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Expert Opinion: Broadband Adventures in Wunderland: The Myth of the $7 million home

If it were a piece of classical music, the “study” by Navigant Economics’ Jeffrey Eisenach and Kevin Caves could easily be titled “Variations on a False Narrative in the key of F.” They claim, after a review of three (count ‘em, 3) of the hundreds of broadband grants, the broadband stimulus cost too much for too little ROI.

The most misleading of the claims, though, is the alleged $349,234 spent per un-served household. Well, I should say the $7 million per un-served household, but I’ll come back to that in a bit.

Published

12 years ago

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If it were a piece of classical music, the “study” by Navigant Economics’ Jeffrey Eisenach and Kevin Caves could easily be titled “Variations on a False Narrative in the key of F.” They claim, after a review of three (count ‘em, 3) of the hundreds of broadband grants, the broadband stimulus cost too much for too little ROI.   

The most misleading of the claims, though, is the alleged $349,234 spent per un-served household. Well, I should say the $7 million per un-served household, but I’ll come back to that in a bit.

U.S. broadband policy and strategy suffers from three fundamental failures that limit the advances we could be making, while allowing the most ridiculous assertions to pass as educated commentary on the progress we do make. Industry funded “research” such as this National Cable & Telecommunications Association (NCTA) funded and hyped report is an example of our latter affliction.

The biggest threats to better broadband in America are many people’s 1) failure to understand financial sustainability, 2) failure to understand what the broadband need are and 3) unwillingness to acknowledge, let alone fight, the failure of competition.

Six years ago, I wrote in my book “Fighting the Good Fight for Municipal Wireless” that consumers are the weakest pillar in the business case for broadband in many communities. They cost a lot to win and retain as customers, and the revenue they generate can be small compared to the cost of the network, particularly in small rural communities. Local government, businesses and other anchor “tenants” (a.k.a. institutions) subscribing to the network is how you generate revenue (or grants) needed to run the network. If broadband is to be successful in many communities, you can’t ignore this reality.

Yet everyone and his mother seems to cling to the consumer as their point of reference. How many houses are passed (served)? What’s the ARPU (average revenue per user)? Pricing practices, marketing messages, types of services offered, measures of success, arguments made against broadband stimulus, reasons given for having a stimulus.

Broadband success is not a matter of homes “passed” but by first resolving the needs of those various anchors I listed. Santa Monica is a good example. The IT department used that city’s dark fiber to replace aging communications technology, generating $750,000 in savings that they invested in expanding the network, and then selling access to local businesses. That revenue, in turn, went into further expansion and the circle continued. In time, consumers received free WiFi in various city locations and other benefits that wouldn’t have been possible if the first emphasis had been consumers.

Whether small town or large metropolis, serve the institutions first and then leverage the benefits to meet constituents’ needs. “Pass” a home with fiber for $30,000 on the way to providing a school with gigabit service that subsequently serves 100 homes with highspeed fixed wireless for five years, and you get a pretty good deal. The supposed “high cost of the stimulus” is less dramatic when you have a clearer understanding of the big financial picture of some of these projects.

That leads to the second failing: not grasping the real needs these projects are meant to resolve. Assess the need of local government to revamp its communication systems to deliver more and better services in the face of continuing budget cuts. Examine what type of communication infrastructure local businesses need to compete on a global scale, what schools need to capitalize on digital learning tools for the 21st Century, what hospitals need to transform healthcare delivery.

These needs translate into demand for high-capacity broadband networks that come with hefty price tags, so you have to spend a lot to put the right infrastructure in place. But those needs also translate into subscribers willing to pay healthy but fair prices that financially sustain these networks in the long term. More importantly, when you meet these combined institutional needs, the benefits are many, varied and long lasting. You get a very different picture of the cost effectiveness of Rural Utilities Service (RUS) broadband subsidies. Often, the picture does not fit neatly or obviously into an accountant’s Profit & Loss mindset.

Because there are politicians, journalists and regular citizens who can’t or won’t see the true needs of organizations that comprise the foundation of the broadband business case, they are easily distracted by shrill claims by industry shills of government waste. They more likely become contributors to the problem rather than enablers of the solution.

This brings us to the third failing epitomized in the false narrative of the $7 million un-served home: the absence of political will in some quarters to aggressively address the lack of competition. Quite a few of these stimulus awards went to projects that will “overbuild” areas where there are existing providers. In case you missed my last column, just because a provider offers service in an area doesn’t mean there is competition in that area.

