Doug Dawson

Since the national dialog has suddenly fixated on inflation, the big ISPs decided to jump into the discussion by claiming that broadband prices are falling. The big ISP industry has been trotting out this untruth for the last several years. What underlies this claim is that the cost per megabit of speed has been falling as ISPs increase speeds. By definition, when an ISP upgrades a customer from 100 Mbps to 200 Mbps, the cost per megabit drops. While the cable companies have been unilaterally increasing speeds, consumers have not seen the check they write each month drop.

As you might expect, the lobbying is becoming hot and heavy to position internet service providers (ISPs) to win the $42.5 billion of Broadband Equity, Access, and Deployment (BEAD) grants that will likely start being awarded in 2023. This is one of the most interesting lobbying challenges I’ve ever seen because there is no one central place that will be awarding these grants. Congress gave the responsibility for these grants to the National Telecommunications and Information Administration (NTIA), but the money is going to flow from them to the states.

I’m not sure that most people understand the extent to which our online experience has moved to the cloud – and this movement to the cloud means we’re using a lot more bandwidth than in the recent past. A huge number of online functions now reside in the cloud, when only a few years ago a lot of processing was done on our computers. The shift to the cloud is still an ongoing transition and there are still plenty of software packages that are not processed in the cloud, but it’s obvious that everything will eventually be in the cloud.

One thing that is extremely rare in the broadband industry is lawsuits between internet service providers (ISPs) concerning unfair trade practices. Big ISPs bully and compete unfairly against small ISPs all of the time, and yet you don’t hear of many cases where a small ISP sues the big ISP. There are several reasons for this. One is simple to understand – the big ISPs have a flock of in-house lawyers who can overwhelm anybody who sues them. Little ISPs don’t generally have the deep pockets needed to last through a long, protracted lawsuit.

Alan Davidson, the Administrator of the National Telecommunications and Information Administration (NTIA), recently held a press conference and webcast talking about the $1 billion Middle-Mile Broadband Infrastructure grant program. The biggest takeaway from that conversation is that the NTIA is likely to make these awards much sooner than the awards from the $42.5 billion Broadband, Equity, Access and Deployment (BEAD) grants for last-mile broadband. Davidson was not specific about the dates of these grants, but anybody wanting to request one of these grants should start getting ready.

There has been a huge shift in broadband subscriptions from early in the pandemic until the end of 2021. Increasingly, customers are signing up for faster broadband speed tiers. It’s obvious that a lot of people have upgraded their broadband subscription during the eighteen months. I’ve heard a lot of anecdotal evidence to support this from my internet service provider (ISP) clients. My consulting firm does a lot of surveys and interviews, and we’ve been seeing this shift everywhere.

When talking about the benefits of broadband, it’s easy to overlook how broadband has become the glue that brings people and communities together. This is becoming particularly important for rural communities but matters to people everywhere. Rural communities have been rapidly losing other forms of media that were the focal point in the past. 2004 was the peak of the newspaper business in terms of readership and revenues. Since then, the number of journalists has been cut in half.

It seems that almost every internet service provider (ISP) going for broadband grants is promising to offer a low-income program by promising to take part in the Affordable Connectivity Program (ACP), which provides a $30 monthly discount on broadband rates for qualifying households. The discount is available for households earning less than 200 percent of the federal poverty level. I love the idea of the ACP, but I think it’s already time to start the discussion of what happens when the ACP program runs out of money.

It’s sometimes easy to forget that the broadband business is just over twenty-five years old. Cable companies have adopted another interesting way to compete through what is called hidden fees, which are fees that are not clearly identified when new customers sign for service. Hidden fees have been around a long time, but in recent years have become gigantic. The motivation for having hidden fees is clear – it lets a cable company advertise a low price for basic service by not mentioning the hidden fees.

It is my firm belief that counties that form partnerships with regional internet service providers (ISPs) to build fiber networks--funded by both Broadband, Equity, Access and Deployment (BEAD) Program grants and local matching grants--will be the ones to win BEAD grants. But this is not an easy choice. For an area that doesn’t have broadband today, the BEAD grants sound like a far distant opportunity. It’s hard to think that any recipients of BEAD grants will be constructing networks any sooner than 2024 – assuming by then that they’ll be able to get the needed fiber and electronics.