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NTIA’s Effort to Dispense Broadband Funds to Municipalities Is Not Without Obstacles

The NTIA’s notice of funding opportunity stops short of explicitly endorsing municipal broadband as the preferred model.

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Photo of Alan Davidson (left) and Drew Clark from Mountain Connect

WASHINGTON, June 9, 2022 – Though the head of the National Telecommunications and Information Administration says he looks to “pressure” states with restrictive laws on municipal broadband builds to use infrastructure money for that end, some aren’t convinced that the federal government can get that deep into state affairs.

The “NTIA lacks the authority to require states that have adopted laws restricting municipal broadband systems to waive or otherwise disregard these state restrictions,” Randolph May, president of the Free State Foundation, told Broadband Breakfast.

“Perhaps NTIA can encourage (strongly or otherwise) states to do so, but it can’t condition their receipt of BEAD grants on states’ refusal to do so,” May added.

The comments come after NTIA administrator Alan Davidson said during Broadband Breakfast event in April that his office is looking to pressure some states to work around their laws to allow the money to go toward municipal broadband builds.

NTIA is  entrusted with handing out to the states $42.5 billion from the Infrastructure, Investment and Jobs Act.

Davidson added during a fireside chat with Broadband Breakfast Editor and Publisher Drew Clark at the Mountain Connect conference in May that the success of the Broadband Equity, Access and Deployment program will depend on getting “every state and territory on board.”

“I do think there will be a lot of deep directions to states,” he said about how the NTIA will administer the BEAD program.

BEAD NOFO bars states from rejecting municipalities

On municipal broadband, Davidson said that the BEAD’s notice of funding opportunity is explicit in that it does not allow eligible entities to not consider public provider types out of hand.

“Eligible Entities may not exclude cooperatives, nonprofit organizations, public-private partnerships, private companies, public or private utilities, public utility districts, or local governments (‘potential providers’) from eligibility for grant funds,” the NOFO reads.

“We are doing all we can to lean into the idea that we believe there is going to be a variety of approaches that communities play a huge role here,” Davidson said in the exchange with Clark. “You know states have their laws, we are going to try and do all we can under the law to pressure states, and to make sure that states are transparent where they are not able to meet them.”

The BEAD NOFO explicitly points to municipal broadband as broadband providers that should be utilized – asserting that eligible entities need to demonstrate the steps they have taken to “ensure the participation of non-traditional broadband providers,” and listing municipalities as one such entity.

The view on municipal broadband

Depending upon the party in the White House, municipal broadband is often considered a best practice by the Federal Communications Commission. Yet it has been outlawed or circumscribed in more than a dozen states.

Although the NOFO stops short of explicitly endorsing municipal broadband as a preferred model – it merely says that eligible entities cannot reject municipal builds without consideration – earlier versions of White House statements on broadband infrastructure explicitly favored granting funds to municipal entities.

The Telecommunications Act of 1996 was enacted “to let any communications business compete in any market against any other.” In doing so, the act mandated that “No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.”

The FCC understood this clause to include state subdivisions within the operational definition of the word, “entity.”

In Nixon v. Missouri Municipal League, however, the Supreme Court of the United States ruled in 2004 against a municipal broadband service that argued that Missouri’s attempts to stifle its work violated the Telecommunications Act of 1996.

The court held that a state’s own subdivisions did not constitute the “entities” protected in the Telecommunications Act. This decision disregarded the FCC’s framework and opened the door to challenges to municipal broadband efforts. Missouri was not the last state to restrict municipal broadband.

Great variety of municipal broadband restrictions

Not all states’ legislation designed to curb municipal networks looks the same, however. States with such legislation exist on a sliding scale.

Some states, such as Nebraska, ban public entities outright from providing broadband services on a retail or wholesale level. South Carolina presents so many obstacles to municipal broadband that such efforts are usually far too expensive or unwieldy to pursue.

The legislators that push these bans often argue that private internet providers are better equipped to provide these services to consumers, and that municipal efforts are a waste of taxpayer money. Advocates for this type of legislation also argue that municipal networks are inherently anticompetitive – as municipalities would compete with the private industry in addition to regulating it – in effect serving as both referee and player in the space.

A limited rollback of restrictions

Though some states have rolled back some restrictions in recent years – namely Arkansas and Washington – municipal efforts are still outright banned or heavily discouraged in 17 states.

