is one of most bizarre reactions that I’ve ever seen from an ISP to potential regulation and a direct poke in the eye to Altice customers.

Back in March, we saw Joan Marsh, the AT&T Executive VP argue that 21st-century broadband doesn’t need upload speeds greater than 10 Mbps. This was an argument that clearly was clearly meant to support using grant funds for rural fixed cellular technology. It’s an odd position to take for the second largest fiber provider in the country.

This is a discussion that should be held at the FCC. However, that agency has punted several times over the last three years on the topic of redefining the definition of broadband. The Ajit Pai FCC announced in several annual reports to Congress that the definition of broadband of 25/3 Mbps is still adequate. I think it’s clear that the Pai-led FCC did not want to take any blame for reclassifying millions of homes as not having broadband.

It’s interesting that Treasury is even involved in broadband grants. But Congress pushed the biggest pile of grant money to Treasury instead of to the FCC or the NTIA – the two agencies with the biggest historic roles in broadband policy. But since Treasury is the agency asking these questions, I have to think that whatever answer Treasury settles on is going to hold big sway moving forward.

This is a topic that the FCC should be tackling, but oddly, the White House is now a half-year into the new administration without recommending a fifth FCC commissioner. Until that position is filled, it seems unlikely that the FCC will tackle the re-regulation of broadband and issues like the definition of broadband. Treasury is going to need to resolve this question quickly since local governments are itching to make final plans for using the ARPA funding.

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Regulation - What is it Good For?

Misunderstanding Public Rights-of-Way

I read an article on WBAY.com, the ABC affiliate in Green Bay, Wisconsin that highlights residents’ dismay over AT&T putting 3-foot pedestals in front yards as part of the process of bringing fiber to a neighborhood. This is a good reminder of the ongoing saga between homeowners and telecom companies over the placement of facilities in public rights-of-ways.

Most homeowners don’t realize that their community has granted a right-of-way for utilities directly along streets and roads. It’s typical for a local government to provide 3-5 feet of right-of-way for utility purposes. The chances are that there are several utilities already buried in the disputed right-of-way in this Green Bay neighborhood. Most utilities are installed before houses are first sold to the public, so homeowners often have no clue that utilities already use their property.

Nobody reminds homeowners when they buy a house that utilities have a right to do construction or place devices at the front of their yard. I can’t recall ever being told that, although it might be buried in the thick pile of papers one signs when buying a home. Homeowners routinely plant flower beds or shrubs in the right-of-way, not realizing that a utility may one day rip out what they have done.

In a situation that is all too familiar with any fiber overbuilder, a city will direct a fiber builder to use the public rights-of-way whenever possible. I’m sure that when AT&T went to build fiber in this particular neighborhood that it was understood by both AT&T and the city that any devices were to be put into the public rights-of-way. There is a disingenuous quote by the Green Bay Public Works Director that his agency and the city are not responsible for the placement of the pedestals – because the city established the rights-of-way and his department approved the permits for the fiber construction.

Every fiber overbuilder can tell stories of irate homeowners who hated when burying fiber dug up a flower bed or, in this example, placed devices that homeowners don’t want. No fiber builder wants to create animosity with potential customers when they place a new network. In this case, AT&T has a legitimate beef when city employees throw up their hands as if this situation is out of their control. Cities enthusiastically support rights-of-ways as a way to keep the placement of utilities under control.

With that said, fiber builders have options. AT&T didn’t have to choose 3-foot-tall pedestals to place in this neighborhood. They could just as easily have used buried flowerpots that would have housed the fiber connections under a metal lid. I have a number of clients that won’t use pedestals for this reason, except perhaps in a few places where there is no other physical choice.

I remember disputes in recent years where cellular companies were placing 12-foot-tall small cell sites in rights-of-way in Colorado – monstrous devices that nobody would want in their front yard. It seems that carriers sometimes go out of their way to antagonize the public. In the long run, utilities and homeowners need to coexist. It’s likely that at least some of the homeowners on this particular street won’t buy broadband from AT&T due to the pedestal issue – or at least not for a few years until people no longer notice the pedestals and the issue is forgotten.

