FCC Releases Broadband Funding Map

As required by the Infrastructure Investment and Jobs Act, yesterday the FCC released the Broadband Funding Map, a companion to the National Broadband Map intended to "to provide a locations overview of the overall geographic footprint of each broadband infrastructure deployment project funded by the Federal Government."

However, and as I highlighted in "Wasteful Duplication by Design: A Case Study on Overlapping Federal Broadband Subsidies," a recent Perspectives from FSF Scholars, the Broadband Funding Map's ability to prevent overbuilding and redundant funding is curtailed significantly by conflicting eligibility requirements across subsidy programs – including inconsistent minimum speed thresholds and exclusionary lists of approved distribution technologies – that open the door to duplication.

For the record, the Broadband Funding Map describes the neighborhood in the foothills west of Denver that was the focus of my case study as "Not Funded." Given that many federal funding sources, including the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program, have not yet begun doling out dollars, this perhaps is not surprising.

I intend to revisit the Broadband Funding Map periodically as more funding decisions are made. Stay tuned.

Senators Thune, Luján Urge GAO to Revisit Broadband Funding

In a letter dated April 24, Senators John Thune (R – SD), ranking member of the Commerce Committee's Subcommittee on Communications, Media, and Broadband, and Ben Ray Luján (D – NM), subcommittee chairman, request that the Government Accountability Office (GAO) "conduct an additional review of federal, state, and local broadband efforts to determine the effectiveness of each program."

In a recent post to the FSF Blog describing an effort led by Senator Thune to compel the National Telecommunications and Information Administration (NTIA) to align with statutory intent its rules for the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program, I pointed out that in prerecorded remarks delivered to the Free State Foundation's Fifteenth Annual Policy Conference, he cited a May 2022 GAO report cautioning that "there are more than 130 federal broadband programs that are administered by 15 federal agencies."

As I noted in a June 2022 post to the FSF Blog, the GAO concluded that "[t]his patchwork of programs could lead to wasteful duplication of funding and effort" and therefore recommended that the "Executive Office of the President … should develop and implement a national broadband strategy with clear roles, goals, objectives, and performance measures."

To date, no such national broadband strategy has emerged. Fortunately, however, Senator Thune's ongoing broadband funding oversight activities maintain a bright spotlight on this multi-agency, multi-program recipe for duplication, waste, fraud, and abuse.

For instance, his December 2022 oversight letter, to which FSF President Randolph J. May helpfully provided a comprehensive response, brought focused attention to the GAO report's findings. Yesterday's letter to the Honorable Gene L. Dodaro, Comptroller General of the United States, treads a similar path.

Specifically, Senators Thune and Luján request that the GAO investigate a number of topics, including:

• Whether each of the 133 (and counting) federal subsidy programs "were … established in line with Congress' directive on the funding's intended purpose";
• The "statutory basis" for each program;
• The extent to which these programs have met their "specific policy goals";
• The frequency with which – and how – "federal programs' funding [has] overlapped other federal programs";
• The effect of "the fragmented and overlapping approach the federal government [has] taken" on the ability of these programs to accomplish their intended goals;
• Whether the goals set forth in the May 2022 Memorandum of Understanding between the FCC, Department of Agriculture, NTIA, and Treasury Department have been achieved; and
• The extent to which "federal agencies [have] coordinated their broadband programs with state and local broadband funding programs."

As the letter rightly concludes, "[a]ddressing weaknesses in each of these broadband programs will help ensure more Americans are connected to reliable broadband services."

Senator Thune Spearheads Call to Revise BEAD Program Rules

In a letter released earlier today, a group of eleven Republican Senators, led by John Thune (SD), ranking member of the Senate Commerce Committee's Subcommittee on Communications, Media, and Broadband, and including Senate Commerce Committee ranking member Senator Ted Cruz (TX), urged National Telecommunications and Information Administration (NTIA) head Alan Davidson to bring in line with congressional intent the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program's rules.

Specifically, the letter pressed Assistant Secretary Davidson to remove several provisions from the May 2022 Notice of Funding Opportunity (NOFO) that "divert resources away from bringing broadband service to rural America and are inconsistent with NTIA's statutory authority in the Infrastructure Investment and Jobs Act (IIJA)."

The letter targets the following extraneous and counterproductive policy priorities not found within the IIJA yet championed by the NOFO:

• Labor requirements inappropriately designed "to achieve targeted social outcomes";
• A "misguided" bias in favor of government-owned networks;
• A fiber-focused failure to heed "Congress' technology neutral stance in the IIJA" with regard to other viable broadband distribution platforms;
• Affordability and other requirements inconsistent with specific language in the IIJA prohibiting NTIA from '"regulat[ing] the rates charged for broadband service";
• Climate change mandates "not envisioned by Congress" that raise costs; and
• "Buy American" mandates that threaten untimely delays absent "a consistent waiver process."

