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Patrick Halley: States Must Be Smart When Defining ‘Extremely High-Cost Locations’

Sleeper issue could derail a state’s ability to spend its broadband infrastructure allocation effectively

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The author of this Expert Opinion is Patrick Halley, President and CEO, Wireless Infrastructure Association

States have a lot to think about as they determine how to prioritize investing federal broadband dollars. Efficiently connecting every unserved and underserved home and business will take priority, but other considerations, like workforce development, advancing 5G, service to libraries and other anchor institutions, and increasing broadband adoption, will also be critical.

Even with the largest federal investment in broadband expansion ever, hard choices abound on how states will spend their federal broadband dollars to close broadband access and equity gaps.

Every state that receives federal funding via the Infrastructure Act’s Broadband Equity, Access, and Deployment Program should have the flexibility to design and implement a plan that meets its policy prerogatives – just as Congress envisioned. However, there is a sleeper issue not receiving much attention that could derail a state’s ability to spend its BEAD allocation effectively.

It’s called the “Extremely High Cost Per Location Threshold,” and if states are not careful, this wonky issue could hamstring their ability to maximize the impact of federal broadband funding. 

You won’t find the term in the statute, but the BEAD Notice of Funding Opportunity requires states to propose, and NTIA to approve, an extremely high-cost threshold – a minimum cost-per-location-passed below which states cannot consider a non-fiber alternative, regardless of the cost differential. 

Why does the ‘Extremely High-Cost Per Location Threshold’ matter? 

Some have called for this threshold to be set as high as possible so that fiber is virtually guaranteed to win every time. This is a mistake. If a state sets the threshold too high, it could be forced to allocate all of its funds for a limited number of fiber deployments, likely to the exclusion of alternative high-speed technologies and other state priorities. That doesn’t make sense for several reasons.   

First, let’s recognize that choosing a non-fiber alternative does not mean providing a second-class service. Quite the contrary. Fixed wireless to the home is a reliable, high-speed, affordable alternative to fiber, and it is much faster to deploy. In fact, fixed wireless broadband is the fastest growing broadband service to the home in the marketplace today, with multiple providers delivering blazing fast service to millions of Americans.

In the third quarter of 2022, the top two fixed wireless providers alone added over 900,000 new subscribers, compared to a net loss of nearly 100,000 subscribers for the top cable and wireline ISPs. Another carrier recently announced it is doubling its FWA subscriber base every 18 months. Nearly ten million homes are expected to be using fixed wireless at the end of 2022. With consumers flocking towards fixed wireless, why create an unnecessary barrier to further deployment of this growing technology?  

Second, rural fixed wireless offers an important additional benefit – mobile 5G. The right mix of spectrum and technology often enables the same radios and antennas being deployed for fixed wireless to also expand access to mobile broadband service in remote areas.    

Third, states are faced with the challenge of designing a bidding process that results in reasonable subsidy levels to sufficiently stretch limited federal funds. Experts are already starting to do the math, and there will be significant variation in terms of which states receive enough funding to connect the unserved and still have additional dollars to address other issues. At the initial program design stage, states will presumably have no way of accurately predicting provider deployment and operating costs, and continued inflation and potential supply chain shortages make determining reasonable per-project subsidy amounts difficult. Why set a threshold so high that it precludes even the consideration of lower-cost alternatives?

Fourth, some states are big and topographically diverse, resulting in systematic broadband deployment cost differences. A high threshold in the eastern part of a state might ensure that all homes there get fiber, but in the process consume the vast majority of BEAD funds, leaving fewer options for the entire western region, even if the state’s goal is to ensure a regionally diverse mix of projects. Thus, it would make sense to set the threshold relatively lower, not higher.

Finally, in addition to physical infrastructure buildout, BEAD dollars can be used for digital literacy and equity programs, workforce development, telehealth facilities, and even device subsidies. Set the threshold too high, and the state may not have enough money for important non-deployment priorities. In fact, some states are likely to receive BEAD allocations large enough relative to their unserved location needs that they could technically “afford” to pay shockingly high amounts to reach their very last unserved locations with fiber. Is that the best use of funds? 

How might this play out? 

