Tuesday, May 23, 2023
Headlines Daily Digest
President Biden Announces Federal Communications Commission Nominees
Rural Digital Opportunity Fund Defaults Estimate: Over $2.8 Billion
Stories From Abroad
Senators Bernie Sanders (I-VT) and Peter Welch (D-VT) and Representative Becca Balint (D-VT) announced that NEK Community Broadband (NEKCB) will receive Vermont’s first-ever United States Department of Agriculture (USDA) ReConnect grant to deploy a fiber-to-the-premises network in Caledonia, Essex, and Orleans counties in Vermont. NEK Broadband will receive more than $17 million in grant funds through USDA ReConnect, helping to connect some of the most rural communities in Vermont with affordable, high-speed internet. The announcement comes as part of Sen. Welch’s first hearing as Chair of the Senate Agriculture Committee’s Rural Development and Energy Subcommittee on the importance of expanding broadband access.
The Federal Communications Commission’s “Funding Map” was just published and, at first glance, it needs work. The FCC’s own Rural Digital Opportunity Fund originally had winning bids for 5.2 million locations. As of the latest release of authorized winners, 3.5 million locations were moving forward. But according to the FCC’s funding map, 11.3 million locations will get RDOF service. This is not good. There is no possible way RDOF will bring broadband service to 11.3 million locations. Here’s one issue: Conexon was one of the big winners in RDOF. According the latest official release, it has been authorized for funding in 10 states. In Louisiana, they’re authorized for 51,589 locations. But on the FCC Funding Map, the Conexon record for Louisiana shows it is authorized for 515,890 locations, exactly 10 times the real number.
The US Treasury Department has released the final version of important compliance guidance applicable to broadband projects funded through the State and Local Fiscal Recovery Fund (SLFRF) or Capital Project Fund (CPF) awards. The “SLFRF and CPF Supplemental Broadband Guidance” addresses several crucial issues relating to the use of SLFRF and CPF funds for broadband projects, including the crucial distinction of internet service providers (ISP) acting as “contractors” vs. “sub-recipients,” the treatment of “program income,” the scope of the Federal interest in the grant-funded property, procurement requirements, and other issues. Key changes adopted in the final guidance are as follows:
- Broadened definition of “ISP”: The final Guidance still uses the term “ISP,” but includes the following key sentence: “For purposes of this guidance, the term ‘ISP’ includes sub-recipients and contractors installing broadband infrastructure using SLFRF and CPF funds, and is not limited to entities that provide retail Internet access service.”
- Revenue from fiber IRUs and leases is not “program income”: The final Guidance squarely addresses the issue: “Treasury clarifies that income from indefeasible rights of use (IRUs) and leases relating to broadband infrastructure will not be considered program income.”
- A “fixed amount sub-award” can include an award involving a cost-sharing or match requirement, or where the recipient requires the ISP to submit evidence of costs: In the final Guidance, Treasury adopts a broad interpretation of “fixed amount sub-award,” so that it may include sub-awards that include a cost-based component or a match requirement.
- Prior incurred costs may be reimbursable: The final Guidance clarifies that costs incurred by an ISP prior to receiving an award “are reimbursable to the extent that they would have been allowable if incurred after the date of the federal award or sub-award (for example, if an ISP purchased fiber or other broadband equipment in advance of being awarded a sub-award or contract).”
- Retroactive application: The final Guidance clarifies that it applies retroactively. It applies “to broadband infrastructure contracts and sub-awards funded by SLFRF and CPF for states, territories, freely associated states, and local governments, including those entered into [before] the release of this guidance.”
Nearly every winning bid in the Rural Digital Opportunity Fund (RDOF) rural broadband funding program has now either been authorized or deemed to be in default. Of the $9.2 billion over 10 years tentatively won in the auction, over $2.8 billion has gone into default, according to an estimate from Cooperative Network Services, a rural broadband consultancy that has been keeping tabs on the program. Three of the 10 largest winning bidders — LTD Broadband, SpaceX and Starry—alone generated nearly $2.5 billion in defaults and there were many other smaller defaults. In some cases, all of a company’s bids were deemed to be in default. In addition, many companies had a portion of their bids deemed to be in default. What happens with the money associated with the RDOF defaults? Potentially the remaining RDOF budget of approximately $14 billion may never be awarded. Carol Mattey, founder of Mattey Consulting and former deputy chief of the Federal Communications Commission's Wireline Competition Bureau, doesn’t expect the FCC to move forward with further RDOF funding in the foreseeable future. Mattey also noted that the FCC said in 2022 that it would undertake a proceeding about ongoing support that may be needed to operate broadband networks after they are built in areas where revenues aren’t sufficient to cover those costs.