Senator Thune stepped up his broadband-funding oversight efforts late last year with the release of a letter soliciting input on a wide range of topics, including many of those listed above.

In "Senator Thune's New Broadband Oversight Initiative," a December 2022 post to the FSF Blog, Free State Foundation President Randolph May welcomed the arrival of Senator Thune's oversight letter and wrote that he "couldn't agree more on the need for congressional oversight of the various programs providing funds for broadband."

Mr. May submitted a thorough response, referencing dozens of related FSF scholarly papers, on January 6, 2023.

In prerecorded remarks addressing the FSF Fifteenth Annual Policy Conference on March 28, 2023, Senator Thune emphasized the importance of congressional oversight and highlighted the Free State Foundation's substantive contributions to those efforts:

On rural broadband oversight, as many of you know, Congress has allocated an unprecedented amount of money in federal broadband investments. And there are more than 130 federal broadband programs that are administered by 15 federal agencies. That spiderweb of bureaucracy is exactly why I began an effort last year to ensure there is stringent oversight of how these taxpayer funds are being spent. And I greatly appreciate the Free State Foundation taking the time to provide thoughtful responses to my oversight request.

The other signatories to the letter to NTIA Administrator Davidson are Senators Ted Cruz (TX), Marsha Blackburn (TN), Ted Budd (NC), Shelley Moore Capito (WV), Deb Fischer (NE), Eric Schmitt (MO), Dan Sullivan (AK), J.D. Vance (OH), Todd Young (IN), and Roger Wicker (MS). 

Senate Broadband Oversight Focuses on Department of Agriculture

With the Department of Agriculture's ReConnect Program poised to distribute this fiscal year an additional $1.5 billion in broadband infrastructure subsidies and amid reports that the 2023 farm bill could provide that agency with even more construction funding, I am encouraged by the news that a bipartisan group of Senators is taking action to prevent (1) waste, fraud, and abuse, and (2) the use of federal dollars to overbuild existing, privately financed networks.

On January 30, 2023, Senators John Thune (R-SD), Ben Ray Luján (D-NM), Amy Klobuchar (D-MN), and Deb Fischer (R-NE), all members of the Senate Committee on Agriculture, Nutrition, and Forestry, reintroduced legislation designed to "streamline and bolster U.S. Department of Agriculture (USDA) Rural Development broadband programs and ensure that their funding is being targeted to rural areas that need it the most."

Seth L. Cooper, Free State Foundation Director of Policy Studies and Senior Fellow, detailed the specific provisions of the Rural Internet Improvement Act of 2022 in a December 2022 post to the FSF Blog. The Rural Internet Improvement Act of 2023, like the 2022 version, would combine Rural Utility Service (RUS) broadband loan and grant programs, specify that no more than 10 percent of locations targeted by a funded project already have access to broadband, encourage greater broadband provider participation, improve the challenge process, and promote greater interagency coordination with the FCC and NTIA.

The RUS manages multiple broadband subsidy programs, the largest being the ReConnect Loan and Grant Program, which to date has distributed more than $3 billion. In a recent interview, RUS administrator Andrew Berke stated his expectation that the ReConnect Program will dole out an additional $1.5 billion in 2023.

In addition, news reports indicate that the next farm bill could appropriate still more money to RUS – Representative David Scott (D-GA), ranking member of the House Committee on Agriculture, identified as his top priority that "[w]e must ensure that appropriate funding is given to USDA to help us bridge the digital divide between rural and urban America" (emphasis added) and argued that "USDA knows what works for our rural communities better than many other Federal agencies."

Considering that (1) tens of billions in taxpayers dollars have been appropriated for the expansion of broadband infrastructure but not yet put to use, and (2) the vast majority of those subsidies will flow to rural areas – after all, at this point in the rollout of broadband "unserved" and "rural" are virtually synonymous – regardless of the distributing agency, it is not at all clear that any additional funding is "appropriate" at this time.

In "Absent Oversight, the Broadband Funding Faucet Likely Will Overflow," a November 2022 Perspectives from FSF Scholars, I drew attention to the concerning potential that, given the large amount of money involved and absent better interagency coordination and oversight, the number of different agencies sharing responsibility for government-led efforts to extend broadband connectivity to those areas that remain unserved could lead to substantial waste and inefficiencies.

But as Mr. Cooper wrote, it is equally true that "intra-agency coordination of broadband deployment subsidy programs through streamlined processes or merging of disparate programs is no doubt essential to ensure that precious tax dollars are spent wisely and that duplicative efforts and other forms of fraud, waste, or abuse are avoided" (emphasis added).

