Broadband Stimulus Funding Reignites Public-Private Ownership Feud

Federal support for some flavor of broadband service expansion to underserved areas of the United States is an idea whose time has come into fuller flower after many years of being an issue mostly in the wheelhouses of local planning boards, telecom company lobbying shops, and communications policy wonks.

It’s another example of a big tech issue that simmered for 20-plus years in “normal” times, then shot to the top of the Federal policy to-do list courtesy of the coronavirus pandemic, when access to robust internet service revealed itself with stunning clarity as the indispensable lifeline to commerce, education, healthcare, and a host of other in-person services.

With potentially tens of billions of Federal spending on the line to deal with broadband expansion issues, it’s worth a look back to the early days of government-private sector tension on the issue and some of the arguments that will drive the current debate.

Fiber Foundations

In the early 1990s as the Commonwealth of Massachusetts’ first chief information officer – arguably the first such position in the country at that time – I was approached by a Governor Weld administration colleague, the chairman of the Massachusetts Turnpike Authority (MassPike), with an interesting proposition.

MassPike was laying 12 strands of fiber optic cable, he explained, from one end of the Bay State to the other, from the Berkshires at the New York state line in the west to Boston harbor 138 miles to the east.

The chairman explained that MassPike would keep nine strands for its own broadband use for intelligent highway systems, emergency communications, and similar transportation-related functions. He then offered the other three to me. As state CIO overseeing the Commonwealth’s primary data center and telecommunications infrastructure, that seemed to make sense on the surface.

After thanking him, I made my way back to my office where I briefed my senior staff and asked, “Is this good news, or bad news?”

Who Gets to Play?

The reason for my ambiguity was the simultaneous development out in far-off Iowa where the state legislature had just passed a bill to establish the Iowa Communications Network (ICN). It was to be the first state-owned, state-operated and statewide fiber optic telecommunications backbone.

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While the ICN was initially designed – and sold to the legislature and the public – as primarily for facilitating distance education, private sector telephone companies considered it the proverbial camel’s nose under the tent. They weren’t far off the mark, as ICN soon expanded to handle long-distance telephone traffic for state government including administrative meetings using the network’s video capabilities.

Intended to assuage the telecom companies, state law prohibited the ICU from serving private parties, but some individuals and organizations had been able to gain access through partnerships with educational institutions. The telecoms became increasingly frustrated and demonstrated that concern through their lobbyists in Des Moines.

For those who’ve never played in the sector, the telecom companies are some of the most vocal organizations in states throughout the country. In Massachusetts and in many other states, they are the largest private sector employer, and governors’ offices are on their speed dial.

According to the Iowa state auditor, the ICU had been surrounded by controversy since its inception, and apparently continues to be so. After its executive director was fired for questionable purchases and alleged cronyism, there was a bi-partisan push by the governor and the legislature to consider a sale of the ICU.

Given these developments, I was glad I asked my staff back then about our highway chief bearing gifts. Fortunately, it was years before the MassPike fiber construction was completed and could become an issue, and by then I had already headed for a sunnier venue in Sacramento.

Battle Lines Drawn

Such public versus private broadband disputes have never really gone away, but over the last decade or so most controversies have involved local governments and their attempts to build their own municipal networks. Unsurprisingly, telecom companies have been among the biggest opponents. Demonstrating the influence, industry lobbyists continue to block the public network option, and nearly 20 states currently restrict the building of municipal networks. A new bill in Congress proposes a nationwide ban on muni broadband, but faces little chance of success with current Democratic control of Congress.

It’s no coincidence, however, that this bill appears now alongside the Biden administration’s new infrastructure stimulus package announced in late March. While an earlier package proposed $7 billion for broadband support, the new one includes a whopping $100 billion to deploy broadband throughout rural America where ‘more than 30 million Americans live in areas where there is no broadband infrastructure that provides minimally acceptable speeds’ according to a recent White House fact sheet.

While such a massive investment may be initially welcomed by the private sector telecoms, it can be of little comfort when they get to the fine print of the infrastructure plan. Earlier this month in President Biden’s speech at a local union hall (co-incidence?) he made his intentions clear. According to the accompanying fact sheet, “the plan prioritizes support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives—providers with less pressure to turn profits and with a commitment to serving entire communities.” (Italics mine) Capitalism, heaven forbid.

A competing Republican infrastructure proposal envisions $65 billion of Federal support for broadband, but doesn’t get into much detail about how that would be deployed, or whether it would run counter to the business aims of the telecom industry.

While the telecoms may bear some responsibility for their lack of investment in rural broadband, providing the other 300 million Americans with robust broadband is no small achievement. The root of the problem is mostly economics: why deploy expensive service infrastructure in areas where it’s geographically difficult to work, and where the number of customers is smaller than in more densely populated areas.

However, incentivizing competition between the big telecoms and municipal networks isn’t such a bad thing either.

As reported recently in Ars Technica, PC magazine “recently named Chattanooga, Tenn., the best work-from-home city in the nation, citing in part the city’s “‘widely available broadband Internet’ provided by the Chattanooga Electric Power Board.” It’s telling that Comcast went to court in Hamilton County, Tenn., to block the bond issue which would fund Chattanooga’s public network – SmartGrid. When that failed, Comcast upgraded its own network to better compete in the community against the new municipal network. That’s an example of competition at work.

It will be interesting to watch the infrastructure package play out especially because terrestrial broadband is so 20th century. The rural broadband issue may be moot in just a few years as Elon Musk’s Starlink satellite service and similar initiatives are fully deployed promising broadband internet service from any point on the globe. Unbounded by traditional ground infrastructure, these new low earth orbit systems promise to deliver high-speed broadband Internet to locations where previous access has been unreliable or completely unavailable.