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Bruce Mehlman: It’s Fitting that Congress is Focused on Accelerating Our 5G Future

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At the beginning of a new Congress, there’s generally an exciting, hopeful spirit, even after the bitter partisanship of the past election.  The issues that new committee chairs choose to focus on upfront are a good indication of their priorities and where they believe progress can be made.

In telecommunications, therefore, it’s promising that Senator Roger Wicker, the new Chairman of the Senate Commerce Committee, opted to begin his tenure by focusing on the need to support and accelerate deployments of 5G technology – the exciting next generation of mobile technology that promises exponentially faster speeds (up to 100 times faster than today’s 4G) and will enable innovations such as truly connected cars and smart cities. Some companies have already begun deployments of 5G, and more are coming this year to dozens of cities across the country…but the real wave will start hitting only in future years.

Make no mistake: these deployments will come from the private sector, not government.  With trillion-dollar deficits and trillions more needed for roads, bridges, air traffic control and other infrastructure improvements, government doesn’t have the hundreds of billions of dollars to make these deployments. But even if policymakers were willing to continue ignoring deficits, the private sector would still be better able to target these resources to national needs, as they have with previous generations of telecommunications infrastructure.

Which is not to say policy makers have no role. To the contrary, government is essential for encouraging and accelerating the massive investments in and deployments of 5G, and they have many methods at their disposal.  First, and most important, policy makers need to identify spectrum that can be used for 5G and then make that spectrum available to innovative companies.  Some of this spectrum will be new; other spectrum will come through repurposing spectrum currently used for other purposes.

Congress took a big step in this regard last year by requiring the FCC to identify 30 megahertz of low-band spectrum suitable for 5G.  Now, the focus must shift to mid-band spectrum, where the properties of 5G can truly shine and where most 5G communications will actually occur – if we get the spectrum.

Other nations, including major economic competitors such as Japan, South Korea, Germany, and the UK, are already allocating mid-band spectrum for their users.  China – our principal competitor in the global race to 5G – has committed to 460 MHz of this valuable spectrum for its three operators.

The U.S. needs to catch up, quickly.  The FCC is looking at repurposing up to 500 megahertz of spectrum for 5G in the “C-Band,” a mid-band spectrum range. This can move forward in a bipartisan manner.  Because 5G is so much more powerful than the previous generations of mobile technology, the needs for spectrum to take advantage of 5G’s potential are likewise more complex.

Congress can help by passing the AIRWAVES Act, a bipartisan bill introduced in the last Congress which would establish a schedule for future spectrum auctions over the next five years to help ensure U.S. preeminence in 5G.

It matters who wins the race to 5G.  The country that gets there first will be able to set standards for this vital technology with implications for all American industries, from automotive to healthcare, in addition to our national defense.  China is already staking out a claim for global leadership in 5G – the first time that our preeminence in mobile technology has been seriously challenged.

That’s why it’s so important to act now, to have a predictable schedule of spectrum so private sector operators will invest the hundreds of billions of dollars necessary.

Accenture estimates that U.S. operators will invest $275 billion to deploy 5G, with an economic benefit of $500 billion.  But these investments and benefits only happen if markets know the spectrum will be there.  Because of the unique nature of 5G, those investments will benefit every corner of our country.

The switch to 5G technology can transform our lives.  The ability for connected cars to send and receive information, for instance, can help avoid school bus accidents and give safer driving experiences.  Getting all this right will be extremely important for the future of our economy and our global leadership.

During a recent hearing, Senator Wicker said that “we need to be the leader in 5G globally.”  He’s right. The time to act is now.  It’s a good first step this year and a good signal to hold this hearing so early in the Congressional session.  I hope the AIRWAVES Act will be reintroduced in this Congress and enacted quickly.  Let’s get this done, in a quick win for the new Congress and a big win for the American people who will benefit from a faster transformation to 5G.

Bruce Mehlman is a founding co-chairman of the Internet Innovation Alliance and previously served as assistant secretary of commerce for technology policy.

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

Broadband's Impact

Dianne Crocker: Recession Fears Have Real Estate Market Forecasters Hitting the Reset Button

Growing fears of recession trigger pullback on previous rosy forecasts.