A state could set the extremely high-cost threshold so high, let’s say $50,000 per location, that it would effectively mean all of the state’s money goes to fiber projects. Don’t believe me? Federal funds have already been approved to fund fiber projects at over $200,000 per location! For example, a fiber builder could bid $4.9 million to serve 100 unserved locations at $49,000 per location. In that same area, a competing provider could propose a fixed wireless network to serve the same 100 unserved locations for $500,000 at $5,000 per location. In that case, the state would be required to select the fiber proposal, even though it is nearly 10 times more expensive, regardless of the network’s speed/capacity, deployment schedule, or ability to enable mobile service in the same area.  

Setting the threshold sufficiently low will give a state maximum flexibility to decide how to spend its money. For one state, that priority might be as much fiber as possible. For another state, it could be getting everyone served as quickly as possible or to lower deployment costs to ensure significant funds remain available for critical non-deployment uses. 

Bottom-line conclusion

This is not a battle between technologies. Fiber and fixed wireless are both incredible technologies that will make sense for a state to deploy in different areas. But states should not unnecessarily tie their own hands by setting an overly high threshold. Instead, states should allow themselves the opportunity to choose the right mix of technology to meet their deployment and non-deployment policy objectives. 

Patrick Halley is the President and CEO of the Wireless Infrastructure Association, which represents more than 140 companies that develop, build, own and operate the nation’s wireless infrastructure and is the leading authority on all things wireless. Halley joined WIA in August of 2022, and previously was Senior Vice President of Policy & Advocacy and General Counsel at US Telecom – The Broadband Association. He also served at the Federal Communications Commission as a legal advisor to the FCC Chairman and two Bureau Chiefs, as Associate Chief of the Wireline Competition Bureau, and Acting Director of the Commission’s Office of Legislative Affairs. This Expert Opinion 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.

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.

Europe

Helge Tiainen: Fiber Access Extension Eases Connectivity Worries for Operators, Landlords and Tenants

A new law presents an opportunity to reuse existing infrastructure for fiber broadband deployment.

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The author of this Expert Opinion is Helge Tiainen, head of product management, marketing and sales at InCoax.

Previously, tenants living in the United Kingdom’s estimated 480,000 blocks of flats and apartments had to wait for a landlord’s permission to have a broadband operator enter their building to install faster connectivity. But that is no longer the case.

At the beginning of the year, a new UK law change meant that millions of UK tenants are no longer prevented from receiving a broadband upgrade due to the silence of their landlords. The Telecommunications Infrastructure (Leasehold Property) Act allows internet service providers to access a block of flats 35 days after the ISP’s request to the landlord. It is estimated that an extra 2,100 residential buildings a year will be connected as a result.

Broadband companies have advised that currently around 40 percent of their requests for access to install connections in multi-dwelling units are delayed or blocked, due to no landlord response. Undoubtedly, tenants residing in these flats and apartment blocks are those most effected by a lack of accessibility to ultra-fast connectivity. So, how can ISPs grasp this newfound opportunity?

Harnessing the existing infrastructure

For many ISPs, MDUs pose a market that is largely untapped in the UK. Why is this? Well, for starters, typically these types of properties present logistical challenges, and are lower down in the pecking order in terms of the low hanging fruits readily available when it comes to installing fiber to the premises. The more attractive prospects are buildings in densely populated areas that can be covered easily with gigabit broadband.

Whereas, MDUs have typically been those underserved. Signing a broadband contract with a customer in a single-family unit is easier than an MDU as it involves securing permissions from building and apartment owners for construction works, as well as numerous tenants. For those ISPs tasked with upgrading tenants’ existing broadband connections, there are other challenges prevalent such as rising costs, wiring infrastructure changes and contract requirements, including minimum take-up rates.

So, there has been no better time to use the existing infrastructure readily available within the property. A fiber-only strategy can be supplemented if fiber to the extension point is employed where necessary. A multi-gigabit broadband service can be delivered at a lower cost and reach more customers over existing infrastructure for a short section of wire leading to the customer premises and inside the premises.

Bringing gigabit connectivity floor to floor

The UK government hopes that 85% of the UK will be able to access gigabit fixed broadband by 2025. However, installing fiber to every flat can be a challenge that is expensive, labor-intensive and disruptive to customers. Landlords may be hesitant to grant permissions due to the aforementioned reasons and potential cosmetic damage caused. Historically, fiber deployments in MDUs can be as much as 40% of fiber to the building deployment costs.

