What Section 706 Means for Net Neutrality, Municipal Networks, and Universal Broadband

What Section 706 Means for
Net Neutrality, Municipal Networks, and Universal Broadband

In 2014, when the United States Court of Appeals for the District of Columbia Circuit struck down key elements of the Federal Communications Commission’s Open Internet rules, the court actually sided with the Commission’s arguments that Section 706 of the Communications Act (1), titled 'Advanced Telecommunications Incentives', gives the FCC authority to regulate broadband networks, including imposing net neutrality rules on Internet service providers. The court ruled that the law “vests [the FCC] with affirmative authority to enact measures encouraging the deployment of broadband infrastructure.” As Andrew Jay Schwartzman wrote in Benton’s Digital Beat blog a year ago, the court gave the FCC a “powerful weapon” with “extremely wide latitude to address threats to broadband deployment and the open Internet.” Since Section 706 authority only kicks in when the FCC finds that “advanced telecommunications capability” is not being deployed to all Americans in a reasonable and timely fashion, we focus today on the Commission’s latest findings on broadband deployment in the U.S. These findings will have a huge impact on major, controversial decisions before the FCC this month -- and the months ahead.

The connection between Section 706 and the FCC’s agenda was highlighted this week when FCC Chairman Tom Wheeler traveled to Boulder, Colorado, to deliver a speech to the Silicon Flatirons Center’s conference on Digital Broadband Migration: First Principles for a Twenty First Century Innovation Policy. In his remarks, Chairman Wheeler said the FCC is in the midst of three historic decisions aimed at reaching two equally important goals: 1) economic return as an incentive for investment in broadband infrastructure; and 2) networks that are fast, fair and open for all Americans.

Two of these three historic decisions will be reached by the FCC at its February 26 open meeting when it votes on new Open Internet/network neutrality rules and the petitions of Chattanooga (TN) and Wilson (NC) seeking relief on their states’ laws restricting municipal broadband networks. Wheeler identifies these two issues as Act Two and Act Three in the overall effort. Both net neutrality and municipal broadband are controversial and garnering lots of press (as we noted just last week) . Both decisions will rely, at least in part, on the authority granted to the FCC by Congress in Section 706.

I. The FCC Considers U.S. Broadband and Finds It Lacking

Wheeler’s Act One is what he called the “issue of fast networks” and it has garnered much less attention than Acts Two and Three. Back on January 29, the FCC adopted the Broadband Progress Report for 2015, the annual report mandated by Section 706.(2) In its latest Broadband Progress Report, the FCC tackled two interrelated questions: 1) what now (and for the next couple of years) is advanced telecommunications capability? and 2) are all Americans able to access that capacity?

Concerning question 1, the FCC, since 2010, has considered broadband speeds of 4 megabits per second (Mbps) download and 1 Mbps upload (4 Mbps/1 Mbps) to be “advanced.” But in looking at current deployment and adoption trends, the FCC came to understand that a new benchmark is needed for 2015.

• First, the FCC noticed that ISPs are asserting in their marketing campaigns that a minimum of 25 Mbps downstream is required to take advantage of the services widely offered and used today.
• Then the FCC considered that many U.S. households are running multiple, simultaneous broadband-enabled applications. Although broadband is often measured in speed, Chairman Wheeler noted this week that the issue is really about “the capacity to have simultaneous connectivity sufficient for the application to perform its task.”
• Finally, the FCC looked at current broadband adoption and noticed what broadband speeds consumers are currently choosing when offered choice: nearly one-third of consumers are choosing 25 Mbps download/3 Mbps upload (25 Mbps/3Mbps) when available.

Given all these factors, the FCC adopted 25 Mbps download/3 Mbps upload as the new benchmark for advanced telecommunications capacity for residential service. Relying on the FCC’s own E-rate Modernization docket and order, the Commission also pegged advanced telecommunications capacity for schools and libraries at, for now, 100 Mbps per 1,000 students and staff and, in the long-term, 1 Gigabit per second per 1,000 students and staff.

“With our vote two weeks ago,” Chairman Wheeler said in Boulder, “we established a standard that anticipates and -- as the Telecommunications Act mandates -- encourages a world in which megabits per second isn’t just about whether a video buffers, but is about the world in which increasing numbers of devices will be making simultaneous demands on the network; a world in which innovation isn’t held back by network capacity.”

