Will Broadband Labels Do Any Good?

The FCC is still considering the use of broadband labels that are supposed to explain broadband to customers. This sounds like a really good idea, but I wonder if it’s really going to be effective?

Some of the items included on the FCC sample label are great. The most important fact is the price. It has become virtually impossible to find broadband prices for many ISPs. Many ISP, including the largest ones, only show special pricing online that applies to new customers. These ISPs show the public the sale prices, but it’s often impossible to know the list prices. It’s often the same if somebody calls an ISP – they’ll be offered different promotional packages, but it’s like pulling teeth to get the truth about the everyday price that kicks in at the end of a promotion.

I’m curious about how the broadband labels will handle bundling. The surveys we’ve done recently show that half or more of homes in many markets are still buying a bundle that might include broadband plus voice, cable TV, security, smart home, or cellular. Big ISPs have never wanted to disclose the cost of individual products inside of a bundle and I can’t wait to see how ISPs handle a bundled broadband product.

There are also hidden fees and other ways to disguise the real price. Disclosing pricing will be a huge breath of fresh air – if ISPs are forced to be totally honest. I can imagine the PR and marketing groups at the bigger ISPs are already agonizing over how to disclose pricing while still keeping it cloudy and mysterious.

More perplexing is the broadband speed issue. The sample label that the FCC circulated for comment would require ISPs to list the typical download speeds, typical upstream speeds, typical latency, and typical packet loss. What does typical mean? Consider a Comcast market where the company sells residential broadband that ranges between grandfathered 50 Mbps and 1.2 Gbps. What is the typical speed in that market? How will any consumer be able to judge what a typical speed means?

I’ve written about broadband speeds a lot, and for many technologies, the speeds vary significantly for a given customer during the day. What’s the typical broadband speed for a home that sees download speeds vary by 50% during a typical day? I don’t always want to come across as skeptical, but I’m betting that the big cable companies will list the marketing speeds of their most popular broadband product and call it typical. Such a number is worthless because it’s what customers are already being told today. I don’t have a proposed solution for the various speed dilemmas, but I fear that whatever is told to customers will be largely uninformative.

What will the typical consumer do when told the typical latency and packet loss? It’s hard to think many homes will understand what those terms mean or what the typical values mean.

ISPs are also supposed to disclose network management processes. Does this mean a cable company must be truthful and tell some neighborhoods that their coaxial cable is too old and needs to be replaced – because that is s specific network practice? Will a cable company tell a customer that their neighborhood node is oversubscribed, which accounts for slowdowns at peak times? I’m guessing the network management processes will be described at the total market level instead of at the neighborhood level – again, making them largely uninformative.

I’m also curious how the FCC will know if customers are being told the truth. Folks who read this blog might tell the FCC if a broadband label is deceptive or wrong – but what is the FCC going to do with such complaints? Broadband issues are often hyper-local, and what happens on my block might be different than somebody living just a few blocks away.

I want to be clear that I am not against the broadband labels. Forcing ISPs to be public with prices is long overdue, as long as they disclose the truth. But I’m skeptical about many other things on the labels, and I fear big ISPs will use the labels as another marketing and propaganda tool instead of disclosing what people really need to know.

BEAD Matching Funds

Most of the published summaries of the BEAD grant rules state that the BEAD program will provide 75% funding, meaning a grant applicant must contribute 25% of the cost of the grant project. The reality is that the matching rules are more complicated than that simple rule. Following is a more detailed dive into the issue of BEAD matching.

Matching funds can come directly from the grant applicant or can be provided by local and state governments using funding from the CARES or the ARPA programs. The BEAD rules don’t allow matching contributions from other federal sources such as the FCC Universal Service Fund, ReConnect grants, or the RDOF subsidy awards. The BEAD rules allow federal broadband loans to be used to supply the matching funds.

While the grant rules allow matching to come from the CARES or ARPA money, there is a big catch. States are required to incentivize matching funds to be directly funded by entities with the financial wherewithal to make such contributions. This means a State might penalize an applicant with a good balance sheet from using state and local matching funds in an application. This is an interesting feature that means that big corporate applicants or other entities with a strong balance sheet probably should be prepared to directly fund all matching and not use other grants as matching. One way to think about this rule is that the NTIA wants to reward applicants that put skin in the game. They don’t want to see entities that come with 75% BEAD grants and 25% local grants. I know that the big ISPs and other strong entities like larger electric cooperatives are seeking to make partnerships to get access to local grant funds – but this rule might mean that is a bad idea.

There is another provision that I think a lot of grant applicants are going to find disturbing. States are required to incentivize matches of more than 25%. This brings an aspect of what feels like the reverse auction into the process, meaning entities willing to contribute higher matching will gain a preference over applicants bringing 25% matching. I label this as disturbing because this could be a way for the well-heeled giant ISPs to snag a lot of grant awards – they can outbid other applicants by bringing more than 25% matching funds. However, unlike a reverse auction, an outbid applicant gets no opportunity to amend their first proposal and make a counter-off. This makes the BEAD application feel like a blind, one-round reverse auction.

