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Joe Kane: Rural Broadband Infrastructure Should Fund People Wherever They Are

Future broadband funding should target those who need it, even if they live in cities or the suburbs.

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The author of this Expert Opinion is Joe Kane, director of broadband and spectrum policy at the Information Technology and Innovation Foundation

Subsidies for rural broadband deployment enjoy unified political support. Endless rhetoric supports federal funding to make up the difference in areas where the upfront cost of broadband infrastructure is prohibitive. But now we’ve allocated hundreds of billions of dollars to rural broadband. To address the digital divide fully, the next focus should be to target broadband funding to those who need it, even if they live in cities or the suburbs.

It’s indeed more expensive to deploy broadband in rural areas than in densely-populated areas, but this reality has warped broadband policy: The Federal Communications Commission’s High-Cost fund spends over $4 billion per year to build out broadband infrastructure in hard-to-reach areas. All told, the Government Accountability Office estimates that the federal government spent $5.9 billion per year on rural broadband infrastructure between 2009 and 2017.

It’s time to face facts. A 2017 FCC study found getting high-speed broadband to 98 percent of homes and businesses would cost $40 billion. Since then, ISPs have increased their yearly capital expenditures by about $3 billion per year and existing subsidies have continued apace. Now, recent infrastructure legislation has added $65 billion more to the pot. It’s safe to say we’ve hit the $40 billion target and then some. If newly allocated funds are not enough to overcome the economic barriers to rural broadband infrastructure deployment, no amount of additional federal funding will likely do so, and it’s time to take the victories we’ve gotten and shift gears.

Money should focus on low-income individuals

The continued focus on rural subsidies is not just an issue for its expense and lack of completion. It necessitates a tradeoff that deprioritizes connectivity barriers non-rural individuals face. A recent federal grant for remote areas, for example, spent over $87,000 per household. That’s 126 percent of median household income and enough for an annuity that would pay $418 per month for life. That money could instead support many more low-income individuals who happen to live elsewhere while letting fast, low-latency service from low-earth-orbit satellites fix the most extreme rural connectivity problems without the need for subsidies.

The tendency to conflate “rural” and “in need” distorts reality: There are individuals of all income brackets in all types of areas. This distortion has perverse effects. The FCC’s High-Cost program is funded by fees levied on individuals’ phone bills. This “contribution factor” has skyrocketed in recent years—now up to one-third of individuals’ monthly bill.

This funding structure means that a relatively low-income urban dweller pays a higher bill to fund Internet service providers’ construction of infrastructure for rural landowners who might be significantly better off financially. With so much cash already committed, policymakers should stop using this blunt instrument that heaps billions of dollars onto certain swaths of land while shortchanging the digital divide that persists among individuals in other parts of the country.

While rural America shouldn’t be left to fend for itself, lower-income individuals in suburban and urban areas are no less deserving of broadband funding than their rural counterparts. Going forward, funding should go to those who need it, regardless of where they live.

The FCC should reduce the new high-cost spending

To start, the FCC should reduce new High-Cost spending by at least 75 percent and transfer some of that funding to programs that fund individual needs. The FCC already administers these types of programs. Lifeline and the Affordable Connectivity Program, for example, discount phone and broadband service for people with low incomes. These programs, combined with ISPs’ existing offerings to low-income Americans, could form the cornerstone of a more equitable broadband funding policy.

Furthermore, these programs should become more flexible. Polling shows that the largest barrier to broadband adoption is not its price, but non-adopters finding it irrelevant. Targeting this barrier to adoption should be the top priority of a policy to close the digital divide. Therefore, funding should be available for digital literacy efforts that demonstrate the value of the Internet to those who don’t think it’s for them. Allowing funds to defray the cost of Internet-connected devices would also advance the goal of closing the digital divide.

