FCC Concludes Auction for Spectrum Licenses in the 2.5 GHz Band

According to news reports by Multichannel News, Telecompetitor, and other outlets, the FCC's competitive bidding auction of 2.5 GHz spectrum licenses has concluded. After 73 rounds, the completed auction apparently raised close to $428 million, subject to discount for certain bidding credits provided by the Commission's rules. The auction reportedly yielded 7,872 winning license bids, and 145 licenses drew no bids.

Importantly, the Commission concluded the 2.5 GHz spectrum auction in a timely manner. Attention should now be directed toward making more spectrum available for private commercial and personal use, including for commercially licensed use. As pointed out in my August 2 blog post, the next swath of lower 3 GHz spectrum, as well as the 4 GHz and 7-8 GHz bands, are candidates for repurposing and licensing for commercial use. Also see my February 2021 Perspectives from FSF Scholars, "Fast Action on the Lower 3 GHz Band Will Secure America's 5G Future."

A True Assessment of the USF's Future Relevance Demands a Full Accounting of Broadband Subsidies

In a Perspectives from FSF Scholars published last Friday, Free State Foundation President Randolph May expressed his disappointment that the FCC's Report on the Future of the Universal Service Fund (Report) did not "go further than it did … in articulating a likely 'end state' for the USF's High Cost Fund."

As the Report does acknowledge, Congress has earmarked "billions" for broadband, an "unprecedented amount." However, it does not follow that money to its logical and inevitable conclusion: a near-term reality in which every location in America has access to a broadband connection – and in which the High Cost Fund therefore is no longer needed. And it exacerbates that lapse by failing to acknowledge nearly $9 billion in Department of Treasury subsidy grants publicized prior to the Report's adoption. The Report's failure to account for all of the known sources of federal funds necessarily casts doubt on its conclusions as to the future relevance and need for the agency's existing universal service programs, especially the High Cost Fund.

Over the last several years, Congress has passed multiple pieces of legislation allocating to multiple federal agencies historic amounts of government subsidies for the construction of high-speed Internet networks. Some of those appropriations provide specific dollar amounts. The most obvious example of this is the Infrastructure Investment and Jobs Act (IIJA), which included $65 billion, $46.45 billion of which targets broadband infrastructure construction via NTIA's Broadband Equity, Access, and Deployment (BEAD) Program and Enabling Middle Mile Broadband Infrastructure Program.

As I noted in a March 2022 Perspectives, however, the American Rescue Plan Act (ARPA) created two separate grant programs administered by the Department of Treasury, the State and Local Fiscal Recovery Funds (SLFRF) and the Coronavirus Capital Projects Fund (CPF), that combined make available a whopping $360 billion – some of which will be used for broadband. That uncertainty demands real-time accounting and close interagency coordination, a point that Mr. May and I emphasized in comments recently submitted to the FCC.

Arguably the best way to define the "end state" for the High Cost Fund, which subsidizes the construction and maintenance of broadband infrastructure in rural areas, is in terms of dollars. That is, the actual amount of money needed to extend broadband infrastructure to every location in the U.S. currently unserved. Generally speaking, the moment when federal subsidies reach that specific financial target is the moment when the goal of the High Cost Fund has been achieved.

Regrettably, the Report does not include such a number. However, the Biden White House, after first asking for $100 billion, in May 2021 did concede that with $65 billion – that is, the very amount that Congress included in the IIJA – "we can still achieve universal access to affordable high-speed internet."

Whatever that total – and, given inflation, it is conceivable that the final price tag may be higher than $65 billion – the other side of the equation is the cumulative amount of federal money allocated. Given the fact that Treasury has at its disposal far more ARPA money than required to supplement NTIA's BEAD and middle-mile coffers (to say nothing of the countless other federal broadband subsidy programs), it is essential that the FCC coordinate with Treasury, in addition to NTIA and the Department of Agriculture, on a running tally.

To its credit, the Report does reference some non-IIJA sources of federal broadband subsidies. Two examples: the ReConnect Program administered by the Department of Agriculture's Rural Utilities Service ($4.8 billion to date) and NTIA's Broadband Infrastructure Program ($288 million).

However, it effectively ignores ARPA's $360 billion – concluding that "we agree with the majority of commenters who caution that the Infrastructure Act will not achieve all of the universal service goals for broadband, and as such, the Commission should not abandon its universal service programs" (emphasis added).

