Options for Accelerating Great American Broadband

Next Administration Broadband Funding Strategy Group
SHLB Coalition
(As Prepared for Delivery)

Thank you.

This is the third in a trilogy of speeches I have done on broadband infrastructure around the time of the election.

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

In the first, at a conference in Wilson, North Carolina on Expanding the Gigabit Ecosystem, I addressed the question, relevant to that community, of how to expand the value of the gigabit network they already have. I began by agreeing with 75% 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—as is this conference—is how we make America great with great broadband.

It was a politically mixed audience, but interestingly, I got spontaneous applause for criticizing the law that prohibits others in North Carolina from doing as Wilson did in exercising the local right to self help.

I said the primary objective of broadband policy ought to be to stimulate faster, better, cheaper broadband. There is no evidence that that law does so. There is evidence that that law makes broadband in North Carolina slower, worse and more expensive.

I expressed the hope that when the newly-elected General Assembly returns to Raleigh, Wilson and others speak with a unified voice and tell the Assembly: Tear down the law that prohibits us from providing faster, better, cheaper broadband.

I didn’t say that to get applause—not my style—but it's an indication, similar to the overwhelming votes for a municipality’s right to build a network in areas that voted heavily for President-elect Trump, that the issues of next generation broadband do not honor rigid red/blue boundaries.

The second speech was in Westchester Country, where four towns have joined in a common effort to accelerate the deployment of a next generation broadband network. The speech was entitled Stronger Together For and With Great Broadband.

Like I said, bi-partisan.

It focused on the different models the communities could now use to get the broadband communities as diverse as Raleigh, Huntsville, Lincoln, South Portland and Lafayette have. All of these communities created alternative paths.

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.

Today’s conference will provide a deep dive in providing a map on that topic.

I will set out different approaches, not with an eye toward advocating what is best, but, rather, laying out different options for how to effectively target funds.

The Trump campaign laid out an approach for distributing the funds that essentially supplies a level of government capital—provided largely through funds repatriated from off-shore holdings—and then levers up through private sector lending.

I don’t think there is significant value in discussing the merits of that financing approach. Ironically—to me—it is structurally similar to the framework for financing next generation communications and clean energy networks that Reed Hundt and I proposed in our 2012 book, The Politics of Abundance, though there are some significant differences in details.

But our group here is not going to affect the financing mechanism. We can influence the targeting. That is, what is the appropriate criteria for eligibility?

As a preliminary matter, I can see at least seven potential targets, none of which are exclusive. Many are complementary. These are:

1. An Anchor Strategy. You already have a proposal drafted to finish the job of connecting all anchor institutions, building on the gains of such programs as BTOP, UCAN and E-Rate. Others will comment on this more, but I would only note that experiences of targeting funds towards these projects makes doing so relatively easy. Further, one could think of this as an E-Rate Fiber accelerator that could take pressure off the universal service funds and the looming contribution factor problem.
2. Middle Mile Strategy. The model for this was the BTOP program. I thought it very successful but, as with any program, it could be improved. Again, however, due to that experience, there are clear, established ways to target projects.
3. A Final Mile Strategy. Another potential target is network upgrades where a community lacks any access to a network offering a certain speed threshold. This is a relatively small percentage of the population, located largely in rural areas, but one where we already spend billions in support through the Connect America Fund (CAF) program. One could see building on the CAF structure, or, alternatively, offering rural companies a large cap ex check to accelerate the next generation build-out in exchange to forgoing future USF payments, again, helping long-term to avoid a contribution factor crisis.
4. A Next Gen Strategy. 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, a fiber network. While I think there is a lot of merit in accelerating the deployment of these networks, I think it might be early to make such investments at scale. Nonetheless, but as a series of models to develop best practices, the dividends of such investments could be large.
5. Digital Enterprise Zones. FCC Commissioner Ajit Pai recently gave a speech in which he laid out a proposal to use broadband to improve the economics of areas of persistent poverty. The core ideas are: “Provide financial incentives for Internet service providers (ISPs) to deploy gigabit broadband services in low-income neighborhoods. Incentivize local governments to make it easy for Internet service providers to deploy these networks. And offer tax incentives for startups of all kinds in order to take advantage of these networks and create jobs in these areas.”

I think Commissioner Pai deserves praise for at least two things. First, he prioritized using government resources to attack poverty. Second, he laid out a detailed proposal. In this time when policymakers sometimes think a tweet provides sufficient detail, we should honor any policymaker willing to provide a more comprehensive view of their ideas, beyond the mere statement of aspirations.

