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Broadband's Impact

Obama’s Third Generation of Broadband Policy and the Universal Broadband Imperative

WASHINGTON, August 22, 2011 – The beauty of the internet has always been the disconnection of content and infrastructure.

Landline phone service was a one-to-one medium. It required the phone company’s infrastructure of wires and switches and telephones. Broadcast television was one-to-many. It relied upon the towers and transmitters of the broadcasters, plus a standard-issue television.

Let alone the fact that today we largely watch televisions connected to wires, and largely talk into mobile phones untethered to Ma Bell’s cords. There is the wealth of many-to-many communication through the multiplicity of applications that make the internet what it is today.

None of this, of course, is new – until one considers Washington’s subsidization schemes.

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WASHINGTON, August 22, 2011 – The beauty of the internet has always been the disconnection of content and infrastructure.

Landline phone service was a one-to-one medium. It required the phone company’s infrastructure of wires and switches and telephones. Broadcast television was one-to-many. It relied upon the towers and transmitters of the broadcasters, plus a standard-issue television.

Let alone the fact that today we largely watch televisions connected to wires, and largely talk into mobile phones untethered to Ma Bell’s cords. There is the wealth of many-to-many communication through the multiplicity of applications that make the internet what it is today.

None of this, of course, is new – until one considers Washington’s subsidization schemes.

What’s new is what’s next. And in the evolution of telecom and technology policy in Washington, a big debate is coming about the modernization of the Universal Service Fund into a Universal Broadband Fund.

Why the Internet’s Layers Need Each Other

There may be some yawns among those of you reading this. But think: we spend time online because of the content, the games, the Facebook updates and iPhone utilities that make us more productive or entertained or engaged. This is content. Think of it as the good stuff at the top of the internet layer cake.

Cut through the candles and the icing and we’re surrounded by internet protocols and open standards that, thank goodness, generally work well together. This is the “glue” that keeps us online.

All of the content and software and internet protocols rest on a physical base. This is the layer of wires, cell towers, “middle mile” connectivity and of transceivers that make all the connectivity possible.

This is infrastructure, and we need more of it. We need better and faster infrastructure. We need it to get us to universal broadband connectivity. And because broadband’s capabilities are always increasing and evolving, we’re going to get more good stuff on top of a layer cake with a bigger platform.

Obama’s First Two Broadband Eras

What about to happen is nothing less than a new era in Washington’s broadband policy.

There is no doubt that the 2008 presidential campaign opened up a dialogue on broadband. This was followed in early 2009 by congressional and executive branch action on broadband. And if we follow the guide of Moore’s law, in which technological progress marches forward with a new generation of processing power 18 months, we’re now entering Obama’s third generation broadband policy.

First, from the election until early 2010, we saw the “broadband stimulus.” The American Recovery and Reinvestment Act, passed February 17, 2009, allocated approximately $7.2 billion for broadband investment. Although about $300 million of these funds were later rescinded by Congress, the vast bulk of these dollars were appropriated for infrastructure investments.

In particular, the U.S. Department of Commerce put a focus on high-speed “middle mile” connectivity through comprehensive community infrastructure investments that are now rolling forward throughout the states. The U.S. Department of Agriculture, which was already experienced in administering broadband loans as part of its Rural Development portfolio, received significant new funding for remote-area broadband projects.

The Recovery Act also put in place the seeds of the next phase of Obama’s broadband policy — the National Broadband Plan. Issued in March 2010, the Federal Communication Commission’s plan had many critics. Some called it too ambitious, or at least too long at 376 pages. Others insisted its speed and coverage goals were not aggressive enough.

I think the plan’s brilliance lies in its framing. Its Part I on “Innovation and Investment” hearken to competition and spectrum policy. I’ll discuss Part II, “Inclusion,” and its focus on universal broadband in a moment. But in Part III, the National Broadband Plan put “national purposes” into a broadband focus. By linking Health Care, Education, Energy and the Environment, Economic Opportunity, Government Performance, Civic Engagement and Public Safety to better broadband, the plan did a real service. It set the agenda for the infrastructure of public and private institutions that are seeking to ensure that broadband is meaningfully used by all.

In turn, the FCC relied upon the work performed organizations such as the U.S. Broadband Coalition led by Jim Baller, by the Benton Foundation, and by the now-defunct Knight Center for Digital Excellence.

