Tuesday, September 29, 2020
Headlines Daily Digest
Elections & Media
Government & Communications
Stories From Abroad
This report looks at the current state of the broadband mergers and acquisitions market including valuations, target companies, market catalysts, risks, and the impact COVID-19 could have on new sources of government funding. Key findings:
- The abrupt shift in 2020 to working from home and remote learning has significantly increased high-speed data subscriptions, representing a new catalyst for the broadband market.
- COVID-19 has exposed the vulnerability of the underserved and unserved, and as a result, Democratic lawmakers have proposed an $80 billion plan to bridge the digital divide. The possibility of new government grants will whet investors’ appetites for broadband assets.
- Investors are starting to show interest in Wireless Internet Service Providers (WISPs) thanks to their Connect America Fund Phase II (CAF-II) awards, new spectrum-sharing business models, and fiber investments.
- While the high-speed low Earth orbiting satellite market represents a long-term headwind for valuations and M&A activity, we remain skeptical until the business model is proven.
- Given these and other factors, we believe current broadband valuations should remain elevated for the foreseeable future.
AT&T is giving wireless customers more flexibility by letting them pick a different unlimited plan for each line on their account. The program, which AT&T is calling Unlimited Your Way, lets you select the unlimited plan you want -- Starter, Extra or Elite -- instead all lines having to use and pay for the same plan. For an account with four lines, the Unlimited Starter plans starts at $35 a month; the Unlimited Extra plan starts at $40 a month and includes 15GB of hotspot data and 50GB of premium data; and the Unlimited Elite plan starts at $50 a month and includes 30GB of hotspot data, 100GB of premium data and HBO Max.
Remote learning continues to be out of reach for millions of students who lack a reliable internet connection at home. But that doesn't have to be a permanent reality, and efforts are already underway to ensure that it isn't. Achieving universal broadband access would cost billions of dollars and will likely take time to build the infrastructure and political will to make it happen. It's also tricky because there's not a single obvious solution to the problem, but rather a menu of options, many of which could be implemented simultaneously.
- Equipping School Buses With Wi-Fi
- Distributing Broadband Directly to Families
- Offering Government Funds to Districts
- Building a Statewide Network
- Using Free and Reduced Meal Lists to Identify Need/Automatically Enroll Families
- Providing Internet Access From School Buildings to Surrounding Neighborhoods
- Allow municipal broadband networks
- Use the Postal Service to Expand Broadband Access in Rural Areas
Computer shortages have raised nationwide concerns about educational inequities, which are amplified in tribal communities that resisted the Bureau of Indian Education’s (BIE) desire for in-person instruction in an effort to control rising cases of COVID-19. At least five BIE-operated schools in Arizona and five in other states were not prepared to start online because the bureau’s late disbursement of federal relief funding delayed purchases for needed laptops and internet hot spots in communities where fewer than half of rural households have access to broadband internet. BIE schools lagged behind the rest of the country in providing online instruction after closing this year. About 45% of BIE schools offered digital learning for students, compared with 85% of public schools serving Native students. Adding to the challenges, limited cellular service in certain tribal communities hinders the effectiveness of wireless hot spots. BIE officials have previously acknowledged that 95% of students in some of the agency’s schools cannot access the internet at home.
In March, Congress allocated more than $150 million to the BIE for coronavirus relief in its K-12 schools. The money was supposed to address immediate deficiencies: mental health services for students affected by the pandemic, protective equipment meant to ensure school buildings were safe to reopen and laptops and internet hot spots for distance learning. In its reopening plan, released in late Aug, the BIE said its schools would provide distance learning opportunities for all students. Children would receive laptops, Wi-Fi hot spots and solar chargers if they lived in homes with no electricity, according to the plan. Citing supply chain issues caused by the pandemic, the BIE warned that the devices might not arrive by the start of the school year. The BIE did not begin distributing money to schools until June. And once schools received the money, they had to buy the technology through the US Department of the Interior’s system, which requires multiple offices to sign off on a purchase before an order is placed.
The Californian students who could benefit the most from the college- and career-focused approach of Linked Learning are the least likely to have the internet and devices needed to access it from home. Across the state, 1.8 million children live in homes without high-speed internet, and nearly 690,000 have no access to devices. Children of color are much more likely to be cut off from virtual learning: Nearly one-quarter of Black families in California and almost one-third each of California’s Latino and American Indian/Alaska Native families do not have high-speed internet access at home. One in 10 each of Black, Latino, and American Indian/Alaska Native families have no computer at home. While most of the burden for equipping students with the devices and internet access for ongoing online learning has fallen to local schools, districts, and states, the report calls on Congress to provide $6.8 billion in critical funding for internet and computer access for all students across the country.
