Bridge Span 18-11: FCC, Please Speed the Deployment of Broadband

FCC, Please Speed the Deployment of Broadband

Yesterday the FCC held an open commission meeting. There are a number of items on the agenda, two items in particular focused on advancing broadband deployment across the country. One item to be considered is to clarify the scope and meaning of the 1996 Communications Act in reference to barriers to entry and the use of rights of way, as well as local zoning authority. But, also to establish “shot clocks” a time in which they must make a decision, for state and local approvals for the development of small wireless infrastructure. The FCC will also provide guidance on streamlining state and local requirements on wireless infrastructure deployment.

The second item addresses regulatory practices in the cable franchising process that have the effect of impeding or blocking broadband deployment by cable operators in towns and cities across the country. Adoption of the infrastructure and franchising items are critical to advancing broadband deployment.

Broadband has been a reliable economic multiplier for the U.S. economy and a steady contributor to the financial health of states, counties and towns. Remarkably, since 1996, cable and telecom companies have invested over $1.6 trillion in private capital in infrastructure and services to bring broadband to communities across the country. Astonishingly, that is 25 percent of the total global investment in broadband. With the second lowest broadband pricing of any OECD countries, and more than 1.25 million low income households have been connected by the cable industry alone. Of the households with broadband, 89 percent used wi-fi to connect in just the first quarter of 2017. All told, such access has made remote work a reality for many, increased their opportunities for entertainment, enhanced access to health care as well as education, just to name a few benefits. But there is so much more yet to come. To get there the regulatory environment must remove impediments broadband thereby spurring build out in those remaining areas of the U.S. where broadband is lacking.

One of the hot topics in the broadband space is the coming of 5G, a system of systems that will work with previous technologies, and also require new infrastructure, including small antennas also known as “small cells.” New investments in many miles of new fiber, cell towers and base stations will also be required. This mash up of existing and new technologies, including Wi-Fi, and improvements in both wireless and wired connections completes the communications loop. For example, 5G providers will continue to use wireline infrastructure to backhaul data between the backbone and the local networks. But, overall there will be more antennas in more places, allowing more wireless connectivity where it makes sense, particularly in cities. This ubiquity of high speeds, a hundred times faster than 4G, will enable more of everything valued in broadband such as hyper fast download speeds but will also open the world to promised technological advancements such as remote surgery, and tactile real-time feedback for robotics, the long-promised internet of things and self-driving vehicles. That is, of the cities and localities will allow.

Earlier this year the FCC pursued some reform, moving to spur investment on the infrastructure of today and tomorrow by updating a federal regulatory scheme designed for completely different technology. But another step is needed because while many states and cities have been cooperative in moving forward in getting broadband to their citizens, there has also been some outlier behavior that needs to end. The great news is that twenty states have passed “small cell” legislation to require reasonable fees for the application to place small cells, reasonable ongoing fees to rent the right of way from the communities, and a guarantee of timely decision making on whether the applications are approved so that infrastructure building can proceed. But in those states and localities where they are slowing the expansion of broadband for their own gains, the FCC must move forward this week and remove those artificial barriers to infrastructure investment and the national broadband network.

Being sensitive to the authority of the states, the structure of the FCC provision preserves the state’s legislation in states where they are actually moving forward on deployment. The FCC has learned from those states – those states have been the laboratory of democracy, the laboratories of policy innovation – and has crafted its proposal accordingly. Ultimately, the intent is to give a fair shot to smaller and medium communities to gain broadband advantages even while large communities continue to benefit as the country moves along a clear path for the national adoption of 5G. Such a move is of great value to the nation. One study by Recon Analytics of the economic effects of 4G showed that America’s 4G leadership led to roughly $125 billion in revenue for U.S. companies and increased wireless-related jobs in the country by 84%, to 4.6 million in 2014 from 2.5 million in 2011. Such bounty, and more, could come again to the U.S. if we lead in 5G.

While 5G will be great for hyper local applications and will be abundant in smart cities, a smart America will take a broader and familiar approach, using a combination of new fiber and wireless. Other technologies will also play a role, and communities can do more to help there too. But aside from the broadband infrastructure item, the FCC will also consider an item that addresses the cable franchising process. Cable operators are major providers of wireline broadband across the country. Many state and local authorities are excited to see broadband expand and have worked collaboratively with cable operators to make that happen. Unfortunately, there are some others that attempt to use the franchising process to impose costs and other requirements on cable broadband deployment. The FCC item launches a rulemaking to curb such abuses.

The franchising process evolved at the state and local level to facilitate the deployment of cable service in communities across the country. The prospective operator would negotiate a franchise agreement with the local or state franchising authority in order to lay cable in the public rights-of-way, and also pay so-called “franchise fees”. However, over time, franchising authorities became experts at extortion when negotiating or renegotiating these franchise agreements, demanding more and more money or other “gifts to the community.” City and county buildings all over the nation were full of dark fiber and unused circuitry that cable companies were forced to install in those same buildings to obtain or renew a local franchise.