This proposed shift should still allow individuals’ benefits to be used for their Internet bill, which will, in turn, continue funding infrastructure because it justifies the cost of ISPs’ broadband buildout. The difference is that consumers would use that option only if ISPs can provide good service at the right price.

Instead of handwringing over who to tax to fund more subsidies to ISPs, policymakers should give consumers control. We continue to make tremendous progress toward closing the digital divide, including spending unprecedented amounts to get rural America up to speed. Adoption is now the key barrier to universal connectivity, and our policies should reflect this shift rather than continuing a lopsided distribution to rural areas.

Joe Kane is director of broadband and spectrum policy at the Information Technology and Innovation Foundation. 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.

Broadband Breakfast is a decade-old news organization based in Washington that is building a community of interest around broadband policy and internet technology, with a particular focus on better broadband infrastructure, the politics of privacy and the regulation of social media. Learn more about Broadband Breakfast.

Expert Opinion

Raul Katz: Can Investments in Robust Broadband Help States Limit the Downside of Recession?

If managed effectively, the BEAD program could play a key role in allowing our economy to weather the storms ahead.

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The author of this Expert Opinion is Raul Katz, President at Telecom Advisory Services LLC.

The United States economy is still undergoing persistent inflation rates, high interest rates, and stock market volatility. According to a Wall Street Journal survey conducted in January, economists put the probability of a recession at 61 percent.

Simultaneously, we are also on the eve of the largest federal broadband funding distribution in American history. All 50 U.S. states have begun formulating plans to help connect their communities through the $42.5 billion Broadband Equity, Access and Deployment Program, and its funds are expected to be distributed within months. That, coupled with the Affordable Connectivity Program  and other initiatives designed to subsidize broadband access, will play a critical role in connecting every American to the internet. This once-in-a-generation investment in building more robust and resilient broadband networks can help states weather the coming economic storm. To learn how, we simply need to look back to March 2020.

When the COVID-19 pandemic initially cratered the economy, states that had a higher rate of fixed broadband penetration were more insulated from its disruptive effects. Simply put, better-connected states had more resilient economies according to a study I authored for Network:On. In a separate study, by using an economic growth model that accounts for the role fixed broadband plays in mitigating the societal losses resulting from the pandemic, I also found that more connected societies exhibit higher economic resiliency during a pandemic-induced disruption.

In the study conducted for Network:On, we documented that U.S. states with higher broadband adoption rates were able to counteract a larger portion of the economic losses caused by the pandemic than states with lower broadband adoption rates. The states most adversely affected by the pandemic, such as Arkansas and Mississippi, were those exhibiting lower broadband penetration rates. Conversely, states with higher broadband penetration, such as Delaware and New Jersey, were able to mitigate a large portion of losses, as connectivity levels allowed for important parts of the economy to continue functioning during lockdowns.

Nationally, if the entire U.S. had penetration figures equal to those of the more connected states during the pandemic, the GDP would have contracted only one percent— a much softer recession than the actual 2.2 percent. These findings show that investments in closing the digital divide and ensuring everyone can access a high-speed Internet connection are critical to building economic resilience.

Today, wide penetration rate disparities exist between states — such as Delaware’s rate of 91.4 percent compared to Arkansas’ rate of 39.7 percent. Because of this, public authorities should focus on creating policy frameworks that allow operators to spur infrastructure deployments and find the optimal technological mixes to deliver the highest performance to users.

Broadband access matters. It doesn’t exist in a vacuum and is crucial to an area’s economic health. As state broadband offices around the country prepare to deploy BEAD funding, they must remember that broadband access and adoption are imperative to building economic resiliency.

Beyond my own study, a review of the research examining the economic impact of digital technologies over the past two decades confirms that telecommunications and broadband positively impact economic growth, employment, and productivity. This reinforces how consequential these government investments in broadband infrastructure and adoption are to protecting America’s economic health.

The BEAD program still has its challenges, but if managed effectively, it could play a key role in allowing our economy to weather the storms ahead.

