Expert Opinion
Scott Wallsten: A $10 Billion Broadband Black Hole?
We know little about how California and other states plan to distribute the money under the opaque arrangement.

The U.S. Treasury just gave California more than half a billion dollars to fund broadband buildout. This money may help reduce the digital divide. It also might not. There’s really no way to know because the only public information about the grant is a press release that more closely resembles a flyer than an explanation of how the government is spending 540 million taxpayer dollars.
The money comes from the Capital Projects Fund, which is $10 billion allocated by the 2021 American Rescue Plan Act. The Act directs the U.S. Treasury to distribute these funds to states, territories, and tribal governments to subsidize new broadband networks.
Congress probably should never have directed the Treasury to lead the program. It’s not a grant-making agency, and Secretary Janet Yellen has bigger things to worry about, like the looming debt ceiling and the global economy.
Still, the Treasury has to do what the law tells it to do, and should be expected to follow some basic rules of good governance.
The program appears to lack even the most basic transparency. Treasury’s website lists a press release similar to California’s for each state award, and those others also provide almost no additional information. They do list “key state contacts,” but it’s typically an entire state agency. That’s just a hair more helpful than telling people to “call Congress” to learn more about government spending.
At a bare minimum, the public should be able to see the plan each state submitted to the Treasury and the final plan the agency approved. That might make it possible for researchers and watchdogs like the Government Accountability Office to evaluate the program — not only to see how well it worked, but to inform other broadband grant programs. Unfortunately, these plans do not appear to be available to the public.
Taxpayers should know how the states intend to spend the money once they have it because there are many ways to distribute the funds to those who would build networks. A long history of broadband subsidies and economic research provide lessons on these practices. It is important to know whether states are heeding or ignoring those lessons.
The answers make a huge difference. Research on the $4.5 billion broadband subsidy program under the Obama administration found that the grant assignment program was little better than randomly selecting winners from the pool of applications, while a more coherent competitive bidding process like a reverse auction would have stretched the money much further.
The little information we have is not encouraging. The grants appear to be spending far more per location than necessary, meaning the money is building less broadband than it could.
For example, California is getting $540 million to serve an expected 127,000 locations, or about $4,250 per location. That’s about the same as what the FCC estimated as the maximum it was willing to pay per location in California in the Rural Development Opportunities Fund in 2020. And because that money was distributed in an auction, the actual subsidy for gigabit connections came in lower than expected, at about $2,000 per location on average.
California does not seem to be an outlier in the Treasury program. Iowa is getting $152.2 million to serve an estimated 18,972 locations, or $8,022 per location. In the FCC’s RDOF subsidy auction, the FCC’s average reserve price for locations in Iowa was about $7,200 per location, and the auction results yielded a lower cost similar to in California — about $2,000 per location.
With the current opaque arrangement, we may never know whether the infrastructure money was well spent because we know little about how the states plan to distribute the money and how their efforts will be evaluated. To its credit, Treasury requires regular reporting on certain metrics by grant recipients. But there is no mention of any plans to invite independent analysis of how the money is spent and its cost-effectiveness.
This kind of transparency is important for more than a nod towards good governance of the $10 billion Capital Projects Fund. Treasury will soon be joined by the Department of Commerce when it releases another $42.5 billion to the states for essentially the same purpose. We should not accept a precedent of keeping the public in the dark on these infrastructure projects.
Scott Wallsten is president of the Technology Policy Institute. He is an economist with expertise in industrial organization and public policy, and his research focuses on competition, regulation, telecommunications, the economics of digitization, and technology policy. 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.
Cloud
John English: Isolating Last-Mile Service Disruptions in Evolved Cable Networks
The adoption of new technologies presents operators with a plethora of new variables to manage on the user control plane.

Cable operators are increasingly investing in next-generation network infrastructure, including upgrades to support distributed access architecture and fiber to the home.
By bringing this infrastructure closer to subscribers, cable operators are evolving their networks, adopting greater virtualization and redistributing key elements toward the edges. They expect these changes to increase their network’s interoperability and, ultimately, improve the speed and uptime available to subscribers. In turn, cable operators expect these new capabilities will help redefine what services they can offer.