Given this new standard, the FCC then considered question 2 and looked to see who has access to advanced telecommunications capacity. The good news: service of at least 25 Mbps/3 Mbps or higher is already available to 83 percent of Americans. The bad news: as of December 31, 2013, approximately 55 million -- 1 in 6 -- Americans lack access to 25 Mbps/3 Mbps or higher fixed broadband service. And approximately 35 percent of schools lack access to fiber, and thus likely lack access to broadband at the FCC’s shorter term benchmark of 100 Mbps per 1,000 users, and even fewer have access at the long term goal of 1 Gbps per 1,000 users.

Moreover, a significant digital divide remains between urban and rural America even though Americans living in rural and urban areas adopt broadband at similar rates when it is available:

• Over half of all rural Americans lack access to 25 Mbps/3 Mbps service while just 8 percent of urban Americans lack access to 25 Mbps/3 Mbps broadband.
• Rural America continues to be underserved at all speeds: 20 percent lack access even to service at 4 Mbps/1 Mbps, down only 1 percent from 2011, and 31 percent lack access to 10 Mbps/1 Mbps, down only 4 percent from 2011.
• 63 percent of Americans living on Tribal lands (2.5 million people) lack access to 25 Mbps/3 Mbps broadband. 85 percent living in rural areas of Tribal lands (1.7 million people) lack access.

National Map of Fixed 25 Mbps/3 Mbps Broadband Service from 2015 Broadband Progress Report

Given these gaps in availability, the FCC concluded that advanced telecommunications capability is not being deployed to all Americans in a reasonable and timely fashion. And, in light of this finding, the FCC must “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

II. Major Federal Efforts to Expand the Reach of Broadband

The FCC highlights the many efforts the government has already taken to help ensure that broadband -- both wireline and wireless -- reaches all Americans. Chairman Wheeler noted this week that the FCC will disburse $11 billion through its Connect America Fund to support infrastructure build-out in rural areas. And the FCC modernized its E-rate program in 2014 to support fiber deployment to and Wi-Fi within the nation’s schools and libraries. In addition, there are a number federal efforts to improve broadband deployment and adoption:

At the White House

• Wireless Broadband Memorandum: On June 28, 2010, President Barack Obama sent all the heads of Executive departments and agencies a memorandum entitled Unleashing the Wireless Broadband Revolution. The memorandum called on the Department of Commerce’s National Telecommunications and Information Administration and the Federal Communications Commission to collaborate to make available a total of 500 MHz of Federal and non-Federal spectrum over the next 10 years, suitable for both mobile and fixed wireless broadband use. In early 2015, the FCC completed, in a bipartisan success story, the AWS-3 auction which brought 65 Megahertz of spectrum to market and raised nearly $45 billion dollars.
• National Wireless Initiative: Building on the Wireless Broadband Memorandum, in early 2011 President Obama set the goal of enabling businesses to provide high-speed wireless services to at least 98 percent of all Americans within five years. The President’s initiative supported a large, one-time investment in and reform of the FCC’s Universal Service Fund.
• Accelerating Broadband Infrastructure Deployment (Executive Order 13616): On June 14, 2012, President Barack Obama signed Executive Order 13616 which promotes broadband deployment in Federal buildings and rights-of-way. The EO established and charged the Broadband Deployment on Federal Property Working Group with ensuring a coordinated approach in implementing agency procedures, requirements, and policies related to these topics. The Working Group is composed of representatives from 14 Federal agencies and offices that have either significant Federal land ownership or management responsibilities or expertise relevant to broadband infrastructure deployment on Federal lands and buildings.(3) The key accomplishments of the Working Group include: 1) Aggregating Data Sets on Federal Asset Locations, 2) Developing General Services Administration (GSA) Common Forms and Templates, 3) Developing an Online Platform for Common Applications and Forms, 4) Ensuring Increased Accessibility and Usability of Federal Broadband Documentation, 5) Establishing Dig Once Best Practices, 6) Improving Section 106 and National Environmental Policy Act (NEPA) Efficiency Measures, and 7) Increasing Coordination with Tribal Nations for Permitting and Environmental Reviews.
• ConnectED: In June 2013, President Obama called on the FCC to reform and modernize its E-rate program with the aim of bringing high-capacity broadband and wireless connections to 99% of American by 2018. The FCC completed these reforms in 2014.
• Net Neutrality: On November 10, 2014, President Obama asked the FCC to “implement the strongest possible rules to protect net neutrality.” The President asked for “bright-line rules” that include: 1) No blocking, 2) No throttling, 3) Increased transparency, and 4) No paid prioritization.
• Calling to End Laws that Harm Broadband Service Competition: On January 13, the President announced his opposition to measures that limit the range of options available to communities to spur expanded local broadband infrastructure, including ownership of networks. As a first step, the Administration filed a letter with the FCC urging it to join this effort by addressing barriers inhibiting local communities from responding to the broadband needs of their citizens. The President also announced a June 2015 Community Broadband Summit of mayors and county commissioners from around the nation who are joining this movement for broadband solutions and economic revitalization.
• Removing Regulatory Barriers and Improving Investment Incentives: Earlier this year, President Obama called for the Federal Government to remove all unnecessary regulatory and policy barriers to broadband build-out and competition, and established the Broadband Opportunity Council which includes over a dozen government agencies with the singular goal of speeding up broadband deployment and promoting adoption for our citizens. The Council will solicit public comment on unnecessary regulatory barriers and opportunities to promote greater coordination with the aim of addressing those within its scope.

