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Regulation - What is it Good For?

Courts Uphold 6 GHz WiFi Order

The right to use spectrum is turning into one of the most valuable pieces of real estate in the country. Cellular carriers have been paying huge sums in FCC auctions to get the rights to use spectrum. Perhaps the biggest sign of the value of spectrum is that there is seemingly a lawsuit every time the FCC makes a spectrum decision by those who want to see the spectrum used in other ways.

The United States Court of Appeals for the District of Columbia recently upheld the FCC’s April 2020 order that assigned 1,200 MHz of the 6 GHz spectrum band for public use. That order was challenged by a coalition of Apple and cellular carriers like AT&T. The challengers wanted some of the 6 GHz spectrum to be auctioned to those willing to pay the most for it – presumably the cellular carriers. Not surprisingly, the intervenors supporting the FCC decision were the big cable companies who take the most advantage of WiFi.

The original FCC order clearly supports the idea that the public needs better WiFi. The 6 GHz spectrum band will revolutionize the way we use WiFi in homes and businesses. WiFi performance is already slated to improve due to the new WiFi 6 technology. But adding the 6 GHz spectrum will drive performance to yet another level by adding seven 160 MHz channels to the WiFi environment.

The legal challenge followed the lines of other recent spectrum challenges that question the FCC’s technical assumptions used in making the order. Since this new spectrum band is open to everybody, including the cellular carriers – the challengers argued, among other technical points, that there will be too much interference to make the spectrum useful for cellular data.

The Court came down clearly on the side of the FCC. The court said that the courts owe ‘significant deference’ to the FCC and its technical staff in deciding complicated technical issues. Intervenors had raised the same interference issues at the FCC during the deliberation of the issue – and the courts were not having any rehashing of issues that the FCC had already considered.

The court did remand one minor issue related to interference back to the FCC raised by the National Association of Broadcasters about interference in the 2.4 GHz WiFi band. The FCC will revisit that issue.

The court decision finally frees up the 6 GHz spectrum for WiFi use. Vendors have assumed this would be ordered and have been building the capability to use the spectrum into devices over the last few years.

I think we’re going to look back at the FCC’s decision to expand WiFi and the Court’s backing of that order as the most important spectrum decision of our time. The current WiFi spectrum is overtaxed and growing busier by the day. This new spectrum will revitalize the WiFi distribution of bandwidth around the home and the office that we’ve all been wanting.

Industry vendors haven’t been sitting still and have already started to develop the next generation of WiFi that will create another big leap in performance.

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Regulation - What is it Good For?

Regulatory Capture

Regulatory capture is an economic principle that describes a situation where regulatory agencies are dominated by the industries they are supposed to be regulating. Economic theory predicts that regulators caught by regulatory capture act in ways that protect incumbent providers instead of the public interest. Unfortunately, the broadband industry is one of the best (or worst) examples of regulatory capture.

Economic theory says that it’s necessary to regulate any industry where a handful of large players control the market. Good regulation is not supposed to be antagonistic to large corporations but should strike a balance between what’s good for the industry and what’s good for the public. In a perfectly regulated industry, both the industry and the public should be miffed at regulators for not fully supporting their issues.

The concept of regulatory capture was proposed in the 1970s by George Stigler, a Nobel prize-winning economist. He described the characteristics of regulatory capture as follows. His list matches what’s happening in the broadband industry to a tee.

  • Regulated industries devote a large budget to influence regulators at the federal, state, and local levels. It’s typical that citizens don’t have the wherewithal to effectively lobby the public’s side of issues.
  • Regulators tend to come from the regulated industry, and they tend to take advantage of the revolving door to return to industry at the end of their stint as a regulator.
  • Regulation from the legislative process tends to become corrupt, such as when politicians vote for bills they don’t understand in return for contributions. Actual regulators can also be corrupt – but often regulators side with the industry over the public because they have an industry perspective.
  • In the extreme case of regulatory capture, the incumbents are deregulated from any onerous regulations while new market entrants have hoops to jump through.