However, these new advanced networks are much more complex than previous generations. By virtualizing or cloudifying functions at the edge, operators risk losing the sort of visibility that is essential to rapidly pinpointing the source of service disruptions – and ensuring their networks are meeting desired performance thresholds for next-gen applications.
The challenge of complexity in virtualized networks
As cable networks evolve, so does their complexity. The adoption of technologies like virtualized Cable Modem Termination Systems (vCMTS) and distributed access architecture presents operators with a plethora of new variables to manage, particularly on the user control plane.
Always-on applications and those applications that are most sensitive to network performance changes, such as video games, AR/VR, and remotely-piloted drones, to name just a few examples, require continuous measurement and monitoring for reliability. But ensuring consistent quality of service under all conditions the network may face is no small feat.
To illustrate, let’s consider how cable operators will manage disruptions in a virtualized environment. When issues inevitably pop up, will they be able to isolate the problem virtually, or will they need to dispatch a technician to investigate? Additionally, once a technician is onsite, will they have advanced intelligence to determine if the source of the problem is hardware or software-related?
Or will they need to update or replace multiple systems (e.g., consumer premesis equipment, optical network terminals, router, modem, etc.) to try to resolve the problem? Finally, will they need to also investigate additional network termination points if that doesn’t do the trick?
Indeed, each time a truck or technician is dispatched represents a significant outpouring of resources, and adopting a trial-and-error, process-of-elimination approach to resolution is a costly means of restoring service that cable operators cannot afford at scale. Likewise, the customers that depend the most on constant network availability and performance for various uses, such as content distribution networks, transportation services, and industrial manufacturers, won’t tolerate significant disruptions for long.
Packet monitoring for rapid resolution of last-mile disruptions
In the evolving landscape of cable networks, where downtime can lead to customer dissatisfaction, churn, and revenue loss, rapid resolution of last-mile service disruptions is paramount. Cable operators need more advanced network telemetry to understand where – and why – disruptions are occurring. In short, evolved networks require evolved monitoring. This starts with deep packet inspection at scale.
Packets don’t lie, so they offer an excellent barometer into the health of both the control and user planes. Additionally, they can help determine last-mile & core latency per subscriber, as well as by dimension, so operators can test how different configurations affect performance.
Additionally, in the event of a major service disruption, packet monitoring at the edge enables operators to accurately measure how many subscribers are out of service – regardless of whatever hardware or software they’re using – and determine if there’s a common reason for mass outages to help technicians resolve any problems faster. Finally, proactive monitoring, especially when combined with artificial intelligence, empowers operators to detect and address potential issues before they impact subscribers.≠
All in all, cable operators are navigating a challenging yet exciting era of network evolution. The transition to advanced infrastructure and the demand for high-quality, low-latency services necessitate sophisticated monitoring and diagnostic tools. Deep packet inspection technology will continue to play a pivotal role in ensuring the smooth operation of evolved cable networks.
Additionally, in the quest to maintain the quality of service expected by subscribers, operators must abandon the costly process-of-elimination approach and adopt rapid resolution techniques. By doing so, they will not only reduce service disruption but also make more efficient use of resources, ultimately benefiting both their bottom line and the end user’s experience. Evolved cable networks require evolved strategies, and rapid issue isolation through advanced monitoring must be at the forefront of this transformation.
John English is Director of Service Provider Marketing and Business Development at Netscout’s Service Provider unit. He has an extensive background in telecom, including a decade at a major communications service provider and numerous OEMs and ecosystem partners. English is an expert on how communications service providers can successfully implement new technologies like 5G and virtualization/cloudification while continually assuring the performance of their networks and services. 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.
Expert Opinion
Ted Hearn: Is a Ban on Cable and Satellite ‘Junk Fees’ Rate Regulation?
The Federal Communications Commission says no.

The Federal Communications Commission could have a legal problem on its hands, but agency lawyers seem to have crafted what appears to be an acceptable workaround: Don’t call a ban on certain cable and satellite TV billing fees rate regulation – call it consumer protection.
