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Big Bucks for Broadband in the Balance: Explaining the Affordable, Accessible Internet for All Act

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Photo of now-Sen. Brian Schatz, one of the sponsors of the Accessible, Affordable Internet for All Act, from December 2010 by Kyle Nishioka used with permission

If you have been following our series on the Accessible, Affordable Internet for All Act, you already know the proposed legislation calls for a $100 billion investment in expanding broadband access and affordability in unserved and underserved parts of the country.

In this fourth installment of the series, we explore the part of the bill that contains the bulk of the funding. Of the $100 billion proposed in the bill, $85 billion of it can be found in the Title III – Broadband Access section.

Amending the Communications Act of 1934, Section 3101 of the bill appropriates $80 billion for “competitive bidding systems” to subsidize broadband infrastructure. That is to say, it requires the Federal Communications Commission, and states, to use “competitive bidding systems” for Internet Service Providers to bid on broadband deployment projects in “areas with service below 25/25 Megabits per second (Mbps), and areas with low-tier service, defined as areas with service between 25/25 and 100/100 Mbps.”

The term “competitive bidding” seems to suggest a reverse auction process, though it hardly makes sense for each state to set up such a system given the logistical challenges. A legislative staffer responded to our email earlier this year saying he believed that language would allow for state programs that solicited applications from ISPs and scored them for evaluation, much like Minnesota’s Border-to-Border Broadband program operates. However, he noted that the FCC would interpret that language ultimately. More on this below.

Prioritizing Higher Upload Speeds

It’s worth noting that this part of the bill implicitly acknowledges the insufficiency of the current FCC definition of a minimum broadband speed of 25/3 Mbps. As it stands now, the FCC defines “unserved areas” as parts of the country where there is either no Internet access or broadband speeds under 25/3.

This legislation raises the bar and broadens the definition of “unserved areas.” It’s a step in the right direction, as there’s widespread support among broadband advocates for increasing the FCC definition of minimum broadband speeds to at least 100/100 Mbps.

By prioritizing higher upload speeds, as this bill does, it makes all the old, outdated copper wire technology irrelevant. In other words, to get the job done as called for in this legislation would require fixed wireless, fiber optics, or recent cable DOCSIS standards.

The $80 billion appropriated in this section creates two separate major sources of funding. It stipulates that 75% of the funds, or $60 billion, be dedicated for a national competitive bidding system for broadband deployment in unserved areas and low-tier service areas.

The other 25%, or $20 billion, would be used for states to set up competitive bidding systems for broadband deployment in, not only unserved and low-tier service areas (service between 25/25 and 100/100 Mbps), but also for underserved anchor institutions (schools, libraries, healthcare facilities, museums, public safety offices, or public housing agencies) with speeds less than 1 gigabit per 1,000 users.

The bill also allows for a state that does not have “unserved areas” or areas with “low-tier service,” for funding to be used for broadband deployment in areas with mid-tier service defined as more than 100/100 Mbps but less than 1 gigabit per second symmetrical.

In both the national and state competitive bidding systems, the legislation further requires that 20% of the funds ($12 billion for the national system and $4 billion for the state system) be used to deploy broadband that delivers 1 Gigabit per second symmetrical speeds. This strikes us as smart because as bandwidth demand continues to rise, it would be a waste of taxpayer dollars to fund broadband networks that rapidly become obsolete. Historically, WISPs may have objected to this, but since the Rural Digital Opportunity Fund (RDOF) rural auction, they seem confident in being able to deliver that capacity widely.

Funding Priority Preferences  

Additionally, the bill goes on to specify funding priority preferences, the most important being projects that expand access to broadband service in areas where at least 90 percent of the population does not have access to 25/3 broadband service.

Other funding priority preferences include projects that would expand broadband access in “persistent poverty counties” and on Tribal lands. We believe it is crucial to set specific funds aside to deal with the historical refusal to invest in telecommunications infrastructure in Indian Country.

Another preference is for projects that would deploy open-access networks, which is a single high-quality network (fiber or wireless) that multiple ISPs can use to compete for customers. It’s a way of introducing competition in a market dominated by monopoly interests – a throwback to the days of dial-up when everyone used the same telephone wires to connect to the Internet and multiple ISPs competed for customers.

Not So Fast

While federal investment in broadband infrastructure is unquestionably needed (considering the failure of private ISPs to provide adequate, affordable and reliable Internet access to all) here’s where things get dicey as it relates to this major funding section of the AAIA, a part of the legislation that looked much better on paper before we saw what happened with the FCC’s recent RDOF auction that left many expert observers puzzled.

