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Changing the Rules: Beware Free Money

One of the dangers of federal programs like the broadband stimulus programs BTOP and BIP is that the feds make the rules... and sometimes they just change the rules. I previously wrote about how the BTOP rules privileged private companies over the public sector (despite Congress' clear intent to prioritize the public sector). As this article notes, NTIA effectively changed those rules along the way -- resulting in what might technically be termed "screwing over" a variety of applicants. Though the Round 1 rules encouraged applicants to apply for last-mile funds, the vast majority of awards went to middle mile applications. In fact, while in Lafayette, we tried to name more than 5 last-mile grants. Why the change in focus? The most likely reason seems to be opposition from powerful, well connected incumbent companies that did not want to deal with the hassle of competition in small parts of their territories. So NTIA quietly chose to award funds to less controversial projects. The problem is that the hundreds of applicants poured money and resources into proposals for last-mile projects that they believed would be considered in good faith. We never miss an opportunity to note that whoever owns the network makes the rules. Well, whoever disburses the funds, makes the rules (and in this case, quietly changes the rules). And in DC, corporate interests all have a seat at the table. When one goes begging to DC for funds, one should not be surprised at the many hoops and frustrations of that process. Not only are communities better off owning their infrastructure - they are generally better off when they take responsibility for financing the network and do not depend on free money (whether from the private sector or DC). Communities have financed networks with a variety of means -- from a loan from a local bank to bonds (taxable, nontaxable, general obligation, revenue, etc) to slowly expanding networks over a longer period of time. TANSTAAFL - There Ain't No Such Thing as a Free Lunch - Robert A. Heinlein

Lessig Presentation on America's Broadband Policy

Paul Venezia is one of the few who noted a recent Lessig presentation that discusses broadband policy. Larry Lessig's presentation offers an excellent short history of broadband and telecom history - from the beginning of AT&T to the National Broadband Plan. The video runs an hour, but should be essential viewing for anyone who wants to understand why the U.S. continues to fall behind international peers in broadband. Lessig's answer is that we have lost our independence. Large corporate interests dominate the federal government as well as the state legislatures, resulting in a government that too often bends to their will. Lessig's presentation covers the essential role of government in forcing AT&T to open the phone network (paving the way for fax machines, Sports Illustrated football phones, and eventually dial-up modems). Key takeaway: the owner of a network makes the rules and determines who is allowed to use it and under what circumstances. Among other issues, he offers the most accessible explanation of what happened with the FCC/Comcast court ruling that has (temporarily - we hope) rendered the FCC unable to stop carriers from telling users what sites they can visit or adjusting the speeds to some sites based on the carriers' business model. He notes his disappointment with the National Broadband Plan - where the Obama "reality-based" Administration chose to ignore reality and take the easy road of not challenging powerful incumbent telecom interests. Toward the end, he raises the chilling prospect of the federal government instituting a form of the PATRIOT ACT on the Internet in the future. Watching this reminded me that we believe government has an essential role in building and owning infrastructure but we strongly support Constitutional checks against the government getting too involved in policing content. This is an excellent presentation - particularly for those who are not as familiar with the history of the AT&T, the FCC, Carterphone, and the competition we briefly had among service providers in the days of dial-up.

Highlights of Reactions to National Broadband Plan

Just a few short snippets, no real commentary from me today... Tracy Rosenberg wrote Single Payer Broadband at the Huffington Post, noting:
Cities and states all over the country have been looking at the possibility of public networks. The FCC admits this may be a last resort for difficult-to-cover areas the market has no profitable solution for. Why a last resort? Why have 18 states passed laws banning municipalities from offering any wholesale or retail broadband services? Is it because they might do it better? More competition should never be considered a last resort.
An article in the Economist pulls no punches:
A YEAR ago, Congress asked for a plan that would provide affordable broadband service to all America’s citizens. On March 16th, the Federal Communications Commission responded with a non sequitur: a national wireless plan which is good in its way, but which largely fails to tackle the problem it was asked to solve.
Great op-ed in the NY Times - "Ending the Internet’s Trench Warfare" by Yochai Benkler, someone who knows quite a bit about networks.
In Japan and many European countries, regulators fought hard to bring existing providers around to open access. They won, and today these countries have more competition, lower prices and higher speeds. Such political will is glaringly absent in the commission’s plan. The 1996 Telecommunications Act did, in fact, point the United States in the direction of open access. But after eight years of intense litigation and lobbying from telephone companies, the Federal Communications Commission gave in, deciding that competition between one telephone incumbent and one cable incumbent was enough — in essence, it rejected open access as a way to create competition.
Others have also written quite well on this, but time is short this week.

