March 19, 2011 6:14 AM
Woke up quick, at about noon
Just thought I had to get to Comp[Tel] soon . . .
", O'Shea Jackson ("Ice Cube"),
Eric Wright ("Eazy E"), Andre Young (Dr. Dre), 1986
I'll be moderating a panel at COMPTEL
in Las Vegas on Monday, entitled "And the Winners Are . . . .
" The panel features BTOP awardees, ION Holdings
Attendees will not only learn about the projects funded under the federal BTOP/BIP broadband stimulus grants
, but will gain some valuable insights into little-discussed entry barriers for shovel-ready projects, and learn about how broadband projects create their own demand (separate and apart from the demand that justified the project). Think of this last point as the broadband version of Keynes' interpretation of Say's law
, that supply creates its own demand
The panelists will be discussing interesting and diverse projects, so each will provide something new for attendees to learn. For example, we have what I might call an "ultra" wholesale project--completely carrier/user agnostic dark fiber--being implemented by Maine's GWI. A more traditional, carrier-class, lit fiber wholesale network, primarily in upstate New York, being implemented by ION Holdings, and, finally, last mile broadband projects serving a number of communities in Arkansas, by Windstream.
This is an opportunity to get beyond the D.C. "policy" circles, and find out what's really involved in implementing shovel-ready broadband deployment projects, and what kind of jobs different kinds of broadband deployment--dark and lit fiber (primarily regional and local wholesale transport), and last mile, end-user broadband--can add to a previously-unserved area.
If you won't be attending, but have some questions you'd like asked, email me and I'll see what I can do. Alternatively, if you'll be at the show, please attend and introduce yourself. I'd love to meet you.
March 16, 2011 7:53 PM
Today is the one year anniversary of the National Broadband Plan
. The Broadband Plan recommends, as a catalyst for broadband deployment, that the FCC undertake long-needed reform of its Universal Service Fund ("USF") and intercarrier compensation regimes. Last month, the FCC released a Notice of Proposed Rulemaking ("NPRM")
, proposing to reform both programs. Noticeably absent in either the National Broadband Plan or the USF/ICC NPRM is any defined ongoing role for the states in either the national goal of spurring broadband deployment, or under a reformed USF/ICC regime.
There is an important role for the states in a new, broadband-centric, regulatory system. But, to get there, the FCC has to put consumers at the forefront, considering that the purposes of its proposed reforms are to make high cost support more efficient, and further extend broadband into high cost areas. It is possible to accomplish both objectives, while giving the states a meaningful role.
The communications visionary (and "patron saint" of Wired Magazine
) Marshall McLuhan
, observed, "[m]ost of our assumptions have outlived their uselessness
." The assumption that the FCC should distribute money to carriers, based on the carrier's optimal utility
, in order to satisfy consumer demand
is an assumption that has outlived its uselessness.
How would a better plan work? First, get rid of the notion that state participation should be accomplished through state regulators. They, too, are trapped by assumptions that have outlived their uselessness. And, to be sure, the assumptions underlying the distribution of High Cost subsidies are useless--the FCC makes that case quite persuasively in its NPRM.
Consider this statement of Indiana Commissioner Larry Landis, on reforming the low income fund
, "[t]oo little attention has been paid to the financial health of the RLECs (and mid-size companies) and the importance of existing High Cost support
." Jt Bd Refferal Order, Sep. Stmt. of Commissioner Larry Landis
. This sentiment is antagonistic to nation's technological goals, and offers no solutions.
While, concern for the welfare of the rural consumer is important, rural consumers' rights are a part of the law, and not up for debate. On the other hand, no carrier has a right to be inefficient
and still be in business. So what's the answer?
I outline the long form here:Abstract_Managed Broadband Markets.doc
. The short answer, though, is to involve those parts of the state that are responsible to the NTIA
for spending the states' broadband mapping/BTOP money. Accountability and efficiency are built into their directives, plus they already have to report on their success. But these state agencies can contribute more.
There are no real "markets" for rural consumers in high cost parts of a state, but the state BTOP point-of-contact is a natural market maker. These agencies could function in the role of broadband development authorities. They already know where open access local and backhaul networks exist, and they could work with rural broadband providers (including ILEC, cable, wireless, and satellite providers) to put together efficiently sized demand RFPs and match them with bidding (or reverse-bidding) supply consortia.
But, what about the "financial health" of the rural carrier? Some, funded with the almost $40 billion or so in High Cost support since 1998 (Jt. Bd. 2010 Monitoring Rept
., Chart 3-1) will, no doubt, be efficient parts of any bidding consortium. If not, why must consumers care?
Much greater sums of competitive fiber investment--arguably more important to the health of a broadband economy--were not protected from market risk. During the "telecom bust" of the early 2000's, an estimated $2 trillion in stock market wealth was destroyed
as a result of over-investment. Is it foolish to think that RLECs, too, may have "over-invested"? It would be shocking if they didn't when, since the modern High Cost fund began dispersing subsidies, the "prime rate" for borrowing has been comfortably below
the RLECs government-protected rate of return of 11.25%. Why should the privately-owned, publicly-subsidized, rural LECs fare any differently from their privately-funded brethren?