Keep in mind, the relevant statutory language in the IIJA directs the Commission to "submit to Congress a report on the options of the Commission for improving its effectiveness in achieving the universal service goals for broadband in light of this Act and the amendments made by this Act, and other legislation that addresses those goals" (emphasis added). As such, the Report's narrow focus on the IIJA not only paints an incomplete picture of progress, it also runs afoul of congressional intent.

To be sure, the Report does point out that "there are billions of dollars more that are available for broadband programs now being implemented by … the Department of Treasury" and that "other recent legislation delivered unprecedented broadband funding to … Treasury." The Commission also commits, appropriately, to "extensive" and "continued close coordination with other agencies" and highlights the interagency agreement among the Commission, USDA, NTIA, and Treasury announced on May 12, 2022.

But prior to the Report's release, the White House and Department of Treasury publicized nearly $9 billion in disbursements from the $350 billion SLFRF Program and the $10 billion CPF – money that the FCC does not even mention in its report. Moreover, that number certainly will increase over time: As Treasury noted in a July 14, 2022, Press Release:

A key priority of the [CPF] is to make funding available for reliable, affordable broadband infrastructure and other digital connectivity technology projects. In addition to the $10 billion provided by the CPF, many governments are using a portion of their State and Local Fiscal Recovery Funds (SLFRF) toward meeting the Biden-Harris Administration's goal of connecting every American household to affordable, reliable high-speed internet.

A June 2022 Fact Sheet released by the White House proclaims that "[t]he American Rescue Plan has already spent or committed more than $25 billion to invest in affordable high-speed internet and connectivity" – a statement that assumes 100 percent of the CPF's $10 billion will be used for broadband.

Limiting the discussion to those grants in fact made prior to the Report's adoption, however, results in the following list of Administration announcements:

• Per the White House Fact Sheet referenced above, "[e]ven without full reporting in, state and local governments have committed more than $8 billion in investments [from the SLFRF] toward expanding affordable digital connectivity, through construction of affordable and high-speed broadband infrastructure and providing assistance to households for Internet access and digital literacy."
• In a June 2022 Press Release, Treasury announced grants from the CPF to four states to the tune of $582.8 million: Louisiana ($176.7 million), New Hampshire ($50 million), Virginia ($219.8 million), and West Virginia ($136.3 million).
• In addition, that Press Release revealed that, as of July 21, 2022, Treasury had made 72 separate grants from the CPF to 76 different Tribal governments, with each receiving $167,504, for a total of over $12.73 million.
• In a July 14, 2022, Press Release, Treasury announced an additional $356.9 million in awards from the CPF to four states: Kansas ($83.5 million), Maine ($110 million), Maryland ($95 million), and Minnesota ($68.4 million).

All told, Treasury announced $952.43 million in grants from the CPF prior to the Report's adoption. Combining that amount with the "more than $8 billion in investments" out of the SLFRF heralded by the White House results in nearly $9 billion, a substantial step toward the High Cost Fund's "end state" not even mentioned in the Report.

In sum, the Report's failure to account for these receipts inevitably casts doubt on its conclusions as to the future relevance of the USF, especially the High Cost Fund.

Senators Urge Fixes to NTIA's NOFO for Broadband Subsidies

On August 18, a letter signed by thirteen senators was sent to Secretary of Commerce Gina Raimondo, calling attention to aspects of the NTIA's Notice of Funding Opportunity ("NOFO") for the Broadband Equity, Access, and Deployment (BEAD) Program that are contrary to directives made by Congress in the Infrastructure Investment and Jobs Act. The letter is worthwhile reading and NTIA should take up the senators' recommendations and make changes to its NOFO in order to help ensure that the BEAD Program conforms to the Infrastructure Act. 

One of the problems with the NOFO has to do with its provisions that impose or at least encourage controls on broadband prices. According to the senators' August 18 letter to Secretary Raimondo: 

The law clearly states: "Nothing in this title may be construed to authorize the Assistant Secretary or the National Telecommunications and Information Administration to regulate the rates charged for broadband service." In your recent testimony before Congress on April 27, 2022, you recognized this express prohibition on rate regulation. You also noted that State plans to address affordability may not involve rate regulation. 

