Tuesday, October 18, 2022
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Don't Discount the Investments in Internet Infrastructure that Content and Application Providers are Making
First-In-The-Nation Digital Ad Tax Struck Down By Maryland Judge
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Stories From Abroad
Don't Discount the Investments in Internet Infrastructure that Content and Application Providers are Making
Should network usage fees be imposed on content and application providers to support internet infrastructure? New research from Analysys Mason shows such a mandate would be harmful to end users and the global internet ecosystem. The internet is a network of networks, which must all be connected (directly or indirectly) to one another to enable traffic delivery from any source to any destination around the globe. Its evolution has been driven by a combination of competition, collaboration, and innovation by all the stakeholders in the value chain. Policymakers should consider the potential impact of network usage fees holistically when evaluating regulatory proposals that would mandate the introduction of such fees.
[David Abecassis is a Partner in Analysys Mason’s London office.]
Los Altos Hills Community Fiber (LAHCF) is a cooperative (co-op) broadband provider that gives multi-gigabit fiber Internet to dozens of homes and has a plan to serve hundreds more. Town residents were able to form the provider with the help of Next Level Networks, which isn't a traditional consumer broadband provider but a company that builds and manages networks for local groups. This was done to overcome frustrations residents have been having with providers like Comcast. Resident Sasha Zbrozek's experience with Comcast led to him getting involved with LAHCF and organizing an expansion that brought 10Gbps symmetrical fiber to his house and others on nearby roads. Zbrozek said it took over a year to and reaching out to the Los Altos Hills town government to get Comcast to tell him how much it would charge for a line extension to his house. The answer was $210,000. Zbrozek proposed connecting to Comcast by running a line to a neighbor's property that had Comcast service. "The closest point between my property and a (now former) neighbor with Comcast who would've let me do some private trenching is about 40 feet," said Zbrozek. However, Comcast doesn't allow that type of property-to-property connection.
The National Telecommunications and Information Administration (NTIA) conducted an annual broadband survey in 2021. The survey asked folks who didn’t have home broadband what they would be willing to pay, with the question, “At what monthly price, if any, would your household buy home Internet service?” The purpose of the survey was to understand the kind of price points that might be needed to get broadband to more of these households. Three-quarters of respondents said they would only get broadband if it was free. I find this result to be troubling for several reasons:
- Many of the homes in this category are the poorest homes that truly can’t afford broadband. I’m sure many of the folks who say they can’t afford broadband would love to have it like most of the rest of us. But as important as broadband is, it’s not more important than rent and food.
- Not everybody who says they can’t afford is telling the truth. How do I know this? What I have discovered in doing surveys is that the responses to any survey questions involving money are not fully reliable. A question I’ve often asked is what people would like to pay.
- I sympathize with the NTIA if they try this. The agency wants to get broadband into every home, and the only way to do this for the poorest homes is to make broadband somehow free. I know that rural cooperatives and telephone companies might try to make this work. But as I tell all of my clients – you have to let the numbers speak.
Ultimately, I know forcing low rates is tempting, and it would feel like a good policy. But you can’t put rate pressure on broadband providers willing to work in rural areas where costs are already sky-high. If the government wants the poorest homes to get broadband, the right solution is to do something like putting more money into the Affordable Connectivity Program (ACP). The right solution is not to ask broadband providers to shoulder the economic burden of too-low rates.
We’ve all been told to put more fiber in our diets. But we also know what happens with too much fiber in your diet. It isn’t pretty. The same is true for broadband policy. As US policymakers at every level of government look to spend tens of billions of dollars to connect Americans to high-speed internet, aka broadband, they are far too focused on using a single technology to get the job done: fiber optic cable. This myopia runs the risk of cost overruns and delayed buildout that will see rural Americans, in particular, waiting even longer for connectivity. The problem isn’t fiber itself, it’s that many policymakers at every level of government, from President Biden to mayors and county commissioners, are operating on the false notion that fiber is “future-proof” and unconditionally better than everything else. The idea that you can put the fiber in the ground once and forget about it is appealing to politicians and their constituents, who, justifiably, don’t want heavy equipment forever digging up their streets. But it just isn’t true. Fiber has a shelf life of about 25 years. Apart from natural degradation over time, other factors can reduce fiber’s lifespan. Infinitesimal surface cracks that go undetected at the time of installation can expand over time. Elevated temperatures and interaction with water can cause “stress corrosion” that grows the cracks. Moreover, every network has upgrade cycles. To claim that one technology does not is misleading at best.
[Scott Wallsten is president of the Technology Policy Institute.]
