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Federal Funds for Broadband? Unlikely

Mari Silbey
2/12/2018
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UPDATE: President Trump spoke at the White House about his infrastructure plan.

Without providing specific details on broadband funding, Trump said of his proposal: "It provides $50 billion for rural infrastructure, who have really been left out -- the rural folks have been left out, including broadband Internet access, which they don’t have. And they want it, and the farmers want it. It will create thousands and thousands of jobs, and increase training for our great American workers, and it returns power to the state and local governments who know best what their people need."

***

In the long-awaited run-up to President Trump's infrastructure proposal, the telecom industry has held out hope that broadband might benefit from a bit of federal funding largesse. But with Trump set to unveil his plan today, those dreams of federal broadband spending look ever more unlikely.

First, several outlets are now reporting that the infrastructure proposal is geared toward incenting state and local governments to raise the bulk of the money they need for infrastructure projects on their own. The federal government would commit $200 billion over the next decade toward that aim, but the goal would be to have localities put up at least 80% of the cost for most infrastructure ventures. In theory, cities and states would be able to use federal dollars to attract private investment, but that assumes that private investors would eventually see a profitable return. Unfortunately, many infrastructure projects can give no such guarantee.

Second, it's not clear that broadband will be given any specific budget allocation in the Trump proposal. According to NPR, the White House wants to set aside $50 billion out of the total $200 billion for rural initiatives. That money is supposed to fund projects where there is no natural incentive for private investment, but it appears those dollars would be required to cover everything from roads and bridges to sewer upgrades and new broadband deployments.

Unlike with most issues, there is general bipartisan consensus that broadband should play a role in any infrastructure bill. However, the degree to which broadband should be included and how deployments should be funded do not get the same level of agreement.

For example, Congressmen Bob Latta (R-OH) and Peter Welch (D-VT) have formed a caucus in the House to address rural broadband. But in speaking about their joint efforts, Welch is much more forceful about how the federal government needs to contribute to the process. Latta says he thinks broadband should be included in an infrastructure package, but Welch lays down the gauntlet by saying that without broadband there can't be a credible infrastructure bill at all.

"How can you have a serious infrastructure bill that doesn't have a serious broadband title? My view? It's not possible," asserts Welch.

Representative Peter Welch (D-VT) on the left talks with Incompas CEO Chip Pickering, middle, and Representative Bob Latta (R-OH) on right at the 2018 Incompas Policy Summit.
Representative Peter Welch (D-VT) on the left talks with Incompas CEO Chip Pickering, middle, and Representative Bob Latta (R-OH) on right at the 2018 Incompas Policy Summit.

The emphasis between Latta and Welch on how best to expand broadband access and stimulate new Internet-based business is also very different. Latta highlights the importance of breaking down regulatory barriers.

"One of the things that Peter and I have heard from everyone [working in IoT]... They all said we're not against regulations, but give us soft-touch regulations that we can move forward with," notes Latta.

Welch, however, sees limits to the effectiveness of reducing the regulatory burden.

"I think there's some common ground there, but what I want to emphasize... if we don't have investment funds from the federal government to actually do the work, it's not going to get done," says Welch. "Because the private market doesn't have a market incentive to go to many of the rural parts of Ohio, many of the rural parts of Vermont. It's just like electricity. So what I get a little bit nervous about is when you talk about removing these barriers thinking that that magically means the lines will be deployed. There's got to be an investment fund."

The issue of funding is where the broadband dilemma gets tricky. Without new money, it's unlikely there will be massive Internet upgrades outside of densely populated areas, and it's even questionable how fast and how far the industry will spread new 5G network deployments.

Communications providers may have hoped for a little more financial support for their network infrastructure plans. But for now at least, it doesn't look like broadband is a federal spending priority.

Related Stories:

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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mendyk
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mendyk,
User Rank: Light Sabre
2/13/2018 | 10:32:47 AM
Eat the dog food
It's hard not to see government-funded broadband buildout as a form of corporate welfare.
msilbey
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msilbey,
User Rank: Blogger
2/13/2018 | 10:59:50 AM
Re: Eat the dog food
Corporate welfare, what a loaded term. It would be nice if SPs would deploy service everywhere, but communities are losing even the ability to negotiate for coverage in sparser regions because of the rush to tear down regulatory barriers to deployment. There is no requirement and no incentive for telcos to deploy networks in a number of areas. There is also every reason to deploy the highest-value, newest network technologies in in the areas with the highest profit-earning potential. This is a problem.
mendyk
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mendyk,
User Rank: Light Sabre
2/13/2018 | 11:08:19 AM
Re: Eat the dog food
I have a hard time buying into the concept that broadband access is a basic human right. We all make trade-offs when it comes to choosing where to live. City slickers get more bandwidth. Country folk get the laid-back lifestyle. Etc.
msilbey
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msilbey,
User Rank: Blogger
2/13/2018 | 11:14:06 AM
Re: Eat the dog food
Interesting take. But I think broadband is far more akin to electricity today than a nice-to-have amenity. It's becoming harder and harder to live without.
mendyk
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mendyk,
User Rank: Light Sabre
2/13/2018 | 11:29:49 AM
Re: Eat the dog food
For the most part, we're talking about degrees of availability regarding broadband. If the need is great enough, and the demand is strong enough, service will extend out to less populated areas without massive public-sector intervention. We have other things to spend our limited money on -- like getting poor folks enrolled in Blue Apron-like meal delivery services.
Duh!
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Duh!,
User Rank: Blogger
2/13/2018 | 12:38:04 PM
Re: Eat the dog food
Health care is not a human right, either. Human rights are political rights. It's wrong to conflate them with human needs. They are different. That doesn't relieve government of the duty to ensure that every resident's human needs are being met.

