Fast, affordable Internet access for all.
Cities Like Syracuse Surge Ahead while the FCC and NTIA Take Baby Steps - Episode 576 of the Community Broadband Bits Podcast
This week on the podcast, Christopher is joined once again by Sean Gonsalves, Associate Director of Communications for the Community Broadband Networks initiative.
Christopher and Sean start by discussing how a new wireless community broadband network in Syracuse, New York called Surge Link is helping the underserved households in their area. Syracuse is a prime example of how cities and towns are taking matters into their own hands by looking for ways to proactively provide affordable broadband access to their citizens right now instead of waiting for potential federal funding and local planning to align perfectly.
Sean and Christopher also unpack other recent news, including the FCC's plan to adjust the definition of broadband to 100 Megabits per second (Mbps) download and 20 Mbps upload speeds, the NTIA's Letter of Credit modifications, and the future of the Affordable Connectivity Program (ACP) with the White House asking Congress for an additional $6 billion in funding to continue the program through the end of 2024.
With ACP's future looming, Christopher and Sean finish by discussing the need and importance for a long-term solution to address the digital divide, including the financial sustainability of networks in rural areas.
We want your feedback and suggestions for the show-please e-mail us or leave a comment below.
Listen to other episodes or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Christopher Mitchell (00:07):
Welcome to another episode of the Community Broadband Bits podcast. This is Christopher Mitchell, and I'm back with, well, there's lots of ways to pronounce it, but we'll just call him Sean Gonsalves today, how he pronounces it.
Sean Gonsalves (00:22):
That's right, that's right. Gonsalves.
Christopher Mitchell (00:24):
So what's going on, Sean?
Sean Gonsalves (00:26):
So much. So much. I feel like now's the time that the [00:00:30] rubber is hitting the road for states, for local communities at the federal level. There's a lot of broadband activities, so it's
Christopher Mitchell (00:39):
That's why you took vacation this weekend and next week.
Sean Gonsalves (00:41):
Yeah, I had to let my brain soak.
Christopher Mitchell (00:45):
Good on you, man. You can't just let that stuff expire. Take it from me. So we're going to talk a bunch of different things today. We're going to talk about, we're going to kick off talking about Syracuse, which is going to touch on CBRS because that's part of their plan [00:01:00] there. We're going to talk just ever so briefly about the FCC improving the definition of broadband. We're going to just do a quick update on what's happening with ACP and the letter of credit toward the end. So we're going to give you the good stuff to begin, and then we're going to be wrapping into some of the stuff that perhaps not everyone is interested in with the administrative stuff toward the end. I'm excited to talk about it. There's a lot of things that are going on out there. We just had a killer connect this show last [00:01:30] week.
It was terrific with Doug and Kim and Travis, and I highly recommend that people give that a listen. If you haven't, connectthisshow.com and we'll be putting some snippets up. But there's a lot of great topics that we had on during that. So with that, Sean, associate Director of communications for the Community Broadband Networks team. Well, I'll just say we got a bunch of great articles on communitynets.org that Carl Bode has written. You've edited some other folks. [00:02:00] Emma's got a great article up there about Hoopa Valley, but you just wrote one about Syracuse and what they're doing. So let's jump into that one.
Sean Gonsalves (02:07):
Carl and I sort of tag teamed on that. So Syracuse, city of 145,000, which we were in actually not too long ago. A lot of cities, and this is why the story I think is instructive because a lot of cities who are probably not going to get much by way of BEAD dollars, if any at all, are looking to put their rescue plan dollars to work. And so [00:02:30] Syracuse has a significant number of low income residents and they want to get quality broadband connections to those residents at little or no cost. And so the city of Syracuse put three and a half million of their upper funds to fund this effort that's been dubbed Surge Link, which is the name for this wireless network that they're building that [00:03:00] will, it's fixed wireless, and they want to be able to deliver that to 2,500 underserved Syracuse households. So I think they're mostly in, I forget which part of the city, but not just in one particular part of the city.