As you may recall, Free State Foundation President Randolph May received a letter from Senator Thune on December 6, 2022, soliciting input on, among other things, the potential for waste, fraud, and abuse as a result of the sheer number of federal broadband subsidy programs, including those administered by the Department of Agriculture.

In his response, Mr. May wrote that "[g]iven the large number of separate programs, it seems self-evident that some of them should be combined and/or eliminated so that there are many fewer programs and fewer agencies disbursing subsidies. This would increase manageability and facilitate accountability and meaningful congressional oversight." He therefore referenced with approval the introduction the Rural Internet Improvement Act of 2022.

In addition, Mr. May drew attention to the fact that the ReConnect Program (1) opens the door to rate regulation via a preference for applicants that provide "at least one low-cost option"; (2) inappropriately encourages applicants to "commit to net neutrality"; and (3) permits grant and loan recipients to apply that assistance in areas where up to 50 percent of locations already are served, in many instances by privately funded networks, "thus disincentivizing further private investment." As noted above, the Rural Internet Improvement Act of 2023 would decrease that threshold to 10 percent.

Senator Thune's New Broadband Oversight Initiative

I was pleased to receive a letter, dated December 6, 2022, from Senator John Thune, a longtime member of the Senate Commerce Committee and former chairman of the committee, seeking responses to a wide-ranging set of questions relating to the implementation of the Infrastructure Investment and Jobs Act (IIJA) and other programs disbursing funds to advance broadband deployment, as well as questions focused more generally on broadband issues. 

As Senator Thune points out, "the Government Accountability Office (GAO) recently found that broadband funding is spread out over 15 separate agencies and more than 130 separate programs." As he rightly observes, the fragmented approach the federal government has taken to address the digital divide raises a number of concerns." Thus, Senator Thune states that "it is imperative Congress exercises its oversight responsibilities and seeks feedback on how best to expand broadband services in the most effective, efficient, and fiscally responsive manner so that we can close the digital divide once and for all."

 

I couldn't agree more on the need for congressional oversight of the various programs providing funds for broadband. Over the past year, Free State Foundation scholars have published many papers addressing many of the issues raised by Senator Thune in his letter. [For one recent example, see Andrew Long, "Absent Oversight, the Broadband Funding Faucet Likely Will Overflow," and the many other FSF papers cited therein published by Mr. Long, Seth Cooper, and me, on broadband funding-related issues.]

 

So, I applaud this timely, important congressional oversight effort initiated by Senator Thune, and I welcome the opportunity for the Free State Foundation and its scholars to provide responsive information throughout his inquiry.

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.

Broadband Funding Agencies Ink Data-Coordination MOU

On May 11, 2022, all four federal agencies responsible for distributing hundreds of billions in broadband infrastructure subsidies announced that they had agreed "to share information about and collaborate regarding the collection and reporting of certain data and metrics relating to broadband deployment."

Pursuant to their Memorandum of Understanding (MOU), and consistent with arguments I made in a recent Perspectives from FSF Scholars, the FCC, NTIA, Department of Agriculture, and Department of Treasury will work together to leverage the FCC's soon-to-be-released broadband service availability maps (among other resources) to disseminate and display publicly "information about projects that have received or will receive funding from" the various programs that they administer.

As I explained in "Overlapping Broadband Appropriations Demand Agency Coordination: New FCC Maps Can Track Grants, Avert Waste," a March 2022 Perspectives, the Consolidated Appropriations Act, 2021 directed NTIA, the FCC, and Agriculture's Rural Utilities Service to "share information with each other about existing or planned projects that have received or will receive funds under the programs" for which those three agencies are responsible. That statutory requirement led to the release of an interagency agreement on June 25, 2021.

Notably, however, Treasury, which was tasked by the American Recovery Plan Act to oversee the $350 billion State and Local Fiscal Recovery Funds as well as the $10 billion Coronavirus Capital Projects Fund, was not a party to that agreement.

The MOU released on May 12, 2022, which supplements rather than supplants the prior three-party agreement, addresses that concern by bringing Treasury into the fold.

Given the vast amount of money at stake in these overlapping programs designed to connect those Americans still unserved, effective coordination is essential to avoid redundant grants, overbuilds, and waste, fraud, and abuse. The transparency and enhanced oversight made possible by this latest interagency pact hopefully will ensure that such coordination indeed does take place.

