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Christopher Ali: How the U.S. Department of Agriculture is Quietly Reshaping Broadband Policy

In the 2022 Consolidated Appropriations Act, Congress reversed USDA’s ReConnect criteria in three crucial ways.

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The author of this Expert Opinion is Christopher Ali, Associate Professor at UVa’s Department of Media Studies.

For almost a century, the United States Department of Agriculture has played a pivotal, albeit underappreciated, role in connecting this country with the trappings of modernity. It’s commitment to universal service began in 1936 with the passage of the Rural Electrification Act, which created the Rural Electrification Administration , a new deal agency charged with connecting rural communities and farms with electricity.

The REA was tremendously successful, growing rural electrification from 33% in 1940 to 96% in 1956. The REA was eventually incorporated into USDA, and in 1949 was given the added responsibility of rural telephony . Through its tried-tested-and-true model that involved the creation of local cooperatives and the championing of localities, REA connected rural communities at a staggering rate.

Don’t miss Christopher Ali’s “Ask Me Anything!” interview on Broadband.Money with T.J. York, which will take place on Friday, April 8, at 2:30 p.m. ET.

The successor of REA, the Rural Utilities Service, a division of USDA, continues the trend of rural connectivity through its broadband and telecommunications programs. Technology aside, the difference between then and now is that in contrast to its early starring role in rural electricity and telephony, it has taken a backseat when it comes to rural broadband policy and planning.

Most broadband planning and policymaking is done, for better or worse, at the Federal Communications Commission (and, with the passage of the Infrastructure Act, the Commerce Department’s National Telecommunications and Information Administration as well. But all of that seems to have changed with its October 2021 Notice of Funding Availability.

USDA’s significant changes to ReConnect

USDA has championed rural broadband deployment since the mid 1990s and continues to make crucial loans and grants through four different telecommunications programs totaling around $1.4 billion in investment. It’s most recent, and arguably most successful broadband program is ReConnect which began in 2018 with a $600 million congressional appropriation. Through the Infrastructure Act, ReConnect received another $2 billion. Thus far ReConnect has distributed $1.5 billion in loans and grants for rural broadband expansion.

It is ReConnect’s third, and most recent funding notice, where USDA flexed its broadband policymaking muscles. Here, USDA made three crucial policy adjustments to current standards presently set by the FCC.

First, it defined an eligible area as any place lacking connectivity at 100 Mbps download/20 Mbps upload. This is a massive improvement from the FCC’s speed definition of broadband at 25/3 and thus dramatically increases the number of eligible communities.

Second, it requires networks that receive funding be able to meet or exceed speeds of 100 Mbps download/100 Mbps upload on day one. This, by definition, excludes previously ubiquitous technologies like DSL and geosynchronous satellite which have both proven incapable of delivering the speeds required by contemporary users.

Third, it prioritizes local governments, non-profits, cooperatives, and public-private partnerships. This differs from the FCC, which has traditionally privileged the largest incumbent providers, and differs from the Infrastructure Act which simply states that these entities cannot be discriminated against.

Single handedly USDA tried to reshape broadband policy, expanding eligibility, forcing grant and loan winners to upgrade their networks, and championing a local-first solution to the rural-urban digital divide.

New changes wrought by the Consolidated Appropriations Act of 2022

Unfortunately, this attempt may not last long. In the 2022 Consolidated Appropriations Act, passed on March 15, 2022, Congress reversed USDA’s ReConnect criteria in three crucial ways. First, it re-instated the 25 Megabit per second (Mbps) download x 3 Mbps upload threshold, rather than the 100 Mbps x 20 Mbps threshold previously proposed.

Second, it downgraded the 100 x 100 day-one requirement to 100 x 20. Even this is subject to a “to the extent possible” clause. Third, and as first reported by Kevin Taglang of the Benton institute for Broadband & Society, the Congressional explanatory statement that accompanied the Act chastised USDA for failing to act in a technologically neutral manner:

  • The agreement is concerned that the most recent funding announcement dictates build out speeds that are not technology neutral and could inflate deployment and consumer access costs. Therefore, the Act sets the build out speeds to ensure that all broadband technologies have equal access to the program. In addition, the agreement encourages the Secretary to eliminate or revise the awarding of extra points under the ReConnect program to applicants from States without restrictions on broadband delivery by utilities service providers in order to ensure this criterion is not a determining factor for funding awards.

The Consolidated Appropriations Act, therefore is a mixed bag for USDA. While it provided an additional $436 million for the ReConnect program, Congress lowered the speed threshold, thereby reducing eligible communities and therefore permitted, once again, the deployment of technologies that cannot measure up to contemporary user needs and demands. Additionally, the last sentence in the excerpt above undercuts the localism impulse of USDA’s previous ReConnect announcement.

