Wednesday, February 3, 2021
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Pressure is rising on the Federal Communications Commission and Congress to rethink the $8 billion Universal Service Fund that subsidizes phone and broadband service, as it teeters on a shrinking budget base. Big phone companies like AT&T, entities that benefit from USF programs, and public interest groups see the Biden administration as a new opportunity to press their case for an overhaul of the funding mechanism. But despite widespread agreement that something must be done, no broad consensus on a solution has emerged amid the brewing debate. “The system is at a breaking point and you have both the big companies, the recipients of USF funding and consumer advocates saying it’s got to be fixed,” said Benton Senior Fellow and Public Advocate Gigi Sohn. “The devil is in the details.”
Democrats have weighed expanding the funding base to include more services, such as broadband internet revenues, but that proposal is fiercely opposed by Republicans who decry it as a tax on the internet. Meanwhile, some top Republicans, including recently departed FCC Chairman Ajit Pai, have recently backed a proposal from AT&T to scrap the contributions system altogether and have Congress fund USF programs through the appropriations process. Some stakeholders worry that the appropriations plan would only increase financial instability, given the frequency of budget fights in Congress.
For some time, many experts have been warning that the universal service funding system is in a death spiral, as the base on which the fees are assessed—generally a telecom company’s interstate and international end-user revenues—is shrinking. The new Federal Communications Commission is forced to consider a rising assessment on a shrinking revenue base to address an increasing demand, with Ajit Pai’s FCC having not done any of the analytic, political, or legal work necessary to make adjustments. Pai was willing to spend billions to address the needs of rural communities lacking broadband. But his attitude about solving the far larger adoption divide was quite different. Rather than address Lifeline’s inadequacies, Pai quietly went about making the program weaker.
Three institutional and strategic problems that President Joe Biden’s Federal Communications Commission will have to resolve:
- Amid global hacks, cybersecurity has gotten little attention. During his four years as chairman, Pai maintained the view that the FCC had no authority in the cybersecurity space. The FCC is even further behind in having the technical and legal foundation for addressing the issues.
- US has fallen behind in 5G leadership.
- A data deficit in the FCC. What is remarkable about the last four years was the degree to which the FCC decided to ignore its data-gathering function, which is the underlying ingredient for any economic or policy analysis. This can be illustrated in three areas:
- Mapping. It will be the task of the next FCC to develop an improved map.
- Network performance standards. One might have hoped that the FCC would have used the pandemic-induced "remote everything" experiment to reexamine the network performance standard (below which, broadband is deemed unavailable), the performance standard that subsidized networks are required to perform above, and the standard for eligibility in the Lifeline program for low-income Americans. But the FCC leadership performed no independent studies and simply praised overall network performance.
- Misinformation. The FCC, which has the responsibility of assuring that the public airwaves are used in the public interest, turned a blind eye to the many ways those airwaves were being used to harm the public during the pandemic. While the FCC must not act in violation of the First Amendment, it should take actions to protect public health.
It is unfortunate that so many of the biggest telecommunications-related impediments to the American economy and society were ignored or made worse in the last four years.
As a member of the Rebuild Rural Coalition, which collectively represents US agricultural producers, rural businesses, rural communities, and rural families, NTCA sent a letter urging President Joe Biden and his administration to address the unique needs of rural infrastructure in all related legislative proposals. The groups wrote: Your plan to Build Back Better in Rural America rightly notes the crumbling state of our country’s infrastructure. We have witnessed this deterioration first-hand – how it jeopardizes jobs, our agricultural competitiveness, and the health of rural families. As you are aware, past infrastructure initiatives often focused on urban and suburban infrastructure, while not adequately addressing the unique needs of rural communities. We ask that you address this as part of your administration’s comprehensive infrastructure renewal efforts. Transportation infrastructure improvement is the most obvious need in rural communities, but not the only one. In particular, we appreciate your plan specifically includes roads and bridges, locks and dams, railroads, electrical and water systems, agricultural research at land grant universities, broadband, healthcare, and housing. These areas all require major investment for America to continue efficiently moving our agricultural products to market.
