During our half day CLIC session, national legislative experts and local champions will address the challenges and opportunities for our local broadband future created by a new Congress in Washington and the FCC. We will examine issues ranging from broadband infrastructure funding, to yet more FCC regulatory initiatives that could intrude on traditional local powers. We will then delve into the 2019 state legislative year and discuss how new state proposals have hampered or helped local broadband deployments. Our afternoon will close with bi-partisan success stories from various local communities who will share their strategies on how to manage the politics of local broadband initiatives. See our diverse range of speakers here.
CLIC Members can attend our April 8 event and all three days of the BBC conference at a deeply discounted rate, by registering here and using the code CLIC410. Or become a CLIC member. It’s free.
Add Austin to your 2019 travel plans! Come join CLIC on April 8, 2019, on the first day of the Broadband Communities Annual Summit, scheduled from April 8-11, 2019 at the Renaissance Hotel in Austin.
On April 8, CLIC will detail its Action Plan for Local Internet Choice for 2019 and Beyond. During this half day session, national legislative experts and local champions will address the challenges and opportunities for our local broadband future created by a new Congress in Washington and the FCC. We will examine issues ranging from broadband infrastructure funding, to yet more FCC regulatory initiatives that could intrude on traditional local powers. We will then delve into the 2019 state legislative year and discuss how new state proposals have hampered or helped local broadband deployments. Our afternoon will close with bi-partisan success stories from various local communities who will share their strategies on how to manage the politics of local broadband initiatives.
CLIC Members qualify for a BBC conference discount by registering here and using the code CLIC410. Or become a CLIC member. It’s free.
FCC Commissioner O’Rielly has recently made some claims regarding risks to the First Amendment that he sees as arising from community and municipal broadband efforts. The Commissioner makes clear his unhappiness with municipal broadband efforts generally, but particularly calls out what he considers to be First Amendment concerns that arise from community provision of communication services.
As proponents of local internet choice and community-based decision-making, we note simply that one of the many driving public policy considerations that leads to community broadband efforts is the recognition by local governments that the broadband internet is increasingly the platform on which America’s democracy lives and on which civic discourse thrives. Without affordable, robust access to the broadband internet, Americans are cut off from the critical policy and political debates of their local communities and of the nation.
Across America, many localities have stepped in where the private sector has failed to provide the abundant and affordable connectivity that their communities need. In so doing, these localities have increased, not decreased, the number and variety of voices participating in our national democratic discourse. The FCC should appreciate and applaud the deep commitment of America’s localities to equity and opportunity with respect to speech and civic discourse.
–Joanne Hovis (CLIC CEO) and Jim Baller (CLIC President)
CLIC President, Jim Baller, last week delivered the keynote address at the BoCo Summit in Botetourt County, Virginia. In his address, Jim spoke of the proud history of local Internet and broadband innovation emanating from rural Virginia and then offered some big picture suggestions to aid in that continuing success.
Jim Baller, Keynote Address, The Rural Broadband Technology Solutions Summit, Botetourt, VA – September 26, 2018
Thank you that generous introduction, Arleen [Boyd]. I am delighted to be here, especially because this is one of the best local government listening-and-learning sessions that I’ve ever seen. You have brought together an amazingly talented and experienced array of broadband experts. You’ve reminded me of President John F. Kennedy’s quip at a dinner he hosted for a large group of Nobel Prize winners, “I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered together at the White House, with the possible exception of when Thomas Jefferson dined alone.”
I applaud Board of Supervisors and the Broadband Planning Committee for your vision, your energy, your pro-activism, and your open-mindedness. As Abraham Lincoln once said, “Give me six hours to cut down a tree, and I will spend the first four sharpening my axe.” That, in essence is what the Board and the committee are doing, and I’m sure that you will be well rewarded for this.
I consider myself to be the most fortunate attorney in America, and events like this contribute mightily to that feeling. I feel so lucky and fulfilled to be able to work every day with progressive, adaptive communities around the country, helping them to help themselves to a better future through advanced communications capabilities. I have the opportunity to work on both policy issues and site-specific individual projects, with highly creative and courageous clients and colleagues. I particularly enjoy working on bipartisan public-private partnerships that focus on economic development and benefit of all concerned. For all this, I have much to thank this region, where my career in telecom really took off.
