Blair Levin

[Commentary] The Federal Communications Commission is finishing an “incentive auction” of broadcast spectrum by which it created a market to match the price at which broadcasters were willing to sell spectrum with the price mobile operators were willing to pay. A bipartisan group of House Commerce Committee members described the outcome this way: “The incentive auction’s conclusion with more than $19 billion in bids marks the end of the second-largest auction and years of successful work in bringing market forces to bear on spectrum use policy. … Not only did the auction successfully encourage investment and competition by bringing 70 MHz of licensed and 14 MHz of unlicensed spectrum to meet our nation’s wireless broadband needs, but it also generated $7 billion for deficit reduction.” How did such a success occur and what lessons does it bring to today’s environment? Three stand out.

First, begin with a clear problem statement and generate bipartisan support for solving the problem.
Second, the solution should flow from a process that is transparent, fair, invites all to share credit and incorporates insights from a spectrum of stakeholders.
There’s one more lesson that might prove more controversial, though it shouldn’t. That is that smart, data-driven economic policy will create far more jobs and economic growth than ad hoc, stunt-driven events.

[Blair Levin is a Non-Resident Fellow at the Brookings Institute Metropolitan Policy Project]

With the Trump Administration dangling the prospect of a $1 trillion infrastructure program, now is the time to consider whether a new approach might more effectively address the rural broadband problem.

As a starting point, Congress should consider setting aside some portion of a new infrastructure fund, say $20 billion, for a one-time rural broadband acceleration fund that is expressly designed to make the Federal Communications Commission’s universal service program more efficient. Under this option, a rural area currently without a network capable of meeting the FCC’s 25/3 Mbps benchmark would be eligible for funding. The FCC would set an opening per-location amount for how much it would be willing to pay a carrier in one-time support to deploy a next generation network providing enough bandwidth to meet the upper bounds of future expected demand (for example, a symmetric 100 Mbps) within a set time frame. An express condition of the support would be that the FCC will not provide any ongoing funding in the future. If companies recognized this is their best chance to finance a “future-proof” solution, the aggregate of funds sought by the carriers would likely be substantially in excess of the available targeted fund. If this is the case, then the FCC would run a reverse auction, with firms bidding to receive a lower per-location amount in each round until the amount reached the available targeted fund.

[Commentary] The federal government has often played a major role in the country’s infrastructure development. With a President who promised federal support for improving infrastructure, we will soon see how the new administration proposes to do so. Based on their approaches to markets broadly, the new administration’s broadband policies are likely to lead to significant deregulation, tax changes, and merger activity that will affect the private sector’s appetite for infrastructure-related investment.

Still, infrastructure deployment is largely dependent on the efforts and policies of cities. In the early part of the last century, cities were the gravitational center for efforts to create the electrical, water, sewer, transportation, and lighting infrastructure required for economic growth and social progress in that time. Subsequently, while telephone service was largely addressed at the state and federal level, cities dealt with the deployment of cable networks and the cellular towers. In the last decade cities have been at the cutting edge of creating a more hospitable environment for deploying gigabit capable networks.

[is the third in a trilogy of blogs discussing the state of broadband policy as a new administration and Congress begins.]

[Commentary] If affordable and abundant broadband is integral to the continued growth of the American economy , then how the market reacts to Trump administration policy will determine whether the country can deliver this necessary infrastructure. Here are the four major areas where I expect the Trump administration to impact broadband policy and my predictions for how those reforms may look:

Expect a change in how the government considers the competitive landscape
Expect a change in the range of government oversight
Expect a change in the center of gravity from the FCC to Congress
Expect an increase in mergers and a change in merger reviews

(This is the second of three blogs discussing the state of broadband policy as a new administration and Congress begin.)

[Commentary] Building broadband infrastructure, as with any infrastructure, raises three questions: how to finance it, what projects are eligible to receive the funding, and how the funds are distributed. I can think of seven potential approaches, none of which are exclusive and many of which are complementary:

Target anchor institutions—schools, libraries, health facilities, and other community institutions—to assure they have abundant bandwidth.
Target middle-mile facilities—the networks between the internet backbone and the local, final connection– to lower operating costs for multiple providers in low-density areas.
Target final-mile facilities, with a focus on communities that lack access to a network offering a certain speed threshold. One could build on the Federal Communications Commission’s current Connect America Fund structure to accelerate a next-generation buildout in rural areas, something I’ll discuss in more detail in a future post.
Target next-generation 5G mobile networks and the Civic Internet of Things to bring intelligence to the water, sewer, electricity, and transportation grids underlying our communities. Both these new platforms will share a need for, and operate over, a fiber network. The infrastructure fund could accelerate such deployments either through a model cities approach of funding demonstration projects or by funding many projects to create scale and standards.
Target digital enterprise zones. The new Federal Communications Commission Chairman Ajit Pai recently proposed to use broadband to improve the economics of areas of persistent poverty. Pai deserves praise for both prioritizing government resources to attack poverty and laying out a detailed proposal. While I have my questions on the specific proposals, I support the direction Pai articulated and hope any infrastructure plan adopts his agenda.
Pursue a state block grant strategy. Distributing the funds through state block grants that rely on a formula, such as per capita funding, may prove a productive path, particularly if the states have broad discretion for eligibility.
Pursue a city block grant strategy, but rather than distributing the funds on a per capita basis, as with states, funds would be distributed to target cities that adopt certain best practices of deployment.
(This is the first of three blogs discussing the state of broadband policy as a new administration and Congress begin.)