This paper considers specifically the extent to which fixed wireless services may be capable of delivering Gigabit‐level services in the kinds of sparsely populated rural areas that the Rural Digital Opportunity Fund (RDOF) auction primarily seeks to serve. Fixed wireless networks will face difficult, if not insurmountable, challenges to provide Gigabit services in very select circumstances when attempting to service distant, non‐town rural subscribers. During the review of the long-form applications, we believe it essential for the Federal Communications Commission to consider technical and related economic criteria such as those analyzed herein to determine whether and to what degree each applicant will be capable of delivering Gigabit level service based upon its proposed network design. When considering any proposed wireless network designed based on mid band spectrum, it would be difficult or impossible to conceive a scenario where a wireless network in this band could reliably provide RDOF Gigabit Level Services. The only band that would have enough capacity to accommodate even just a small handful of gigabit users would be the 5 & 6 GHz unlicensed bands. When using these bands, the wireless provider is not protected from interference from other wireless users and devices such as common home Wi‐Fi routers. This is not an acceptable solution, especially when considering the RDOF broadband services must also provide voice services and access to emergency services such as 911.
The Federal Communications Commission's Rural Digital Opportunity Fund (RDOF) Phase I encouraged many with the promise of needed support to connect homes with true broadband services in unserved rural communities. However, RDOF’s Phase I exposed many issues that will likely lead to deployment delays, missed expectations, or worse. Specifically, some applicants that bid in the Gigabit tier have submitted unrealistic wireless network designs that are highly unlikely to produce Gigabit service to rural communities. Also, several awards for wide swaths of the country with varied terrain and topography went to bidders with limited financial and operational qualifications. Despite this, the $9.2 billion awarded was far below the $16 billion budgeted amount. The FCC can address these issues during the upcoming long-form review by scrutinizing:
- Technology/Network Design: The Commission itself initially expressed reasonable concerns about new technologies, and proposed (but unfortunately did not retain) reasonable limits upon certain types of bids. It foresaw the problem with allowing bidders to obtain funding using unproven technologies at the Gigabit level. Unproven methods risk stranding rural consumers without broadband infrastructure.
- Financial and Operational Qualifications: The FCC reasonably sought to include smaller companies seeking to serve relatively limited areas. But there are questions regarding how some applicants, with apparently limited operational experience, bid for and won RDOF support for vast areas that they will likely not be able to build or operate.
Add Windstream CEO Tony Thomas to the list of those who have questioned whether some Rural Digital Opportunity Fund (RDOF) winners will be able to deploy the networks they committed to building at the level of funding they won. Without mentioning names, he said some “new entrants” that won RDOF funding believe they can “do something the established carriers can’t do using technology and economics that simply aren’t in the marketplace.”
One of Windstream’s key concerns about gigabit fixed wireless, Thomas said, was that RDOF rules require winners to make service available throughout an entire census block. “We’re confident we can get one gigabit per second downloads through a large swath [of a census block], but topology makes it difficult to do that ubiquitously,” he explained, adding that RDOF rules specify penalties for not making service available to all locations in a census block. Thomas also expressed concerns about the ability of fixed wireless to support the upstream speed required for RDOF gigabit buildouts.
He also questioned the logic of allowing companies to bid in the auction before they were fully vetted. Only after the auction were winners required to submit a long-form application that requires more details about the companies’ capabilities and buildout plans. “It seems like it’s a little bit out of order,” he said. “We’re assessing [a company’s capabilities] post-auction.” He hopes that in the next phase of the RDOF auction, the FCC will do a better job of qualifying bidders. “We need to move more processes up front,” he said. One idea might be to require bidders to make a refundable deposit before participating in an auction, noting that spectrum auctions already have that requirement.
Comcast made several announcements that build on its longstanding commitment to advancing digital equity, closing the digital divide, and addressing both digital literacy and the homework gap.
- Accelerating the Nation’s Largest Broadband Adoption Program, Internet Essentials. Comcast is now doubling the program’s Internet download speed to 50 Mbps and increasing the upstream speed to 5 Mbps for all new and existing customers at no additional cost. To receive the increased Internet speeds, existing customers will not need to do anything. The new speeds will be rolled out nationally beginning March 1.
- Launching 1,000 Lift Zones by December 2021. Lift Zones provide safe spaces for students to access free Wi-Fi so they can participate in distance learning and do their schoolwork. Comcast is now accelerating that timeline to connect 1,000 Lift Zones by the end of 2020 – more than a year ahead of its original plan.
- Investing in Education and Equity-Focused Organizations. Comcast is also expanding its targeted philanthropic investments in organizations working to increase digital equity and contributing to the collective action needed to drive sustained change. These new organizations and investments are focused on creating greater pathways to opportunities for communities of color, particularly in media, technology, arts, and entrepreneurship.
