Thursday, June 8, 2023
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One Year In: Treasury Department’s Capital Projects Fund Connecting Nearly Two Million Families and Businesses
One year after announcing the first awards under the American Rescue Plan Act's (ARPA) Capital Projects Fund (CPF) in 2022, the US Department of the Treasury has awarded approximately $6.7 billion for broadband, digital technology, and multi-purpose community center projects in 42 states, which those states estimate will reach more than 1.88 million businesses, homes and other locations. These ARPA dollars are working in tandem with the Infrastructure Investment and Jobs Act's (IIJA) Affordable Connectivity Program (ACP) to close the digital divide as a part of President Biden’s Investing in America agenda – deploying high-speed internet to those without access and lowering costs for those who cannot afford it. Already, President Biden’s Investing in America agenda has delivered affordable high-speed internet to over 18 million American households. Read more here for a roundup of local coverage on how these investments are impacting communities across the country.
Former FCC Commissioner Michael O'Rielly called the Affordable Connectivity Program (ACP) "the best mechanism we've had to date" for subsidizing low-income broadband. But he added that the current Congress is unlikely to pass funding for the ACP without changes to the program. According to O'Rielly, Congress will want to address waste, fraud, and abuse with the program, and likely limit its eligibility. By some estimates, up to 40% of Americans currently qualify for the program. "That's probably not suitable for policymakers that I talked to on Capitol Hill. It's just not in the cards," he said. it's unclear if there's support to fund the ACP again, with or without changes. Meanwhile, the program is projected to run out of funding sometime in 2024. How soon that date arrives depends in part on the success of new grant programs launched by the FCC to fund local government and non-profit efforts to boost enrollment in the ACP. While there are currently over 18.5 million households enrolled, according to the latest available data, that's a fraction of the estimated eligible households. Industry stakeholders generally see the effort to extend the ACP's reach as far as possible as a positive thing, despite the fact that it will force the program to end faster without congressional action.
Growth in neighborhoods and cities means that there is a lot of stress on the existing utilities. As you might expect, the over-taxed utilities are showing the strain. Our telecom networks are not immune from growth problems. The Charter cable network clearly has occasional problems. It’s not hard to imagine that there are neighborhoods where the cable network is overloaded due to growth. I also imagine that Charter's networks are a hodge-podge of different neighborhoods built over time – it is not one big ubiquitous network but rather a patchwork of smaller networks built in different decades that are all grafted together. That means different generations of coaxial cable, different sizes of cable nodes, and different schemes and designs of taps and amplifiers. Passive optical networks (PON) are the best at handling growth. A good analogy for thinking of a PON network is to envision one of the many board games that are based on hexagons. PON technology can handle growth by adding new hexagons as long as the broadband provider can get enough bandwidth to feed the new neighborhood. A PON network can theoretically handle nearly unlimited growth. If an existing hexagon adds a lot of new homes, it’s just as easy to add a new PON core optical line terminal (OLT). However, not all fiber networks are alike. I know some providers that are building what I consider to be slim fiber networks, meaning a network with a minimum of extra fibers. The chances are that in most rural places this will be okay – but it means a lot of future investment in areas where growth shows up unexpectedly.
Solving the digital divide in Maine takes vision and resources. Maine’s vision is for a statewide connectivity infrastructure that will improve the lives of Mainers now and in the future, empowering broad participation in modern society. The Maine Connectivity Authority exists to plan, invest in, deploy, and enable universal access to affordable, high-speed broadband that will dramatically improve the quality of life of Mainers. MCA proposes the following primary strategies and related activities to achieve affordable universal access to broadband in Maine.