About twenty-five years ago, I began to serve as outside telecom counsel to the American Public Power Association, the national association representing the interests of America’s 2,000 publicly-owned electric utilities. Most of these utilities emerged during America’s push for electrification between the 1880s and 1930s, in communities that were being left behind by private power companies. The communities that did this generally survived and thrived, while many other communities that waited for the private sector to get around to them stagnated or even became “Ghost Towns.”
In the early 1990s, APPA and many of its members grew increasingly concerned that the history of the power industry was going to repeat itself in the telecom area, with private phone and cable companies focusing on lucrative urban markets and leaving rural communities behind in the emerging era of advanced communications. My job was to help ensure that public power communities would have the authority and ability to take matters into their own hands again, if necessary, as they had done so successfully in the electric power arena.
One of my early assignments was to help APPA and its members participate successfully in the debates that led up to Congress’s major overhaul of the federal telecom laws in the Telecommunications Act of 1996. To support APPA’s efforts on Capitol Hill, I wrote a white paper that compared this period in telecommunications with the comparable period in the electric power industry. The comparison was jaw-dropping in 1994, and it is still striking today.
Like electric utility systems, advanced communications networks are all-purpose platforms, drivers, and enablers of simultaneous progress in just about everything that matters to communities.This includes economic development and global competitiveness, lifetime educational and occupational opportunity, public safety, access to affordable modern health care, environmental protection, energy efficiency and security, high-quality government services, urban revitalization, digital equity, democratic engagement, entertainment, and much more.
Not surprisingly, more communities across America than ever before are now seeking to obtain affordable access to advanced communications networks. They are working with willing incumbents, partnering with new entrants, building their own networks if they believe that’s their best option, or developing other creative engagement models. The public is solidly behind these local efforts. A recent poll by Pew Research showed that 70 percent of Americans, including both Democrats and Republicans, believe that local governments should have the right to develop their own broadband networks if they feel that doing so is necessary.
Among the earliest of America’s localities to understand the potential of advanced communications capabilities was the City of Lynchburg, just 55 miles from here. In the mid-1990s, the Lynchburg city government and school system jointly built a 42-mile fiber network for $3.5 million to connect the city’s public facilities and schools. After reading the white paper that I mentioned a few minutes ago, the City’s public works director, Ray Booth, and his deputy, David St. John, sought out and engaged our firm to help them figure out what else the City could do with its fiber network.
As soon as word of our engagement became public, Verizon’s predecessor, Bell Atlantic, pushed a bill through the Virginia legislature that not only prohibited localities from selling telecommunications services directly to the public, but also barred localities from making telecom infrastructure available to companies that could compete with Bell Atlantic.
There were only two exceptions. One exception was for all localities located adjacent to Exit 17 off Interstate 81. Can anyone guess what that applied to? This particular shoe fit only Abingdon, the home of Rick Boucher, who was then a major force in telecom in the US Congress. The other exception was that localities could sell their networks to the private sector without offering them to Bell Atlantic.
In response to the new law, the City launched what we called the Strategic Partner Development Process, a nationwide search for a strategic partner. We started with about 40 candidates, and we ultimately came down to CFW Telecom, a 100-year old communications company based in Waynesboro, VA. In case some of you are wondering, “CFW” stood for Clifton Forge/Waynesboro. CFW later became nTelos, and nTelos, in turn, was acquired by Lumos Networks. In what may have been the first public-private partnership in America involving a fiber broadband network, we ended up with a deal that worked well for both parties, for different but complementary reasons.
The City sold its network to CFW for $1 dollar. This complied with the Virginia law in question and gave CFW a state-of-the-art fiber backbone, a substantial potential market, a beachhead from which to expand throughout the region, and a very happy city that was eager to promote its partnership. In return the City got
the right to continue to use the fibers it was currently using without charge for the next 30 years;
the right to use 8 fibers on all new CFW builds in the city, again without charge for 30 years;
CFW’s commitment to make broadband Internet access available to 95 percent of the addresses in the City within 4 years, with minimum buildout requirements specified for each year;
CFW’s commitment to provide the City the best telephone rates in Virginia for the next 10 years;
CFW engineering consulting services worth up to $200,000;
Use of CFW’s purchasing discounts of up to $500,000.