You hear the incessant whining of incumbents about overbuilding and unfair competition. When Eisenach and Caves calculated their “squandered” dollars per un-served home, they identified homes without access to service. But what about the hundreds of homes in areas that subscribe to service that’s over-priced and crappy because there’s insufficient competition to drive prices down and innovations up? They’re also un-served by adequate broadband at an affordable price. Are there hundreds of homes in areas where incumbents advertise services that constituents actually can’t get, but by government standards are deemed “covered?” Sorry, they’re un-served. What about the local companies, home businesses, schools and hospitals that can’t buy high-end broadband to meet identified needs, even if they have the money, because no provider in the area is capable of providing sufficient capacity? They’re un-served.

Eisenach and Caves’ numbers don’t mean jack because they’re running a false narrative. It doesn’t appear they’re addressing numbers for the homes whose broadband is so deficient it may as well be dial up. Their report addresses residences while apparently failing to take into account the businesses and institutions that currently are un-served, yet will be with the stimulus projects. They constantly claim “duplication of services” when in fact, someone selling Internet access doesn’t automatically make their service meaningful broadband.

If you want to know the value of this particular tune, you just need to see who’s paying the piper.

 

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Craig Settles conducts needs analyses with community stakeholders who want broadband networks to improve economic development, healthcare, education and local government. He hosts the radio talk show Gigabit Nation, and is Director of Communities United for Broadband, a national grass roots effort to assist communities launching their networks. He recently created a guide to help librarians uncover patrons’ healthcare needs, create community health milestones and effectively market telehealth.

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Broadband Mapping

Efficacy and Timeline of FCC’s Challenge Process Questioned by State Officials, Industry Experts

The challenge process is important because mapping is a “zero-sum game,” panelists said.

Published

3 months ago

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January 13, 2023

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WASHINGTON, January 13, 2023 — As the next deadline for challenging the Federal Communication Commission’s national broadband map arrives on Friday, state broadband officials and industry experts still have questions and concerns about the overall process, according to panelists at a Broadband Breakfast Live Online event on Wednesday.

Much of the urgency surrounding the challenge process stems from the fact that the map will be used to determine the allocation of $42.5 billion in funding from the Broadband Equity, Access and Deployment program. Limited resources and contractual restrictions have barred several states from being able to challenge data that they argue contains significant mistakes and omissions.

The allocation of BEAD funding is “definitely a zero-sum game,” said J. Randolph Luening, founder of BroadbandToolkit.com.

“If everyone presents new locations and new underserved and unserved areas in the same proportions, then nothing changes,” Luening said. “But… if you’re a state broadband office, you do want to be diligent to try to discover those areas within your bounds because they’ll result in, on the margin, a significant number of dollars if you do a good job.”

Although challenges will be accepted on a rolling basis, the NTIA has announced that challenges should be submitted before Friday, January 13, in order to be reflected in the map used for BEAD funding. allocation

However, there is some confusion over exactly which types of challenges are included in this deadline. The fixed-broadband portion of the FCC’s map includes the “fabric,” which is a dataset of locations at which broadband is or could be installed, as well as provider-reported availability data.

Difference between fabric (or location) challenges and availability challenges

Availability, or coverage, challenges submitted by Jan. 13 will be factored into the BEAD allocation map. But according to Meghan Grabill, geospatial data analyst for the Maine Connectivity Authority, the cutoff for fabric (or location) challenges to be included in the BEAD allocation map was Oct. 30.

In an email after the Broadband Breakfast event, Grabill attributed this information to statements made by multiple officials during “office hours” held by the FCC and the National Telecommunications and Information Administration, as well as in private meetings.

Meghan Grabill

The few states who were able to submit location challenges before that date are now far ahead in the “zero-sum game” of obtaining funding, Grabill said.

An October location challenge deadline was not formally communicated by the NTIA or the FCC. Several state broadband offices have continued to prepare location challenges under the assumption that anything submitted by Jan. 13 will be used for BEAD allocation.

On Jan. 5, the two senators from Nevada — Jacky Rosen and Catherine Cortez Masto — wrote in a letter to the FCC that the map was “deeply flawed,” pointing to “missing serviceable locations” and noting that the discrepancies could cost Nevada millions of dollars in federal funding. In order to combat these shortcomings, the senators asked for a 60-day extension of the challenge period.

This extension request was echoed by an open letter signed by local governments and organizations in 19 states and Washington D.C.

