July 1, 2012
Rural Broadband: Tossing America’s Newest Political Football
By Stuart Zipper
The provision of broadband to rural America has become a political football at both the national and state levels in a complicated arabesque mixing competing technologies, anti-trust concerns, entrenched financial positions and posturing for the upcoming elections.There are an estimated 48 million rural homes with no access to broadband services, and there’s no shortage of proof that broadband availability can be of major value. In a recently published white paper, The Smart Rural Community, the National Telecommunications Cooperative Association (NTCA) makes that case with dozens of examples of successful rural broadband deployments provided by smaller MSOs and independent telcos.
In part, the report says, “A smart rural community relies on broadband networks to enable a series of applications that the community can leverage for innovative economic development and commerce, top-notch education, first-rate health care, cutting-edge government services, enhanced security and more efficient utilities use. These functions are increasingly important as the imperative to compete in a global marketplace increases.”
The fact is, support for rural broadband on the state level has been going down in flames in state legislatures across the country.
One of the most recent examples of this is in Colorado, where a bill to set up a working group to investigate the status of broadband connectivity in rural areas and to develop a strategic plan for improvement failed to win approval, despite bipartisan sponsorship. Tellingly, the bill was called the “Rural Broadband Jobs Act,” due in part to the political cachet of tying any new legislation to jobs creation. The bill was approved by the Colorado Senate in May, but it died in the Colorado State House just weeks later, when that body adjourned without acting.
Observers, though, put the blame on politics and lobbying by incumbent telco CenturyLink. In an earlier bill, legislators were going to take away some $50 million a year the carrier receives from the High Cost Fund, designed to pay for basic phone service in rural areas. Legislators argued that rural areas really aren’t rural any more, and the money should go to broadband development in the areas identified by the working group.
“The High Cost Fund exists to ensure reliable phone service to Coloradans in areas that are very expensive to serve," comments Kenny Wyatt, Mountain Region president for CenturyLink, which successfully argued against that bill. "Operating and maintaining a network in the most remote parts of our state comes at a cost – one that has been funded by the High Cost Fund for many years. We must also remember those customers include schools, libraries and healthcare institutions in those markets.”
Warning that loss of the funds would mean loss of jobs for its workers, CenturyLink even found itself on the same side of the fence as the Communications Workers of America (CWA), an obvious marriage of convenience.
With the first bill dispatched, Colorado legislators simply flipped the switch, turning a funding bill into a jobs bill. Perhaps to no surprise, Comcast came out in support of the bill because it would have stripped funding from its major rival in the Colorado market.
The shifting pattern of self-interest in rural broadband led to different results in Washington State, where Comcast teamed with Frontier Communications to oppose a bill that would have allowed public utility districts and rural districts to provide telecommunications services directly to consumers. Currently, some public utilities in Washington do have broadband lines, but they sell their services wholesale to ISPs. Erik Poulsen, government-relations director at Washington Public Utility District Association, says public utility districts, using wholesale authority they were granted in 2000, have built 4,500 miles of fiber-optic cable, have invested $300 million in infrastructure, and have signed some 150 retail providers. But, he said, such wholesaling isn’t possible in certain parts of the state.
“The idea was that PUDs would build critical infrastructure and private companies would come in and provide direct service,” Poulsen said. “This wholesale arrangement serves many of our PUDs well. Others believe they need expanded authority to overcome some of the barriers that still exist.” That argument, though, wasn’t enough to overcome the objections and Washington’s bill died in committee early this year.
In other states, legislation has been brewing that would effectively ban local communities from providing broadband. In Minnesota, a bill introduced in the State Legislature was so blatantly anti-community broadband in rural areas that an embarrassed-sounding Minnesota Cable Communications Association (MCCA) disowned it; that legislation appears to be dead. A somewhat similar bill in Georgia, which opponents claimed was written by AT&T and which would have put major roadblocks in the way of community broadband efforts, also was shelved. However, a tally shows that in almost half of the states, rural municipalities either are prohibited or face great difficulty in providing broadband, even where incumbent telcos and MSOs are absent or don’t offer adequate broadband services.
Change Of Heart
There has been a major change in the willingness of telcos to provide rural broadband, a change born of prudence rather than desire. In a surprise wrinkle in the provision of rural broadband, the failure of AT&T to close its deal to purchase T-Mobile USA due to antitrust concerns now looks to unexpectedly represent a major boon to what could be 15 million rural broadband users. AT&T had planned to use the spectrum it thought it would get with the acquisition of T-Mobile to provide rural broadband, at the same time selling off its rural wireline assets, which it had classified as “underperforming.”
Now that the T-Mobile deal is gone, in an unexpected move, AT&T CEO Randall Stephenson disclosed on analyst calls in early June that the carrier is considering the use of IP DSLAMs to provision some 15 million of its 20 million rural wireline customers.
"We are giving this a hard look," Stephenson said, adding IP DSLAMs "bring broadband capability in a more cost-effective manner, with a better revenue profile than perhaps we would have thought two years ago."
What AT&T isn’t saying is that much of its rural network is closely paralleled by MSOs’ cable infrastructure, leaving it highly vulnerable to cable broadband offerings and making its change of heart a matter of business prudence.
On the federal level, there’s a continuing major battle over the equitable division of wireless spectrum for the provision of rural broadband, with AT&T and Verizon cast as the bad guys.
In a recent lobbying mission to Washington, D.C., executives from more than 20 wireless ISPs (WISPs) converged on the nation’s capital in an effort to convince Congress and the Federal Communications Commission (FCC) to shake loose more spectrum, preferably unlicensed, for use in providing rural broadband. The Wireless Internet Service Providers Association (WISPA) took direct aim at traditional cellular companies, charging them with “spectrum squatting” and “spectrum warehousing.” The group also attacked the subsidies given, via the Universal Service Fund, to traditional landlines and MSOs.
The problem, explains WISPA Executive Director Rick Harnish, is that “when they (spectrum licenses) are auctioned, they are usually auctioned off in large geographic chunks.” The result is that small WISPs are locked out of that spectrum, even though it is not being used.
The WISPA position on the Universal Service Fund puts it at odds with the NCTA, whose members also are recipients of large chunks of USF funding. Indeed, the NCTA currently is lobbying the FCC not to adopt what’s called a “quantile regression formula” it fears will slash the funding its members receive. The NCTA claims the proposed changes to the USF formula “will frustrate sustainable broadband deployment in rural areas contrary to law and good policy.” Again, opponents to one piece of the rural broadband battle become allies in another.
The NCTA also is pressuring Washington to regulate spectrum so that it is best used to deliver rural broadband by its members. In a filing with the FCC in early June regarding proposed interoperability regulations for use of the 700 MHz spectrum, the group warned that “without appropriate protections, the two largest 700 MHz spectrum holders have the ability and incentive to shut smaller providers that hold spectrum primarily in rural areas out of the market.”
“The propagation characteristics of the 700 MHz spectrum could allow rural carriers to cover widespread areas with just a few towers,” the group continued. “This spectrum, if properly utilized, could offer an economical solution to reaching the most remote and difficult to serve rural consumers with affordable fixed and/or mobile broadband products.”
The NCTA also pointed to a recent auction of 700 MHz spectrum in which only 23 of its members managed to win licenses out of 1,093 that were offered. AT&T and Verizon got the rest.
Stuart Zipper is a freelance technical writer and frequent contributor to Communications Technology. Contact him at sZipper@ElectronicNewsman.com.