RDOF auctioned large swaths of rural areas of the U.S. that have no broadband access. Up to $16 billion was at stake though the auction will actually disperse some $9+ billion dollars because many areas were bid well below what was expected and to the point where some were bid down so far that it is almost certainly not economical to build.

In a nutshell, much of RDOF funding went to ISPs for projects where many familiar with the industry question whether they have the capacity to deliver. As our own Christopher Mitchell, who has been closely analyzing RDOF, notes: “RDOF should not give any faith that a national competitive auction is a good way to subsidize. I would not want to see an auction with so much more money after RDOF until we know the FCC can properly vet bidders. It’s probably the right amount of money (in AAIA) but it should be distributed over multiple years with local input.”

It’s not that the competitive bidding system envisioned in the legislation is inherently flawed, but in light of RDOF, it highlights the importance of ensuring the auction rules are fine-tuned, part of which should provide for local government to have a say in which ISPs do the work in their respective communities. In fact, it would make sense to revise the language in this bill to give preference for projects that are endorsed by the local governments in the project area.

Another item missing from the funding priority preferences section is one that preferences cooperatives and municipal governments looking to build locally-accountable networks. A preference for cooperatives and local governments makes sense primarily because they are directly responsible to local citizens in ways private companies often are not.

Infrastructure Bank

None of this should give the impression that local governments or public entities are completely overlooked in this bill. In fact, Section 3201 of the bill, would establish a $5 billion Broadband Infrastructure Financing Innovation (BIFIA) program. We’re talking about an infrastructure bank that would be administered by the National Telecommunications and Information Administration (NTIA) to provide state and local governments, public authorities, and public-private partnerships financial assistance in the form of secured loans, lines of credit, and loan guarantees.

To be eligible, the legislation requires the NTIA to determine that BIFIA funding for the project do three things: (a) foster partnerships to attract private and public investment for the project; (b) enable the project to proceed at an earlier date than the project would otherwise be able to proceed; and (c) reduce the Federal contribution for the project. Preference will be given for open access projects.

Section 3210 requires the Assistant Secretary of Commerce for Communications and Information to report to Congress one year after the bill is enacted and every two years thereafter “summarizing the financial performance of the projects that are receiving, or have received, assistance under the BIFIA program, including a recommendation as to whether the objectives of the BIFIA program are best served by [either] continuing the program under the authority of the Assistant Secretary; or establishing a Federal corporation or federally sponsored enterprise to administer the program.”

The final part of the “Title III – Broadband Access” portion of the bill, Section 3301, is unrelated to building broadband networks but would extend the E-rate program to include providing Wi-Fi access on school buses. No dedicated funds are appropriated for this as the legislation anticipates the funding would come from E-rate, which another section of the bill seeks to appropriate an additional $5 billion to expand broadband access for students off-campus as the existing E-rate program only provides for on-campus connectivity.

Our next installment in this series will look at the last three “Titles” of the bill: Title IV – Community Broadband; Title V – Broadband Infrastructure Deployment; and Title VI – Repeal of Rule and Prohibition on Use of NPRM.

Editor’s Note: This piece was authored by Sean Gonsalves, a senior reporter, editor and researcher for the Institute for Local Self Reliance’s Community Broadband Network Initiative. Originally published on MuniNetworks.org, the piece is part of a collaborative reporting effort between Broadband Breakfast and the Community Broadband Networks program at ILSR.

Sean Gonsalves is a longtime former reporter, columnist, and news editor with the Cape Cod Times. He is also a former nationally syndicated columnist in 22 newspapers, including the Oakland Tribune, Kansas City Star and Seattle Post-Intelligencer. His work has also appeared in the Boston Globe, USA Today, the Washington Post and the International Herald-Tribune. An award-winning newspaper reporter and columnist, Sean also has extensive experience in both television and radio. Sean has made appearances on WGBH’s “Greater Boston” TV show with Emily Rooney and was a frequent guest on New England Cable News (NECN), commentating on a variety of Cape Cod tourist attractions. He left print journalism in 2014 to work as a senior communication consultant for Regan Communications and Pierce-Cote, advising a variety of business, non-profit and government agency clients on communication strategy. In October 2020, Sean joined the Institute for Local Self Reliance staff as a senior reporter, editor and researcher for ILSR’s Community Broadband Network Initiative.

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Digital Inclusion

Broadband is Affordable for Middle Class, NCTA Claims

According to analysis, the middle class spends on average $69 per month on internet service.