States have an important role to play in the reform of the USF and stimulating broadband deployment. However, the FCC should update its assumptions about what state agencies they find most helpful to accomplishing the Commission's goals. The NTIA points of contact for broadband mapping/grant purposes are ideal. By playing the intermediary between "suppliers" of high-cap backhaul, and the most efficient aggregations of local demand, the state agencies could--using "real" markets--determine the most efficient way to bring the best broadband/voice service to the most consumers.
December 29, 2009 11:57 PM
Earlier this month, on December 17th, the White House announced the distribution of the first round of Recovery Act broadband grant awards
. Notably, of the $183 million in broadband grant awards to be awarded by the Department of Commerce (through the NTIA) and the Department of Agriculture (through the RUS), the NTIA awarded over $120 million toward wholesale, "middle mile" infrastructure. A short summary of the NTIA awards, including the "middle mile" projects is available here
The reason that I highlight the NTIA's decision to devote the bulk of its funds to wholesale infrastructure supply projects is that--as I explained back in April
--I truly believe that this approach is the best way to do a job that is extremely difficult to do well. The Recovery Act requires both the NTIA and the RUS to distribute a very large amount of money in a very short period of time. While the Recovery Act does contain policy guidance to the awarding agencies, and some built-in safeguards, such as limiting the federal government to funding, at most, 80 percent of a project's cost (unless the grantee obtains a waiver from the awarding agency), the responsibilities charged to the NTIA and the RUS are still formidable.
The combination of: 1) direct aid (grants, not loans), 2) the sheer amount of that direct aid (a little less than $6.5 billion in "unrestricted" grant funds, and a total of $7.2 billion in total funds), 3) being distributed by government bureaucracies, 4) in a very short time period (by September 30, 2010) makes the job of efficiently distributing the grant money extremely difficult. Adding to the difficulty of efficiently distributing the broadband grants is the fact that the agencies have little objective tools--such as the "broadband map" (my thoughts here
) authorized by the Recovery Act, but not required to be completed until after the grant funds are required to be awarded (the map must be completed 2 years after adoption of the Recovery Act--February 17, 2011--though, as noted, the awards must be completed by the end of fiscal year 2010).
In my April post
, I argued that Wholesale INfrastructure Supply projects ("WINS") were the best way for the agencies to allocate discretional grants in the allotted time, because allocating grants to wholesale infrastructure providers allows the agencies to transfer the even-more-difficult job of identifying unserved, existing demand to the most efficient prospective suppliers. The attempt at creating my own acronym was, admittedly, weak (like, "wow-that's-weak" weak), and maybe the idea itself was obvious--but even "obvious" good ideas are not always embraced by the government.
This is why I really think the NTIA got it right by allowing itself a lot of discretion to fund "broadband infrastructure projects" (without any more specificity), and then by pushing more funds into wholesale-oriented projects. Multi-party, combination wholesale/retail ("middle mile"/"last mile") projects benefit from the ongoing incentives of the wholesale provider to: 1) stimulate output by seeking out new wholesale customers, as well as 2) monitor its retail partners success in increasing and promoting retail penetration. These projects offer the promise of being easier to "generically" identify and to police on a forward-looking basis than more "unique" projects.
Continue reading First Round of BTOP Grant Awards Show Some Solid "WINS"
April 9, 2009 2:37 PM
In my previous post, I recommended a "first things first" approach to distributing grant money--arguing that we can't get where we want to go without a map; a broadband treasure map, to be specific. A map, though, is only part of the journey. Before a map is helpful, we need to take inventory of where we are right now. To this end, yesterday, the FCC released a Notice of Inquiry ("NOI") soliciting public comments and asking questions pertaining to the agency's obligation to develop a National Broadband Plan as required under the American Reinvestment and Recovery Act ("ARRA"). An NOI, though, is not exactly the fastest way to collect information. On the other hand, in all fairness, the NOI approach was the prudent way to go for Acting Chairman Copps, given that the Commission's longer-term leadership has not yet arrived at the Commission. Therefore, since the "first things" (in the "first things first" approach) are unlikely to be completed before the ARRA requires the first of the grant money to be distributed, I figured the NTIA and the RUS might be able to use some unsolicited advice on how to get the initial grants distributed quickly and safely.
I say this because whenever I've seen officials from the agencies charged with administering the $7.2 Billion in broadband-related grants under the ARRA, they just look a little stressed. And who could blame them? The ARRA requires them to distribute an unprecedented amount of money in a short period of time, while maximizing the economic development effect of the broadband funds, meeting other goals (e.g., open networks), and, all the while, protecting the taxpayer funds (and their own reputations) from the 3 Deadly Sins of Waste, Fraud, and Abuse. Piece of cake, right?
Continue reading StimCity Broadband--WINS and INS