At the other extreme, a State has the ability to waive any matching requirements, particularly for small applicants or for areas with extremely high costs. If not done well, this could really gum up getting funding to high-cost areas. Would somebody offering a 5% match automatically beat somebody that is asking for the match waiver?

The BEAD grants also allow for in-kind matches. These are non-cash donations of property, goods, or services that meet federal audit standards. In-kind matches can be complicated and might include things like employee time or volunteer services; equipment; supplies; indirect costs; computer hardware and software; use of facilities; or waiver of fees associated with access to rights of way, pole attachments, conduits, easements, or access to other types of infrastructure. These are worth considering. For example, it would count as a non-cash in-kind match if a local government provided free permitting for a grant project.

These various matching rules add another layer of complication to the grant process. Applicants now have to worry if pursuing local matching funds from ARPA will hurt their chances of winning. Applicants must worry if some big ISP offers more than a 25% match to outbid them to grab a market. A lot of the answers to these questions will depend upon how a given state interprets the NTIA rules – it won’t be surprising to see these requirements handled differently by state. This means that it’s going to be vital to understand the nuances of what your state is proposing because the grant rules are not going to be the same everywhere.

The NTIA Preference for Fiber

As might be expected when there is $42.5 billion in grant funds available, we are probably not done with the rules for the BEAD grants. There are several areas where heavy lobbying is occurring to change some of the rules established by the NTIA in the NOFO for the grants.

One of the areas with the most lobbying is coming from WISPs that are complaining that the NTIA has exceeded its statutory authority by declaring a strong preference for fiber. The NTIA went so far as to declare that fixed wireless technology that doesn’t use licensed spectrum is not a reliable source of broadband and isn’t eligible for BEAD grants. The wireless industry says that the NTIA is out of bounds and not sticking to a mandate to be technology neutral.

I decided to go back to the Infrastructure Investment and Jobs legislation and compare it with the NOFO to see if that is true. Let’s start with the enabling language in the legislation. The IIJA legislation makes it clear that the NTIA must determine the technologies that are eligible for the BEAD grants. One of the criteria the NTIA is instructed to use is that grant-funded technologies must be deemed to be reliable. Reliable is defined in the Act using factors other than speed and specifically says that the term “reliable broadband service’ means broadband service that meets performance criteria for service availability, adaptability to changing end-user requirements, length of serviceable life, or other criteria, other than upload and download speeds.

I interpret ‘adaptability to end-user requirements’ to mean that a grant-eligible technology must have some degree of what the industry has been calling being future-proofed. A grant-funded technology must be able to meet future broadband needs and not just the needs of today.

‘Length of serviceable life’ refers to how long a grant investment might be expected to last. Historically, broadband electronics of all types typically don’t have a useful life of much more than a decade. Electronics that sit outside in the elements have an even shorter expected life, with components like outdoor receivers for wireless not usually lasting more than seven years. The broadband assets with the longest useful lives are fiber, huts, and new wireless towers. If you weigh together the average life of all of the components in a broadband network, the average useful life of a fiber network will be several times higher than the useful life of a wireless network.

NTIA then used the reliable service criteria to classify only four technologies as delivering a reliable signal – fiber, cable modem hybrid fiber-coaxial technology, DSL over copper, and terrestrial fixed wireless using licensed spectrum. Since DSL cannot deliver the speeds required by the grants, that leaves only three technologies eligible for BEAD grants.

The legislation allows the NTIA to consider other factors. It appears that one of the other factors the NTIA chose is the likelihood that a strong broadband signal will reach a customer. I speculate that fixed wireless using only unlicensed spectrum was eliminated because interference of unlicensed spectrum can degrade the signal to customers. It’s a little harder to understand which factors were used to eliminate satellite broadband. The high-orbit satellites are eliminated by not being able to meet the 100-millisecond requirement for latency established by the legislation. I would speculate that low-orbit satellites are not eligible for grants because the average life of a given satellite is being touted as being about seven years – but I’m sure there are other reasons, such as not yet having any proof of the speeds that can be delivered when a satellite network fills with customers.

From the short list of technologies deemed to be reliable, the NTIA has gone on to say several times in the NOFO that there is a preference for fiber. When looking at the factors defined by the legislation, fiber is the most future-proofed because speeds can be increased drastically by upgrading electronics. Fiber also has a much longer expected useful life than wireless technology.