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Photo of Rick Cimerman, vice president of external and state affairs at NCTA

WASHINGTON, November 22, 2022 – Even as policymakers push initiatives to make broadband less expensive, primarily for low-income Americans, broadband is already generally affordable for the middle class, argued Rick Cimerman, vice president of external and state affairs at industry group NCTA, the internet and television association. 

Availability of broadband is not enough, many politicians and experts argue, if other barriers – e.g., price – prevent widespread adoption. Much focus has been directed toward boosting adoption among low-income Americans through subsidies like the Affordable Connectivity Program, but legally, middle-class adoption must also be considered. In its notice of funding opportunity for the $42.5-billion Broadband Equity, Access, and Deployment program, the National Telecommunications and Information Administration required each state to submit a “middle-class affordability plan.”

During a webinar held earlier this month, Cimerman, who works for an organization that represents cable operators, defined the middle class as those who earn $45,300–$76,200, basing these boundaries on U.S. Bureau of Labor statistics for 2020. And based on the text of an Federal Communications Commission action from 2016, he set the threshold of affordability for broadband service at two percent of monthly household income.

According to his analysis, the middle class, thus defined, spends on average $69 per month on internet service. $69 is about 1.8 percent of monthly income for those at the bottom of Cimerman’s middle class and about 1.1 percent of monthly income for those at the top. Both figures fall within the 2-percent standard, and Cimerman stated that lower earners tended to spend slightly less on internet than the $69-per-month average.

Citing US Telecom’s analysis of the FCC’s Urban Rate Survey, Cimerman presented data that show internet prices dropped substantially from 2015 to 2021 – decreasing about 23 percent, 26 percent, and 39 percent for “entry-level,” “most popular” and “highest-speed” residential plans, respectively. And despite recent price hikes on products such as gas, food, and vehicles, Cimerman said, broadband prices had shrunk 0.1 percent year-over-year as of September 2022.

Widespread adoption is important from a financial as well as an equity perspective, experts say. Speaking at the AnchorNets 2022 conference, Matt Kalmus, managing director and partner at Boston Consulting Group, argued that providers rely on high subscription rates to generate badly needed network revenues.

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Digital Inclusion

FCC Advisory Committee Approves Strategies to Advance Digital Equity

In 2021, the FCC charged the council in its mission to prevent digital discrimination.

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Photo of Heather Gate, vice president of digital inclusion at Connected Nation and chair of the CEDC.

WASHINGTON, November 8, 2022 – The Federal Communication Commission’s Communications Equity and Diversity Council on Monday unanimously recommended strategies to minimize digital discrimination and advance digital equity, advocating stakeholder collaboration, the promotion of affordable broadband service, workforce diversity initiatives, state and local incentivization of partnerships with small minority and women-owned businesses, and more.

The new report’s three main sections lay out best practices to prevent discrimination by internet service providers, to ensure the equitable dispersal of funds from the Infrastructure Investment and Jobs Act, and to advance universal access for marginalized populations, respectively.

The IIJA allocated $65 billion to broadband funding. $42.45 billion from that pot went to the Broadband Equity, Access, and Deployment program, which will issue grants to the states based on relative needs. States will subsequently run their own sub-grant processes.

In 2021, the FCC charged the CEDC with assisting the agency in its mission to prevent discrimination based on race, color, religion, national origin, sex, or disability.

“This was a complex and critically important task for the CEDC, and I thank the members of the three working groups who worked so diligently to provide this expert guidance,” said FCC Chairwoman Jessica Rosenworcel. “Earlier this year the Commission adopted a notice of inquiry on preventing and eliminating digital discrimination, and I look forward to incorporating these findings into that effort.”

“I applaud the chairwoman for trusting the council to contribute to the commission’s efforts to gather information from diverse stakeholders across the country,” said Heather Gate, vice president of digital inclusion at Connected Nation and chair of the Communications Equity and Diversity Council.

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Digital Inclusion

Not All Affordable Connectivity Enrollees Are Using the Benefit: A Look into 30 Major Metro Areas

‘The percentage of households in major metro areas…using the program is smaller than the percentage of households enrolled.’

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Photo from USAC's affordableconnectivity.gov web site

Since the launch of the Affordable Connectivity Program last January, millions of households have benefitted from the $30 per month connection subsidy to help pay for their broadband bills. The program serves as a necessary bridge in a failed marketplace, dominated nationally by a small number of regional monopolies driven by shareholders to charge the highest price possible.

Along the way, ILSR and a host of other research and advocacy organizations have been digging into the American Connectivity Program data in order to better understand how the program has operated over the last year, and how we can work collectively to improve education and outreach efforts and make sure as many households as possible will benefit. From this work we created an ACP Dashboard to collect and visualize useful data to support the critical work of digital navigators, nonprofits, and local governments.

