House Communications Subcommittee Hearing: Promoting Broadband Infrastructure Investment

The House Communications Subcommittee, in a hearing titled, "Promoting Broadband Infrastructure Investment", discussed ways to promote broadband infrastructure investment in an environment with ever-growing demand for fixed and mobile broadband access.

“Broadband Internet access has become the communications and commerce tool of our time…It has literally changed the old rules for how we live our lives. Which begs the question: why are we using old rules to regulate new networks?” said Subcommittee Chairman Greg Walden (R-OR). “We hope that today’s hearing will start a discussion that reinvigorates a national debate on the best policies for continuing the model of private network investment that has made the United States a world leader in broadband.”

In Ranking Member Anna Eshoo's (D-CA) opening statement for the hearing, she said that key ingredients are a "dig once" policy that includes laying broadband pipes during federal highway construction, better access to utility poles that reduce the cost for deployment, freeing up more unlicensed spectrum, and the Federal Communications Commission's preemption of state laws limiting municipal broadband buildouts.

Witnesses included Jonathan Adelstein, President and CEO of PCIA; Craig Moffett, senior research analyst at Moffett Nathanson; Michael Slinger, Director of Google Fiber Cities; Deb Socia, Executive Director of NextCentury Cities; and the Honorable Stephen Roe Lewis, Governor of Gila River Indian Community, Arizona.

House Communications Subcommittee Chairman Walden (R-OR): Chairman Walden emphasized the trillions in public and private dollars that have been invested in broadband infrastructure, suggesting the government should not get in the way. He gave a shout out to municipal broadband buildouts -- "when necessary" -- but suggests the best policies for boosting broadband infrastructure investment don't include "using old rules to regulate new networks," an apparent reference to the FCC's reclassification of Internet access under Title II. "Despite the clear demand for high-speed services, investment in network infrastructure is not for the faint of heart. A staggering amount of capital is required to deploy fiber, antennas, routers, and switches to build a network with useful scale. Those who invest often won’t see returns for years; and the return comes only if the service satisfies enough customers to keep them coming back," he said. "There are real challenges to investing in broadband infrastructure, our laws shouldn’t be among them." Chairman Walden said enough had not been done to expedite access to poles and federal lands and buildings and improving tower siting, hurdles he said need to be overcome to help promote "efficient" investment and deployment.

House Commerce Committee Chairman Fred Upton (R-MI): “There is an incredible infrastructure that makes tasks that once took hours and even days as simple and as instant as a click or a swipe. In Michigan and across the country, we all are reaping the benefits. But if we, as a country, are to continue our leadership in the global technology industry, we must have policies that promote investment in the infrastructure to support it...My hope is that the discussion today will shed light on challenges to the economics of broadband networks and ideas that will help us replicate conditions that have already led to successful broadband deployment.”

House Communications Subcommittee Ranking Member Anna Eshoo (D-CA): Ranking Member Eshoo had a prescription for promoting infrastructure investment in broadband. As mentioned, according to Ranking Member Eshoo's opening statement for the hearing, key ingredients are a "dig once" policy that includes laying broadband pipes during federal highway construction, something President Barack Obama has advocated; better access to utility poles that reduce the cost for deployment, something the FCC and cable operators have advocated; freeing up more unlicensed spectrum, something Silicon Valley players in her district (and cable ops) have advocated; and the FCC's preemption of state laws limiting municipal broadband buildouts, something cable operators have opposed. She argued those are necessary because "55 million Americans lack access to the broadband speeds needed to unlock everything the Internet has to offer." "Equally alarming," she said, "is the fact that more than half of US households have just one choice for high-speed broadband service." She called 2014's $46 billion investment in broadband by the top cable and telecommunication companies impressive, but said that still put the country 17th on a list of global Internet speeds. Ranking Member Eshoo says those are not a cure-all, but said they are steps she thinks both Democrats and Republicans can support, though that is an optimistic view on preemption since Republican leaders have not been reticent on their dislike of preemption of state laws by the FCC. In reference to expanding broadband access on reservations, Ranking Member Eshoo added, “I think if there’s something that moves up to the top of the list here in a bipartisan way, it’s to see that we bring to parts of the country where there are reservations that you get first class service for first class citizenship.”

Witnesses shared their thoughts on how Congress can help resolve issues involved in broadband infrastructure and create a better environment where broadband can thrive:

Jonathan Adelstein, President and CEO of PCIA: Adelstein said infrastructure investment could have a powerful effect on the network. “One suggestion for Congress to consider that would alleviate roadblocks to wireless siting at the local level would be removing requirements that a provider demonstrate ‘proof-of-need’ or show a ‘gap- in-service’ when siting a wireless facility.” “Wireless infrastructure investment by private capital addresses the wireless data crunch as soon as it’s deployed,” he said.

Craig Moffett, Senior Research Analyst at Moffett Nathanson: “It is simply the case that broadband is an infrastructure that is very difficult to support two of, and in some case, even one of. And I would submit that a clear-eyed acknowledgement of the microeconomics of the broadband business deserves, or even demands, a seat at the policy table.” Moffett said federal regulators should look at controlling "soaring" program costs in order to spur investment in broadband. "Absent reforms to restrain the runaway growth in programming costs, video will become unprofitable," Conversely, the analyst added, "new builds of broadband will become increasingly economically challenged and therefore will become less and less likely." In his speech, Moffett outlined the enormous infrastructural investments made by cable and wireless companies to build broadband infrastructure. Investments in current infrastructure were made, Moffett explained, with the expectation that resulting pay-TV services would be profitable. Exacerbating the situation, Moffett said broadcast retransmission fees are rising so fast that SNL Kagan recently revised a projection released in October stating that total retrans fees would hit $9.4 billion by 2020. The new projection is now $9.8 billion. "As everyone understands, the cable video business is facing unprecedented pressure," Moffett told lawmakers. "Cord cutting has been talked about for years but is finally starting to show up in a meaningful way in the numbers. And soaring programming costs are eating away at video profit margins. From a cable operator's perspective, the video business and the broadband business are opposite sides of the same coin. It is, after all, all one infrastructure. Pressure on the video profit pool will therefore naturally trigger a pricing response in broadband, where cable operators will have greater pricing leverage."

Michael Slinger, Director of Google Fiber Cities: “Policymakers can do more to help reduce delays associated with obtaining adequate information and make-ready work, and increasing access to existing conduit and rights of way.” “While the FCC has taken important steps to improve rules related to infrastructure access, our own experience in building new broadband networks demonstrates that more work needs to be done to reduce delays and barriers.” “Policymakers’ top broadband goal should be achieving broadband abundance -- which requires reducing the cost of network buildout and removing barriers that limit providers’ ability to reach consumers. The key is to focus on competition, investment, and adoption.”

Deb Socia, Executive Director of NextCentury Cities: “The federal government can play a central role in helping to empower local communities across the country. Our policy agenda outlines a number of concrete actions that Congress, including Members of the Subcommittee can undertake: Provide a National Platform… Mandate National Data Collection… Encourage Competitive Local Markets…”

Stephen Roe Lewis, Governor of the Gila River Indian Community, Arizona: “The challenges are big but we do have tools that can help us overcome them. One of the key tools that we know can help is tribal consultation and engagement. Having a government-to-government commitment to engage with one another on important policy decisions is critical to ensuring that policies do not have unintended consequences.”