Maine Connectivity Authority Accepting Applications for $100 Million in Broadband Infrastructure Grants
Applications are open for the Main Connectivity Authority's "Connect the Ready Program." The competitive grants program will allocate $70 million to public & private partners such as governmental entities, broadband utility districts, and internet service providers (ISP). This initiative will support partners’ efforts to proactively and collaboratively design, fund, and build broadband infrastructure projects in eligible areas. The program will prioritize the deployment of broadband infrastructure in mostly unserved communities, including some of the most rural and remote around the state. The strong partnerships between Maine’s communities and ISP businesses are at the core of Connect the Ready. The program builds on the growing list of 44 Maine communities and regions that have received broadband infrastructure funding through Maine Connectivity Authority (and previously the ConnectMaine Authority). By allowing communities to demonstrate where access is needed the most, new internet infrastructure will grow to meet Mainers not only where they are, but where they're headed. Connect the Ready is part of the comprehensive suite of Maine Connectivity Authority's “All-In” Programs, which are funded by a $150 million allocation from the American Rescue Plan Act’s (ARPA) Capital Projects Fund and the Maine Jobs and Recovery Program.
The largest ever 5G global consumer study to date. The respondents selected for the interview represent the online population aged between 15 and 69 within the surveyed markets, which in total consists of 1.7 billion consumers and 430 million 5G users. The research reveals that the next wave of 5G is underway, with mainstream consumers now adopting 5G in frontrunner markets that launched 5G early on. It also highlights six key 5G trends and suggests how communications service providers can respond to the expectations of both early adopters and the next wave of consumers, driving further 5G adoption. The 6 key finds are as follows:
- Consumer 5 G adoption to be inflation-resilient: Despite spiraling inflation, elevated food and energy costs, and rising interest rates during 2022, consumers globally are still planning to upgrade to 5G. However, this will vary across different markets.
- 5G is being adopted by a new wave of users with higher expectations: 5G subscriptions have gone beyond early adopters and we are now seeing the next wave of users, who are demanding 5G works without hassle.
- Perceived 5G availability is emerging as the new satisfaction benchmark: 5G users perceive being connected to an active 5G signal. Ensuring the availability of 5G has become the new benchmark for user satisfaction. Consumer satisfaction with 5G can no longer be assessed by the extent of the population covered by 5G alone; perceived availability is a far better metric.
- 5G is pushing up usage of enhanced video and augmented reality (AR): over the past two years, time spent by 5G uhas have been on AR and enhanced videos such as HD/4K multi-view video or 360-degree video.
- 5G monetization models are expected to evolve: Around 6 in 10 consumers globally want 5G plans to move beyond just offering more gigabytes. However, most service providers still provide the same offerings they did for 4G.
- 5G adoption is paving the path to the Metaverse: The transition from immersive services to metaverse experiences is now underway. Our research reveals that 5G users are taking the first steps into the metaverse.
The first-in-the-nation digital advertising tax in Maryland is no more after less than two years in practice. The tax was struck down in the Anne Arundel County Circuit Court after Judge Alison Asti sided with subsidiaries of Comcast and Verizon, finding that the policy violated the First Amendment, the Internet Tax Freedom Act, and the Dormant Commerce Clause. By only taxing advertising when it is served digitally, the tax discriminated against e-commerce and violated the federal Internet Tax Freedom Act, Judge Asti said. He also ruled the tax violated the Dormant Commerce Clause—which prohibits states from passing legislation that discriminates against interstate commerce—as it makes little effort to apportion the tax based on in-state activity. First enacted in 2021, the policy levied a tax of between 2.5% and 10% on large companies like Facebook and Google that sell online advertisements. Proponents of the bill argued that it was a necessary move to help modernize the state’s tax code. Opponents, including Governor Larry Hogan (R-MD), said it would only cost local businesses more money in the long run.
Telecom services revenue will fall 4.2% per user as new tech fails to deliver enough value by 2027
Total worldwide telecoms revenues from mobile and fixed broadband services will grow 14% between 2022 and 2027 to reach €1.2 trillion ($1.18 trillion). However monthly average revenue per user (ARPU) combined across both mobile and fixed broadband will fall by 4.2% from €7.48 ($7.36) in 2022 to €7.16 ($7.05) in 2027. In mobile markets, it is now evident that 5G will not be sufficient to offset ARPU decline as customers are unwilling to pay more for it. Unlimited data and video streaming services bundled exclusively on 5G contracts have had some success, but this only gives the industry the illusion of a 5G ARPU uplift. In fixed broadband markets, the transition to fiber has had a net positive impact in most cases as the technology offers a much-needed step-change in-home broadband quality of service on the back of the pandemic. However, markets with high fiber penetration are seeing a significant drop in ARPU such as France, Spain, and China as competition intensifies and there isn’t a clear monetization path for fiber customers once they transitioned. Omdia forecasts 5G will account for 5.9 billion subscriptions in 2027 equivalent to a population penetration of 70.9%. Consumer residential fixed broadband subscriptions delivered via fiber to the home will exceed 1 billion subscriptions by 2027 equivalent to a household penetration of 41.9%.
