Kansas House Bill 2563 would require content providers that sell products and services in Kansas to pay into the state’s rural broadband fund.

ISPs and any website that generates at least $500,000 in revenue from Kansas residents would be required to pay into a state fund to subsidize rural broadband, if a bill introduced by a Lawrence Republican becomes law.

Rep. Thomas Sloan’s House Bill 2563 — a bill requiring broadband and content providers to pay into the Kansas Universal Service Fund (KUSF), drew immediate fire from cable and telephone companies across the state, and Sprint Corp. told state officials the bill was illegal.

“Rural residents lack the same broadband opportunities as urban residents because of the high cost to serve low-population density areas,” Sloan said. “We have a classic case of rising customer expectations for capabilities delivered through a broadband communications system and a fiscally stressed telecommunications provider network’s ability to serve high-cost rural customers.”

As in many rural states, finding the funding to solve the rural broadband problem gets more difficult as those hardest to serve are also the most expensive to reach. Kansas currently spends about $40 million annually to reach homes and businesses that are still using dial-up or forced to invest in satellite internet service. Most KUSF money is given to incumbent rural telephone, wireless or cable providers to subsidize expansion, keeping costs in line with each company’s Return On Investment expectations.

But as demand for faster and more robust broadband accelerates, and as the definition of broadband itself has evolved, rural providers are increasingly challenged reaching both unserved customers and those now considered underserved because older technologies like DSL often do not meet the current FCC definition of broadband: 25/3 Mbps service.

Sloan said his bill is designed to address both problems by wiring unserved areas and improving access to reliable, high-speed internet service where only slower alternatives now exist. The bill would provide funding to more than 90 Kansas counties with a population density of less than 100 people per square mile (excepting the county seat). In an agricultural state like Kansas, that would directly inject cash for upgrades into large sections of the state. Sloan says his law would cover at least 40% of a provider’s wiring and upgrade costs.

Rep. Sloan

House Bill 2563 would fund a rural broadband project that:

• is capable of minimum download speeds of 25 Mbps and minimum upload speeds of three megabits per second;
• provides an average latency of less than 100 milliseconds to enable the use of real time communications; and
• provides subscribers with a minimum monthly data allowance of 150 gigabytes per month.

“Poor connectivity to the internet undermines operation of businesses, filing of government documents, school research projects, viewing of entertainment and other day-to-day activities,” Sloan said.

ISPs would likely pass along the costs of the new broadband universal service fund charge to subscribers, which means urban Kansans will be contributing a portion of their monthly internet bill to benefit their rural neighbors.

Sloan’s bill would also take the unprecedented step of taxing internet content companies and for-profit websites that generate at least $500,000 in revenue attributable to Kansas customers and use the money for rural broadband expansion as well. Websites like Amazon.com, Netflix, and Hulu would certainly be liable, but so would thousands of other smaller website ventures, including porn websites and online publishers like newspapers.

Telecom industry lobbyists quickly descended on state lawmakers in Topeka to encourage them to kill Sloan’s bill:

• Catherine Moyer, chief executive officer of Pioneer Communications in Ulysses, represents the interests of the State Independent Telephone Association for Kansas and the Kansas Rural Independent Telecommunications Coalition. She is strongly opposed to the bill because she claims it would weaken the current Kansas Universal Service Fund (KUSF) model that has given rural companies confidence and certainty their rural expansion investments will be backed with adequate state subsidies. Under Sloan’s bill, the disbursement formula and the areas entitled to receive state support would be expanded, potentially reducing funds that were payable to projects under the old KUSF subsidy system.
• Patrick Fucik, national director of legislative affairs for Sprint Corp. in Overland Park, is concerned about broadening the universal service fund to tax content providers and other websites, claiming the state lacks the legal authority under federal law to impose such taxes.
• John Idoux, a lobbyist with CenturyLink, which serves more than 100 Kansas communities with fewer than 1,000 residents, said the bill would likely make lawyers rich from the “prolonged” and inevitable legal challenges that will begin if the bill becomes law, “all while creating false hope of rural broadband availability.” Idoux also wants to make sure none of the KUSF money will be spent in areas already served by a fixed broadband provider (like CenturyLink). He does not want to see public money competing with private investment, even if it results in better service.