The accusations against the NTIA seem to be implying that the NTIA had a preference for fiber even before being handed the BEAD grants. But in the end, the NTIA’s preference for fiber comes from ranking the eligible technologies in terms of how the technologies meet the criteria of the legislation. It’s worth noting that there are other parts of the NOFO that do not promote fiber. For example, state broadband offices are encouraged to consider other alternatives when the cost of construction is too high. I think it’s important to note that any NTIA preference for fiber does not restrict a state from awarding substantial awards to fixed wireless technology using licensed spectrum – that’s going to be a call to make by each state.

There is a lot of lobbying going on the expand the NTIA’s list to include fixed wireless using unlicensed spectrum and satellite broadband. I’ve even heard of rumors of lawsuits to force the expansion of the available technologies. That’s the primary reason I wrote this blog – as a warning that lobbying and/or lawsuits might delay the BEAD grants. I think the NTIA has done what the legislation required, but obviously, anybody who is being excluded from the grants has nothing to lose by trying to get reinstated in the grants. When there is this much money at stake, I don’t expect those who don’t like the NTIA rules to go away quietly.

Reducing Construction Barriers

One of the most interesting sections of the BEAD NOFO requires that states must define how they are going to make it easier for grant recipients to implement broadband solutions. Specifically, the BEAD NOFO requires states to try to “reduce costs and barriers to deployment, promote the use of existing infrastructure, promote and adopt dig-once policies, streamlined permitting processes and cost-effective access to poles, conduits, easements, and rights of way, including the imposition of reasonable access requirements.

These are all great ideas, but I have to wonder if whoever wrote that understands how hard it is for a state to change any of these policies. Certainly, there is no state broadband grant office with the power to effectuate any of these changes – is this section of the NOFO aimed at legislatures?

Some states have wrestled with these issues for many years. Consider pole attachment and issues related to streamlining the process of building fiber on poles. At my last count, twenty states have adopted their own state rules for the processes related to pole attachments.

I have been involved in several state proceedings looking at pole attachment issues, and this is not something that any state can change quickly. Changing any of the rules associated with pole attachments means opening a docket and soliciting ideas from the parties involved. Since most poles are owned by electric companies, any proceeding brings in the full lobbying power of the electric companies to not do anything rash. It’s also debatable if a state can implement a radical pole attachment rule that is too far out of bounds with FCC rules – since the FCC requires state rules to still adhere to many FCC standards.

For the FCC to consider changing pole attachment rules would take even longer. The FCC has tackled this a few times, and as you might imagine, looking at this issue from a national perspective is hard since pole attachment issues vary widely by locality. The biggest issue with changing pole attachment rules is the lobbying power of the other parties that use the pole – the telcos and cable companies. While they build a lot of fiber, they don’t want to see it be easier for their competition to build fiber.

It’s hard to imagine finding a way to universally streamline permitting in a state. It’s easy to understand why fiber builders don’t like the hodgepodge of permitting rules since every local jurisdiction has its own set of permitting rules and processes. But there is probably not a lot of interest by ISPs to let a State set universal permitting rules – in many states, the permitting rules for building along state highways are some of the most onerous, costly, and time-consuming. I also doubt that many states could declare jurisdiction over permitting since most state constitutions grant authority over local infrastructure to local governments.

The one change on the NTIA list that would have the most impact would be a requirement to make it easy to use existing infrastructure. There are existing fibers running through almost every rural county that is off-limits to anybody that wants to build last-mile fiber. It’s owned by telcos, cable companies, cellular carriers, and electric utilities – and all would fight tooth and nail against having a mandate to give access to their spare fibers. There is also a lot of fiber owned by state governments, local governments, and school boards. Interestingly, in most states, the legislatures have put these government-owned fibers off-limits for commercial purposes – all due to the lobbying effort of the existing ISPs. This requirement from the NTIA would be asking state legislatures to reverse the rules they put into place and have followed for decades.

Every list about infrastructure efficiency always suggests dig-once as a solution for reducing the cost of building fiber. This policy might have made a difference for the current grants if it was implemented twenty years ago, but implementing dig-once now would have very little impact on building BEAD grants if the requirement went into place tomorrow. Even if dig-once is implemented, it’s unlikely that a state policy will require the extra cost to add frequent access points along buried conduit – and without the access points, buried conduit is often nearly worthless for building last-mile fiber.

I completely understand the sentiment behind this requirement, but I think that state broadband offices are all going to tell the NTIA that these issues are not under their control. I find it a bit ironic that the NTIA wants states to take steps to make it easier and more affordable to build fiber while the NOFO layers on a lot of requirements that significantly inflate the cost of building a BEAD grant network.

Politics and the FCC Maps

Harold Feld of Public Knowledge wrote an interesting personal blog looking at the possibility that the FCC won’t be able to get the needed votes to approve the new broadband maps this fall, which would then put the $42.5 billion BEAD grants on hold. It’s an interesting speculation that, unfortunately, sounds completely plausible.