National Broadband Plan Reaction

The FCC has released its National Broadband Plan and I have perused it, in anticipation of digging into it. The vast majority of reactions seem to agree that it has some good parts and some disappointments. Karl Bode summarizes the plan nicely (as does Glenn Fleishman). From our perspective, it is good on a million details but disappointing on its solutions. As is usual for me, I'll focus on wired networks. This plan will not lead to the meaningful competition we all want. It will further cement the power of incumbent providers who have refused to invest -- especially in rural areas. However, it does encourage Congress to "clarify" that the public should be able to build and own networks via local governments and other arrangements. This is the closest we come to a victory. This is what they have to say about the matter (page 153):
Tribal, State, Regional and Local Broadband Initiatives In addition to Tribal, federal, and state efforts to support broadband deployment, local governments and regions often organize themselves to support deployment in their communities. According to recent market research, as of October 2009, there were 57 fiber-to-the-premises (FTTP) municipal deployments, either in operation or actively being built, in 85 towns and cities in the United States. These deployments collectively serve 3.4% of the FTTP subscribers in North America. Not all government-sponsored networks serve consumers directly. Several government-sponsored entities, such as NOANet in the Pacific Northwest and OneCommunity in Ohio, are major providers of backhaul capacity in areas that benefit community institutions and local broadband service providers. Their networks are often “constructed” by patching together and opening up to wider use fiber and other connections that might originally have been built for single-purpose institutional needs, such as the needs of government offices and local transportation.

Upcoming National Broadband Plan

From what we have seen of the upcoming broadband plan, it looks to solve very little. Karl Bode explains why the National Broadband Plan will deliver everything but what it is supposed to. Basically, it comes down to an Administration that is unwilling to challenge very powerful private sector interests. The main question we need to ask when the plan comes out is how the plan will increase the power of communities to succeed in the 21st century. For more than a decade, private companies have decided when communities will receive the utility of the 21st century: broadband Internet access. They have decided, without any oversight from the community, what speeds are available and at what prices. Towns regularly lose businesses because incumbent providers offer only overpriced, slow connections. In several states, communities are greatly limited in what telecom services they can provide -- legislation that protects the incumbents that refuse to invest in next generation networks. The National Broadband Plan should call for ending all state barriers on publicly owned networks. The FCC has been quick to note that there are few federal funds to put into expanding broadband access. Great - all the more reason to stop subsidizing the private profits of incumbents with Universal Service programs that reward slow, overpriced connections to schools and rural residents. The Universal Service Fund must be reformed from a program that throws away money with inefficient, ongoing subsidies to private companies so they will run networks in rural areas. These areas should be served by cooperatives and other networks that operate in the public interest. If they require ongoing subsidization, the networks should operate in the public interest, not pad private profits. We have one opportunity to transition from copper to fiber - if we waste this opportunity by cementing the power of the very companies that have refused to build the infrastructure we need, it will be our fault and our fault alone. The pathetic U.S.

Broadband for Libraries and Schools

Following up on my previous post "Institutional Networks and Cherry Picking," I want to briefly note that the U.S. should reform how it funds Internet connections at schools and libraries. Let me start with an assumption: we do not want to use federal taxes to support these local institutions except where most necessary. It strikes me that wherever possible, communities should take responsibility for their own community institutions. With that in mind, the eRate program concerns me. Basically, eRate is a means for the federal government to aid local schools and libraries in affording broadband. I'm afraid that it indirectly encourages monopolistic service providers (mainly telephone incumbents) to overcharge for T-1 lines while removing any incentive for the school or library to invest in a better connection. If a school or library is only paying 20% of the cost of a slow and overpriced line, it has considerably less motivation to seek a better connection -- especially as the only alternative to an existing connection may be building new fiber paths - as noted in "Libraries dying for bandwidth."
But another problem is simple availability. As the ALA's report (PDF) points out, "moving from a 56Kbps circuit to 1.5Mbps is one thing. Moving from 1.5Mbps to 20Mbps or to 100Mbps or even to a gigabit—depending on the size and need of the library—is another." Even when they can pay for it, many libraries are finding that higher speeds simply aren't available.
This program has been around since 1998 and has paid out $25 billion.