There are many examples throughout history of economic cartels that successfully captured regulators. For example, the railroads in the 19th century ran roughshod over the economy and regulators. Unfortunately, the best current example of regulatory capture is the broadband industry, perhaps closely followed by big agriculture and big pharmaceuticals. There is no question that the power of the broadband industry is concentrated among only a few firms. Comcast, Charter, AT&T, and Verizon together serve 75% of all broadband customers in the country.

The FCC is a textbook example of a captured regulator. The FCC under Ajit Pai went so far as to deregulate broadband and to wash the FCC’s hands of broadband as much as possible by theoretically passing the little remaining regulation to the FTC. It’s hard to imagine an FCC more under the sway of the broadband industry than the last one.

But federal regulators are only the tip of the iceberg. The large ISPs have convinced most state regulators to deregulate (or never regulate) broadband. The ISPs spend an immense amount of money in state legislatures trying to get laws passed that favor the big ISPs or that disfavor any potential competitors. The surest sign of regulatory capture is that the big ISPs are also active at the local level and pressure City and County Councils to not consider local broadband projects. There is an immense lobbying effort currently underway to dissuade local politicians from using ARPA grant money for broadband.

We don’t have to look far to see how the industry has gotten its way with regulators. The U.S. has some of the most expensive broadband in the world. Tens of millions of homes have little or no broadband. The broadband industry has the worst overall customer service among all industries- and that’s saying something. The big ISPs abuse customers in other ways such as quietly monetizing customers’ private data.

There is no real fix for regulatory capture other than a loud public outcry that brings back strong regulations. That can start at the FCC, but even that isn’t going to put a dent in the influence of the ISPs at the state and local level.

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Regulation - What is it Good For?

The Future of the Universal Service Fund

The FCC adopted a Notice of Inquiry on December 15 that asks for comments about the future of the Universal Service Fund. There is not a lot of time to respond with the holidays in the middle since comments are due on January 18. But the NOI is asking the right questions.

High-Cost Programs. On the topic of the High-cost programs, it asks how the giant BEAD grants will impact the future of the FCC broadband awards. It asks if there should be an additional round of RDOF. It asks if some of the highest-cost areas constructed with the BEAD grants will need ongoing high-cost support. It asks if the FCC should adopt a standard of 100/20 Mbps as a requirement for future high-cost support. It asks about the use of future reverse auctions.

Lifeline. The NOI asks about the future of the existing Lifeline fund in light of the funding given to the EBB program and now to the ACP program that provides a larger monthly broadband subsidy.

E-Rate. The NOI asks if the E-Rate program for schools and libraries should be changed due to anything that came out of the Infrastructure Act. It asks about ways to protect against waste, fraud, and abuse.

Rural Health Care. The NOI asks if the program changes due to telehealth funding in the Infrastructure Act.

Funding. The NOI asks if the method of funding the USF should be changed.

I’ve written about all of these questions before. Here are a few quick thoughts I have on these questions – each question deserves a much longer response:

The FCC’s high-cost funding has outlived its usefulness. While this funding did a lot of good and helped telcos build rural fiber, it also made some telco owners rich through overpayments. The overpayments became obscene when the FCC gave $11 billion in CAF II funding to the big telcos and then ignored the reports that upgrades weren’t being done. The RDOF reverse auction is a giant mess and will turn into a disaster if the FCC doesn’t soon kill off unworthy awards in favor of BEAD grants. It’s time to kill this program completely, get the FCC out of the broadband funding business, and downsize the USF accordingly. The need for broadband funding can always be revisited in a decade if some rural places still need ongoing support. But even revisiting the idea is suspect because the FCC is always going to rely on poor mapping and inadequate cost models to determine who gets funded.

The $9.95 Lifeline fund still has some use to support cellphone for homeless and other forgotten communities. But the monthly subsidy is too small to make home broadband more affordable. The FCC should either re-purpose the Lifeline fund to strictly support low-income cellphones or kill the program.