Not a bad deal for a City whose fiber network had already paid for itself within 18 months. Before I move on from Lynchburg, I’d like to share a war story with you. I was reminded of this as I was talking to your economic development specialist, Ken McFayden, last night. Our talk brought home to me how far economic development professionals have come over the last few years.
When Lynchburg’s Strategic Partnership Development process got down to a short list of 6 candidates, we invited each company to come to Lynchburg to make its case. On our side of the table, we’d typically have representatives of Lynchburg’s city government, the school system, local businesses and colleges, and the local and regional economic development organizations. We’d kick off a discussion about what the Lynchburg community could do with an advanced broadband network, others would pick up the theme and build on it, and before long, the energy around the room would rise to such a level that we could levitated the conference table.
In the middle of one of these sessions, the representative of a company from California watched the discussion accelerating around the room and, after a while, leapt up from her chair and yelled, “I’ve got it, I’ve got it! I know just what Lynchburg needs – a chips factory!” “Oh no,” the regional economic development expert responded, “Lynchburg already has a chips factory – its Frito Lay potato chips plant.”
Happily, as you’re seeing in this Summit, economic development professionals now understand that advanced communications capabilities will increasingly becoming essential, but not alone sufficient, features of successful communities in the years and decades ahead, as electricity was in the last century. As a result, economic development professionals are now critical members of a community’s broadband team.
Let me know turn to a few “big picture” suggestions that I hope will contribute to the County’s success in this Summit and beyond.
First, keep on doing what you’ve already started. You’ve defined your goals, created an open process, invited stakeholders and potential contributors of all kinds to participate, and kept an open mind. Bravo to you. You’re on exactly the right path.
Second, these are uncertain times, with many unknowns and unknowables. As you consider the advice that you’ll be receiving, try to distinguish between facts and opinions, and be wary of taking anyone’s arguments at face value. That includes assertions by the Federal Communications Commission, the communications industry, and the media. In particular, don’t trust lawyers like me when we’re spouting off on technological, business, marketing, and other matters that are beyond our legal expertise. Instead, seek advice from experts who have had years of first-hand experience with successful broadband initiatives in circumstances comparable to yours. If you’d like, I can help you identify the best of these experts.
Let me give you some examples of claims that deserve great caution. We hear every day from some quarters that fifth-generation – that is, “5G” – wireless networks will cure all that ails America, that winning the global race to 5G will create trillions of dollars of gross national product and millions of new jobs, and that 5G networks will eliminate the digital divide between rural and urban areas. Wouldn’t it be great if all this were true? Unfortunately, some of it may not be, at least not in the next few years for rural markets, including some areas of Botetourt County.
There’s a healthy and spirited debate going on around America today about what 5G is, about whether 5G can be successful even in major cities in the United States, and about whether 5G will ever work in rural areas that cannot economically justify the construction of the fiber backhaul necessary for 5G wireless to work.
Without giving these key foundational issues the attention they deserve, the Federal Communications Commission has decided to make rapid 5G deployment one of its top priorities. Unfortunately, in doing so, it has tried to portray state and local governments as impediments to such deployments. In fact, the Commission is voting today on new rules that would severely restrict local authority to manage public rights of way and facilities and to obtain fair compensation for doing so. The FCC’s new rules are likely to result in endless litigation, not just over the FCC’s authority to impose such overbearing rules on state and local governments, but also about how localities should apply the rules on a case-by-case basis. This sadly reminds me of former Colorado governor Richard Lamm’s trenchant observation that “No nation ever sued its way to greatness.” I applaud the Botetourt County Board of Supervisors for its recent letter to the Federal Communications Commission applauding its goals but taking strong issue with the Commission’s approach to achieving them.
I’m not going to get into these issues in greater depth now, as they are on the agenda for discussion later today. I suggest to you, however, that there are few bigger issues affecting local governments today, including Botetourt County, than this one.
