You’re reading the Benton Foundation’s Weekly Digest, a recap of the biggest (or most overlooked) telecommunications stories of the week. The digest is delivered via e-mail each Friday.

Round-Up for the Week of August 19-23, 2019

On August 21, 2019, Governor Jay Inslee (D-WA) – the Democrat who ran for president making climate change his signature issue  – laid out his vision to expand broadband in rural areas with his Growing Rural Prosperity plan. Shortly after, Senator Bernie Sanders (I-VT) took up the mantle as the "green candidate," unveiling his Green New Deal, which includes massive investments in municipal broadband. Though Inslee has now exited the race, his plan nevertheless gives us something to think about: reform of the Universal Service Fund. And, now Bernie has us asking – is universal broadband an environmental issue?  

Gov. Inslee’s Plan

Like other candidates, Gov. Inslee called for new investment in rural broadband deployment -- $80 billion worth. His aim was to make sure every community has access to broadband to support their schools, their hospitals, their farms, and their businesses.

He also called for doubling annual finance authority for the Rural Utility Service (RUS) to offer $8 billion in Treasury rate financing to hundreds of rural electric cooperatives owned by the 42 million rural residents they serve. RUS would support rural electric co-ops with technical assistance and federal financing for investments in smart grid technologies and enable them for broadband infrastructure.

Inslee's plan would have provided $5 billion in subsidies to low-income rural Americans to make sure internet is affordable even in these hard-to-serve areas. If private companies would not provide broadband service, Inslee said he would work with public entities to create community broadband access. And he wanted to remove barriers to locally owned and created broadband networks. "Every community should have the ability to build a broadband network — and local control and ownership can deliver more local benefit," Inslee said. Some states bar local internet providers, and currently, a number of states ban public utilities or municipalities from offering broadband services. Inslee would have removed those restrictions and allow every provider willing to meet core accessibility standards the ability to provide internet. 

Inslee wanted more investment in and greater accessibility to the federal E-Rate program to ensure school broadband access. And he wanted to extend broadband access for Tribal nations. 

Wait -- Make Big Tech Pay for USF?

One of the most intriguing parts of Inslee’s proposal was his plan to make Big Tech pay into the federal Universal Service Fund, which funds a number of programs that make telephone and broadband services more available and affordable. The plan states:

USF contribution reform is a longstanding issue, though it has also been under-the-radar. The USF is supported by fees on long-distance telecommunications revenues. These fees are passed on to consumers. One problem: the goals of the USF program have expanded to include broadband in addition to voice service. But the FCC still only uses revenues from long-distance voice services to pay for the program -- revenues that have been declining due to changes in the marketplace, such as widespread adoption of wireless phone plans that do not charge for long-distance calls and internet-based calling apps like Skype. 

As far back as 2002, the FCC launched a proceeding on how to support USF. The FCC sought public comment on whether to assess contributions on carriers based on the number and capacity of connections they provide to customers, rather than on the long-distance revenues they earn. The FCC also invited commenters to supplement the record with any new arguments or data regarding proposals to retain or modify the existing revenue-based system. The FCC then offered three possible reforms:

1. Whether to assess USF contributions based on the number and capacity of connections, rather than on the interstate revenues they earn. Under this proposal, local exchange carriers, interexchange carriers, and wireless providers would contribute $1 per month for each connection to a public network for residential users (paging providers would contribute 25 cents per connection). Business connection assessments would be based on the maximum available capacity, or bandwidth, of a connection.
2. Whether to require carriers that choose to recover their USF contributions through a line item on their customers’ bills to make the line item uniform for all their customers; to ensure that the carrier collects its contributions in a non-discriminatory manner.
3. Whether to prohibit carriers from recovering amounts in excess of their actual USF contributions. Under such a proposal, carriers would not be permitted to mark-up their line items to recover administrative costs, uncollectibles, or other contribution-related expenses.

But the FCC never acted on this proceeding.

Although Inslee’s plan was light on crucial details, the proposal still has value to restart the discussion around USF contribution reform. In June 2019, the proposed Universal Service contribution factor exceeded 24%, meaning that nearly 25 cents of every dollar that users spend on long-distance voice services goes towards the USF. The current contribution system seems to be unsustainable. As such, USF reform should be on the radar for policymakers looking to expand broadband access. But something this wonky probably won’t be mentioned on the campaign trail. [Sigh. Us broadband wonks can dream though.]

But if there was a 2020 candidate willing and able to make this a campaign issue, what could they propose? Taxing online advertising revenue? Taxing commercial transactions on the internet (like how a postage stamp serves as a transaction tax on mail)?  Perhaps the simplest solution would be to assess a fee on broadband internet access service revenues. All places candidates can start.

Bernie's Green New Deal

Like Gov. Inslee, Senator Sanders sees climate change as the most important political issue. "The climate crisis is not only the single greatest challenge facing our country; it is also our single greatest opportunity to build a more just and equitable future, but we must act immediately."