People living in rural areas have just as much need for good broadband access as suburban and urban folks. Arguably, more. It's not just about streaming Netflix in 4k. Connected farms, e-commerce, telehealth, telemedicine and distance learning demonstratably improve productivity and well-being to rural communities. Broadband is no more optional than electricity, roads and POTS (in the day).
mendyk
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mendyk,
User Rank: Light Sabre
2/13/2018 | 12:54:50 PM
Re: Eat the dog food
All of this sounds good, except when you factor in that the people who would benefit from these programs overwhelmingly vote for representatives that espouse the exact opposite of governmental activism. And many of those people would and do argue that the less the government is involved in ensuring that human needs are met, the better. Hence the title of this thread.
brooks7
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brooks7,
User Rank: Light Sabre
2/13/2018 | 1:07:50 PM
Re: Eat the dog food
 

So, just FYI satellite broadband is just about everywhere.  So we are really talking about 2nd and 3rd providers.

To me the real deal is that if we are going to subsidize rural broadband we need to change the social contract with it.  Turn those areas back into a utility.  Otherwise they are not getting an upgrade.  I don't care how much you lay out in funds, it is not worth it for a large provider.

seven

 
Duh!
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Duh!,
User Rank: Blogger
2/13/2018 | 3:05:06 PM
Re: Eat the dog food
Broadband satellite is an inadequate substitute for fixed broadband. Even the latest FCC Broadband report admits to that, even though satellite would paper over the broadband divide. Maybe, someday, it will get to 25/3 or better, and sub-30 ms latency and pricing in line with fixed providers.

You did notice that last week, Verizon announced they were taking $70.1 M from New York State, $12 M from CAF (!!) and chipping in $23.8 to pass 15 k premises in Upstate New York?
mendyk
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mendyk,
User Rank: Light Sabre
2/14/2018 | 2:32:10 PM
Re: Eat the dog food
It looks like spaceboy Elon Musk is going to make a run at the LEO communications satellite thing. So maybe there will be better (or at least other) options for the rurals without massive investment in wired broadband.
Duh!
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Duh!,
User Rank: Blogger
2/14/2018 | 2:35:51 PM
Re: Eat the dog food
Maybe.

I was up close and personal with the Iridium program. Need I say more?
mendyk
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mendyk,
User Rank: Light Sabre
2/14/2018 | 2:49:43 PM
Re: Eat the dog food
Iridium was a fine program. John McCain told me so. And Mr. Pai will back this initiative heartily as part of Make America Infrastructure Again. And all the Star Trekkers will love it because Elon Musk. Problem solved. 
brooks7
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brooks7,
User Rank: Light Sabre
2/14/2018 | 5:40:20 PM
Re: Eat the dog food
Dennis,

 

I heard those low orbit satellites will be feeding balloons from Google that are in turn connecting to Amazon Drones.

seven

 
Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
2/19/2018 | 1:25:46 PM
Re: Eat the dog food
While satellite broadband could be an infrastucture investment, old infrastructure like roads, bridges, water mains, etc., should be prioritized. Nowhere near enough investment has gone into these in more than 30 years.
kq4ym
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kq4ym,
User Rank: Light Sabre
2/26/2018 | 7:01:01 AM
Re: Eat the dog food
Ultimately it will the the lobbyists and their pursuasion that may determine where infrastructure money ends up. Of course the big push has been or roads and bridges, and our "builder" President surely has made his wishes known. But on the other hand Congress may in the end decide of spreading the money out in lots of different ways not just sticking to the transportation end.
Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
2/26/2018 | 8:35:04 AM
Re: Eat the dog food
There needs to be a push for roads and bridges. I was writing about the failing infrastructure 30 years ago, nothing has changed except that everything has gotten older and more in need of repair/replacement.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
2/26/2018 | 10:18:37 PM
Re: Eat the dog food
@Phil: It's worst in the north where the winters are harshest.

Being a New Englander, it has frustrated me to see the same fine stretches of road reworked (even if there's nothing wrong with them) summer after summer, while far more treacherous roads are lucky to get once in a while patchwork if they are even attended to at all.
Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
2/27/2018 | 1:20:09 AM
Re: Eat the dog food
Joe,

You're right about the North. I'm in the Chicago area. Thirty years ago I wrote about the issue, first when covering transportation, then when covering steel. Bridges are in horrible shape in many areas of the country, including many south of the Mason-Dixon line.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
2/27/2018 | 10:32:01 PM
Re: Eat the dog food
@Phil: I believe it. There was a recent headline out of Detroit of a passenger dying after the driver hit a pothole that was large enough to cause him to lose control of the vehicle and get in an accident.

We have our share of trouble-causing potholes out here, too.
Duh!
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Duh!,
User Rank: Blogger
2/13/2018 | 2:43:48 PM
Re: Eat the dog food
You mean the folks that never met an ag subsidy they didn't like?

Government hand-outs for me but not for thee.
Duh!
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50%
Duh!,
User Rank: Blogger
2/13/2018 | 12:23:57 PM
Re: Eat the dog food
It's complicated. The policy goal is to get broadband to everybody. Sometimes tilting an incumbent's business case toward serving an unserved area is the most cost-effective way of doing that. Sometimes a few chunks of federal grant or loan money, added to other sources can make a business case work for rural electric coops, local governments, public/private partnerships or local small businesses. 

If there is to be new federal money, it should be handed out to whatever entity than can most effectively apply it toward the policy goal. Reverse auctions (like CAF-II) or merit-based grants (like REA) that are business-model neutral would be an effective use of federal $$.

"I am not a capitalist. I am not a socialist. I am a pragmatist." (Lee Kwan-Yoo)

 

 
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