Bridge Span 19-2: Severe Storm Warning for 5G, Inaccuracies Flood Watch

Government often seems quite adept at solving yesterday’s problems, building or protecting systems that are irrelevant today. Sometimes, to protect these inventions of yesteryear, government can hoard our spectrum resources, the building block for communications. Rather than abandon projects where spectrum is lying fallow or pursuing means to share the spectrum in such a way that more use can be made of this precious resource, sometimes government just holds on being unwilling to let go.

Communications traffic of all sorts continue to skyrocket, with consumers finding increased value in the inventions of entrepreneurs. As ever more interesting uses of spectrum are introduced into the marketplace ever more spectrum is needed. An exciting innovation-fueled future faces a significant challenge as it depends on a current and continued pipeline of available spectrum.  While various efforts are underway to free more of our spectrum for uses that consumers demand, still more needs to be done just to keep up with the exponential use of this precious resource. Broadband is too important for too much of economy to not be a priority issue in Washington. And far too important to waste.

Yet, the federal government has wasted 20 years and more than $1 billion in taxpayer money in a quest to create DRSC (Dedicated Short-Range Communications) technology, a system for vehicle to vehicle communications. During that time, precious spectrum bandwidth, the 5.9 GHz band, was locked up and made unavailable for the American people, even though it was, and is, critical to expansion of faster broadband. Government decided that automated vehicles would best be served by connective technology. The marketplace thought otherwise, heading down a different road to the technologies being deployed today. The federal government still will not let go.

Something similar is now happening with another band of spectrum, the 24GHz band, and the Commerce Department does not want developed for broadband use. This band is close to the band used by the National Oceanic and Atmospheric Administration (NOAA) to observe changes in the weather. They claim use of the 24 GHz band could interfere with weather prediction because of interference with a certain sensor. While the Administration is claiming that the sky is falling, turns out that prediction well misses the mark.

NOAA has based their claims on a certain sensor technology that was never used, and ultimately scrapped thirteen years ago. Thirteen year old unused technology as the basis for a claim today? Newer, less sensitive technology is already being used. This is a 3G analysis in a 4G world of what could happen because of 5G. Given that their speculative claims are about technology never used, one would think the debate would end there. But even assuming those errant claims were true, NOAA was provided a 5-year process at the FCC with multiple opportunities to consult and comment to defend their claims. Throughout those many years no objections or even concerns were raised on the public docket, not even when the FCC formally established rules two years ago, and then announced its plan to auction the band last year.  But now, instead of being prepared for the predicted change, NOAA is drumming up a storm of objections at the last moment, based on their unused, antiquated system.

During massive storm events we are warned to be prepared for what is coming, to not take the predictions lightly. After a hurricane strikes and the floods begin, we are often made aware of stranded people on their rooftops flagging down rescuers at the last minute because they did not appropriately prepare. NOAA has apparently missed its own lessons.

Bridge Span 19-1: Finish Franchise Fee Fudging

In the early 1990s cable television began to reach more households and become a true alternative to broadcast. Seemingly overnight, the four-channel world became a universe of 400 channels. Consumers were benefitting for the massive growth in cable and the subsequent explosion in competitive video options and alternatives for consumers.

At the same time local communities were layering on rules, requests and regulations. Congress, not to be outdone, stepped in with the Cable Act to regulate from the federal perspective. The federal law allowed local communities to continue regulating television by awarding “franchises” to local cable television operators, but a cap was placed on franchise fees. Under the federal law these could be up to five percent of the operator’s cable television service revenues. The result was economic boom for municipalities around the country, delivering over $3 billion a year in new revenues. The five percent cap provided predictability and ensured that cable television operators paid a fair, not excessive, tax that more than covering any costs associated with their operations.

But over time a handful of communities ignored the intent of the law and have tried to find new ways to circumvent the franchise fee cap to boost their municipal coffers. In some localities this has meant attempting to extract franchise fees from other services that flow over cable infrastructure, such as broadband internet access. This is merely a form of backdoor double taxation that the Cable Act clearly does not allow. Congress has repeatedly and clearly stated a strong federal policy banning any local taxes on the internet in order to encourage deployment and development of faster and farther-reaching broadband, something a new internet access tax would completely undercut.

Other communities have demanded “in kind” donations of valuable goods and services as a condition of awarding a cable television franchise, something that also clearly breaks the cap. Taxes are still taxes whether they are exacted in cash or “in kind” contributions with the exact same economic value.