At its Dec. 13 open meeting, FCC Chair Jessica Rosenworcel is planning to launch a rulemaking designed to bar cable and satellite TV providers from collecting early termination fees and billing cycle fees – even though the agency receives just hundreds of informal complaints about these fees annually. The U.S. has 53.3 million cable and satellite TV subscribers combined, down 15.7 million since January 2021.
Although the FCC says a ban on these fees has nothing to do with rate regulation, the agency is likely to face strong rebuttal on this point – if not from NCTAitv, the trade association for large cable TV operators, then at least from Charter Communications. Charter invoked impermissible rate regulation in its court fight against a billing cycle fee ban adopted by the state of Maine in 2020 that remains in effect.
In seeking U.S. Supreme Court review of its loss below, Charter was emphatic that Maine’s billing cycle fee statute embraced prohibited price regulation by requiring partial-month refunds.
“Maine’s law … caps Charter’s rates during the final month of service and precludes Charter from charging either for the full month, or a daily rate higher than its standard monthly rate. That is rate regulation, pure and simple,” Charter said last year in a brief with the high court. The Supreme Court declined to take the case, handing victory to Maine.
An early termination fee is collected when a customer cancels service prior to the expiration of an existing service contract, which can run as long as 24 months. A billing cycle fee involves denial of pro rata refunds when customers cancel before the end of the month. Echoing President Biden, Rosenworcel blasted ETFs and BCFs as “junk fees” that penalize consumers and impede competition.
If all goes according to plan, the FCC will adopt new junk fees rules in 2024. The FCC has floated an exemption for small or rural cable TV operators, but it put the onus on these entities to justify any special treatment.
The FCC’s crackdown on ETFs and BCFs would run counter to the agency’s bipartisan light-touch approach to cable TV regulation that began more than two decades ago. By law, the FCC in 1999 had to cease regulating the price of cable’s expanded basic tier, a service level which typically includes ESPN, C-SPAN, CNBC, and Fox News.
In 2015, the FCC stripped away the last layer of cable rate regulation. The agency, led at that time by Chairman Tom Wheeler, an Obama appointee, held that every cable operator in the country was subject to “effective competition.” That prevented local governments from continuing to regulate cable’s basic tier – the traditional home of local TV stations and public access channels. Rosenworcel, then an FCC Commissioner, voted against the Wheeler plan as going too far.
Rosenworcel is evidently not planning on letting the agency’s long legacy of cable deregulation to prevent her from pivoting in the opposite direction.
Sprinkled throughout the FCC’s junk fees ban proposal are references to recent court cases holding that BCFs are not rate regulation preempted by federal law, but rather consumer protection measures that states are permitted to adopt and enforce. The FCC said the logic used by the courts in upholding state BCFs applies just as well to a would-be ETF ban.
The FCC said its authority to ban ETFs and BCFs on cable is contained in the 1992 Cable Act, saying it provides for the agency to protect “consumers against … poor customer service” and “establish standards by which cable operators may fulfill their customer service requirements.”
Whether past FCC cable deregulation steps would prevent a junk fees ban, the FCC concluded: “The applicability of ETF and BCF regulations are not affected by the existence of effective competition in a community.”
DBS providers Dish and DirecTV will probably have an easier time than cable in getting a junk fees ban struck down in court.
Since their arrival in the mid-1990s, Dish and DirectTV have never been price regulated at the state or federal level or subject to any form of cable-like specific customer service obligations adopted by the FCC.
Still, the FCC is confident regarding its power to act, asserting that it retains “exclusive jurisdiction to regulate the provision of direct-to-home satellite services” and authority to impose “public interest or other requirements for providing video programming” on DBS.
In a final rationale left undeveloped, the FCC said a junk fees ban exemption for Dish and DirecTV would be inappropriate because it would allow the DBS providers to gain “a competitive advantage over their competitors through the use of ETFs and BCFs.”
The FCC failed to explain how DBS reliance on junk fees deemed unlawful for cable could be an effective tool at keeping customers or attracting new ones while Dish and DirecTV bled nearly 700,000 subscribers in the most recent quarter.