 

The NOFO, however, appears to open the door to rate regulation by imposing several requirements not included in the law. The NOFO even suggests a price point of $30 dollars for states to adopt for low-cost options. This appears to be an attempt to pressure Eligible Entities to set rates deemed appropriate by NTIA. Additionally, the NOFO prohibits all data usage-based pricing options, which many existing providers use in conjunction with different tiers of service. This requirement could discourage provider participation by conditioning grants on substantial changes to their current practices. Additionally, the NOFO states that, "each Eligible Entity must include in its Initial and Final Proposals a middle-class affordability plan to ensure that all consumers have access to affordable high-speed internet." A "middle-class affordability plan" is a new term that does not appear in the law. Asking States to pursue various strategies for achieving this new objective, including by requiring "providers receiving [BEAD] funds to offer low- cost, high-speed plans to all middle-class households using the BEAD-funded network," is another indirect form of rate regulation. Elsewhere, the NOFO requires States to review the affordability of a 1 Gbps symmetric service and 100/20 Mbps service as part of their prioritization for program scoring. That requirement is also not part of the law. 

 

Congress did not invite States to adopt rate regulations that the statute plainly prohibits, nor can NTIA go beyond the statutory affordability initiatives in the law. Unfortunately, the NOFO does not fully conform to this clear limitation and, if NTIA or States move in this direction, it could deter participation in the BEAD program. We therefore urge NTIA to rescind or correct these portions of the NOFO and make clear to States that rate regulation of broadband service is prohibited under this program. 

Indeed, NTIA ought to make the changes prescribed in the senators' letter and alleviate these reasonable concerns that the BEAD Program will result in federal price controls on broadband services. 

 

Additionally, the senators' letter calls out the NOFO's provisions that discard technological neutrality by favoring fiber technology. FSF Senior Fellow Andrew Long called attention to this problem with the NOFO and the need for NTIA to correct it in his May 24 Perspectives from FSF Scholars, "Future Guidance Can Fix NTIA's Flawed "Fiber-First" Approach." Also, the letter takes issue with the provisions in the NOFO that give preferences to government-owned broadband networks in the BEAD Program grant award process. Those concerning NOFO provisions were addressed in my May 26 Perspectives, "NTIA's Broadband Subsidies Must Respect State Law Limits on Government-Owned Networks."

 

The senators' letter rightly calls for changes to fix the NOFO's provisions favoring technological non-neutrality and government-owned networks and to bring the BEAD Program more in line with the Infrastructure Act. 

Report Touts Benefits of Fiber Broadband Speeds and Pricing for Americans

On August 23, the Fiber Broadband Association released a report titled "A Detailed Review: The Status of U.S. Broadband and the Impact of Fiber Broadband." The report was prepared by Michael C. Render of market research and consulting firm RVA, LLC. It contains several interesting data points regarding broadband Internet access and fiber-to-the-home (FTTH) services in America.  

Relying on data from Pew Research, the report found that about 92% of Americans have Internet access at home, with 77% having wired service and 15% with wireless service. In terms of market share, the report found that about 49% of Americans with Internet access at home subscribed to cable broadbands, 21.3% subscribed to FTTH services, 13.1% still subscribed to DSL services, 11.7% subscribed to mobile wireless services, 3.1% subscribed to fixed wireless services, and 0.9% subscribed to satellite broadband services. Notably, many cable subscribers are actually served by FTTH services. 

 

On a side note, one can expect the market share for DSL to decline and for fiber as well as fixed wireless connections to rise over the next few years. And it will be interesting to see how the future rollout of multi-gigabit 10G cable broadband platform will impact broadband market share in the times ahead. 

 

Additional data points contained in the report include:

• "The average download speed experienced by users as tested in the annual FBA/ RVA random survey of Internet users…has increased from about 4 Mbps download to 121 Mbps from 2009 to 2022." 
• "Average U.S. upload speeds have increased from about 0.4 Mbps to 26 Mbps in the same period. The upload to download ratio was 11% in 2009 and has increased to 26% in 2022."
• Average download/upload speeds for FTTH services clock at 199 Mbps/75 Mbps.
• "The cost per provided Mbps (cost divided by the number of Mbps received downstream) has decreased very dramatically from about $9.00 to about $0.55 since 2010." 

The report is available on the FBA's website. 

FTC Initiates Privacy Rulemaking Despite Congressional Momentum: Republican Commissioners Issue Strong Dissents

At a virtual news conference last Thursday, the FTC announced the adoption of an Advance Notice of Proposed Rulemaking (ANPR) on "commercial surveillance" (that is, the use of personal information) and "lax" data security practices.

Over forceful objections from the two Republican Commissioners, and in the face of significant congressional progress on a bipartisan, bicameral federal comprehensive data privacy bill, this action by the majority initiates a "Magnuson-Moss" rulemaking pursuant to Section 18 of the FTC Act.