The E-Rate program provides noticeable benefits to schools and has brought gigabit broadband to some of the poorest parts of the country. I’ve never heard anything but good about the Rural Health Care funding.

As far as funding – if the High-cost fund and Lifeline programs are curtailed or eliminated then the amount of needed funding drops drastically. But I think a more fundamental question needs to be asked. Why is the FCC still being allowed to operate a giant slush fund? A huge percentage of the funding over the years has gone to the big ISPs. The USF has been riddled with stories of abuse and fraud. The primary problem with the USF is that regulators are trying to run national one-size-fits-all programs without the needed facts or staffing to do it right. I think it’s time to have a conversation about ending the Universal Service Fund. The E-Rate and Rural Health Care programs are successful, but they are something that should be funded by Congress. Let’s get regulators out of the funding business and aim the agency back towards their primary goal of regulating the broadband industry – instead of funding the companies the FCC is supposed to be overseeing.

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Regulation - What is it Good For?

Broadband Mapping Woes Continue

The FCC’s plan to fix broadband mapping is progressing slowly. I think by now that everybody in the industry understands how lousy the FCC maps have been. Through a combination of dumb mapping rules and ISPs overreporting broadband speeds, the current maps sometimes completely miss the mark.

Congress got involved and passed legislation to require the FCC to fix the maps. In March 2020, Congress passed S.1822, the Broadband Deployment Accuracy and Technology Availability (DATA) Act. That bill requires the FCC to gather granular service data for wired, fixed wireless, and satellite broadband providers. It requires the FCC to consider using state broadband mapping data where states have tried to create a better picture of broadband. It also requires a crowdsourcing process to allow the public to participate in data collection. The Act provides for penalties against ISPs that knowingly or recklessly submit inaccurate mapping data. Finally, the Act requires the FCC to use better maps when making awards for broadband funding.

But as often happens in the government, this bill didn’t provide any funding to make the needed changes. The FCC started the process of formulating new rules after the passage of the Act, but didn’t take any action to fix the maps due to lack of funding.

Congress finally provided $98 million in funding from the American Rescue Plan Act (ARPA) in December 2020 that included $65 million to create better maps. During that same month, the FCC completed the $7 billion RDOF reverse auction that was still based upon the lousy mapping – seemingly in violation of the Act.

In February of this year, the FCC under acting chair Jessica Rosenworcel established the Broadband Data Task Force with the aim of implementing the goals of the DATA Act and fixing the mapping. The FCC kicked off the new Broadband Data Collection (BDC) program in March 2021 to change the way that mapping data is collected from ISPs. The federal procurement process is slow, and the FCC finally released the RFP to hire a vendor to fix the mapping and eventually awarded a $45 million contract to CostQuest Associates.

In November, LightBox challenged that RFP award. According to federal procurement rules, it will take at least one hundred days for the FCC to deal with that challenge.

Meanwhile, it is raining federal broadband grant monies. There was a huge amount of potential grant funding in the ARPA legislation that gave some grant monies to federal agencies like the NTIA and the RUS. But that legislation gave far more money directly to cities, counties, and states – much of it directed at broadband. In November, Congress added another $42.5 billion in grants to the pile of federal money that is on the way.

All of these grants include some sort of speed test threshold to define what is eligible for grant funding. That’s going to require relying on the FCC maps. People all over the country are already making plans for applying for the BEAD grants, and they will be hindered all next year while waiting on the maps.

The FCC was recently asked by Congress for a status of the mapping update and the FCC has no estimated timeline for the introduction of revised mapping. I’ve talked to several knowledgeable folks who are estimating that it will be at least early 2023 before we get a gander at revised mapping. I think everybody expects the first version of the new maps to be a mess as ISPs try to interpret how to report in the new mapping system. In fact, that was one of the purposes for having a challenge process. It’s hard to think that it won’t be well into 2023 before the maps are scrubbed to the point of making sense.

