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Trump Administration Releases Details of $1.5 Trillion Infrastructure Plan Leveraging $200 Billion in Federal Funds

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WASHINGTON, February 11, 2018 – After a year of promises, President Donald Trump on Monday is expected to unveil his long-awaited proposal for revamping the nation’s infrastructure. The plan, which was previewed by a senior White House official over the weekend, is designed to stimulate investment with an injection of limited federal funds and streamlining the permitting process.

Infrastructure is obviously a critical component to the functioning of our economy,” the official said. He called the current system “fundamentally broken” because of years of underinvestment and a permitting process that can take up to a decade before construction on infrastructure projects can begin.

“[T]he President’s vision is to have a permanent fix for the problems that plague us in terms of underinvesting and the length of the permitting process, and not just kick the can down the road and pass things over for a couple of years, which has been the habit in infrastructure policy for the last couple of decades.”

Is Trump infrastructure plan coming back to the forefront?

During the 2016 election, Trump often spoke of the nation’s crumbling bridges and roads. He pledged to help rebuild as President by bringing the know-how and experience he’d gained from decades working as a real estate executive building hotels and apartment complexes in numerous countries.

Many hoped that this experience would lead Trump to make an infrastructure package his first priority.

But the White House only touched lightly upon the subject during Trump’s first year. Last June, in an attempt at imposing message discipline by the communications division of the White House, Trump’s nascent administration tried its hand at highlighting infrastructure issues – particularly the difficulties associated with the federal permitting process – during something called “infrastructure week.” It was one of several similarly-themed weeks.

That week included the signing of an executive order meant to streamline the federal permitting process. But the week soon became dominated by coverage of Capitol Hill testimony by former FBI Director James Comey and other news relating to Trump’s decision to fire Comey.

Previously leaked document shows Trump administration plans to spend $1.5 trillion on infrastructure

Leaked documents indicate plans to spend $1.5 trillion on infrastructure projects. But the administration’s second bite at the infrastructure apple might disappoint those seeking large federal projects.

Although $1.5 trillion infrastructure plan would certainly rival the Obama administration’s American Reinvestment and Recovery Act, estimated at the time as $787 billion of new spending. The amount was later revised to $831 billion between 2009 and 2019.

But the Trump proposal envisions no new federal projects, contains no overarching plan for repairing, rebuilding or new construction projects, and gives nearly no attention to 21st century digital infrastructure components like fiber or wireless broadband.

Instead, Trump’s proposal will spend just $200 billion in federal funds – to be found in cost savings from other programs – on loans and block grants for mostly rural infrastructure projects.

Details of Trump administration infrastructure investment plans

The $1.5 trillion number, the official said, comes not from any rigorous attempt at projections but represents how state and local governments will respond to the program.

While it was once projected at $1 trillion, it was bumped up to half a trillion “because we’ve actually received a… more enthusiastic response than we anticipated from state and local governments coming to us and saying, ‘we have this project, we have funding identified, but we’d love to participate in incentives to get that match to help finish up the project and build the whole thing.’”

The hope, the senior White House official said, is that the $1.5 trillion in infrastructure investment will be realized by spending the $200 billion and having it stimulate states, localities, and the private sector to spend that much on infrastructure investments in the form of repairs and improvements to existing infrastructure as well as new construction projects.

The plan reserves one-half of the $200 billion — which the official referred to as an “incentives package” – for use as matching funds to be distributed to state and local governments as a reward for infrastructure spending.

“If they’re creating new revenue streams and they want to build something, we will partner with them to help them to match and fulfill that one final gap in terms of financing infrastructure.”

The fund will finance rail, water and transportation projects

The plan directs another 10 percent of the $200 billion, or $20 billion, toward expand current loan and private activity bond programs to finance rail, water and other transportation projects.

Still another $20 billion will be directed toward “transformative projects,” which the official defined as projects “that can lift the American spirit, that are the next-century-type of infrastructure as opposed to just rebuilding what we have currently.”

“That ensures that we’re not focusing on just patching up the infrastructure that we have currently, but will we also have a vision toward the future,” the official said.

Another $10 billion won’t actually go toward infrastructure projects, but will be set aside for a “capital financing fund” to help with “governmental accounting rules,” the official said. “In essence, it’s a just more responsible way for us to actually fund the office-building infrastructure that the federal government is building currently.”

Second-largest segment of funds, or $50 billion, will go to rural infrastructure

But the official confirmed that the plan sets aside the second-largest portion of funds of the $200 billion in federal spending – $50 billion – for rural infrastructure projects.