The blog dives deeply into the administrative rules at the FCC, and Feld explains in detail why the FCC must vote to approve the new broadband maps. There are no administrative alternatives to an FCC vote for approving the maps to use in the BEAD grant process.

That vote is where it gets interesting because that’s where politics and lobbying by the big ISPs come into play. Feld speculates that the FCC might not approve the broadband maps because all votes on similar matters over the last decade have gone entirely along party lines. If partisan voting sticks true for this issue, then a 2-2 tie would mean that the new maps would not be authorized – and without the approval of the new maps, the $42.5 billion of BEAD grants would be on hold.

I’m sure that most people don’t realize how partisan the FCC has become. The FCC routinely approves a lot of administrative issues, often by unanimous votes. The agency has also been approving more complex issues like issuing spectrum – which is not politically controversial.

But the 800-pound gorilla in the room is the question of whether ISPs should be regulated. The big carriers expended huge lobbying efforts and contributions to politicians to get the Ajit Pai FCC to kill Title II regulation. The big ISPs are like the largest companies in every industry in hating to be regulated. But big ISPs are somewhat unusual in that they have effectively been able to largely neuter the FCC, meaning that ISPs are no longer regulated for issues that matter.

The biggest fear the big ISPs have is the idea of price regulation. As the prices for broadband have climbed out of the reach of affordability for many families, the ISPs have to know that a strong FCC would be calling them to task for their rates. The big ISPs must have collectively cringed recently when the NTIA’s NOFO for the BEAD grants talked about requiring a ‘middle-class rate plan’, whatever that is.

The big ISPs know that allowing a fifth Commissioner selected by a Democratic administration will mean a renewal of something like Title II regulation. Staving off regulation is priority one, two, and three on the big ISP wish list. It probably seems unbelievable to the average person that we’re a year and a half into a new administration and we haven’t replaced the outgoing Ajit Pai. But it seems like donations from the big carriers have been effective in squelching a vote to nominate Gigi Sohn.

The billion-dollar question that Feld asks is if Congress will care more about continuing to kill chance of being regulated versus awarding grants to bring broadband to rural America. As Feld points out, the big telcos aren’t enthusiastic about grants that will finally overbuild their historic service territories and kill the remaining revenues, so it’s possible that they are fine with delaying the BEAD grants.

The most important question nobody will be able to answer until this fall is if it will really require five FCC Commissioners to approve the new maps. It’s certainly possible that one or both of the Republican Commissioners could vote to approve the maps, making Feld’s speculation moot. There will certainly be gigantic political pressure to approve the maps – there is a huge groundswell of enthusiasm from communities that believe this is their chance to get broadband. But to a large degree, sitting FCC Commissioners are shielded from direct political pressure.

I know that in most of rural America that broadband is not a partisan issue. I’ve talked to countless county officials who tell me that broadband is the most talked-about local issue. Unfortunately, local sentiments often don’t carry up to DC. If the existing Commissioners continue to vote along partisan lines, as has happened regularly for the last decade, then the only way to break that tie will be the approval of the fifth Commissioner. I don’t have any better crystal ball than anybody else, but the scenario painted by Feld seems far too plausible.

The Extra Costs of BEAD Funding

A few weeks ago, when I did my first summary of the $42.5 billion BEAD grant program, one of my observations was that there are a lot of extra costs for an ISP to accept BEAD funding. This is something that anybody taking the funding must understand. Some of those extra costs include:

Environmental and Historic Preservation Reviews. I’ve occasionally worked on a non-grant network project that required these reviews. For example, these are normal requirements for building networks through state and federal parks. Indian tribes require these if there is any chance of construction through historically sensitive areas. I would expect to take extra precautions if I was building fiber close to the Liberty Bell or some other historical place. But other than those examples, no commercial project I’ve ever worked with has voluntarily done these reviews. Most networks are built using existing rights-of-way along roads where the soil was excavated in the past. I can’t imagine the slightest reason why these reviews would be required for placing fiber on existing utility poles.

Letters of Credit. I’ve written a separate blog on this issue. The grants require an irrevocable letter of credit just to apply, and a second letter of credit from grant winners. I think the NTIA saw the criticism leveled at the FCC in the RDOF process and wants to exclude bad actors, but this jacks up the cost of applying for a grant and could add a few percent to the overall cost of a grant project. This will also likely deter small ISPs who want to fill in some of the neediest pockets but can’t get a bank to provide the line of credit.

Prevailing Wages. Projects over $5 million must use prevailing wages. The majority of the projects will be rural, and the folks who made this requirement don’t understand the rural contractor environment. Rural contractors already pay wages that are some of the best paying jobs in a rural economy. They must do so, or in this time of technician shortage, they wouldn’t have any workforce. But they don‘t pay the extra-high prevailing wage rates that are charged in urban areas. Those rates are higher because of the higher cost of living in urban areas. If prevailing wage studies were done correctly, they’d find a separate prevailing wage for urban and rural communities. To make things worse, rural contractors don’t want to be required to pay prevailing wages if they also have non-prevailing wage workers because it causes dissension between crews who want to all work on the higher-paying project. This is a case of a solution seeking a problem because the existing wages in rural areas are balanced by the lower cost of workers not having to live in cities.