Third, the world of communications today is a Tower of Babel. It’s “5G,” “Smart Cities,” “Dig Once,” “One Touch Make Ready,” “Internet of Things,” “The Future of Work,” buzz-word after buzz-word. How can a community make sense of all this and avoid either being frozen in place or being led astray by all the hype? The key, I suggest, is to view your community holistically, to distill from the buzz-words the core principles that make sense for your community, and to take full advantage of the maximum amount of flexibility that evolving federal and state law allows you to exercise. Every community is unique, and its accountable elected officials are in the best position to determine what the community wants its future to be, what it has, what it needs, and what it is willing and able to do to achieve its goals. That, at bottom, is what’s so wrong with the Federal Communications Commission’s one-size-fits-all approach.
Fourth, during a recent visit to London’s remarkable city transportation museum, I came across two thought-provoking quotations from Antoine de Saint-Exupéry, a French philosopher and writer who lived from 1900 to 1944. Saint-Exupéry’s first quotation was:
“A rock pile ceases to be a rock pile the moment that a single man contemplates it, bearing within him the image of a cathedral.”
His second was:
“[Our] task is not to foresee the future but to enable it.”
In my experience, there are two things that are present in just about every successful broadband project. One is local visionaries and champions who see cathedrals in rock piles, who are willing to bet big on the future, and who will work 24/7 to meet every challenge necessary to make the project a success. But that’s not enough. There’s an equally strong need for clear-eyed realists who will cross-examine every fact, figure, and assumption that the visionaries and champions may make and will ensure that the project remains grounded in reality. So, by all means, think cathedrals, but base your decisions on conservative estimates that overstate costs, understate revenues, and leave plenty of headroom to cope with the inevitable unforeseen or unforeseeable circumstances.
Last, I’d like to leave you with a quotation from a great hero of mine, Senator John McCain. In the mid-2000s, he and Senator Frank Lautenberg (D-NJ) co-sponsored a bill called the “Community Broadband Act” that would have banned state barriers to local broadband initiatives, while protecting private carriers from discriminatory local regulation. The bill drew broad bipartisan support in both houses of Congress, and came close to becoming law in 2006.
Senator McCain’s core philosophy was succinctly summarized in this sentence from his statement on the Senate floor when he introduced his bill. “As a country, we cannot afford to cut off any successful strategy if we want to remain internationally competitive.” No single approach is going to meet all of our Nation’s broadband challenges. We’ve got to be open to all options, especially community-driven options, that might work well in the circumstances at hand.
All of us, in our own ways, have the interest, the ability, and the opportunity to help make our communities, our states, and our country a better place. Let’s get on with it.
Earlier this week, CLIC advisor Blair Levin sent CLIC and NATOA leadership a letter detailing his concerns with the FCC’s draft small cell order, an order that preempts local authority while purporting to advance broadband deployment. Blair’s letter describes why the draft order will have the opposite impact and is likely to exacerbate the digital divide while tying the hands of local governments to build collaboration with the private sector. Excerpts of Blair’s analysis are below, and the full letter is here.
Blair Levin :
This is in response to your request for my view of the FCC’s pending order, proposing to cap the fees that state and local governments may charge for small cell attachments. According to the FCC’s draft order, these price-caps will save the industry $2B in costs to operate in metropolitan areas—which will translate into $2.5B in new wireless investment, primarily in rural areas. This letter summarizes my thoughts on aspects of the draft order.
[On Wall Street and in Washington, DC], I’ve interacted with numerous investors, carriers, and localities, and that experience leads to my concerns with the FCC’s argument:
First, focusing on state and local government fees and process is a distraction from the real obstacles to accelerated and ubiquitous deployment of next generation mobile services, which are that broadband deployment economics are very challenging and have to be addressed at all levels of government and through creative collaboration with the private sector. Fees for access to public property represent only one of many, many costs of doing business a carrier will encounter. A focus on reducing or eliminating one (relatively marginal) cost of doing business does not solve the challenging economics of broadband deployment and serves only to obscure the true challenges….
