Three Challenges for 2024
Thursday, November 16, 2023
Three Challenges for 2024
Remarks as prepared for delivery to the
Fifth Annual-ish Maine Broadband Summit
November 15, 2023
Good morning! It’s wonderful to be here. I want to thank Myles Smith and Peggy Schaffer for inviting me. What an honor it is to be speaking after Senator King! He is a true broadband champion and the driving force behind the $10 billion Capital Projects Fund. It was also his wise idea to give broadband funding to the states to distribute rather than have the federal government do it.
I was last in Maine in 2019, when I was testifying in Augusta on behalf of a bill sponsored by then-Senator and now Secretary of State Shena Bellows that would protect the privacy of broadband users. That bill became law, and the state was able to beat back a lawsuit by incumbent broadband providers. Not long after the privacy bill was passed, Maine passed a law protecting net neutrality.
What struck me about the policymakers I worked with was their dedication to ensuring that Maine residents had access to broadband networks that were open and protective of privacy. Today, Maine policymakers face an even bigger test—how to best spend the almost $272 million the Commerce Department allocated from its Broadband Equity Access and Deployment (BEAD) Program as well as the funding the state receives under the Digital Equity Act.
We have seen this movie before, and it didn’t have a happy ending. Between 2010 and 2020, the Federal Communications Commission alone spent around $50 billion to deploy broadband in rural America. If you include the funding programs under the US Department of Agriculture’s Rural Utilities Service and the Department of Commerce’s National Telecommunications and Information Administration, that number is probably closer to $60 billion. The result? According to the FCC’s December 2022 numbers, approximately 42,000 locations in Maine have no broadband connection—or service of less than 25/3 Megabits per second (Mbps). These unserved locations account for about 6.5 percent of the total locations statewide. An additional 52,000 locations (8% of locations) are “underserved,” with service between 25/3 to 100/20 Mbps. And as we know, the FCC’s map tends to undercount the number of unserved and underserved households, so that number is probably much higher. In the US overall, according to NTIA, one in five households lack broadband Internet access at the grossly outdated speed of 25/3.
How can we make sure that the state and the country avoid a sequel? Today I want to look ahead to 2024 and talk about three challenges that all states, including Maine, will face. I also want to suggest how states can meet these challenges to ensure that this once-in-a-lifetime funding secures fast, affordable and reliable broadband Internet access for every US household. But it will take an enormous effort by policymakers, organizational and industry representatives, and individuals to achieve this goal.
Challenge #1: Timing
It’s remarkable what has transpired since the bipartisan infrastructure law that created the BEAD program was signed exactly 2 years ago today. In mid-2022, NTIA published its Notice of Funding Opportunity with the rules and regulations for the program just six months after the law’s passage. The FCC published its broadband map later that year and NTIA announced the allocation of funding to the states this past June. And, in 2023 alone, state broadband offices, among other things, will have developed five-year plans and published two volumes of draft initial proposals and for some, digital equity plans as well. This whirlwind of a schedule continues until the end of the year—states must submit the final initial proposal by December 27.
Producing all these proposals and plans has been an enormous challenge for state broadband offices, some of which have no more than 3 or 4 employees. (Rhode Island has just one if you can believe it.). Anyone looking for relief in 2024 can forget about it, and the stakes are just as high.
To begin with, every state must conduct a state-wide BEAD mapping challenge to ensure that those communities most in need get the funding they deserve to connect every household. I probably don’t need to tell anyone in this room that the FCC’s service location fabric and availability maps are flawed—with the former understating where broadband could be deployed and the latter overstating where it is available. But the good news is that this new challenge process provides an opportunity to vastly improve upon the FCC’s map. Maine is in very good shape, having started developing its own state map in 2018. Importantly, the Connectivity Authority is also supporting the use of speed tests the public can use to challenge broadband provider claims, as well as crowd-sourced speed tests from platforms such as M-Lab and Ookla.
Much more taxing will be NTIA’s requirement that states provide the final list of BEAD grant winners when they submit their final grant proposals. The final proposal is due one year after the NTIA approves the initial grant proposal, which should be in early 2024. For most states, it will be a daunting and likely impossible task.
Let me walk you through the normal timeline for determining grant winners, as described by noted broadband consultant Doug Dawson:
- A state broadband office will have to finalize the rules for awarding grants through attorneys and state leadership. Some states are going to be required to get the Legislature involved to approve grant rules. This will likely take 3-4 months for most states, but a few will take much longer.
- The office will then be ready to announce the date for the first round of grant applications. They would typically give applicants 60-90 days to submit them.
- The office will need at least 30 days for the initial review of applications and to provide time to ask for clarifications from applicants.
- Next, the detailed grant scoring must be done. The BEAD grants are complex, and it’s hard to see a state scoring and ranking grant applications in less than 60 days. There is a lot of complicated due diligence needed by offices that are often manned by first-time grant reviewers.
- The state is then required to allow 15-30 days to post the grant applications and allow for protests and challenges. There would be another 30-60 days to resolve protests.