GOP Senators Criticize Treasury for Promoting Broadband Overbuilds

On January 28, 2022, eleven Republican Senators wrote to Department of the Treasury Secretary Janet L. Yellen to voice their "deep concern" that Treasury's Final Rule for a $350 billion government subsidy program encourages the use of taxpayer dollars to construct broadband networks in locations where robust service already exists – a concern that Free State Foundation President Randolph J. May and I similarly raised in a recent Perspectives from FSF Scholars.

In "Self-Defeating Treasury Subsidy Rule Wrongly Champions Broadband Overbuilds," Mr. May and I noted with alarm how the Final Rule adopted by Treasury for the State and Local Fiscal Recovery Funds (SLFRF) program rejects the sound policy that subsidies ought to target those areas that lack adequate levels of service – defined by Congress in the Infrastructure Investment and Jobs Act as 25 megabits per second (Mbps) downstream and 3 Mbps upstream – and instead declares eligible any "location where the recipient has identified need for additional broadband investment."

We also pointed out that the Final Rule encourages applicants to rely upon "any available data" – not just the revised broadband service availability maps that Congress directed (1) the FCC to generate, and (2) NTIA and the states to rely upon exclusively in disbursing over $42 billion in grants via the Broadband Equity, Access, and Deployment (BEAD) Program.

As we concluded, "[i]n championing government-subsidized overbuilds of existing, privately financed broadband networks, the Final Rule discourages continued private investment, interferes with the efficient operation of the competitive marketplace, ignores congressional intent, and undermines achievement of the very goal it seeks to advance: universal broadband access."

The letter to Secretary Yellen makes a number of similar points.

Led by Senator Moran (KS), the eleven GOP Senators wrote that the Final Rule "will allow SLFRF recipients to fund projects in areas where broadband service is already or will be available – while continuing to leave truly unserved areas in our states without access to broadband" and "allows states to choose whatever information they wish to determine the availability of broadband in a given area."

Instead, the Senators urged Secretary Yellen "to ensure that SLFRF funds are focused on truly unserved areas to maximize the benefit to those Americans currently without broadband service."

Commenters Address Transition from Emergency Broadband Benefit to Affordable Connectivity Program

The recently passed Infrastructure Investment and Jobs Act (IIJA) appropriated $65 billion to broadband-related initiatives. While the $42.5 billion targeting the construction of network infrastructure has received much of the attention, another significant component of the IIJA is the $14.2 billion to be used by the FCC to modify and extend the Emergency Broadband Benefit Program (EBBP), a consumer subsidy created in December 2020 by the $900 billion COVID-19 relief and government funding bill. (For more information on the nearly $7 billion in broadband funding contained therein, please see this post to the Free State Foundation's blog.)

Interested parties recently submitted comments on how the Commission can assure a smooth transition, for both consumers and service providers, from the EBBP to the IIJA's Affordable Connectivity Program. That valuable and informed input can only benefit consumers and warrants careful consideration and action by the FCC.

As I described in "The Emergency Broadband Benefit: A Possible Model for Future Lifeline Funding," a February 2021 Perspectives from FSF Scholars, at the end of last year Congress allocated $3.2 billion to a short-term, pandemic-specific subsidy program to be administered by the FCC. Low-income Americans, as well as those experiencing financial hardship due to the ongoing public health crisis, were able to receive (1) a recurring $50 monthly discount on high-speed Internet access service, and (2) a one-time connected-device subsidy up to $100.

The EBBP, by design, was limited in duration: Congress made clear that it would conclude at the earlier of the end of the pandemic (plus six months) or when the money ran out.

The $1.2 trillion IIJA appropriated an additional $14.2 billion to extend those broadband service and device discounts. While the program established by the IIJA in many ways builds upon the EBBP, as initially defined by Congress and subsequently implemented by the FCC, it also made some changes, in particular to eligibility requirements and the amount of the standard monthly service discount. And it gave the program a new name to reflect its longer-term nature: the Affordable Connectivity Program (ACP).

On November 18, 2021, the Wireline Competition Bureau issued a Public Notice soliciting input from interested parties on how best to implement the ACP. A wide range of entities – including broadband providers (such as AT&T Services, Inc., T-MOBILE USA, INC., and Verizon Communications Inc.) and industry trade associations (among others, USTelecom – The Broadband Association, NCTA – The Internet & Television Association, and CTIA – The Wireless Association®) – submitted comments by the December 8, 2021, deadline.

Interested parties raised a host of issues, some "big picture," others highly detailed and specific. Below I discuss a few of the topics that seem to have garnered the most attention.

First and foremost, commenters emphasized the importance of policies and procedures that provide for a smooth and orderly transition, for both consumers and providers, from the EBBP to the ACP. Pursuant to the operative text of the IIJA, the EBBP will end, and the ACP will begin, on December 31, 2021. However, a final order will not issue from the FCC until the middle of January 2022.