I certainly have my questions. For example, while we contemplated proposing tax incentives for certain broadband deployments for both the Recovery Act and the National Broadband Plan, economists in both cases rejected the option, citing numerous inefficiencies. Is Commissioner Pai’s economic analysis different than these economists? And while he argues that cities should avoid regulatory barriers that discourage deployment, what does he think of cities trying to lower the cost and time of deployment with one-touch, make-ready pole access proposals?

But my questions, and I have others, do not detract from my respect for the speech. I assume Commissioner Pai is currently trying to get the Trump transition to include his ideas in their own broadband proposals. If so, we should consider how best to provide support to such a targeted effort.

6. State Block Grant Strategy. A long-standing policy tactic, particularly favored by Republicans, is to have a program goal, but give states significant leeway in how to accomplish the goal through a state block grant program, distributed through a formula, such as on a per capita basis. Given the different state needs, and given the laboratories of democracy that states provide, it may prove a productive path, particularly if the states have broad discretion for eligibility.
7. A City Block Grants Strategy. A similar strategy is to provide block grants to cities, but instead of distributing the funds on a per capita basis, funds would be distributed to target those cities that adopt certain best practices.

While you are thinking about these strategies, we should also consider the arguments that some conservatives raised in opposition to the Clinton plans. For example, several scholars at the American Enterprise Institute, also the home of Trump telecom transition lead Dr. Jeffrey Eisenach, wrote pieces critical of the Clinton broadband infrastructure agenda. While I disagree with some of their arguments, they raise legitimate points and map out potential critiques that we need to consider for any proposal we might offer.

We also have to consider the potential need to play defense. For example, there were certain changes to the E-rate program that I suspect many here thought positive. We should acknowledge that not all did so. Some critics will want to rollback the changes. Further, I would not be surprised to see some proposed changes in the tax code that make it harder for local governments to undertake broadband projects. If we want faster, better, cheaper broadband we ought not to make it harder for communities to engage in self-help, particularly as it has often been the threat of self-help that has caused private sector providers to improve their service. In that light, political capital must be devoted to both offense and defense.

But the most important thing to keep in mind is that the changes we want to see in the broadband ecosystem will only occur if some enterprise decides to allocate capital towards that goal. So our job is to figure out how to change the math so investing in the great infrastructure we want becomes more attractive.

In closing, let us step back to consider what it means to make America great. The bedrock of American greatness is found in John Winthrop’s sermon, “A Model of Christian Charity.” He delivered it in 1630 to his fellow Puritans as they sailed to their new home in the Massachusetts colony. Winthrop, playing off of Matthew’s version of the Sermon on the Mount, admonished his compatriots to create a “shining city on the hill”, one bonded together in love, compassion, and hard work, for “the eyes of all people are before us” and—consciously echoing arguments in Exodus of Moses rallying the Israelites wandering the desert—suggested failure would mean failure of God’s mission for humanity on earth.

Consider how different that mission statement was from the Spanish mission in the New World. It was not about extracting gold.

It was about creating an exceptional nation, a model to inspire, and, as President Reagan described it in his farewell address, to build a city “teeming with people of all kinds living in harmony and peace; a city with free ports that hummed with commerce and creativity. And if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here.”

I hope we all take that vision to heart. Of course, having a gigabit network alone will not get us there or solve all our problems. Addressing other challenges —from climate change to quality education to the need to create an educated and diverse workforce—must be part of the mix.

But at some point in the near future, a broadband network providing affordable, abundant bandwidth will be the new table stakes for addressing both the challenges and opportunities of this century to build a better life for ourselves, our children, and the generations to follow.

And when those generations arrive, I hope that America is still great. I hope its residents and the world will see it as a shining city on the hill that we have aspired to be since our earliest days, that Reagan so eloquently described.

As Yogi Berra usefully reminded us, predictions are tricky, particularly about the future.

But these two predictions are 100% certain: America will not be great if it does not have great broadband.

And we will not get it if we do not work together.

Many thanks.

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Blair Levin serves as a non-resident Senior Fellow of the Metropolitan Policy Project of the Brookings Institute. He also serves as the Executive Director of Gig.U: The Next Generation Network Innovation Project, an initiative of three dozen leading research university communities seeking to accelerate the deployment of next generation networks. From 2009-2010, Mr. Levin oversaw the development of the FCC’s National Broadband Plan. From 1993-1997 Levin served as Chief of Staff to FCC Chairman Reed Hundt.