While the $100 billion “incentives package” will be spent as matching funds, the $50 billion directed specifically for rural states, which overwhelmingly supported Trump over Democrat Hillary Clinton in the 2016 election. This $50 billion will be distributed directly to rural governors in the form of block grants, “to allow governors to select what the priorities of infrastructure are in their respective states.”

While telecommunications projects of a “transformative nature” would theoretically be eligible to receive federal funding, the rural program is the only part of the plan for which broadband is specifically envisioned as a use case, the senior White House official said.

Previously announced rural broadband initiatives

Monday’s plan will not, however, be the Trump administration’s first foray into the world of rural broadband, as President Trump has previously acknowledged the need for expanded broadband access in rural America.

In January 2018, Trump addressed the American Farm Bureau convention in Nashville, Tennessee, and signed two executive actions meant to facilitate rural broadband deployment: An executive order for “Streamlining and Expediting Requests to Locate Broadband Facilities in Rural America” and a presidential memorandum for “Supporting Broadband Tower Facilities in Rural America and Federal Properties Managed by the Department of the Interior.”

The two actions would “provide broader and faster, and better internet coverage,” Trump said at the time.

Another previously-announced rural broadband initiative announced by the Trump administration intended to explore the use of federally-owned “dark fiber” – fiber that has been laid but is not currently in use – in order “to interconnect and provide service to communities that have not had access to broadband before,” National Economic Council Special Assistant for Technology, Telecommunications, and Cybersecurity Grace Koh said in January.

Compared to Obama, Trump administration shows lack of attention to telecommunications infrastructure

The lack of attention to broadband and other telecommunications infrastructure from Trump or his advisors compared to that given to brick-and-mortar projects may not be surprising when considering the president’s background as a builder.

Still, it remains noteworthy when contrasted with the Obama administration’s attention to broadband deployment and efforts to improve access and close the digital divide, which were the focus of several programs funded under the 2009 American Reinvestment and Recovery Act.

Under the Recovery Act, in which Congress pumped federal money into an economy still suffering from the effects of the 2008 financial crisis, the Obama administration distributed a combined $7.2 billion in loans and grants through the National Telecommunications and Information Administration’s Broadband Technology Opportunity Program and the U.S. Department of Agriculture Rural Utilities Service’s Broadband Incentives Program.

While the Trump infrastructure plan in theory makes a combined $60 billion available which could be used for broadband projects, none of the funds are set aside for such projects.

Potential state laws barring municipal broadband networks

In addition, jurisdictions in many of the same states that will be eligible to receive block grants under the rural infrastructure program would be prohibited from spending those funds on broadband projects, as they have laws in the books banning public funds from being spent to build or operate municipal broadband networks.

State legislatures enacted many of those laws at the behest of cable and internet providers, which often lobby for municipal broadband bans out of fears that such networks would cut into their customer base.

As to why the Trump administration’s plan lacked any specific focus on broadband networks or whether it would copy the ARRA’s inclusion of a “dig once” requirement to mandate that federally-funded projects include features to facilitate broadband deployment – including conduits in road projects – neither the White House nor the National Economic Council responded to queries on the subject by our deadline.

(Photo of Donald Trump in October 2016 by Gage Skidmore used with permission.)

 

 

 

 

Expert Opinion

Paul Atkinson: Why Fiber Trumps Satellite When Bridging the Digital Divide

On the surface, satellite seems like the ideal way to close the rural-urban digital divide.

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The author of this Expert Opinion is Paul Atkinson, CEO of Optical Networks of STL

The Grand Canyon in Arizona is 18 miles across at its widest point. The only thing wider is the digital divide between the state’s rural and urban areas. Roughly 99% of urban Arizonans have access to fixed terrestrial broadband services that deliver at least 25 Megabits per second (Mbps) down and 3 Mbps up, according to the FCC’s 2021 Broadband Deployment Report . Only 66% of its rural residents do.

Arizona isn’t an anomaly, either. Nearly 99% of all urban Americans have access to broadband versus 82.7% of rural residents.

This problem also is a business opportunity, which is why so many vendors and service providers are positioning their technology of choice as the best way to bridge the digital divide. The main contenders are satellite, fiber, Wi-Fi and fixed wireless access that uses 5G cellular. Each has its strengths and weaknesses.

For example, 5G FWA requires building hundreds of thousands of base stations in remote areas that might be home to only a handful of homes and businesses — a buildout that likely would take years and tens of billions of dollars. That’s a difficult investment to recoup and make profitable.