Broadband providers urged the FCC to afford them reasonably sufficient flexibility as they strive to comply with rules not yet written – and adequate time to make necessary changes once those rules are finalized. For example, multiple broadband providers argued that, in the interim, they should be permitted to continue to determine eligibility according to the existing EBBP rules.

In addition, and as mentioned above, Congress modified the amount of the standard monthly discount. Whereas the EBBP made available $50, the ACP reduced that to $30. From the consumer perspective, commenters highlighted the need to provide meaningful notice of this change so that recipients are not caught off guard financially.

Providers, meanwhile, identified numerous time-consuming to-dos necessitated by this change, including billing-system modifications, website and other marketing material revisions, and customer service representative training. Again, commenters asserted that these steps demand adequate time to complete.

Another change wrought by the IIJA: participating broadband providers "shall allow an eligible household to apply the affordable connectivity benefit to any internet service offering of the participating provider, at the same terms available to households that are not eligible households" (emphasis added).

Commenting broadband service providers raised operational concerns and uncertainties triggered by this vague and overly broad language. As one example, they urged the FCC to clarify that "any internet service offering" does not include grandfathered packages – that is, those no longer actively marketed to existing or potential new customers.

In the interest of effective and efficient administration, these and other concerns identified by commenting parties deserve close consideration and a robust response from the FCC.

The deadline for reply comments is December 28, 2021.

New Study Quantifies Huge Potential Losses Absent Revised Pole-Attachment Policies

An economic analysis commissioned by Connect the Future assigns a hefty price tag to the potential delays that utility pole disputes could cause in the deployment of broadband infrastructure.

"Advancing Pole Attachment Policies To Accelerate National Broadband Buildout," by Professor Edward J. Lopez and Patricia D. Kravtin, asserts that "broadband deployment is being inhibited or outright stopped due to the lack of effective pole policy to address problematic behavior of certain utility pole owners affecting broadband provider access to utility poles."

According to their analysis, this "hold up problem" could lead to substantial economic losses: between $491 million and $1.86 billion for each month of delay that results.

As I highlighted in a February 2021 post to the Free State Foundation's blog, Charter Communications, Inc. (Charter) has announced plans to invest $5 billion, including $1.2 billion in subsidies won via the FCC's Rural Digital Opportunity Fund auction, to connect over a million locations currently without access to broadband.

That initiative, however, hinges upon reasonable and timely access to utility poles. And in a post last week to the FSF Blog, I drew attention to two FCC filings in which Charter described several ongoing disputes that underscore the need for the relief sought by NCTA – The Internet & Television Association (NCTA) in a July 2020 Petition for Expedited Declaratory Ruling: (1) greater clarity regarding the proper allocation of pole replacement costs between attachers and owners, and (2) use of the Commission's Accelerated Docket to resolve pole-related impasses promptly.

Consistent with the NCTA petition, the study's authors conclude that "policymakers need to facilitate the streamlining of equitable access and cost-sharing arrangements between broadband attachers and pole owners" in order to realize the full economic potential of ubiquitous broadband coverage.

Charter to Commission: Pole Disputes Threaten Timely Deployment of Broadband Infrastructure

In two recent FCC filings, Charter Communications, Inc. (Charter) offered further evidence that efforts to connect rural Americans to broadband hinge upon agency action ensuring access to utility poles "on reasonable timelines, terms and conditions." Specifically, the grant, whether through declaratory ruling or notice-and comment rulemaking, of the forms of relief requested by NCTA – The Internet & Television Association (NCTA) in a Petition for Expedited Declaratory Ruling submitted in July 2020 and denied by the Wireline Competition Bureau in January of this year.

As I highlighted in "Charter Announces Ambitious Project to Deploy Broadband to Over One Million Unserved Locations," a February 2021 post to the FSF Blog, Charter is investing $5 billion, including $1.2 billion in subsidies secured via winning bids in the Rural Digital Opportunity Fund (RDOF) reverse auction, to expand its network in 24 states. This will enable it to offer high-speed Internet access – specifically, service that meets or exceeds the FCC's current 25 megabits per second (Mbps) downstream and 3 Mbps upstream definition of "broadband" – to more than one million locations at present unserved.

When it unveiled its plans, Charter cautioned that "pole applications, pole replacement rules and their affiliated issue resolution processes are all factors that can have a significant impact on the length of time it takes to build into these rural areas."

And in conversations last week with representatives of the Wireline Competition Bureau and legal advisors to Chairwoman Jessica Rosenworcel and Commissioner Geoffrey Starks, Charter presented specific evidence of issues relating to the processing of pole applications that threaten its ability not just to connect rural Americans, but to meet deadlines associated with RDOF subsidies.