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Regulation - What is it Good For?

The Infrastructure Guessing Game

As Congress inches closer to an infrastructure bill, the industry is feverously speculating how a broadband infrastructure plan might work. There is still a lot of compromise and wheeling and dealing to be done, so nobody knows how a final broadband program might work, or even definitively if there will be one. But since this is the billion-dollar question for the industry, it’s worth a review of the possibilities.

At this point, I think we know where the White House would come down if they were the decider in the issue. We can see the White House’s influence in shaping the policies concerning ARPA grant monies. The White House has pushed to ignore the FCC’s outdated 25/3 Mbps definition of broadband and has quietly pushed for rules that would let broadband money solve the urban broadband gap and not just the rural gap. The White House’s original proposal was for $100 billion to built state-of-the-art broadband infrastructure. Other than that, the original White House plan avoided talking about the mechanics of how to use broadband funding – and that is the real billion-dollar question.

But the White House does not get to decide the details of how infrastructure spending will be done – that responsibility lies fully with Congress. There have been two radically different broadband plans suggested in Congress.

Last year, an $80 billion infrastructure plan was proposed with the Accessible, Affordable Internet for All Act sponsored by Rep. James E. Clyburn of South Carolina and Sen. Amy Klobuchar of Minnesota. This bill included a lot of unique ideas. Most of the funding was to be awarded in one gigantic reverse auction of at least $60 billion. We saw the perils of using the reverse auction last year when much of the FCC’s reverse funding awards went awry. We saw companies with no balance sheets winning huge dollars. We saw grant awardees claiming technologies like gigabit rural wireless that doesn’t exist. We saw money going to an unproven low orbit satellite business. We also quietly saw many of the big incumbents claim huge funding.

The Accessible, Affordable Internet for All Act also had a big emphasis on affordability. This was the act that suggested a $50 monthly discount for low-income broadband that materialized this year in the EFF program. The Act also promotes the idea of open access – an idea that is anathema to many ISPs. Altogether, the mechanics of this Act are troublesome.

Just this month, three Senators – Michael Bennet, D-Colorado, Angus King, I-Maine, and Rob Portman, R-Ohio – reintroduced the Broadband Reform and Investment to Drive Growth in the Economy Act (BRIDGE Act).  This would allocate $40 billion for broadband infrastructure. The bill promotes gigabit broadband and would require that funding only be allowed for technology that can deliver symmetrical 100 Mbps speeds. The bill lifts the ban on municipal participation in creating a broadband solution.  The BRIDGE Act takes a drastically different approach in allocating funding and would give money to States to choose funding priorities.

We now hear that a bipartisan group of Senators and the White House have hammered out a compromise infrastructure plan that would allocate $65 billion for broadband infrastructure. The plan at this point doesn’t talk about the mechanics of how the funding would be awarded. Nut it seems likely that a bipartisan compromise bill would be something different than the bills discussed above. For instance, it’s likely that a bipartisan bill would not support municipal broadband. By all news accounts, this compromise is still far from a done deal, and a Democratic-only infrastructure bill is also being considered. But passage of that is far from assured.

I predict that for the rest of the summer we’re going to continue to see different dollar amounts and different ideas on how to spend the infrastructure money – and that’s assuming there even is an infrastructure bill passed. We are now down to the sausage-making, and anybody who thinks they know how this will turn out has a better crystal ball than mine. There is still a lot of time for DC lobbyists to suggest tweaks that benefit their clients. One thing I think we can count on is every Senator telling us how much they care about solving the digital divide. For the broadband industry, this is great theater and there will be continuous headlines – but it’s also serious business since the plans that are already on the table vary significantly in the details that matter.

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Regulation - What is it Good For?

A Busy Year for State Broadband Legislation

One of the more interesting ways to see the degree to which broadband has grown in importance around the country is to look at the volume of legislation that has been proposed around the country this year. This website from the National Conference of State Legislators shows the status of the many broadband bills that have been introduced in state legislatures.