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The author of this Expert Opinion is Dianne Crocker, Principal Analyst for LightBox

The lyrics to “Same As It Ever Was” by the Talking Heads certainly don’t apply to how 2022 is playing out in the commercial real estate market. Two quarters of negative economic growth has put a damper on market sentiment and triggered fears that the U.S. economy is heading for a recession. By midyear, market analysts were taking a good, hard look at their rosy forecasts from the start of the New Year and redrawing the lines.

Once upon a time…

At the start of 2022, forecasters were bullishly predicting that commercial real estate investment and lending levels would be nearly as good as 2021. This was significant, considering that 2021 set new records for deal-making and lending volume as the debt and equity capital amassed during the pandemic while looking for a home in U.S. commercial real estate.

What a difference a few quarters have made. Virtually, all the predictions that started the New Year were obsolete by mid-summer. The abrupt shift in market conditions is palpable and surprised just about everyone. Now, markets are reaching an inflection point that is in sharp contrast with the strong rebound of last year.

The two I’s: Inflation and interest rates

At the core of the recent upset in market sentiment is the persistence of high inflation, which seems to be ignoring all attempts by the Federal Reserve to raise interest rates and bring prices down. Higher inflation is having a ripple effect throughout the economy, pushing up the costs of construction materials, energy, and consumer goods. Among the notable economic indicators showing stress at mid-year was the GDP, which fell for the second consecutive quarter, and the Consumer Price Index, which jumped 9.1% year-over-year in June – the highest increase in about four decades.

In July, the CPI fell to 8.5%, an encouraging sign that inflation was beginning to stabilize. By the latest August report from LightBox, however, hopes were dashed when the CPI showed little improvement, holding firm at a still high of 8.3%.

The market is responding to a higher cost of capital as lenders tap the brakes. As the cost of capital rises with each interest rate hike and concerns of a recession intensify, many large U.S. financial institutions are pulling back on their loan originations for the rest of 2022 and into 2023. This change in tenor is a significant shift, given that 2021 was a record-breaking year for commercial real estate lending. Many lenders have already shifted to a more defensive underwriting position as they look to mitigate risks.

The Mortgage Bankers Association, which had previously predicted that lending levels in 2022 would break the $1 trillion mark for the first time revised their forecast downward in mid-July. By year-end, the MBA now expects volume to be a significant 18% below 2021 levels—and one-third lower than the bullish forecast made in February. Now, investment activity is cooling as higher borrowing costs drive some buyers from the market.

In the investment world, transactions were down by 29% at midyear due to a thinning buyer pool as higher rates impact access to debt capital. Market volatility is causing investors, lenders, and owners to rethink strategies, reconsider assumptions, and prepare for possible disruption.

Looking ahead to year-end and 2023

The rapid and diverse shifts in the market make for an uncertain forecast and certainly a more cautious investment environment. The battle between inflation and interest rates will continue over the near term. As LightBox’s investor, lender, valuation, and environmental due diligence clients move toward the 4th quarter—typically the busiest quarter of the year–unprecedented volatility is driving them to recalibrate and reforecast given recent market developments.

Continued softness in transaction volume is likely to continue as rates and valuations establish a new equilibrium. If property prices begin to level out, there will be more pressure on buyers to consider how to improve a property to get their return on investment. The next chapter of the commercial real estate market will be defined by how long inflation sticks around, how high interest rates go, and whether the economy slips into a recession (and how deeply). The greatest areas of opportunity will be found in asset classes like office and retail that are evolving away from traditional uses and morphing to meet the needs of today’s market. Until barometers stabilize, it’s important to rethink assumptions, watch developments, and recalibrate as necessary.

Dianne Crocker is the Principal Analyst for LightBox, delivering strategic analytics, best practices in risk management, market intelligence reports, educational seminars, and customized research for stakeholders in commercial real estate deals. She is a highly respected expert on commercial real estate market trends. 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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Digital Inclusion

White House Presses Outreach Initiatives for Affordable Connectivity Program

White House officials urged schools and other local institutions to engage in text-message and social media campaigns for the ACP.

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Photo of President Joe Biden, obtained from Wikimedia.