Maureen O'Connell, Charter Vice President, Regulatory Affairs, detailed one impasse, involving the Warren Rural Electric Cooperative Corporation (WRECC) in rural Kentucky, that jeopardizes its plans to provide broadband to over six thousand unserved locations:

At the permit processing rate currently proposed by WRECC, it would take 14 years to complete the permitting process for attachments to poles to reach these locations – about seven times longer than planned and double the maximum allowed to deploy these federal taxpayer dollars under RDOF. That means a child in kindergarten now will have graduated from high school before the permitting phase is complete.

Charter also identified pole-related disputes in California, Hawaii, and South Carolina and "expressed concern that some pole owners have competitive incentives to delay broadband deployment by attaching entities because they are themselves affiliated with broadband providers who are putative competitors to the attaching entities, including (in the case of WRECC) affiliates or business partners receiving RDOF support."

In July 2020, NCTA filed with the FCC a Petition for Expedited Declaratory Ruling (NCTA Petition) seeking relief in rural areas including: (1) various clarifications regarding the appropriate allocation of pole replacement costs between attachers and owners, and (2) timely resolution of pole-related disputes via the Commission's Accelerated Docket.

Free State Foundation President Randolph May and Director of Policies Studies and Senior Fellow Seth Cooper filed Comments in support of the NCTA Petition.

In a January 2021 Declaratory Ruling, the Wireline Competition Bureau did clarify that "utilities may not require requesting attachers to pay the entire cost of pole replacements that are not necessitated solely by the new attacher and, thus, may not avoid responsibility for pole replacement costs by postponing replacements until new attachment requests are submitted."

As a general matter, however, the Wireline Competition Bureau denied the NCTA Petition, concluding that "it is more appropriate to address questions concerning the allocation of pole replacement costs within the context of a rulemaking, which provides the Commission with greater flexibility to tailor regulatory solutions."

The picture painted by Charter underscores how important it is for the FCC to provide additional clarity and guidance with respect to the respective rights and responsibilities of pole owners and attachers.

In that regard, I point out that, in a statement to Telecompetitor, a self-described "puzzled" WRECC disputed Charter's allegations and expressed "hope than we can come to an agreement soon." Thus, it would seem that the parties involved are not on the same page. Prompt intervention by the FCC holds the potential to accelerate the deployment of network infrastructure.

In other words, the policy goal of rapid rural broadband expansion compels precisely the relief requested in the NCTA Petition: "expedited consideration under the Accelerated Docket."

As noted above, the Wireline Competition Bureau denied NCTA's request for declaratory relief because it believed that a rulemaking of general applicability would be the more appropriate vehicle. It is time to begin that process.

New BroadbandNow Report Further Demonstrates Affordability of Broadband

A report released on August 18, 2021, by BroadbandNow provides additional proof that the number of U.S. consumers with access to affordable broadband service is both vast and growing rapidly.

In "Evidence of Falling Broadband Prices Grows Despite Overall Spike in Inflation," a recent Perspectives from FSF Scholars, I compared USTelecom broadband pricing information to Consumer Price Index (CPI) data released by the U.S. Bureau of Labor Statistics.

The former revealed that, between 2020 and 2021, the cost of connectivity fell across the board: entry level tier prices dropped by 9.1 percent, the most popular tier prices by 7.5 percent, and the highest speed tier prices by 2.3 percent.

By contrast, and over the same time period, the latter demonstrated that the cost of other in-demand consumer goods – various food items, electricity, fuel oil, and gasoline – increased by an average of over 7 percent.

Free State Foundation President Randolph May and I highlighted similar data in May 2021's "Biden Broadband Plan: Claims That Broadband Is 'Too Expensive' Are Unfounded," a direct response to unsupported assertions contained in the American Jobs Plan Fact Sheet released by the White House at the end of March.

BroadbandNow's "The State of Broadband in America, Q2 2021," provides still more evidence that competitive marketplace forces are driving down prices at an impressive pace.

Specifically, the report finds that, as of the second quarter of this year, 87 percent of Americans were able to subscribe to "low-priced" high-speed Internet access service – that is, offerings priced at $60 per month or less – providing speeds that meet the FCC's definition of "broadband": 25 megabits per second (Mbps) downstream and 3 Mbps upstream.

Impressive in isolation, that figure reflects incredible and rapid progress: an increase of 10 percentage points from just three months prior (Q1 2021) and, amazingly, over 35 percentage points since Q1 2020.

The report also notes that the percentage of Americans with access to "low-priced" offerings at even faster speeds – 100 Mbps downstream and 25 Mbps upstream – grew by 11 percent over that same brief period of time.