Dr. Raul Katz is the president at Telecom Advisory Services LLC and author of the study: The Role of Robust Broadband Infrastructure in Building Economic Resiliency During the COVID-19 Pandemic. 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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Expert Opinion

Kate Forscey: For the FTC to Rein in Big Tech, Slow and Steady Wins the Race

Going after Big Tech with marquee cases may make headlines, but those failures make big headlines too.

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The author of this Expert Opinion is Kate Forscey, contributing fellow for the Digital Progress Institute

Recognizing the outsize power Big Tech has in the tech marketplace and throughout our daily lives, the Biden Federal Trade Commission, helmed by Chair Lina Khan, has made big headlines for pursuing cases and regulatory changes in an attempt to restore competitive balance to the tech ecosystem.

Khan started off with a bang. She, along with the Department of Justice’s Antitrust division, sought to modernize the merger guidelines that would provide better guidance for courts and scholars to challenge Big Tech’s rampant consolidation of the tech sector. Moreover, she has initiated a proceeding that will evaluate the anticompetitive effects of overly broad non-competes; some of which have the effect of entrapping valued coders and engineers into these large tech firms indefinitely, preventing smaller competitors from availing themselves to their expertise.

But rather than complete these efforts in an incremental, potentially bipartisan manner, the agency has continued to set its sights higher and higher. Let’s just say the FTC has had a tough go at implementing this strategy.

For example, as part of Facebook’s pivot to the metaverse, it planned to merge with Within Unlimited—a virtual reality fitness start-up.  Fearing a loss of “potential future competition,” the FTC just expended an enormous amount of its resources to enjoin the merger, not only going to court but starting a concurrent proceeding with one of the agency’s administrative judges. The result? A federal district court outright denied the requested injunction, and now the FTC has abandoned its administrative case too.

And it looks like the FTC is going for a repeat with its challenge to Microsoft’s merger with Activision, the maker of World of Warcraft and Candy Crush. Strangely enough, the fear here is creation of future potential competition, specifically Microsoft and Xbox gaining a foothold against its larger gaming competitors like Sony and Tencent, a Chinese multinational conglomerate.

Even more bizarrely, the agency appears to ignore that the merger would open up more competition in the mobile gaming market—largely controlled by the Apple and Google app stores—by bringing Activision titles, like Call of Duty, to every mobile device. In short, it’s looking like the FTC will be 0-for-2 by the end of the year.

Agency should take incremental steps, not tackle unwinnable battles

Look, reining in Big Tech is a laudable goal. However, it may be time for Khan to turn to tried-and-true ways to accomplish that goal with incremental, ideally bipartisan steps, instead of focusing the agency’s limited resources on unwinnable epic battles.

The first thing Khan should do is finish what’s already on the agency’s plate.

For one, Khan should complete modernizing the merger guidelines. The current guidelines were written before Big Tech was even a thing and without an understanding of today’s technology and modern markets. New guidelines would provide a stable framework for courts, academia, and the antitrust agencies to analyze anticompetitive practices in a more productive manner as cases crop up going forward.

For another, the FTC should conclude its privacy investigation of prominent social media and video streaming companies.  More than two years ago, the Commission launched an investigation into the privacy practices of nine social media and video streaming companies — including TikTok, Facebook, Twitter, YouTube and Amazon.  And we have yet to see any results, even though all the tech companies mandated submissions are presumably in.

For yet another, the FTC should reexamine pending proceedings to take a more targeted approach that has a better shot of passing legal muster. Take the FTC’s proceeding to ban non-compete clauses. Whatever the general merits, it’s politically divisive, and legally questionable, to think the FTC could really ban even executives being held to a non-compete clause.

In contrast, a really bright idea would be to address Big Tech dominance by going after noncompete clauses for mid-level engineers and workers. It used to be that a talented mid-level engineer could go cut her teeth working a few years at a place like Google, getting experience there and then moving on to a start-up to help them build their company up.

