After weeks of tense negotiations to secure bipartisan support for the Biden Administration’s $1 trillion infrastructure stimulus measure, the White House appears to have largely capitulated to Republican efforts to water down funding to expand broadband service into a $65 billion package that will doubtless be a financial bonanza to the country’s largest phone and cable operators.

The Biden Administration’s original proposal for $100 billion in broadband funding was dedicated to wiring rural areas as well as focusing funding on new entrants like community-owned networks that could deliver internet access to unserved and underserved locations without having a profit motive. The original proposal also would have prioritized funding for future-capable fiber internet, with some advocating that networks be capable of delivering at least a gigabit of speed to customers to qualify for funding. The Administration also promoted the idea of affordable broadband, combatting the growing digital divide exacerbated by internet pricing out of reach of the working poor.

What emerged on Sunday as a “bipartisan agreement” with Republicans on infrastructure stimulus is almost a travesty — slashed almost by half and now effectively a veritable gift to Big Telecom. The industry spent hundreds of millions lobbying Congress and got almost everything it wanted. If passed in its current form, those same phone and cable companies will pocket much of the money for themselves.

Here is how consumers were sold out:

Reduced speed requirements are a dream come true for cable operators.

The bipartisan measure proposes to water down speed requirements to qualify for government stimulus funding to a underwhelming 100/20 Mbps. That speed is tailor made for cable operators, which traditionally offer upload speeds just a fraction of their download speeds. Gone is any condition requiring gigabit-capable networks, at a time when more providers than ever are marketing near-gigabit speeds. That could quickly lead to the emergence of a speed divide, with rural Americans stuck with slower broadband technology from companies that will have no financial incentive to upgrade in these areas.

Addressing affordability is now mostly wishful thinking.

The latest proposal’s idea of solving the broadband affordability issue is to admit there is a problem and declare the need for some kind of low-cost broadband option, but apparently does not specify pricing, who is qualified to get cheaper service, and who will oversee that such programs remain affordable. That allows providers to keep writing the rules of their own token, voluntary efforts to offer discounted internet, like those that disqualify current customers and requires enrollees to jump through various qualification hoops to sign up. The stimulus program will also spend billions of dollars effectively paying a portion of disadvantaged Americans’ internet bills, at the current high prices many ISP’s charge. That is a direct subsidy to big cable and phone companies that can continue charging whatever they please for access, knowing the government will now pay $30-50 of the bill.

Republicans have made sure there is not a whiff of rate regulation or consumer protection mandates in the measure. It also abandons establishing a fixed rate, affordable internet tier for as little as $10 a month. That original proposal would have given cable and phone companies as little as $10 a month from the federal government, much less than collecting up to $50 a month from the Emergency Broadband Benefit, which pays a portion of regular-priced service. The $14 billion being set aside to continue subsidizing Americans’ internet bills at Big Telecom’s monopoly or duopoly prices could be better spent building and expanding internet services where no service or competition exists now.

Digital redlining is A-OK

The watered down compromise measure chastises companies for only incrementally expanding fiber service, mostly to wealthy neighborhoods, but stops short of banning the practice. This wink and a nod to redlining primarily benefits phone companies like AT&T and Frontier, which can now cherry-pick rich neighborhoods for fiber upgrades most likely to return the biggest profits. Phone companies and fiber overbuilders will continue to skip over urban poor neighborhoods and the highest cost rural areas which have always been the hardest to reach.

Sky is the Limit pricing with onerous data caps are fine with us.

Nothing in the measure will give preference to providers willing to offer affordable, flat rate service without the hassle of data caps. Neither will it discourage applicants that plan to use public tax dollars to subsidize expanding service that comes at high prices and with paltry usage limits.

Light Reading reported Wall Street analysts were generally pleased with the outcome, noting the negotiations resulted in stripping out oversight and price regulation and the measure won’t fund potential competitors. It also noted Big Telecom and its associated trade organizations spent more than $234 million on lobbying. Comcast topped the list of spenders at more than $43 million, with AT&T coming in second at $36 million. Both the cable and wireless industry also spent tens of millions on lobbying. They got their money’s worth. Taxpayers won’t.

President Biden

Large cable and telephone companies are applauding the Biden Administration’s compromise $65 billion broadband infrastructure plan, designed to reduce the number of rural Americans without access to broadband service.