Maryland's "Connect Maryland" Broadband Initiative

 Maryland Governor Larry Hogan has announced that the state will commit another $100 million to the the $300 million investment that was announced in March as part of a bipartisan budget agreement to allocate federal funding from the American Rescue Plan Act. Together, these funds - $400 billion - are part of what Governor Hogan calls the "Connect America" initiative designed to close remaining digital divides.

The funds will be used both to deploy broadband in parts of the state that lack access to broadband networks and to subsidize service for low-income individuals.

The objective of closing remaining digital divides by closing both deployment and affordability gaps is a worthy one. But $400 million is a lot of new funding - on top of that which already has been expended. It will be especially important, if the funds are not to be used in an inefficient and wasteful fashion to carefully target the expenditures to meet the initiative's objectives - and then to carefully monitor the expenditures.

 

Bill Would Require FCC to Consider Big Tech Contributions to Universal Service Fund

On July 21, three Republican members of the Senate Commerce Committee announced the introduction of legislation that could revitalize the Universal Service Fund (USF) via contributions from so-called edge providers such as YouTube, Netflix, and Google.

With the Funding Affordable Internet with Reliable (FAIR) Contributions Act, Senator Roger Wicker (MS), ranking committee member, along with Senators Shelley Moore Capito (WV) and Todd Young (IN), would have the FCC consider the viability of an approach first articulated by Commissioner Brendan Carr in a May 2021 Newsweek op-ed.

As Mr. Carr explained, the USF's reliance upon steadily decreasing "telecommunications" revenues, through a monthly tax on bills for traditional voice offerings, is "now hopelessly outdated" and "on the verge of collapse."

The facts bear this out. Once below 6 percent, the USF contribution factor (that is, the rate at which consumers are taxed) surpassed 30 percent for the first time shortly before Mr. Carr wrote his op-ed. Not long thereafter, it rose even higher – 33.4 percent – for the second quarter of 2021. The proposed contribution factor for the third quarter of 2021 did dip slightly, but only back to the first-quarter level that gave Mr. Carr pause: 31.8 percent.

The reason the contribution factor continues to rise is no mystery. Consumers today use traditional telecommunications services far less – and Internet-based offerings far more. Rather than continuing to ratchet up the burden on the former, Mr. Carr instead proposed that "[w]e should start requiring Big Tech to pay its fair share."

Simply put, the anachronistic and unsustainable USF mechanism regressively taxes the dwindling user base of "telecommunications" services in large part to subsidize high-speed Internet service in high-cost areas. Edge providers utilize broadband infrastructure to generate billions and billions of dollars in revenues — without any obligation to help pay to close remaining digital divides.

In the words of Mr. Carr, "Big Tech has been enjoying a free ride on our internet infrastructure while skipping out on the billions of dollars in costs needed to maintain and build that network…. It is time to end this sweetheart deal. Big Tech should stop passing its costs onto the American people."

In a series of tweets at the time, FSF President Randolph May argued that Mr. Carr "makes a persuasive case" and that his "proposal deserves serious consideration."

More recently, Justin (Gus) Hurwitz, a member of the Free State Foundation's Board of Academic Advisors, asserted that, in the context of the ongoing congressional infrastructure funding debate, "[be]fore we decide how much to spend on [universal service] we should discuss, as Commissioner Carr rightly suggests, who should pay for [it]."

Senators Wicker, Capito, and Young clearly agree.

The FAIR Contributions Act, among other things, would require the FCC to:

• Seek input from the public "on the feasibility of collecting USF contributions from internet edge providers" and prepare, within 180 days, a report detailing its conclusions;
• Consider possible revenue sources;
• Evaluate the fairness of both the current system and one in which Big Tech contributes;
• Determine the feasibility of requiring such contributions;
• Estimate the impact on Tribal, low-income, and elderly populations; and
• Identify any statutory changes that may be required.

FSF President Randolph May Moderates Federalist Society Teleforum on Broadband Featuring Commissioner Carr

On June 15, Free State Foundation President Randolph J. May moderated a teleforum hosted by The Federalist Society featuring FCC Commissioner Brendan Carr.

Their conversation touched on a wide range of topics, including broadband infrastructure, legislative and regulatory efforts to close remaining digital divides, and Commissioner Carr's thought-provoking proposal to require that Big Tech companies contribute their fair share to government broadband subsidy programs.

Audio versions of "Closing the Digital Divide: The Future of Broadband Access" are available here.

Broadband Organizations Join Together to Form America's Broadband Future

On May 14, seven broadband providers and trade associations announced the formation of America's Broadband Future, a coalition that "will urge lawmakers to bridge the digital divide by expanding access in rural America, equipping vulnerable communities with resources needed to get connected, and investing in digital literacy initiatives to empower all Americans to thrive in the digital age."