An audio-only hearing of the Committee on Energy, Utilities and Telecommunications of the Kansas State Legislature on HB2563, held Feb. 5, 2018. (35:53)

Gov. Andrew Cuomo announcing rural broadband initiatives in New York.

It was called “Broadband for All” — New York Governor Andrew Cuomo’s commitment to bring high-speed internet service to every New York State resident. But it now appears the governor will break that promise and leave more than 72,000 rural New York residents with satellite-delivered internet that does not come close to meeting the broadband speed standard and is infamous for customer frustration, slow speeds, and low data caps.

Ensuring High-Speed Internet Access for Every New Yorker

In today’s world, internet connectivity is no longer a luxury—it is a necessity. Broadband is as vital a resource as running water and electricity to New York’s communities and is absolutely critical to the future of our economy, education, and safety.

In 2015, Governor Cuomo made the largest and most ambitious state broadband investment in the nation, $500 million, to achieve statewide broadband access by 2018. 

The New NY Broadband Program sets as its goal access to speeds of 100 Mbps for all New Yorkers, with 25 Mbps acceptable in the most remote and rural areas. The cost must not exceed $60 and there is a general prohibition of data caps. This goal exceeds requirements of the FCC’s Connect America Fund program and requires that projects be completed on a more accelerated timeline.

Today, the governor announced the state grant winners to split $209.7 million in the third and final round of awards to offer 122,285 additional homes, businesses, and institutions broadband internet service.

“These latest awards through Round III of the New NY Broadband Program will close the final gap and bring high-speed broadband to all New Yorkers in every corner of the state,” the governor’s office claimed.

Except it won’t.

Tucked in among the grant award winners is a $14,889,249 grant to Hughes Network Systems, LLC, targeting 72,163 rural New Yorkers, more than half of the total number of customers to be reached in the third round. Hughes operates the HughesNet satellite internet service, a technology derisively known as “satellite fraudband” for routinely failing to meet its advertised speed claims. It’s also known as “last resort internet” because it is slow, expensive, and heavily data capped.

Complaints about HughesNet are common on websites like Consumer Affairs:

“Extreme false advertising. Over the first 30 days with HughesNet Gen5, I averaged 3 Mbps download when advertised 25 Mbps. I canceled when they couldn’t answer why I used 20 GB of data in less than 24 hours. I am a 55 year old average internet user. No streaming. No music. No videos (YouTube). DO NOT GET THIS SERVICE EVEN IF NO OTHERS ARE AVAILABLE.” — Dennis, Tazewell, Tenn. (1/25/2018)

“HughesNet claims high speed internet in our region. Clearly not available here, 3 service calls, with exchange of equipment, 50 calls – recorded leaves us no choice, we demand that this contract be null/void without stealing $399 cancellation. A despicable Company, uninformed customer service, average speeds with a video; upload speed 0.62 Mbps, the download speed is 1.28 Mbps. Help!!!” — Jeffrey, Kerhonkson, NY (1/21/2018)

“Promised speeds of no less than 25 Mbps. Actual speed received was 5-9 Mbps. Unable to stream anything. Computer programs did not operate and did not update as required. We have cancelled HughesNet at great cost to us. Worst internet service ever.” — Jennifer, Hartsville, SC (1/12/2018)

Pat (last name withheld) lives 1.3 miles from the nearest Charter Communications customer in Niagara County, near Niagara Falls and is very disappointed with recent developments. Charter has quoted an installation fee of $50,000 to extend their cable service and Verizon has refused to provide DSL service, leaving Pat resorting to using an AT&T mobile data plan, which is expensive and gets throttled after using more than ~22 GB a month.

“This was a scam from Jump Street,” Pat said. “Phase 3 has 70,000 out of 120,000 homes getting satellite internet, a technology that was already available. It also gives $70 million to Verizon who declined funds in first place. Five years and $675 million later and still no internet for my kids.”

“This is a huge disappointment for us,” Pat added. “We were counting on this happening. Told numerous times it would. Now we have to debate moving, we can’t continue not having internet. My oldest son just graduated high school never having internet at home.”