In Arkansas, the shift appeared to come as a response to the Covid-19 pandemic. Senate Bill 74 was sponsored by Republican Arkansas State Sen. Ricky Hill and was signed into law by Republican Gov. Asa Hutchinson in February of 2021.

The bill recognized broadband as “necessities” and that citizens who lack broadband “also lack access to healthcare services, education services, and other essential services.” The bill amended the Telecommunication Regulatory Reform Act of 2013 to allow municipal entities to provide broadband services to consumers.

Data gathered prior to the pandemic and published in the International Journal of Digital Economy, Data Sciences, and New Media argues that restrictions on state and municipal broadband decreases broadband penetration by 1-2 percentage points and 3 percentage points, respectively.

“These results make a strong argument that state broadband policies are having a measurable impact on broadband diffusion across the U.S., including in rural areas,” the study’s authors concluded.

Spectrum

Industry Dissent on Whether Spectrum Sharing is Sustainable

Experts disagree on the capabilities of spectrum sharing, particularly the CBRM model.

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Photo of Colleen King of Charter Communications, John Hunter of T-Mobile, and Matthew Hussey of Ericsson (left to right)

WASHINGTON, March 22, 2023 – Industry leaders disagreed on the capabilities of spectrum sharing and its future in the United States at a Federal Communications Bar Association event Wednesday. 

Dynamic spectrum sharing – a technology that allows for 4G, LTE, and 5G wireless to be used in the same frequency bands – is essential to a successful national spectrum strategy, said Jennifer McCarthy of Federated Wireless.  

Establishing a combination of access points for one frequency band can open its availability for all prospective users, she continued, touting the success of the Citizens Broadband Radio Service established by the Federal Communications Commission in 2012. 

CBRS is the spectrum in the 3.5 GHz to 3.7 GHz band which is shared through a three-tiered framework. Access to the spectrum is managed by a dynamic spectrum access system where incumbent users have protected access, priority access users enter through competitive auction, and general authorized access is given to a broad pool of users when not in use by others.  

Representative of T-Mobile, John Hunter, disagreed, claiming that dynamic spectrum sharing means there is less power available for technologies, particularly on higher frequencies that don’t propagate very far despite power disparities. As such, deploying the CBRS framework at scale across the country is not cost-feasible, he said. 

We should not conclude to share just for the sake of sharing, he said, particularly because it will decrease utility of the band so much that it will decline quality of networks down the line. “In many cases, sharing just outright won’t work,” said Hunter.  

Colleen King, vice president of regulatory affairs at Charter Communications, pushed against the argument that dynamic sharing’s lower power will stop providers from providing great service, claiming that it instead allows for more carriers to provide great service. In fact, the CBRS auction had 228 winning bids, 10 times the amount of other spectrum auctions, she said. 

The FCC’s Communications Marketplace Report showed that in one market where Verizon is using the CBRS framework, the company is providing “much faster speeds” than its other markets, King cited. Charter will use the CBRS system for its spectrum uses, she said. 

Panelists nevertheless agreed on the importance of maintaining US leadership in the spectrum space by developing a national spectrum strategy to address sharing issues. 

The panel followed considerable debate over spectrum allocation, sharing, and expansion. Earlier this week, industry leaders suggested that the allocation process be updated in preparation for future disputes. Additionally, debate continues over whether 5G operations can be shared on the 12 GHz spectrum with satellite service providers.  

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Broadband Mapping & Data

Association Says FCC Not Budging on Identifying Anchor Institutions on Broadband Map

SHLB said FCC officials recommended a workaround that risked penalties.

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Photo of John Windhausen, executive director of SHLB

WASHINGTON, March 22, 2023 – An association representing anchor institutions said in a letter Wednesday that officials from the Federal Communications Commission conveyed that they will not be changing the methodology that excludes schools and libraries from the broadband map and instead recommended a “work around” that the group said could risk penalties.

The Schools, Health and Libraries Broadband Coalition has repeatedly told the FCC that its broadband map incorrectly leaves out anchor institutions because they are categorized as non-broadband serviceable locations by virtue of the fact that they are treated as businesses that purchase commercial service rather than subscribers to “mass-market broadband internet access service,” which is what the FCC maps. SHLB has said this means institutions may not be able to get enhanced connectivity.

While SHLB has said that many small and rural libraries and other institutions subscribe to mass market service, it said in meeting notes from a Monday rendezvous with officials that the commission is “locked into” their current methodology and even recommended a “work-around” that the association said risked penalties.

According to SHLB, officials said the institutions could challenge their status on the map by representing that “they are not anchor institutions in order to change their designation.