Shemar, a 12-year-old from East Baltimore, is good at math, and Karen Ngosso, his fourth grade math teacher at Abbottston Elementary School, is one reason why. Remote learning started in earnest on April 6. For Shemar, that meant just four hours per week of live online instruction — an hour for each of the four main subjects once a week, with nothing on Fridays. Shemar had an Xbox but no computer, so the pastor at our church, Rob Hoch, said that it would reimburse me for buying Shemar a laptop. It soon became clear that, even with the computer, this form of schooling wasn’t going to work for Shemar. He had a wireless connection at his grandmother’s house, but he spent some of his days at a row house, a mile to the southwest, that his mother had moved into, in one of her repeated efforts to establish a home for them. A few weeks earlier, a 21-year-old man had been killed a block away. There was no internet, and when his mother called Comcast to ask about the free Wi-Fi it was offering to the families of Baltimore schoolchildren, she was told that a previous tenant had applied, so she couldn’t do so herself. It was a familiar situation for her: so often, when she made an effort on her son’s behalf, it foundered quickly in a bureaucratic dead end.
I have chosen to tell the story of Shemar’s remote-learning difficulties, with his family’s permission, because it was his plight that alerted me to the fact that remote learning was proving disastrous. As the spring went on, I grew increasingly distressed by the lack of public alarm over students like Shemar, who were sitting in countless dark rooms, safe from COVID-19, perhaps, but adrift and alone. Society’s attention to them has always been spotty, but they had at least been visible — one saw them on the way to school, in their blue or burgundy uniforms, or in the park and the playground afterward. Now they were behind closed doors, and so were we, with full license to turn inward. While we dutifully stayed home to ﬂatten the curve, children like Shemar were invisible.
The report begins with an overview of each candidate’s general philosophy on technology, innovation, and trade policy, and then compares the candidates’ policy positions across 10 specific issue areas:
- Innovation and Research and Development (R&D)
- Internet and Digital Economy
- Broadband and Telecommunications
- Education and Skills
- Advanced Manufacturing
- Life Sciences and Biotechnology
- Clean Energy Innovation
The candidates’ positions on broadband:
President Donald Trump: Promises to build “the World’s Greatest Infrastructure System.” Presumably, this would include improvements of some kind to the nation’s broadband infrastructure. In 2019, the Trump FCC revamped the existing rural broadband subsidy program into the “Rural Digital Opportunity Fund.” The first phase, which will begin in October, aims to provide broadband to over six million unserved homes and businesses. In 2018, the administration proposed an infrastructure package that aimed to spur a total of $1.5 trillion of investment, and incent state, local, and private investment through a combination of tax incentives and $200 billion in federal spending, including state-directed grants that could be spent on broadband or other infrastructure projects. The proposal did not advance in Congress.
Former-Vice President Joe Biden: Promises “universal broadband access” to “expand broadband access to every American.” The campaign has committed to invest $20 billion in rural broadband as part of a larger infrastructure package. Plans to triple US Department of Agriculture rural broadband grants and partner with municipal utilities to increase rural broadband coverage.
The Federal Communications Commission could look very different next year, even if President Donald Trump is reelected. If President Trump wins a second term, industry observers believe the agency will push ahead with the administration's desire to reform a prized legal shield for content moderation on online platforms and remain focused on expanding rural broadband policies.
While FCC Chairman Ajit Pai's current term would allow him to stay on at the commission until Jan 2023, if he chooses to stay that long, recent precedent among FCC chairs from both parties is to step down after a full four-year term. Doug Brake, director of broadband and spectrum policy at the nonpartisan public policy think tank Information Technology and Innovation Foundation, said that if President Trump is reelected, he thinks Pai could stay on as chair if he wanted to, but noted that it is "not uncommon to have two different chairmanships" under the same presidential administration. In the event that Pai does choose to leave the commission in the coming months, Brake believes current FCC Commissioner Brendan Carr could be at the top of Trump's list to lead the commission. Chris Lewis, president and CEO of public interest group Public Knowledge, agreed that if President Trump is reelected and Chairman Pai steps down, Commissioner Carr would "have the greatest amount of experience … so that's the name you hear most often."