- Prioritize funding to maximize impact, balancing urgency, universality, and equity
- Proactively drive investments as a comprehensive portfolio
- Optimize Broadband Deployment
- Expand and Enhance the Foundation for Digital Equity
- Focus on Affordability
- Raise Awareness and Strengthen Feedback Loops
Maine faces a perfect storm of challenges in achieving digital equity. Our remote and rugged terrain makes our state one of the most difficult and expensive to reach with digital infrastructure. As the oldest state in the nation, we have a significant population that didn’t grow up with all of the technology available today. Maine’s median household and per capita income lag behind most other states. Almost all of us live in small, rural communities with limited resources. These forces combine to shape the contours of the digital divide in Maine. The National Telecommunications and Information Administration (NTIA) estimates that 89% of Mainers identify as a population likely to be most impacted by the digital divide, referred to as “covered populations” in the Digital Equity Act. These important audiences include: older adults, low-income households, people living in rural areas, veterans, individuals with a disability, individuals with a language barrier, individuals who are members of a racial or ethnic minority group, and people who are incarcerated. Through the engagement process, we set out to explore the experience of many Mainers. We learned that the barriers to digital equity that impact all of us are exacerbated for these covered populations in our state. It’s not enough to simply have access to broadband service; we must also be able to afford that service and have the skills, devices, and support to truly benefit from it. One thing has been clear and consistent throughout the planning process: Maine people recognize that
digital connectivity is essential to our daily lives.
Representatives for T-Mobile and Ka’ ena Corporation met with Federal Communications Commission officials to argue why T-Mobile should be able to acquire Mint Mobile and Ultra Mobile from Ka’ ena. According to a June 5 , 2023 filing with the FCC, T-Mobile presented a PowerPoint spelling out why the transaction will not harm the competition or consumers. In fact, T-Mobile said it’s a much easier case than Verizon’s acquisition of TracFone for a number of reasons. The move is notable given that some industry stakeholders advocate for more government scrutiny in T-Mobile’s potential $1.35 billion buyout of the Mint and Ultra brands. Both Mint and TracFone are MVNOs, or mobile virtual network operators, that use the networks of facilities-based carriers. In the case of Mint/Ultra, its customers already are exclusively on the T-Mobile network. Verizon closed on the TracFone acquisition in November of 2021. Mint Mobile serves about 2 million customers and Ultra Mobile has about 500,000 customers, according to T-Mobile’s filing. Mint is distributed almost exclusively online, whereas Ultra, which targets budget customers who want international calling, is distributed through third-party retailers like Walmart. Also used as arguments in its favor: Mint and Ultra don’t target the same customer segments as T-Mobile’s prepaid brands, and as MVNOs, Mint, and Ultra have limited ability to independently reduce prices or improve quality. Plus, they’re both already using T-Mobile’s network and don’t offer the aforementioned Lifeline or Affordable Connectivity Program benefits.
Windstream will walk away from its Chapter 11 bankruptcy for good following a decision from the Federal Communications Commission to waive a rule that prohibits US telecommunications carriers from having more than 25% ownership by foreign companies. The FCC waiver is the final stamp of approval for Windstream’s plan of reorganization, for which the Bankruptcy Court gave the go-ahead in June 2020. Windstream was forced to file for bankruptcy in 2019 after losing a legal battle with New York hedge fund Aurelius Capital Management over whether the company had defaulted on bonds. As part of the restructuring, Windstream negotiated a proposal with hedge fund manager Elliott International and other investors to buy most of the company’s equity out of bankruptcy, while also removing a large chunk of its debt. At the time the FCC granted a temporary waiver for its foreign ownership rules to enable Windstream’s “prompt emergence from bankruptcy,” but reserved the right to review and rule on the proposed foreign ownership interests following the company’s successful emergence from bankruptcy. Under the proposal, Windstream will have a total foreign equity interest of about 66.29%, according to the FCC’s order. US-based Nexus Aggregator would have a 49.27% interest in the reorganized Windstream. But Elliott International, which is almost entirely owned by a Cayman Islands entity, is not US-based and owns about 69.57% of Nexus. With guidance from the National Telecommunications and Information Administration (NTIA), the FCC said that public interest “would not be served by prohibiting foreign ownership of Windstream, the controlling US parent,” in excess of the usual benchmark of 25%.
