Category Archives: Regulation – What is it Good For?

FCC Considers New Definition of Broadband

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

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

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

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

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

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

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

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

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

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

A Peek Inside the FCC

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

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

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

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

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

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

Tackling Junk and Hidden Fees

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

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

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

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

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

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

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

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

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

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

NTIA Modifies the Letter of Credit Requirements

For the first time in the BEAD process, the NTIA has bent to outside pressure and modified one of the grant rules. I almost labeled this blog as “NTIA Relaxes Letter of Credit Requirement,” but I still need to do more digging before I’m convinced that this makes a difference for smaller ISPs compared to the previous rules.

The specific modified  rules can be found here. Following is a summary of each change, shown in italics, followed by some of my continuing concerns.

A BEAD grant bidder can now obtain its Letter of Credit from a credit union that is insured by the National Credit Union Administration and has a credit union safety rating issued by Weiss of B- or better.

I am not sure of the genesis of this idea, but this opens the door to more financial institutions that can provide the Letter of Credit. There must be some subset of potential grant applicants that asked for this. A lot of the BEAD projects are going to be large, and I have to wonder how many credit unions will be willing to tie up cash reserves of many millions of dollars for a Letter of Credit. Financial institutions must keep any cash pledged to a Letter of Credit in reserve, meaning that money can’t be used to make other loans. That’s why the interest rate and the cost of a Letter of Credit are substantial – because money pledged to a Letter of Credit can’t be used to make other loans.

A grant bidder will not have to provide a bankruptcy opinion letter if they obtain a performance bond for 100% of the awarded grant amount.

One of the big gotchas for using a Letter of Credit is that a grant applicant must also obtain a legal opinion that the Letter of Credit will not be considered to be property if the grant applicant undergoes bankruptcy. That’s a hard legal opinion to obtain since bankruptcy courts tend to snag every asset with any perceived value. This is not a meaningless provision since large ISPs like Charter, Frontier, and Windstream have gone through bankruptcy.

The more important change is that a grant applicant can substitute a performance bond for a letter of credit. However, the performance bond is for the amount of the award. In the typical BEAD grant, the performance bond would have to cover the 75% grant, while the Letter of Credit covers only the 25% grant matching. I’m going to have to do some checking, but a performance bond that covers a larger dollar amount might not be much cheaper than a Letter of Credit that covers only the matching.

Additionally, a grant applicant must have proof of the performance bond before applying for the grant. This ignores the way that companies that give a performance bond operate. I have never worked with one who would give a bond for a theoretical project – only for an actual shovel-ready project that already has the funding and subcontractors under contract. It might be extremely difficult or impossible to get a performance bond for a theoretical grant project that might never come to fruition, or that might be materially different than what was contemplated when the performance bond was created.

A grant winner will be able to ratchet down the letter of credit as they meet specified buildout milestones. A grant winner using a performance bond will have the same option to reduce the size of the bond for meeting specific buildout requirements.

This sounds great in that the Letter of Credit or the performance bond can be reduced in size as the project gets constructed. However, this ignores the way that financial institutions work. Changing a Letter of Credit will likely be treated by a bank as a whole new transaction. They are going to do a complete new review of the borrower and the project and will charge a significant fee to make this change – much like having to undergo a credit check, pay for a new inspection, and pay points when you refinance a home loan. I’ve never been part of a project that reduced the amount of a performance bond, but I have to imagine the process is similar.

It is good to see the NTIA willing to make changes. They have been hounded by a wide range of industry folks and politicians to make changes to the Letter of Credit. Unfortunately, the change that was really needed was to get rid of the Letter of Credit requirement since it strongly favors big ISPs over small ones. I don’t want to sound skeptical, but I still see red flags in the practical application of the new rules that will be expensive and perhaps impossible for anybody but giant ISPs to meet. This feels more like a band-aid than a fix.

One More BEAD Map Challenge

There is still one more chance for local communities or ISPs to fix the maps that will be used to allocate BEAD grant funding. Under the NTIA rules for the BEAD grant process, every State Broadband Office (SBO) must conduct one more challenge process to the maps. This must be done sometime after an SBO has submitted its planned grant rules to the NTIA and before any BEAD grant can be awarded.

The Notice of Funding Opportunity (NOFO) for the BEAD grant says that a unit of local government, nonprofit organization, or broadband service provider can challenge the maps used by each state that define locations that are eligible for BEAD – meaning that the fastest broadband speed offered currently would be slower than 100/20 Mbps.

