Providers attempting to wire rural communities to offer broadband service or a competitive alternative to cable and phone companies face unfair tax and pole attachment fees that often give the advantage to existing companies and deter would-be competitors.

Those differences have a meaningful impact on rural broadband providers in states like New York, where wiring rural upstate communities is being made difficult by bureaucratic pole attachment fee policies and wide differences in property taxation that give an edge to existing cable giants like Charter Communications while hampering small start-ups with costly and confusing tax policies that slow down broadband rollouts.

The Watertown Daily Times recently published an in-depth special report on the broadband challenges impacting northern New York, where fast internet access has evaded some communities for more than two decades. That lack of access is becoming a critical problem for a growing number of employers who are now considering exiting those communities because companies like Verizon, Frontier Communications and Charter/Spectrum are refusing to provide 21st century broadband service in rural upstate communities.

One example is Tupper Lake Hardware in Tupper Lake, N.Y., which wanted to expand, but considered exiting the area instead after being stuck using satellite internet access because no phone or cable company offered broadband service in the area.

“It came to the point where if you are going to make a $1 million investment, we actually talked about this, we said ‘do we put our money into this place or do we just pick up and move?’” general manager Chris Dewyea told the newspaper. “It is real. It sounds dramatic, but that is the way it goes. The connectivity speed that we had with satellite internet was not good enough, so that is when we started on our journey to get high-speed here.”

Calling Verizon, Frontier, or Spectrum was fruitless, so the company picked up the phone and called… the Empire State Forest Products Association, a group that has tangled with internet connectivity problems in upstate New York before. The group pointed the company to Slic Network Solutions, owned by the independent Nicholville Telephone Company, which has spent the last several years slowly expanding the reach of its fiber optic network in the north country. Slic currently provides service to about 10,000 homes in small communities like Belmont, Lake Placid, Schroon Lake, and Titus Mountain.

Like many fiber overbuilders operating in New York, Slic has to plan its network expansion carefully, as it lacks the financial resources and staff of a company like Verizon or Charter. Slic’s fiber service is in very high demand, because the alternatives are almost always satellite internet access or appallingly slow DSL service from Verizon or Frontier, neither of which have shown much interest in delivering the FCC’s 25Mbps definition of broadband. Charter’s Spectrum service is available only in larger concentrated communities that can meet the cable company’s return on investment property density test. Many rural upstate communities don’t.

“In most of the places, there really was the option of satellite. Some places had DSL but it was usually pretty marginal,” said Kevin Lynch, vice president of technical operations & chief operations officer of Slic Network Solutions. “There are a few areas, but very limited, that might have had Spectrum.”

Slic is one of several small fiber providers operating in New York, each trying to cover territories larger phone and cable companies have ignored for years. Cooperation in commonplace among some companies operating in similar regional areas to keep construction and operating costs down. Some providers share their networks to extend their reach. Most target commercial or institutional users but will lease out their networks for residential providers. Some of the state’s middle mile fiber networks were built with economic stimulus money or through other grant or government programs. Others are privately funded. Many are underutilized but lack the funds to expand.

Westelcom, based in Watertown, counts Slic as one of its partners. Westelcom currently limits its business to commercial accounts in its six county service area, which includes Watertown, Malone, Clayton, Elizabethtown, Ticonderoga and Plattsburgh. But it is willing to provide wholesale access to third-party companies that want to serve residential customers.

One of the biggest and most surprising impediments to serving “last-mile” residential customers isn’t the cost of construction or the return on investment. It’s New York’s tax laws. Current tax policy requires fiber providers to pay taxes on the value of the infrastructure being used, regardless of revenue. At present, that tax rate can cost between $25,000 and $30,000 per fiber route mile. If it takes five miles of fiber to reach only a half-dozen homes, the provider would owe New York over $100,000 in taxes alone, making it impossible to recoup costs and drain the provider’s finances.