Governor Ron DeSantis (R-FL) signed into law a so-called “digital bill of rights” aimed at giving residents more control of their data, boosting children’s protections online, and barring social networks from coordinating with government officials to “censor” speech. It marked the latest broadside from a Republican presidential contender against Silicon Valley, which is poised to be a significant target as the 2024 campaign heats up. White House hopefuls are increasingly outlining their views on key tech fronts as we barrel toward the election. Senator Tim Scott (R-SC) has not been a major player in the debates around tech regulation in Congress, in part because he has not sat on the most relevant committees. But he has weighed in more decisively on two fronts: claims of tech “censorship” and industry ties to China. It’s unclear how much Mike Pence’s tech agenda may differ from Trump’s — whose enforcers targeted the tech giants over claims of bias and on competition grounds but also faced criticisms for not doing more to check their alleged antitrust and privacy abuses. Nikki Haley has taken two notable positions in recent months as her campaign has geared up: calling for a total ban against TikTok in the United States, decrying what she called Chinese “spying,” and assailing the Silicon Valley Bank rescue as a “bailout” for “Big Tech and Chinese companies.”
Flume, a service provider operating in New York City, metro Los Angeles, and Connecticut, has a rather unique business model. It offers fiber broadband but has very little fiber infrastructure of its own. “In the metro core, there’s a lot of overbuilt fiber,” said Prashanth Vijay, Flume co-founder and CEO. In some cases, the fiber may have been installed by a utility company, cell tower company, or another entity that doesn’t offer residential broadband. Apartment buildings or other multi-dwelling units often have fiber coming to the building, enabling Flume to get a handoff in the basement. And some cities have open access networks designed with the specific purpose of making connectivity available to service providers like Flume. “We build edge networks, core routing, and switching,” explained Vijay. Flume targets areas lacking high-speed symmetrical broadband services and bundles services with managed Wi-Fi. Flume expects to expand to other markets later in 2023.
Whether you believe that generative AI has the potential to change the world for good, or that it poses more risks than benefits, most experts agree it is likely to have a significant impact on the future of our economy and society as a whole. This is certainly true for the communications industries. From security to broadcast content, and from online safety to spectrum management, generative AI promises to disrupt traditional service delivery, business models, and consumer behaviour. The use of generative AI could also pose risks. Teams across Ofcom are closely monitoring the development of generative AI. Our technical, research and policy teams are undertaking research to better understand the novel opportunities and risks surrounding the development and use of generative AI models across the communications sectors that Ofcom regulates, and the steps that developers and other industry players are taking to mitigate those risks.
Lawmakers in Costa Rica writing a bill with ChatGPT. A judge in Colombia using the same tool to ask for advice in a case before him. A news anchor developed by artificial intelligence giving live reports in Mexico. As in the rest of the world, both the wonders and absurdities of AI are increasingly visible in Latin America. The difference is that the region is among the world’s most unequal when it comes to not only income but also technology. The question for both corporations and regulators is how to use the rise of AI to narrow that divide. While smartphone adoption in the region is only slightly lower than in richer countries, about 40% of Latin American homes still don’t have fixed broadband, according to a 2022 study, limiting the availability of Internet connections needed to study, work or do online transactions. The digital divide is especially stark between urban and rural areas — and while the disparity is longstanding, the worry is that the explosive irruption of AI will quickly widen it. The challenge is how to design public policies to address the rise of AI in poor nations often beset with unstable political leadership. The region needs to foster more widespread and inclusive digital adoption, says Luis Adrián Salazar, an international consultant and the former minister of science, technology, and telecommunication for Costa Rica. He proposes special funds, created by governments, to finance retraining for jobs that will be affected by AI. He also suggests a summit meeting of heads of state to discuss a unified approach to AI.
[Juan Pablo Spinetto is a Bloomberg News managing editor for economics and government in Latin America.]
Benton (www.benton.org) provides the only free, reliable, and non-partisan daily digest that curates and distributes news related to universal broadband, while connecting communications, democracy, and public interest issues. Posted Monday through Friday, this service provides updates on important industry developments, policy issues, and other related news events. While the summaries are factually accurate, their sometimes informal tone may not always represent the tone of the original articles. Headlines are compiled by Kevin Taglang (headlines AT benton DOT org), Grace Tepper (grace AT benton DOT org), and David L. Clay II (dclay AT benton DOT org) — we welcome your comments.
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