That’s simply not a viable business model, as a US Cellular white paper acknowledged: “ Our economics require approximately 500 subscribers to build a new tower, and we can’t assume that everyone will adopt the service. The cost of building and maintaining a tower in rural America can be nearly twice as expensive as building a tower in an urban area.”

Satellite and fiber have emerged as the top two contenders. On the surface, satellite seems like the ideal way to close the rural-urban digital divide because it doesn’t require hundreds of thousands of base stations. But satellite has its share of technological and business limitations, too — to the point that in August, the FCC rejected SpaceX’s application for Rural Digital Opportunity Fund (RDOF) subsidies.

FCC Chairwoman Rosenworcel questioned whether it was affordable to ‘subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements, especially when consumer would have to purchase a $600 dish.

Rural America’s high-fiber diet

The FCC’s rejection of SpaceX/Starlink is not a setback in bridging the rural-urban digital divide. It’s actually a milestone toward parity because it ensures that an unproven technology doesn’t divert scarce public subsidies from a proven one.

As Gary Bolton, Fiber Broadband Association president and CEO rightly stated, this is a huge victory for 640,000 families who were relegated to Low Earth Orbit Satellite service. They could have been redlined from being eligible for fiber broadband. There is now clarity and a path forward for fiber to bridge the digital divide.

Fiber has already proven its worth in rural America, where it has 23% of the broadband market and the highest customer satisfaction of all internet-access technologies, according to a 2021 Pivot Group study . By comparison, fixed wireless and satellite have only 10% and 6% penetration, respectively. Cable has the largest share of the rural market, but many customers find it lacking: One third say they want faster speeds.

In fact, broadband speed is a decisive factor when people are deciding where to relocate. According to the 2022 RVA Market Research & Consulting study “A Detailed Review: The Status of U.S. Broadband and The Impact of Fiber Broadband,” 47% of the people who moved to a rural area in the past year chose one where fiber-to-the-home service is available. That preference highlights how rural communities can use fiber to attract retirees, young professionals, families, entrepreneurs and other demographics looking to escape to the beautiful countryside.

Fiber’s 23% share of the rural broadband market also busts the myth that as a wired technology, it takes too much time and money to deploy in sparsely populated areas, including those with challenging terrain such as mountains. Another wired technology — electricity — overcame those challenges 86 years ago with passage of the Rural Electrification Act , which funded utility cooperatives that built out transmission and distribution networks to serve farms, ranches, small towns and other rural places.

Today, more than 250 of those co-ops have built or are planning broadband networks, according to the National Rural Electric Cooperative Association . Many have been in service for the better part of a decade — or longer. For example, in 2006, Blue Ridge Mountain EMC launched FTTH in Georgia. In 2019, it deployed a 7,000-foot line up a mountain, using drones to overcome challenges such as deep gorge and 100-foot-tall pine trees. In 2016, Elevate Fiber, a division of Delta-Montrose Electric Association, launched gigabit FTTH in two Colorado counties by overlaying fiber on its 4,000 miles of distribution lines.

Co-ops are just one example of how fiber isn’t just poised to bridge the rural-urban digital divide. It already is. That’s great news for rural Americans, who don’t have to wait on unproven, pie-in-the-sky technologies such as satellite.

Paul Atkinson is Chief Executive Officer of Optical Networks for STL. This Expert Opinion 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 reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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WISP

Wireless Internet Service Providers Facing Challenges Meeting BEAD Program Requirements: Experts

Hurdles WISPs face include defining reliable service, regulatory burdens, and financial requirements, experts say.

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Carol Mattey, principal at Mattey Consulting LLC, via Twitter.

LAS VEGAS, October 4, 2022 – Several requirements for providers receiving funds from the Broadband Equity, Access, and Deployment program present significant difficulties for wireless internet service providers, said experts at the WISPAPALOOZA conference on Monday.

The BEAD program, administered by the National Telecommunications and Information Administration, will allot $42.5 billion dollars to the states to promote broadband access. States will in turn issue awards from their allotted funds to “subgrantees” – such as wireless internet service providers – for broadband deployment and other projects.

“The biggest concern is the way that NTIA has defined ‘reliable broadband service’ to exclude locations that are served exclusively with unlicensed spectrum,” Stephen Coran, attorney in the broadband and communications practice group at Lerman Senter, told Broadband Breakfast Monday. “There’s nine million people who are getting broadband service that way. Many of them can’t get it any other way and the service is reliable.”