The National Conference of State Legislatures, a bi-partisan group, published Property Taxation on Communications Providers: A Primer for State Legislatures in 2015, outlining a legacy of inconsistent and often outdated state and local taxation policies across the United States that treat communications providers differently on issues like property tax. The group points out New York’s tax authorities treat cable and phone companies very differently than upstart fiber providers. Mobile phone companies are taxed differently as well:

The taxation of communications property varies widely in New York. There are several types of property taxes that are applied in varying ways to the communications sector. While New York does not generally tax tangible personal property, the state considers lines, wires, poles, electrical conductors, fiber optic equipment, and related equipment to be real property. Landline companies and cable companies are subject to a real property tax on “Special Franchise” property which is centrally administered and assessed using the reproduction cost method by the Office of Real Property Tax Services (ORPTS). The Special Franchise property tax applies to equipment located on public property. In addition, Nassau County and New York City have a “split roll” which  requires higher taxes on the “utility” class which includes landline telephone companies. Wireless companies and cable companies are assessed locally for their real property (land and buildings,  e.g., towers)

In plainer English, Lynch points out Slic is taxed about $465 per mile per year in St. Lawrence County, which is “significantly higher” than what cable companies like Charter pay, because they are taxed differently.

In the college town of Potsdam, Slic pays more than double the school and property taxes paid by Charter Communications, even though it serves fewer customers and earns much less. That disparity forces providers to target their networks in more dense areas like inside towns and villages, which means more customers per fiber route mile, reducing the bite of the tax man.

“Broadband infrastructure is considered real property, so it is taxed just like a house when it is in the right of way. So when we attach to these poles which are in the public right-of-way, we pay taxes on it and it is based on construction costs,” Lynch added. “There are a certain number of customers we have just to break even on those two operational costs and that does not include any of the other overhead and the content, the electronics and all that.”

After paying New York, Slic then faces the bureaucratic challenge of pole attachment permitting and fees. Every pole on which Slic attaches its fiber wiring is owned by someone else, typically utility companies like National Grid, Verizon, or Frontier. Some poles are jointly owned and maintained by the phone and electric company in the area. Fees and procedures vary in different parts of the state. There is generally a very costly pole attachment application fee and ongoing pole rental fees, which in this part of New York can run $400 a mile, per year.

Lynch said the costs of pole attachment fees alone can account for up to 40 percent of Slic’s expansion budget, and those initial fees can run between $10,000-14,000 per mile. This is why fiber overbuilders frequently decide on coverage areas based on customer commitments to sign up for service if it becomes available. This allows companies like Slic to secure the financing required to provision the service. But money alone doesn’t buy instant access.

“We apply to National Grid or whoever the pole owner is and say, ‘We would like to attach to these 30 poles on this road,’ and do a pole application and pay a fee,” Mr. Lynch explained to the newspaper. “They come out, they look at each pole and they determine if there is space on the pole, do they need to rearrange the electrical wires so they are in compliance with the electrical code, do they need to move down the phone lines. A lot of times these poles are jointly owned. It will be National Grid and Verizon, so they have to coordinate and then there might be a section that has Spectrum on it, so you have three or four companies that have to coordinate this effort.”

The state adds its own layer of bureaucracy with different Department of Transportation regions, regional economic regions, and Department of Environmental Conservation regions, each with its own rules and procedures. It is common for fiber projects to cross from one region into another, requiring additional paperwork and likely delays. If a project has to cross into the Adirondack Park, the rules and permits required to manage that are byzantine.

The result of all this is usually a significant delay in getting started, but once the paperwork is complete and fees are paid, the work can go faster than many realize.

“In these areas where we are constructing right now, Schroon Lake and Belmont and Lyon Mountain, we are building three to five miles of fiber per week. Our next group of projects that has been funded by New York state is 300-plus miles of fiber,” Lynch said. “And when I say three to five miles per week, that is per area.”

Fiber providers would like to see tax fairness and a lot less bureaucracy. The rules in states like New York may eventually leave fiber to the home service at a distinct disadvantage, because wireless networks don’t face pole attachment complications and pay lower taxes because their real property is generally a cell tower and the fiber line that connects to it. As it stands, some internet providers may gravitate towards wireless internet solutions in rural areas instead of fiber just to avoid excessive taxes and the pole attachment bureaucracy. Most homes and businesses prefer fiber optic service when given a choice, but without some changes to tax laws and a more centralized, less bureaucratic approach to pole attachments, fiber optics may never make financial sense in rural upstate New York.

