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William Rinehart: Why the Democrats $40 Billion Broadband Deployment Plan Misses the Mark

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Democratic leadership in both the House and Senate recently released a plan for broadband deployment that would spend $40 billion in taxpayer money in an effort to get everyone online. Like many other proposals of this nature, however, it lacks in the very specifics that are so important in broadband policy.

First, as the Federal Communications Commission (FCC) notes, the plan would not extend access to all Americans. Second, the plan makes a false equivalence between rural electrification and rural broadband. In fact, the rural electrification was accomplished through a loan program, while proposals for broadband are organized as grants.

Finally, the plan misidentifies the problem it is trying to solve. It assumes that the problem with broadband is one of availability, when there is significant evidence that demand plays just as large of a role. Rather than simply throwing money at the problem, policymakers should focus on making the technology relevant.

Cost Estimations Are Likely Off the Mark

In suggesting that the United States needs a “Roosevelt Plan” for broadband, the proposal aims to “connect every American to high-speed, reliable Internet by providing direct federal investments to deliver the highest quality internet access at the lowest price.” In total, nearly $40 billion would be spent to obtain this goal. While it is not directly linked in the document, this is the cost estimated by Paul de Sa, Chief of the Office of Strategic Planning & Policy Analysis at the FCC.

Even this projection has some serious caveats which are not included in the plan, the most important of which is that it would not cover every American. As de Sa notes, “the total upfront capex required to deploy FTTP [Fiber to the Premise] to the 14% of locations lacking access would be ~$80b but, because of the shape of the cost curve, ~98% coverage could be attained for ~$40b.” To reach that last 2 percent, the estimated program costs nearly double. In other words, even if $40 billion was spent, there would still be nearly 6.5 million people without access to broadband.

These numbers are also based on an assumption that either fiber or cable will be the last mile technology, ruling out telephone-based technologies, fixed wireless, and satellite. In less dense urban and rural communities, telephone networks are being upgraded and provide a path towards superfast internet.

Indeed, the next generation of technology, known as G.fast, will give network operators the ability to support gigabit speeds over twisted pair copper or coax wiring. Among other problems in the previous Wheeler FCC, his administration consistently discounted DSL, fixed wireless and other edge technologies in broadband deployment. These models and the cost estimates reflect that bias.

Comparison to Rural Electrification Act

In arguing for this buildout, the Better Deal plan suggests that rural broadband deployment is just an extension of the Rural Electrification Act (REA), a 1936 program to build electricity infrastructure in rural U.S. areas. While the programs are similar in that they aim to provide rural communities with new technology, the similarities largely end there.

REA was a loan program. Most current broadband proposals, on the other hand, are grant programs. As the 1937 Report of Rural Electrification Administration noted, there is quite a difference in establishing loans at fixed 20-year terms at 2.88 percent interest as compared to block grants that will help build out a broadband network.

Most important, the REA was actively involved in reducing the price of electricity to achieve economies of scale in rural areas. The REA created an engineering department that helped to lower the cost of electricity lines and construction methods. As REA administrators noted, “Sometimes a difference of a fraction of a cent per kilowatt hour in the wholesale rate will represent the difference between a sound and unsound project.”

By 1939, the Rural Electrification Administration reported that the cost of building rural electricity lines decreased more than $500 per mile, or over a third of the cost. Nothing of the sort is included in this Better Deal.

Demand

While there are varying figures on the cost of broadband deployment, an underlying problem is that there is too much focus on supply and not enough on demand. Currently, the FCC puts an emphasis on the percentage of Americans with broadband coverage. This is an overly simplistic way to look at broadband deployment.

In 2015, Cornell University’s Community & Regional Development Institute studied the impact of broadband deployment on rural communities. It found that Internet access correlated with economic growth, but only when people adopted broadband. When they measured broadband availability (simply having the Internet infrastructure), there was little correlation. Availability and adoption are two completely different concepts. For people to benefit from the Internet, they need to use it.

As AAF has noted before, federal government efforts to expand availability of broadband will not be as effective as those efforts to get state and local players to help spark broadband adoption.

Editor’s Note: The views expressed in this commentary do not necessarily represent the views of BroadbandBreakfast.com. Other commentaries are welcome, at commentary@broadbandcensus.com.

(Photo of fiber connections by Tmthetom used with permission.)

Will Rinehart is Director of Technology and Innovation Policy at the American Action Forum, where he specializes in telecommunication, Internet, and data policy, with a focus on emerging technologies and innovation. Rinehart comes to the Forum from TechFreedom, where he was a Research Fellow. He was also previously the Director of Operations at the International Center for Law & Economics. In 2009, Rinehart was a Koch Summer Fellow at The Progress & Freedom Foundation, concentrating on advertising policy and Internet governance. In 2008, he was a Research Associate at the Illinois Policy Institute, where he studied state-level budget, energy and tax issues. Additionally, he worked for the Institute for Policy and Civic Engagement as the Research Assistant in Technology and Civic Engagement. Rinehart is currently a Fellow at the Internet Law & Policy Foundry. Additionally, he serves on the Federal Communications Commission’s Broadband Deployment Committee and Consumer Advocacy Committee.