The ANPR:

[I]nvites comment on whether it should implement new trade regulation rules or other regulatory alternatives concerning the ways in which companies (1) collect, aggregate, protect, use, analyze, and retain consumer data, as well as (2) transfer, share, sell, or otherwise monetize that data in ways that are unfair or deceptive.

It poses a total of 95 wide-reaching questions, grouped into the following broad categories:

• The extent to which personal data practices and security measures harm consumers, particularly children and teenagers;
• The appropriate way to balance costs and benefits; and
• Whether the FTC should regulate prevalent data privacy and security practices.

In just one troubling example of the ANPR's explicit bias against the prevailing notice-and-consent paradigm – a point of view that Commissioner Noah Phillips in his dissent characterizes as "a rather dystopic view of modern commerce" – question 74 asks under "which circumstances, if any, is consumer consent likely to be effective" and question 77 seeks input on "[h]ow demonstrable or substantial must consumer consent be if it is to remain a useful way of evaluating whether a commercial surveillance practice is unfair or deceptive" (emphases added).

In her Dissenting Statement, Commissioner Christine Wilson objected to the ANPR primarily on the basis of the risk it poses to the continued progress of the American Data Privacy and Protection Act (ADPPA). As I noted two weeks ago in a Perspectives from FSF Scholars, an amended version of the ADPPA on July 20, 2022, cleared the House Commerce Committee on a 53-1 vote.

Emphasizing her unwavering preference for congressional, rather than agency, action, Commissioner Wilson made plain that "[t]he momentum of ADPPA plays a significant role in [her] 'no' vote" – and that she is "gravely concerned that opponents of the bill will use the [ANPR] as an excuse to derail the ADPPA."

Commissioner Wilson did acknowledge that, at an earlier point in time, she "became willing to consider whether the Commission should undertake a Section 18 rulemaking to address privacy and data security."

However, for a litany of reasons – including "changes to the Section 18 Rules of Practice that decrease opportunities for public input and vest significant authority for the rulemaking proceedings solely with the Chair" and "Chair Khan's public statements [that] give [Commissioner Wilson] no basis to believe that she will seek to ensure that proposed rule provisions fit within the Congressionally circumscribed jurisdiction of the FTC" – the Commissioner has had an abrupt change of heart.

I documented this evolution in a series of posts to the Free State Foundation's blog.

In his Dissenting Statement, Commissioner Phillips reiterated a similarly longstanding conviction that Congress, rather than the FTC, "is where national privacy law should be enacted." In that vein, he wrote that he is "heartened to see Congress considering just such a law today" and hopes that "this Commission process does nothing to upset that consideration."

Taking issue with the ANPR's foundational terminology, Commissioner Phillips labeled the phrase "commercial surveillance" an "academic pejorative," one that is "defined so broadly (and with such foreboding) that it captures any collection or use of consumer data" – and one that "trades a serious attempt to understand business practices it would regulate for the chance to liken untold companies large and small to J. Edgar Hoover's COINTELPRO."

Expanding upon this concern, Commissioner Phillips makes the following additional points:

• The ANPR "provides no notice whatsoever of the scope and parameters of what rule or rules might follow" – thereby "undermining the public input and congressional notification processes" required by Section 18.
• It exceeds the FTC's congressionally delegated Section 5 authority over "unfair or deceptive acts or practices" and "signal[s] the majority's view that the scope of the rules passed by the unelected commissioners of an independent agency should be on par with statutes passed by elected legislators." Referencing (1) "personalized" or "targeted" advertising, and (2) consent, which he refers to as "one of the traditional bedrocks of privacy policy," he argues that the ANPR portends regulating "common business practices we have never before even asserted are illegal."
• Overstepping the limits of the FTC's jurisdiction, "[i]t seeks to recast the agency as a civil rights enforcer, contemplating policing algorithms for disparate impact without a statutory command."
• It "shortchanges data security, one area ripe for FTC rulemaking."

Critically, Commissioner Phillips highlights how the ANPR in practice could result in consumer harm: "Reducing the ability of companies to use data about consumers, which today facilitates the provision of free services, may result in higher prices – an effect that policymakers would be remiss not to consider in our current inflationary environment."

On September 8, 2022, the FTC will host a virtual public forum on the ANPR.

Comments on the ANPR will be due 60 days after its publication in the Federal Register.