And after all of that, I still hold out little hope for the new maps. ISPs are still going to be reporting theoretical marketing speeds instead of actual speeds. Further, as I wrote in a recent blog, there is no way to map actual speeds – it’s a futile quest. I personally don’t think it’s possible to create an accurate broadband map when two neighbors can experience different broadband speeds from the same ISP. But hopefully, we can at least improve the mapping to the point where the maps don’t stop neighborhoods from getting broadband upgrades.

 

 

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Regulation - What is it Good For?

Giving the BEAD Grants to the States

One of the most interesting discussions running around the industry is asking why Congress gave the immense power of the $42.5 billion BEAD grants to the states. Large grant programs in the past have been controlled at the federal level. Of course, the only people who know for sure are those that crafted the language in the Infrastructure Innovation and Jobs Act.

Congress had a number of options for how to distribute this grant funding. They could have given a role to the FCC, NTIA, USDA, or to the States. They easily also have divvied up the money and given some to each of the above – with the concept that this is a chance to see what works the best. The Act has a little bit of spreading the money around. For example, the Act gave an extra $2 billion to the USDA and the RUS ReConnect Grants. The FCC will be riding herd over the $14 billion that has been allocated to the Affordable Connectivity Program that provides discounts on broadband for qualifying low-income households. But the big grant money is going to the states with overall grant rules administered by the NTIA.

I think the awards make it clear that Congress doesn’t trust the FCC to administer a big grant program. It appears that the FCC has sullied its reputation in the way it administered the RDOF awards. Congress has repeatedly heard how unhappy constituents are with that program. Back when the idea of a giant infrastructure bill was first circulated, there was serious discussion about letting the FCC distribute the money in a giant reverse auction – and the first draft of the House bill did just that. Thankfully some sanity prevailed in Congress since that would have been a boondoggle of unprecedented horribleness. The FCC made a lot of blunders with the RDOF awards (as they had blown the CAF II program in earlier years).

It makes sense not to give the money to the FCC. I think the FCC chose the reverse auction because the agency knows it doesn’t have the staff or expertise to review complex and overlapping federal grant requests. But the agency is not supposed to have that kind of staff – the FCC is a regulatory agency that makes and enforces rules. There is nothing in that job description that would entail having a large technical staff capable of administering billions of dollars of grants. I can only hope that somehow this new gigantic funding will dissuade the FCC from holding a second round of RDOF or a 5G reverse auction that is being contemplated at the agency.

It’s clear that some in Congress like the RUS, which is part of USDA, and there have now been several annual rounds of ReConnect grants. But the RUS also doesn’t have a staff capable of quickly processing tens of billions of grants. The ReConnect grant program is paperwork-heavy, and the RUS is known for being deliberate in awarding grants and loans. Deliberateness is a great characteristic when dispensing federal dollars, but it would be a challenge for the RUS to award BEAD grants quickly.

Congress could also have given the grant obligation to the NTIA directly, but the agency has even less staff able to review grant requests than the RUS. It’s hard picturing the NTIA staffing up quickly enough to dispense $42 billion in grants. However, Congress did trust the NTIA to set the policy for the new BEAD grants. It could have given that task to any of the three agencies. The NTIA recently set the policies for the recent ARPA grants, and this probably means that somebody in Congress appreciated that effort.

Giving the money to the states might be the only practical way to dispense this money with any sanity. I’m hearing that state broadband offices across the country are adding significant staff in anticipation of these grants. That will mean many hundreds of grant reviewers and administrators – far more than any of the federal agencies could have mustered in a short period of time.

But giving the money to the states was an interesting choice because each state will put its own stamp on how to spend the money. I know that the NTIA has been given the task of making sure that the grants meet the intentions detailed by Congress in the Act. But I’ll not be surprised to see states push the boundaries of the grant rules or even defiantly disregard them. States know that this is likely the only chance to solve the rural broadband problem, and I don’t picture states failing to award grant money to places that need it, regardless of how Congress wrote the rules.

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Regulation - What is it Good For?