The clock is ticking on the Affordable Connectivity Program (ACP). Current estimates show the program may run out of funding as soon as the end of the first quarter in 2024. The only solution for keeping ACP operating is for Congress to refill the ACP funding bucket somehow. Angela Siefer of the National Digital Inclusion Alliance said that reauthorizing ACP was one of the biggest broadband issues on the plate for Congress. She talked about the many gains that have been made in getting broadband to low-income homes. The ACP was not created through a normal budget appropriations bill but was funded by $14.2 billion from the Infrastructure Investment and Jobs Act (IIJA). There was also rollover funding of $2.2 billion added from the previous Emergency Broadband Benefit (EBB) program that had been funded by the Consolidated Appropriations Act, 2021. That was a one-time funding event, and that means specific legislation is needed to keep the program running. There has been talk of moving the responsibility of the ACP to the Federal Communications Commission's Universal Service Fund (USF). But that would mean the agency would have to find a new way to pay for it. The current fees levied on long distance telecommunications are not nearly large enough to absorb the ACP obligations. Congress has already been considering ways to eliminate the FCC’s Lifeline fund, so the USF might not be a politically viable solution.
The Wisconsin Public Service Commission Awards $16.6 Million in Broadband Expansion Grants for 24 Projects
The Public Service Commission of Wisconsin (PSC) awarded funding from the state’s Broadband Expansion Grant Program. The PSC awarded $16,601,085 for 24 projects that will expand broadband internet to 6,042 residential and 276 business locations that are underserved. The projects receiving awards will impact 19 counties. The grant awards will leverage $25,360,858 of matching funds from recipients. The broadband expansion grants invest in infrastructure projects for internet service in areas of the state where people need improved service. The state grant program is well positioned to fulfill the unique internet access needs of Wisconsin where the Infrastructure Investment and Jobs Act's (IIJA) programs may fall short. During the next several years, as the state prepares to implement federal programs to build broadband infrastructure, state investments will ensure innovation-supporting, high-speed internet is delivered more quickly.
The state of Tennessee is expected by some estimates to receive as much as $896 million through the federal government's $42.5 billion Broadband Equity, Access, and Deployment (BEAD) program. But some customers in the rural southwest region of the state are on target to get fiber broadband service before those funds roll out, thanks to a buildout from Southwest Tennessee Electric Membership Corporation (STEMC) and Aeneas, which is nearly a year ahead of schedule. STEMC, like other electric co-ops in the US, decided several years ago that it wanted to build out fiber for its membership. In the process of determining whether to start or acquire their own broadband provider, STEMC discovered that local Internet and telephone company Aeneas was looking for a buyer following the death of the company's owner. Together, through a combination of grants from the Federal Communications Commission's Rural Digital Opportunity Fund (RDOF) and state grants funded through Tennessee's share of American Rescue Plan Act (ARPA) funds, STEMC and Aeneas are working with a total of $35.6 million in federal and state funds for this buildout.
North Dakota ranks as the best-connected state with gigabit broadband availability, according to a new report from Smarthomestarter.com. North Dakota broadband providers offer gigabit service to 60.58% of residential locations in the state — the highest percentage in the nation, according to the research. The average North Dakota household’s annual expenditure on telecommunications services is $1,670.25, which is nine dollars less than the national average ($1,679.96), indicating that residents are getting good value for their broadband expenditures. Neighboring Minnesota has the second highest availability of gigabit broadband speeds with the service available to 60.41% of residential locations, according to the report. Though the percentage is close to that of North Dakota, Minnesota residents pay significantly more for their broadband, with the average annual bill for services at $1,840.70. Much further south than the top two states, Tennessee places a distant third for residential access to gigabit broadband – 48.28% of properties can get it – and possibly at a low cost, with the state’s average annual spend on services at $1,544.13. The other states in the top 10 are (in order) Utah, Connecticut, Texas, Nebraska, Kentucky, Kansas, and Indiana.