Many industry lobbyists and Wall Street analysts were wary of earlier plans by the Administration to spend $100 billion or more on internet infrastructure expansion, because amounts that high were seen to likely attract major proposals from municipalities to construct their own independent broadband projects, some in direct competition with cable and phone companies. The Biden Administration had sought preferential treatment to fund public broadband projects, suggesting the direct competition they could bring would lower prices. Unlike for-profit phone and cable companies, municipal projects were “less pressured to turn profits” and would have a natural incentive to commit to serve entire communities.

Heavy lobbying from for-profit phone, cable, and wireless companies, largely directed at Republicans in the Senate, sought a much lower budget for broadband expansion in the $35 billion range and a commitment to discourage municipal broadband.

Last week the Administration and a small group of Senate Republicans settled on a $65 billion compromise measure, with many of the details still unavailable early this week. But big ISPs are already breathing a sigh of relief, convinced a slimmed-down compromise measure will choke off any existential competitive threat from municipal providers invading their turf.

Wall Street analysts predict the compromise measure will be too small to provide funding for competing major city municipal broadband networks and would continue the tradition of targeting funds on unserved, high-cost rural areas. Historically, this has resulted in funding going to nearby cable and telephone companies to subsidize expansion of existing networks into areas currently deemed too unprofitable to wire for service. But ample funds are still likely to be awarded to rural telephone and electricity co-ops to expand internet access.

Analysts expect the final measure will include a requirement to offer service at minimum speeds of 100 Mbps, which would be a challenge for wireless companies and rural phone companies seeking to expand DSL service. Most providers would likely have to use fiber optics to build networks consistently capable of delivering that speed. If the compromise measure only insists on 100 Mbps download speed, expect the cable industry to be relieved. If the minimum speed requirement is substantially relaxed to as low as 25 Mbps, that would also benefit wireless ISPs offering fixed wireless access.

Also unknown is whether the compromise measure still contains language overriding state laws that restrict or prohibit municipal broadband projects.

Sen. Portman

Three moderate senators will reintroduce the latest in a line of broadband funding initiatives later today that would allocate $40 billion to expand rural internet access and provide subsidies to make service more affordable for income-challenged Americans.

The Broadband Reform and Investment to Drive Growth in the Economy Act (BRIDGE Act), is a bipartisan measure sponsored by Republican Sen. Rob Portman of Ohio, Democrat Michael Bennet of Colorado, and independent Angus King of Maine. Originally introduced in 2020, the measure has been expanded this year to combine rural funding of broadband projects with direct subsidies to keep service affordable for poorer Americans. The measure is considerably smaller than the Biden Administration’s own proposal to spend $100 billion on broadband initiatives, the $94 billion broadband proposal from Congressional Democrats, and the $65 billion compromise plan Republicans tentatively reached with the Biden Administration before talks were called off.

Funding would be provided to internet providers prepared to expand broadband service, but only using technology capable of providing speeds starting at 100/100 Mbps — gigabit being even better. The bill would also invalidate state laws that impede or prohibit the development of municipal/public broadband projects. This could eventually lead to additional competition in rural areas not adequately served by existing providers. Funding would also be used to reduce the retail cost of internet service for those qualified as economically disadvantaged.

The reduced cost of the bill would limit the number of rural subsidy projects and would likely not be enough to provide service to all unserved Americans.

AT&T CEO John Stankey is still looking to wring costs out of the business, and the company’s rural landline customers are next to take the cut.

At this morning’s J.P. Morgan Technology, Media and Communications Conference for investors, Stankey said AT&T is considering mothballing landline facilities in rural parts of its service area and offer wireless service instead.

“We have a voice replacement service now, so that allows us to look at our options around the footprint […] and begin the work of starting to shed some of that footprint and reduce the number of square miles that have that fixed infrastructure in place [where] you’re never going to have an incentive to ultimately upgrade to fiber,” Stankey told investors, quickly correcting himself over use the word ‘never’ in favor of “the next several years.”

“The best way to serve them is with robust wireless infrastructure and stepped up investment in that case and we will do that,” he added.

AT&T has been testing fixed wireless replacement phone service in parts of the southern United States for several years, to very mixed reviews. In these trials, AT&T rural landline customers receive a wireless modem that connects with existing home phone lines. Internet service is provided over AT&T’s 4G LTE network.

Stankey

AT&T ceased marketing its DSL service last October, although some Stop the Cap! readers claim they still occasionally receive targeted invitations for DSL service in some areas. The company has allowed its current rural DSL customers to keep their service, but many don’t. The company lost almost 39,000 DSL customers in the first three months of this year, with so signs of stopping. Across AT&T’s landline footprint, which extends from the Great Lakes region to the South as far west as Texas and east to Florida, there are only about a half-million AT&T DSL customers remaining. Most of those customers keep the service because they have no other options.