Maybe FCC lawyers don’t have it all figured out after all.
Ted Hearn is the Editor of Policyband, a new website dedicated to comprehensive coverage of the broadband communications market. A former communications executive and reporter for newsletters and trade journals, Hearn has decades of experience with traditional video and broadband industry trends, regulatory developments, technology advancements, and market dynamics. 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.
Expert Opinion
Kate Forscey: National Security and Global Success Depend Upon Prioritizing Telecom Funding
The Affordable Connectivity Program and the Rip-and-Replace program are both central funding needs for the industry.

With the government now funded into the new year, it’s time for Congress to take another look at its broader priorities, especially when it comes to the race with China for dominance in next-generation technologies. Whether it’s AI or cloud computing or virtual reality, if the United States is to remain competitive, we need to make secure and effective communications a priority. This means finally connecting all Americans to high-speed broadband and ensuring that our connectivity cannot be undermined by foreign adversaries.
Two popular programs are central to this goal: the Affordable Connectivity Program and the Rip-and-Replace program. Both of these programs have tremendous bipartisan, bicameral support; but both have been underfunded and now risk dying on the vine. Congress has the opportunity to fully fund these programs if it has the will to do so.
Let’s break it down.
The Affordable Connectivity Program provides low-income American families and veterans with discounts on Internet service and connectivity equipment, including higher discounts for those living on Tribal lands. With affordable broadband, more Americans can get online and be a part of the digital economy.
The ACP has been wildly successful, connecting over 21 million households to essential broadband they could otherwise not afford. And it continues to garner widespread support, with the vast majority of voters (78%) calling for its extension, including 64% of Republicans, 70% of Independents, and 95% of Democrats.
Congress provided the ACP with $14.2 billion in 2021—but funding is now running low and is projected to be fully exhausted by spring 2024. Governors, lawmakers on both sides of the aisle, public interest groups, and Internet service providers are all raising the alarm about its imminent depletion. That’s why the Biden Administration in October called on Congress to replenish the program’s coffers with an additional $6 billion.
A good start, but not the whole story. Our foreign adversaries are well known for their espionage, and while a spy balloon might get the attention, a far more insidious problem lurks in our communications networks: equipment designed and produced by Chinese suppliers Huawei and ZTE. A bipartisan Congress passed the Secure and Trusted Networks Act to eradicate national security threats such as these, but sufficient funding for the Rip and Replace program has never materialized.
Again, the Biden Administration has stepped up and identified a need for $3.1 billion to fully fund the program as a “key national security priority” in its emergency supplemental funding request. It’s a narrative we can all get on-board with: that broadband falls under the umbrella of national security as a whole. American consumers and institutions both benefit from American-built networks and increased protection at home. But communications providers can’t live up to these needs on their own.
As it stands, the responsibility to get affordable, secure connectivity programs across the finish line rests with Congress. Even with a consensus of support for these two programs, the devil is in the details of how to make the price tags palatable to enough policymakers on Capitol Hill. The key is ensuring that any changes preserve the widespread efficacy of the program that has made it popular so far.
For example, Congress could cut the cost of the ACP by limiting the additional Tribal funding to rural Tribal lands. Any such change should be grounded in an evaluation of existing need in urban areas, but could be an opportunity to ensure funds are being directed to areas of greatest need. And Congress should consider indexing the ACP to inflation. The high inflation of recent years has wreaked havoc on the budgets of consumers—and inflation-proofing the program would ensure that broadband remains affordable for all Americans even should inflation come back.
As for Rip-and-Replace, those of us urging for more funds could concede putting safeguards in place to ensure the money is being used for its intended purpose – the kind of compromise needed to get such policies across the finish line
These are just some ideas as we head into the final funding fight. Not everyone is going to be on the same page on what is and isn’t working best, but shared success starts by recognizing that we all have the same endgame. Congress must ensure that adequate funding for the ACP and Rip and Replace program are included in any year-end spending package. We have an all-too-rare opportunity to win the race for high-tech dominance—we just need to provide the resources.
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 expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.
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