Rep. Michele Hoitenga (R-Manton) doesn’t care much for community broadband, so she introduced a bill in the Michigan legislature that is as stark as it is short:

House Bill 5099:

The bill is remarkable for its brevity — most proposed community broadband ban bills avoid outright bans, preferring to use forced complicated referendums or operational limitations that usually make municipal broadband projects untenable. But Rep. Hoitenga’s bill leaves no doubt she wants private cable and phone companies left unmolested by publicly funded alternatives. Although the Michigan Republican chairs the House’s Communications and Technology committee, she appears confused about the difference between upload and download speeds. Her bill would define a “qualified” internet service as one offering at least 1/10Mbps service. Yes — 1Mbps download speed and 10Mbps upload speed.

Ars Technica’s Jon Brodkin asked Rep. Hoitenga about the oddity of the language in her bill:

When asked about this on Twitter, Hoitenga said she would have to “speak with the attorneys who wrote the bill” to determine whether the listed speed was a mistake. “I will speak with the attorneys who wrote the bill. They changed the language I submitted but will ask why they changed it,” Hoitenga wrote.

Rep. Hoitenga

Rep. Hoitenga used her Twitter account to promote and defend her bill, pointing out the district she represents had “37 providers” to choose from — a fact she gleaned from an online AT&T Yellow Pages directory. Stop the Cap! investigated that claim and found the majority of the providers cited did not offer internet access to members of her district, provided service only in adjacent communities, or sold commercial internet services to businesses only. In fact, for the overwhelming majority of her constituents, there are only two providers to choose from — AT&T or Comcast. Both are top donors to Rep. Hoitenga’s campaign, but more on that later.

Michigan has never been a hotbed of community broadband initiatives, despite having uneven broadband service in suburban and rural areas across the state. Michigan law already includes several significant roadblocks for public broadband projects, notes Lisa Gonzalez from the Institute for Local Self-Reliance:

“Michigan already has a significant state barrier in place; municipalities that wish to improve connectivity must first appeal to the private sector and can only invest in a network if they receive fewer than three qualifying bids. If a local community then goes on to build a publicly owned network, they must comply with the terms of the RFP, even though terms for a private sector vendor may not be ideal for a public entity.

“Nevertheless, several communities in Michigan have dealt with the restrictions in recent years as a way to ameliorate poor connectivity. They’ve come to realize that their local economies and the livelihood of their towns depend on improving Internet access for businesses, institutions, and residents.”

Although Rep. Hoitenga’s bill offers the possibility for “public-private” partnerships, her bill would bring a significant chilling effect because the proposed law fails to define how such partnerships should be structured.

Rep. Hoitenga told Stop the Cap! the bill would put a stop to tax dollars being spent on broadband service, something she felt was unwarranted. We asked the Michigan representative, “Did you know the phone and cable companies receive taxpayer subsidies already in the form of PILOT agreements, and other incentives?” which received the non-sequitur response that her office’s phones were ringing constantly with callers praising her new bill.

But that isn’t what Rep. Hoitenga told her Facebook fans.

“Many individuals have reached out to my office in regards to HB5099; with the belief that I am attempting to limit broadband expansion,” Hoitenga wrote. “This could not be further from the truth. One of my main goals as the Chair of the House Communications and Technology committee is to make internet access more easily obtainable. This legislation does indeed prevent cities from using tax dollars to subsidize ISPs; especially without a vote of the people. While at first glance government operated networks may sound like a good idea, the argument in support of them crumbles with an in depth look into the financial and long-term investment side of implementing such a network.”

So we remain unsure if the wave of phone calls Hoitenga referenced were in support of her proposed bill or opposed to it. Either way, the Michigan representative mischaracterized her own three-paragraph bill by claiming it would prevent cities from using tax dollars for internet service, “without a vote of the people.” But no provision for such a vote exists or would be allowed by her existing bill. Hoitenga’s bill also clearly makes internet access less obtainable, especially in communities where a for profit provider does not exist and a community is seeking to provide an alternative.

Hoitenga later states communities may not need to worry about internet accessibility because, “there is also a package of bills in the senate regarding Small Cell Technology (which also attempts to reduce barriers),” she wrote. That provision is backed by AT&T, which is currently one of the two ISPs serving her district.

She then picks up familiar talking points distributed by public broadband opponents:

“There are examples throughout the state and nation of taxpayers being on the hook for failed networks. There is also concern that some of these networks are in towns where employee pensions are severely underfunded, causing layoffs and cutting services, yet there seems to be money for high risk broadband investments. It’s time to address these issues.