The Next Broadband Policy Topic: The Universal Broadband Fund

The next major battle over broadband policy will be over the future of the Universal Service Fund. It’s telling that the Universal Service Fund spends more than $8 billion each year on providing telephone connectivity to rural areas, and also to low-income individuals. Two other components of the Universal Service Fund offer internet connectivity to schools and libraries, and to hospitals and health care centers. This amounts to more, on an annual basis, than Obama’s one-time investment in broadband infrastructure.

How the Universal Service Fund should be reconfigured is, as of now, up for grabs. The existing mechanisms in the Universal Service Fund have been criticized by academics and by economists. In their eyes, it wasn’t cost-effective at meeting its telephone-connectivity mandate. Now the mandate itself needs to be different.

At the Broadband Breakfast Club last month, “Making the Universal Service Fund into a Universal Broadband Fund,” BroadbandBreakfast.com hosted experts from a range of stakeholders, including Russell Hanser of Wilkinson Barker Knauer, Hank Hultquist, vice president of federal regulation for AT&T, Joshua Seidemann, director of policy for the National Telecommunications Cooperative Association, Michael Spead, senior technical specialist for broadband at ICF International, and Darrell M. West, vice president and director of governance studies at the Brookings Institution.

Three key points emerged from the debate.

First, unlike plain old phone service, there is a multiplicity of technologies, and a multiplicity of business models, in broadband connectivity. That means the government needs to be clearer about what it wants when it comes to universal broadband, said Hank Hultquest of AT&T.

Second, not every consumer is going to wants or needs a land-line phone. A new broadband connectivity fund may identify consumer and offer them a choice between land-line phones, mobile phones, or broadband access, said Darrell West of Brookings.

Finally, several panelists alluded to the possibility of a new digital divide: between low-speed broadband, such as 5 Megabits per second (Mbps) or less, and higher-speed broadband, such as 45 Mbps.

Watch the debate online.

Remember that getting to universal broadband connectivity, by itself, won’t do anything. Just as telephone wires and broadcast towers’ value was limited by the people with whom you could talk, or the shows that you could watch.

But because of the internet’s protean nature, and because of the vastness of its nooks and crannies of content, it is and will remain far more useful and important for individuals, for businesses and for the anchor institutions of our society.

Making sure that the good things offered by the internet are available and accessed by all is the true next challenge for our nation’s broadband policy.

Drew Clark is the Editor and Publisher of BroadbandBreakfast.com and a nationally-respected telecommunications attorney at The CommLaw Group. He has closely tracked the trends in and mechanics of digital infrastructure for 20 years, and has helped fiber-based and fixed wireless providers navigate coverage, identify markets, broker infrastructure, and operate in the public right of way. The articles and posts on Broadband Breakfast and affiliated social media, including the BroadbandCensus Twitter feed, are not legal advice or legal services, do not constitute the creation of an attorney-client privilege, and represent the views of their respective authors.

Digital Inclusion

Catherine McNally: The Digital Divide is an Equality Issue

To work toward equal access, more affordable options must be created, including community-based solutions.

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The author of this Expert Opinion is Catherine McNally, editorial lead for Reviews.org

Per the latest U.S. Census numbers, about one in four American households is stuck without internet. And a quarter million people with home internet still listen to the dial up screech when they hop online.

The majority of folks lacking home internet live in states with large rural populations and high rural poverty rates, like Mississippi, Arkansas and Alabama.

In Mississippi, as an example, 60% of homes don’t have broadband, satellite or dial up. And 53% of the state’s population is considered rural with a rural poverty rate of 23%.

Limited options and slow speeds top the list of reasons why rural states are home to high numbers of disconnected households. But steep costs are the most imminent barrier to home internet in rural areas.

According to a 2020 report on worldwide internet pricing by Cable.co.uk, the U.S. is the most expensive country for internet out of all developed Western nations. Here, internet costs an average of $60 a month. Internet in the cheapest country, Ukraine, costs an average of $6.40 a month.

Digital divide deep dive: Issaquena County, Mississippi

Issaquena County is Mississippi’s least-connected county with only 20% of homes paying for an internet connection. The median income there is $14,154 per individual in 2019, compared to a $31,133 national median income. The overall poverty rate in the county is 29%, which is about 16% higher than the U.S. as a whole.

That is a glaring contrast to the most-connected county in the most-connected state: Morgan County, Utah. Morgan County is home to 95% of households with an internet connection, the median individual income there was $37,091 in 2019 and the overall poverty rate is 3%.

Residents of Issaquena County are lucky if they can get download speeds of 25 Mbps, which is the Federal Communication Commission’s current definition of “high speed internet.” The slowest speeds available, 5–12 Mbps, are barely enough to stream in HD, let alone connect to a Zoom call.