Requirements on Contractors. The BEAD NOFO layers a few new requirements on contractors. As an example, a construction contractor working on a BEAD project must certify that it has a workforce development program that includes participation in an apprenticeship program. This requirement ignores an important characteristic of most fiber and tower contractors – many of these contractors have few direct employees. They instead hire small crews of specialty subcontractors – and these small subcontractors will walk away if asked to meet this requirement or do extra paperwork. My fear is the contractors who have historically worked in rural markets won’t take BEAD work if it puts extra burdens on them – there is plenty of non-BEAD work.

Heavy Reporting Requirements. I don’t have a problem with requiring follow-up reporting on the effectiveness of grants, and in the past, some programs like CAF II had almost no follow-up. But the reporting requirements for BEAD are more detailed than anything I’ve seen, so it’s going to cost more to comply.

Grants are Taxable. We can’t forget that grants are taxable income to any taxable entity that accepts the funding. I’m hearing rumors of a D.C. workaround on this issue, but without a solution, it’s going to be hard for a small commercial ISP to justify taking millions in grant money if that means having to somehow fund paying 21% of that back to the federal government plus whatever will be due to the state. It’s not comforting to know that the tax savings will roll back over the next twenty or thirty years as grant-funded assets are depreciated. This is not specifically a BEAD issue and applies to all grants from local, state, or federal sources.

Summary. One of the sentiments I loved in the grant NOFO is that the NTIA wants to get broadband to even the most remote places, and they used the example that funding should be available to reach even a single location. But I have to laugh when I look at these requirements and see that reaching that single remote location might get layered with hundreds of thousands of dollars of extra costs.

The biggest drawback of expensive grant compliance is that it drives up the cost of every grant project. And that means that the BEAD money won’t stretch as far to bring broadband to as many homes. For an individual grant applicant, the extra cost translates into the need for more out-of-pocket matching funds – which in some cases will be enough to make a project infeasible.

I fully understand the desire at the NTIA to not fund bad projects. I imagine there are folks there that still remember the agency being accused in 2009 of funding projects that were “fiber to nowhere”. But the many extra grant requirements feel like we’re applying a pound of prevention to solve an ounce of risk. Any one of the various grant requirements can probably be justified, but when taken as a whole, the grant requirements are adding extra cost and hassle that will make many ISPs pass on the opportunity.

More RDOF Controversy

I read a lot of petitions and pleadings at regulatory commissions. But one of the most extraordinary filings I can remember was made recently in Minnesota, where the Minnesota Telephone Alliance and the Minnesota Rural Electric Association jointly filed with the Minnesota Public Utilities Commission, asking to revoke the ETC status for LTD Broadband. I call this extraordinary because I can’t recall ever seeing a big group of petitioners asking to decertify another carrier.

The petition stems from LTD being the winner in the RDOF auction in Minnesota to receive $311 million to bring broadband to 102,000 passing in the state. In the RDOF filings, LTD promises to build fiber-to-the-premise to all of these passings. The petition contends that LTD can’t make the financial commitments to fulfill the RDOF pledge.

The petition relies heavily on a recent South Dakota proceeding where the State denied LTD’s petition to gain ETC status. ETC stands for Eligible Telecommunications Carrier and must be awarded by a state regulatory authority or by the FCC to any carrier that wants to collect funding from the FCC’s Universal Service Fund. In order to get ETC status, a carrier must demonstrate that it has the technical, managerial, and financial resources needed to operate.

In this case, LTD already has ETC status in Minnesota – something it got in the past as an operating WISP in the state. This filing argues that LTD doesn’t meet the technical, managerial, or financial requirements to tackle a huge fiber build in Minnesota. I’m not going to spit back the specific details, which are in the petition and the gist of the filing is as follows. The petitioners argue that the State can’t take a chance on LTD. If the FCC awards the RDOF funding to LTD, the company will have six years to build the fiber network, with completion landmarks that must be met along the way. The first completion goal is not until three years after the award, and the pleading argues that is too long to wait to find out if LTD can fulfill its requirements. The petition argues that if LTD fails to build broadband as promised that it would be detrimental for the households involved because the current period of big federal grant funding will have passed. That might mean no broadband for the 100,000 impacted homes for many years.

LTD has already run into problems with getting ETC status in other states. The FCC vacated the RDOF awards in California, Kansas, Oklahoma, Iowa, Nebraska, and North Dakota because LTD didn’t properly apply for ETC status in those states as required for all RDOF winners. As mentioned, the South Dakota Public Utilities Commission recently denied ETC status for LTD.