Comcast is boosting internet speeds for more than 20 million of its Xfinity broadband customers, doubling the download rate on one of its lower tier plans and increasing the speed by 33% on two others. All told, it is bumping up speeds on five service tiers across its territories. Users on Comcast’s Performance/Connect More plan (the name varies by region) will see the biggest jump, with their download rate doubling from 100 Mbps to 200 Mbps. Speeds on the base Performance Starter/Connect plan are getting a 50% increase from 50 Mbps to 75 Mbps. Both the Performance Pro/Fast and Blast/Superfast plans will get a 33% increase, with the former jumping from 300 Mbps to 400 Mbps and the latter from 600 Mbps to 800 Mbps. Meanwhile, the Extreme Pro/Gigabit plan will increase from 900 Mbps to true 1 Gbps speed.
Frontier is launching its first-ever social impact program, Broadband for Good. The new program will use Frontier’s fiber technology to advance digital inclusion and strengthen the communities it serves. Frontier is Building Gigabit America, the digital infrastructure that enables high-speed, reliable connectivity. As part of its purpose, the company is launching Broadband for Good to use its technology to address critical connectivity needs and find innovative ways to promote digital inclusion. Frontier selected The Boys & Girls Clubs of the Brazos Valley in Bryan, Texas as the first community location to benefit from its new program. The organization offers underserved youth in the community a safe place to learn, grow and play. As part of the program, Frontier will donate high-speed broadband connectivity and computer equipment to support the organization’s mission to connect today’s youth to tomorrow’s opportunities.
Although Rep Ro Khanna (D-CA)'s district includes a wide swath of the tech industry's homes in towns like Sunnyvale, Cupertino, Santa Clara, and Fremont, he is an advocate for laws that would curb Big Tech's power. Among the restrictions Rep Khanna favors would expand privacy protections beyond California's existing law as well as a change in antitrust law that would shift the burden of proof in large deals, requiring the acquiring company to prove a deal won't hurt competition. Members of Congress have proposed new bills around privacy and antitrust and children's online safety, but so far none have passed the full chamber. However, some federal legislation on tech issues could yet pass in the post-election lame-duck session, but the larger question is which party emerges with control of Congress after the midterms. Overall, Khanna said he would support the creation of a new federal agency to govern tech regulation that could augment the work currently split among the Federal Trade Commission, the Federal Communications Commission, and the Department of Justice. Though getting such an agency approved and funded would be an uphill climb given the difficulty Democrats have had passing any new tech legislation — and the funding limits the existing regulatory agencies already face.
Federal Trade Commissioner Noah Phillips stepped down from his position Oct 14, leaving a Republican vacancy at the antitrust and consumer protection agency. Phillips, a former Senate staffer, joined the agency in May 2018. He announced his intent to resign in August. His departure will take the five-member commission down to four, with three Democrats and one Republican. President Joe Biden will select Phillips’ successor, though the president generally defers to Senate Minority Leader Mitch McConnell (R-KY) to suggest candidates to fill Republican vacancies. Senator McConnell has been meeting with possible candidates since Phillips announced his resignation. Possible contenders include Mark Meador, a staffer for Senator Mike Lee (R-UT), the top Republican on Senate Judiciary’s antitrust panel; Svetlana Gans, a partner at the law firm Gibson Dunn & Crutcher LLP who served as chief of staff to former FTC Acting Chair Maureen Ohlhausen; and Olivia Trusty, a senior aide to Senator Roger Wicker (R-MS), the top Republican on the Senate Commerce Committee.
Benton (www.benton.org) provides the only free, reliable, and non-partisan daily digest that curates and distributes news related to universal broadband, while connecting communications, democracy, and public interest issues. Posted Monday through Friday, this service provides updates on important industry developments, policy issues, and other related news events. While the summaries are factually accurate, their sometimes informal tone may not always represent the tone of the original articles. Headlines are compiled by Kevin Taglang (headlines AT benton DOT org) and Grace Tepper (grace AT benton DOT org) — we welcome your comments.
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