Joan Engebretson

The state of Massachusetts has asked the Federal Communications Commission to release federal broadband Connect America funding to states. The funding in question was rejected by the nation’s largest price cap carriers in 2015. Granting the Massachusetts request would mean the FCC would hand over approximately $1 billion to 20 states over a period of six years, according to Telecompetitor’s estimate.

Massachusetts is one of several states served in large part by Verizon for local service. Verizon, unlike most large incumbent carriers, rejected the FCC’s initial offers of Connect America Fund (CAF) broadband funding. Accordingly, Massachusetts and other Verizon states have not received little or no federal CAF cash infusion of the sort that carriers in some other states have begun to use to help cover the costs of bringing broadband to high-cost areas where broadband is not available today.

Rural stakeholders are hoping state governors can help in obtaining additional federal rural broadband funding. Just before the winter holiday break, Shirley Bloomfield, chief executive officer of NTCA – The Rural Broadband Association, sent a letter to the National Governors Association asking them to highlight broadband as a critical infrastructure initiative in their communications with President-elect Donald Trump’s transition team.

In the letter, Bloomfield also made two specific recommendations for boosting rural broadband deployment, including closing a budget gap in the Universal Service Fund program and creating a new capital infusion program. NTCA sent the letter when staffers learned that the Trump transition team had asked governors for input on critical infrastructure initiatives and had given the governors just a few days to respond. “Placing a priority on deployment of such networks makes sense when one considers the economic payback of such investments for individual consumers and businesses and for the States more broadly,” wrote Bloomfield in the letter. She cited a recent Hudson Institute study which found that companies investing in and operating rural broadband networks contributed $24.1 billion to the economies of the states in which they operated in 2015. A particularly notable finding was that two-thirds of the economic output actually accrued to urban areas.

The Federal Communications Commission’s decision to allow qualified low-income households to use funding from the Universal Service Lifeline program toward broadband service was welcomed back in March when it was made, but problems with the program are mounting.

Key Lifeline broadband problems: big carrier participation and rural carrier stand-alone broadband pricing. According to a press release from The National Hispanic Media Coalition (NHMC), more than 80 service providers have opted out of participation in the Lifeline broadband program for at least part of their territories. Verizon, for example, only wants to offer Lifeline broadband service in areas where it has deployed its FiOS fiber-to-the-home service. Other major service providers opting not to participate in Lifeline broadband include AT&T, Cox, Windstream, Charter, CenturyLink, FairPoint and Frontier. Reforms adopted in March called for the government to create a national eligibility verifier – essentially a database of eligible households — thereby eliminating the need for service providers to determine whether recipients are qualified to receive Lifeline payments. But according to a November 23 blog post from AT&T executive Joan Marsh, the eligibility verifier will not be fully implemented until 2019. Until then service providers are still responsible for verification – a responsibility that also entails compliance risks. Rather than take on that responsibility, AT&T would prefer to hold off on offering Lifeline broadband until the verifier is operational. Other carriers opting not to participate in the program may have similar motivation. There are a few areas where AT&T will offer a Lifeline discount on broadband – namely, anywhere the company receives high-cost Universal Service funding.

The reason is that carriers accepting high-cost program funding are required to participate in the Lifeline broadband program. But there, too, the Lifeline broadband program is encountering problems. Rural rate of return carriers, many of whom rely on high-cost funding, do not expect to be able to offer stand-alone broadband service at rates that are comparable with those available in urban areas. With rates projected to exceed $100 monthly, a $9.25 discount wouldn’t go far toward making service more affordable for low-income consumers. Rural carrier associations argue that this situation is the result of insufficient funding for the high-cost program.

The Federal Communications Commission has authorized Rural Broadband Experiment support totaling nearly $3.5 million for Lake Connections, a community-owned network in rural Lake County (MN). The support will go toward bringing broadband service to 845 census blocks comprising 8,497 locations that do not have broadband available to them today.

The average US peak broadband speed was 70.8 Mbps in the third quarter of 2016 – an increase of 23% over the same period a year earlier, according to the latest Akamai “State of the Internet” report. The average peak connection speed is Akamai’s closest approximation to the actual speeds that end users’ connections can support. In comparison, overall average connection speed was considerably lower – measuring 16.3 Mbps for third quarter, a 30% increase over third quarter of 2015. Nearly 90% (88%) of Americans have service supporting speeds of at least 4 Mbps, including 61% who can connect at speeds of at least 10 Mbps and 39% who can connect at speeds of at least 15 Mbps, Akamai said.