Second, local governments have a strong recent track record of endeavoring to enable and facilitate broadband deployment,as the Google Fiber experience conclusively demonstrated. Vilifying them based on fees for use of public property is not only a distraction, but also unfair. Indeed, rather than acknowledging that carriers have a proven ability to negotiate advantageous fees with localities, the FCC’s draft order infantilizes carriers by preempting state and local government, presumably on the theory that carriers cannot protect themselves in negotiations with states and localities. This is absurd….. Tying the hands of localities and states is self-defeating – it stops them from using creative partnering strategies (as they have successfully done in cities like San Jose, CA and Lincoln, NE) to find ways to improve broadband outcomes…. Thus, despite the FCC’s rhetoric, the proposal will likely exacerbate, rather than alleviate, the digital divide.
Third, the FCC’s draft order is based on a fallacy that no credible investor would adopt and no credible economist endorse:that reducing or eliminating costs for small cell mounting on public property in lucrative areas of the country (thus reducing carriers’ operating costs), will lead to increased capital expenditures in less lucrative areas– thus supposedly making investment more attractive in rural areas.
That simply is not how investment decisions are made…. My experience on Wall Street is that neither analysts nor investors regard this FCC action as likely to lead to increased deployment in non-economically attractive areas, which most on Wall Street would consider an irrational act… In short, while the FCC may ignore reality, the carriers and Wall Street understand that increasing profitability in Market A will not make Market B more attractive for investment. Market B will still be an area that is unprofitable or otherwise unattractive for investment, and the new requirement that Market A subsidize carriers by reducing fees will not benefit Market B under these circumstances….
Finally, let me note something I discuss at length in the attached speeches: the draft order presents a framework in which industry gets all the benefits (reduced fees to access state and local property) with no obligations to reinvest the resulting profits in rural broadband—even though the purported rationale for the reduced fees is that they will lead to new investment. At the same time, states and localities will be forced by federal mandate to bear all the costs and receive no guaranteed benefits.
In short, my response to your request is that I am deeply troubled by the FCC’s draft order, the options it ignored, and the fallacious logic on which it rests. And I’m particularly concerned about the prospect of unelected federal officials in Washington DC mandating how, and at what price, state and local elected officials can manage their own property—all for the benefit of a select group of companies that are under no obligations to reinvest these mandated public subsidies in new deployment.
Today, a large and rapidly growing number of communities are aggressively seeking access to advanced Internet capabilities through public private partnerships or building their own networks. In these endeavors, the key to successful outcomes is the ability to choose among the options that work best for the community. We call this having “local Internet choice.”
Unfortunately, in some 20 states, local Internet choice is constrained by legal or other barriers. Moreover, the “model state codes” developed by the Federal Communications Commission’s industry-dominated Broadband Deployment Advisory Committee foretell new barriers being proposed in many other states in 2019.
For these reasons and more, CLIC and its allies — government officials, private sector leaders, community and broadband advocates –must redouble efforts to make local Internet choice a national priority at all levels of government, to oppose new state barriers and to roll back as many of the existing barriers as possible.
WHY ONTARIO, CALIFORNIA?
Ontario, California exemplifies the growth and opportunity inherent in having access to critical modern infrastructure. Having emerged from a small farming town, this community of now 170,000 residents utilized its gateway location to southern California, its train, plane, freeway and now fiber infrastructure to become a global e-commerce center. Ontario has utilized its municipal fiber network, OntarioNet, to attract and grow globally-oriented small businesses and to offer residents a dedicated fiber connection with gigabit Internet speeds. OntarioNet also provides fiber to the home in Ontario Ranch, the city’s 8,200-acre, 13-square-mile master planned development and southern California’s first gigabit community. Ontario Ranch will ultimately boast 46,000 new homes and is one reason the U.S. Census Bureau predicts Ontario’s population will double by 2035.
JOIN US & GET OUR CONFERENCE DISCOUNT
Join us in this critical discussion at the DoubleTree by Hilton Ontario Airport hotel.* CLIC members can register here and receive a $25 discount, by using our code: CLIC-ONT18. This registers you for CLIC’s half day session and the entire BBC conference (Oct 23-25). Or become a member of CLIC by joining here (it’s free).