“I have written and spoke with New York Broadband Program Office and it was clear to me from the beginning they didn’t understand the problems they faced, namely infrastructure costs,” said Pat. “They didn’t want to hear it. They wrongly assumed that telecoms would bid and everyone would have internet. I knew when announcements were delayed that the bids for last mile didn’t come in. Tragic really. I think they made a mistake accepting that money from the FCC. Satellite was never on the table until that happened.”

Stop the Cap! readers have told us satellite internet is the worst possible option for internet access, and many have reported better results relying on their mobile phone’s data plan. But New York’s solution for more than 70,000 of its rural citizens — many that believed the governor’s commitment of 100% coverage — is to saddle them with satellite internet access starting at $49.99 a month for a paltry 10 GB of usage per month. The top plan on offer costs $99.99 a month and is capped at 50 GB a month before a speed throttle kicks in and reduces speeds to dial-up levels. A 24-month contract is required with a very steep early cancellation penalty.

Another surprising winner is Verizon Communications, a company that originally refused to participate in rural broadband expansion efforts. Verizon will accept more than $70 million to expand its broadband service to 15,515 homes, businesses, and institutions in the Capital Region, central New York, the North Country, and Southern Tier. At press time, it is not known if Verizon will bring FiOS or DSL to these customers.

Because New York State relied on private companies to bid to cover unserved residents, it seems clear HughesNet is the default choice for those New Yorkers stranded without a telecom company bidder. Although that will allow Gov. Cuomo to claim his program reaches 99.99% of New Yorkers, the rural broadband problem remains unresolved for those who were depending the most on New York to help bring broadband to rural farms, homes in the smallest communities, and those simply unlucky enough to live in small neighborhoods deemed unprofitable to serve.

Exurban communities in northern Illinois bypassed for upgrades from second-rate cable companies and considered too-small-for-fiber by AT&T are clamoring for a third option that will deliver fiber optic broadband.

In the Fox River Valley, west of Chicago, Sugar Grove residents are hopeful that a midwestern upstart that specializes in taking on larger cable and phone companies in the region will come to town with gigabit broadband and better service.

MetroNet is currently surveying residents of this fast-growing village of 9,000, looking for future customers willing to put down deposits of $20 to join a “MetroZone,” an area where MetroNet sees enough potential to begin construction of its fiber to the home network, over which it sells television, phone, and internet service.

The Kane Country Chronicle reports local resident Wendy Betustak can’t wait. Betustak has been a customer of both AT&T and Mediacom, and both underwhelmed her.

“I hate AT&T now, but I don’t want to make a jump back to Mediacom because I remember what that was like,” she said. “But AT&T has been out so many times that I’ve stopped calling them.”

While both Mediacom and AT&T have been promoting their investments in upgrading service, those benefits often take many years to reach smaller communities inside their service areas. In some cases, those upgrades will never arrive.

Sugar Grove is just one of several exploding exurban communities in the far western suburbs of Chicago. As residents migrate further away from the city center, they expect services to migrate with them. But when essential utilities are in the hands of private companies, smaller towns and villages are often frustrated to hear there is not enough Return On Investment to provide 21st century quality service.

But MetroNet’s business plan is more forgiving, in part because it recognizes it will almost always compete head to head with one or two long-established telecom companies. It also does not hurt to have neighboring communities already wired up by MetroNet, which serves Batavia, Geneva, Montgomery, North Aurora, Oswego, and St. Charles. MetroNet has already installed fiber throughout the village of Sugar Grove and plans to install more.

“These installations will facilitate service to the village at a later date. Currently they are being utilized as transport routes,” Sugar Grove village administrator Brent Eichelberger told the newspaper. “We do not have a firm date for when MetroNet plans to start providing service within the village. If residents and businesses are interested in having MetroNet provide service they should contact MetroNet directly.”

They might want to hurry. Residents are encouraged by the company to visit www.metronetinc.com/metrozone and select Sugar Grove (or another community MetroNet is considering) and create an account. A refundable $20 deposit allows MetroNet to know that a would-be customer is seriously interested in getting service. Right now, MetroNet estimates around 10% of Sugar Grove residents have placed deposits.