Of course, much of the legislation didn’t pass, but that’s true of all types of legislation. In the typical state legislative session, there are usually hundreds of bills proposed but only a small fraction that are approved.

There is an interesting chart at the beginning of the report that categorizes the various pieces of broadband legislation. As might be expected, the biggest category of proposed laws is aimed at solving the rural broadband divide. The next big category is funding, and a lot of state legislatures this year allocated money to help solve the digital divide.

The best thing about this website to me is that it’s linked to all of the various bills. Anybody who is interested in improving broadband in their state can likely find proposed bills on this list that provide a jump start for proposing new legislation.

I’ve always found proposed legislation to be fascinating. Many bills are proposed every year that have no chance of being passed, but for which the bill’s author wants to make a political point. There are other bills that get introduced year-after-year, with the author hoping that the time to consider an idea will eventually come.

Not all bills are pro-broadband. There are plenty of bills found in this list that were likely penned by industry lobbyists who are hoping to tamp down competition for the big ISPs.

A policy person could skim through the proposed legislation all day. Here are a few of the more interesting and typical bills I found on the list:

  • Arkansas SB 74 makes it easier for municipalities to partner with existing ISPs. There were laws proposed in other states that make it harder for municipalities to participate in getting better broadband.
  • California AB 34 would create a $10 billion state broadband fund for solving the rural broadband gap, upon approval of the voters.
  • Connecticut HB 6167 would create residential broadband as a public utility and all rate increases would have to be approved by the Public Utilities Regulatory Authority. I’m surprised that some state hasn’t tried this.
  • Florida SB 1944. This was one of several Florida laws that are aimed at modifying regulations for pole attachments. This is a common theme with most bills aimed at making it easier for fiber providers of 5G companies to get access to poles.
  • Illinois HB 3275 established a State Low Income Assistance Program that would provide a $9.95 monthly subsidy for qualifying homes to help pay for broadband.
  • Indiana HB 1522 creates a state broadband map to contrast with the FCC’s faulty maps. There are similar initiatives in other states.
  • Maine LD 80 permanently assigns 33% of sales and use tax revenues to be used to deploy broadband infrastructure.
  • Michigan HB 4210 was vetoed by the Governor and would have given tax breaks to ISPs. There are similar attempts every year by ISPs across the country.
  • Missouri HB 321 allows electric companies to own and operate broadband infrastructure.
  • Virginia SB 1434 requires that any school board that requires virtual learning must provide the needed technology to students.
  • Washington SB 5439 institutes a dig once policy for state highways. Similar bills are contemplated or passed in other states.
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Regulation - What is it Good For?

Grant Funding is Not Free

It’s easy to think of grants as free money, but nothing is ever really free. I know ISPs that have won grants and then decided to return the grant funding once they fully understood all of the costs and requirements that come along with the grant funds. The following are a few of the issues that ISPs might not like about grants.

  • Filing for grants can be expensive, particularly if the grant requires undertaking engineering studies or market studies that the ISP might have otherwise not taken on. There is, of course, no guarantee of winning a grant after going through the cost of grant preparation.
  • Environmental studies can add a lot of cost to a grant. Environmental studies seem unnecessary for networks that will be built entirely in existing utility rights-of-ways that already contain other utilities – particularly when putting fiber on poles. Environmental studies can be expensive in some circumstances. I helped a client that wanted to replace abandoned cell sites on national parkland where the environmental study for a $2 million project cost over $250,000.
  • Archaeological studies can also be expensive and can again seem unneeded when a project will be using existing rights-of-ways and previously disturbed soil.
  • Some grants require historic preservation studies which seem unneeded when the entire network is being built outside and not in or near to historic buildings.
  • Prevailing wages can add a lot of cost to fiber construction – particularly if engineering estimates didn’t anticipate paying higher wages.
  • I’ve seen all of these extra costs add as much as 20% to the cost of a project. It’s easy to think that’s okay as long as the grants cover the extra costs – but these extra costs also add to the needed matching funds which might change the attractiveness of the grant.
  • Grants can require significant paperwork to show compliance with all of the grant rules. Sometimes paperwork is needed annually for many years after the end of grant construction.
  • Grants can require the grantee to provide free broadband to anchor institutions or others for long periods.
  • There have been grants that put restrictions on the grantee selling the grant property far into the future.