Christopher Mitchell (03:17):
Tell me the name of the partner of the city in this effort, because it's not confusing at all
Sean Gonsalves (03:22):
Christopher Mitchell (03:24):
Oh, no, no, no. The company that they're working with also US Ignite is yes, a partner as well, but the name [00:03:30] of the company, isn't it Community Broadband? Oh yeah,
Sean Gonsalves (03:32):
Exactly. I forgot about that. Right, right. Yeah, they're based in Geneva, New York, but they're called Community Broadband Networks. And as I had to note in the story, no relation to us.
Christopher Mitchell (03:43):
Yeah, I was going to say, if we merged with them, it'd be very easy.
Sean Gonsalves (03:46):
Yeah, wouldn't have to change our business cards or anything.
Christopher Mitchell (03:51):
So yeah, I mean think this is cool. I mean, one of my takeaways is that I'm glad to see Syracuse is doing this. I think we need to [00:04:00] see cities trying things. I don't know the deep ins and outs of this, and people who are more familiar might say, ah, I wish they'd done things a little differently.
Sean Gonsalves (04:09):
Christopher Mitchell (04:09):
I think the most important thing is that cities get going on trying to solve these issues and they can learn and they can improve. And that's one of the things that I think from my management philosophy to the extent that I have one aside from wait till the last second and make a quick decision that you'll regret later. I think it is important. It is important to [00:04:30] make a plan, try to execute it, rather than trying to sit around in a room and say, we're going to refine this plan for a year, and before we do anything, you just got to get out there and do stuff.
Sean Gonsalves (04:41):
You got to get out there and do stuff. And so exactly hats off to Syracuse for saying, you know what? We're going to tackle this and we're going to put some real money into it and move forward with the plan. Now they're using CBRS, what is that? Citizens Band Radio Service. And obviously I'm not [00:05:00] a super techie guy, particularly on the wireless side, but my understanding and better than I do. But CBRS has had some mixed results. It's sort of an experimental technology that I think that has a lot of promise.
Christopher Mitchell (05:10):
Oh, I think we should unpack that for a sec after you finish this thought.
Sean Gonsalves (05:13):
Okay. There have been communities that have used CBRS and didn't like the result. It didn't give the kind of quality connection that they were hoping for and they moved on. And so it's building on what you said earlier, it's like Syracuse is jumping in. [00:05:30] We spoke to Brooke Schneider, who's the senior information officer there for the city, and she was pretty candid and said, look, fix wireless technology provides quick time to market, and they wanted to get something out there right away. And I think we'll probably learn as they go along. And then, so hopefully communities that take this kind of targeted kind of approach, see it as an iterative process and something that they can learn and build on and not just sort of offer something and then [00:06:00] say, all right, we're done, and move on to the next thing.
Christopher Mitchell (06:03):
We just spoke last week about a wireless effort in Rhode Island as well, which I feel like has gone well for solving some of the issues that they were targeting. But anyway, the CBRS, I think I was thinking of it this morning, how to explain it real quick to avoid getting too into it. And I think of it as like it's embodied by the idea of E Ink, which is to say that you have the spectrum that the Navy [00:06:30] has the right to use, and if they're not using it in a given area at that time, then other people can use it. And so you have radios that are constantly basically being like, can I use this spectrum right now? And as long as the Navy's not operating in the area, they can use it. As soon as the Navy comes in and needs it, you ink those radios all have to turn off and let the Navy use it.
Sean Gonsalves (06:51):
So you're telling me that if you're on the coast, that could be an issue, but if you're in Kansas, the Navy's probably not going to need it quite [00:07:00] as much.
