Universal Broadband

The week of June 19 was Technology Week at the White House, and the Trump Administration held events focusing on modernizing government technology and stimulating the technology sector.

That Monday, June 19, the White House invited major tech leaders and university presidents for the inaugural summit of the American Technology Council. Hosted by the White House's Office of American Innovation, the event consisted of multiple breakout sessions to discuss ways to modernize the government by retiring out-of-date legacy systems and increasing the use of shared services. On Tuesday, United States Secretary of the Treasury Steven Mnuchin and Director of the National Economic Council Gary Cohn held a listening session with technology leaders to discuss tax reform in the United States and the implications of a new tax plan on the technology sector. On Wednesday, President Trump traveled to Cedar Rapids, Iowa. He toured Kirkwood Community College and spoke about agricultural innovation and empowering the American farmer. On Thursday, the White House hosted the American Leadership in Emerging Technology Event, where American tech industry leaders demonstrated technologies like advanced drones and 5G wireless networks to the President. On Friday, President Trump signed the Department of Veterans Affairs Accountability and Whistleblower Protection Act of 2017. After a successful week of addressing American innovation and meeting with leaders of the technology sector, next week the Trump Administration will turn its focus to energy.

Expanding high-speed internet access to rural areas has been one of the few issues that’s drawn bipartisan support in a sharply divided Congress. And while nothing’s assured, backing by Federal Communications Commission Chairman Ajit Pai may help push those congressional efforts across the finish line.

Chairman Pai recently talked up the Senates Gigabit Opportunity Act (S 1013), that would effectively legislate his proposal for spurring broadband investment in remote areas, where internet access is available through 1990s-era dial-up service. The legislation — introduced May 3 by Sen Shelley Moore Capito (R-WV) and co-sponsored by Sen Chris Coons (D-DE) — would provide tax benefits for investments in “gigabit opportunity zones,” primarily in low-income and rural communities. On the other side of the Capitol, Rep David Loebsack (D-IA) introduced related legislation, the Rural Wireless Access Act (HR 1546), which would require the FCC “to establish a consistent methodology for its collection of coverage data about the available speed tiers and performance characteristics of commercial mobile and data service” for use in deciding on the eligibility of areas that can receive funds from the FCC-administered Universal Service Program or similar initiatives.

Attendance at the June 22 House Small Business Committee's Subcommittee on Agriculture, Energy & Trade hearing on improving broadband deployment in rural America was small, but it was yet another dive into a crowded pool as Washington drilled down on the issue, including on Capitol Hill, at the Federal Communications Commission and even in Iowa, where the President talked up rural broadband as well.

The chairman of the subcommittee, Rep Rod Blum (R-IA), is from a rural district and also owns a small technology company that relies on internet access, so he cautioned the audience not to read the light attendance as lack of interest, only that there was a lot going on at the Hill. Chairman Blum said "the nation's small telecom providers are the ones that traditionally supply the bulk of broadband services to the most rural parts of America, and that is no easy task."

Students increasingly must gain 21st century technology skills to succeed in life after high school. Despite the technological shift driven by rapid innovations, approximately 5 million US households with school-age children still do not have access to high-speed Internet at home. The paper gives school leaders guidance to improve digital access in their communities.

In addition, CoSN puts forth recommendations for districts to build and strengthen their networks and identifies funding opportunities for school systems to improve digital equity. These include leveraging capital expenditures, operational expenditures, federal and state funds, bonds, levies, grants, and in-kind and school-to-business partnerships to address digital equity. “School-to-Home” details the main barriers to extending broadband to homes nationwide. These include assessing size of the connectivity problem and addressing the need for adequate Internet access at home and in the community, particularly for students from low-income homes. Despite cost and lack of fiber or high-speed Internet availability, some districts are improving Internet access by promoting public Wi-Fi access, providing Internet in school parking lots and athletic fields, and establishing portable loaner Wi-Fi hotspots for student use to take home to do school work.

