Support for broadband infrastructure legislation seems to be growing, as evidenced by a new report from the Information Technology & Innovation Foundation (ITIF). The report, titled “A Policymaker’s Guide to Rural Broadband Infrastructure,” aims to educate legislators about the state of broadband deployment and policy and to steer them in the right direction on any infrastructure package they might make available.
“Broadband boosts social opportunity and economic growth,” the report argues, also noting that “the gap between rural and urban broadband performance is real.”
Even though policymakers have long made statements such as those, only recently have they appeared open to the idea of making additional funding available for broadband. Investment in infrastructure was one of President Trump’s campaign promises and one which seems to be gaining support. And as legislators contemplate infrastructure investment, support seems to be strong for including broadband in those plans.
“Congress should take the opportunity to support a major infrastructure package by designating a portion of the funds for broadband deployment to rural and less-densely populated areas,” the ITIF report states. To illustrate the high cost of offering broadband in rural areas, the authors ask readers to consider a “common measure of anticipated return on a network – the number of customers per mile of fiber.” In rural areas, “the metric is often flipped, instead measuring the number of miles of fiber per customer,” the authors note.
Broadband Infrastructure Legislation
Some policymakers have recommended spurring broadband investment by using tax credits and reducing regulatory hurdles such as permitting processes and pole attachment rules. But the ITIF authors argue that while tax credits and reducing regulatory barriers can be helpful, they are not sufficient to “move the needle” in the highest-cost areas. For those areas, the authors said “targeted support is appropriate.”
In targeting support, the authors urge legislators to use existing FCC funding mechanisms established for the Connect America Fund program. The CAF program allocates funding more efficiently than other government broadband programs such as the Rural Utilities Service loan and grant program or the broadband stimulus programs, the authors argue.
That idea also seems to be gaining support. Two of the current three FCC commissioners – Chairman Ajit Pai and Commissioner Michael O’Rielly — have recommended that any new broadband funding be directed through the CAF/ Universal Service program.
The ITIF authors point specifically to the process that has been used to award funding in phase two of the CAF program for price cap carriers. That program initially offered funding to incumbent carriers to upgrade their networks to support minimum broadband speeds based on a cost model. Any funding that was rejected will be awarded through a reverse auction process. This approach, the ITIF authors argue, “helps ensure subsidy dollars are most effective in maximizing the additional users brought online.”
While applauding the CAF program, however, the report does not discuss the current budget shortfall for the CAF program for rate of return carriers, which some stakeholders point to as evidence of the need for additional funding.
The authors do note, however, that “one of the long-term challenges of the CAF is its contribution base.” Noting that the program is funded through a fee on declining voice services, the authors argue that “a shot of infrastructure funds into the CAF would help reduce anxiety over this support mechanism as a longer-term financing arrangement is developed.”
The report authors argue that subsidies ideally would focus on areas that only require up-front capital support, rather than funding ongoing support for operating expenses. They also state, however, that in the highest cost-portions of the country, ongoing support may be required.
Other key report recommendations include:
- Given limited funds, the focus of any grant program should first be on the lowest-cost one percent of areas without fixed broadband of any speed. If additional funding is available, the authors advocate targeting it toward the next one percent, until costs grow “unreasonable.”
- Support should be made available for both fixed and mobile broadband.
- Download speed targets should be based on “reasonable expectations of application demand and cost.”