MDU buildings have existing coaxial networks, and reusing this infrastructure is a tangible possibility and time-saving alternative for ISPs instead of installing fiber direct to the premises. Which can be costly if the take-up rate is low for new services. The coaxial networks in MDUs can be used in an innovative way as in-building TV networks are upgraded to support higher frequency spectrums thanks to the analogue switchover to digital TV services.

ISPs can potentially opt to use fiber access extension technology for a cost-effective and less complex upgrade of broadband as it utilizes the existing in-house coax cable infrastructure. The technology provides multi-gigabit broadband services, positioning it as a clear frontrunner when optical fiber cannot be deployed due to construction limitations, a lack of ducts, building accessibility, and technical or historical preservation reasons.

Time for change

Not only does this landmark new law allow ISPs to seek rights to access a flat or an apartment if the landlord required to grant access is unresponsive, but it also prevents any situations where a tenant is unable to receive a service simply due to the silence of a landlord.

This is a crucial opportunity to reuse existing infrastructure for broadband access as TILPA enables subscribers and service providers to circumvent landlords who fail to provide access permission.

As many ISPs look to seamlessly execute their fiber deployment strategies, using cost-effective solutions can accelerate the addressable number of subscribers and allow for a major return on investment.

As head of product management, marketing and sales at InCoax, Helge Tiainen is responsible for developing sales and marketing of existing products and new business opportunities among cable, telecom and mobile operators by developing use cases and technologies within standard organizations as Broadband Forum, MoCA, Small Cell Forum and other working groups. He also manages partnerships of key technology partners suited with InCoax initiatives. 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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Asia

Dae-Keun Cho: Demystifying Interconnection and Cost Recovery in South Korea

South Korean courts have rejected attempts to mix net neutrality arguments into payment disputes.

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The author of this Expert Opinion is Advisor in Dae-Keun Cho, a member of the telecom, media and technology practice team at Lee & Ko.

South Korea is recognized as a leading broadband nation for network access, use and skills by the International Telecommunications Union and the Organisation for Economic Co-operation and Development.

South Korea exports content and produces platforms which compete with leading tech platforms from the US and China. Yet few know and understand the important elements of South Korean broadband policy, particularly its unique interconnection and cost recovery regime.

For example, most Western observers mischaracterize the relationship between broadband providers and content providers as a termination regime. There is no such concept in the South Korean broadband market. Content providers which want to connect to a broadband network pay an “access fee” like any other user.

International policy observers are paying attention to the IP interconnection system of IP powerhouse Korea and the lawsuit between SK Broadband (SKB) and Netflix. There are two important subjects. The first is the history and major regulations relating to internet protocol interconnection in South Korea. Regulating IP interconnection between internet service providers is considered a rare case overseas, and I explain why the Korean government adopted such a policy and how the policy has been developed and what it has accomplished.

The second subject is the issues over network usage fees between ISPs and content providers and the pros and cons. The author discusses issues that came to the surface during the legal proceedings between SKB and Netflix in the form of questions and answers. The following issues were identified during the process.

First, what Korean ISPs demand from global big tech companies is an access fee, not a termination fee. The termination fee does not exist in the broadband market, only in the market between ISPs.

In South Korea, content providers only pay for access, not termination

For example, Netflix’s Open Connect Appliance is a content delivery network. To deliver its content to end users in Korea, Netflix must purchase connectivity from a Korean ISP. The dispute arises because Netflix refuses to pay this connectivity fee. Charging CPs in the sending party network pay method, as discussed in Europe, suggests that the CPs already paid access fees to the originating ISPs and should thus pay the termination fee for their traffic delivery to the terminating ISPs. However in Korea, it is only access fees that CPs (also CDNs) pay ISPs.

In South Korea, IP interconnection between content providers and internet service providers is subject to negotiation

Second, although the IP interconnection between Korean ISPs is included in regulations, transactions between CPs and ISPs are still subject to negotiation. In Korea, a CP (including CDN) is a purchaser which pays a fee to a telecommunications service provider called an ISP and purchases a public internet network connection service, because the CP’s legal status is a “user” under the Telecommunications Business Act. Currently, a CP negotiates with an ISP and signs a contract setting out connection conditions and rates.

Access fees do not violate net neutrality

South Korean courts have rejected attempts to mix net neutrality arguments into payment disputes. The principle of net neutrality applies between the ISP and the consumer, e.g. the practice of blocking, throttling and paid prioritization (fast lane).