The FCC and Broadband Outages

Comcast had a widespread network outage in early November. The problems started in San Francisco and spread the next day to Chicago, Philadelphia, parts of New Jersey, and three other states. The outage knocked out broadband customers along with Comcast cellular customers. Comcast has never disclosed the reason for the outage and announced only that it was due to a ‘network issue’.

In 2020 CenturyLink suffered an even larger outage that not only knocked out CenturyLink customers but spread into other networks, including Amazon, Cloudflare, and Hulu. The problem was blamed on a software update that blocked the establishment of Border Gateway Protocol (BGP) sessions and impeded broadband traffic routing.

T-Mobile also had a major network outage in 2020 that knocked out broadband customers and also cut off some voice calls and most texting for nearly a whole day. T-Mobile blamed the issue on problems with a leased circuit that was compounded by two previously undetected flaws in third-party software. Reports at the time said that the electronics failed on a leased circuit, and then the backup circuit also failed. This then caused a cascade that brought down a large part of the T-Mobile network.

In 2019 CenturyLink had perhaps the largest outage that knocked out much of its network and customers that relied on the Level 3 network for transport. The company blamed the outage on a bad circuit card in Denver that somehow cascaded to bring down a large swath of fiber networks in the West, including numerous 911 centers.

The FCC investigates big outages from time to time and opened an inquiry in October 2020 in a few of the outages listed above. The FCC also recently adopted a Notice of Proposed Rulemaking to investigate the disaster resiliency plans of major telecom providers to take a harder look at how cellular and broadband carriers make repairs after big storms.

Interestingly, the FCC recently fined T-Mobile $19.5 million for the 2020 outage, but not the other carriers. This is not because T-Mobile’s outage was worse than the others. T-Mobile was fined because they are a cellular carrier and still fully regulated by the FCC. But Comcast and CenturyLink are ISPs and under different regulatory rules.

Oddly, the FCC has very little power to do anything about ISP network outages because the FCC has very little regulatory authority over ISPs in general. The FCC abrogated its authority to regulate ISPs when it killed Title II regulation and handed a few vestiges of regulation to the Federal Trade Commission. The FCC only regulates ISPs tangentially through the specific authority given directly by Congress. Any authority the FCC once had as a result of claiming Title II regulatory authority is gone.

The process has finally started to seat a fifth FCC Commissioner, and the industry speculates that one of the early acts with five Commissioners will be to reinstate Title II authority. This effort might be a little more streamlined in the past because federal courts have already ruled that the FCC can choose to regulate or not regulate broadband.

Unfortunately, any move to regulate ISPs and broadband will only last until we have another shift in administration that wants to kill regulation again. We have ended up in an absurd regulatory merry-go-round where regulating or not regulating ISPs depends on the party that controls the White House. It makes no sense to not regulate ISPs at a time when cable companies have nearly total monopoly power in some markets. Overall, broadband might be the most important industry in the country because it powers just about everything else. Local jurisdictions around the country regulate occupations like nail salon technicians, plumbers, and masseuses, and yet we can’t get our act together as a country to regulate an industry where a handful of giant ISPs openly manifest monopoly behavior.

There is a really simple fix for this. Congress could give authority to the FCC to regulate broadband so that future FCCs or administrations could not undo it. It would only take a simple law that says something like, “The FCC shall regulate the broadband industry for the benefit of the citizens of the United States.” Obviously, lawyers could word this to be more ironclad – but giving the FCC the authority to regulate broadband doesn’t have to be complicated.

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Uncategorized

The Fight Over 12 GHz Spectrum

For an agency that has tried to wash its hands from regulating broadband, the FCC finds itself again trying to decide an issue that is all about broadband. There is a heavyweight battle going on at the FCC over how to use 12 GHz spectrum, and while this may seem like a spectrum issue, it’s all about broadband.

12 GHz spectrum is key to several broadband technologies. First, this is the spectrum that is best suited for transmitting data between the earth and satellite constellations. The only way Starlink is going to be able to grow to serve millions of remote customers in the U.S. is by having enough backhaul to fuel the huge amounts of data that will be passed to serve that many customers. Lack of backhaul bandwidth will significantly limit the total number of customers that can be served and is an obvious major concern of the satellite companies.