ISPs have sometimes found lenders unwilling to lend to a grant-funded project because of the restrictions. For example, a prohibition against selling a grant-funded asset for a decade might make an asset worthless as collateral for a bank loan. You can’t assume that a commercial bank will accept all of the requirements of a grant.

There are obviously many ISPs willing to accept these various provisions when grants provide enough dollars to make it worthwhile. But these various restrictions can be a lot more problematic when taking grant money to fund only a small portion of a larger project – because the restrictions come whether the grant is funding 90% or only 10% of a project.

It can be even more problematic when accepting multiple grants for a single project since each grant likely comes with different rules. It’s sometimes a Gordian knot to reconcile multiple grants with external financing.

The bottom line is that anybody accepting a grant needs to read the fine print and be aware of the restrictions that might come with the grant. Many rural projects are not viable without substantial grants – but as the above list shows, grants are not free.

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Regulation - What is it Good For?

NTIA’s New Broadband Map

The National Telecommunications and Information Administration surprised the broadband industry by issuing a new broadband map for the whole U.S. The map differs in dramatic ways from the FCC’s broadband map, which is derived from broadband speeds that are reported by the ISPs in the country. It’s commonly understood that the FCC broadband map overstates broadband coverage significantly. The NTIA map draws upon varied sources in an attempt to create a more accurate picture of the availability of broadband.

The NTIA map was created by overlaying layers from various data sources over Google Maps. This includes speed test data from both Ookla and M-Lab. The map shows the results from Microsoft measurements of speeds experienced during software updates. There are two layers of data from the American Community Survey showing homes that report having no Internet access at home and also homes that have no computer, smartphone, or tablet. The NTIA also includes the FCC Form 477 data that is the only basis for the FCC broadband map. The NTIA map then offers an additional layer that shows high poverty areas have 20% or more households below the national poverty level. The data in the map can be viewed at both the Census tract and Census block level.

The data on the map is eye-opening. I live in Asheville, North Carolina. The map shows that broadband adoption varies widely across the city. In my Census tract, there are 6% of homes without broadband access. The neighboring tracts have broadband access in between 6% and 10% of households. But there is also a part of the city where 43% of homes don’t have broadband. This is clearly an issue of poverty and not availability because, in the rural areas surrounding the city where there is little option except slow DSL, the percentage of homes without broadband access is around 20%.

The NTIA map sticks it in the eye of the FCC for being so slow to change its broadband maps. The exaggerated coverage in the FCC maps first became obvious to me in 2009 when clients were seeking ARRA stimulus grants that defined homes as either served, unserved, or underserved for the first time. It was clear then that some of the ISP reporting to the FCC was pure fantasy. There has been a loud call since then to fix the FCC maps that has largely gone unheeded until a recent effort to begin the process of modifying the maps. That effort is expected to take a year or two.

The NTIA is making a point that there are many other sources of broadband data than just the FCC data. For example, we all know that speed test data isn’t perfect – but taken in mass, speed tests create a pretty accurate picture of broadband speeds. One of the most interesting data points is from Microsoft – one can argue that the speeds encountered when downloading a big data file like a software update is the best measurement of actual speed. The Microsoft data shows that actual download speeds are far below what ISPs claim in most of the country.

There are even more data points that could be layered onto the NTIA maps. For example, I wish the NTIA has also layered on maps created by State broadband offices because the States have taken a stab at undoing the worse fictions in the FCC mapping.

As might be expected, the industry reacted almost immediately to the new maps. The NCTA – The Internet and Television Association quickly blasted the NTIA maps. The big trade associations probably have a good reason to hate the maps after the Department of Treasury said just last week that cities and counties could rely on mapping data from any federal agency when deciding where ARPA grant funding can be spent. Localities are going to find these maps to be interesting and useful as they consider spending money on broadband infrastructure.