Federal Communications Commission Chairman Ajit Pai was spotlighting the news that Sen Chris Coons (D-DE) has signed on as a cosponsor of the Gigabit Opportunity (GO) Act. The bill was introduced in May by Sen Shelley Moore Capito (R-WV). The bill would give tax breaks to companies for investing in gigabit-capable expansion into those communities; direct the FCC to release a framework that encourages states, counties and cities to voluntarily adopt streamlined broadband laws and be designated as a “Gigabit Opportunity Zone;" and defer capital gains for upgrades and allow companies to expense the cost of creating those zones, as well as allow states to more easily issue tax-exempt bonds.

In a statement released after the news of Sen Coons' support, Chairman Pai said: “Closing the digital divide is a top national priority. Gigabit Opportunity Zones would go a long way toward meeting that priority. By streamlining regulations to encourage broadband deployment and establishing targeted tax incentives for entrepreneurs to build those networks, we can empower millions of Americans, rural and urban alike. This is a common sense idea, and I’m excited to see it gaining bipartisan support."

Nearly a quarter of the city-dwelling population in the US isn’t connected to broadband internet, according to a recent IHS Markit and Wireless Broadband Alliance study charted for us by Statista. To be clear, the US is doing a better job at making the internet available to its urban population than many other large nations. But the disconnect that does exist is what happens when you mix the relatively high costs of entry for broadband in America with the number of lower-income people living in cities in the first place. As the study notes, this simply makes it difficult for those people to participate in society at the same level.

Federal Communications Commission Chairman Ajit Pai says he did not discuss his proposal to roll back Title II classification of Internet service providers at a meeting at the White House but did talk about the building blocks of a wireless future—spectrum and infrastructure. Asked about the meeting by a reporter following the FCC's public meeting—particularly given Chairman Pai's criticism of what he thought as too close ties between the White House and Tom Wheeler on that issue—the chairman said they had an "excellent conversation" with tech and telecom leaders and his input was sought on the rollout of 5G and the Internet of Things.He called it a "very fruitful" conversation about spectrum and infrastructure and the like and that he looked forward to working with all interested parties.

As to FCC independence, he said the FCC was still an independent agency, but there were ways to collaborate with others in the Administration, before launching into a string of nautical references to make his point. He said he wanted to make sure "we are steering in the right direction," calling them "all sailors in the same boat" and saying that it was an "all hands on deck effort" to make sure wireless innovators have the necessary tools.

Federal Communications Commission Chairman Ajit Pai issued the following statement following the President’s announcement that he will include expanding rural high-speed Internet access in his infrastructure proposal. “I am grateful to President Trump for his leadership on expanding high-speed Internet access in rural America. Far too many families and businesses in rural communities do not have access to adequate broadband, limiting their opportunities in the digital age. Closing the digital divide needs to be a national priority, and the President’s decision to include rural broadband in his infrastructure plan holds great promise for creating more jobs and prosperity in our nation’s rural areas.”

Local Des Moines (IA) CBS affiliate KCCI featured a story recently on ‘cord cutting’ of wireline telephone service that highlights the challenges of the current rural broadband regulatory framework for small, rural telecommunication companies. The report is somewhat misleading, in that it doesn’t provide a full explanation. An Ogden Telephone Company customer, Christina Janssen-Solheim, was featured because she complained about a policy of the phone company that is directly tied to the current regulatory framework. Janssen-Solheim complained that she was going to be charged $80 per month if she wanted to disconnect her landline telephone.

This paper reviews experiences with subsidizing telecommunications services, and broadband in particular, in the United States and around the world. Based on those lessons it proposes a path forward intended to yield the biggest broadband bang for the subsidy buck.

Specifically, an effective broadband subsidy program would:
Set a single, clear objective: bring broadband service to populated areas that do not have it.
Define “broadband” by taking into account consumer demand characteristics. This definition should be use-centric, not technology-centric. Any technology should be eligible to participate in the auction.
Make the program a one-time subsidy.
Rank-order the bids in terms of cost-effectiveness in terms of new locations, not area, connected per subsidy dollar. Fund the most cost-effective project first, the next most costeffective second, and so on until the budget is exhausted.
Rigorously evaluate the results and have organizations other than the one implementing the program conduct the evaluations.