Enjoying the Fruits of One's Labor and the Copyright Clause

For anyone remotely interested in intellectual property law, and more particularly copyright law, I want to commend to your attention a very important amicus brief just filed in the Supreme Court by Curt Levy and the Committee for Justice. The brief opposes what it characterizes (rightly in my view) as a radical interpretation of the fair use doctrine by the Andy Warhol Foundation for the Visual Arts.

In the context of explaining why the Warhol Foundation's unduly expansive interpretation of the fair use doctrine should be rejected, the Committee for Justice's brief states: "Copyright protections serve to vindicate the fundamental civil right that authors have to the fruits of their labors. This is how the Founders understood it at the time they enacted the Constitution with its Copyright Clause, and this is how this Court has understood it ever since." According to the brief, the Warhol Foundation "wants to change this accepted understanding of the Copyright Clause by replacing it with a utilitarian-based regime…."

 

The resort by the Committee for Justice's brief to foundational "first principles" regarding the proper interpretation of the Copyright Clause is in all respects consistent with the views articulated by me and Free State Foundation Director of Policy Studies Seth Cooper in our book, "The Constitutional Foundations of Intellectual Property: A Natural Rights Perspective." Indeed, I am pleased that our book was cited as an authority in Committee's brief alongside these "other authorities" – James Kent, William Blackstone, John Locke, Adam Mossoff, Antonin Scalia, Joseph Story, and Federalist No. 43! I would not be so coy as to deny that I am honored and proud to be listed among such illustrious company, and I'm sure Seth fees the same way.

Again, for anyone with an interest in copyright law, and especially anyone with an interest in understanding why the Founders' included the Copyright Clause in the Constitution of 1787, I heartily commend to you the Committee for Justice's excellent amicus brief. And if you want to delve more deeply, well… I commend our book, "The Constitutional Foundations of Intellectual Property: A Natural Rights Perspective." It's still a bargain.

Discussing Chevron Deference After West Virginia v. EPA

As Free State Foundation President Randolph May wrote in his July 2022 Perspectives from FSF Scholars, "A Major Ruling on Major Questions": "There are aspects of the U.S. Supreme Court's decision in West Virginia v. EPA that will be studied and debated by scholars—and, indeed, by judges, lawyers, and executive branch officials—for years to come." Indeed, some the implications of that decision were discussed in the Federalist Society's August 1 online panel event, "The Future of Chevron Deference at the Supreme Court." The panel features Columbia Law School Prof. Thomas Merrill, Jones Day attorney Yaakov M. Roth, and moderator Eli Nachmany. Prof. Merrill and Mr. Roth offer their insights into what the role of the Chevron doctrine may be going forward and how it will relate to the major questions doctrine. One interesting matter that was discussed during the event is whether courts will apply the major questions doctrine as a threshold inquiry prior to any application of Chevron's two-step inquiry – or whether the major questions doctrine will be subsumed into Chevron's first step, which has to do with whether Congress clearly spoke to the matter at hand. 

For more on West Virginia v. EPA, check out FSF President May's press release from June 30 of this year responding to the decision as well as his July 2022 Perspectives.  

PLAN for Broadband Act Addresses Funding Coordination Concerns

On August 4, Senators Roger Wicker and Ben Ray Lujan introduced the Proper Leadership to Align Networks (PLAN) for Broadband Act. That same day, a companion bill was introduced in the House by Representatives Tim Walberg and Peter Welch. The PLAN for Broadband Act would require the President, in consult with the heads of several federal agencies, to develop a "National Strategy to Close the Digital Divide" as well as an "Implementation Plan." Under the Act, the National Strategy would have to be submitted to Congress within one year of the legislation's enactment, and the Implementation Plan would have to be submitted to Congress 120 days later. 

The PLAN for Broadband Act was prompted by a May 2022 report by the Government Accountability Office (GAO) titled "Broadband: National Strategy Needed to Guide Federal Efforts to Reduce Digital Divide." As Free State Foundation Senior Fellow Andrew Long explained in a June 14 blog post, the GAO report warned about significant wasteful duplication of funding and effort to increase broadband access that could result from the lack of coordination among over 133 broadband access-related funding programs under the purview of 15 different agencies. To address this concern, the GAO report recommended that the Executive Office of the President develop and implement a national broadband strategy. 

The sponsors of the PLAN for Broadband Act deserve credit for calling attention to the issue of duplicative wasteful spending and for seeking to improve the effectiveness and efficiency of federal efforts to close the digital divide. In the meantime, nothing ought to prohibit federal agency heads from closely coordinating their efforts to expand broadband access to all Americans and to protect taxpayer dollars from being wasted. 