Hopefully, the NTIA will continue to update these maps as new data becomes available. You probably know by reading this blog that I am not a fan of using speed definitions when allocating broadband grants. I think it would far easier, as an example, to say that grants can always be used to overbuild rural DSL. But if the government continues to base grants upon something like the 25/3 Mbps definition of broadband, then maps like this new one are extremely helpful by showing more realistic speed numbers while also reminding is that there are a lot of other factors like poverty and broadband adoption rates to considere when deciding which parts of the country need grant assistance.

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Regulation - What is it Good For?

Treasury Makes it Easier to Fund Broadband

On June 17, the US Treasury Department clarified the rules for using federal ARPA broadband money that is being given to states, counties, cities, and smaller political subdivisions. The new FAQs make it a lot clearer that local government can use the funds to serve businesses and households that are considered as served – meaning they receive broadband speeds over 25/3 Mbps. My first reading of the rules came to the same conclusion, but these clarifications hopefully make this clear for everybody. There was language in the original Treasury Interim rules that might have scared off city and county attorneys from using the funding for broadband. Following is some of the clarifying language from the revised FAQs:

FAQ 6.8 adds the clarifying language that unserved or underserved households or businesses do not need to be the only ones in the service area funded by the project. This is a massively helpful clarification that discloses Treasury’s intent for the funds. The response to this FAQ could have previously been interpreted to mean that the money could only be used to bring broadband to places that have less than 25/3 Mbps. FAQ 6.9 further makes this same point, that while the goal of a broadband project must be to provide service to unserved or underserved areas, a sensible solution might require serving a larger area to be economical – and again, unserved and underserved locations need not be the only places funded by the ARPA funding.

FAQ 6.11 looks at the original use of the term ‘reliably’ when defining the broadband provided to homes and businesses. The Treasury response makes it clear that advertised speeds don’t define broadband speeds, but rather the actual broadband performance experienced by customers.

The use of “reliably” in the IFR provides recipients with significant discretion to assess whether the households and business in the area to be served have access to wireline broadband service that can actually and consistently meet the specified threshold of at least 25/3 Mbps – i.e., to consider the actual experience of current broadband customers that subscribe to served at or above the 25/3 Mbps threshold. Whether there is a provider serving the area that advertises or otherwise claims to offer speeds that meet the 25 Mbps download and 3 Mbps upload speed threshold is not dispositive.  

FAQ 6.11 goes on to clarify that governments can consider a wide range of information to use as proof that broadband is not reliably meeting the 25/3 threshold including federal or state broadband data (meaning State broadband maps or the newly released NTIA broadband map), speed tests, interviews with residents, or any other relevant information. Local governments can consider issues such as whether speeds are adequate at all times of the day – do speeds bog down at the busiest times? Issues like latency and jitter can be considered.

Maybe most significantly, the FAQ gives an automatic pass to overbuild DSL or cable companies still using DOCSIS 2.0. While there are very few homes still served by DOCSIS 2.0, Treasury is allowing localities to basically declare DSL to be obsolete, regardless of any speed claims made by the telcos. This negates the tens of thousands of Census blocks where telcos claim rural DSL speeds of 25/3 Mbps – an area served only by DSL is justification to use the funding.

In a clarification that some states and counties will find reassuring, FAQ 6.10 says that the ARPA funding can be used to fund middle-mile fiber as long as it is done with a goal of supporting last-mile fiber.

These were critically important clarifications since there has been a lot of debate at the local level about whether ARPA money could be used in various circumstances. The clarifications make it clear that ARPA money can always be used to overbuild rural DSL. It’s also clear that the ARPA money can be used in urban settings as long as the funded area included at least one location that doesn’t have a broadband option of at least 25/3 Mbps. There are numerous little pockets in all cities where the cable companies didn’t build and where DSL is the only option. Cities can clearly use this funding to provide support for low-income neighborhoods and places the big ISPs have bypassed or ignored.