“The MetroZone opportunity is a milestone in that we are able to track those who are interested in us coming to the village of Sugar Grove,” said Kathy Scheller, business development manager for MetroNet. “Our goal is to have 25 percent of the village pre-signed by Feb. 28.”

MetroNet’s broadband customers blow past Mediacom and AT&T’s offerings with 100/25 Mbps internet service for $49.95 a month. MetroNet’s top speed – 1000/250 Mbps costs $89.95 a month.

The usual alternative for most towns and villages unwilling to consider building their own broadband networks is to wait for the cable and phone company to upgrade service, which could take years in smaller communities. But a growing number of small commercial ventures are starting to offer fiber broadband service in a growing number of communities to meet the demand for better and faster broadband service.

National security officials inside the Trump Administration dropped a controversial proposal on the desks of multiple federal agencies that advocates a federal government takeover of the nation’s forthcoming 5G wireless network.

Axios obtained a copy of an accompanying memo and PowerPoint presentation outlining the proposal that would nationalize 5G service and have taxpayers fund the construction of a single,  nationwide network that would allow federal officials to secure traffic from foreign economic and cybersecurity threats.

Some national security officials worry the Chinese have achieved dominant market positions in network infrastructure and artificial intelligence, and this could have security implications for emerging technologies like self-driving cars and machine to machine communications, which will likely use 5G networks.

“China is the dominant malicious actor in the Information Domain,” the presentation notes, adding that two Chinese manufacturers – ZTE and Huawei are dominant players in 5G infrastructure at a time when American manufacturers of wireless technology are disappearing.

That 5G technology and who makes it is becoming a national security issue, claims the author, advocating reduced risk by authorizing the United States government to build a single, nationwide 5G wireless network, on which America’s wireless carriers could lease secure access. The network concept could even eventually be shared with America’s allies to protect them from “Chinese neo-colonial behavior,” the author writes.

The author of the presentation, perhaps unintentionally, waded into the heart of a fierce debate between municipalities, broadband advocates and private cable and phone companies and their funded special interest groups, over the benefits of public vs. private broadband service.

Calling the taxpayer-funded effort “the 21st century equivalent of the Eisenhower National Highway System,” the author advocated first spending up to $200 billion to construct a national fiber optic backbone that would reach neighborhood 5G small cells. Additional funding would cover small cell placement and equipment.

The author implied the Department of Defense budget could be tapped for some of the money, quoting the Secretary’s interest in expanding secure communications. The author noted little of the military’s current $700 billion budget does any good for the American people in the information domain. Constructing a secured 5G broadband network would presumably change that.

The proposal suggests a national 5G network could be up and running within three years, if it became a government priority. ISPs and other users would then be able to obtain access on the network to service their respective customers.

If adopted, the Trump Administration would oversee the country’s largest public broadband project in American history, paid for by U.S. taxpayers, a concept that has traditionally been anathema to most Republicans and the broadband industry. Both have traditionally opposed public broadband projects if or when they compete with the private sector.

“This is coming from a Trump’s National Security Council,” tweeted Hal Singer, a principal at Economists, Inc. “If the same thoughts came from Bernie Sander’s NSC (or Elizabeth Warren’s), Republicans would be up in arms and Fox News would sound the socialism alarm.”

Commissioners at the Federal Communications Commission also roundly criticized the proposal.

“I oppose any proposal for the federal government to build and operate a nationwide 5G network,” wrote FCC Chairman Ajit Pai. “The market, not the government, is best positioned to drive innovation and investment.”

Pai wants the government to accelerate the allocation of additional wireless spectrum that could be auctioned off to wireless carriers to expand 5G.

The large wireless carriers remained silent about the implications of the proposal, claiming they had not yet seen it.

But by late morning, the Trump Administration was attempting to downplay the presentation, telling Recode the document was dated and had merely been floated by a staff member and was not a reflection of an imminent major policy announcement.

That did not stop four of the five commissioners at the FCC from hurrying out statements criticizing the proposal, and the fifth tweeting negatively about it. They apparently took it very seriously:

• • Commissioner Clyburn’s comments
  • Commissioner Carr’s comments
  • Commissioner O’Rielly’s comments
  • Chairman Pai’s comments

After spending millions to kill net neutrality, AT&T today called on Congress to pass a new national law protecting AT&T’s idea of a free and open internet by regulating internet websites like Facebook, Google, and Amazon.