As for what the policy priorities would be at the agency under a second Trump term, Brake said that much of that will depend on who becomes the next chair. If the agency were to prioritize reform of Section 230 in the next term, Brake believes that "even if you get the sort of more aggressive chair on those issues, that even if they do move forward, I think those would likely be challenged and rolled back in court." Lewis agreed that he expects that the "230 discussion" will continue in a second Trump term.
If Democratic Presidential nominee Joe Biden gets elected, policy experts expect him to choose a new Federal Communications Commission. The term of the current FCC Chairman Ajit Pai does not end until Jan 2023, but FCC chairmen typically exit the commission before a new president takes office. On the question of Biden's choice for chairman, Chris Lewis, president and CEO of public interest group Public Knowledge, says the conventional wisdom is that he would nominate someone with a lot of experience at the commission, which would start with Mignon Clyburn, former FCC commissioner and acting chair, and current Democratic FCC Commissioner Jessica Rosenworcel.
As for policy priorities under a Biden-led FCC, Lewis believes a top goal for any Democratic chair would be to reestablish the agency's authority over broadband in "whatever form that takes." Blair Levin, a former FCC chief of staff who now works as policy adviser at New Street Research, said recently that while he thinks that Democrats would try to move to classify internet service providers as Title II carriers, he does not believe that the classification in and of itself matters to investors, because he believes there was no indication that the rules passed in 2015 impacted investment, margins and profits.
Government & Communications
The United States Department of Agriculture (USDA) has launched a webpage to notify the public when the USDA has received applications from rural electric cooperatives and utilities for loans and loan guarantees in which up to 10 percent of the funds will be used to deploy broadband service. The applications pertain to the Electric Infrastructure Loan and Loan Guarantee Program. The new webpage also will list the proposed broadband service areas. The funds must be used in areas without broadband speeds of at least 25 megabits per second (Mbps) downstream and 3 Mbps upstream for both mobile and fixed service. This website supports a final rule authorized by Section 6210 of the Agriculture Improvement Act of 2018 (The 2018 Farm Bill) to allow the use of funds under select programs to help expand access to broadband services in rural America. (For additional information, see page 57077 of the Sept. 15 Federal Register.) USDA encourages applications that will support recommendations made in the Report to the President of the United States from the Task Force on Agriculture and Rural Prosperity to help improve life in rural America. Applicants are encouraged to consider projects that provide measurable results in helping rural communities build robust and sustainable economies through strategic investments in infrastructure, partnerships and innovation. Key strategies include:
- Achieving e-Connectivity for Rural America
- Developing the Rural Economy
- Harnessing Technological Innovation
- Supporting a Rural Workforce
- Improving Quality of Life
Verizon and AT&T have agreed to pay a combined $127 million to settle lawsuits alleging that they overcharged California and Nevada government entities for wireless service. The lawsuit was filed in 2012 and resulted in a settlement approved on Sept 24. "Verizon will pay $76 million and AT&T $51 million to settle claims that, for more than a decade, they knowingly ignored cost-saving requirements included in multibillion-dollar contracts offering wireless services to state and local government users in California, Nevada, and other states," the announcement said. "Sprint and T-Mobile previously reached settlements totaling $11.7 million. Combined, the four major telecom providers will pay $138.7 million to settle allegations in the lawsuits." Those numbers do not include what the carriers agreed to pay in attorneys' fees, which is $23.45 million from Verizon and $13 million from AT&T.
The contracts required that carriers bill government entities "at the 'lowest cost available' and that the carrier[s] identify 'optimized' rate plans that best suited actual usage patterns that drive cost," the law firm also said. The lawsuits alleged that the carriers' contract violations "cheated California and Nevada government entities out of hundreds of millions in savings," the law firm said.
A system Google set up to promote competition on Android has left some smaller search engines having trouble gaining traction, fueling rivals’ complaints about the tech giant’s compliance with a European Union antitrust decision ahead of potential US charges. Since March, Google has been showing people in Europe who set up new mobile devices running the company’s Android operating system what it calls a “choice screen,” a list of rival search engines that they can select as the device’s default. The system is part of Google’s compliance with a 2018 decision that found the company used Android’s dominance to strong-arm phone makers into pre-installing its search engine. But some small search engines that are relatively popular in Europe failed to win spots in large European countries in the latest round of auctions to appear on the choice screen.
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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