D.C. Circuit Unanimously Affirms the FCC's 5.9 GHz Band Order

Earlier today, in a development that will benefit WiFi users and make way for modern wireless vehicle safety capabilities, the U.S. Court of Appeals for the District of Columbia Circuit unanimously affirmed the Commission's November 2020 Order repurposing 45 MHz of fallow spectrum in the 5.9 GHz band for unlicensed use.

In a Statement, NCTA – The Internet & Television Association called the court's decision in Intelligent Transportation Society of America v. FCC "an enormous victory for American consumers," one that will lead to "even more reliable high-speed Wi-Fi and access to next-generation automotive safety applications."

Image by Jagathish Saravanan

In 1999, the FCC dedicated 75 MHz of beachfront spectrum to a proprietary vehicle safety technology that never lived up to its promise. Over twenty years later, the 5.9 GHz Order put that valuable wireless capacity to its highest and best use, making 30 MHz available for successor intelligent transportation systems technologies and repurposing the lower 45 MHz for WiFi and other unlicensed services.

Free State Foundation President Randolph May and I filed comments in support of the FCC's proposal. And in a Perspectives from FSF Scholars published shortly before the Commission adopted the 5.9 GHz Order, I argued that it represented "a fresh approach to this vastly underutilized spectrum that advances both public safety and the capabilities of WiFi networks."

Regrettably, in one of several recent high-profile instances of a breakdown in interagency spectrum coordination efforts necessitating process reform, the Department of Transportation raised objections to the Commission's proposal outside of established channels.

Eventually, several interested parties challenged the 5.9 GHz Order in court.

As Free State Foundation Director of Policy Studies and Senior Fellow Seth Cooper explained in a December 2021 post to the FSF Blog, consistent with the Supreme Court's 1968 decision in U.S. v. Southwest Cable Company, "[a] decision by the D.C. Circuit to uphold the 5.9 GHz Order would constitute a small but helpful step toward vindicating the FCC's 'unified jurisdiction and regulatory power' over commercial spectrum from interference by other federal agencies."

Today's decision does just that. In response to petitioners' claims that the 5.9 GHz Order "was arbitrary and capricious because it violated the Transportation Equity Act," the D.C. Circuit succinctly responded as follows: "It was not."

Specifically, the court held that:

[T]he Transportation Equity Act did not transfer away from the FCC its broad authority to manage the spectrum related to intelligent transportation systems. Instead, as the FCC noted, it simply required the FCC to account for the Department of Transportation's views and the needs of intelligent transportation systems when it does so. The FCC did that here.

The Goal of Broadband Subsidies Should Be to Connect the Unserved, Not Promote Municipal Networks

As the states establish mechanisms for doling out billions of dollars in federal broadband subsidies, time is of the essence. Proposed legislation in California therefore would expedite the regulatory approval process via a 180-day shot clock.

A recent op-ed warns, however, that opposition from advocacy organizations more concerned with promoting municipal broadband than meeting funding deadlines threatens to leave significant amounts of money on the table – and, consequently, a significant number of Californians unnecessarily unserved.

"Welcome to California, Nevada-California Border, U.S. 95" by Flickr user Ken Lund is licensed under CC BY-SA 2.0.

In an August 4, 2022, opinion piece published by the Capitol Weekly, Jonathan Spalter, president and CEO of USTelecom | The Broadband Association, described $2 billion in last-mile subsidies from the Department of Treasury as "present[ing] a once-in-a-generation opportunity to expand the reach of affordable, high-speed broadband services throughout the Golden State."

Notably, however, the Treasury's Final Rule for the $350 billion State and Local Fiscal Recovery Fund (SLFRF) program clearly states that that $2 billion "may only be used for costs incurred within a specific time period, beginning March 3, 2021, with all funds obligated by December 31, 2024 and all funds spent by December 31, 2026."

Accordingly, Assembly Bill (AB) 2749 would require the California Public Utility Commission (CPUC) to "review each application and notify the applicant of its decision on or before 180 days from the date that the completed application was submitted." Should the CPUC fail to act within that timeframe or reach an agreement with the applicant to extend the deadline, after 180 days the "completed application shall be deemed approved."