While Congress continues to pursue legislation, we think there’s direct action the next Federal Communications Commission Chairman can take on day one that would immediately improve the quality of public debate on pending agency action. And that is to hold a second monthly meeting, during which FCC staff gives presentations on major items that might be brought before the Commission at least 60 days before any vote. This second, forward-looking monthly meeting would provide the public--the real party of interest—the information needed to provide meaningful input to the Commission prior to its decision-making. It would also improve the Commissioners’ own ability to respond to policy recommendations on an informed basis.

Although Donald Trump will be our next President, we are not sure who will occupy key positions in broadband policy. We can, however, know what some of the agendas and issues will be and their potential direction. Several can impact the economics and options related to network deployments. 1) The Federal Communications Commission’s ability to legally undercut laws restricting municipal broadband efforts is likely to remain limited, but we note that a number of efforts have proceeded in states with such laws, and as more communities obtain next generation broadband through their own efforts, and as such broadband becomes more important from an economic development perspective, the ability for incumbents to convince legislatures to pass such laws will likely weaken. 2) As competitors try to deploy next generation networks, they have pointed to two places where they see significant barriers: utility poles and entry to multiple-dwelling units (MDUs). 3) One of the few areas of agreement between the Democratic candidate, Hillary Clinton, and the President-elect, Donald Trump, is that both agreed there was a need for the country to spend more on infrastructure. While Trump has not yet laid out his technology-related agenda, cities making plans for upgrading their networks should pay close attention to policy debates in the first part of 2017 to determine if there are new resources to be utilized in upgrading networks for these future needs. 4) In the last few years, there have been increasing calls for the government to adopt policies that enable all to participate in what we might think of as digital life, particularly for such services as health care, education, job training, and public safety. Again, we cannot know what the precise policies will be for improving inclusion in digital life. We can know that greater efforts at inclusion increase the value of, and the percentage of, adoption in traditionally low-adoption communities. Both have the impact of improving the economics of new deployments, as they bring new customers, and a greater willingness to pay, to the platform.

While my voting habits are partisan, I view broadband as potentially bi-partisan. The substance of my three recent speeches, written before the election, were consciously designed to communicate the same messages regardless of outcome.

Today’s topic, relevant regardless of election results, is how best to utilize the bi-partisan consensus that we need better infrastructure, including our broadband networks. I will set out different approaches, not with an eye toward advocating what is best, but, rather, laying out different options for how effectively targeting funds. I can see at least seven potential targets, none of which are exclusive. Many are complementary. These are: 1) An Anchor Strategy, 2) Middle Mile Strategy, 3) A Final Mile Strategy, 4) A Next Gen Strategy, 5) Digital Enterprise Zones, 6) State Block Grant Strategy, and 7) A City Block Grants Strategy.

[Levin serves as a non-resident Senior Fellow of the Metropolitan Policy Project of the Brookings Institute]

Recently, I gave a speech in Wilson (NC) at a conference on Expanding the Gigabit Ecosystem. I wasn’t there to make a partisan statement but began by agreeing with 75 percent of an assertion of one of the presidential candidates: that it is time—because it’s always time--to Make America Great. I suggested the real topic of that conference is how we make America great with great broadband. Today I would like to address four questions related to further steps along that journey:

What is the impact of next generation broadband?
Why not just wait for current market forces to deploy such networks?
What are some models for communities to act to accelerate deployment?
What other steps are useful for expanding the value of the gigabit ecosystem?

The primary objective of broadband policy ought to be to stimulate faster, better, cheaper broadband. There are many paths up the mountain. Let me offer a couple of thoughts based on my experiences with other communities.
First, get everyone on. Adoption is a vexing problem, combining elements of affordability, literacy and relevance. But it is also viral; the more members of a community who are own, the greater the incentives for others to get on. And once universality is achieved, it opens the door to all kinds of community improvements not available to those communities half on and half off. The FCC’s reform of its Lifeline program and many successful community adoption programs create new opportunities and models for achieving this goal.
Second, use the platform to better deliver public goods and services. All large enterprises are moving off the old analog platform and moving strictly to the digital platform. If you want to sell something, if you want a job, if you want information, you have to be on line. They don’t do this because they are nerds. They do this because it improves their ability to constantly improve how they deliver goods and services. Government, because it has to serve everyone, cannot migrate as easily, another reason it is important to get everyone on. But government should also aspire to constantly improve how it delivers goods and services. That means ending the era of lines and paper and making all government services web-based, providing greater transparency, always on, and above all, using more reliable data to improve performance.
Third, help every enterprise to become a networked, empowered enterprise. Amazingly many small businesses are still not online. This not only undercuts their ability to sell, it makes it more difficult to improve efficiency in buying, operating, and accounting made possible by cloud-based services. Not every company needs to be a web-based company. But every company can benefit from the services now available on the web.
Fourth, be a laboratory for all the communities that resemble Wilson (NC) more than they resemble Silicon Valley. In Silicon Valley, VC’s advise start-ups to “build things people need.” But what we have seen in the last few years is a focus on building things that people who live in Silicon Valley need. As will be discussed in the next several panels, you bring to the table an understanding of needs that Silicon Valley will have trouble understanding. Make that work to your advantage.
Fifth, partner with the incredible resources of the Research Triangle Park area. You are lucky. You are the only community fiber network I know of so close to a large-scale fiber build where soon, residents will have the most competitive gigabit market in the country. Moreover, you have access to the incredible resources of three world-class universities and a world-class tech hub.
And sixth, make sure your network accommodates the next technology shifts. The next two great networks to be built are the 5G next generation mobile network and the Civic Internet of Things, bringing intelligence to the infrastructure underlying our communities, improving water, sewer, electricity, and transportation grids. Both these new platforms will share a need for, and operate over, the fiber network you already have. Now is the time to start adopting the network to those emerging needs.