Analysis

Despite the more than $1.6 trillion private internet service providers (ISPs) have invested in broadband infrastructure since 1996, the internet landscape in the US faces significant challenges. As private ISPs have struggled to tackle these challenges, two related models have emerged as creative alternatives: municipal broadband and cooperatives.

Regional utility districts formed among multiple towns or municipal entities represent one of several emerging frameworks for providing broadband service to unserved or underserved areas, particularly in more rural parts of the country. Historically, such utility districts have been formed to build out infrastructure and provide essential services.

Investor-owned utilities, typically large, publicly-traded electricity distributors, can play a critical role in bringing broadband services to rural and underserved areas by allowing providers to use their existing infrastructure to provide the middle mile network for making high-speed internet connections. Rural areas present a challenge for broadband providers: These regions tend to be more costly and less profitable to serve than densely populated urban and suburban areas. Connecting rural communities requires middle and last-mile networks.

State policymakers have increasingly sought new solutions to improve the availability of broadband, including allowing electric cooperatives to offer service, the formation of regional utility districts to provide broadband, and the use of investor-owned utilities to improve the availabili

The Federal Communications Commission recently issued a Second Notice of Proposed Rulemaking concerning the allocation of costs when replacing poles to accommodate adding fiber or other communications wires communications devices to poles. The traditional rule has been that the new attacher must pay for 100 percent of the cost of make-ready, including the cost of pole replacement if there is not sufficient room to add a new wire or device (like a small cell).

There’s a lot of money flowing to 5G network buildouts right now as US wireless operators race to expand their 5G coverage. In fact, it’s likely that 2022 to be the peak year for 5G spending by US wireless operators. Stefan Pongratz, vice president at Dell’Oro Group, said that the company expects US wireless capital expenditures to grow at a double-digit rate in 2022 and then taper off in 2023 and 2024. One reason behind this is that both AT&T and Verizon are ramping up their mid-band 5G deployments in the C-band and the 3.45 GHz spectrum bands.

The big monopoly incumbent providers are aiming their lobbying efforts to influence state lawmakers as states funnel federal funds into state broadband grant programs. In January 2022, Illinois State Senator Patrick Joyce (D-IL) introduced legislation in the Illinois General Assembly known as the Illinois Broadband Deployment, Equity, Access, and Affordability Act of 2022 (SB 3683).

For many years there have been people extolling the huge benefits of public-private partnership for broadband. For all of that talk, there is not a big number of partnerships, but there are some successful examples around the country. Communities that are looking for broadband solutions might want to consider public-public partnerships and non-profit partnerships. I’m seeing public-public partnerships develop that are similar to the more traditional public-private partnership. Existing municipal internet service providers (ISPs) are reaching out to help neighboring communities.

Casey Lide of Keller & Heckman wrote a recent blog that warns that federal grant funding might be considered as taxable income by the Internal Revenue Service (IRS). This would be a dreadful outcome for any taxable entity that receives the grant funding since it would create a huge tax liability that would have to somehow be covered outside of the grant funding.

AT&T announced that it has plans to cut its copper network footprint in half by 2025. However, Jeff McElfish, the CEO of AST&T’s Communications division, said the company isn’t planning to forcibly move customers off copper as they decommission copper. According to McElfish, customers are naturally migrating off copper. I find that hard to believe. CCG Consulting is still seeing DSL penetration rates in cities between 10 percent and 40 percent.