But as Mr. Spalter wrote:

Unfortunately, some California advocacy organizations are attempting to stall the CPUC's broadband grant review process because they claim that the expeditious distribution of broadband funds disadvantages Government Owned Networks (GONs). These organizations are more concerned with supporting the creation of new GONs than getting the desperately needed, reliable infrastructure to underserved Californians.

Despite a well-documented track record devoid of financial viability, constitutional concerns, and countless other shortcomings, municipally owned-and-operated broadband projects undeniably have their champions. Here, however, it seems clear that those opposed to AB 2749 for reasons relating to the municipal broadband cause are missing the forest for the trees.

SLFRF money not spent by the end of 2026 must be returned, and an Assembly committee analysis reveals that, under normal circumstances, CPUC deliberations can drag on for up to a year and a half. AB 2749's 180-day shot clock would accelerate that decisionmaking process – and thereby decrease the odds that time runs out before federal subsidies can be leveraged to connect unserved Californians. On that basis alone, it warrants the backing of all who claim to support the goal of universal broadband access.

Debating the Constitutionality of the Universal Service System

For thoughtful discussion and debate about the constitutionality of the universal service's contribution system as currently operated by the FCC, consider checking out the July 19 webinar hosted by the Federalist Society, titled "Consumers' Research v. FCC and the Legality of the Universal Service Fund Contribution Regime." Video and audio of the event are both available online. The event features a very knowledgeable and experienced panel that ably present their cases. Although the webinar is focused on constitutional arguments about USF raised by the Consumers Research v. FCC case, including the non-delegation issue raised by Section 254 of the Communications Act, the panel discussion also touches on USF contribution policy reform.

As noted in an April 19 blog post, the Free State Foundation and FSF President Randolph May joined an amicus brief that was filed by Competitive Enterprise institute in the Consumers' Research case.  

FSF President Randy May also addressed constitutional issues regarding USF in his November 2021 Perspectives from FSF Scholars, "A Nondelegation Doctrine Challenge to the FCC's Universal Service Regime." Also check out our April 2021 Perspectives, "Congress Should Put Universal Service on a Firmer Constitutional Foundation." Also, I addressed USF contribution reform in my June 2022 Perspectives, "Congress Should Require Major Web Platforms to Support Universal Service."

Commissioner Carr Praises National Broadband Strategy Bill

In a statement released earlier today, FCC Commissioner Brendan Carr welcomed the introduction of bicameral and bipartisan legislation compelling the Biden Administration to create a national broadband strategy – a much-needed development for which he long has advocated.

As I pointed out in a June 2022 post to the FSF Blog, a report issued by the Government Accountability Office (GAO) the previous month found that 15 different federal agencies and departments had been tasked with administering upwards of 133 unique broadband funding sources – and cautioned that "[t]his patchwork of programs could lead to wasteful duplication of funding and effort."

I raised a similar concern in March 2022's "Overlapping Broadband Appropriations Demand Agency Coordination: New FCC Maps Can Track Grants, Avert Waste," a Perspectives from FSF Scholars in which the above chart, depicting over $450 billion in potential subsidies overseen by just four agencies and departments (the FCC, NTIA, and Departments of Agriculture and Treasury), originally appeared.

Accordingly, the GAO report recommended that the "Executive Office of the President … develop and implement a national broadband strategy with clear roles, goals, objectives, and performance measures to support better management of fragmented, overlapping federal broadband programs and synchronize coordination efforts."

In a statement released in response, not for the first time Commissioner Carr voiced his concerns regarding this "troubling" state of affairs, concluding that "it appears that the Administration has turned the spigot on full blast and then walked away from the hose" and warning that "[a]s a result, taxpayers are about to get soaked."

For similar reasons, the Free State Foundation argued in comments submitted Monday regarding the effectiveness of the Interagency Broadband Coordination Agreement between the Commission, NTIA, and Department of Agriculture that "it is incumbent upon the Biden Administration to craft a national broadband strategy out of the current chaos."

Introduced by Senators Roger Wicker (R – MS) and Ben Ray Luján (D – NM) and Representatives Tim Walberg (R – MI) and Peter Welch (D – VT), the PLAN for Broadband Act would ensure that that occurs.

As Commissioner Carr's statement explains, "[t]his bipartisan, bicameral legislation would require the President to develop a national strategy to improve the coordination and management of broadband programs, including adopting accountability and performance measures, as well as an implementation plan to reduce waste, fraud, and abuse in federal broadband programs."