“This recommendation is not feasible,” SHLB said. “Anchor institutions are not about to risk penalties by mis-representing themselves in such a way.”

The map, which has been extensively challenged by local governments and is updated every six months, is relied on to provide the most accurate picture of connectivity in the country and to assist federal agencies in divvying out public money. In fact, the National Telecommunications and Information Administration will use the map to determine how much each state will get from tis $42.5 billion Broadband Equity, Access and Deployment Program by June 30.

SHLB said it commissioned a study that found the “vast majority” of 200 libraries on the FCC map were “grayed out” as not broadband serviceable locations.

“If states base their funding decisions on the Map, they will not be able to provide funding to ensure that anchor institutions receive gigabit level service as called for” in the BEAD program, SHLB said in the letter.

The association also said that information presented to it by the FCC during the meeting suggests the map “significantly overstates the areas that are served.”

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Expert Opinion

David Strauss: How State Broadband Offices Will Score BEAD Applications

Fiber, coax and fixed wireless network plans dependent on BEAD funding demand scrutiny.

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The author of this Expert Opinion is David Strauss, Principal and Co-Founder of Broadband Success Partners.

Given the vital ways in which access to broadband enables America, adequate Internet for all is a necessary and overdue undertaking.  To help close the digital divide, the Infrastructure Investment and Jobs Act includes $42.5 billion in Broadband Equity, Access and Deployment funding for the last mile. Add to this the estimated level of subgrantee matching funds and the total last mile figure rises to $64 billon, according to the BEAD Funding Allocation and Project Award Framework from ACA Connects and Cartesian.

The federal funds will be disbursed by the Department of Commerce’s National Telecommunications and Information Administration to the State Broadband Offices who will then award subgrants to service providers. On June 30, each state will find out their allocation amount. By 2024, the states will establish a competitive subgrantee process to start selecting applicants and distributing funds.

A critical element of the selection process is the methodology for scoring the technical merits of each subgrantee and their proposal. Specific assessment criteria to be used by each state are not yet set. However, the subgrantee’s network must be built to meet these key performance and technical requirements:

  • Speeds of at least 100 Megabits per second (Mbps) download and 20 Mbps upload
  • Latency low enough for “reasonably foreseeable, real-time interactive applications”
  • No more than 48 hours of outage a year
  • Regular conduit access points for fiber projects
  • Begin providing service within four years of subgrant date

What level of scrutiny will each state apply in evaluating the technical merits of the applicants and their plans?

Based on our conversations with a number of state broadband leaders, the answers could be as varied as the number of states. For example, some states intend to rigorously judge each applicant’s technical capability, network design and project readiness. In contrast, another state believes that a deep upfront assessment is not needed because the service provider will not receive funds until certain operational milestones are met. Upon completion, an audit of the network’s performance could be implemented.

We, at Broadband Success Partners, are a bit biased about the level of technical scrutiny we think the states should apply. Having assessed over 50 operating and planned networks for private sector clients, we appreciate the importance of a thorough technical assessment. Our network analyses, management interviews and physical inspections have yielded a valuable number of dos and don’ts. By category, below are some of the critical issues we’ve identified.

Network Planning & Design

  • Inadequate architecture, lacking needed redundancy
  • Insufficient network as-built diagrams and documentation
  • Limited available fiber with many segments lacking spares

Network Construction

  • Unprotected, single leased circuit connecting cities to network backbone
  • Limited daisy-chained bandwidth paths on backhaul network
  • Lack of aerial slack storage, increasing repair time and complexity

Network Management & Performance

  • Significant optical ground wire plant, increasing potential maintenance cost
  • Internet circuit nearing capacity
  • Insufficient IPv4 address inventory for planned growth

Equipment

  • Obsolete passive optical network equipment
  • Risky use of indoor optical network terminals in outdoor enclosures
  • Sloppy, untraceable wiring

Technical Service / Network Operations Center

  • Technical staff too lean
  • High labor rate for fiber placement
  • Insufficient NOC functionality

While the problems we uncover do not always raise to the level of a red flag, it happens often enough to justify this exercise. Our clients who invest their own capital in these networks certainly think so. The same should hold true for networks funded with taxpayer money. Fiber, coax and fixed wireless network plans dependent on BEAD funding demand serious scrutiny.

David Strauss is a Principal and Co-founder of Broadband Success Partners, the leading broadband consulting firm focused exclusively on network evaluation and technical due diligence. 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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