She also cited a 2017 study critical of municipal broadband networks authored by University of Pennsylvania Law School Professor Christopher Yoo and co-author Timothy Pfenninger. Neither author or Rep. Hoitenga disclosed the group that produced the study is funded by AT&T and Comcast, among other large telecom companies and their respective lobbying organizations.

After opening a dialogue with the Michigan representative, she did not take kindly to questions or criticism about her bill, and summarily blocked Stop the Cap! from seeing her Tweets or communicating with her further — the first time anyone has blocked our group on Twitter. Shortly after that, she changed her Twitter channel to be viewable by invitation only, limiting her potential audience to her 284 current followers. At the moment, the only social media outlet that seems to be still open to communicating with Rep. Hoitenga is Facebook, where she is taking heat from her constituents about her bill.

The Michigan representative has been behind several controversial bills introduced in the current session of the Michigan House, including a proposal to allow concealed pistols to be carried in public and a ban on Sharia law being practiced in the United States.

Her top donors for the current legislative session include:

#2 – Telecommunications Association of Michigan PAC, $3,000
#4 – AT&T Michigan, $1,500
#11 – Comcast Corp. & NBC Universal, $500

With many cable operators reporting a need to double network capacity every 18-24 months to keep up with customer traffic demands, the industry is spending time and money contemplating how to meet future needs while also finding ways to cut costs and make networks more efficient.

Top technology executives from five major cable operators answered questions (sub. req’d.) from Multichannel News about their current broadband networks and their plans for the future. Some, like Mediacom, are aggressively adopting DOCSIS 3.1 cable broadband upgrades for their customers while companies like Cox and Comcast are deploying multiple solutions that use both traditional hybrid fiber-coax network technology and, on occasion, fiber-to-the-home to boost speed and performance. But at least one cable company — Charter Communications — thinks it can continue operating its existing DOCSIS 3 network without major upgrades for several years to come.

Cable Broadband Traffic Can Be Handled

“We’ve been on a pretty steady path of doubling our network capacity every 18-24 months for several years, and I don’t see anything that makes me think that will change,” said Tony Werner, president of technology and product at Comcast. “We’ve been strategically extending fiber further into our network to meet customer demand, and that effort, combined with our commitment to deploying DOCSIS 3.1 has given us a network that’s powerful, flexible, and ready for what’s next.”

J.R. Walden, senior vice president of technology at Mediacom was more aggressive.

“We have completed the removal of all the analog channels. That was the big step one,” Walden said. “Step two was to start transitioning high-speed data over to DOCSIS 3.1, so we’re not adding any more 3.0 channels, and reuse spectrum for 3.1, which is a bit more efficient. The whole company is 3.1, all the modems we’re buying since June have been 3.1, so we’ve begun that next transition.”

Walden added Mediacom is also trying to improve broadband performance by reducing the number of customers sharing the same connection.

“We average about 285 homes to 290 homes per node as an average,” he said.

Mediacom is also scrapping older technology on the TV side to open new bandwidth. The cable company is getting rid of MPEG-2-only set-top boxes so the company can transition its video lineup to MPEG-4. But even that won’t last long. Walden admits the company will then quickly start moving less-viewed channels and some premium networks to IP delivery.

Traditional cable broadband service relies on a hybrid fiber-coax network.

In its European markets, Liberty Global has adopted Converged Cable Access Platform (CCAP) equipment across its footprint. CCAP technology saves cable operators space and operates more efficiently, and supports future convergence of technologies that cable operators want to adopt in the future. CCAP has helped Liberty Global deal with its 45% traffic growth by making upgrades easier. The company is also using advanced features of CCAP to better balance how many customers are sharing a connection. The next step is adopting DOCSIS 3.1.

“Seventy to 80% of our plant will be DOCSIS 3.1 ready by the end of next year, giving us a path to even greater capacity expansion allowing us to continue to increase the available capacity across our access network, upstream and downstream,” said Dan Hennessy, chief architect of network architecture for Liberty.

Charter is prioritizing maximizing performance on the network it already has.

“Our priority is to constantly balance capacity against demand. It’s a never-ending quest,” said Jay Rolls, Charter’s chief technology officer. “We watch it very closely, and we’re very pragmatic about it — the volume of tools, metrics and ways to see what’s really happening, and invest accordingly, is really deepening in ways that matter.”

Is Fiber-to-the-Home in Your Future?