Sanders' proposal frames broadband investment as a way to prepare against climate impacts like sea-level rise, more frequent and severe weather, wildfires, spreading disease, heatwaves, floods, and droughts. As such, broadband-related provisions of the proposal include:

• Build resilient, affordable, publicly-owned broadband infrastructure: $150 billion (!) in infrastructure grants and technical assistance for municipalities and states to build publicly owned and democratically controlled, co-operative, or open access broadband networks. 
• Repair and modernize public housing including making all public housing accessible, conducting deep energy retrofits of all public housing, and providing access to high-speed broadband. 
• Invest in workers and de-industrialized community economic development. Counties with more than 35 qualifying workers will be eligible for targeted economic development funding to ensure job creation in the same communities that will feel the impact of the transition most. Eligible projects include drinking and wastewater infrastructure, broadband, and electric grid infrastructure investments. 
• Provide targeted regional economic development. Communities in need of assistance during our transition to a clean energy economy will be eligible for additional funding for economic development investments through regional commissions and authorities. Our federal regional commissions make targeted economic development investments in rural America. These commissions have funded projects that enhance workforce competitiveness, build and repair infrastructure, and increase community capacity like broadband projects, clean drinking water, organic farming, and energy efficiency.
• Infrastructure investments for impacted communities. Provide $130 billion for counties impacted by climate change with funding for water, broadband, and electric grid infrastructure investments.
• Saving American families money by weatherizing homes and lowering energy bills, building affordable and high-quality, modern public transportation, providing grants and trade-in programs for families and small businesses to purchase high-efficiency electric vehicles, and rebuilding our inefficient and crumbling infrastructure, including deploying universal, affordable high-speed internet.

Bernie's framing of broadband policy as investing in a resilient communications infrastructure in the face of environmental disaster has practical, historical precedent. The FCC was created with the mission of "promoting safety of life and property through the use of wire and radio communication." The FCC's Public Safety & Homeland Security Bureau (PSHSB):

Sen. Sanders has now given broadband policymakers something to think about: seeing universal broadband as part of building necessary, resilient communications infrastructure in response to environmental disaster.

Conclusion

In the announcement of his departure from the 2020 presidential race, Inslee said his campaign had “advanced the dialogue” on climate change. Perhaps we can hope that he also has advanced the dialogue around digital divide policy. 

His parting shot turns out to be a unique contribution to the national debate around closing the digital divide. While lacking the specific details that would make such a plan feasible, it nevertheless adds USF reform to the current conversation about broadband expansion. 

And now that Sen. Sanders is attempting to be the green candidate, he has advanced the idea of universal broadband as an emergency communications issue in response to climate change. Can we say that broadband has now gone green?

“Every facet of society depends on broadband connectivity,” Inslee’s plan stated. “America needs a comprehensive vision to advance technology and give consumers the tools necessary to meet the challenges of the 21stCentury.”

In the weeks ahead, the Benton Foundation will be releasing analysis from broadband policy expert Jon Sallet on how best to update America’s approach to broadband policy for the coming decade. We’re excited to contribute our research and roadmap to policymakers to get us to a more comprehensive, universal solution. 

Broadband policy is officially an issue for major 2020 candidates. To stay up-to-date with the twists and turns, and all other broadband news, be sure to subscribe to our daily Headlines email newsletter.

Quick Bits

• FCC's Pai targets Lifeline fraudsters but doesn't propose a funding cap (C|Net)
• FCC Authorizes $4.9 Billion Over 10 Years For Rural Broadband (FCC)
• Sen Manchin Sends Chairman Pai Speed Tests Results From Across West Virginia (US Senate)
• USTelecom Broadband Map Pilot: Up to 38% of “Served” Rural Locations Actually Lack Broadband (telecompetitor)
• Wireless Carrier Throttling of Online Video Is Pervasive (Bloomberg)
• FCC’s CenturyLink 911 Outage Report Reveals Tech Transition Risk (telecompetitor)

Weekend Reads

• The FCC has no idea how many people don’t have broadband access (ars technica)
• Democrats torch President Trump failures on rural digital divide (Politico)
• Rural America cannot be overlooked (Sen. John Thune (R-SD))
• Rural Policy: ‘Here’s What We Need,’ Advocates Say (Roberto Gallardo)
• NDIA and Brookings Institution Launch Broadband Research Base (National Digital Inclusion Alliance)
• FCC Commissioner Starks Visits New Mexico Tribal Communities (FCC)

ICYMI from Benton

• An Engineer’s View of the Department of Justice’s T-Mobile/Sprint/DISH Strategy (Andrew Afflerbach)
• Survey Says: Telehealth + Community Broadband = Local Economic Success (Craig Settles)
• How Do We Measure Broadband? (John Horrigan)
• Digital Divide Policy Enters the National Conversation (Robbie McBeath)
• 2020 Candidates Offer Plans to Extend the Reach of Broadband (Robbie McBeath)
• What to Expect When You're Expecting a Net Neutrality Decision (Andy Schwartzman)

Benton, a non-profit, operating foundation, believes that communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities. Our goal is to bring open, affordable, high-capacity broadband to all people in the U.S. to ensure a thriving democracy.

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