If we narrow down our view to Valley Park, a town of just over 100 people in Issaquena County, we see that some residents have the option of a single AT&T DSL internet plan.

The AT&T plan costs $660 a year for speeds of 25 Mbps, which barely keep up with critical modern-day online tools like online learning and telehealth.

Our case study of Issaquena County and Valley Park, Mississippi, highlights further opportunities tied to home connectivity and equality:

  • Access to online learning. About 23.7% of Issaquena County residents have obtained a high school degree, while 3.2% have no schooling. Online education allows individuals to expand their knowledge and further their careers.
  • Greater access to livable wages.5% of residents earn a household income of $10k or less. This is further divided by race: In 2019, Black and African American residents earned a median household income of $21,146, while white residents earned a median household income of $52,188.
  • More employment opportunities. The employment rate in Issaquena County has steadily declined since 1990. Now, 10.6% of residents are considered unemployed.
  • Better access to health care. The U.S. Health Resources and Services Administration found that half of Mississippi’s residents live in counties with more than 2,000 patients per primary care physician. Issaquena County has been designated a Medically Underserved Area since 1978, meaning the county has a shortage of primary care, dental and/or mental health providers. Better access to telehealth also enables residents who cannot make the drive to the nearest hospital or clinic.

Solving the digital divide

To work toward equal access, more affordable options must be created. The Emergency Broadband Benefit fund is one option, but it remains largely untapped by American households. Subsidies like Lifeline may also lower barriers to internet access, but participation remains low.

Community-focused solutions are likely a better answer, such as Land O’Lakes’s American Connection Project. The project opened more than 2,800 free public Wi-Fi locations in spots like the Tractor Supply Store in Spooner, Wisconsin, in order to keep farming communities connected.

Also significant is this year’s infrastructure bill, which calls on states to determine localized needs and strategies for improving affordability and access to the internet.

State sponsored projects may also solve the severe lack of competition between U.S. broadband services. This should reduce costs last-mile providers incur to connect to middle-mile networks, which could, and should, pass savings down to households. Case in point: California recently introduced an open access middle-mile project with the goal of providing nondiscriminatory access. The bill passed unanimously.

A modernized definition of what qualifies as “high speed internet” would also benefit rural households. Currently, the standard of 25 Mbps download speeds and 3 Mbps upload speeds shorts rural users of opportunities tied to telehealth, online learning and remote work.

This outdated definition allows service providers to complete minimum-viable network expansions and mark areas as “connected.” It also de-incentivizes providers to improve existing-but-subpar networks, such as the 10 Mbps DSL line I found offered in nearby Morton, Mississippi.

One thing is clear: The way the U.S. has approached internet access in the past does not work. New strategies and policies are required to repair the digital divide. Internet access is a right, not a privilege in today’s world.

Catherine McNally is an Editorial Lead for Reviews.org, where she reviews internet service providers across the US. She has a passion for using data to highlight the need for better internet access across the US and believes that internet is a critical lifeline in today’s world. She has also published speed test and pricing reports to help everyday consumers make informed decisions. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Education

National Non-Profit to Launch Joint Initiative to Close Broadband Affordability and Homework Gap

EducationSuperHighway is signing up partners and will launch November 4.

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Evan Marwell, founder and CEO of Education Super Highway.

WASHINGTON, October 18, 2021 – National non-profit Education Super Highway is set to launch a campaign next month that will work with internet service providers to identify students without broadband and expand programs that will help connect the unconnected.

On November 4, the No Home Left Offline initiative will launch to close the digital divide for 18 million American households that “have access to the Internet but can’t afford to connect,” according to a Monday press release.

The campaign will publish a detailed report with “crucial data insights into the broadband affordability gap and the opportunities that exist to close it,” use data to identify unconnected households and students, and launch broadband adoption and free apartment Wi-Fi programs in Washington D.C.

The non-profit and ISPs will share information confidentially to identify students without broadband at home and “enable states and school districts to purchase Internet service for families through sponsored service agreements,” the website said.

The initiative will run on five principles: identify student need, have ISPs create sponsored service offerings for school districts or other entities, set eligibility standards, minimize the amount of information necessary to sign up families, and protect privacy.

The non-profit said 82 percent of Washington D.C.’s total unconnected households – a total of just over 100,000 people – have access to the internet but can’t afford to connect.

