Thursday, November 14, 2019
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Winning Connect America Fund Bids
Bringing High-Performance Broadband to Rural America
House Continues Deep Dive into Digital Antitrust and Big Tech
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The Federal Communications Commission's Wireline Competition Bureau (WCB), in conjunction with the Rural Broadband Auctions Task Force and the Office of Economics and Analytics, authorize $13,468,201.20 in Connect America Fund Phase II (Auction 903) support for winning bids. An Auction 903 support recipient is required to complete construction and begin commercially offering service to 40 percent of the requisite number of the locations in a state by the end of the third year of funding and to an additional 20 percent in each subsequent year, with 100 percent by the end of the sixth year. The service milestones for the long-form applicants are as follows:
Percentage of Locations in a State Service Milestone Deadline
40 November 12, 2022
60 November 12, 2023
80 November 12, 2024
100 November 12, 2025
The Federal Communications Commission's extremely hands-off approach to broadband-customer complaints has alarmed Rep Mike Quigley (D-IL). Rep Quigley wrote a letter to FCC Chairman Ajit Pai in Aug after learning of a Frontier customer who was forced to pay a $10-per-month rental fee for a router despite buying his own router. It turns out that the FCC hasn't proactively forwarded any broadband-billing complaints to the Federal Trade Commission despite the agencies' working agreement. But Chairman Pai's initial response to Rep Quigley didn't reveal that tidbit. Chairman Pai's response letter told Rep Quigley that consumers filed 450 informal complaints about broadband-equipment rental fees in the past year and that "nearly all" of them were "served on the relevant provider for a response." Chairman Pai's letter also said that complaints about "unfair or deceptive billing practices by Internet service providers have been referred to the FTC."
After the exchange of letters, Rep Quigley's staff followed up with the FCC to find out how the agency decides whether to forward complaints to the FTC. The answer from FCC staff was that it hasn't forwarded any billing complaints to the FTC without being asked to do so first. The FCC apparently only forwarded complaints to the FTC when the FTC asked for a set of complaints about particular companies. "At no point has the FCC actually sent, of their own volition, a single complaint to FTC for enforcement," a Quigley senior staff member said. "So essentially what the FCC is saying is, 'If you complain to us, we have to send a letter [to your ISP] that recognizes that we got a complaint within 30 days. And if we do that, that's the extent of our responsibility.' Now, the second part of that is, [the FCC says that] 'If we think it's a really big deal and should rise to the level of enforcement, we'll send it to the FTC.' But [the FCC has] never done that."
The FCC told Rep Quigley's office that, since the Restoring Internet Freedom order, it has referred 4,228 broadband-billing complaints to the FTC but that all of those were specifically requested by the FTC. The FTC asked for those complaints in one case "related to an AT&T unauthorized cellular data plan" and in another "related to a Frontier Internet speed issue," the Quigley staff member said. "Somehow, the FCC has not received a single complaint that they think requires enforcement action or any followup whatsoever, beyond the recognition that they received this complaint," the Quigley staff member said. "When our committee staff heard about this, they were floored. This is certainly not what the FCC initially implied when they responded to our inquiry, and it's pretty alarming."
Grading the Presidential Candidates' Positions on Broadband: The Democrats Receive Mostly Poor Marks
Broadband policy has emerged as a way for Democrats running for President to appeal to primary voters. They emphasize their commitment to "Net Neutrality," often in its most extreme form (i.e., public utility regulation). They also promise expansive (and expensive) government-funded construction of broadband infrastructure. Neither, however, constitutes effective policy. The unprecedented success and growth of the marketplace for high-speed Internet access services are the direct result not of government intervention, but rather a deregulatory approach to network management and policies designed to maximize private investment and innovation. I grade the candidates, and those who turn their back on these free-market principles receive poor marks. In general, they all do.
[Andrew Long is an Adjunct Senior Fellow of the Free State Foundation, an independent, nonpartisan free market-oriented think tank]
Broadband networks do not reach millions of people in the United States. And this lack of access has a significant impact. Research shows that in rural counties with better access to broadband services, the millennial population increased between 2010 and 2016, in stark contrast to the tendency in recent years for most rural communities to lose young people. Many rural communities understand the importance of broadband to their future and they are taking matters into their own hands. What we know in 2019 is that we cannot let where we live determine our potential to connect. When people in rural America are connected, everyone who uses the network benefits—from Western rancher to urban hipster. We know that the future of agriculture is now rooted in broadband. We know that High-Performance Broadband can help close the rural health-care gap and solve some of health care’s most enduring problems and intractable challenges. What we need is leaders at all levels of government to ensure that everyone in America is able to use High-Performance Broadband in the next decade.