In South Korea, ISPs do not prioritize a specific CP’s traffic over other CP’s because they receive fees from the specific CP. To comply with the net neutrality principle, all ISPs in South Korea act on a first-in, first-out basis. That is, the ISP does not perform traffic management for specific CP traffic for various reasons (such as competition, money etc.). The Korean court did not accept the Netflix’s argument about net neutrality because SKB did not engage in traffic management.

There is no violation of net neutrality in the transaction between Netflix and SKB. There is no action by SKB to block or throttle the CP’s traffic (in this case, Netflix). In addition, SKB does not undertake any traffic management action to deliver the traffic of Netflix to the end user faster than other CPs in exchange for an additional fee from Netflix.

Therefore, the access fee that Korean ISPs request from CPs does not create a net neutrality problem.

Why the Korean model is not double billing

Korean law allows for access to broadband networks for all parties provided an access fee is paid. Foreign content providers incorrectly describe this as a double payment. That would mean that an end user is paying for the access of another party. There is no such notion. Each party pays for the requisite connectivity of the individual connection, nothing more. Each user pays for its own purpose, whether it is a human subscriber, a CP, or a CDN. No one user pays for the connectivity of another.

Dae-Keun Cho, PhD is is a member of the Telecom, Media and Technology practice team at Lee & Ko. He is a regulatory policy expert with more than 20 years of experience in telecommunications and ICT regulatory policies who also advises clients on online platform regulation policies, telecommunications competition policies, ICT user protection policies, and personal information protection. He earned a Ph.D. in Public Administration from the Graduate School of Public Administration in Seoul National University. This piece is reprinted with permission.

Request the FREE 58 page English language summary of Dr. Dae-Keun Cho’s book Nothing Is Free: An In-depth report to understand network usage disputes with Google and Netflix. Additionally see Strand Consult’s library of reports and research notes on the South Korea.

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

Luke Lintz: The Dark Side of Banning TikTok on College Campuses

Campus TikTok bans could have negative consequences for students.

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The author of this expert opinion is Luke Lintz, co-owner of HighKey Enterprises LLC

In recent months, there have been growing concerns about the security of data shared on the popular social media app TikTok. As a result, a number of colleges and universities have decided to ban the app from their campuses.

While these bans may have been implemented with the intention of protecting students’ data, they could also have a number of negative consequences.

Banning TikTok on college campuses could also have a negative impact on the inter-accessibility of the student body. Many students use the app to connect with others who share their interests or come from similar backgrounds. For example, international students may use the app to connect with other students from their home countries, or students from underrepresented groups may use the app to connect with others who share similar experiences.

By denying them access to TikTok, colleges may be inadvertently limiting their students’ ability to form diverse and supportive communities. This can have a detrimental effect on the student experience, as students may feel isolated and disconnected from their peers. Additionally, it can also have a negative impact on the wider college community, as the ban may make it more difficult for students from different backgrounds to come together and collaborate.

Furthermore, by banning TikTok, colleges may also be missing out on the opportunity to promote diverse events on their campuses. The app is often used by students to share information about events, clubs and other activities that promote diversity and inclusivity. Without this platform, it may be more difficult for students to learn about these initiatives and for organizations to reach a wide audience.

Lastly, it’s important to note that banning TikTok on college campuses could also have a negative impact on the ability of college administrators to communicate with students. Many colleges and universities have started to use TikTok as a way to connect with students and share important information and updates. The popularity of TikTok makes it the perfect app for students to use to reach large, campus-wide audiences.

TikTok also offers a unique way for college administrators to connect with students in a more informal and engaging way. TikTok allows administrators to create videos that are fun, creative and relatable, which can help to build trust and to heighten interaction with students. Without this platform, it may be more difficult for administrators to establish this type of connection with students.

Banning TikTok from college campuses could have a number of negative consequences for students, including limiting their ability to form diverse and supportive communities, missing out on future opportunities and staying informed about what’s happening on campus. College administrators should consider the potential consequences before making a decision about banning TikTok from their campuses.

Luke Lintz is a successful businessman, entrepreneur and social media personality. Today, he is the co-owner of HighKey Enterprises LLC, which aims to revolutionize social media marketing. HighKey Enterprises is a highly rated company that has molded its global reputation by servicing high-profile clients that range from A-listers in the entertainment industry to the most successful one percent across the globe. 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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