Education

Digital Learning is Here to Stay, Necessitating Multi-Sector Collaboration: Connected America Conference

The pandemic heightened the urgency of closing the digital divide, but several barriers remain.

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Photo of panelists at Connected America 2023

DALLAS, March 29, 2023 — As technology continues to play a growing role in education, successful efforts at closing the digital divide will require collaboration between schools, government agencies, community organizations and the private sector, according to industry experts at the Connected America conference on Tuesday.

Lack of digital access has short-term impacts on students’ grades and test scores, as well as compounding long-term effects on their ability to succeed in the workforce — and these impacts are particularly significant for students of color, explained Ji Soo Song, digital equity advisor for the U.S. Department of Education.

The pandemic left millions of students struggling to participate in remote classes, heightening the urgency of closing the digital divide.

“In Texas alone, it was 34 percent of students that did not have full internet access,” said Tonjia Grimble, founder and CEO of STEM It Up Sports. “That’s about 1.8 million students.”

Although schools have largely returned to in-person learning, the pandemic “opened a door that can’t be closed again” in terms of technology’s role in education, said Jennifer Berkner, education lead strategist at AT&T’s FirstNet.

This shift enables a new realm of learning opportunities, but it also presents challenges for both students and educators, panelists agreed.

“Affordability is still the main barrier to access,” said Francisco Gallegos, digital inclusion program manager for the Dallas Innovation Alliance.

For some schools, their actual physical infrastructure poses a problem. “You have schools that are built in concrete — you can’t get service through concrete,” Grimble said. “If their structure itself is not sound, then they’re not going to be able to get what you’re trying to get them… More of our states need to start thinking about improving that infrastructure.”

Song pointed to a September 2022 report, stemming from the Department of Education’s Digital Equity Education Roundtables initiative, that detailed existing barriers and potential solutions for increasing digital access. Among other recommendations, the report advised that community leaders should develop public trust by partnering with a broad range of local entities, including educational institutions, internet service providers, nonprofit organizations and more.

“The education sector needs to be in collaboration with the broadband sector as the digital equity plans are developed, because we can’t have siloed solutions,” Song said. Many states have already announced opportunities for community members to contribute to the digital equity planning process, he added.

In addition to the digital equity funding established by the Infrastructure Investment and Jobs Act, Song highlighted a variety of other government funding programs that can be layered to support digital learning. A “Dear Colleague” letter issued by the Office of Educational Technology in January provided guidance for maximizing this range of federal funding.

Private companies can also play a role in narrowing the digital divide, said Garner Duncan, vice president of sales for Ezee Fiber. Noting the longevity of fiber, Duncan advocated for service providers to focus on a longer-term return on investment in order to better support digital education infrastructure.

“We have returns that we have to make, but we need to be less rigid,” he said.

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Lindsay Mark Lewis: As Inflation Spiked, Broadband is ‘The Dog That Didn’t Bark’

Why have internet prices remained constant while demand surges? It all boils down to investment.

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The author of this Expert Opinion is Lindsay Mark Lewis, executive director of the Progressive Policy Institute.

There are many lessons to be learned from last year’s midterms, but Democrats should not take the results as some broad endorsement of the economic status quo. Midterm voters identified inflation as the most important issue driving their votes. And while the latest Labor Department data shows the producer price index decreasing by 0.1% in February, prices remain 4.6% higher than a year ago, which means lawmakers still have work to do to bring inflation under control.

And as they search for ideas, they may want to examine the dog that didn’t bark – in particular, the one sector of the economy that has been an interesting counternarrative to the otherwise troubling inflation story.

Home internet service is one of the few major living costs that isn’t skyrocketing. In fact, the most popular broadband speed tier one year ago actually costs 15% less today, on average.

This success story – and the bipartisan policies behind it – offers important lessons.

Remarkably, broadband prices are declining even as demand surges. The pandemic made home internet service more essential than ever for education, job opportunities and health care – all driving internet traffic 25% to 50% above pre-pandemic levels.

So why have internet prices remained constant – even declined by some measures – while demand surges? In short, it all boils down to investment.

When the pandemic cratered economic activity in the spring of 2020, executives in many industries – from lumber to oil refineries to computer chips – made the snap decision to pull back on long-term investments in new factories and manufacturing capacity. When the economy roared back, those industries couldn’t meet demand, sending prices soaring.

In the broadband industry, conversely, providers responded by investing $86 billion into their network infrastructure in 2021 – the biggest one-year total in nearly 20 years. These investments are fueling faster speeds – fixed broadband speeds are up 35% nationwide in the past 12 months – while making sure networks have the capacity to handle growing traffic needs.

This teaches us three things.

First, we should observe a Hippocratic oath and “do no harm.” America’s broadband system has thrived under a decades long bipartisan consensus for light-touch, pro-investment policies. Nearly $2 trillion in private capital built the networks that now deliver American consumers higher speeds at lower per-megabit prices than consumers enjoy in Europe, despite having to cover greater distances and more difficult terrain.

