After we posted Empire of the senseless: rural legislators shrug off rural broadband funding for coming session, we came across two more rural broadband pieces via The Morning Take.
In Mark Fischenich's article at the Mankato Free Press, Rural broadband fight to continue in '17 session, there's this item:
. . . But while lawmakers and Gov. Mark Dayton have had well-publicized debates over the grant funding, the telecommunications industry has been winning quieter battles that may be undermining the Border-to-Border Broadband Development Grant Program, according to Dan Dorman.
"It's really been a tough uphill battle," said Dorman, executive director of the Greater Minnesota Partnership, which lobbies for policies that promote outstate economic development.
One of Dorman's biggest concerns is a change in the grant program approved by the Legislature in 2016 that allows existing cable companies and other internet providers to challenge grants being sought by a new competitor looking to enter a marketplace.
The provision seemed reasonable at first blush — that existing companies could object to state aid being provided to competitors if the existing provider promised to upgrade its service.
"On the surface, a lot of legislators said, 'Well, that sounds reasonable — let the local provider have that chance," Dorman said. "... It sounds like it just protects the local guy, but it really is really anti-competitive and keeps the competitor out."
The problem is that incumbent providers can challenge most grant applications by promising that they are planning to provide better service. The promised service can be substantially slower than what the new competitor is proposing, and the existing providers don't have to actually follow through on their promise.
With 2016 coming to a close, not a single grant has been authorized from the $35 million in funding for the program approved by the Legislature last spring.
"It sure looks like — since the grants haven't been awarded and everybody's hush-hush — that there's a problem with the challenge process," Dorman said. "... At least the rumors are that it's causing problems." He also worries that companies in coming years will choose to back off on expansion plans into underserved areas, deciding that any grant application will be challenged by an existing provider.
"What we don't know is, will this have a chilling effect moving forward?" he said, noting that it can cost $25,000 or more to develop preliminary plans for expanding a broadband network into a new city or rural area.
Lovely. But there's more. Once again, Republicans are promoting the notion that advances in technology will make fiber broadband obsolete and the invisible hand of the marketplace will swoop in with cheap wireless or whatever. The Morning Take features this fun quote from state representative Pat Garofalo speaking to MNN:
Republican Representative Pat Garofalo, [R-Farmington] says technological changes and market forces will improve broadband access “way more than more government spending. Just like the government didn’t buy cell phone towers to bring cell phone service to rural areas, it’s the exact same thing with broadband,” he says...Garofalo says fiber-optic installations are very expensive and don’t make sense in low-density rural settings — but he says emerging technologies such as wireless could work. . . .
As a matter of fact, just as the state's broadband grants allow rural internet providers to bring broadband service to rural customers, who then pay for the service (it's not owned by the government or free to subscribers), "the government"--the federal government --did indeed provide provide to the telecommunications industry to bring cell phone service to rural areas.
Under Wikipedia's entry for the Universal Service Fund we read:
The Universal Service Fund (USF) is a system of telecommunications subsidies and fees managed by the United States Federal Communications Commission (FCC) intended to promote universal access to telecommunications services in the United States. The FCC established the fund in 1997 in compliance with the Telecommunications Act of 1996. The fund reported a total of $7.82 billion in disbursements in 2014, divided among its four programs. The fund is supported by charging telecommunications companies a fee which is set quarterly. As of the third quarter of 2016, the rate is 17.9% of a telecom company's interstate and international end-user revenues.
While separate itemization is not required by the FCC, it is common for USF fees to be listed separately from other charges on a consumer's bill. Universal Service charges should not be confused with what are sometimes referred to in telephone company bills as "Federal Subscriber Line" charges, which are access fees charged by telecommunications companies, not the local or federal government.
In short, a tax. What does it provide? According the FCC:
The Universal Service Fund provides support through four programs:
- High-Cost Support (now known as the Connect America Fund) provides support to certain qualifying telephone companies that serve high-cost areas, thereby ensuring that the residents of these regions have access to reasonably comparable service at rates reasonably comparable to urban areas . . .
In early 2009, Congress directed the FCC to develop a National Broadband Plan to ensure every American has “access to broadband capability. The plan was released in March of 2010. The plan highlighted ways that the government could influence the broadband ecosystem including to “reform current universal service mechanisms to support the deployment of broadband and voice in high-cost areas; and ensure that low-income Americans can afford broadband; and in addition, support efforts to boost adoption and utilization.”
That support (High-Cost Support/Connect America Fund) has gone to such things as towers. CNET reported back in 2006's Cell phone coverage holes hurt public safety:
So why haven't carriers been able to fill in the coverage gaps left from retiring their old analog service or expand service to rural areas that have never had coverage? The answer comes down to economics. A single cell phone tower can cost between $500,000 and $1 million to deploy, and in many rural areas there aren't enough subscribers to pay for the up-front cost of building a new tower.
"Every one of our carriers is trying to cover these rural areas as quickly as they can," said Clay Dover, the incoming executive director of the Rural Cellular Association in 2007. "But without the population density, it's costly. So it makes sense to start rollouts in areas where there are more people."