At the FCC

• The National Broadband Plan, released by the FCC on March 17, 2010, sets out a roadmap for initiatives to stimulate economic growth, spur job creation and boost America's capabilities in education, health care, homeland security and more. The plan includes sections focusing on economic opportunity, education, health care, energy and the environment, government performance, civic engagement and public safety.
• The FCC’s Connect America Fund has dispersed more than $438 million which will bring new broadband service to rural areas in the next several years. Phase II of the Connect America Fund will provide nearly $9 billion to expand broadband to five million Americans living in rural areas within the next five years.
• The Mobility Fund has made more than $300 million available for one-time support to provide 3G or better mobile voice and broadband services to areas where those services did not exist.
• E-rate Modernization: On December 11, 2014 the FCC approved additional E-rate funding for libraries and schools to purchase broadband connectivity capable of delivering gigabit service over the next five years. The newest FCC rules raise the spending cap on the E-rate program from the current $2.4 billion to $3.9 billion.
• Rural Broadband Experiments are testing how tailored economic incentives can advance the deployment of next generation networks, both wireline and wireless, in rural, high-cost areas, including Tribal lands. The FCC has allocated $75 million for the construction of networks capable of delivering 100 Mbps/25 Mbps, while requiring the funding recipients offer at least one service plan that provides 25 Mbps/5 Mbps to all locations within the selected census blocks. Another $25 million was allocated for projects offering at least 10 Mbps/1 Mbps broadband service in high-cost and extremely high-cost areas.
• Healthcare Connect Fund: Since July 13, 2013, healthcare providers have been able to apply for funds from the Healthcare Connect Fund, which supports the cost of broadband -- including new construction -- for healthcare providers, with up to $400 million in support for the combined rural healthcare universal service programs. As of November 30, 2014, a total of $6,816,777 in funds were disbursed through the Healthcare Connect Fund.
• Technology Transition Order: On January 14, 2014, the FCC began the process for a diverse set of experiments and data collection initiatives that will allow the Commission and the public to evaluate how customers are affected by the historic technology transitions that are transforming our nation’s voice communications services – from a network based on TDM circuit-switched voice services running on copper loops to an all-IP network using copper, co-axial cable, wireless, and fiber as physical infrastructure. The Commission explained that “the type of experiments described in this Order will accelerate broadband deployment and therefore advances the goals of section 706.”
• Emerging Wireline Networks and Services Notice of Proposed Rulemaking (NPRM): On November 21, 2014, the FCC adopted an NPRM to strengthen its public safety, pro-consumer, and pro-competition policies and protections as the nation transitions to an all-IP network using fiber and other forms of physical infrastructure. The NPRM proposes and seeks comment on steps to safeguard the public interest through these transitions. The steps that the NPRM proposes would enhance consumer confidence in the safety and reliability of IP-based technologies, thereby leading to increased demand for -- and resulting deployment of -- advanced facilities and services.
• Lifeline Broadband Pilot Program: Throughout 2014, the FCC has collected survey information from Lifeline subscribers under the Lifeline Broadband Pilot Program. The survey results, which are expected in 2015, will assist the FCC in understanding the effects of varying subsidy amounts, end-user charges, access to digital literacy training, usage allowances, choices for broadband speed, access to equipment and other important reasons consumers may not adopt broadband.
• Modernizing Form 477 Order: The FCC collects data about broadband and voice connections from providers twice a year on Form 477. The information is used to measure broadband deployment and telephone competition. New Form 477 deployment data is being collected as required by the Modernizing Form 477 Order, which revised the Form 477 data collection to collect network broadband deployment data for both fixed and mobile broadband. These reforms will improve future Broadband Progress Reports and allow the FCC to “update … universal service policies and monitor whether … statutory universal service goals are being achieved.” The FCC expects that the revised data collection will improve its ability to identify unserved areas and, in particular, may improve mobile and satellite deployment estimates in the future.
• Open Internet: On February 26, the FCC will consider new rules to protect and promote an open Internet. In 2014, the FCC proposed a series of rules intended to preserve and facilitate the virtuous cycle of innovation which drives demand for Internet services and deployment of broadband infrastructure. The FCC stated that absent such rules, broadband providers would have the incentive and ability to interfere with the virtuous cycle, therefore inhibiting that deployment.
• Municipal Broadband: Also on February 26, the FCC will vote on a Memorandum Opinion and Order addressing petitions filed by two municipal broadband providers asking that the Commission preempt provisions of state laws in North Carolina and Tennessee that restrict the abilities of communities to provide broadband service.