This further tells us that it’s precisely the wrong time to abandon this successful model in favor of price controls and utility-style regulation, as some House and Senate progressives have proposed. Even Democratic policy experts acknowledge that approach would be toxic for private investment.

Second, policymakers need to recognize that broadband isn’t immune from the supply chain crunches plaguing so many other sectors of the economy. Broadband buildouts are already getting delayed by shortages in fiber cable, network hardware and skilled labor. And that’s before $42 billion in federal infrastructure funding goes out the door starting next year, which will only intensify demand for these scarce supplies.

That means rural buildout projects funded by federal dollars are likely to see inflationary pressures – and take longer to complete – than Congress expected when it passed the infrastructure bill in 2021. That will put pressure on state broadband offices to be even more diligent about waste, and to emphasize reliable supply chains with experienced network builders. Bidders will also need the flexibility to buy fiber from wherever they can manage to source it, even if that means relaxing the program’s strict “Buy American” rules. This requires a regulator ability to do smart tweaking of rules to expedite buildouts cost-effectively.

Third, we need to help more financially struggling households get connected. Thanks to President Joe Biden’s Affordable Connectivity Program – and an agreement with 20 broadband companies – 48 million households can now get home internet service for free.

But more than a year later, just over a third of eligible households have signed up. Investing in enrollment campaigns and digital literacy training programs is the fastest way we can crank up the dial on enrollment. Relatively small investments here could pay huge dividends in bringing millions more Americans into the digital economy.

Even with these remaining challenges, the overall contours of American broadband policy – encouraging investment, competition and affordability – are working well. And as the saying goes: “If it ain’t broke, don’t fix it.” In an inflation-roiled economy that defies easy answers, we should learn from – not mess with – this all-too-rare success story.

Lindsay Mark Lewis is executive director of the Progressive Policy Institute. Contact him at llewis@ppionline.org. This piece was originally published in the Richmond Times on March 24, 2023, and is reprinted with permission.

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

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Josephine Bernson: The Customer Experience is About More Than Fiber

‘Listen to the customer’ is a fundamental pillar in gaining a satisfied customer.

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The author of this Expert Opinion is Josephine Bernson, Chief Revenue Officer at Great Plains Communications.

Customer experience and the digital customer experience are what makes businesses today stand apart from competitors. In our connected world, it means delivering products and services via high-speed internet, provided by a network that’s reliable and scalable according to rising bandwidth demand.

Yet, we must keep in mind the other component of a first-rate customer experience: customer service excellence.

Customer service excellence, from the beginning

How does a fiber provider successfully work with the customers and the community from the very beginning? And, continue to provide exceptional customer service each day thereafter?

It begins with listening.Listen to the customer” is a fundamental pillar in gaining a satisfied customer, whether it’s meeting with business executives, community leaders or residents. What are they hoping to achieve with their network, short-term and long-term? Any concerns that should be addressed?

Respond with solutions that meet their needs.  Personalization is better than a one-size-fits-all approach. Each customer has different needs and unique bandwidth specifications that should be taken into consideration. For example, the ability to adjust availability to accommodate peak work hours for a financial institution or local government complex or the flexibility needed for a local business that serves an online global market.

Get to know your customers. Focus on getting to know your customers through participating in local events and spending time in the community. Teams that live and work in same community they serve care about providing their neighbors with high-quality products and superior service. Valuable feedback comes from customers who directly interact with local employees immersed in the community.

Timely and convenient customer service options. If there’s a problem, how can customers contact you for a resolution? Does the customer service center or 24/7 operations center always have agents available? Are there easily accessible online resources equipped to handle common questions? Automation is a big trend in CX. While we enjoy our personal relationships with our customers, we also leverage technology for self-service tools. It’s important to enable customers to do business in whichever manner works best for them.

Happy employees for a happy customer experience

Happy employees have long been credited with increased productivity and better service for customers. Great Plains Communications’ culture has always been to attract, train and retain workers from the areas it serves.

Customer service representative Marisa Benham has been with Great Plains Communications for 15 years. “I’ve always been a people person so I really love talking to people! I love helping them figure out what services they want and helping them if they have an issue with their account.”

As for the GPC team itself, she says, “The biggest thing I love about our team is that even though we’re a large company, I feel like we are still trying to get that small company family feel.  I really love that about Great Plains as well.”

For any business to survive for a long period it must continually evolve. Great Plains Communications is a 113-year-old company serving nearly 200 Midwestern communities.  As a leading digital telecommunications leader, our core focus remains the same: customer service excellence. We believe in our high-performing network and high-performing people.

Customer loyalty depends on the customer experience, but it must be earned. It’s more than state-of-the-art technologies. It’s the people behind the innovation. It’s the teams that deliver and support the technology that make all the difference.

Josephine Bernson is the chief revenue officer at Great Plains Communications. This piece is exclusive to BroadbandBreakfast.

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

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