From a regulatory perspective, it’s an interesting petition. It is fairly easy for a state to deny a new petition for ETC status. A state can deny a petition based on a carrier not meeting any one of the managerial, technical, or financial requirements. It’s harder for a state to revoke an ETC status that the state has already granted in the past. The petition argues that there are new facts available that were presented in South Dakota, including information on the FCC long-form application made by LTD to the FCC that shows that the company cannot meet its financial obligations to fund the broadband. Those documents aren’t available to the public, so we don’t know specifically what that means.

Interestingly, the Minnesota PUC doesn’t have to do anything. Regulatory bodies are free to accept or reject requests to open new proceedings. However, the sheer number of petitioners probably means the State will feel obligated to investigate the issue. Commissions generally hate contentious filings between carriers, but the fact that a nearby state has already acted on this issue might make it hard for the MPUC to not at least look at the issue. There is also tremendous political pressure for the MPUC to act since the RDOF award stretches across many counties.

The petition is interesting because of the timing. Rural communities across the country are hoping that the FCC decides soon on the large RDOF awards that are still pending, like the one for LTD. There are other large RDOF awards that have not been awarded, including an RDOF claim by Starlink. Communities need to know soon if the RDOF awards are going to be rejected so they can begin the process of looking for other grants. That option was driven home this week when the Minnesota legislature approved a $95 million Border-to-Border grant for this summer to build rural broadband. The areas with the pending LTD Broadband RDOF awards are not eligible for these new grants. Hundreds of counties nationwide want the FCC to decide on the large RDOF awards soon. If the FCC rejects LTD soon, this petition would be moot and other grants could be used for these areas.

When I first read this petition, my first thought was that the primary reason for the petition is to put pressure on the FCC to reject LTD Broadband. I’m not sure what else is happening at the MPUC, but this filing likely means it’s not going to have a quiet summer.

Get Ready for the Challenge Process

There is one interesting aspect of the BEAD grants that could impact any rural community that is hoping to find a broadband solution from the $42.5 billion BEAD grant process. The NTIA is allowing local governments to challenge the broadband maps that will be used to determine the areas that are eligible for the grants. This is something that communities should be getting ready for today.

Let me first explain the background to this challenge process. It’s a confusing and messy story. When Congress funded the new BEAD grants, one of the provisions was that States have to use the FCC maps as the basis for the broadband grants. This is a dreadful provision since the FCC maps have been so inaccurate in the past. Several states have done enough analysis to show that the current FCC maps mischaracterize millions of homes as having adequate broadband that doesn’t exist. This is almost entirely due to the fact that ISPs feed the data into the FCC maps with no review or challenge by the FCC. The FCC mapping rules say that an ISP can report ‘marketing speeds’, and many ISPs have used that ability to overstate the speeds of broadband. For example, there are millions of homes in the current FCC maps using DSL where the telcos claim speeds of 25 Mbps, but where actual speeds are almost always far slower than this. This overstatement of the existing capability means that customers would be categorized as underserved in the BEAD grants instead of unserved.

The FCC is scrambling to create a new set of broadband maps to be used for the BEAD grants. The latest I’ve heard is that the new maps might be ready by November. The new maps completely change the way that ISPs report the data – they now must draw polygons around customers rather than using Census blocks. But the new mapping rules didn’t make the change that matters the most – ISPs are still allowed to list marketing speeds instead of actual speeds.

I’m certain that the new maps are going to be a disaster, at least this first version that comes out this fall. First, many ISPs are going to stumble making the conversion to the new mapping system – it’s complicated and is not going to be easy to get right. But my real concern is that ISPs that want to gum up the grants can do so by overstating broadband speed capabilities, as they have done in the past.

We don’t have to look back very far into the past to see the big telcos try this. On the eve of the RDOF auction, CenturyLink and Frontier tried to increase the reported speeds for tens of thousands of Census blocks to above 25/3 Mbps – a change that would have kept those locations out of the RDOF auction. The FCC blocked these mass changes before the auction, but there is nothing to stop the ISPs from doing this again.

And now, there is a new group of ISPs with this same motivation. In the recent NOFO for the BEAD rants, the NTIA says that grants can’t be used to overbuild a fixed wireless ISP that uses licensed spectrum and provides broadband speeds of at least 100/20 Mbps. That ruling means that these ISPs are going to be highly motivated to declare that they are delivering 100/20 Mbps speeds even if they don’t in order to protect their service areas from BEAD grant eligibility. Many wireless ISPs have overstated broadband speeds in the past even more than big telcos, so it’s not hard to imagine some of them doing this.