Several other states have issued statements highlighting the January cutoff, such as a Jan. 4 press release from the Pennsylvania Broadband Development Authority asking residents to “submit their challenge by the Jan. 13 deadline so the commonwealth receives enough federal funding to expand broadband access.”

The communications from Pennsylvania, Nevada and several other states include explicit reference to location challenges — indicating a belief that both availability and location challenges submitted by Jan. 13 will be included in the BEAD allocation map.

Grabill said she had mixed feelings about a potential extension, noting that while it would be a good opportunity for the office to engage with citizens, it wouldn’t have a major impact on BEAD allocation because “location challenges were kind of where the battle was won.”

Questions remain about the overall efficacy and purpose of the challenge process

Some experts have argued that the challenge process doesn’t matter because the map is consistently inaccurate across every state.

Garland McCoy, executive director of the Precision Ag Connectivity Act Stakeholder Alliance, expressed doubt about the impact of the challenge process on BEAD allocation, saying that whether the deadline passed months ago or whether it will be extended another 60 days is unlikely to “make any difference whatsoever.”

Grabill disagreed with that premise. “People have tried to investigate whether we’re all skewed equally, and I think the answer is no — there’s some winners and there’s some losers in the ‘skewed-ness’ of the fabric and who got noted as served and unserved,” she said.

Even if participation in the challenge process will not yield a higher share of federal funds, states still have reason to actively pursue an accurate map, McCoy said. Local entities should be preparing for the “internal battle that’s going to be taking place within the state maps” when it comes to the division of funding between urban and rural areas.

Unless rural counties actively push for their unserved and underserved populations to be included in the mapping and planning processes, they will not receive the appropriate allocation of funding, particularly because internet service providers lack financial incentive to serve remote locations, McCoy said.

Because the FCC is not requiring providers to formally respond to crowdsourced data, state officials and other actors may feel less motivation to aggressively pursue those challenges, Luening said. However, that data can still prove valuable in certain situations.

“If you’ve got a large area where you have many ISPs who are claiming to provide service, and you have no crowdsourced data points showing that level of service, then it will seem that that’s a pretty good argument that it may not be there… Even though it’s been categorized as a second-class citizen in terms of the FCC response, [crowdsourced data is] still a very powerful tool,” Luening said.

Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. Watch the event on Broadband Breakfast, or REGISTER HERE to join the conversation.

Wednesday, January 11, 2023, 12 Noon ET – How to Challenge the FCC’s Broadband Map

In November 2022, the Federal Communications Commission published the first draft of its new national broadband map, which displays data for fixed and mobile broadband. In addition to provider-reported availability data, the fixed-broadband portion of the map includes the “fabric,” a dataset of locations at which fixed broadband “is or could be installed” that was constructed by CostQuest Associates — not without some controversy. The map is important because its data will likely factor heavily into the distribution of broadband grant funding, but many state broadband officials have said the processes through which the map’s accuracy can be challenged are difficult and complicated. In this Live Online event, a panel of experts will review the controversies surrounding the FCC’s map and discuss the various challenge processes.

This FREE Broadband Breakfast Live Online event will feature insights from the exclusive Broadband Breakfast Club report for the month of January. Access the full report by registering here.

Panelists

  • Meghan Grabill, Geospatial Data Analyst, Maine Connectivity Authority
  • J. Randolph Luening, Founder, BroadbandToolkit.com
  • Garland McCoy, Executive Director, Precision Ag Connectivity Act Stakeholder Alliance
  • Drew Clark (moderator), Editor and Publisher, Broadband Breakfast

Panelist resources

Meghan Grabill is the Geospatial Data Analyst for Maine Connectivity Authority, where she is responsible for data management and analysis to ensure everyone in the state of Maine has access to affordable, accessible, high-quality broadband.   With a background in geography and planning, she brings a unique blend of skills and experience to the position with training in spatial analysis and community development.  Previously Meghan worked for the Island Institute as a community development officer.

J. Randolph Luening is founder of BroadbandToolkit.com (video), a “commercial mapper” that provides analytical planning tools to the telecommunication industry to help state broadband offices, investors, grant applicants, engineering firms and ISPs in BEAD / CPF and others in infrastructure and funding-related decisions. He has enjoyed a 35-year carrier in the fixed, mobile, and satellite telecommunications, doing business in the U.S., Europe and Asia. His education includes a Bachelors of Science in Electrical Engineering (Duke University), Masters of Engineering in Electrical Engineering (Cornell University) and an MBA in Marketing (Wharton School of Business).