“This ‘broadband affordability gap’ keeps 47 million Americans offline, is present in every state, and disproportionately impacts low-income, Black, and Latinx communities,” the release said. “Without high-speed Internet access at home, families in Washington DC can’t send their children to school, work remotely, or access healthcare, job training, the social safety net, or critical government services.”

Over 120 regional and national carriers have signed up for the initiative.

The initiative is another in a national effort to close the “homework gap.” The Federal Communications Commission is connected schools, libraries and students using money from the Emergency Connectivity Fund, which is subsidizing devices and connections. It has received $5 billion in requested funds in just round one.

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Broadband's Impact

Steve Lacoff: A New Standard for the ‘Cloudification’ of Communications Services

The cloudification of communications services makes it easy to include voice, data, SMS, and video within any existing service.

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The author of this Expert Opinion is Steve Lacoff, general manager of Avalara for communications

The line of demarcation between what has traditionally been considered a telecommunications service was once very clear. It was tangible – there were wires, end points, towers, switches, facilities. Essentially, there was infrastructure required to relay voice or data from point A to point B.

Today that line is fuzzy, if not invisible. The legacy infrastructure remains, but an industry of cloud-based services that don’t require the physical connections has exploded. Voice, data, SMS, and video conferencing can now be conveniently delivered OTT. Enabled by simple API integrations, businesses can embed just one of these services or a complete communications platform-as-a-service (CPaaS) into an app, service, or product.

Cloudification is a game changer

This “cloudification” of communications services makes it easy to include voice, data, SMS, and video within any existing application, product, or service. These are essential components for many business models.

Consider these services we have come to rely on in our daily lives: food or grocery delivery, ride services, and business and personal communications. These require multiple methods of communication with shoppers, drivers, co-workers, watch party groups, and external business partners.

The exciting news is there is no end in sight. Use cases will continue to evolve and growth will continue to skyrocket. The scale cloud delivery accommodates is massive. These untethered, easy to embed communications services are a critical differentiator for both business-to-business and business-to-consumer buyers, and the lifeblood of the businesses providing both the end user subscriptions and the APIs.

In fact, one industry juggernaut saw H1 YoY video application service demand grow nearly 600% in 2020.

Not surprisingly, as business demand for these services increases smaller CPaaS players continue to enter the market to quickly snag market share. According to a recent IDC study, “the global market revenue for CPaaS reached $5.9bn in 2020, up from $4.26bn in 2019, and is expected to reach $17.71bn by 2024.”

Merger and acquisition activity is aligned with this hockey stick growth forecast. Large telcos, SaaS providers, and even other CPaaS providers are all on the hunt. Whether they want to add additional features to punch up their products or eliminate the competition in a very tight, nuanced market, the end game is clear – as the market expands, the players will ultimately contract leaving only the most competitive offerings.

Don’t let communications tax take you by surprise

One of the least understood risks when adding cloud-based voice, data, SMS, or video conferencing to an existing product or service is new eligibility for and exposure to the complex world of communications taxation. Making mistakes can get costly very quickly.

Here are some of the key pitfalls to keep an eye on:

  • Expanded nexus: Understanding communications tax nexus is different – and exceptionally more complicated – than sales tax. There are approximately 60,000 federal, state, local, and special taxing jurisdictions, each with uniquely complex rules that tend to change at their own pace. Rules are very different for each service.
  • More complex calculations: The more communications services you provide via API, the more complicated communications taxes will be. Each feature can be taxed at different rates in each individual jurisdiction, or the whole bundle can be taxed at one rate. It’s critical to monitor monthly to avoid audit issues.
  • Maintaining overall compliance: Just as tax rates and rules need to be maintained, so must tax and regulatory filing forms in each jurisdiction. Some of these are very long and require significant detail.  They must be filed in a timely, accurate cadence to avoid additional audit risk.

Bottom line: Don’t assume, be prepared! As these communications services become more pervasive a larger swath of technology providers will find themselves liable for communications tax. The more your business falls behind, the more it can cost you.

It pays to be proactive and prepared. Tax and legal advisory experts can help determine your level of risk, and tax and compliance software providers can help you keep up with changing rules and regulations. Don’t underestimate the ongoing value of networking with peers who are either struggling to answer the same questions or have already overcome the hurdles you’re facing today.

Steve Lacoff is General Manager of Avalara for Communications. With a focus on data, VoIP, and video streaming, Steve has spent 15 years in various product and marketing leadership roles in communications and technology industries, including Disney’s streaming services and Comcast technology solutions. Steve now drives business strategy on today’s changing industry landscape and associated tax impacts. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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