The challenge process gives a community the chance to fight back if the new FCC maps show that their community is not eligible for the BEAD grants. Each state must allow for a challenge process where a unit of local government, a nonprofit organization, or an ISP can challenge the broadband maps. These challenges are made to the State, and not to the FCC. I’m hopeful that most states will be sympathetic to challenges that will bring faster broadband to places that need it. A State much submit every successful challenge to the NTIA for review – but I believe that the NTIA will want to get these grants done right.

How could a community mount a challenge? The best way to do this is with a mountain of speed test data that has been collected by address. We know that any individual speed test reading is not reliable proof of broadband speeds – there can be factors at a home, such as a poor WiFi router than can lower the measured speed. But speed tests taken in bulk are good proof. For example, if no speed test in a rural area hits the speeds claimed on the FCC maps, it’s fairly certain that the claimed speed is not being delivered.

I also think that gathering anecdotes and stories of the results of the poor broadband in the affected areas can be effective. If an ISP overstates broadband speeds in an area, stories from folks who tell how they can’t work from home or how their kids can’t do homework over the broadband connections can help to bolster the fact that the broadband speeds are being exaggerated.

States will not be asking for these challenges until sometime after the new year, so there is plenty of time this year to start gathering the evidence. It may turn out you won’t need a challenge if the ISPs in your area report existing speeds honestly. But you need to be prepared for the situation where the FCC maps will deny broadband funding for your area. It will be a disaster for a community if they are unfairly denied grant funding because of a dispute about the FCC maps. It’s happened many times before – but communities need to make sure they don’t miss out on this giant round of funding.

Future-proofing Grants

There has been a lot of discussion in the last few months about how wonderful it was for Congress to have increased the speed requirements for broadband grant eligibility to 100/20 Mbps in the $42.5 billion BEAD grants. But is it really all that wonderful?

It’s obvious that the FCC’s definition of broadband of 25/3 Mbps is badly out of date. That definition was set in 2015, and it seemed like an adequate definition at the time. If we accept that 25 Mbps was a good definition for download speed in 2015 and that 100 Mbps is a good definition in 2022, then that is an acknowledgment that the demand for download broadband speed has grown at about 21% per year, which is shown in the table below.

Historic Download Speed Demand in Megabits / Second

2015 2016 2017 2018 2019 2020 2021 2022
25 30 37 44 54 65 79 95

We have outside evidence that the 21% growth rate makes sense. Several times over the last decade, both Cisco and Opensignal opined that the residential demand for download speed has been growing at that same 21% rate. Cisco said that it thought business demand was growing at about a 23% clip.

This raises an interesting question of how good it is for a grant program today to use a 100 Mbps definition for broadband? The main reason that this is a relevant question is that the BEAD grants aren’t going to be constructed for many years. My best guess is that the majority of BEAD grants will be awarded in 2024, and ISPs will have four more years to finish network construction – until 2028. The above table shows how much broadband demand for download speed grew from 2015 until 2022. What might this look like by the time the BEAD networks are fully implemented?

Future Projected Download Speed Demand in Megabits / Second

2022 2023 2024 2025 2026 2027 2028
100 121 146 177 214 259 314

If we accept that 100 Mbps download is adequate today as a definition of download broadband speed, then if broadband demand continues to grow at 21% annually, the definition of download broadband ought to be over 300 Mbps in 2028. I know many cynics will say that broadband demand cannot continue to grow at the historic rate, but those same people would have said the same thing in 2015 – and been proven wrong. In fact, there has been a steady growth curve for broadband speed demand back into the 1980s. There is no evidence I’ve heard that would indicate that the demand growth has slowed down.

We don’t really need to have this theoretical discussion of adequate broadband speeds because the market is ahead of the above speed growth curves. Since the early 2000s, cable companies have unilaterally raised the speed of basic broadband to keep ahead of the demand curve. The cable companies have raised minimum speeds every few years as an inexpensive way to keep customers happy with cable broadband.

The cable industry is in the process right now of increasing the speed of basic download speed to 200 Mbps – a number higher than predicted by the table above for 2022. There is a strong argument to be made that the cable companies have been resetting the definition of broadband while regulators were too timid to do so. I can remember when the cable companies collectively and unilaterally increased speeds to 6 Mbps. 12 Mbps, 30 Mbps, 60 Mbps, 100 Mbps, and now 200 Mbps.

This argument is further strengthened when considering that the big cable companies serve almost 70% of all broadband customers in the country today. When Congress gave the FCC responsibility for broadband in the 1996 Telecommunications Act, the requirement that the FCC has largely shoved under the rug was that rural broadband should be in parity with urban broadband. If 70% of new broadband subscribers in the U.S. are offered 200 Mbps broadband as the slowest basic product, it’s hard to argue that having a definition of anything under 200 Mbps today is not parity.