It turns out that 12 GHz is also the best spectrum for transmitting large amounts of data with 5G. The carriers have been dabbling with the higher millimeter-wave spectrum, but it’s turning out that there are squirrelly aspects of millimeter-wave spectrum that make it less than ideal in real-world wireless deployments. The 12 GHz spectrum might be the best hope for carriers to be able to deliver gigabit+ wireless drops to homes. Verizon has been deploying fiber-to-the-curb technology using mid-range spectrum and seeing speeds in the range of 300 Mbps. Using the 12 GHz spectrum could provide a reliable path to multi-gigabit wireless drops.

The big question facing the FCC is if 12 GHz can somehow be used to satisfy both needs, pitting the 5G carriers against the satellite carriers. As an aside, before talking more about the issue, I must observe that the satellite companies bring a new tone into FCC proceedings. Their FCC filings do everything except call the other side a bunch of dirty scoundrels. Probably only those who read a lot of FCC documents would notice this, but it’s something new and refreshing.

The current argument before the FCC comes from filings between Starlink and RS Access, which is associated with Michael Dell, who owns a lot of the spectrum in question. But this is part of the larger ongoing battle, and there have been skirmishes that also involved Dish Networks, which is the largest owner of this spectrum.

The FCC will have to somehow untie the Gordian knot on a tough issue. As is to be expected with any use of spectrum, interference is always a major concern. The usefulness of any band of spectrum can be negated by interference, so carriers only want to deploy wireless technologies that have minimal and controllable interference issues. Both sides in the 12 GHz fight have trotted out wireless engineers who support their positions. RS Access says that spectrum can be shared between satellite and terrestrial usage, supporting the idea of not giving more spectrum solely to Starlink. Starlink says the RS Access engineers are lying and wants dedicated spectrum for satellite backhaul. I don’t know how the FCC can sort this out because the only way to really know if spectrum can be shared is to try it.

What I find most unusual about the fight is that the FCC is being dragged into a broadband issue. The last FCC Commission, Ajit Pai, did his best to wash broadband out of the vocabulary at the FCC. But in today’s world, almost everything the FCC does, other than perhaps chasing robocallers, is ultimately about broadband. While this current 12 GHz fight might look like a spectrum battle to an outsider, it’s all about broadband.

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Regulation - What is it Good For?

Broadband Labels

There is one quiet provision of the Infrastructure Investment and Jobs Act that slipped under the radar. Congress is requiring that the FCC revamp broadband labels that describe the broadband product to customers, similar to the labels for food.

The Act gives the FCC one year to create regulations to require the display of a broadband label similar to the ones created by the FCC in Docket DA 16-357 in 2016. A copy of the FCC’s suggested broadband label from 2016 is at the bottom of this blog. The original FCC docket included a similar label for cellular carriers.

ISPs are going to hate this. It requires full disclosure of prices, including any special or gimmick pricing that will expire. ISPs will have to disclose data caps and also any hidden charges.

As you can see by the label below, it includes other information that big ISPs are not going to want to put into writing, such as the typical download and upload speeds for a broadband product as well as the expected latency and jitter.

To show you how badly big ISPs don’t want to disclose this information, I invite you to search the web for the broadband products and prices for the biggest ISPs. What you are mostly going to find is advertising for special promotions and very little on actual prices and speeds. Even when it’s disclosed it’s in small print buried somewhere deep in an ISP website. And nobody talks about latency and jitter.

What is even harder for ISPs is that they often don’t know the speeds. How does a telco describe DSL speeds when the speed varies by distance from the hub and by the condition of the copper wire on each street. I’ve seen side-by-side houses with different DSL speeds. Cable companies can have a similar dilemma since there seem to be neighborhoods in every city where the network underperforms – most likely due to degradation or damage to the network over time.