Local franchise authorities are of course free to request or demand “in kind” services such as television service for municipal buildings or wi-fi hotspots in a public park, but the value of those contributions must count against the five percent cable television franchise fee cap. If not, the cap becomes completely meaningless something Congress never intended and would not accept.

The franchise fee cap end around schemes are bad for cable operators, but they are even worse for customers who end up footing the bill for spiraling taxes on cable television and broadband. Already franchise fees including the “in kind” component are nearly double the statutory cap, and the longer it goes unaddressed the worse the problem will become.

The FCC’s current Section 621 proceeding provides a valuable opportunity to re-affirm the basic logic of the Cable Act, and to put an end to these outrageous local efforts to skirt the law that undermine the basic tradeoff that has seen cable television and consumer choice skyrocket. The FCC has the opportunity to stand up for consumers and stop a practice that threatens to spike cable television and internet bills.

The FCC has the opportunity to restore and honor the Congressionally crafted a solution that has withstood time because that solution was bipartisan and imbued with the notion that the marketplace can best address market challenges. Consumers should look forward to FCC action when they again will protected from overzealous local tax raisers.

Bridge Span 18-11: FCC, Please Speed the Deployment of Broadband

FCC, Please Speed the Deployment of Broadband

Yesterday the FCC held an open commission meeting. There are a number of items on the agenda, two items in particular focused on advancing broadband deployment across the country. One item to be considered is to clarify the scope and meaning of the 1996 Communications Act in reference to barriers to entry and the use of rights of way, as well as local zoning authority. But, also to establish “shot clocks” a time in which they must make a decision, for state and local approvals for the development of small wireless infrastructure. The FCC will also provide guidance on streamlining state and local requirements on wireless infrastructure deployment.

The second item addresses regulatory practices in the cable franchising process that have the effect of impeding or blocking broadband deployment by cable operators in towns and cities across the country. Adoption of the infrastructure and franchising items are critical to advancing broadband deployment.

Broadband has been a reliable economic multiplier for the U.S. economy and a steady contributor to the financial health of states, counties and towns. Remarkably, since 1996, cable and telecom companies have invested over $1.6 trillion in private capital in infrastructure and services to bring broadband to communities across the country. Astonishingly, that is 25 percent of the total global investment in broadband. With the second lowest broadband pricing of any OECD countries, and more than 1.25 million low income households have been connected by the cable industry alone. Of the households with broadband, 89 percent used wi-fi to connect in just the first quarter of 2017. All told, such access has made remote work a reality for many, increased their opportunities for entertainment, enhanced access to health care as well as education, just to name a few benefits. But there is so much more yet to come. To get there the regulatory environment must remove impediments broadband thereby spurring build out in those remaining areas of the U.S. where broadband is lacking.

One of the hot topics in the broadband space is the coming of 5G, a system of systems that will work with previous technologies, and also require new infrastructure, including small antennas also known as “small cells.” New investments in many miles of new fiber, cell towers and base stations will also be required. This mash up of existing and new technologies, including Wi-Fi, and improvements in both wireless and wired connections completes the communications loop. For example, 5G providers will continue to use wireline infrastructure to backhaul data between the backbone and the local networks. But, overall there will be more antennas in more places, allowing more wireless connectivity where it makes sense, particularly in cities. This ubiquity of high speeds, a hundred times faster than 4G, will enable more of everything valued in broadband such as hyper fast download speeds but will also open the world to promised technological advancements such as remote surgery, and tactile real-time feedback for robotics, the long-promised internet of things and self-driving vehicles. That is, of the cities and localities will allow.

Earlier this year the FCC pursued some reform, moving to spur investment on the infrastructure of today and tomorrow by updating a federal regulatory scheme designed for completely different technology. But another step is needed because while many states and cities have been cooperative in moving forward in getting broadband to their citizens, there has also been some outlier behavior that needs to end. The great news is that twenty states have passed “small cell” legislation to require reasonable fees for the application to place small cells, reasonable ongoing fees to rent the right of way from the communities, and a guarantee of timely decision making on whether the applications are approved so that infrastructure building can proceed. But in those states and localities where they are slowing the expansion of broadband for their own gains, the FCC must move forward this week and remove those artificial barriers to infrastructure investment and the national broadband network.