New Agreement Between FCC and NTIA Could Improve Spectrum Coordination

On August 2, the FCC and NTIA announced the signing of a new memorandum of understanding (MOU) on spectrum coordination. Free State Foundation President Randolph May and I addressed the topic of an updated MOU in a February 2022 Perspectives from FSF Scholars titled "Congress Should Require Better Agency Coordination on Spectrum Policy" and in a contemporaneous short blog titled "Congress Should Set Parameters for Improved Interagency Spectrum Coordination." Also, my July 26 blog post acknowledged the Government Accountability Office's (GAO) recommendation that the Commission and NTIA update their agreement. 

The signing of the MOU by Chairwoman Rosenworcel and Assistant Secretary Davidson is welcome news. It is to be hoped that the new MOU's framework for regular meetings and information sharing between the FCC and NTIA on spectrum management will foster conditions that are more conducive to interagency cooperation. In the last few years, we have witnessed conflicts between the Commission and executive branch agencies on spectrum policy in regarding 5.9 GHz band, the 24 GHz band, the C-band, and the L-band. The updated MOU may help reduce those types of conflicts in the future. In particular, the new MOU's formal requirements that the FCC and NTIA give each other 20-day advance notice regarding interference concerns and final actions on spectrum matters may help stop dubious process-based attacks on Commission spectrum decisions like the ones made against the 2020 L-band Order.

But we won't know how useful the new MOU is until we see it put into operation. As I explained in a July 13 blog post, new agreements and formal procedures will not mean anything unless the agencies act in good faith to resolve their disputes – through the interagency working group and through the new MOU framework – rather than employing hyperbolic, if not false, attacks on contested spectrum proposals using outside channels. 

Congress Should Direct Repurposing of Specific Spectrum Bands for Commercial Use

Today, August 2, the Senate Commerce Committee held a hearing on "The Future of Spectrum." Speakers testifying at the hearing spotlighted pressing wireless spectrum issues, including renewing the FCC's spectrum auction authority, repurposing more mid-band spectrum for commercial use, and ensuring better cooperation between agencies on spectrum policy. 

A key point made at the Senate Commerce Committee hearing was that renewal of the Commission's authority should be connected to Congressional directives that specific spectrum bands be repurposed and auctioned for private commercial use:

@CTIA Prez & CEO Meredith Attwell Baker @SenateCommerce hearing: Spectrum policy is out-of-balance in mid-band, with 2/3 held by govt. Lower 3 GHz, 7-8 GHz, and 4 GHz bands should be the immediate focus for maximizing amount of commercial licensed spectrum. #FutureofSpectrum

— Seth Cooper (@CooperFSF) August 2, 2022

Mandates by Congress regarding specific bands will ensure that the agencies take action and that the spectrum is actually repurposed. 

 

The Senate Commerce Committee hearing was particularly timely, as the ongoing 2.5 GHz band spectrum license auction (Auction #108) is the last near-term auction on the FCC's plate, and the House of Representatives passed the Spectrum Innovation Act (H.R. 7624) on July 27. As observed in my July 28 blog, the Spectrum Innovation Act would confer on the Commission an 18-month extension of its spectrum auction authority, which currently is set to expire later this year. The bill also would direct NTIA and FCC to examine and repurpose for public auction the next swath of spectrum in the lower 3 GHz band. Last week, Free State Foundation President Randolph May commended the House's passage of the bill, which is essential to replenishing the spectrum pipeline for next-generation wireless services.

Now it's the Senate's turn to pass legislation that will ensure that the future of spectrum will promote commercial wireless services, the American economy, and jobs. That legislation should extend the FCC's spectrum license auction authority and also mandate the repurposing of lower 3 GHz band as well as other specific bands for commercial use.  

FCC's 2.5 GHz Band Spectrum License Auction is Underway

The FCC is currently conducting Auction 108 – the 2.5 GHz band spectrum license auction. It has been reported that the Commission is selling 8,017 county-sized licenses in this band, also known as the Educational Broadband Service (EBS) spectrum. Sasha Javid has reported that, at the end of the third round of auction bidding, nationwide gross proceeds total more than $115.2 million. Some reports have suggested reasons for why the auction proceeds for the 2.5 GHz band will be much lower compared to other recent auctions for mid-band spectrum, including the 3.45 GHz band auction. In any event, repurposing even small swaths of spectrum is important for expanding next-generation wireless services. And there may be no other spectrum available for auction until the next swath of the lower 3 GHz band is readied. The Commission deserves credit for having commenced the 2.5 GHz band auction on schedule.