Updated, June 2, 3:55 p.m. EDT: This article has been corrected with respect to comments by Jim Baller.
WASHINGTON, June 2, 2011 – The Information Technology & Innovation Foundation assembled a panel Wednesday to debate the merits and minuses of government support of broadband networks.
The Oxford-style debate, “Governments Should Neither Subsidize nor Operate Broadband Networks to Compete with Commercial Ones,” included four panelists. Rob Atkinson, President of ITIF and Jeff Eisenach, Managing Director and Principal of Navigant Economics argued against government intervention; Jim Baller, President of Baller Herbst Law Group, and Chris Mitchell, Director of Telecommunications at the Institute for Local Self-Reliance argued in favor.
The arguments against government intervention centered largely around the harms to private-sector competition and duplicative nature of government sponsored networks that compete with private ones. The pro-government sponsorship side argued that there are significant market failures in the sector and that governments, especially local ones, are in a unique position to assess the overall needs of the community without deference to profit models.
Rob Atkinson, President of ITIF, steered the beginning of the debate to the problem of government overbuilding – that is where a government broadband network is built where another network already exists.
“[Overbuilding] takes money out of the broadband ecosystem that could be used to bring prices down for the rest of us or improve [capital expenditures into other networks] for the rest of us,” said Atkinson.
Moreover, he said, governments that overbuild networks tend to impede competition rather than foster it. Because profit margins in the industry do not approach 50 – 60 percent, the addition of another competitor in the field will raise the cost per consumer to network providers, thereby eventually raising costs to the consumer.
Mitchell, however, asserted that fundamental flaws in the marketplace necessitate government intervention to supply needed infrastructure.
“Market competition has failed,” said Mitchell. “Americans pay too much for too little compared to peer nations.”
Mitchell also questioned whether markets are truly in competition with each other, given significant variations in service quality and speed.
“The question [of whether networks compete] is vague,” he said, “is fiber really duplicative of a DSL network?”
Following his fellow panelist’s point, Baller noted that in several instances, municipalities unsuccessfully attempted to convince network providers to lay networks before building their own.
“Community leaders have almost always gone to incumbents and pleaded with them to provide networks first,” he said, pointing to the success of Ft. Wayne, Indiana as a rare example of an incidence where an municipality convinced a provider to lay a high-speed fiber network. In many other instances, said Baller, communities have been unable to convince established carriers like Verizon to connect them to fiber networks.
Though municipalities may have a unique eye to the needs of the community, government-supported networks still cost money and will always drag unwilling participants with them, pointed out Eisenach.
“I want to challenge [the premise] that money is free,” said Eisenach. “When you levy a tax to support a broadband network, you are taking money from people, many of whom don’t want to give it.”
A video of the ITIF Debate, “Government Should Neither Subsidize Nor Operate Broadband Networks That Compete with Private Ones” can be found here.
Doug Lodder: How to Prevent the Economic Climate from Worsening the Digital Divide
There are government programs created to shrink the digital divide, but not many Americans know what’s out there.
From gas to groceries to rent, prices are rocketing faster than they have in decades. This leaves many American families without the means to pay for essentials, including cellphone and internet services. In fact, the Center on Poverty and Social Policy reports that poverty rates have been steadily climbing since March. We’re talking about millions of people at risk of being left behind in the gulf between those who have access to connectivity and those who don’t.
We must not allow this digital divide to grow in the wake of the current economic climate. There is so much more at stake here than simply access to the internet or owning a smartphone.
What’s at stake if the digital divide worsens
Our reliance on connectivity has been growing steadily for years, and the pandemic only accelerated our dependence. Having a cell phone or internet access are no longer luxuries, they are vital necessities.
When a low-income American doesn’t have access to connectivity, they are put at an even greater disadvantage. They are limited in their ability to seek and apply for a job, they don’t have the option of convenient and cost-effective telehealth, opportunities for education shrink, and accessing social programs becomes more difficult. I haven’t even mentioned the social benefits that connectivity gives us humans—it’s natural to want to call our friends and families, and for many, necessary to share news or updates. The loss or absence of connectivity can easily create a snowball effect, compounding challenges for low-income Americans.
The stakes are certainly high. Thankfully, there are government programs created to shrink the digital divide. The challenge is that not many Americans know what’s out there.
What can be done to improve it
In the 1980s, the Reagan administration created the federal Lifeline program to subsidize phones and bring them into every household. The program has since evolved to include mobile and broadband services.
More than 34 million low-income Americans are eligible for subsidized cell phones and internet access through the Lifeline program. Unfortunately, only 1 in 5 eligible people are taking advantage of the program because most qualified Americans don’t even know the program exists.
The situation is similar with the FCC’s Affordable Connectivity Program, another federal government program aimed at bringing connectivity to low-income Americans. Through ACP, qualifying households can get connected by answering a few simple questions and submitting eligibility documents.
Experts estimate that 48 million households—or nearly 40% of households in the country—qualify for the ACP. But, just like Lifeline, too few Americans are taking advantage of the program.
So, what can be done to increase the use of these programs and close the digital divide?
Our vision of true digital equity is where every American is connected through a diverse network of solutions. This means we can’t rely solely on fixed terrestrial. According to research from Pew, 27% of people earning less than $30,000 a year did not have home broadband and relied on smartphones for connectivity. Another benefit of mobile connectivity—more Americans have access to it. FCC data shows that 99.9% of Americans live in an LTE coverage area, whereas only 94% of the country has access to fixed terrestrial broadband where they live.