Every state will have its own timeline, but it’s likely that mapping challenges will done in the first quarter of next year. SBOs are supposed to file their BEAD plans with the NTIA by the end of this year, and so far, only two states have made that filing.

It’s expected that most states will use the FCC maps to define the grant-eligible areas, although states are free to ask the NTIA to use their own version of the maps. The FCC maps were used to allocate the BEAD dollars to states, but states are free to define grant-eligible areas for purposes of awarding grants.

I know from working around the country that there are still plenty of places that should be grant-eligible, but that are still misclassified on the FCC maps. Most States challenged the FCC maps earlier this year, but many states did not have the staff or the facts needed to challenge the maps at the detailed level needed to correct the maps. The FCC map challenge process is complicated, and a lot of valid map challenges were not accepted due to not meeting the FCC’s challenge format.

Any map challenge is going to be most effective if a challenger has some sort of data to support the challenge. Many ISPs are leery of using speed tests as a basis for a map challenge. There is some basis for this since many speed tests are slow due to reasons outside of the control of the ISP, such as a poor WiFi router inside a home.

But I believe that speed tests are a great tool in some circumstances. To be effective, there needs to be a large enough sample of speed tests taken in any geographic area. With enough speed tests, false claims on the FCC map become fairly obvious. For example, if an ISP is claiming in the FCC maps that its technology is delivering speeds greater than 100/20 Mbps, but there are no speed tests even close to that speed, it’s almost certain that the ISP is exaggerating its speed in the FCC reporting.

Challenging a map can get tricky. There are technologies like DSL or FWA wireless where speeds are slower as the distance between a customer and a hub increases. A telco that claims 100 Mbps DSL might be telling the truth for customers close to the DSLAM core – but customers even a relatively short distance further away won’t be able to achieve that speed. I often see telcos and cellular ISPs claiming a uniform speed across a large footprint when that is not possible with the technologies.

As anybody who digs deeply into the FCC maps knows, there are ISPs that just overstate the speed capabilities. They may not be breaking any FCC rules by doing so since ISPs are free to report marketing speeds to the FCC instead of actual speeds. But market speed overstatements can make a neighborhood ineligible for BEAD funding – which would be a shame since there might not be another chance for such places to get broadband funding in the foreseeable future.

It’s likely that there will be a short time window for filing challenges, so anybody interested in doing so should be prepared early and should keep a close eye on the State Broadband Office website to note important events.

ACP Fraud

It seems like every time there is talk about increasing or renewing federal funding for broadband subsidies, the industry is flooded with stories about rampant fraud in the current subsidy programs. While there is some fraud and abuse, I have to think part of the reason for the stories is political and is raised by opponents of subsidies.

I’ve seen several recent stories talking about fraud in the ACP program. The stories say that unscrupulous ISPs are enrolling folks into ACP and then continuing to bill the FCC after customers no longer are getting broadband service. It’s not hard to believe that this is true.

We heard similar stories for years about the FCC’s Lifeline program which is funded by the Universal Service Fund. The big complaint for Lifeline fraud was that carriers would sign up customers that weren’t eligible for the program. The FCC took some major steps to address this issue by creating the National Lifeline Accountability Database (NLAD). This database is populated by the federal agencies that operate the programs that are used to qualify a household for Lifeline. By all accounts, this database got rid of a lot of the problems since the FCC won’t process payments for customers who are not included in the database.

But the current accusation that ISPs are billing for service that isn’t being delivered is a lot more troublesome. Other than minor infractions caused by billing errors, any ISP doing this is committing criminal fraud. This is a lot harder for USAC, the agency that handles Lifeline and ACP, to monitor and uncover.

I have a suggested fix for the problem. I would wager that most of the supposed ACP fraud is coming from cellular carriers. The ACP monthly $30 subsidy can be applied to either a cellphone plan or to home broadband. In some parts of the country, that subsidy can now be as high as $75 – which is going to invite even more fraud. My suggestion is that we stop using ACP to subsidize cellular service. The underlying concept of ACP is to get better broadband to folks, and I don’t care how you try to justify it – cell phone data is not a substitute for home broadband. Many people claim that they only use their cellphone as a broadband connection, but if they are more than a casual broadband user, they are probably getting most of their broadband through WiFi connections on somebody else’s broadband connection.

ACP should be used to subsidize home broadband. The Quello Center, which is part of the Department of Media and Information at Michigan State University, released a definitive study in 2022 that showed that students without home broadband and a computer at home struggle to become computer literate. One of the most startling findings was that an 11th grader without home broadband has about the same level of computer literacy as an eighth grader with home broadband.