Average US peak broadband speed varied considerably by state, according to the Akamai State of the Internet report for the third quarter of 2016. Maryland had the highest average peak broadband speed, which measured 90.6 Mbps, Akamai said. The seven next highest states were also in the eastern US and all had average peak speeds of at least 81.7 Mbps. Those seven were Massachusetts, the District of Columbia (which Akamai counts as a state), Virginia, Delaware, Rhode Island, New Jersey and New York.

The House of Representatives has adopted legislation and a resolution targeting broadband for veterans and school-age children.

Broadband for Veterans: The bill is the Improving Broadband Access for Veterans Act of 2016 (HR 6394). Introduced by Rep Jerry McNerney (D-CA), the bill would require the Federal Communications Commission to submit a report to Congress about promoting broadband Internet access service for veterans, with a special focus on low-income veterans and veterans residing in rural areas.

Student Broadband Resolution: The resolution, H. Res. 939, was introduced by Rep Peter Welch (D-VT). It argues that all students should have access to digital tools, including broadband, which are necessary to further their education and compete in today’s economy. Leading up to that assertion are 13 “whereas” clauses, such as:
Whereas the United States should lead the world in providing high-quality education and opportunities to its citizens;
Whereas digital skills are essential for education and preparing citizens for the economy of the future;
Whereas a disproportionate number of students without high-speed Internet access at home reside in low-income and minority households.

The Verizon 5G fixed wireless trial planned for 2017 will support gigabit speeds and will include over-the-top (OTT) video, said Verizon CEO Lowell McAdam. “I call it ‘wireless fiber,’” said McAdam of the 5G fixed wireless technology. Eventually 5G is expected to also support mobile services, but initial plans for Verizon and some other carriers are focused on fixed deployments. Verizon’s initial 5G fixed wireless deployments are expected to support services similar to fiber-to-the-premises based offerings such as Verizon’s FiOS service, but fiber will be brought only to within 200 to 1,000 feet of the home, using high-speed wireless for the final link, McAdam explained.

iPass Inc., the leading provider of global mobile connectivity, and Telrite Corporation, through its Lifeline supported wireless service, Life Wireless™, announced a partnership to bring unlimited Wi-Fi access to qualifying subscribers of the Lifeline program. The partnership will help provide Lifeline program subscribers with a secure, fast connection on their mobile devices.

Beginning on Dec 1, 2016, Lifeline program subscribers will receive access to the iPass global Wi-Fi service. Once activated, the service will provide each subscriber with access to the world’s largest Wi-Fi network. “For the individuals and families we serve through the Lifeline program, Wi-Fi access, courtesy of iPass, is absolutely invaluable,” said Brian Lisle, the president of Telrite Corporation. “This partnership represents our continued dedication to ensuring that the subscribers we serve continue to have access to doctors, families, employers and emergency services – as well as access to education resources to help bridge the ‘Homework Gap’ for students at home – so that they can compete on a level playing field.”

If CenturyLink’s plan to merge with Level 3 Communications is approved, the combined carrier will get 76% of its revenue from the enterprise and wholesale market, said a Level 3 executive. After the CenturyLink, Level 3 merger, the combined company would be the most heavily business-focused of the nation’s five largest service providers by a long shot, according to data presented by Level 3 Chief Financial Officer Sunit Patel at the Bank of America Merrill Lynch Leveraged Finance Conference, which was also webcast. AT&T would be in the number two spot, with 17% of its revenue coming from enterprise and wholesale, followed by Verizon and Charter who are tied at 13% and Comcast, which gets just 6% of its revenues from the enterprise and wholesale market.

The combined Level 3/ CenturyLink enterprise and wholesale markets “really becomes the prime business of the company moving forward,” said Patel. At $32.5 billion for 2015, AT&T would still have the largest overall enterprise and wholesale revenues after a CenturyLink/ Level 3 merger. But the merged company would be in the number two spot with combined CenturyLink enterprise and wholesale revenues of $18.8 billion, followed by Verizon, Charter and Comcast.

Two key telecommunication associations – USTelecom and NTCA—The Rural Broadband Association – have asked the Federal Communications Commission for additional Universal Service funding. The requests come in the wake of the revelation that more rate-of-return carriers than anticipated had opted for A-CAM Universal Service funding based on a cost model, creating a budget shortfall of $1.6 billion over a 10-year period. At the time this news came to light, the FCC asked for input from stakeholders about how to address the shortfall.

A-CAM is an acronym for “alternative Connect America model.” Carriers opting to receive Universal Service funding based on that model also must commit to building out broadband to customers that cannot get broadband today in conformance with strict targets and deadlines that are more aggressive than those for carriers not opting for A-CAM funding. In separate filings, USTelecom and NTCA asked the FCC to make up the $160 million annual funding shortfall in A-CAM Universal Service support for the next 10 years.