Words matter. Definitions matter. Technologies matter. As I recall in my new book on rural broadband Farm Fresh Broadband: The Politics of Rural Connectivity, technological neutrality is crucial to federal policymaking, but that does not mean that policy should be what the NRECA calls, “technologically blind.”

For what it’s worth, USDA’s ReConnect NOFA was indeed technologically neutral – it did not advocate for one technology over another, but rather set the speed thresholds at such a level that outdated technologies are ineligible. USDA should be applauded for its attempt to move the broadband needle forward to help local, rural communities. As we await the rulemaking proceedings of the NTIA for the $42.5 billion BEAD program, policymakers can learn valuable lessons from this federal department charged with championing rural communities.

Christopher Ali is Associate Professor at UVa’s Department of Media Studies and a Knight News Innovation Fellow with the Tow Center for Digital Journalism at Columbia University. He is the chair of the Communication Law and Policy Division of the International Communications Association and the author of two books on localism in media, “Media Localism: The Policies of Place” (University of Illinois Press, 2017) and “Local News in a Digital World.” 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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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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Jeff Pulver and Noah Rafalko: A Humble Request to the FCC on Robocalls

Blocking bad actors requires a whole new way of thinking, the authors say in this ExpertOp exclusive to Broadband Breakfast.

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The authors of this Expert Opinion are Jeff Pulver (left), innovator in VoIP and Noah Rafalko, is a pioneer in TNID

Should the Federal Communications Commission seek out alternative platforms to solve their 2022 spam, scam and robocall issues? Yes! Does Blockchain offer valuable solutions? Yes! We would like to ask the FCC to increase the width of their lens when it comes to deploying solutions to solve their growing number of systemic challenges.

Any action to stop robocall insanity and tech-driven scams would be welcome. While Americans deal with the linger pandemic, mass shootings, an uncertain economy and war in Europe, the constant annoyance from scammers and 4.1 billion robocalls a month is just too much. Most people have responded by literally giving up voice communications all together.

Recently implemented legislation called STIR/SHAKEN is a step in the right direction, but it is not a long-term solution. The FCC  is simply taking old standards and applying them to new technologies. New thinking is needed; the next generation of technology must be explored. And the most promising of the new tools to protect our telecommunications system from fraudulent players lies in blockchain.

The key to stopping these nefarious acts lies in a digital identity solution powered by blockchain – a shard database or ledger. An identity solution enables customers to be confident that the communication is truly from enterprises they know and trust.

With blockchain, only authorized and verified messages get through. Spam and robocalls are virtually eliminated in one shot. All that’s required is a slight change in how we approach communications.

In a world where consumers are already doing whatever they can to self-manage their identity, it isn’t a large leap of faith to imagine adding a certified, digital ID to our telephone numbers.

Consumers freely use their telephone numbers to attest and manage their identity – even more than they use their Social Security numbers, birthdays, mother’s maiden name and secret questions. In our current digital universe, consumers use their phone numbers to register for store discounts, receive health and safety alerts and even transfer money to others.

And in their effort to stop spam and robocalls, consumers willingly add apps such as Hiya, paying over $300 million a year to these intermediaries.

The FCC needs to evolve and embrace the technology that allows consumers and mobile carriers who have a shared stake in attesting their identities. They need to recognize that blockchain technology offers an elegant, all-encompassing solution to the $40 billion in fraud that consumers fall victim to every year.

It’s time we leveraged a solution that’s already being used in other countries such as India, where blockchain technology helps protect over 600 million citizens from spam and robocalls.

Back in 2004, when the future of telecommunications was being written, the FCC was challenged with laying down rules governing Voice over Internet Protocol (VoIP). At that time, we hosted brown-bag lunches for Congress, and held open demonstration days at the FCC as well as a mini-trade show on the Hill in our effort to inform and educate Congress, staffers and other government employees on the latest and greatest innovations in Internet communications technology.

The FCC would be wise to revisit this practice of show and tell where they hear from the innovators of new game-changing technologies that can solve their biggest concerns. It certainly is wiser than simply taking advice handed down from lobbyists and relying on legislation that’s severely limited and unenforceable.

When the FCC uses its influence to investigate and embrace new and innovative technologies, they can finally make significant headway in restoring trust in the quality of service associated with our communications.

Jeff Pulver is an innovator in the field of Voice over Internet Protocol (VoIP). He was instrumental in changing how the FCC classified VoIP in 2004, paving the way for the development of video and voice internet communications. The co-founder of Vonage, Jeff has invested in over 400 start-ups. 

