Talkie's Preemption Petition Looks Persuasive - Part II

On March 12, I posted a blog titled, "Talkie's Preemption Petition Looks Persuasive." As I explained, in its petition Talkie asks the FCC to preempt Queen Anne's County in Maryland from enforcing what it claims are local zoning requirements that have the effect of prohibiting Talkie from attaching its communications equipment to a utility pole owned by Talkie. The county's purported justification for obstructing Talkie's proposed broadband service is that it would be delivered over multi-use (that is, comingled) facilities.

 

In my March 12 post, I concluded:

 

This is just one of many instances in which local cities and counties across the country implement onerous and often costly requirements, or engage in bureaucratic delay tactics, that prevent the timely deployment of new communications services and advanced broadband infrastructure. It's important that, when appropriate, the FCC grant meritorious preemption petitions. Talkie's petition looks like it may be just such a case.

 

While I hope that the Marylanders who might be served by Talkie proposed broadband service will not be denied that service because of improper actions by local officials, I'm also interested, of course, in the principle at stake in this particular preemption spat and other similar ones. That's why, in the above excerpt, I referred to "many instances" involving tactics similar to those confronted by Talkie in Maryland.

I'm pleased to see that INCOMPAS, representing a broad coalition of competitive communications providers and broadband builders, has submitted comments to the FCC supporting Talkie's preemption petition. INCOMPAS reports that its members "regularly

encounter discriminatory zoning requirements, excessive fees, sequential permitting processes, and de facto moratoria that significantly hinder broadband deployment."

 

INCOMPAS states that "the Commission has consistently preempted fees and requirements that disrupt deployment of advanced services over commingled facilities. The County’s opposition asks the Commission to retreat from that settled position, and INCOMPAS urges the Commission to decline to do so." Therefore, according to INCOMPAS, "the outcome of this proceeding will affect every INCOMPAS member deploying modern multi-use networks."

 

It is this potentially broader impact of the Commission's disposition of Talkie's preemption petition –aside from concern regarding the immediate impact on those residents who might benefit from having available Talkie's services – that prompted me to highlight Talkie's petition in the first place. Absent affirmative Commission action on Talkie's petition pursuant to Section 253 of the Communications Act, the ability to deliver broadband services over multi-use infrastructure could be put in jeopardy.

 

If that is the case, the full realization of FCC Chairman Brendan Carr's much-needed "Build America" agenda, which is necessarily dependent on rapid deployment of broadband infrastructure, could be adversely impacted. It still looks to me like Talkie has presented a persuasive case that should be given close attention by the Commission in a timely fashion.

 

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.

MEDIA ADVISORY: A BRIDGEAct Too Far

 Regarding the introduction today by Senators Michael Bennet, Angus King, and Rob Portman of the BRIDGE Act, the following statement may be attributed to Free State Foundation President Randolph May:

“While I am sympathetic to ongoing efforts in Congress to find proper solutions that further broadband deployment and adoption in order to bridge remaining digital divides, I’m troubled by several aspects of the BRIDGEAct introduced by Senators Michael Bennet, Angus King, and Rob Portman. For example, by requiring the adoption of a specific low-income option and prohibiting rate caps, the law, in effect, would be engaging in a form of rate regulation that is ill-suited to the capital-intensive, technologically-dynamic broadband Internet marketplace. Also very troubling is the pronounced tilt favoring local government communications networks over private networks constructed and operated with private capital. The proposal would actually preempt approximately twenty state laws that presently either prohibit or otherwise restrict such local government-run networks. States have adopted these laws in order to protect state taxpayers from having to subsidize the often financially unsuccessful muni networks and to prevent them from disadvantaging private sector competitors by virtue of the exercise of their control over rights-of-ways, permitting processes, and fees charged.

With these concerns in mind, I surprised that Senator Portman is a co-sponsor of the bill. Indeed, based on his record and the history of his years of public service, I’m hopeful he might reconsider his support of the legislation in its current form."    

U.S. House Committee Passes "Dig Once" Reform to Boost Fiber Buildout

As reported by John Eggerton at Multichannel News, on June 10, the House Transportation and Infrastructure Committee favorably reported the National Dig Once Act out of committee as part of the INVEST America Act. The Dig Once Act, writes Eggerton, "would require that the plastic conduit that houses fiber optic cable be included in the construction of any road being built with federal funds in areas without broadband," with broadband providers receiving notice of opportunity to use those conduits. The idea behind the bill is to expedite fiber deployment and reduce the time end expense of multiple excavations.

Leaving aside the other parts of the INVEST America Act, the policy contained in the Dig Once Act is sensible way to promote broadband access to unserved Americans. Hopefully, the 117th Congress will see fit to pass "dig once" reform as a way to promote real infrastructure in the United States. For more on the "dig once" legislation's sponsorship and history, see John Eggerton's report.