Congress wasn’t all that brave in setting the definition of grant-eligible at 100/20 Mbps. That is the lowest possible current definition of download speeds, and a number that is already starting to drift to be obsolete. Recall the gnashing of teeth in the industry last year while the legislation was being created – cable companies and WISPs both thought that 100/20 Mbps was too aggressive.

If we really wanted to future-proof the BEAD grants, then technology that won’t be built until 2028 should be required to deliver at least 300 Mbps download. Anything less than that means networks that the public will feel are inadequate as they are being deployed.

Another BEAD Grant Complication

I’ve been thinking more about the NTIA’s definition of Reliable Broadband Service that was part of the recently issued Notice of Funding Opportunity (NOFO) for the $42.5 billion BEAD grants. That definition says that any grant cannot be used to overbuild a reliable broadband technology that meets or exceeds the 100/20 Mbps speed threshold of the grants. The NOFO said that the grants can’t be used where speeds are adequate for the following technologies: (i) fiber-optic technology; (ii) Cable Modem/ Hybrid fiber-coaxial technology; (iii) digital subscriber line (DSL) technology; or (iv) terrestrial fixed wireless technology utilizing entirely licensed spectrum or using a hybrid of licensed and unlicensed spectrum.

The policy behind this makes sense – the NTIA doesn’t think that valuable federal grant dollars should be used where adequate broadband technology is already in use. That would make them a good shepherd of the federal dollars.

But this particular definition is going to cause some complications the NTIA might not have considered. I’ve been running into rural FWA cellular wireless broadband in rural markets. So far, I’ve only encountered the new technology from T-Mobile and Verizon. But this will also be introduced by Dish Network. AT&T says it also has plans to roll out the faster cellular home product.

The FWA technology is enabled when a cellular company beefs up cell sites to provide home broadband in addition to cell phone service. This is being enabled by the introduction of new spectrum bands. For marketing purposes, the carriers are labeling these new bands as 5G, although the technology is still 4G LTE.

The cell carriers have been offering a weak version of home broadband for years, marketed as a hotspot or jetpack. But that technology shared the same frequencies used for cell phone service, and the broadband has been slow, weak, erratic, and expensive. However, putting home broadband onto new cellular spectrum changes the product drastically.

Recently I heard from a farmer who is getting 200 Mbps download broadband from a rural T-Mobile FWA connection – this farmer sits right next to a large cell tower. According to the NTIA, this farm should not receive any grant subsidy to bring fiber broadband with a grant. But as is usual, real life is a lot more complicated than that. This same farmer says that his nearest neighbors, only a little over a mile away, are seeing speeds significantly below 50 Mbps.

This makes sense because that’s how cellular technology works. Most people don’t realize how quickly broadband signal strength weakens with distance from a cell site. In cities, practically everybody is within half a mile or a mile from a cell site, so we never notice. But in rural areas, most people live too far from a cell site to get decent bandwidth from this technology. Consider the following heatmap of a real cell site.

The fastest broadband speeds would be within a few thousand feet, like with the farmer. The area that might get 100 Mbps broadband is in the orange and yellow areas on the map. The speeds in the green areas are where speeds fall below 100 Mbps, and by the time the broadband signal reaches the light blue areas the speeds are almost non-existent. The purple areas show where a voice signal might carry, but only unreliably.

What does this mean for the BEAD grants? As T-Mobile and the other cell carriers start updating rural cell sites they are going to be putting heatmaps like the one above into the FCC mapping system. It’s worth noting that most cell sites don’t create a roughly symmetrical coverage pattern because the wireless signal gets disrupted by any obstacles in the environment, even small rolling hills. It’s also worth noting that cellular coverage is dynamic and changes with temperature, precipitation, and even wind.

Recognizing cellular broadband coverage (licensed) as reliable broadband will have several consequences. First, this disrupts grant coverage areas since there will be cellular areas in every county that won’t be eligible for grants. This will create a swiss cheese phenomenon where there are areas where grants are allowed next to rural areas that are not allowed. That will complicate the engineering of a broadband solution for the areas that are left. This is the same thing the FCC did with the RDOF awards – chopped up potential grant areas into incoherent, illogical, and costly swiss cheese.

This also might mean this farmer won’t get fiber. His neighbors who can’t get good speeds on T-Mobile might be covered by a BEAD grant, but an ISP might be unwilling to fund the cost to reach this farmer if the cost is not covered by a grant.

I doubt that the NTIA thought of the practical consequences of the new definition, just like I can’t imagine the FCC had the slightest idea of the absolute mess they made with RDOF coverage areas. The only way to justify building a new network in a rural area, even with grants, is to cover large areas with one coherent network – not by building a network that has to somehow avoid RDOF areas and cell towers.

ISPs interested in BEAD awards are now going to have to wait until the new broadband maps come out to know what this might do to their grant plans. I’m thinking that, at least in some cases, this will be the final straw that breaks the camel’s back and convinces an ISPs to walk away and not even try.