If AT&T wins FCC approval to decommission its wired network in rural areas where it has no plans to provide fiber to the home service, customers will lose traditional landline phone service and DSL.

Stankey said any serious effort in that direction is unlikely to begin until 2023, largely because AT&T will not make the investments to bolster its rural wireless infrastructure until then.

The CEO also foreshadowed no immediate plans to follow Verizon into the 5G wireless home internet business. In fact, Stankey admitted AT&T’s network is likely inadequate to support the data demands of home broadband customers.

That leaves rural customers in AT&T’s service areas with no hope of high-speed upgrades unless a community broadband provider launches or a cable operator agrees to wire rural areas. There are still questions about the capacity next generation satellite internet service will have in rural areas and whether service will be adequate to meet today’s data demands.

AT&T’s customers in urban and major suburban areas have a brighter future, however. Stankey told investors AT&T will expand its fiber to the home service to another three million households in 2021 and at least four million more in 2022. Overall, AT&T plans to provide fiber service to around 30 million homes and businesses in its wireline service area. If adequate returns on investment can be realized, along with reduced upgrade costs to reach each home, Stankey suggested another 10 million customer locations could one day see fiber service as well.

Maine’s broadband internet authority is proposing major changes to win public financing of broadband projects in the state, demanding better speeds and performance and giving more Maine communities the potential to construct their own public internet projects.

The ConnectMaine Authority (ConnectME), which traditionally modestly funds a variety of smaller scale internet projects in the state, wants to think big now that it has a budget over fifteen times its original size. With at least $15 million to spend this year and potentially tens of millions in federal broadband funding to manage, courtesy of Congress and the Biden Administration, the authority wants to make certain future projects can deliver the scale and service consumers need in the 21st century digital economy.

In April, ConnectME’s board voted to propose changing the criteria for broadband funding awards, now insisting that projects be capable of delivering at least 100/100 Mbps service, which is four times faster than the FCC’s current minimum definition of downstream broadband. The board hopes the faster speeds will be future-proof and more realistic of what consumers need to telecommute and access online classes, streaming video, and other high bandwidth services. The result of the proposed standards would likely require all future projects to be fiber to the home, although historically the vast majority of broadband projects funded by ConnectME in the past have been fiber to the home.

The authority has also proposed expanding the definition of what represents an “unserved/underserved” area qualified to receive public funding to include any address that lacks access to at least 50/10 Mbps service, up from the current standard of 25/3 Mbps. Such a change would likely open up funding in areas where only DSL service or wireless internet is currently available. Most cable operators can meet the new standard, so their territories would likely remain closed to public funding. Opposition from the state’s telephone companies was almost instant, however, represented in comments from Ben Sanborn, executive director of the Telecommunications Association of Maine, a state telecom lobbying group.

Sanborn considers the proposed changes negative because public dollars could end up funding competitors in areas already served by lower speed providers.

“Arguably, there are going to be a whole bunch of areas in the state that will be eligible for funding either from ConnectME or with federal dollars,” Sanborn told the Press Herald. “Our concern with that is that it is going to create a situation of overbuilding existing networks,” which could leave currently unserved areas out of getting any funding for service.

At present, about 11% of Maine homes still have no internet access, mostly in rural areas. Traditionally, telephone companies or co-op telecom providers are the most likely to provide rural internet service, but the costs to reach those not currently served can be prohibitive. Cable operators have been the least likely to extend service in rural areas, and cash-strapped telephone companies have been reluctant to replace rural copper wire networks that can extend for miles with fiber optics, just to reach a few dozen homes. As broadband penetration increases, the cost to reach remaining unserved homes typically rises as they are often the most costly to reach. Subsidy funding can make a considerable difference when determining the cost/benefit analysis of expanding service to these homes.

The authority is also hoping to inspire existing providers to adopt 100/100 Mbps as the new broadband speed minimum across the state, which it claims will meet the needs of customers. For cable providers, that likely will not happen until upgrades to DOCSIS 4.0 are implemented, unlikely in the short term. Cable broadband networks are designed to deliver much faster downstream speeds at the expense of uploads.

The newly available funds are likely to achieve a significant increase in the number of rural homes served, but probably will not be enough to achieve 100% penetration.

ConnectME plans a public hearing to discuss the proposed changes on May 13, with a final vote scheduled for later this month.