At the Departments of Agriculture and Commerce

• Broadband Initiatives Program: The American Recovery and Reinvestment Act (also known as the stimulus) provided the U.S. Department of Agriculture’s Rural Utility Service (RUS) with $2.5 billion to expand access to broadband services in rural America. RUS leveraged its budget authority appropriated by the Recovery Act to make grants, loans and loan/grant combination awards. In total for the broadband program, over $2.33 billion in grants and $1.19 billion in loans were made to 320 projects, totaling over $3.5 billion. Of those original 320 projects, 297 were for infrastructure, 4 for satellite broadband service support, and 19 for technical assistance, the majority of which went to tribal communities. These projects reported deploying over 63,576 miles of fiber and delivering new or improved broadband connections for more than a quarter of a million households, community institutions, and public safety providers.
• Unveiling New Grant and Loan Opportunities for Rural Providers: RUS is accepting applications to its Community Connect broadband grant program and will reopen a revamped broadband loan program, which offers financing to eligible rural carriers that invest in bringing high-speed broadband to unserved and underserved rural areas.
• Broadband Technology Opportunities Program: The Recovery Act provided the Department of Commerce’s National Telecommunications and Information Administration with approximately $4.7 billion to increase broadband access and adoption, including at public safety agencies. In 2009 and 2010, NTIA invested approximately $4 billion in 233 BTOP projects and $293 million in 56 State Broadband Initiative (SBI) projects benefiting every state, as well as five territories and the District of Columbia. As of December 31, 2013, BTOP grantees were responsible for 109,137 miles of fiber infrastructure (including new, upgraded, and leased miles) and had directly connected 21,240 community anchor institutions.
• Announcing a New Initiative to Support Community Broadband Projects: NTIA launched BroadbandUSA to promote broadband deployment and adoption. Building on expertise gained from overseeing BTOP, BroadbandUSA will offer online and in-person technical assistance to communities; host a series of regional workshops around the country; and publish guides and tools that provide communities with proven solutions to address problems in broadband infrastructure planning, financing, construction, and operations across many types of business models.

III. Notice of Inquiry on Immediate Action to Accelerate Broadband Deployment

Included with the FCC’s Broadband Progress Report is a new Notice of Inquiry seeking ways to remove barriers to infrastructure investment and promote competition. In the NOI, the FCC seeks public comment on actions that will accelerate the rate at which 25 Mbps/3 Mbps service is deployed. In particular, the NOI seeks comment on the following:

• Coordinating federal support with other funding opportunities that, collectively, could increase the availability of services that offer at least 25 Mbps/3 Mbps.
• Improving coordination among federal agencies (similar to the earlier Executive Order 13616, designed to allow easier access to public lands).
• Exploring whether federal, state, and local efforts to increase broadband can be better coordinated.