This allows smaller companies to potentially compete with the big guys and ultimately create a more competitive marketplace in a given space, whether that’s search or social or whatever. But the goliath groupers don’t like that idea – Big Tech likes its dominance – so nowadays they lock employees into noncompete clauses that prevent them from any sort of outward mobility. The FTC could change that with a targeted and incremental rule—one that could be bipartisan and legally sustainable.

Going after Big Tech with marquee cases may make headlines, but those failures make big headlines too.  To do this and do this right – in a way that doesn’t create legal conundrums down the road – the Commission might want to recognize that incremental, bipartisan victories have the greatest staying power.  If you want to have a lasting impact, take it from Aesop: slow and steady wins the race.

Kate Forscey is a contributing fellow for the Digital Progress Institute and principal and founder of KRF Strategies LLC. She has served as senior technology policy advisor for Congresswoman Anna G. Eshoo and policy counsel at Public Knowledge. 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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Broadband's Impact

Josephine Bernson: The Customer Experience is About More Than Fiber

‘Listen to the customer’ is a fundamental pillar in gaining a satisfied customer.

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The author of this Expert Opinion is Josephine Bernson, Chief Revenue Officer at Great Plains Communications.

Customer experience and the digital customer experience are what makes businesses today stand apart from competitors. In our connected world, it means delivering products and services via high-speed internet, provided by a network that’s reliable and scalable according to rising bandwidth demand.

Yet, we must keep in mind the other component of a first-rate customer experience: customer service excellence.

Customer service excellence, from the beginning

How does a fiber provider successfully work with the customers and the community from the very beginning? And, continue to provide exceptional customer service each day thereafter?

It begins with listening.Listen to the customer” is a fundamental pillar in gaining a satisfied customer, whether it’s meeting with business executives, community leaders or residents. What are they hoping to achieve with their network, short-term and long-term? Any concerns that should be addressed?

Respond with solutions that meet their needs.  Personalization is better than a one-size-fits-all approach. Each customer has different needs and unique bandwidth specifications that should be taken into consideration. For example, the ability to adjust availability to accommodate peak work hours for a financial institution or local government complex or the flexibility needed for a local business that serves an online global market.

Get to know your customers. Focus on getting to know your customers through participating in local events and spending time in the community. Teams that live and work in same community they serve care about providing their neighbors with high-quality products and superior service. Valuable feedback comes from customers who directly interact with local employees immersed in the community.

Timely and convenient customer service options. If there’s a problem, how can customers contact you for a resolution? Does the customer service center or 24/7 operations center always have agents available? Are there easily accessible online resources equipped to handle common questions? Automation is a big trend in CX. While we enjoy our personal relationships with our customers, we also leverage technology for self-service tools. It’s important to enable customers to do business in whichever manner works best for them.

Happy employees for a happy customer experience

Happy employees have long been credited with increased productivity and better service for customers. Great Plains Communications’ culture has always been to attract, train and retain workers from the areas it serves.

Customer service representative Marisa Benham has been with Great Plains Communications for 15 years. “I’ve always been a people person so I really love talking to people! I love helping them figure out what services they want and helping them if they have an issue with their account.”

As for the GPC team itself, she says, “The biggest thing I love about our team is that even though we’re a large company, I feel like we are still trying to get that small company family feel.  I really love that about Great Plains as well.”

For any business to survive for a long period it must continually evolve. Great Plains Communications is a 113-year-old company serving nearly 200 Midwestern communities.  As a leading digital telecommunications leader, our core focus remains the same: customer service excellence. We believe in our high-performing network and high-performing people.

Customer loyalty depends on the customer experience, but it must be earned. It’s more than state-of-the-art technologies. It’s the people behind the innovation. It’s the teams that deliver and support the technology that make all the difference.

Josephine Bernson is the chief revenue officer at Great Plains Communications. This piece is exclusive to BroadbandBreakfast.

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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