Being sensitive to the authority of the states, the structure of the FCC provision preserves the state’s legislation in states where they are actually moving forward on deployment. The FCC has learned from those states – those states have been the laboratory of democracy, the laboratories of policy innovation – and has crafted its proposal accordingly. Ultimately, the intent is to give a fair shot to smaller and medium communities to gain broadband advantages even while large communities continue to benefit as the country moves along a clear path for the national adoption of 5G. Such a move is of great value to the nation. One study by Recon Analytics of the economic effects of 4G showed that America’s 4G leadership led to roughly $125 billion in revenue for U.S. companies and increased wireless-related jobs in the country by 84%, to 4.6 million in 2014 from 2.5 million in 2011. Such bounty, and more, could come again to the U.S. if we lead in 5G.

While 5G will be great for hyper local applications and will be abundant in smart cities, a smart America will take a broader and familiar approach, using a combination of new fiber and wireless. Other technologies will also play a role, and communities can do more to help there too. But aside from the broadband infrastructure item, the FCC will also consider an item that addresses the cable franchising process. Cable operators are major providers of wireline broadband across the country. Many state and local authorities are excited to see broadband expand and have worked collaboratively with cable operators to make that happen. Unfortunately, there are some others that attempt to use the franchising process to impose costs and other requirements on cable broadband deployment. The FCC item launches a rulemaking to curb such abuses.

The franchising process evolved at the state and local level to facilitate the deployment of cable service in communities across the country. The prospective operator would negotiate a franchise agreement with the local or state franchising authority in order to lay cable in the public rights-of-way, and also pay so-called “franchise fees”. However, over time, franchising authorities became experts at extortion when negotiating or renegotiating these franchise agreements, demanding more and more money or other “gifts to the community.” City and county buildings all over the nation were full of dark fiber and unused circuitry that cable companies were forced to install in those same buildings to obtain or renew a local franchise.

Congress took steps in 1984 and again in 1992 and 1996 to impose certain federal standards on the franchising process as part of the federal Cable Act. For example, Congress set a franchise fee rate cap at 5 percent of cable service revenues and also placed limitations on regulation of non-cable services delivered over cable systems. The FCC, for its part, has periodically adopted rules to implement Congress’s statutory directives, most recently in a series of orders starting in 2007 that sought to curb some local franchising practices that were inconsistent with the Cable Act. Those orders were appealed in federal court, and the court ruled in 2017 that some of the FCC’s decisions were not properly justified and sent those issues back to the FCC for further consideration. The item considered this week tackled these and related issues.

The item addresses two main issues. First, it proposes to bar franchising authorities from imposing fees and other requirements on broadband and other non-cable services delivered over cable systems. As the FCC explains in the rulemaking notice, Congress intended to limit the cable franchising process to the regulation of cable services, not other services provided over cable systems. Unfortunately, in recent years, a number of states and localities have sought to use the franchising process as a vehicle for imposing additional fees and regulations on cable broadband, contrary to the express directives of Congress, the broadband goals of the FCC, and the interests of consumers. The FCC is proposing to end those abusive practices, and thereby facilitate greater broadband deployment across U.S. communities.

Second, the item proposes to bar franchising authorities from using the franchising process as a way to extort various fees and services that often have nothing to do with cable service and are not contemplated in the franchise fee framework established in the Cable Act. Under the FCC’s proposal, if a municipality wants to force a video provider to, say, provide decorative baskets of flowers down Main Street (yes this has really happened), the cost of doing so would be considered an in-kind contribution offset against that 5 percent franchise fee cap. Additionally, the Commission would clarify that capital costs for public, educational, and government channels required by a franchise agreement are the only cable-related contributions that are not subject to the statutory 5 percent franchise fee cap.

Such fees, which effectively act as a tax regardless of what they are called, should be much lower, if they must exist at all, but certainly they should not be allowed to expand beyond video, and in that should apply to all video. As cable video revenue is in decline even while broadband expands, municipalities would like to expand their income by expanding the reach of franchise fees, essentially hiding behind video providers to collect a tax from its citizens. Such tax creep is unacceptable, creating an ever-larger barrier to entry for new broadband and should be curtailed. A further, related, threat is the invention of new fees or taxes, such as a licensing fee on cable modems. The FCC should be applauded for combatting these practices and thereby facilitating broadband deployment and benefitting U.S. consumers.

In all cases, barriers to broadband expansion end up harming those who are without or now struggle to pay for, broadband. Administrative barriers, fees and taxes all result in higher costs for and slower expansion of broadband. Congress, the FCC, and local leaders of all sorts, from legislators to administrators, should consider how they can reduce the barriers for broadband expansion. The path to success is clear – make broadband deployment easy.