The FCC is asking a couple of specific questions:

• Are there restrictions on the use of government funding that discourage providers from entering the market?
• Are there ways in which governmental efforts to promote broadband can more effectively complement and boost private actions?

The FCC is also required to promote competition in the telecommunications market to increase and enhance broadband service. The Broadband Progress Report notes evidence that competition does encourage other providers to build-out or upgrade broadband services. For example, where Google Fiber has built-out in certain cities, Comcast and other providers have responded. The Broadband Progress Report also includes estimates on the number of competitive choices at various speeds: 45% of households have only a single provider option for fixed 25 Mbps/3 Mbps broadband services, and an additional 16% are in areas without a single provider option for these services -- leaving the majority of households with no choice for high-capacity broadband. Chairman Wheeler said this week, “Where there is no choice, the market cannot work. American families need to be able to shop for affordable prices and faster speeds. The Commission is committed to removing barriers to broadband investment and competition.” The FCC’s NOI asks for comment on additional actions it can take to increase competition, remove barriers to market entry or stimulate the offering of innovative services. For example, are there efforts in addition to those we have taken that would encourage providers to enter the market or expand their reach to unserved or underserved areas, including Tribal lands?

The FCC also seeks comment on how to address the disparity in broadband availability between Americans living in urban areas with those living in rural areas and Tribal lands. This gap, the FCC notes, is, by itself, the basis for a determination that broadband is not being deployed to all Americans in a reasonable and timely fashion.

Finally, the FCC asks if there are additional actions it could take to reduce the number of schools that lack high-capacity broadband.

IV. Conclusion: Getting Americans the Broadband Capacity They Need in the Time They Deserve

Blair Levin, the architect of the FCC’s 2010 National Broadband Plan, wrote an op-ed for Recode this week cautioning on exuberance over the net neutrality and municipal broadband victories expected this month. Although not downplaying the significance of either an open Internet or community networks, Levin says “a sober analysis reveals they will not broadly stimulate upgrades or new deployments. To achieve affordable, abundant bandwidth, our work in the trenches remains in front of us.”

As President Obama has stressed for sometime, if we are to win the future, if we want to out-educate, out-innovate, and out-compete the world in a technology we invented, it will take hard work, and tough choices. There are no silver bullets or single efforts that can get us there on their own. It will take pragmatic policy choices and sustained policy attention in a variety of areas -- from new policies around lowering barriers to pole attachments, deployment of fiber, improved access to programming, access to spectrum, a vigorous competition policy agenda, and policies that continue to enable innovation in the content and services that broadband can deliver and that can transform the way we work, the way we live, and the way we learn. Ultimately, that is the challenge that is before us. And the reason that Congress gave us Section 706 in the first place.

1. Section 706 is a provision adopted in the Telecommunications Act of 1996 and, in 2008, Congress augmented Section 706 when it passed the Broadband Data Improvement Act (BDIA). In that Act, Congress required the FCC to issue its section 706(b) reports annually, rather than “regularly.” Congress also amended Section 706(b) by requiring that the FCC provide demographic information for unserved areas and an international comparison in its annual Report. The revisions to the statutory directive were based on Congress’s finding that the deployment and adoption of broadband “has resulted in enhanced economic development and public safety for communities across the Nation, improved health care and educational opportunities, and a better quality of life for all Americans.” Congress also recognized that continued efforts were necessary so that “our Nation remains competitive and continues to create business and job growth.”
2. Section 706(b) requires the FCC to “initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms).” In conducting this inquiry, the FCC must “determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.” For a service to be considered advanced (thanks for asking), it must enable Americans “to originate and receive high-quality voice, data, graphics, and video telecommunications.”
3. The Working Group members include: Department of Defense, Department of the Interior, United States Department of Agriculture, Department of Commerce, Department of Transportation, Department of Veteran Affairs, United States Postal Service, Federal Communications Commission, Council on Environmental Quality, Advisory Council on Historic Preservation, National Security Staff, General Services Administration, Department of Homeland Security, and the Executive Office of the President. These members have property management or transportation funding responsibilities and serve on the Working Group because of their broadband or other related expertise.