Explore the Affordable Connectivity Program here, and read more about why we created it.

Recognizing the Gap

In addition to tracking how much of the $15.5 billion fund ($1.3 billion was carried over from the Emergency Broadband Benefit and $14.2 billion was allocated for the ACP] is left and predicting when it’ll run out (April 2026 at current rates), keeping an eye on state- and zip-code level use and enrollment, and following what types of connections households are using the benefit to pay for, an important part of this work has been tracking data across major metropolitan areas across the country.

As we continue to analyze the data and refine our tools to support work at the local level, we have found that the percentage of households in major metro areas (and likely elsewhere) that are actually using the program is smaller than the percentage of households enrolled in the program.

While a community’s ACP enrollment rate has been understood as an indicator both of its overall need for financial support and the effectiveness of local outreach efforts to sign up eligible households to participate in the ACP, the rate of claimed subscribers reflects the real effect of the program on that community. Here, we take a look at what the gap between enrollment and subscription looks like across 30 major metropolitan areas.

Currently, the major metro areas with the highest ACP enrollment rates are Detroit (58 percent of eligible households enrolled), Cleveland (58 percent), Columbus (55 percent), Baltimore (53 percent), and Los Angeles (52 percent). Only Cleveland, Columbus, and Los Angeles, however, also appear among the top five areas for greatest percentage of eligible households using the benefit (Cleveland: 46 percent claimed subscribers, Columbus: 45 percent, Los Angeles: 41 percent).

When we dive further into the metro area data, we can get some sense of why some cities are succeeding in not only enrolling households, but making sure they are using the benefit. For instance, San Antonio is on the list of top-five metro areas for use, despite being ranked 11th for enrollment.

At present, only 16 percent of enrolled San Antonio residents are not using the benefit. Why? The city has dedicated resources to staffing field organizers, who go door to door in low-income zip codes and talk to residents about the program, offering information both in English and in Spanish. Similar efforts are underway in Los Angeles, where there is only a 12 point difference between enrolled households and those using the benefit. Los Angeles also has a coalition of groups doing their own funded and unfunded community outreach to raise awareness of the program.

On the other hand, the following areas have relatively high enrollment rates but show large discrepancies when looking at the number of claimed subscribers:

Washington, DC: 49 percent of eligible households are enrolled, but only 17 percent are using the benefit.

Atlanta: 49 percent of eligible households are enrolled, but only 17 percent are using the benefit.

Detroit: 51 percent of eligible households are enrolled, but only 19 percent are using the benefit.

Baltimore: 53 percent of eligible households are enrolled, but only 24 percent are using the benefit.

Philadelphia: 48 percent of eligible households are enrolled, but only 20 percent are using the benefit.

Cleveland and Detroit both have an enrollment rate of 58, but Cleveland has a significantly higher percentage of households using the benefit, likely the result of years of dedicated efforts by DigitalC and the Cleveland Foundation to close the digital divide. Portland has the greatest relative discrepancy between enrollees and households using the benefit, with more than two thirds of its enrolled households not using the credit.

Reflecting the Gap in Our Tools

To reflect the significance of these gaps, while an earlier version of our ACP Dashboard focused on enrollment rates, we’ve adjusted our methodology to use the Total Claimed Subscriber number to calculate current ACP usage rates and predict future funding levels. We believe using Total Claimed Subscribers reflects a more faithful representation of usage rates and the rate of funds being depleted. A future iteration of the dashboard may further investigate the discrepancy between percentage enrolled and percentage claimed.

Explaining (and overcoming) this gap between enrollment is important, but we need more data to do so. It’s possible that some ISPs are deciding after some period of time that it’s not worth the resources to administer it and participate. It could also result from families getting enrolled by their ISP but not understanding that the benefit is available to them, or not having the digital literacy skills to use it.

The gap could also result from the way that the FCC verifies households’ eligibility, and regularly de-enrolls households it (sometimes erroneously) decides no longer qualify. We need more granular data from the Universal Services Administrative Company and the Federal Communications Commission to better understand why this gap between enrolled and claimed users continues to grow.

The policy implications and our analysis of the efficacy and future of this program stand: if anything, these numbers reflect less success in education and outreach efforts nationwide.

Check out the ACP Dashboard for more information. Special thanks to Drew Garner for his insight and feedback on the USAC data.

Authored by Emma Gautier, this article originally appeared on the Institute for Local Self Reliance’s Municipal Broadband project on October 26, 2022, and is reprinted with permission.

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