Christopher Mitchell (07:00):
Right. Although I'll remind you that the Navy does have, I was going to say Arab training facilities and other facilities around where they might be using some of this in different ways. So absolutely, if you're in San Diego, good luck. It's
Sean Gonsalves (07:13):
Going to be difficult
Christopher Mitchell (07:14):
Right next to the border also. So you got real challenges, but then the spectrum is split even further in that you have entities that have paid for prioritized access to it, and the cable companies tended to buy this at auction and a few others. And so then there's some [00:07:30] stuff that's left over for others to use as long as they follow basic rules. And Rye is a certified installer of CBRS. We've tried to learn quite a bit about this, and I think it's just useful to note that this has worked out very well in areas where you don't have a lot of congestion with Spectrum. So out at Hoopa Valley, GY and the networks we've talked about with Acorn Wireless before, they're really putting it to great use and it's fantastic for them [00:08:00] up in the redwoods in other areas, Yonkers, their experience was not as good. I think there's more congestion, their building materials for trying to get it into big apartment buildings. It just didn't provide a good option.
Sean Gonsalves (08:12):
I think Tucson as well didn't have a great experience with it, although we haven't checked in with them recently, so I don't really know.
Christopher Mitchell (08:19):
I think that might've been a lack of outreach in the community as opposed to a technical issue. But you're right, they did put a big effort behind CBRS, so there are definitely mixed results. Now, [00:08:30] I want to note that there's a trade organization of the big wireless companies that want to gobble up all the spectrum and not let anyone else use it, so we'll have to pay them to have access to it. That's a trade group called CTIA. And they've been telling everyone that CBRS doesn't work. Now when we're talking about how CBRS isn't doing the job good enough in places like Yonkers, the reason for that is because there's not enough spectrum available. The concept of sharing spectrum is good. It works. It's proven. We need to do a lot [00:09:00] more of it. And so I just want to be careful as people are talking about this, to understand different nuances around where is there a problem because of the concept of sharing spectrum, I don't really see one, it's working out pretty well and we could do a lot more of it. It would be more efficient use of the spectrum that the public owns and leases to private companies or others. But there are problems because there's so little spectrum that's been dedicated to this that you just can't get a lot of people connected with high quality connections. So I hope we'll see [00:09:30] more of this kind of approach.
Sean Gonsalves (09:31):
Right. Well, to me, the takeaway I think you hit on right off the bat on Syracuse, which is, and I think about this a lot in Massachusetts where I live, there's a lot of cities and towns that are not going to get BEAD dollars that are itching to do something. And one of the things in talking to different folks in these different communities is to remind them that, listen, you don't necessarily need to build a citywide municipal broadband network. It's worth thinking about more targeted approaches. Syracuse [00:10:00] perhaps is a city like other places where you can learn from. And I think it is important to think about what these other cities are doing, what they're doing in Cleveland, what they're doing in Baltimore in project waves, and these different efforts of trying to, as you say, get out there and do something and not just debate and refine a plan for a municipal fiber citywide fiber network until the cows come home.
Christopher Mitchell (10:28):
Yeah, I mean, one of the things that I've posed [00:10:30] to different people in different communities is if we had a resurgence of the pandemic that specifically was a strain that was particularly harmful to children, and we absolutely had to shut down the schools. I'm not talking about a debate about whether, oh, is it worth it or not? Something, I mean, it could go real dark and literally we have to quarantine children just for a thought experiment. How many kids would still be without high quality access in the home compared to how many were without it in 2020? [00:11:00] And most people think that number has not changed that much. I think it has gotten better in a number of places, but there's still tons of places where that Comcast Internet Essentials isn't getting the job done where they don't have an alternative and we need to do better.
And this is the beginning of doing better. I think the one last thing I wanted to throw in before we move on is that one of the things that should be great about CBRS and I think would be great for another solution in this is the prospect [00:11:30] of, in fact, it's actually, I'm going to guess that CBRS is actually more of a mobile wireless in some ways. With certain implementations, you could do it fixed or not, but one of the goals is that you give a family a puck, they could get it at a library or something, they take it home. There doesn't have to be an installation on the home. And if you have a situation where kids are spending one night in one place and then they spend Wednesday and Thursdays in a different place, and that's still under the same CBRS network, they can move around with it. And [00:12:00] that's what we need for these families.