Garland T. McCoy, co-founder and executive director of the Precision Ag Connectivity and Accuracy Stakeholder Alliance, is a long-time nonprofit veteran in the fields of technology and telecommunication policy, having served as Founder and CEO of the Technology Education Institute. Garland was recently an adjunct professor at Syracuse University’s iSchool, teaching information policy and decision making, and can be reached at garland.mccoy@pagcasa.org.

Drew Clark (moderator) is CEO of Breakfast Media LLC. He has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

Photo illustration by Em McPhie/Breakfast Media/Adobe Stock

WATCH HERE, or on YouTube, Twitter and Facebook.

As with all Broadband Breakfast Live Online events, the FREE webcasts will take place at 12 Noon ET on Wednesday.

SUBSCRIBE to the Broadband Breakfast YouTube channel. That way, you will be notified when events go live. Watch on YouTube, Twitter and Facebook. 

See a complete list of upcoming and past Broadband Breakfast Live Online events.

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Broadband Mapping

FCC Broadband Challenge Data May Be Evaluated Post-Deadline by the Commerce Department

States facing difficulties collecting coverage data may have more time to present challenges.

Published

3 months ago

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January 10, 2023

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Photo of Jake Varn, principal associate Pew Charitable Trusts

WASHINGTON, January 10, 2023 – Challenge data for the Federal Communications Commission’s broadband availability map submitted after the January 13, 2023, deadline may still be evaluated by the National Telecommunications and Information Administration, said experts in a Tuesday webinar hosted by National Broadband Resource Hub.

Those challenges submitted before Friday’s looming deadline will be considered in the version of the map that will guide the Commerce Department’s NTIA in divvying funds from the $42.5 billion Broadband Equity, Access and Deployment program in June.

Join the Broadband Breakfast Live Online event, How to Challenge the FCC’s Broadband Map, on Wednesday, January 11, 2023, at 12 Noon ET.

State and local officials are clamoring to meet the January 13 deadline, but experts indicate that local maps need not be entirely up to date by Friday. Instead, officials should be primarily concerned with the portion of available funds allocated to the state, said Alex Kelley, head of broadband consulting at Center on Rural Innovation. Local-level officials should work to update maps prior to the allocation of funds from the state, he continued.

Next Century Cities representative Ryan Johnston added that it is never too late to collect data to be included in the next iteration of the map. He added that there is a possibility that the Commerce Department’s NTIA will consider data added post-deadline in fund allocations.

Crowdsourcing broadband data

States official attending the event expressed concern in collecting viable challenge data within a short timeframe. The primary data collection method for states previous to the FCC’s challenge process was speed tests, which are not being accepted by the agency, said Jake Varn, principal associate at Pew Charitable Trusts.

Instead, states must turn to bulk crowdsourcing by encouraging residents to submit challenges to the state. Evidence of unsupported claims may include a service provider denying service installation, failing to schedule a repair or installation within 10 days of a request, not appearing for a scheduled service, denying service claims, requesting more than the standard installation fee to connect the location, requiring new and non-standard equipment, or having no wireless or satellite signal available.

Ohio engineered a crowdsourcing program to reach those known unserved locations through mail with information on how to file a challenge via phone number or email, said Varn. Mississippi followed suit by establishing a hot line for unconnected residents to submit their filings.

Kelley suggested that states looking to improve crowdsourcing efforts involve more people and “tap into the grassroot energies already existing” in the community. Connect crowdsourcing to broadband initiatives that already exist, he suggested, make a culture and movement around broadband access rather than a one-time initiative.

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Broadband Mapping

What You Need to Know About the FCC’s Maps and the Challenge Process

The Broadband Breakfast Report for January 2023 lays out the things to know about the challenge process.

Published

3 months ago

on

January 9, 2023

By

Photo illustration by Em McPhie/Breakfast Media/Adobe Stock

The allocation of billions of dollars of broadband infrastructure money is contingent on the big update to the broadband map of the Federal Communications Commission, which has set Jan. 13, 2023, as the deadline for challenges to a preliminary version released on Nov. 18, 2022.

That deadline is intended to set a timeline for the version of the map — after challenges — that will guide the National Telecommunications and Information Administration, a U.S. Commerce Department agency, in divvying out to the states by this June 30 the $42.5 billion from the Broadband Equity, Access and Deployment Program, which emerged from the Infrastructure, Investment and Jobs Act of November 2021.

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