Areas covered solely by unlicensed spectrum are considered unserved by the NTIA. Carol Mattey, principal at Mattey Consulting LLC, told Broadband Breakfast Monday that although WISPs who operate such networks can apply for BEAD funding to alter their networks to meet the NTIA’s definition of “reliable broadband,” navigating BEAD’s complex regulatory framework will be difficult for many small providers.

“Most small providers don’t have the in-house staff or expertise to manage regulatory compliance,” she explained. “They’re…in the business of building networks. They don’t have people [who are] regulatory compliance experts.”

Mattey said small networks will have to adapt to overcome BEAD’s regulatory barriers. “They either have to acquire [regulatory-compliance] resources of share resources with others,” she said.

Possible financial hurdles

States or subgrantees must provide matching funds of at least 25 percent of each project’s cost. In addition, the NTIA’s notice of funding opportunity requires subgrantees to provide a letter of credit from a bank, totaling no less than 25 percent of the subgrantee’s award from the state.

Subgrantees receiving BEAD funding must also comply with Build America, Buy America provisions, which require construction material produced domestically make up at least 55 percent of total project cost – even if foreign sourcing would be cheaper. The NTIA is moving to waive some of these requirements for recipients of the NTIA’s $1-billion Middle Mile grant program.

Many subgrantees must also comply with the Davis-Bacon Act, which empowers the Department of Labor to set wage thresholds for contractors working on federally funded projects.

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5G

Johnny Kampis: Wireless Survey Shows 5G’s Role in Closing Digital Divide

5G has experienced a quantum leap in growth since it first began rolling out in 2018.

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The author of this Expert Opinion in Johnny Kampis of the Taxpayers Protection Alliance

There was universal consensus that 5G wireless technology would be a game changer for closing the digital divide. The question was whether or not private investment would be enough to deploy the needed infrastructure. A new report shows that capital expenditures from wireless providers reached a record high in 2021, as 5G saw tremendous growth and will continue to help connect households now unserved by broadband.

CTIA’s 2022 Annual Wireless Industry Survey shows that wireless providers invested $35 billion into growing and improving their networks, the fourth consecutive year of industry growth.

CTIA said this is “a powerful trend that emphasizes the societal importance of wireless connectivity and underlines the industry’s commitment to building a robust platform for innovation that connects all communities.”

5G has experienced a quantum leap in growth since it first began rolling out in 2018, as infrastructure reforms that eased deployment barriers have resulted in 5G growing twice as fast as 4G. Since the Federal Communications Commission and state legislatures worked to modernize key siting regulations that could have stymied the technology’s growth, wireless providers have added 70,000 active cell sites. There are now nearly 420,000 operational cell sites across the U.S.

As CTIA notes, “More cell sites enhance coverage, encouraging adoptions and helping to close the digital divide.”

Clearly consumers want faster mobile internet speeds as the number of connective 5G devices grew more than a whopping 500 percent this past year from 14 million to Accenture 85 million. About one-third of American now possess an active 5G device.

CTIA points out that the number of connections that require wireless technology is helping fuel the growth – everything from smart watches to medical sensors. Such data-only devices represent about 42 percent of all wireless connections.

Wireless providers have invested nearly $121 billion into their networks since the launch of 5G.

CTIA notes that in an age of incredible inflation, the wireless industry’s investment, combined with increased market competition, has led to lower prices, “providing a welcome contrast to an economy where consumers have faced priced increases for 94 percent of tracked goods and services nationwide.”

Since 2010, the cost of unlimited data plans has declined 43 percent while wireless speeds have increased 85-fold over the same period.

Investment and competition have also led to new innovations such as 5G for home broadband and 5G fixed wireless. The latter is particularly useful in connecting rural areas where it’s hard to make a business case for fiber due to the cost of the last-mile connections. CTIA notes that 5G home broadband is available in more than 40 million households, providing home connections via spectrum with high capacity and low latency rather than a wired connection.

The report also points out that 5G is helping mitigate the impacts of climate change by creating green jobs in key industries. Accenture has found that 5G-enabled use cases should delivers 20 percent of the U.S.’s emission reduction targets by 2025.

5G is clearly helping usher in a new age of connectivity in this country. CTIA’s statistics are encouraging signs that the latest wireless technology is helping make broadband access available to more Americans than ever before. The best part of this growth is that taxpayer dollars are not being spent.

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance. 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 reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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