Additionally, we need more local communities to get behind these programs and proactively market them. We should see ads plastered across billboards and buses in the most impacted areas. Companies like ours, which provide services subsidized through Lifeline and ACP, market and promote the programs, but we’re limited in our reach. It’s imperative that local communities and their governments invest more resources to promote Lifeline, ACP and other connectivity programs.
While there’s no panacea for the problem at hand, it is imperative that we all do our part, especially as the economic climate threatens to grow the digital divide. The fate of millions of Americans is at stake.
Doug Lodder in President of TruConnect, a mobile provider that offers eligible consumers unlimited talk, text, and data, a free Android smartphone, free shipping, and access to over 10 million Wi-Fi hotspots; free international calling to Mexico, Canada, South Korea, China and Vietnam; plus an option to purchase tablets at $10.01. This piece is exclusive to Broadband Breakfast.
Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to firstname.lastname@example.org. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.
Senate Bill Subsidizing U.S. Semiconductor Production Clears House, Going to White House
Bill aims to strengthen American self-reliance in semiconductor chip production and international competition.
WASHINGTON, July 29, 2022 – A $54 billion bill to subsidize U.S-made semiconductor chips passed the House Thursday on a 243-187, and moves to President Biden for his expected signature.
Dubbed the CHIPS Act for Creating Helpful Incentives to Produce Semiconductors Act for America Fund, the measure is expected to incentivize domestic semiconductor manufacturing and also provide grants for the design and deploying of wireless 5G networks. It also includes a $24 billion fund to create a 25 percent tax credit for new semiconductor manufacturing facilities.
Advocates of the measure say that it will also improve U.S. supply chain, grow U.S. domestic workforce, and enable the U.S. to compete internationally to combat national security emergencies.
The measure passed the Senate Wednesday on a 64-33 vote.
Congressional supporters tout benefits
House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., voiced his support on the House floor, calling it “a win for our global competitiveness.”
The CHIPS Act of 2022 provides a five-year investment in public research and development, and establishes new technology hubs across the country.
Of the funds, $14 billion goes to upgrade national labs, and $9 billion goes to the National Institute of Standards and Technology research, of which $2 billion goes to support manufacturing partnerships, and with $200 million going to train the domestic workforce.
In a virtual press conference on Tuesday, Colorado Democratic Sen. Michael Bennett said that America’s semiconductor industry has lost ground to foreign competitors. “Today, only 12% of chips are manufactured in the United States, down from 37% in the 1990s.”
He said relying on cheaper products produced in China and overseas for so long, it has caught up with the United States.
Bennet suggested to move manufacturing labs to Colorado, where it can support it due to the plenty of jobs in aerospace and facility and infrastructure space.
“We don’t want the Chinese setting the standard for telecommunications. America needs to lead that. This bill puts us in the position to be a world leader,” said Bennet. “We are at a huge national security disadvantage if we don’t do this.”
Sen. John Hickenlooper, D-Colorado, joined his Rocky Mountain state colleague in support: “There is a real sense of urgency here to compete not only to re-establish the U.S. to make their own chips, but to compete internationally.”
He said that semiconductor chips are vital to almost every business and product, including phones, watches, refrigerators, cars, and laptops. “I’m not sure if I can think of a business that isn’t dependent on chips at this point.”\
“This is a space race,” he said. “We cannot afford to fall behind.”
Industry supporters say measure is necessary
The U.S. has lost ground to foreign competitors in scientific R&D and in supply chain industry during a recent semiconductor crisis, said France Córdova, president of the Science Philanthropy Alliance, at a U.S. Chamber of Commerce Foundation event on July 19. The U.S. only ranks sixth best among other prominent countries in the world for research and development, she said.
“The CHIPS Act of 2022 and FABS Act are critical investments to even the global playing field for U.S. companies, and strategically important for our economic and national national security,” said Ganesh Moorthy, president and CEO of Microchip Technology Inc.
Bide expected to sign measure
With the Biden’s Administration’s focus to tackle the semiconductor shortage and supply chain crisis through the Executive Order made in February, the Biden administration has been bullish on the passage of the CHIPS Act, in a Wednesday statement:
“It will accelerate the manufacturing of semiconductors in America, lowering prices on everything from cars to dishwashers. It also will create jobs – good-paying jobs right here in the United States. It will mean more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security,” said Biden.
Providers Call for More FCC Telehealth Funding as Demand Grows
‘I think obtaining funding from the Universal Service Fund would go a long way.’
WASHINGTON, July 26, 2022 – Health care providers in parts of America say they are struggling to deliver telehealth due to a lack of broadband connectivity in underserved communities, and recommended there be more funding from the Federal Communications Commission.
While the FCC has a $200-million COVID-19 Telehealth program, which emerged from the Coronavirus Aid, Relief and Economic Security (CARES) Act, some providers say more money is needed as demand for telehealth services increases.
“The need for broadband connectivity in underserved communities exceeds current availability,” said Jennifer Stoll from the Oregon Community Health Information Network.
The OCHIN was one of the largest recipients of the FCC’s Rural Health Care Pilot program in 2009. Stoll advocated for the need for more funding with the non-profit SHLB Coalition during the event last week. Panelists didn’t specify how much more funding is needed.
Stoll noted that moving forward, states need sustainable funding in this sector. “I am hoping Congress will be mindful of telehealth,” said Stoll.
“The need for telehealth and other virtual modalities will continue to grow in rural and underserved communities,” she added.
Brian Scarpelli, senior global policy counsel at ACT, the App Association, echoed the call for FCC funding from the Universal Service Fund, which subsidizes basic telecommunications services to rural areas and low-income Americans. “I think obtaining funding from the Universal Service Fund would go a long way.”
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