*The conference hotel discount rates ends September 22
Today, a large and rapidly growing number of communities are aggressively seeking access to advanced communications capabilities by working with willing incumbent carriers, entering into public-private partnerships with new entrants, building their own networks or developing other creative approaches. In these endeavors, the key to successful outcomes is the ability to choose among the options that work best for the community.
Unfortunately, in some 20 states, local Internet choice is constrained by legal or other barriers. Moreover, the “model state codes” developed by the Federal Communications Commission’s industry-dominated Broadband Deployment Advisory Committee may result in new barriers being proposed in many other states in 2019.
For these reasons and more, the coming year will be critical for local Internet choice. CLIC and its allies must redouble efforts to make local Internet choice a national priority at all levels of government, to oppose new state barriers and to roll back as many of the existing barriers as possible.
CLIC Members can register here and receive a $25 discount, by using our code: CLIC-ONT18. This registers you for CLIC’s half day session and the entire BBC conference (Oct 23-25). Or become a member of CLIC by joining here (it’s free).
*Theconference hotel discount rates ends September 22.
Senator John McCain was a very special person. As is evident from the outpouring of tributes following his death, he touched millions of Americans with his patriotism, his wisdom, his courage, his fundamental decency, and his grace. In these divisive times, we need many more leaders like him, from all political parties.
Senator McCain was a particular hero to advocates of local Internet choice. In the mid-2000s, he and Senator Frank Lautenberg (D-NJ) co-sponsored a bill called the “Community Broadband Act” that would have banned state barriers to local broadband initiatives, while protecting private carriers from discriminatory local regulation. The bill drew broad bipartisan support in both houses of Congress and came close to becoming law in 2006.
Much of what Senator McCain said on the Senate floor at the time he introduced the bill remains as true and compelling today as it was then:
“… Many of the countries outpacing the United States in the deployment of high-speed Internet services, including Canada, Japan, and South Korea, have successfully combined municipal systems with privately deployed networks to wire their countries. As a country, we cannot afford to cut off any successful strategy if we want to remain internationally competitive.
“I recognize that our Nation has a long and successful history of private investment in critical communications infrastructure. That history must be respected, protected, and continued. However, when private industry does not answer the call because of market failures or other obstacles, it is appropriate and even commendable, for the people acting through their local governments to improve their lives by investing in their own future.
“In many rural towns, the local government’s high-speed Internet offering may be its citizens only option to access the World Wide Web. Despite this situation, a few incumbent providers of traditional telecommunications services have attempted to stop local government deployment of community high-speed Internet services. The bill would do nothing to limit their ability to compete. In fact, the bill would provide them an incentive to enter more rural areas and deploy services in partnership with local governments.
“This partnership will not only reduce the costs to private firms, but also ensure wider deployment of rural services. Additionally, the bill would aid private providers by prohibiting a municipality when acting as both ‘regulator’ and ‘competitor’ from discriminating against competitors in favor of itself.
“Several newspapers have endorsed the concept of allowing municipalities to choose whether to offer high speed Internet services. USA Today rightfully questioned in an editorial, ‘Why shouldn’t citizens be able to use their own resources to help themselves?’ The Washington Post editorialized that the offering of high speed Internet services by localities is, ‘…the sort of municipal experiment we hope will spread.’ The San Jose Mercury News stated that a ban on localities ability to offer such services is ‘bad for consumers, bad for technology and bad for America’s hopes of catching up to other countries in broadband deployment.’ Finally, the Tampa Tribune lectured Federal and State legislators, ‘don’t prohibit local elected officials from providing a service their communities need.’”
We at CLIC thank Senator McCain for his herculean contributions to local Internet choice, and we pledge to continue to do all that we can to achieve his and our shared goals.
–Jim Baller, CLIC President
*PHOTO: CLIC President Jim Baller, in his capacity as a FirstMile.US board member, together with FirstMile.US President Susan Estrada, presenting Senator McCain in 2005 with an award for his efforts to protect local broadband choice.