Congress took steps in 1984 and again in 1992 and 1996 to impose certain federal standards on the franchising process as part of the federal Cable Act. For example, Congress set a franchise fee rate cap at 5 percent of cable service revenues and also placed limitations on regulation of non-cable services delivered over cable systems. The FCC, for its part, has periodically adopted rules to implement Congress’s statutory directives, most recently in a series of orders starting in 2007 that sought to curb some local franchising practices that were inconsistent with the Cable Act. Those orders were appealed in federal court, and the court ruled in 2017 that some of the FCC’s decisions were not properly justified and sent those issues back to the FCC for further consideration. The item considered this week tackled these and related issues.

The item addresses two main issues. First, it proposes to bar franchising authorities from imposing fees and other requirements on broadband and other non-cable services delivered over cable systems. As the FCC explains in the rulemaking notice, Congress intended to limit the cable franchising process to the regulation of cable services, not other services provided over cable systems. Unfortunately, in recent years, a number of states and localities have sought to use the franchising process as a vehicle for imposing additional fees and regulations on cable broadband, contrary to the express directives of Congress, the broadband goals of the FCC, and the interests of consumers. The FCC is proposing to end those abusive practices, and thereby facilitate greater broadband deployment across U.S. communities.

Second, the item proposes to bar franchising authorities from using the franchising process as a way to extort various fees and services that often have nothing to do with cable service and are not contemplated in the franchise fee framework established in the Cable Act. Under the FCC’s proposal, if a municipality wants to force a video provider to, say, provide decorative baskets of flowers down Main Street (yes this has really happened), the cost of doing so would be considered an in-kind contribution offset against that 5 percent franchise fee cap. Additionally, the Commission would clarify that capital costs for public, educational, and government channels required by a franchise agreement are the only cable-related contributions that are not subject to the statutory 5 percent franchise fee cap.

Such fees, which effectively act as a tax regardless of what they are called, should be much lower, if they must exist at all, but certainly they should not be allowed to expand beyond video, and in that should apply to all video. As cable video revenue is in decline even while broadband expands, municipalities would like to expand their income by expanding the reach of franchise fees, essentially hiding behind video providers to collect a tax from its citizens. Such tax creep is unacceptable, creating an ever-larger barrier to entry for new broadband and should be curtailed. A further, related, threat is the invention of new fees or taxes, such as a licensing fee on cable modems. The FCC should be applauded for combatting these practices and thereby facilitating broadband deployment and benefitting U.S. consumers.

In all cases, barriers to broadband expansion end up harming those who are without or now struggle to pay for, broadband. Administrative barriers, fees and taxes all result in higher costs for and slower expansion of broadband. Congress, the FCC, and local leaders of all sorts, from legislators to administrators, should consider how they can reduce the barriers for broadband expansion. The path to success is clear – make broadband deployment easy.

Bridge Span 18-10: Streamlining the Future: Reducing Resistance to Broadband Everywhere

Next week, the Senate Commerce Committee is scheduled to move forward on the ‘Streamlining The Rapid Evolution And Modernization of Leading-edge Infrastructure Necessary to Enhance Small Cell Deployment Act’’ or the ‘‘STREAMLINE Small Cell Deployment Act.” The goal of the legislation is to modernize the process for and speed the deployment of small antennas or “small cells” required in the building of 5G infrastructure, the next generation of wireless connectivity.

5G is not just a single system but rather is a system of systems that will work with previous technologies, and that will also require new infrastructure, including small antennas, as well as new investments in many miles of new fiber, cell towers and base stations. 5G will be a mash up of existing and new technologies, including Wi-Fi, and improvements in both wireless and wired connections to complete the communications loop. For example, 5G providers will continue to use wireline infrastructure to backhaul data between the backbone and the local networks. But, overall there will be more antennas in more places, allowing more wireless connectivity where it makes sense, particularly in cities.

This ubiquity of high speeds, a hundred times faster than 4G, will enable more of everything valued in broadband and open the world to promised technological advancements such as remote surgery, and tactile real-time feedback for robotics and self-driving vehicles. With so much to be coordinated, and demand ever increasing, artificial slow-downs due to government reviews that no longer fit the facts should not be tolerated.

Earlier this year the FCC pursued some reform, moving to spur real investment on the infrastructure of today and tomorrow by updating a federal regulatory scheme designed for completely different technology. But more is needed, not just for wireless deployments but also for fiber deployments, and not just federally but also by the states and localities across the country.

The Act itself has three primary pieces to help speed along deployment. Consumers should not be denied technological advancement because of a lack of cooperation with a locality, or because the reviewer sees the application as an opportunity to shake down the industry, as has happened time and time again for decades. So, when it comes to review of small cell siting applications, a 90-day deadline is created for localities to act. If the locality does not act, the application is “deemed granted.”

Again, to make sure that opportunism does not stall progress, the legislation ensures that fees for applications are publicly disclosed and include only the actual costs incurred by the locality. In a similar vein, the Act seeks to ensure that all siting applications are reviewed on a competitively neutral and technology neutral basis, not based on unfair restrictions that favor certain providers over others and, in the process, impede broadband deployment.