Our broadband internet connection at home must be as rock-solid and dependable as any other utility. So many devices depend on this connection: computers, phones, tablets, smart speakers, TVs, security systems, gaming consoles, smart home devices, and more. That’s why we asked readers to rate their satisfaction with their home internet service providers. Four of our Readers’ Choice Award winners for broadband home internet also won in 2022: Astound Broadband, AT&T Fiber, Starlink, and Verizon 5G Home Internet continue to receive some of the best satisfaction ratings from our respondents. But this year’s standout is a local provider: NextLight serves the approximately 100,000 people in the town of Longmont, Colorado. It's a municipal broadband service, meaning that it is owned by the town. This fiber-based broadband service receives the highest satisfaction scores on every question that we asked. NextLight's near-perfect scores, including an astronomic 9.9 for overall satisfaction, are unprecedented in the history of PCMag's surveys of broadband providers.
The same day that SpaceX scored a big win on the proper use of spectrum, it became embroiled in a new fight over appropriate spectrum use. The new fight is with AT&T over SpaceX’s plans to enable calls from T-Mobile cellphones via SpaceX satellites. That type of service is called supplemental coverage from space (SCS) and is a market AT&T also is pursuing via a deal with satellite operator AST. In a filing with the Federal Communications Commission, AT&T expresses concern that the planned T-Mobile/SpaceX service, which will use spectrum in the PCS G-block, could interfere with AT&T cellphone operations in the adjacent PCS C-block. AT&T’s filing was made the same day that the FCC declined to allow two-way mobile operations between 12.2 GHz and 12.7 GHz out of concerns that doing so would interfere with SpaceX Starlink satellite broadband service that also operates in the band. The FCC is still in the process of determining how to regulate SCS service.
President Joe Biden will nominate the following individuals to serve as key leaders in the Federal Communications Commission:
- Anna M. Gomez, Nominee for Commissioner of the FCC: A telecommunications attorney with extensive experience in domestic and international communications law and policy. Gomez serves as a Senior Advisor for International Information and Communications Policy in the Bureau of Cyberspace and Digital Policy. Gomez served as the National Telecommunications and Information Administration Deputy Administrator from 2009 to 2013.
- Geoffrey Adam Starks, Nominee for Commissioner of the FCC: Currently serves as a Commissioner of the Federal Communications Commission since 2017. Throughout his career, Starks has focused on creating access to high-quality broadband for every American including rural America. While serving at the FCC he has worked to make networks more secure. Starks previously served as Assistant Bureau Chief of the FCC’s Enforcement Bureau.
- Brendan Carr, Nominee for Commissioner of the FCC: Currently serves as a Commissioner of the Federal Communications Commission, having first joined the agency as a staffer in 2012. In his time on the Commission, Carr has focused on expanding affordable, high-speed Internet service to all Americans. Carr also leads a groundbreaking telehealth initiative at the FCC, the Connected Care Pilot Program, which supports the delivery of high-quality care to low-income Americans and veterans.
In Europe, fibre networks have been expanding, driven by a combination of private investment and competition, and by ambitious policy targets to connect every European to a gigabit network by 2030. Full-fibre networks are now available to a majority of Europeans. Nearly everyone in Spain, Portugal and France has the option to buy full-fibre-based connections; in Germany, where DSL and cable perform relatively well and deployment costs are reportedly high, fibre investment and roll-out has been slower to materialise. This rapid increase in full-fibre network coverage can be ascribed to investment by established operators, financial investors, and the public sector. Roll-out has been remarkably fast in countries where regulatory policies, new private investment and competition came together to reduce deployment costs and put competitive pressure on legacy networks. In other countries, where competitors face greater costs or non-cost barriers, deployment has been slower. Public funding and subsidies have played a crucial role, particularly where the business case for private investment has been weak, resulting in a mix of publicly-owned and subsidised infrastructure in many European countries.
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), Grace Tepper (grace AT benton DOT org), and David L. Clay II (dclay AT benton DOT org) — we welcome your comments.
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