On July 23, 2018, Blair Levin, Executive Director of Gig.U, and Nonresident Senior Fellow of the Brookings Institute’s Metropolitan Policy Project, provided opening remarks at the Next Century Cities Making Connections Regional Broadband Summit in Pittsburgh, Pennsylvania. In a powerful speech, he identified “learning” as the secret to smart policies about smart cities, and then widened the lens to show us what he has learned. Using various examples, he described how the FCC’s latest approach will not get us closer to a solution on how to facilitate the deployment of next generation networks because the FCC intends to restrict the very entities, local governments, that are best equipped to solve this challenge. In Mr. Levin’s analysis, it is local governments that are best positioned to move this country forward, because they represent and understand the environment where those deployments will take place.
On June 26, 2018, Blair Levin, Executive Director of Gig.U, and Nonresident Senior Fellow of the Brookings Institute’s Metropolitan Policy Project, provided keynote remarks at the Kansas City Gigabit Summit. As he did in Austin, Mr. Levin again took the FCC’s BDAC process to task, and suggested better ways for cities and carriers to advance 5G networks — such as through smart local negotiations, among other options. We provide an excerpt of his prepared remarks below, with the full text linked at the end.
Cities, the FCC and Gigabit Networks
Blair Levin, Brookings Institute, Metropolitan Policy Project
It is pleasure to be with you today.
I open many speeches that way but here I really mean it.
This summit symbolizes the enormous vision, and a great achievement, of cities.
When I first spoke here, at the first gigabit summit in 2013, it was shortly after over 1000 communities had expressed an interest in having gigabit broadband networks.
By contrast, only one carrier was interested in offering gigabit internet service—Google. All the other carriers dismissed gigabit networks as a PR stunt; something done for bragging rights but irrelevant to creating consumer value.
Now, five years later, hundreds of cities have gigabit offerings and all the carriers are upgrading their fixed and mobile networks to offer such speeds as fast as they can. Charter has even declared this season “Gigabit Summer.”
Further, the federal government is saying that getting gigabit speeds on our mobile networks is a national imperative and failure to do so threatens our economy and national security.
This is a big and welcome change. The federal government is recognizing what cities and those of us here in 2013 already knew: that our policies should ensure that bandwidth never constrains economic growth or social progress.
Unfortunately, one thing hasn’t changed; the federal government’s view of its own role in helping achieve that goal. It is:
1. Make cities do all the hard work, pay all the government costs and accept all the blame for whatever happens; and
2. Let the federal government pay none of the costs, do none of the hard work, and take all the credit.
The first speech by an FCC Chair about Gigabit networks was in 2013. He was concerned that Google Fiber and a project I was doing, Gig.U, were proceeding without his involvement so gave a speech to get the FCC in the game of gigs.
His policy prescription?
He challenged the audience to build a gigabit network in every state.
He provided no analysis of why they don’t exist, no insight into barriers that can be removed, and no policy to improve their prospects. He simply offered the moral equivalent of the ‘hearts and prayers’ kind of leadership that does nothing but make the speaker feel better.
I called that speech the “most amateurish speech ever given by an FCC Chair” that “bordered on the absurd.”
I can be very bi-partisan in my criticism.
But at least that speech did not set us backward.
Unfortunately, the current FCC is on a path, to do exactly that.
“…the FCC has curiously interpreted its statutory mandate to dramatically reduce its regulatory powers over broadcasters, ISPs, telephone companies, cable companies, and wireless companies, while simultaneously asserting new authority to regulate and micromanage…local governments.“
As I detailed in a speech a few weeks ago in Austin—one I will summarize rather than repeat–the current Federal Communications Commission (FCC) has curiously interpreted its statutory mandate to dramatically reduce its regulatory powers over broadcasters, ISPs, telephone companies, cable companies, and wireless companies, while simultaneously asserting new authority to regulate prices and micromanage over one set of enterprises: local governments.
A major tactic in the FCC’s effort to regulate cities is through its Broadband Deployment Advisory Committee (BDAC) process. The stated, and worthy, goals of the BDAC are to accelerate and broaden deployment of next-generation broadband networks and reduce the digital divide.
However, the BDAC suffers from significant failures of design and execution. The failures are threefold.
First, the BDAC did not have a balanced membership that could have lead to a real consensus between stakeholders.