A federal government program known as thehas helped provide some cash for rural network construction. And it will likely continue to help operators looking to serve sparsely populated regions of the country. The program is funded by phone companies, which pay a fee based on the percentage of interstate telecommunications services that their customers use. Most operators pass on the charges to consumers.
Rural operators can also apply for low-interest loans from the Rural Utilities Service, a development agency of the U.S. Department of Agriculture. Funding for these loans will likely be debated next year, when Congress reauthorizes the Farm Bill.
So yes, telecoms received support to bring cell phone service to sparsely populated parts of rural America--and the program (rebranded as the Connect America Fund) now helps fund among other things towers for voice and wireless. In 2015, Fierce Telecom reported in AT&T takes $427M in CAF II funding, sets plan to bring wireline, wireless broadband to 18 states:
AT&T (NYSE: T) has joined fellow Tier 1 telco CenturyLink, Consolidated Communications and others in accepting $427 million annually in phase two of the FCC Connect America Fund (CAF-II) program, allowing it reach 2.2 million rural locations in 18 of the 21 states in its operating territory with broadband services.
In making its decision to accept the funding, AT&T said it "carefully analyzed a number of factors including the regulatory obligations associated with accepting the funds and whether the funding makes deployment economically feasible (including by using our advanced fixed wireless technology)."
The service provider will meet the commitments of the CAF II program using a mix of traditional wireline and wireless technologies. In the case of wireless, AT&T will construct new wireless towers in previously unserved areas.
Jim Cicconi, senior executive VP for external and legislative affairs at AT&T, said in a letter to the FCC that "they will diligently pursue the necessary tower siting and permitting processes so that these new towers can be completed in a timely manner."
Those wireless towers service voice as well as wireless broadband--and the towers are underwritten by the government program, just as earlier towers were installed with the help of the Universal Service Funds and the Rural Utilities Service program.
There's more. Garofalo is recycling points he's made in past sessions, and there's another way to look at the claim. He goes on to suggest that other technologies might be cheaper:
Garofalo says fiber-optic installations are very expensive and don’t make sense in low-density rural settings — but he says emerging technologies such as wireless could work. Garofalo ays “if the policy changes are made to allow for more wireless technologies, new emerging technologies, that gives us the opportunity to deliver broadband to way more people at a far lower price.”
In 2015, consultant Dan Dawson wrote in Wireless is Not a Substitute for Wireline:
Any time there is talk about government funding for broadband, arguments arise that wireless broadband is just as good as wireline broadband. But it is not the same and is not a substitute. I love wireless broadband and it is a great complement to having a home or business broadband connection, but there are numerous reasons why wireless broadband ought not to be funded by government broadband programs.
The most recent argument for wireless broadband comes the Minnesota House which is currently in session. In last year’s legislative session, Minnesota approved a $20 million grant program to help expand broadband in rural areas of the state. That grant was distributed to a number of broadband projects, all wireline, which required a significant matching fund from an entity building the wireline facilities. The 2014 funding, which mostly went to independent telephone companies, is being used to bring broadband to thousands of rural residents as well as 150 rural businesses and 83 rural schools and libraries.
But the chairman of the House Job Growth and Energy Affordability Committee in Minnesota killed an additional state grant; it’s been left out of this year’s House budget. Rep. Pat Garofalo, R-Farmington, said that wired broadband is too costly in sparsely populated areas and believes that wireless and satellite technologies are more financially effective. . . .
The NTCA, which is now called the Rural Broadband Association, sponsored a report from Vantage Point Solutions that compares wireless and wireline technologies, and which argues that government funding should only be used to fund wireline networks. This whitepaper makes many of the same arguments I have been making for years about the topic, and included a few I had not considered. Here are some of the major arguments made by the whitepaper:
- Even without considering the cost of spectrum, it costs far more to build a wireless network when comparing construction cost per megabit that can be delivered to end users. Modern fiber networks rarely cost more than $10 per Mbps capacity created, and often far less than that, while it costs several hundred dollars per effective megabit to construct a wireless network using any of the common technologies like LTE.
- From a physics perspective, the amount of frequency available through US allocated spectrum is not large enough to deliver large symmetrical bandwidth, which is the goal of the National Broadband Plan. This limitation is a matter of physics and not of technology. That limitation is still going to be there with 5G or later wireless technology unless the FCC massively reworks the way it allows frequency to be used.
- At least in today’s world, the prices charged to customers are drastically different for wireless and wireline data. Already today, 25% of residences are downloading more than 100 gigabits per month in total data. That can be affordable on wireline, but almost every current wireless provider has monthly data caps that range upward from just a few gigabits per month. A customer on a capped data plan who uses 100 gigabits in a month would face an astronomical monthly bill.
- The report also made the economic argument that the shelf-life for wireless equipment and networks is relatively short, in the range of seven years, while fiber networks can have an incredibly long economic life. The report argues that the Connect America Fund should not be investing in technology that will obsolete and potentially unusable just a few years after it’s built. There certainly is no guarantee that the large wireless carriers will make needed future investments once they stop getting a federal subsidy.
- The report also made all of the normal comparisons between the two technologies in terms of operating characteristics such as available bandwidth, latency times, and high reliability, all of which tilt in favor of landline.
We'll be keeping an eye on broadband funding proposals as the session drags on.
Photo: Even the cows understand the need for internet service.
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