The sample label asks for the typical speed. Are ISPs going to take the deceptive path and list marketing speeds, even if they can’t be achieved? If an ISP tells the truth on the labels, shouldn’t it be required to submit the same answers to the FCC on the Form 477 data-gathering process?

I’m sure that big ISPs are already scrambling trying to find some way out of this new requirement, but that’s going to be hard to do since the directive comes from Congress. It’s going to get interesting a year from now, and I can’t wait to see the labels published by the biggest ISPs.

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Regulation - What is it Good For? The Industry

Being an ISP

Over time, this blog has talked about everything broadband, but I don’t think I’ve ever talked about being an ISP. In the simplest terms, an ISP is somebody that connects to a home or business and routes broadband traffic to and from the Internet. ISPs do a lot more these days. For example, they protect customers against hacking and bad behavior on the web.

We all know the big ISPs like Comcast, Charter, AT&T, and Verizon since these four ISPs serve over 75% of all broadband customers in the country. All of the other ISPs you hear about collectively serve the other one-fourth of the U.S. market.

The heyday of the ISP industry, in terms of the total number of ISPs, was probably in the late 1990s when anybody could be a dial-up ISP by buying a modem bank, some telephone lines, and a connection to the Internet. It seems like every small town and even many neighborhoods had one or more ISPs who competed with the few big nationwide players like AOL and CompuServe.

ISPs come in every shape and size. The ones we most think about as ISPs own networks that reach people’s homes, either through wires or wirelessly. Satellite companies like Viasat and Starlink are ISPs. But there are other kinds of ISPs. For example, some ISPs lease fiber connections from a city or somebody else that owns a network. There are still some ISPs delivering broadband over leased telco copper wires. A lot of people don’t think of cellular carriers as ISPs, but most people today have smartphones and connect to the Internet using apps. In many of the surveys we conduct, we see that as many as 10% of households only connect to the Internet over a cellular connection.

ISPs are somewhat regulated, but it gets complicated. The FCC under Ajit Pai largely deregulated broadband by wiping out the FCC’s Title II authority to regulate ISPs except for a handful of regulations specifically required by Congress. In doing so, Chairman Pai constantly referred to his deregulation as light-touch regulation, but the FCC eliminated 90% of the ways that the agency might theoretically be able to regulate ISPs. Consequently, the current FCC has very little regulatory authority over ISPs.

This doesn’t mean that ISPs are fully unregulated. ISPs are supposed to comply with a few regulations. For example, they are supposed to register with the FBI and describe the steps needed if the FBI wants to surveil a customer on an ISP network. An ISP has to officially register with the FCC if it wants to participate in receiving any funding from the Universal Service Fund. Many states expect ISPs to register as carriers – mostly, so the state knows who they are.

The FCC requires ISPs to use the Form 477 process to report the location of customers by Census Block, along with a description of the technology being used and the speeds delivered. But broadband regulation is taken so lightly that a lot of ISPs ignore this completely. For example, in almost every county I’ve ever worked in, there is a least one ISP that doesn’t report customers to the FCC. There doesn’t seem to be any penalty for not reporting or at least any that I’ve ever seen. Some of the ISPs that skirt regulation are sizable and sell fiber connections to large businesses in multiple markets.

ISPs are also theoretically regulated by the Federal Trade Commission. But that is truly light regulation because the FTC can’t easily establish rules or policies that affect all ISPs. Instead, the agency occasionally punishes a specific ISP for bad behavior, mostly centered on mistreating customers in some manner.

There are a lot of entities that don’t even realize they are ISPs. Governments often build fiber networks to connect various government buildings into a local network. But when cities then connect all of the government locations to the Internet, they have become an ISP. Cities also often branch out and provide a fiber connection to a few large businesses in a community – often without realizing this makes them an ISP like any other.