Comments on Round Two for Broadband Stimulus

I have just submitted comments from the Institute for Local Self-Reliance to both the the National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS) regarding suggestions for rules in round two (the last round) of the broadband stimulus programs -- the Broadband Technology Opportunities Program (BTOP - administered by NTIA) and Broadband Initiatives Program (BIP - administered by RUS). The two agencies previously posted a joint request for information [pdf] on lessons learned from the first round:
RUS and NTIA released a joint Request for Information (RFI) seeking comment on further implementation of the Broadband Initiatives Program (BIP) and the Broadband Technology Opportunities Program (BTOP). Comments must be received by November 30, 2009. The input the agencies expect to receive from this process is intended to inform the second round of funding.
We offered five pages of comments, responding directly to the questions - I am led to believe that this is the preferred way of responding to such requests for information. Thus, the format consists of a short introduction and then questions (in italics) followed by our responses. Unsurprisingly, we generally encourage NTIA and RUS to better serve the public interest by requiring more transparency in the second round. We also call on them to stop accepting "advertised" speeds in their broadband definition and use actual delivered speeds in order to ensure communities are not discouraged from applying because their incumbent providers exaggerate the capabilities of their network. Most importantly, we call on NTIA and RUS to encourage public sector entities to apply by ceasing to consider all private networks to operate in the public interest. As we previously documented here, NTIA subverted the intent of Congress with the rules from round one. The rules should prefer public and nonprofit entities as they are directly accountable to the public and should therefore be the first in line to receive public money for essential infrastructure. As the number of applications to NTIA and RUS was far higher than expected, making the public interest requirements stronger should be a natural response.

Tropos Comments on Publicly Owned Wireless Networks

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Tropos is a California-based company that sells wireless networking gear, frequently to municipalities. They filed comments with the FCC regarding the National Broadband Plan in response to the request: "Comment Sought on the Contribution of Federal, State, Tribal, and Local Government to Broadband." We fully support their framing of the issue:
Municipalities that own and control their wireless broadband networks, operate public services more efficiently, prioritize broadband traffic for emergencies, and put unused bandwidth to use to attract new businesses, afford educational opportunities to students and in many cases, provide free broadband access to unserved or underserved residents.
Tropos calls for an end to preemption on community networks.
Congress should not adopt legislation that would prohibit local governments from building and operating broadband networks to provide services within a community. Local governments should have the freedom to make decisions on how they want to provide broadband within their community.
And finally, Tropos harkens back to the same political battles from one hundred years ago:
A century ago, when inexpensive electricity was available to only a small fraction of the U.S. population, incumbent suppliers of electricity sought to prevent the public sector from offering electricity for many of the same reasons incumbent broadband providers now argue against community broadband deployment and services. Back then, incumbents sought to limit competition by arguing that local governments didn’t have the expertise to offer something as complex as electricity. They argued that their own businesses would suffer if they faced competition from cities and towns. Local community leaders recognized that their economic survival and the health and welfare of their citizens depended on wiring their communities. They understood that it would take both private and public investment to bring electricity to all Americans. Fortunately, they prevailed.

ILSR Comments on Publicly Owned Networks to FCC

As the FCC continues to formulate a National Broadband Plan, the Institute for Local Self-Reliance has submitted comments [pdf] about publicly owned networks in response to the Request for Comments #7: "Comment Sought on the Contribution of Federal, State, Tribal, and Local Government to Broadband." In our comments, we highlight the importance of publicly owned broadband networks by noting many success stories and offering details on networks from Chattanooga, Burlington, Monticello, and Powell, Wyoming. We also offer some comments about middle-mile networks and networks that connect core anchor institutions, like libraries and schools.

FCC Needs Your Comments on Local Government and Broadband

The FCC is asking for comments on the contribution of federal, state, tribal, and local government to broadband [pdf]. Comments are due on Friday, Nov 6. Take a look at the comment request above (it is only 5 pages long) and pick one of the areas in which they are interested - readers here may be most interested in #2 - "Government broadband initiatives."
a. Governments have engaged in various initiatives to increase broadband deployment and adoption in certain geographic areas. With regard to specific examples of federal, state, tribal, or local broadband initiatives, how did the initiatives come to fruition from start to finish? Please describe cost information, including planning, equipment, training, labor, and conclusion of the initiatives, as well as barriers that were overcome. What elements of the initiation, planning, or implementation were most critical to the success of the project? What factors impacted the technological choices made in the planning and implementation of the project? Were the projects sustainable, and have the projects continued beyond their initially conceived timeframes? What were the costs and the resulting empirically demonstrable benefits or harms of the implementation? How did costs and benefits differ from the original plan and why? b. What conclusions should be drawn from any particular experiences (e.g., what efforts or practices should be replicated or avoided)? c. Please provide examples of governments aggregating demand to encourage broadband deployment. Are such programs sustainable? Do these programs cause the deployment of network infrastructure that otherwise would not have occurred? Please provide data when possible. d. How can successful broadband solutions be more widely shared or publicized to enable other governments to benefit? What should be the role for the federal government (and specifically, this Commission) in fostering the widespread adoption of ideas and initiatives that have worked? e.