Full page newspaper ads taken out in several nationally known newspapers proclaimed AT&T CEO Randall Stephenson’s support for the first “Internet Bill of Rights,” conceived by some of the same lawyers and lobbyists AT&T paid to destroy the FCC’s net neutrality rules put into effect during the Obama Administration.

“Congressional action is needed to establish an ‘Internet Bill of Rights’ that applies to all internet companies and guarantees neutrality, transparency, openness, non-discrimination and privacy protection for all internet users,” Stephenson wrote in the ad.

AT&T’s proposal would attempt to include content regulation of websites under the guise of fairness, claiming that while internet service providers are expected to treat all content fairly, large websites like Google and Facebook currently do not. Critics of AT&T’s proposal call that a distraction that has nothing to do with ISPs seeking the right to establish paid internet fast lanes and favoring partnered websites with exemptions from data caps or speed throttles.

AT&T doesn’t inform readers of its own complicity in the “confusion” over net neutrality policies that have faced constant legal and political challenges from AT&T and other telecom companies. The telecom industry has furiously lobbied Congress and regulators to keep net neutrality from taking effect. Once it did, AT&T took the FCC to court to overturn the rules.

AT&T wants their own law for their own version of net neutrality.

AT&T’s campaign comes with some urgency as the company works to block states from enacting their own net neutrality laws to replace the rules abandoned by the Republican majority controlling the FCC. Despite assurances from FCC chairman Ajit Pai that the Commission would sue to pre-empt any state law that would re-establish net neutrality, AT&T and other large cable and phone companies prefer the regulatory certainty available from the quick passage of a federal law that would establish AT&T’s definition of net neutrality indefinitely. AT&T is also trying to rush passage with support from Republican congressional majorities and President Trump before the midterm elections threaten a Democratic takeover of the House, Senate, or both.

AT&T attempted to assuage customers of its good intentions by claiming it doesn’t block websites.

“We don’t censor online content. And we don’t throttle, discriminate, or degrade network performance based on content, period,” AT&T wrote (emphasis ours). But that claim opens the door to important loopholes:

1. Speed throttles, data caps, and zero rating do not impact network performance. They impact your ability to equally access internet content, something AT&T does not promise here.
2. AT&T only claims it won’t interfere with websites based on their content, but that was never the premise ISPs have used to demand additional payments from content creators. It isn’t the content ISPs are concerned with — it is the traffic those websites generate and, in the eyes of many net neutrality supporters, whether those websites compete with an ISPs own offerings. AT&T could have said it doesn’t throttle, discriminate, or degrade websites, period. But it didn’t.

AT&T alarmingly suggests that without predictable rules, next generation applications like virtual reality, telemedicine, and the Internet of Things will be threatened. Except that is not the message AT&T gives shareholders, arguing AT&T has robust capacity both now and into the future for next generation applications. AT&T has long promoted how lucrative it expects the Internet of Things marketplace will be.

Allowing the telecom industry to write its own “Internet Bill of Rights” met with harsh criticism from the consumer groups AT&T claims it wants to enlist in its efforts.

“Zero real net neutrality supporters are fooled by this,” wrote Fight for the Future executive director Evan Greer. “We had an Internet Bill of Rights. It was called Title II and AT&T’s army of lobbyists did everything in their power to burn it down.”

“AT&T’s hypocrisy knows no bounds,” said Free Press policy director Matt Wood. “Its phony bill of rights argument makes no sense based on the law, the policies, or the politics in play. AT&T’s head fake towards one-size-fits-all rules for all websites and content providers should fool no one. As soon as AT&T wants to stop lobbying against net neutrality, broadband privacy, and the other rights it has worked to kill at the Trump FCC and in this Congress, maybe people will stop laughing at desperate tactics like this. For now, all we can do is point out the company’s audacity in pretending that this hyper-partisan Congress can step in to fill the void of the net neutrality repeal by writing a new law tailor-made for AT&T.”