Rates for many of the communications and content services we’ve all grown to rely on over the last year have risen recently or will rise in 2021, and there’s little you can do about it. Pay-TV service providers have watched their revenue decline as a growing number of Americans cut the cable cord and rely instead on internet-based streaming services. To compensate, and to keep shareholders happy, the industry keeps steadily increasing the cost of broadband internet access — and claiming that the higher fees are justified by ongoing investments in data networks.
That’s a bogus argument. Mark Cooper, director of research at the Consumer Federation of America, said there’s no need to expand broadband cable networks. “They already have plenty of dark fiber,” he said, using the industry term for unused network capacity. That is, even though there’s more online streaming to people’s homes, the networks have more than enough bandwidth to handle the load. Harold Feld, senior vice president of the advocacy group Public Knowledge, said the same. “If you want to make your cable network go faster,” he said, “you’re talking about software upgrades. You’re not talking about new fiber.”
Thanks to years of mergers and industry consolidation, many of the companies that provide pay-TV and internet access are also in the programming business. When they insist, therefore, that they have to raise rates because of higher programming costs, Cooper observed, “they’re just paying themselves.” “All they’re doing is making up for their pay-TV losses with higher charges for internet,” Cooper said.
T-Mobile and Shenandoah Telecommunications Company (Shentel) settled their dispute over the purchase price of Shentel’s wireless assets, with the final price coming in at $1.95 billion. Shentel was a Sprint affiliate since 1995 and was still using the Sprint brand post-merger. Shentel had about 1.1 million subscribers as of June 30, 2020. Shentel also offers cable and wireline services. T-Mobile and Shentel expect the transaction will close in the second quarter 2021 after satisfying customary closing conditions and obtaining required regulatory approvals.
In this Report and Order, we take the next step toward committing funding through the COVID-19 Telehealth Program (Program) by finding it is in the public interest to expand the administrative responsibilities of the Universal Service Administrative Company (USAC) to include the Program. In March 2020, Congress allocated $200 million to the Federal Communications Commission to establish a program to help health care providers offer telehealth and connected care services and connected devices to patients at their homes or mobile locations in response to the COVID19 pandemic. The FCC established the Program and committed this funding to health care providers across the country. In December 2020, Congress appropriated an additional $249.95 million for a second round of funding for the Program under the Consolidated Appropriations Act, 2021.
As policymakers address the immediate needs of students and teachers, they should also use this as an opportunity to take a fresh look at the E-rate program, both from how it has been operationalized to date as well as its goals for the future. AT&T believes the following principles should guide any expansion of the program:
- Keep schools the focus of the program and provide them with greater flexibility in meeting core objectives: As the connectivity needs of schools and students change, the program should adapt to support those needs. There is precedent for this. In 2014, the FCC updated the program to cover wireless technologies, including Wi-Fi. Now, in 2021, when most students are at least partially learning remotely, schools should have greater flexibility to use E-rate funds as they deem necessary to ensure that every student is connected.
- Modernize the program’s rules to ease participation: As the scope of the program is being debated, we believe the Federal Communications Commission, in consultation with the Department of Education (DoE), should evaluate whether the current E-rate structure is the right one for today’s world. Given its role in quickly distributing billions of dollars to schools across the country in response to the COVID pandemic, DoE’s learnings may inform any E-rate reform efforts. The use of technology in schools has transformed greatly in the 25 years since E-rate began and the once nascent ed-tech marketplace is now highly competitive. Much of this change is due to the success of the program itself. It is therefore appropriate to now ask whether the program rules that made sense in 1998 are still needed today.
- Directly address how we pay for E-rate: As long as E-rate relies on the Universal Service Fund, any long-term expansion of the program must consider the current fragile state of the USF contribution mechanism. E-rate subsidy demands for the current school year are approximately $3 billion. This demand contributes to the size of the USF program and impacts how much money the FCC must collect from contributors to the Fund. With the contribution factor already at a staggering 32%, we have argued that the funding mechanism is fundamentally broken and unsustainable.
Where there’s a coup, there will probably be an internet outage. At least 35 countries have restricted access to the internet or social media platforms at least once since 2019, according to Netblocks, a group which tracks internet freedom. Authorities have used the outages to reduce or prevent unrest — or to hide it from public view. The internet was created to democratize information, but it's now one of the most powerful weapons autocrats use to silence dissenters and maintain power. Authorities often cite a desire to stop the spread of disinformation when implementing internet shutdowns. Internet censorship by government or military forces is one of the clearest signals that democracy is being tested.
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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