I don’t want to sound heartless. I know that subsidies on cell phones provide a much-needed service to a lot of people. But the cellphone service being subsidized by ACP is not broadband – it’s limited access to the Internet. There ought to be a different program to provide subsidized cellphone service to those who need it.

I would guess that eliminating the cellular companies from ACP would eliminate most of the fraud. Many of the cellular companies participating in ACP do not own cellular networks and are reselling wholesale service from somebody else. These are not facility-base carriers or ISPs.

There may be landline ISPs also committing fraud, and if so, I hope that USAC and the FCC nails them. But most ISPs I know are not going to endanger their network business by chasing extra dollars through fraud. Any network owner that does this should be penalized with huge fines and also prohibited from participating in any federal broadband program for at least a decade. That means no ability to win grants or subsidies. That would mean no ability to sell services using the Schools and Library funds or the Rural Healthcare funds.

I am sure that there are cellular carriers participating in ACP who are good actors and are not committing fraud. But bad actors are endangering the whole program that is vital for millions of low-income households to get affordable broadband. It’s really hard to make a case that cellular service is equivalent to a home broadband connection, and we should stop pretending that it is. Eliminating cellular carriers from ACP probably instantly eliminates most of the fraud problem and would have the additional benefit of extending the life of the ACP fund.

Fairness in Broadband Prices

I recently read a report about broadband prices in California from the Public’s Advocate’s Office (Cal Advocates), that is part of the California Public Utilities Commission. Cal Advocates has a mandate to look at regulatory issues from the viewpoint of the public. Cal Advocates conducted a similar rate study in 2019.

The study found that households paying the highest prices for broadband are those who are buying the slowest speeds. While that might sound counterintuitive, it appears that some ISPs in California are soaking customers who live outside of the reach of big landline ISPs.

The study found that prices for bottom-tier broadband have increased dramatically since 2019. Particularly hard hit are speed tiers of 10-25 Mbps, 25-50 Mbps, and 50-100 Mbps. The study notes that in the past, these tiers were the least expensive due to low rates for DSL. The study notes that since the pandemic, there are a lot of expensive broadband alternatives introduced in the slower speed tiers.

I’ve seen the same trend nationwide. Homes without a lot of broadband options were forced to buy expensive broadband during the pandemic from fixed wireless ISPs, cellular hot spots, and satellite providers.

The report cites some examples. In comparing the range of prices for 25/3 Mbps broadband, the study found the following: Race Communications has the lowest monthly price at $25-$35. The big telcos have DSL prices between $45-$55. Customers living outside metropolitan areas pay a lot more. Small telco prices ranged from $72.50 for TDS to $150 for Ponderosa. Customers using other fixed wireless and satellite technologies are seeing prices between $70 and $229 per month.

I’ve seen this same phenomenon around the country. High-orbit satellite and cellular hot spot broadband can get extremely expensive due to the tiny monthly data caps. I interviewed families during the pandemic who were seeing monthly bills over $500 to support working from home or schoolwork.

The study also found that some ISPs offer a range of speeds but don’t deliver the faster speeds. The study specifically cites the DSL pricing of AT&T which is $55 regardless of the speed. AT&T will sell customers a DSL broadband product that barely works.

The study also found that some of the biggest carriers, like AT&T instantly raised prices in reaction to the launch of the $30 monthly ACP subsidy. AT&T had a low-income product priced at $20 before the pandemic, which appears to have been set to provide free broadband to households using the FCC’s Lifeline discount. AT&T and other carriers raised the price for the low-income product to $30 to collect the full amount of subsidy from the ACP.

The report also cites a statewide survey that showed that a majority of low-income households don’t know that they are eligible for a broadband subsidy discount. Also, only 24% of homes that know they can get a discount have enrolled in a low-income program.

I see similar pricing issues around the country. It’s going to be interesting to see what happens with prices for in BEAD grant areas. State broadband offices are walking a tightrope when it comes to rates since the IIJA law said that states are not allowed to dictate rates for BEAD grant recipients. Some of the early state plans clearly mandate specific rates and also ask ISPs to guarantee rates for five to ten years.

Another Challenge to FCC Authority

There is a new legal challenge that could alter the way that the FCC and other federal agencies regulate industries. The issue was highlighted in an article by John Eggerton in Multichannel News.

The Supreme Court has agreed to hear the case of Relentless Inc. et al v. Department of Commerce, et al. The specifics of the case are about the ability of the National Oceanic and Atmospheric Administration (NOAA) to regulate fishing. Specifically, fishermen have to pay for the cost of having NOA monitor their herring catches. There is a lot of speculation that the Court is open to weakening the ability of regulatory agencies to make new regulations.

