White Houses Identifies 5G as Key Infrastructure

The White House recently released the National Security Strategy paper that lists 5G as one of the key infrastructure goals for the country. The specific language from the paper is:

Federal, state, and local governments will work together with private industry to improve our airports, seaports and waterways, roads and railways, transit systems, and telecommunications. The United States will use our strategic advantage as a leading natural gas producer to transform transportation and manufacturing. We will improve America’s digital infrastructure by deploying a secure 5G Internet capability nationwide. These improvements will increase national competitiveness, benefit the environment, and improve our quality of life.

This is a policy paper and there is no way to tell if anything contained in the report will turn into an actual proposed government program, such as infrastructure grants. But it’s worth noting that this is very different from the language used during the early days of the administration that talked about expanding broadband coverage and that hinted at a $40 billion grant program to expand rural broadband infrastructure. The industry took that to mean some sort of expansion of the FCC’s CAF programs aimed at building fiber and other broadband infrastructure.

It seems that during this last year that the administration has been persuaded by the wireless companies to embrace 5G as the future of broadband. It’s probably not a coincidence that all of the wireless carriers met with the administration in recent months and that all of them refer to 5G as a strategic priority for the country.

In the long run 5G might become the preferred broadband solution, but it’s far too early to tell. We need to see 5G actually working in a number of different environments to understand the strengths, weaknesses and deployment cost of the technology. We already understand that 5G is going to require a significant investment in fiber and very little of the country is fiber-rich enough to support 5G infrastructure.

The priority for the wireless carriers is to make it easier to deploy small cell sites. They are currently supporting numerous state legislative efforts that preempt rights of communities and that force low-cost cell site connections with little or no paperwork or approval process by pole owners. While it takes some reading between the lines, one has to suppose that the administration will be supporting FCC efforts to make this the rule nationwide. However, the FCC is somewhat limited in the ability to force pole attachment rules on states and it will take new legislation from Congress to change the parts of the Telecommunications Act of 1996 that gave states the rights to set their own pole attachment rules.

Listing 5G as an infrastructure priority also makes me think that there will be federal funding available to help fund 5G networks if Congress can get their act together enough to pass an infrastructure plan. For now, only the giant companies are considering 5G deployments, but with federal grant money perhaps smaller entities could consider building the fiber needed to bring 5G to smaller and more rural communities.

But all of this ignores the fact that 5G might never be a cost-effective solution for rural America. The physics of the millimeter wave spectrum used for 5G is going to require getting fiber close to customers, and in rural America that means spending nearly the same amount to build a rural 5G network as it would cost to build a rural FTTP network. Unless the government just hands out the money to build such networks it’s hard to think that any of the big ISPs will ever be interested in serving rural markets.

I’m trying to envision what a 5G infrastructure plan would fund. The most likely scenario in my mind would be grants given to the large ISPs to expand 5G to suburbia where the cost per subscriber to expand 5G is probably reasonable. Such an effort would be interesting in that it would bring a second major ISP to compete against the near-monopoly of the cable companies. But this does not feel like the sort of investment that ought to be made with federal dollars.

It’s hard though to see the feds funding the fiber needed to build a rural 5G network. And it’s hard to see the big ISPs wanting to support the operational costs to support such a rural network – AT&T and Verizon are both bailing as fast as they can today from serving rural America.

The language in the policy paper means nothing unless the federal government creates some sort of funded infrastructure plan and calling 5G a priority is just rhetoric without the funding to back it up. But one thing is clear from the language in this policy paper – the administration has bought into the rhetoric from the wireless providers.

Challenging CAF Funding

USAC LogoLast week the FCC accepted a challenge by OnlyInternet Broadband and Wireless that had been filed against Frontier Communications. Frontier had filed to get Connect America Funds (CAF) to spend capital to enhance broadband to some rural areas that were either unserved or underserved. The FCC agreed that OnlyInternet already served the area in question with broadband.

There have only been a few of these challenges, but there is going to be a lot more coming since the FCC is expected to expand possible recipients of the funds this month. In the past few years the major recipients of CAF funding for construction have been a handful of very large telephone companies like Frontier. However, the FCC is expected to broaden the list of recipients to include other companies like rural electric utilities.

Today a company must be certified as an Eligible Telecommunications Provider (ETC) by their state Commission to be eligible for CAF funding. But as the FCC expands the definition they also are thinking about changing this requirement.

The CAF funding is intended to provide support for constructing broadband facilities in unserved or underserved areas. An area either has to have no broadband today (unserved) or a majority of residents that can’t get broadband that meets the federal broadband definition of 3 Mbps  download / 768 Mbps upload (underserved). The FCC is expected to increase this threshold in the future, although they will probably never do anything so bold as to set the threshold to something that would be really considered as broadband. But I guess they think that if households have no broadband that they will be grateful to get 3 Mbps.

This FCC ruling is worth pointing out because other large companies are going to also be requesting CAF funding. For instance, Frontier has requested funding for huge rural swaths of its own service territory where it had never spent the money to put in DSL. This ruling shows that you need to be on the alert if the large companies are planning to use federal funds to bring broadband to an area where you have already made the investment. You can challenge such an attempt and win.

Interestingly, Frontier had previously challenged funding for OnlyInternet for not providing fast enough upload speeds for some other markets where they were providing broadband.

If your company is close to areas that are unserved or underserved you might want to consider applying for CAF funding. CCG has been successful in the past in getting numerous federal grant awards for clients. The CAF funding awards are going to require some capital from the grantee, and the more of your own money you are willing to put in, the higher the chance of getting a grant. But it should not be unreasonable to think that CAF funding could be used to finance a significant percentage of a network build-out, as long as you are building to unserved areas.

The bottom line is to keep your eye on the CAF funding requests. The large carriers are requesting funding for large areas and some of those areas are bound to already have broadband. Don’t let the big companies get a foothold in your area using free federal funds.