While some cable operators like Altice’s Cablevision are scrapping their existing hybrid fiber-coax networks in favor of fiber-to-the-home (FTTH), America’s largest cable operators are not in any hurry to follow Altice.

Comcast has expanded its fiber network closer to customers in the last few years, but sees no need to convert customers to FTTH service.

“I feel pretty strongly that the best path ahead is to leverage the existing coaxial network and DOCSIS resources to the fullest, then inch towards FTTH, over time Why? Because we can. We don’t have to build an entire network just to turn up one customer.”

The next generation of cable broadband service may depend on CCAP – technology that will cut operator costs and lay the foundation for changing the way video and other services are delivered to customers.

Cox has a 10-year Network 2.0 plan that will bring fiber closer to customers, but not directly to every home. More important to Cox is having the option to support symmetrical speeds, which means delivering upload speeds as fast as download speeds. In the meantime, network cabling Greensboro can improve your current connectivity and reliability, preparing your network for high-speed internet.

“We’re also thinking about the fiber investment and fiber deep as it relates to our wireless strategy, enabling some of our customers with a small cell strategy but also positioning ourselves to take advantage of that in the future, as well as thinking about fiber deep to benefit both residential and our commercial customers simultaneously,” said Kevin Hart, Cox’s executive vice president and chief product and technology officer.

Liberty/Virgin Media’s Project Lightning is bringing cable broadband and TV service to places in the UK that never had cable service before.

In Europe, Liberty Global’s “Project Lightning” network expansion initiative is building out traditional cable service in the United Kingdom. Most of the UK never adopted cable service, favoring small satellite dish service instead. Now Liberty Global is putting cable expansion on its priority list. But decades after most North Americans got cable service for the first time, today’s new buildouts are based largely on fiber optics — either fiber to the home or fiber to the neighborhood, where coaxial cable completes the journey to a customer’s home.

Charter admits the technology it will use in the future partly depends on what the competition is offering. Rolls says the company can eventually roll out DOCSIS 3.1, take fiber deeper, or offer symmetrical download/upload speeds presumably targeted towards its commercial customers. But he also suggested Charter’s existing network can continue to deliver acceptable levels of service without spending a lot on major upgrades.

“It’s a rational approach, where we’re trying to balance the needs, the available technologies, and the costs,” Rolls said. But he also suggested DOCSIS 3.1 isn’t always the answer to upgrades. “DOCSIS 3.1 has some pretty remarkable capabilities, but it’s not necessarily a hard-and-fast reason to not take fiber deeper, for instance [allowing for additional DOCSIS 3 node splits]. Different situations drive different capacity decisions.”

Walden agreed, and Mediacom customers should not expect more than DOCSIS 3.1 upgrades for the near future.

“[Fiber deep] is a bit further out, at least as a large-scale type of project,” Walden told Multichannel News. “I think fiber deep for multi-dwelling units, high-density areas and some planned higher end communities doing deeper fiber or fiber-to-the-home [is happening]. But as a wholesale [change] and going to node+0 kind of architecture, I don’t see that in the next two years.”

Are Symmetrical Speeds Important for Customers?

Verizon’s fiber to the home service FiOS uses symmetrical broadband speeds to its advantage in the marketplace.

Many fiber to the home networks offer customers identical upload and download speeds, but cable broadband was designed to favor downstream speeds over upstream. That decision was based on the premise the majority of users will receive much more traffic than they send. But as the internet evolves, some are wondering if cable broadband’s asymmetric design is now outdated and some competitors like Verizon’s FiOS fiber to the home service now use its symmetrical speed advantage as a selling point.

Cox Communications does not think most customers care, even though its network upgrades are laying the foundation to deliver symmetrical speeds.

“It’s a little but further out on the horizon,” said Hart. “The upstream growth rate is ticking up a couple of notches, but not to the tune that we would need significant additional capacity and/or a complementary need for symmetrical bandwidth. [A]t this stage, the symmetrical is a nice-to-have for residential and definitely will be a good option for our commercial customers.”

Rolls isn’t sure if symmetrical speeds are important to customers either and Charter has no specific plans to move towards upload speed upgrades.

“The world of applications and services continues to evolve, obviously, but so far we’ve been able to meet those needs with an asymmetrical topology,” Rolls said. “That said, things like real-time gaming, augmented and virtual reality, and the Internet of Things — some of those will likely drive more symmetry in the network. It remains to be seen.”