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Current News Regulation - What is it Good For?

Why Do We Give Grants to Huge ISPs?

The blog title is a rhetorical question because we all know why we give federal money to big ISPs – they are powerful companies that have a lot of lobbyists and that make a lot of contributions to politicians. But for some reason, the rest of us don’t talk enough about why giving money to the big ISPs is bad policy.

I could write a week’s worth of blogs detailing reasons why big ISPs don’t deserve grant funding. The public dislikes big ISPs and has rated them for two decades as having the worst customer service among all corporations and entities, disliked even more than insurance companies and the IRS. The public hates talking to big ISPs, because every call turns into a sales pitch to spend more money.

The big ISPs routinely deceive their customers. They routinely advertise special prices and then proceed to bill consumers more than what was promised. They have hidden fees and try to disguise their rates as taxes and fees. The big telcos unashamedly bill rural customers big fees for decrepit DSL that barely works. The telcos have known for over a decade that they can’t deliver what they are peddling.

Cable companies come across as better than the telcos only because their broadband technology is faster. But in every city, there are some neighborhoods where speeds are far slower than advertised speeds – neighborhoods where longstanding network problems never get fixed. I hear stories all of the time about repeated slowdowns and outages. About 30% of the folks we’ve surveyed during the pandemic have said that they couldn’t work from home due to problems with cable company upload speeds.

And then there are the big reasons. The big telcos created the rural broadband crisis. They made a decision decades ago to walk away from rural copper. They quietly cut back on all upgrades and maintenance and eliminated tens of thousands of rural technicians, meaning that customers routinely wait a week or longer to even see a technician.

What’s worse, the big telcos didn’t walk away from rural America honestly. They kept talking about how they could provide good service, to the point that the FCC awarded them $11 billion in the CAF II program to improve rural DSL – we paid them for what they should have routinely done by reinvesting the billions they have collected from rural customers. But rather than use the CAF II money to improve rural DSL, most of the money got pocketed to the benefit of stockholders.

While I think the decision to walk away from rural broadband was made in the boardroom – the worst consequences of the decision were implemented locally. That’s how giant companies work and is the primary reason we shouldn’t give money to big ISPs. Upper management puts pressure on regional vice presidents to improve the bottom line, and it’s the regional managers who quietly cut back on technicians and equipment. Rural broadband didn’t die from one big sweeping decision – it was murdered by thousands of small cutbacks by regional bureaucrats trying to earn better bonuses. I’ve talked to many rural technicians who tell me that their companies have taken away every tool they have for helping customers.

What does this all boil down to? If we give money to the big ISPs to build rural networks, they are going to pocket some of the money like they did with CAF II. But even if they use grant money to build decent rural networks, it’s hard to imagine them being good stewards of those networks. The networks will not get the needed future upgrades. There will never be enough technicians. And every year the problems will get a little worse until we look up in twenty years and see rural fiber networks owned by the big ISPs that are barely limping along. Meanwhile, we’ll see networks operated by cooperatives, small telcos, and municipalities that work perfectly, that offer good customer service, and that have responsive repair and maintenance.

I have a hard time thinking that there is a single policy person or politician in the country who honestly thinks that big ISPs will take care of rural America over time. They’ll take federal money and build the least they can get away with. Then, within only a few years they’ll start to nickel and dime the rural properties as they have always done.

I have to laugh when I hear somebody comparing current rural broadband grant programs to our effort a century ago for rural electrification. That electrification money went mostly to cooperatives and not to the big commercial corporations. We’ve lost track of that important fact when we use the electrification analogy. The government made the right decision by lending money to citzens to solve the electricity gap and didn’t give money to the big commercial electric companies that had already shunned rural America.

The main reason we shouldn’t give grants to big ISPs is that solving the rural broadband gap is too important to entrust to companies that we know will do a lousy job. There is nobody who thinks that the big telcos or cable companies will do the right thing in rural America over the long run if we’re dumb enough to fund them.