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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.

Digital Inclusion

Rosenworcel Hails FCC’s Efforts on Mapping, Said Country Needs More Wi-Fi Access

Rosenworcel also emphasized spectrum policy and getting connectivity to low-income Americans.

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FCC Acting Chairwoman Jessica Rosenworcel.

WASHINGTON, October 27, 2021 ­– Federal Communications Commission Acting Chairwoman Jessica Rosenworcel said Friday she is optimistic about the agency’s direction on new broadband mapping efforts and said the testing of the project has produced the best wireless coverage map in the country.

Speaking at the Marconi Society Symposium Friday, Rosenworcel said the mapping efforts are part driven by crowdsourced methods that she credited as a valuable way to ensure the maps are as accurate as possible.

The new maps are a product of the Broadband DATA Act, which is set to expand mapping efforts to make them more precise. The current mapping method, which uses Form 477 data, has led some companies to bid for federal funding in areas that are already served. The FCC is currently cleaning up the results of the $9.2 billion Rural Digital Opportunity Fund due to those errors.

Rosenworcel emphasizes spectrum policy

Additionally, Rosenworcel emphasized the need to improve spectrum policy. She suggested that this take place by making sure consumers benefit from competitive FCC auctions and placing more Wi-Fi access in locations where licensed airwaves see low usage.

Industry experts at the event stressed challenges that must be addressed in order to expand broadband access, such as the fact that low-income individuals will often reject offers to receive free internet. This happens because the individuals think that a free service will be low quality or that they will be tricked into paying for the service in the future.

During one panel, professor Margaret Martonosi of Princeton University explained the importance of realizing that utility functions present in rich and poor service markets are different, meaning that the appetite for internet service in richer communities is different from the appetite in poorer ones.

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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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