On its home page, America's Broadband Future asserts that:

Unfortunately, some of the broadband policy plans being discussed in Washington, D.C. fall short. They fail to provide the resources necessary to empower and enable vulnerable communities to get connected quickly. And they fail to prioritize those unserved areas of the country that are most in need of major broadband investment. 

Free State Foundation scholars have addressed various shortcomings of the broadband-specific provisions in President Biden's American Jobs Plan in the following Perspectives from FSF Scholars and blog post:

• "Biden Broadband Plan Favoring Government-Owned Networks Lacks a Constitutional Foundation"
• "Biden Broadband Plan: Claims That Broadband Is 'Too Expensive' Are Unfounded"
• "Biden Broadband Plan: Misdirected Broadband Subsidies Hurt Competition and Consumers"
• "'Future Proofing' Subsidized Broadband Would Inflate Consumer Prices"

The founding members of America's Broadband Future are AT&T, Charter Communications, Comcast, Verizon, CTIA, NCTA – The Internet & Television Association, and USTelecom.

Latest FSF Critique of Biden Broadband Plan Disproves Claim That Service Is "Too Expensive"

The Free State Foundation today published the third piece in an ongoing series exposing flaws in the broadband-specific elements of President Biden's American Jobs Plan.

In "Biden Broadband Plan: Claims That Broadband Is 'Too Expensive' Are Unfounded," FSF President Randolph May and I tackle head-on the factually incorrect assertion that "Americans pay too much for the Internet." Citing multiple data sources, we demonstrate convincingly that the efficient operation of the competitive marketplace for high-speed Internet access is producing greater consumer choice, lower prices, and higher speeds. Make no mistake, time-tested trends prove that market forces are doing their job.

In "Biden Broadband Plan: Misdirected Broadband Subsidies Hurt Competition and Consumers," published on April 28, 2021, we described the harm that necessarily would result from the use of taxpayer dollars to overbuild existing, privately funded broadband networks: private investment would decrease, competition would suffer, and consumers ultimately would be worse off, not better.

And the first in the series, "'Future Proofing' Subsidized Broadband Would Inflate Consumer Prices," an April 13 post to the FSF Blog, explained how the Biden Administration's stated preference for "gold-plated" funding-eligible networks – that is, infrastructure capable of providing far more capacity than consumers demand, particularly in the upstream direction – inevitably would incentivize subsidy recipients to target areas already served and, more broadly, lead to higher, not lower, prices.

Republican Senators' $568B Infrastructure Proposal Includes $65B for Broadband

A group of five Republican Senators has released a $568 billion infrastructure framework in response the $2 trillion American Jobs Plan announced by President Biden.

Those lawmakers are Roger Wicker (MS), Ranking Member of the Commerce, Science, and Transportation Committee; Shelley Moore Capito (WV), Ranking Member of the Environment and Public Works Committee; Pat Toomey (PA), Ranking Member of the Banking, Housing, and Urban Affairs Committee; Mike Crapo (ID), Ranking Member of the Finance Committee; and John Barrasso (WY), Ranking Member of the Energy and Natural Resources Committee.

The Biden Plan, one aspect of which I discussed in a recent post to the FSF Blog, would make $100 billion available for broadband-related projects and would "prioritize[] support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives."

The Republican counter-proposal, by contrast, would allocate $65 billion out of the $81 billion generated by the recent C-band auction for new spending by the FCC and NTIA.

Be on the lookout in the coming days and weeks for additional commentary from Free State Foundation scholars on broadband spending proposals.

AT&T Will Invest $2 Billion to Reach Low-Income and Rural Americans with Broadband

Today, AT&T announced that it will invest $2 billion over the next three years to reach American who lack access to broadband Internet services or who have difficulty affording it. AT&T deserves credit for stepping up and pledging significant amounts of money to make broadband Internet services more available as well as affordable to low-income Americans.

As part of its continuing initiative to close digital divides, A&T will continue to offer discount wireless services to over 135,000 public and private schools and universities. Additionally, AT&T will continue its Access from AT&T program that offers wireline Internet service at $10 or less per month for qualifying households, with no contract obligations or install fee. 

Also, the Federal Emergency Broadband Benefit (EBB) program administered by the FCC will allow over 30 million households to reduce their monthly broadband service bills to as low as zero with. EBB will subsidize qualifying households up to $50 per month or $75 per month on Tribal lands. 

 

For more on AT&T's $2 billion investment pledge and other ways it intends to bring broadband Internet services to more Americans, check out AT&T's press release.