While 5G will be great for hyper local applications and will be abundant in smart cities, a smart America will take a broader and familiar approach, using a combination of new fiber and wireless. Other technologies, such as satellite, will also play a role. Just last week, in a hearing to discuss ways to promote greater broadband in rural areas, fixed wireless was discussed extensively. One company, Midco, has been able to provide 80 percent of its rural customers with high speed Internet using fixed wireless services.

To have more success like this in cities, suburbs, and rural communities, states and localities should continue in the same direction as the federal government. One easy improvement would be to require that conduits (plastic pipes thorough which wires can be pulled) be installed as a part of all appropriate infrastructure projects. This so called “dig once” approach saves money and also allows for more rapid deployment of new technologies. Improving access to rights of way on a technology-neutral basis would also be a step in the right direction. As with the STREAMLINE Act, access to rights of way should be accelerated, with applications to build out broadband infrastructure given priority.

Additionally, fees for right of way access should be minimized for all broadband facilities, regardless of the technology used, and no provider should have to pay multiple recurring fees for access to the same rights-of-way. Similarly, rates for the attachment of broadband equipment and lines to existing poles must be carefully considered to avoid arbitrary rate increases on only some providers, which slow deployment, increase costs to consumers, and inhibit fair competition.

Such technology neutrality has a great benefit — bringing all qualified broadband providers to the market enhances competition and ultimately benefits consumers. Both wireline and wireless infrastructure need to be considered, as both are necessary. While widely dispersed populations, such as those in rural areas of the United States, can be challenging to serve profitably, federal, state, and local governments can help in removing barriers. All said, streamlining processes for wireless installation is one piece of the puzzle that brings a robust broadband future to all of us.

Bridge Span 18-9: They Said It Best When They Said Nothing at All

For years, perhaps decades, or perhaps forever, Washington D.C. has been the butt of jokes with punchlines about how the political class talks and talks and talks while little gets solved. But sometimes Congress speaks by staying quiet. Sometimes doing nothing really is an actively made decision. Multiple U.S. Supreme Court justices seem to understand this even if pro-expansionist government advocates have repeatedly missed the point.

Several states, led by South Dakota, undertook a scheme to overturn current law, intentionally passing unconstitutional laws to bait the Supreme Court into acting. And it worked. In South Dakota v. Wayfair, heard by the Court last month, the Court was asked to determine whether in fact there are limits on state taxing authority or in other words, whether state authority to tax and enforce is as deep and broad as the internet. The real goal of South Dakota and others who support the state’s efforts is to remove any restraints on how far a state can reach into other states across the country to tax and regulate the other state’s citizens. To achieve their end they would have the Court create law where Congress has decided not to do so by overturning the current rules as governed by the earlier Supreme Court decision in Quill Corp. v. North Dakota. Those rules prevent states from collecting sales taxes on purchases made remotely, such as via internet, catalog unless the seller had a physical presence in the state.

During oral arguments the Court seemed skeptical. As Chief Justice Roberts pointed out, if Congress wanted to change the rules they had plenty of time and opportunity to do so. Congress could have already made a decision, the decision that the current standards for when a state can force the collection of tax and compliance with their rules have worked fine for the last twenty-six years and that the issue need not be revisited. Justice Breyer pointed out that in fact, at least several in Congress had spoken directly to the issue. He noted that three Senators and Congressman Goodlatte, chairman of the House Judiciary Committee, made clear that Congress was about to act but stopped when the Court moved to decide the Wayfair case. But the states did not want to compromise and it seems their own scheme is working against them.

Justice Kagan went even further in suggesting that Congress not acting may in fact be the action, “[U]sually, when somebody says something like that, that Congress has not addressed an issue for 25-plus years, you know, it — it gives us reason to pause, because Congress could have addressed the issue and Congress chose not to. This is a very prominent issue which Congress has been aware of for a very long time and has chosen not to do something about that. And that seems to make the — your bar higher to surmount, isn’t it?” Such questioning also implies that this is an area that should be left to Congress. Justice Kagan continued by pointing out that when the Court gets involved a binary option develops, Law or no law, whereas Congress has the capacity to craft a compromise that addresses the wide range of issues involved.

Justice Alito pulled on the same thread when he asked if the Court overruled Quill, ruling in support of South Dakota’s arguments, what incentives the states would have to continue to work for a congressional solution. Of course, there would be no incentive which is in large measure the strategy the states have pursued – to have their way without having to find solutions acceptable to all.

As Justice Breyer pointed out, if the fifty states were truly as united as suggested by South Dakota there is no more powerful group to move Congress. “And you are 50 states. If you do not have the power to get Congress to do something, I don’t know who would.”

In Justice Breyer’s point the truth is told – the states that support their pro higher tax, bigger government plan do not speak for the country. In fact, they speak for a small minority of the people. When constituents understand the legal scheme that has been underway the politicians tax agencies who crafted and pushed the cynical plan will have wished that they, like congress, had intentionally said nothing at all.