WASHINGTON, September 15, 2022 – The White House on Monday urged schools and other local institutions to engage in text-message and social media campaigns, PSAs, and other community-outreach initiatives to promote enrollment in the Federal Communications Commission’s Affordable Connectivity Program among of families with school-age children.

The Affordable Connectivity Program subsidizes internet service bill for low-income households. Monthly discounts of up to $30 are available for non-tribal enrollees, $75 for applicants on qualifying tribal lands. In addition, the ACP offers enrollees a one-time discount $100 on qualifying device purchases.

To boost ACP enrollment, speakers encouraged schools to reach out directly to families. Bharat Ramanurti, deputy director of the National Economic Council, said text-message campaigns drive up enrollment in government programs. A Massachusetts text-message campaign doubled ACP enrollment rates in subsequent days, said Ramanurti.

Also highlighted was the administration’s “ACP Consumer Outreach Kit,” which provides partners with resources, including fliers, posters, audio PSAs, social-media templates.

In fact, many of these tactics have proved effective in increasing ACP enrollment among telehealth patients. In addition, Microsoft and Communications Workers of America recently announced a circuit of ACP sign-up drives in that will tour several states including Michigan, New York, and North Carolina.

Political considerations as November nears…

As students go back to school and midterm elections loom, new ACP sign-ups could benefit the enrollees as well as the Democrats’ political chances.

Public officials and private experts alike recognize the value of community involvement in extending broadband connectivity and digital literacy nationwide. Marshaling community institutions – like schools – to maximize broadband access could help Biden and other Democrats overcome inflation-driven electoral headwinds in the November midterms. The White House obtained commitments from 20 providers to offer high-speed internet plans for $30 per month or less to ACP-eligible households – this means no out-of-pocket costs for recipients of ACP discounts. Free broadband coverage could bring the administration – and all Democrat candidates, by extension – back into the good graces of low-income families.

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Digital Inclusion

Federal Government Must Collect More Granular Data on Minorities to Aid in Initiatives

Discussion on the “data gap” comes as the nation tries to connect the unserved and underserved.

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Screenshot of Denice Ross, the White House's chief data scientist

WASHINGTON, August 31, 2022 – In order to serve the needs of all Americans, the federal government must gather and act on more granular data on underrepresented minority groups that have been historically overlooked in the data-gathering process, said Denice Ross, the White House’s chief data scientist.

Ross argued at an online event hosted by the Center for Data Innovation on Tuesday that many minority groups – including African Americans, Native Americans, the disabled, and the LGBT community – are disadvantaged by the “data divide,” a term which refers to disparities in the amount and quality of available data on various groups.

Ross was citing a report issued earlier this year by the Equitable Data Working Group, a task force created by President Joe Biden earlier this year, which said policymakers are often unable to perceive or ameliorate problems facing minority communities if data on those communities are unavailable or insufficiently disaggregated. Disaggregated data, the report says, is “data that can be broken down and analyzed by race, ethnicity, gender, disability, income, veteran status, age, or other key demographic variables.”

The report recommends a federal data collection strategy that safeguards privacy and facilitates analysis of “the interconnectedness of identities and experiences,” or how individuals’ various minority-group identities compound the societal disadvantages they face. The report also advocates the creation of “incentives and pathways” promoting minority representation in the data collection process.

The recommendations come as the broadband industry and federal agencies try to improve knowledge of where there are unserved and underserved areas for broadband connectivity and to take action to improve digital literacy. The Illinois Broadband Lab and other state broadband offices, for example, implement a community-up approach to data gathering. Direct community involvement provides data insights that help states deliver coverage to in-need communities, officials say. 

In the panel discussion that followed Ross’s opening remarks, experts and academics agreed that community outreach is a necessary step in closing the data divide. Dominique Harrison, director of bank Citi Ventures’ Racial Equity Design and Data Initiative, said that some in the African American community view data collection with skepticism.  

Christopher Wood, executive director of LGBT Tech, argued that the passage of a federal privacy standard is a critical step toward establishing trust in government data collection. The most recent attempt to pass a national privacy regime, the American Data Privacy and Protection Act, was approved by the House Committee on Energy and Commerce last month.

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