The big ISP industry believes that broadband regulation will be coming back when the FCC finally gets a fifth Commissioner. Companies with monopoly powers in all industries would love to be unregulated, and so far, the only two groups of companies that have largely been able to pull this off are ISPs and the giant web content companies. The need for some regulatory oversight is obvious. For example, the FCC is currently investigating the response efforts of big ISPs after a major storm. But without explicit regulatory authority, I’m not sure the agency has any authority to compel ISPs to do more to be ready for disaster recovery.

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Regulation - What is it Good For?

States Fight Back Against CAF II

Jon Brodkin of ArsTechnica wrote a recent article about the Mississippi Public Service Commission (PSC) notifying the FCC that AT&T had failed to meet its CAF II requirements in the state. AT&T had taken over $49 million per year for six years ending this December and was supposed to use that money to upgrade broadband to almost 144,000 residents in the state to at least 10/1 Mbps broadband.

The PSC notification informs that FCC that they don’t believe the upgrades have been done or that many of those homes were able to get faster broadband. AT&T has certified to the FCC that the CAF II work has been completed on schedule. AT&T has stonewalled the PSC on data requests to find out how many homes have successfully been able to access faster broadband.

The FCC is supposed to begin testing CAF II homes in 2021 and is supposed to fine the big telcos like AT&T if homes in the CAF II area aren’t getting the faster speeds. However, that testing program is badly flawed in that the telcos are going to have some say about which homes get tested, and they’ll certainly funnel the testing into places that meet the speed test.

AT&T elected to use the CAF II funding to upgrade speeds by offering fixed cellular service to customers that formerly had slow DSL service. From what I can see, AT&T has not widely advertised the new wireless product and it’s unlikely that they have added many people to the cellular technology in Mississippi or anywhere else. The company is refusing to tell the state how many homes are on the new product.

Unfortunately, what AT&T is doing in Mississippi is not unusual. AT&T took $2.57 billion nationwide for CAF II and it’s likely It hasn’t made many upgrades in other states as well. I’ve seen a lot of evidence that Frontier ($1.7 billion) and CenturyLink ($3.03 billion) have also failed to upgrade rural customers. Those two companies elected to mostly upgrade rural DSL to the faster speeds. We’ve recently had engineers in counties where Frontier and CenturyLink were supposed to make CAF II upgrades and we could find no evidence of upgraded DSL anywhere in the rural parts of these counties. We’ve also helped counties to solicit speed test from citizens and we’ve studied a number of counties where no rural DSL service tested even close to the 10/1 Mbps goal of CAF II.

To make matters even worse, the FCC recently decided to award these big telcos a seventh year of subsidy. That means AT&T will get $428 million in 2021, Frontier will get $283 million, and CenturyLink will get $506 million. The companies have no obligation for this addition funding and don’t have to use it to improve rural broadband.

While 10/1 Mbps broadband isn’t great, it’s a lot better than the DSL that was in these rural areas in 2015 when the CAF II payments began. The CAF II areas are remote and most customers who could even get DSL saw speeds under 1 or 2 Mbps download.

The impact of AT&T’s failure to make the upgrades became apparent this year when millions of students were sent home during the pandemic. A student might be able to squeak out a school connection on a 10/1 Mbps broadband connection, but students cannot function on the slower DSL that is still in place due to lack of upgrades. The actions of the FCC and the greed of the big telcos robbed millions of rural homes from getting better broadband.

The failure of CAF II rests entirely on the FCC. The last FCC under Chairman Wheeler awarded the funding to upgrade to 10/1 speeds, even though the definition of broadband at the time was 25/3 Mbps. The current FCC under Chairman Pai has turned a blind eye to the non-performance of the big telcos and absurdly is awarding them with an additional year of CAF II funding. The overall CAF II program handed out over $10 billion in funding for improving rural broadband that might as well have been flushed down the drain. The FCC could have awarded this money instead to broadband grants that could have brought better broadband in the CAF II rural areas.

I hope the Mississippi PSC does more than just write a letter. I’d like to see them ask for AT&T to refund the CAF II money to the state to use for broadband grants. And I’d love to see other states do the same and take back the billions of CAF II broadband funding that was wasted.