This may sound like is not relevant to the FCC, but the case could impact all federal agencies that enact regulations that have not been specified by Congress. Agencies feel empowered to make regulatory rulings based on the Chevron doctrine. This doctrine comes from a strong ruling by the Supreme Court in 1984 in the case of Chevron U.S.A., Inc. v. Natural Resources Council, Inc. The lawsuit involved a challenge from Chevron that challenged the ability of the government to create and enact environmental rules that were not specifically ordered by Congress. Chevron also comes into play whenever there are conflicting laws from Congress – agencies get to interpret any conflicts.

Chevron is considered a landmark case where the Supreme Court gave substantial deference to the ability of government agencies to enact regulations. The Supreme Court ruling looked specifically at cases where agencies enact regulations that were not specified by Congress. The Court, in Chevron, looked instead at the intent of Congress when it gave agencies the power to enact regulations. A simplified explanation of Chevron is that the Court ruled that regulators are allowed to regulate as long as agencies stay within the overall framework of responsibilities given to them by Congress when the agency was created.

The Chevron doctrine has already been used by the Supreme Court related to the FCC in the 2005 case of NCTA v. Brand X Internet Services. The Court relied on the Chevron doctrine in ruling that the FCC had the authority to classify broadband as an information service that is not subject to common carrier regulation. This same ruling was used as subsequent FCCs reimposed Title II regulation and then reverse that decision a second time.

The issue is certainly going to arise again if FCC Chairwoman Jessica Rosenworcel goes through with her recently announced intention to reclassify broadband as a telecommunications service. The reason that Chevron was needed in the 2004 Brand X case is that Congress has been moot on the topic of regulating broadband. The last major related ruling from Congress was the Telecommunications Act of 1996, which preceded the explosion of the Internet. While there have been attempted bills introduced in Congress over the years to formally regulate broadband, Congress has apparently never had the necessary votes to enact broadband regulation.

Overturning Chevron would result in regulatory chaos since every regulatory agency makes rules that are not specifically spelled out by Congress. This would mean lawsuits challenging both new rulings by regulatory agencies but also older decisions. This also will likely results in the confusion that will come when courts issue conflicting opinions on the same topic.

Ending Chevron would mean that regulatory agencies will lose more court fights concerning new regulations, making it harder to create or modify regulations. Chaos will also abound since challenges to new regulations will result in a long delay as regulations are argued in court. This could mean a lot more delays, and for a longer time, for any new regulations not specifically required by Congress. Of course, Congress could avoid all of this by enacting explicit laws for regulations it cares about – but I don’t think anybody expects that.

The FCC Plan for Better Rural Cellular Coverage

The FCC recently released a Notice of Proposed Rulemaking (NPRM) that restarts an initiative to improve rural cellular coverage. The proposed FCC funding is for $9 billion to create a 5G Fund to subsidize the construction of rural 5G cell sites. These funds would be paid out over multiple years from the Universal Service Fund.

I’ve been working around the country with rural counties, and the lack of cellular coverage is often on par as a local issue with the lack of broadband. Huge numbers of people don’t have cell coverage at their homes and don’t have the outdoor cell coverage that everybody else takes for granted.

The FCC first proposed this in 2020, but the initiative came to a sudden halt when it became obvious that the large cellular carriers had provided maps that substantially overstated where they have coverage. It might seem counterintuitive for the big cellular carriers to overstate coverage for a program that wants to pay to build cell towers, but smaller cellular carriers said the purpose of the overstatements was to lock them out of the FCC funding. The FCC largely agreed and killed plans for the program until it got better maps.

Cellular carriers must now participate in the twice-annual broadband mapping that is required for ISPs. The FCC must believe that the maps are now better.

The NPRM starts by asking if the original concept of using a reverse auction to award the funding is the best approach. This is a case where a reverse auction might make a lot of sense. A cellular carrier that asks for the least amount of funding for a given rural tower location would get the funding. I assume that most winners are going to welcome other wireless carriers to use the towers, so it might not be that important who wins each location.

The bidding is going to be more complicated than a simple subsidy per location. The FCC is asking if it should consider factors like the miles of roads and the number of homes and businesses around each proposed site. The FCC is also asking how they might aggregate bids for multiple cell sites in a region rather than having bids required for each cell site.

The NPRM also asks about several technical issues, such as if the 5G Fund should favor the deployment of open radio access network (O-RAN) technology.