- Finally, grant awards are announced, and it can easily take three months to negotiate contracts with grant winners. Inevitably, some winners will back out during this process.
This timeline is 16 months long, if, as Dawson says, everything “goes smoothly.” It also doesn’t account for rules, for example, that require de-duplication of federal and state grants and special handling of high-cost areas. It’s also notable that a number of states that got approved for Capital Projects Funds well over a year ago still have not chosen all of the subgrantees for that program. The one-year final proposal deadline will also pressure some states to do a single round of grants, which can be less efficient and competitive and force the state office to "negotiate" with incumbents to reach 100 percent service, driving up the overall cost of a project.
Will states be able to get relief from this mandate? As with any massive government funding project, there are politics involved. In an election year, the Biden Administration wants to boast that billions of dollars are coming to the states for broadband imminently—not in 2026 or 2027. But the fallout from rushing the states to choose subgrantees would be much worse.
Think of the first round of the Rural Digital Opportunities Fund, or RDOF, where the Trump FCC rushed to give $9 billion to providers right before the 2020 election without engaging in the due diligence necessary to determine whether all the winners had the financial, technical and managerial capability to build the promised networks. Not only did the FCC have to claw back nearly a third of that money when it was discovered that several winners lacked the wherewithal to build those networks, but, as I’ll discuss later, many of them haven’t even started to build those networks.
I’m encouraged by the recent decision of NTIA to allow alternatives to its requirement that BEAD grant winners provide a letter of credit equal to 25 percent of the grant award from a Weiss-rated bank of B- or higher. That decision was the result of many months of hard work by a coalition of small, minority, female, and publicly owned ISPs, state broadband officials, and civil society. For many months NTIA could not be moved, but when the coalition submitted a letter with 300 signatories to the Department of Commerce, the White House, and Members of Congress, the agency took notice. To its credit, once NTIA leadership was made aware of how the Letter of Credit requirement would prove an insurmountable barrier for small ISPs wanting to participate in the BEAD process, it realized the agency had to be flexible.
Based on my conversations with NTIA leadership, they are similarly unaware of the impact that their timeline will have on the success of the BEAD program. This presents an opportunity for state broadband offices—along with their allies in state, local government, industry, civil society and Congress—to inform NTIA and seek relief NOW. Political expediency should not override good policy or undermine the goal of the BEAD program—to connect every American household everywhere.
Challenge #2: Affordability
The problem of affordability for low-income and middle-class households may be the biggest barrier to achieving the BEAD program’s goal of universal connectivity, and depending on what happens in the next six weeks, that barrier may get larger.
I’m going to focus mostly on low-income affordability, although I’d like to briefly address middle-class affordability. The Pew Charitable Trusts found that determining what is affordable for middle-class families is extraordinarily complicated, weedy and heavily dependent on what region a household is in. Even Pew, which is a top thought leader on Internet affordability, came to no specific conclusions, because it discovered, among other things, that the data about subscription prices and consumer demand were either outdated or unreliable and that there was a dearth of research on middle-class affordability.
I find the Connectivity Authority’s definition of middle-class affordability to be too rigid. The Authority took the FCC’s broadband affordability benchmark of of monthly income, which the agency itself admitted was not “inherently meaningful,” and applied it to the state’s middle-class income range of $42,123-$126,364. From there it determined that a $70 a month 100 Mbps symmetrical service is “affordable.” I don’t think one needs to do research to conclude that a household at the lower end of the income range, with $3500 in gross monthly income, is going to struggle affording $70 a month for decent, but not great, broadband. Assuming an average of two children under 18 per household, that outlay becomes even more difficult. The offer of a $30 a month 100/20 service gives me little comfort, as the upload speed isn’t fast enough for many of today’s applications. And, as I’ll discuss in a moment, some broadband providers are offering much faster speeds for $30 to low-income households that are eligible for the Affordable Connectivity Program, or ACP. Middle-class Americans shouldn’t be stuck with second-rate broadband.
Which is the perfect segue. As you know, the infrastructure law created the $14.2 billion ACP, which provides a $30 a month broadband subsidy for low-income households; and $75 for households in tribal lands and high-cost areas. Over 21 million US households are currently enrolled and, in Maine, there are 94,207 households enrolled, representing nearly 17 percent of all households in the state. But as you probably also know, the ACP is due to run out of funding by Spring 2024.
By most measures, the ACP has been a success. It has benefitted rural and urban households in every state, and enrollment in Republican- and Democratic-controlled states is roughly equal. At the same time, it has also become a major source of revenue for broadband providers big and small. Many carriers, to their credit, provide a $30 service that drives the cost of broadband down to zero. For example, Sonic provides up to 10 GB symmetrical, and Optimum Fiber provides a 300 Mbps symmetrical service to ACP subscribers for the price of the subsidy—$30.
Importantly, the ACP has also become integral to the success of the BEAD program. The ACP helps to incentivize broadband providers to serve rural and low-income communities and makes BEAD dollars go farther by improving the providers’ return on investment. A recent study by Common Sense and the Boston Consulting Group shows that the ACP reduces the per-household subsidy required to incentivize ISP investment by $500. This makes it much easier to build new networks.