The largest cable and telephone providers in the US – representing about 96% of the market – acquired about 605,000 net additional broadband Internet subscribers in 3Q 2019, compared to a pro forma gain of about 600,000 subscribers in 3Q 2018. These top broadband providers now account for about 100.6 million subscribers, with top cable companies having 67.1 million broadband subscribers, and top telephone companies having 33.5 million subscribers. Findings for the quarter include:
- Overall, broadband additions in 3Q 2019 were 101% of those in 3Q 2018
- The top cable companies added about 830,000 subscribers in 3Q 2019 – 114% of the net adds for the top cable companies in 3Q 2018
- The top telephone companies had a net loss of about 225,000 subscribers in 3Q 2019 – more net losses than in any quarter except 2Q 2016
- At the end 3Q 2019, cable had a 67% market share vs. 33% for Telcos – compared to 64% cable vs. 36% Telco at the end of 3Q 2017
Despite raking in hundreds of millions in government broadband subsidies, Frontier Communications has failed time and time again to bring reliable, high-speed connectivity to the rural communities it serves. Instead of investing in network upgrades, Frontier has neglected its rural infrastructure to the detriment of its subscribers and the company’s own financials, with its worsening service quality paralleling its plummeting stock value. A new fact sheet, Frontier Has Failed Rural America, presents evidence of Frontier’s negligence and suggests that rather than continuing to trust Frontier, government officials should look to publicly owned and community-minded providers to connect rural residents, businesses, and institutions.
The Public Interest Registry (PIR), which maintains the .org top-level domain, announced that it will be acquired by Ethos Capital, a private equity firm. This move will make PIR, previously a non-profit domain registry, officially part of a for-profit company — which certainly seems at odds with what .org might represent to some. Originally, “.org” was an alternative to the “.com” that was earmarked for commercial entities, which lent itself to non-profit use. That’s not all: On June 30th, ICANN, the non-profit that oversees all domain names on the internet, agreed to remove price caps on rates for .org domain names — which were previously pretty cheap. Seems like something a for-profit company might want.
To gain federal approval of their $26 billion merger, T-Mobile and Sprint have spent years promising a universe of incredible benefits, from lower prices to better rural wireless coverage. So far, agencies like the Federal Communications Commission have been more than happy to believe them. But US telecom history suggests you shouldn’t believe a word coming out of their mouths. From AT&T’s 2006 merger with BellSouth to Comcast’s 2011 merger with NBC, telecom megadeals are routinely accompanied by any number of promises that are promptly ignored once the deal ink is dry. Instead, consolidation routinely delivers terrible customer service and ever-higher prices.
The Schools, Health & Libraries Broadband (SHLB) Coalition petitioned the Federal Communications Commission to reconsider certain portions of its “Promoting Telehealth in Rural America” Report and Order (R&O). The R&O improved the integrity and transparency of the Rural Health Care (RHC) program, but will likely raise the costs of broadband for many rural healthcare providers.
“We avidly support and appreciate the Commission’s effort to improve telemedicine for rural Americans. SHLB Coalition membership includes several healthcare consortia and providers whose mission is to extend the benefits of broadband to the very same small and extremely remote healthcare providers that the Order aims to help. Unfortunately, some of the changes to the RHC program will cause unintended harm to many healthcare providers and patients,” said John Windhausen, executive director of the SHLB Coalition. “The August Order moved the ball forward, but more work is needed to prevent significant rate increases for rural healthcare providers. We ask that the FCC revisit several aspects of the Order to eliminate the discrimination against health care consortia and rectify the rate-setting process for participants in the Telecommunications program.”
The House Antitrust Subcommittee heard from two major players in the government's review of Big Tech and whether the antitrust laws have kept up with their exponential growth, but not before the legislators had staked out their own positions. Subcommittee Chairman David Cicilline (D-RI) pulled no punches, saying that the extreme concentration of online platforms may have some benefits, but they were clearly using their power to set market terms that enrich themselves and make it impossible to compete. He also commented on Google and Fitbit. “Google’s proposed acquisition of Fitbit would threaten to give it yet another way to surveil users and entrench its monopoly power online," he said. He said the power Big Tech wields is in some measures unprecedented, while government regulators have been paralyzed. Full Committee Chairman Jerry Nadler (D-NY) echoed that criticism. He said they were at a critical moment when a handful of dominant companies control "commerce, content, and communications." He got specific, pointing out that Google had over 90% of search, Facebook over 80% of social media revenues, and Amazon over half of online commerce.
Witnesses for the hearing were Department of Justice antitrust chief Makan Delrahim and Federal Trade Commission Chairman Joseph Simons. Delrahim and Simons both talked about their ongoing, separate, investigations into Big Tech and antitrust, but both talked about the actions they had already taken in the digital space, and that they would take future action if their investigation warrants. On the issue of enforcement, FTC Chairman Simons conceded that the FTC was resource-restrained so it focused on cases it had a better likelihood of winning, adding that if it had more money, it could pursue more cases.
Since the time of the early advertising-supported newspapers, economic incentive has worked to bring people together around a common set of shared information. Maximizing ad revenue meant offending as few readers as possible by at least attempting a balanced presentation of the facts. The search for balance began to retreat with the arrival of cable television, but the economic model of maximizing revenue by maximizing reach still governed. The targeting capability of social media algorithms, however, has extinguished the traditional economic model. Now profit comes not through the broad delivery of common information, but the targeted delivery of selected information. The result is an attack on the model of shared information that is necessary for a democracy to function.
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 Robbie McBeath (rmcbeath AT benton DOT org) — we welcome your comments.
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