The FCC is also asking if the availability of landline broadband should be considered. This makes a lot of sense because of the huge amount of money being spent on BEAD and other broadband grants that will mean a proliferation of rural fiber that can provide backhaul to newly constructed towers. This fund should not be used to construct fiber if it’s already built or is soon coming.

It will be interesting to see if the FCC opens the 5G Fund to local governments and not just to companies in the cellular or tower industries. I know several counties that have built towers hoping to expand broadband and cellular coverage, and there are many other county governments that see the lack of towers as vital to their economic success.

There is a tool that might help rural areas qualify for the funding. The FCC is gathering cellular speed tests to document where coverage is poor. The speed tests can only be done using the FCC’s speed test app. Unfortunately, this app requires a lot of speed tests in a given neighborhood before the FCC will even consider the results. Local governments should or motivated individuals should consider undertaking an effort to collect many speed tests with the app in the areas with the worst coverage.

Is Broadband Essential?

There is an easy way to simplify the upcoming battle between the FCC and big ISPs over Title II regulation and net neutrality. The public expects government to regulate industries that are essential. That’s the reason we regulate electric companies and drinking water quality. It’s the reason we regulate meat and drug safety. Governments also eventually regulate companies or industries that gain monopoly power since monopolies inevitably engage in practices that harm the public or unfairly compete in the marketplace to drive out competition. Monopolies that deliver essential services should get the most regulatory scrutiny.

Now that the FCC has formally started the process of placing some regulations on ISPs, we’re going to hear a lot of reasons from big ISPs why they don’t need to be regulated. They are going to march out testimonials telling us what wonderful corporate citizens they are. Big ISPs will tell us how the prices they charge us are fair and are even getting less expensive over time. They will attack the regulators and say that attempts to regulate them are only for political reasons. They will publicize opinions by industry experts who will say that regulation isn’t needed (with many of the experts on the big ISP payroll). They will swear that they don’t do anything that requires regulation. They will cry wolf and say that regulation will drive up prices. And they will deflect any conversation about regulation using red herrings to make the discussion about something else. I’ve already seen all of these tactics in just the last few weeks.

Big ISPs will do everything possible to avoid having an open discussion about why big ISPs should be regulated. If explained in the simplest terms, almost everybody would agree that big ISPs should be regulated since they deliver essential services and have monopoly power.

The monopoly power of the big ISPs is easy to prove. The four biggest ISPs – Comcast, Charter, AT&T, and Verizon serve nearly 75% of all broadband customers in the country. All four also sell cellular broadband and collectively control the large majority of that market as well. Any industry where four companies control the large majority of the market is clearly under the sway of monopoly power.

It’s not hard to make an argument that broadband is essential and growing more so each year. Most people would agree that agriculture, water, housing, energy, healthcare, and banking are the most essential industries for daily life. In the short 25-year history of broadband, it has grown to join this list.

Like banking, broadband is now an industry that supports every other industry. While many of us still know a few small businesses that don’t use broadband, even those businesses benefit from the broadband that is essential to the logistics for the raw materials and products that support them.

But broadband is not only essential to other industries; it is essential in the daily lives of people. A recent U.S. News and World Report survey showed that 85% of Americans now go online every day. A lot of us have jobs that wouldn’t exist without broadband. Broadband is essential for education. The broadband industry is at the heart of how we communicate with each other. I could easily write multiple blogs to list the ways that people have become reliant on broadband – and that long list would clearly demonstrates that broadband has become essential.

A society that doesn’t regulate essential industries is at risk of falling prey to companies that abuse consumers who must buy the services. The danger to the public only gets worse when the companies that control essential services are also monopolies. All of the other essential industries I’ve listed above are regulated, and not just in the U.S., but in all of other industrialized nations.

Big ISPs can’t make the argument that they don’t harm the public. Broadband prices have already grown out of the reach of many families, and the affordability gap is climbing. Big ISPs dissemble and claim that their prices have grown slower than inflation, but that is demonstrably not so. In 2005, the price of cable broadband and DSL from the biggest ISPs was around $40 per month. Price increases to keep up with inflation would have that price today around $63. The two big cable companies now have prices for basic broadband between $85 and $100.

So tune out the non-stop red herrings and misdirection you are going to see from the big ISPs for the rest of this winter. They have been extremely successful in shedding regulation, and they will now fight tooth and nail to keep regulation at bay. Don’t buy their many arguments about why regulation isn’t necessary. The big ISPs deliver an essential commodity and have monopoly powers – it would be a travesty not to regulate them.