In my 35 years of working in communications law and policy, I’ve never seen a program that was supported by nearly everybody in the ecosystem. Industry and advocates Republicans and Democrats all like it. Yet, because of general dysfunction in Congress and the pull of other priorities like wars and natural disasters, the program may perish.
Failure to provide more funding for the ACP would be a huge step backward in the effort to close the digital divide. Households would either be disconnected entirely or return to a state of what some call "subscription vulnerability," but I call Internet insecurity, where there are some months when they can afford having Internet service, and others when food, clothing or medical expenses take precedence. Even if Congress restores the ACP at some point, the government would have lost the trust of millions of households, making the program far less successful than it is now.
Recently, the White House asked Congress to include $6 billion for the ACP in the bills it passes to fund the government—commonly known as appropriations bills. But just because the White House asks Congress for money doesn’t necessarily mean it will get it. The good news is that Maine has two powerful Senators who could play a large role in saving the ACP. Senator Collins, who was one of the architects of the infrastructure law, is also the Vice Chair of the Senate Appropriations Committee, and I would ask those of you who want to see this program continue to urge her to ensure that ACP funding is part of the Commerce, Justice and State appropriations bill. Senator King can also be helpful by talking to his appropriator colleagues. I’m delighted that Governor Mills weighed in yesterday by joining a letter signed by 26 bipartisan governors asking Senate and House leaders to provide the ACP with more funding.
While the funding for the ACP could come together very quickly and at the very end of this year, states should have a backup plan should the funding not come through or if there is a gap between the end of current funding and new funding. That money could come from unspent American Rescue Plan Act funds if there are any, Digital Equity Capacity Grants, other state funds, or philanthropies.
In the near future, the ACP will need a “forever home,” which I and many others believe should be the FCC’s Universal Service Fund. Among other things, the USF funds connectivity to K-12 schools and libraries, rural healthcare facilities, and low-income mobile phone service through its Lifeline program. But how to make this happen is a discussion for another day.
Challenge #3: Oversight
It would be natural to think that once the BEAD funding is disbursed, everybody can breathe a sigh of relief and go home. But disbursement of funds to the subgrantees is not the end of the process—in many ways it is the beginning.
I have my own biases over where state broadband offices should spend their BEAD funds, although I realize that NTIA has already set in stone a scoring system for determining grants that in many cases could favor large incumbents. But regardless of which broadband providers ultimately win these grants, it is critical that both federal and state government officials conduct consistent oversight to ensure that the promised networks actually get built and in a timely fashion. Providers have four years to build these networks, even though today they are typically built in 18-24 months. That’s a lot of time for things to go wrong—for equipment prices and interest rates to grow, for the workforce to shrink, for natural disasters to hit.
The recent history of federal broadband funding teaches us a valuable lesson of what not to do. I spoke earlier about the RDOF, which was the last major round of federal government funding for broadband prior to the passage of the infrastructure law. In 2020, RDOF recipients were given 6 years to build their networks, and many have taken their time. Today, many of the grantees have not even started to build their networks, and some never will. It is widely rumored that some of these RDOF winners have sat on the funds and simply collected the interest. In Southern Mississippi alone, 25,000 census blocks are subject to RDOF grants, but the grantees will eventually default unless the FCC gives them more money or allows them to default without penalty. The FCC has said that it is not inclined to give the RDOF winners any more funding, and it hasn’t spoken about the “get out of jail free” card. This is a double whammy, because any area that is subject to a federal government grant, whether or not the network has been built, is not eligible for BEAD funding.
How does the FCC ensure that its high-cost funds are used to build the promised networks? It allows a recipient to self-certify that it has met certain milestones. But self-certification didn’t work for the RDOF, and it didn’t work for the broadband maps. The BEAD program’s historic public investment in broadband demands much more than a process of “trust and kind of verify.” Many of the residents of areas that will receive BEAD grants have been waiting three decades for fast and reliable connectivity and, in some cases, any connectivity at all. They cannot wait any longer.
NTIA has a very long list of reporting requirements for states and broadband providers, but that isn’t enough. Federal and state officials must go into the field, survey progress, and, if timelines are not met or missed without good reason, they should require that the grant money be returned back to the states to re-grant to another provider who will keep its promises. Otherwise, BEAD will suffer from the same problems that bedeviled the RDOF and other federal high-cost funding programs—slow network builds, subpar networks, and, in way too many cases, no networks at all.
The challenges I’ve set out today can seem overwhelming, especially to state broadband officials and constituents who have limited resources and tight deadlines. But they can be overcome if federal, state and local officials, community anchor institutions, industry, civil society and individual stakeholders work in concert. We must ensure that the BEAD money goes to those who can and will build fast and reliable networks to every household in a community, not just some. We must exercise oversight to ensure those networks are actually built. And we must create a support system for those who need help obtaining internet service, devices, and digital skills. Nothing less is necessary to ensure that this historic investment in broadband achieves the goal of universal connectivity.
Gigi Sohn is the Benton Senior Fellow and Public Advocate
The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.
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