The BDAC should have been designed to generate ideas that optimize outcomes for all stakeholders and build a political consensus that makes it more likely that those ideas will be adopted and implemented successfully.
Unfortunately, the FCC overwhelmingly filled the BDAC with industry representatives and therefore undercut its potential to build political capital for a balanced and optimal set of solutions.
Rather, the FCC has spent its political capital reinforcing a false narrative about how cities are the cause of delays in 5G deployments while ignoring the real, market-driven causes of delay.
Second, the BDAC started from the false assumption that industry does not have the leverage to negotiate the deals it needs to make investments in new networks.
The carriers themselves recognize they have the necessary leverage.
Google Fiber changed the traditional negotiating leverage by saying that it would build, but only in places where city government adjusted their policies to make it economically feasible.
And that framework applied to all carriers.
Consider what AT&T said about the impact of the Google Fiber process. Noting that municipalities had made it “’easy’ for Google Fiber, AT&T, in a pleading to the Broadband Opportunity Council, wrote that Google has “also essentially established a template for lowering existing regulatory barriers in other jurisdictions. That template, in turn, has allowed other providers to accelerate and broaden their plans for deploying the infrastructure necessary to provide high-speed Internet service. That has certainly been true for AT&T.”
Consider what Verizon’s CEO Lowell McAdam recently noted, “Cities are embracing us to come in and provide this broadband service for the citizens… .” He further said Verizon would walk away from cities that want too many concessions, adding, “there’s no market that’s not on the table.”
The pièce de résistance demonstrating the ability of carriers to work things out with cities without federal interference involves the carriers and San Jose. They were antagonists in the BDAC process, with the carriers supportive and the Mayor of San Jose, one of two big city representatives, resigning and blasting the process. He observed, “At the 11th hour, we saw industry rewrites that pushed aside everything that had been negotiated for an industry-friendly, cookie-cutter set of rules.”
But those parties were able to negotiate terms that all thought fair and allow the companies to begin 5G deployments. Notably, the deals include having the companies contributing to a digital inclusion initiative and helping the city pay for accelerated permitting.
Let’s engage in a thought experiment: What if the FCC in 2011 had said that fiber deployment was critical to the future security of the United States and therefore mandated that every city should give Google Fiber the same deal that Kansas City gave Google?
I am certain that there would have been a huge uproar with all saying that such a mandate is crazy, unnecessary, and a clear usurpation of local power to benefit a large private enterprise.
That is, however, what the BDAC/FCC process appears to be moving to—a single federal mandate for how cities should price their rights of way and manage local construction for the benefit of a select group of companies.
Third, BDAC did not understand the value of asymmetric value creation.
I am often a big fan of asymmetry. In 10 years of practicing corporate law, as well as in being involved with dozens of deals between cities and next-generation network providers during the heart of the Gig.U effort, I saw how every successful deal involves asymmetric value creation.
That is, the two sides don’t want the same thing. So, the trick is to find the things that cost side A little and create considerable value for side B, with side B doing the same for side A. Both, in this way, get more than they give. That value creation may be asymmetrical but the idea of both getting more than they give is hugely powerful.
The BDAC, however, ignored this kind of value creation. Instead, it focused exclusively on what cities could do to improve the profitability of the carriers. It did not ask—obviously it was not interested—in what it would cost the cities. It involved the kind of cost-benefit analysis in which the costs to one side are ignored and only the benefits to the other side are considered.
“…I expect the BDAC and the FCC will adopt a framework in which the industry gets all the benefits with no obligations and municipalities will be forced to bear all the costs and receive no guaranteed benefits.“
Due to these three failures, I expect the BDAC and the FCC will adopt a framework in which industry gets all the benefits with no obligations, and municipalities will be forced to bear all the costs and receive no guaranteed benefits. This kind of process will result in a large transfer of wealth from public to private enterprises—and leave American cities and metropolitan areas no better positioned to tap into digital telecommunications to unlock innovation and shared economic prosperity.
So how should cities respond to a BDAC that ignored their voices, market realities and any principles of fairness and shared rights and obligations?
I think it would be wise for cities to establish their own working group to establish best practices, work collaboratively to find solutions to new problems, and generally lower the cost of deployment…..