New York residents can click the image above and input their address and see if Charter’s expanded service area will include their home or business.

The New York State Public Service Commission (PSC) today announced approval of a $13 million settlement agreement with Charter Communications after the cable company failed to build-out its cable network as required in last year’s approval of Charter’s acquisition of Time Warner Cable. The $13 million settlement is the largest cable company financial settlement of its kind in state history and possibly the largest in the nation’s.

“In its approval of the merger, the Commission required Charter to undertake several types of investments and other activities,” said Commission Chair John B. Rhodes. “While Charter is delivering on many of them, it failed to expand the reach of its network to un-served and under-served customers at the pace it committed. We are taking these additional steps to ensure full and complete compliance.”

Charter Communications was required, as a condition of approval of its merger with Time Warner Cable, to expand its broadband service to 145,000 unserved/underserved homes and businesses in New York over the next four years. Rural broadband expansion was one of the conditions Stop the Cap! recommended to the New York regulator in our testimony regarding the merger proposal.

In the first year, Charter failed to meet its buildout requirements, only reaching 15,164 locations — less than half of the 36,250 it agreed to serve by May, 2017. The cable company first tried to blame utility companies for dragging their feet allowing Charter to place its cables on their utility poles, an argument that failed to impress the PSC. Even if utility companies instantly cleared the way for Charter, the cable company admitted it would not be ready to proceed because of necessary preparatory work needed to begin the buildout.

As a result, Charter has been forced to place $13 million in an escrow-type account that New York can tap into in amounts of up to $1 million increments to penalize the company for further delays. Charter can win back all $13 million if it stops missing its six-month buildout targets. Each time it does miss a deadline, the State reserves the right to withdraw funds in amounts that will vary based on the seriousness of the violation. Some forfeited funds will be used to acquire computers and internet training for low-income New Yorkers. The rest will be channeled into New York’s general fund.

Charter’s new targets require the company to expand its cable service in increments of 21,646 homes over six periods through May 18, 2020.

Many rural New Yorkers with no access to broadband service have complained Charter has not been forthcoming about whether the broadband expansion will reach their individual home or business, so the cable company has also agreed to launch a new website where New Yorkers can input their home or business address to learn if they are included in the broadband expansion. Charter warns that inclusion on the build-list database is not a guarantee that a home or area will be actually be reached.

“Build plans, timelines, and all other information provided are subject to change and areas designated for build may not be built,” the website states.

Charter is also required to deliver broadband speeds up to 100Mbps statewide by the end of 2018 — something the company has already accomplished in almost every part of the state where it provides service. The company is not subject to broadband rate regulation, and Charter charges a $199 setup fee for customers who seek to upgrade to speeds in excess of 60Mbps (except in former Time Warner Cable Maxx service areas, where 100Mbps is already the standard broadband speed). Charter must also make 300Mbps available to all New York residents by the end of 2019, something the company will likely achieve in most parts of the state sometime late next year.

Charter Communications is by far the largest cable company serving New York State. The company provides cable television, internet and telephone service in the major metropolitan areas of Buffalo, Rochester, Syracuse, Albany and the boroughs of Manhattan, Staten Island, Queens and parts of Brooklyn. Cablevision, now owned by Altice, covers the other boroughs and Long Island, as well as part of the Hudson Valley and Westchester County.

AEI: If you bought broadband service, that means you like your service and don’t need or want anything better.

The American Enterprise Institute wants the FCC to judge to quality of America’s broadband based on what customers are able to buy today and how much they are willing to pay to get it.

Section 706 of the Telecommunications Act of 1996 requires the FCC to report to Congress whether broadband “is being deployed to all Americans in a reasonable and timely fashion.” As part of that process, the FCC must determine if Americans are getting internet connections capable of providing “advanced telecommunications capability.”

If the FCC reports to Congress that the country’s biggest telecom companies are letting their customers down with inadequate service or no service at all, that can create conditions for the FCC to step in and start insisting on more competition and oversight as well as setting benchmarks for providers to meet. If the report shows that broadband service is adequately provided, the FCC need not regulate, and in some cases such a finding will fuel calls to further deregulate the industry by getting rid of “unnecessary regulation.”