Noah Rafalko is a pioneer in TNID (Telephone Number ID), a blockchain solution that restores trust in communications. Noah is founder and CEO of TSG Global, Inc. which provides voice, messaging and identity management services for SaaS companies and large enterprises. 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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Jay Anderson: Is Texas the New Home for Robust Internet Access?

Cost of doing business is driving companies into markets with favorable tax rates and fewer regulations. Here’s how they’re prioritizing.

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The author of this Expert Opinion is Jay Anderson, chief technology officer, FiberLight

It is hard to ignore how the COVID-19 pandemic has impacted our lives––namely, how we work and live. Many people emerged from the pandemic with a request to employers: Continue to allow flexible work arrangements. Thanks to digital transformations across industries, Americans are embracing flexible work arrangements, and they want more of it.

In fact, according to McKinsey’s American Opportunity Survey, 58 percent of U.S. job holders—equivalent to 92 million people—report that their employers are still offering the option to work from home for all or part of the week. The survey also showed that when given the opportunity to work flexibly, 87 percent of workers embrace it.

Because of the shift toward remote work, people are relocating to cities that better suit their needs. New data by Upwork reports that 2.4 percent of Americans–– about 5 million people––have relocated since 2020. And, 9.3 percent of Americans––around 20 million people––are planning to relocate.

Companies also are considering relocation. According to FiberLight’s 2022 Business Relocation Expansion Survey, 70 percent of IT and corporate decision makers say they are considering relocating their business or adding more locations within the next 3-5 years. Executives cited market saturation and availability, followed by the expense of doing business in major metropolitan areas, and expanding their operations, as factors driving the change.

Notably, of these respondents, 78 percent said they are considering relocating their business to Texas. Why Texas? Texas offers several advantages including a lower cost of living, favorable tax rates, and fewer regulations. Ranking high on the list of Texas cities decision makers are considering for relocation include: Dallas / Ft. Worth, Austin, and San Antonio, in that order. Decision makers also are considering a host of more rural Texas markets including El Paso, Arlington, Corpus Christi, Plano, Lubbock, Irving, Laredo, Frisco, Garland, Brownsville, Amarillo, McKinney, and others.

Yet businesses will need faster, more robust connectivity in order to execute their business strategies.

Executives surveyed said that they are planning, primarily, for Hybrid and Cloud infrastructure models. Their biggest priorities for connectivity upgrades include 1) Speed / Low Latency, 2) Security, and Diverse Connections.

Executives also said that they are prioritizing the following local infrastructure needs:

Data center access (29% of respondents): What today’s data center requires

The new data center requires an infrastructure that can provide rapid, secure data transmission through reliable, scalable, high-capacity bandwidth that meets the processing demands of next-generation technologies like blockchain systems. Many blockchain data centers are cropping up in rural areas of Texas; however, sourcing reliable connectivity to the internet can be challenging.

Public sector (22% of respondents): A broadband for all advocate for rural America

Public sector teams are critically important to finding solutions that deliver next-generation technology to underserved rural areas. By raising awareness of the need for broadband for all, connecting communities to funds and resources, and establishing partnerships, public sector teams can help municipalities, schools, and businesses access the networks that will help them to grow and scale into the future.

Cloud migration (20% of respondents): Key factors to consider

For enterprises choosing to migrate operations and workloads to the cloud, robust and secure fiber connectivity within a mission-critical colocation facility is a must. Choosing the right data center with the best connection to the cloud is half the battle. Organizations must also ensure there is fiber network infrastructure that’s scalable and reliable providing interconnectivity between their locations and their chosen data centers.

Dedicated internet access (15% of respondents): The path to increased uptime, speed, and reliability

Enterprises of all sizes can benefit from choosing Dedicated Internet Access (DIA)––a private or fully dedicated connection between the internet and the customer. Enterprises, data centers, government institutions, and many more businesses today require a fully dedicated connection allowing large amounts of data to be transferred at faster speeds in order to keep pace with their business needs.

Dark fiber (12% of respondents): A cost effective network strategy to future-proof businesses

Dark fiber holds a lot of potential to rejuvenate the capabilities of businesses across many key vertical industries, including healthcare, finance, education, and beyond. This network strategy effectively future-proofs businesses, empowering them with the ability to cost effectively meet the growing needs of their end-users with bolstered bandwidth, reduced latency, and more.

Post-pandemic relocations are igniting digital transformation and highlighting the core infrastructure requirements to support business expansion. It will be exciting to see how rural areas around our country will begin to flourish as a result.

Jay Anderson is chief technology officer of FiberLight, a fiber infrastructure provider with more than 20 years of experience building and operating mission-critical, high-bandwidth networks. As CTO, he is responsible for evolving FiberLight’s infrastructure and technical capabilities to ensure the company can respond quickly to the changing digital ecosystem needs of its customers. 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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