Not surprisingly, findings since 2001 have varied depending on which political party holds the majority on the Commission. Under President George W. Bush, the FCC consistently found broadband service was being adequately deployed to Americans. The FCC also set the bar pretty low on broadband speed, claiming anything at or above 4/1Mbps service constituted “broadband.” That definition comfortably accommodated DSL service from the phone companies.

Wheeler – Argued for better broadband and more competition.

During the Obama Administration, the FCC set the bar higher. With dissent from the Republican minority, the FCC raised the minimum speed that could be defined as broadband to 25/3Mbps, immediately excluding most DSL and wireless connections. In 2015, former FCC Chairman Thomas Wheeler specifically excluded satellite and wireless connections from that formula, despite objections from FCC Commissioner Ajit Pai. Particularly under Wheeler’s watch, the Democratic majority frequently complained about inadequate broadband and competition, and used Section 706 as its authority to override state laws in North Carolina and Tennessee that placed onerous restrictions on municipal broadband networks. Wheeler felt such laws were anti-competitive, but the courts ruled the FCC exceeded its authority and overturned his pre-emption orders.

Under the Trump Administration, FCC Chairman Ajit Pai seems to be headed down a similar path taken during the Bush Administration, which was optimistic about the state of broadband service and, as a result, applied a lot less pressure on the telecommunications industry.

Chairman Pai is seeking to overturn current Net Neutrality regulations and seems ready to support efforts to undermine the broadband speed standard established by his predecessor. That would allow mobile/wireless companies to offer 10/1Mbps speed and have it qualify as broadband service. Even better, ISPs — wired or wireless — would be considered “competitive” in many cases, even if only one provider offered service in the area.

Pai’s proposal was met with serious objections from Democratic Commissioner Mignon Clyburn who claimed even the current 25/3Mbps standard no longer met the definition of “advanced telecommunications capability.”

“The statute defines advanced telecommunications capability as broadband that is capable of ‘originat[ing] and receiv[ing] high-quality voice, data, graphics, and video telecommunications. High-definition video conferencing is squarely within the rubric of ‘originating and receiving high-quality… video telecommunications,’ yet the 25/3Mbps standard we propose would not even allow for a single stream of 1080p video conferencing, much less 4K video conferencing. This does not even consider that multiple devices are likely utilizing a single fixed connection, or the multiple uses of a mobile device.”

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Pai: Wants broadband providers and the competitive marketplace to determine whether broadband is good enough.

AEI dismissed the entire debate, claiming the only people who will respond to the FCC’s request for comments on the subject will be “pundits, special interests, and companies with skin in the game.”

Instead, AEI proposes the FCC rely on watching customers navigate their broadband options — a monopoly for some, duopoly for many others — and only address problems if something unusual emerges. AEI’s test is to see if “a location or demographic is inexplicably different and purchases less than would be expected.”

If something odd does happen in a particular area, AEI argues there could only be two reasons for that:

• Barriers to competition;
• Outdated government regulations and policies standing in the way of progress.

Missing from AEI’s list of possibilities is the presence of an abusive monopoly provider, a comfortable duopoly among two providers with no interest from a third competitor to enter the market, or an area served by two lackluster providers that won’t invest in their networks.

AEI’s test depends entirely on gathering data about what internet services are available for sale in any particular area now and then study who is buying what. But this does not measure customer satisfaction or consider whether those speed tiers and prices are adequate.

Under AEI’s test, “if a geographic area does not have broadband, the FCC could use the results of its customer study to determine what customers in the area would likely find valuable. Then, the FCC could do a cost-benefit study and an economic feasibility study — and conduct a reverse auction if a subsidy is potentially needed — to determine what, if any, financial incentive might be appropriate for the area.”

In other words, the same think tank that has been on record for decades opposing government subsidies to private companies now wants to offer telecom companies government funding to build what would become largely unregulated privately-owned broadband networks that would run with little or no oversight.

AEI’s willingness to let “customers express their opinions through their purchases” is hardly an adequate replacement for current broadband policies designed to keep the U.S. competitive with the rest of the world and ensure adequate service and competition. As any cable subscriber knows, you can subscribe to Comcast or Charter/Spectrum and still loathe your options and want something better. AEI doesn’t appear interested in seeing you get those options, much less preserve what little oversight, consumer protection, and broadband benchmarks we have now. Neither does current FCC Chairman Ajit Pai.