Sean Gonsalves (12:02):
Yeah, I mean, that's actually really cool and more in line with, I think the reality that lots of families are dealing with. That's a great point.
Christopher Mitchell (12:10):
So speaking of great points, the FCC is moving forward with improving the definition of broadband. It's been a minute. We're approaching basically, I mean the speed definition that we are using right now was adopted, I want to say eight years ago, maybe eight [00:12:30] and a half years ago now, which means it was based on research that is almost 10 years old. Needs have changed over that time. We're just going to say very briefly about this. We're not going to get in deep on it. But the FCC, I think they're poised to adopt a new definition that's 100 by 20. What's your first reaction to that?
Sean Gonsalves (12:49):
My first reaction is great because I wouldn't expect them to do anything more. Not that they shouldn't, but given the political realities and who they've got in their [00:13:00] ear, I'm quite sure that obviously it's easy to make the case that it should be a symmetrical 100, but I'm sure that there are different elements out there that would like to keep it at 100 over 20.
Christopher Mitchell (13:17):
Right. And I think this gets to a question of what should this definition do? Should this definition reflect the minimum capacity that is needed for your typical family or typical household to use the applications that [00:13:30] are available today? Or should this be a definition that is forward-looking and tries to spur innovation and that sort of thing?
Sean Gonsalves (13:36):
Absolutely. And I fall squarely in the camp of thinking about this in terms of peak usage down the road and not just what's sort of good enough for today. And then we'll have this perennial debate every 10 years or so about how hopelessly outdated the definition is.
Christopher Mitchell (13:56):
I think the FCC might have then come up with a strategy, [00:14:00] and I don't fully understand this yet. I just saw this an hour or two ago, so I haven't had time to give it a thought or to ask people who are smarter than me what they think about it. So I'll feel pretty dumb if in two weeks I'm like, oh, this is terrible. But right now I'm feeling pretty good about the fact that they're suggesting that they want to have a visionary goal then of a gigabit down 500 megabit up. To me, that seems reasonable. That's where we want to be. We want people to, and this just gets to our electric grid, we make sure there's plenty of electricity out there. [00:14:30] Well, more than every family needs today because of that margin for growth. We don't know what's going to be happening, and we should be doing that with our networks too. And I think that sort of reach goal of what we're looking for, putting that into statute, putting that into words, not statute in this case, but putting that into a rule can be a good step.
Sean Gonsalves (14:47):
Absolutely. Absolutely. And we'll see where it goes now that they finally have a three, two majority, maybe they can get a few things done
Christopher Mitchell (14:54):
Right now. I'll just also say that I've often talked about the need for more [00:15:00] symmetrical networks, but I've never felt that they have to be perfectly symmetrical. In my mind, 500 megabits up a gigabit up is basically the same for the purpose of the vast majority of people. So that's not something I'm going to freak out about myself.
Sean Gonsalves (15:13):
You're not going to die on that hill.
Christopher Mitchell (15:15):
No. There's so many other hills that I can choose.
Sean Gonsalves (15:18):
Christopher Mitchell (15:20):
Yeah, I'm still on. I'm capital I for Internet Hill, and that's Hills way behind us. [00:15:30] The other thing was then ACP you just wrote about changes to the affordable connectivity plan. Well, really I think updates in terms of the politics around it and that sort of thing. You've long had a complicated relationship with acp, I feel like. That's right. So what are you thinking now?
Sean Gonsalves (15:45):
I mean, well, first of all, finally the White House is making a formal request from Congress to at least keep the program running until pretty much the end of 2024. Folks should know that it's projected to run out of funds [00:16:00] probably in the spring of next year and 2024, the Biden White House is asking for another 6 billion to keep it going. The White House though says it will last until the end. That would keep it viable till the end of December of 2024. But our internal calculations disagree a little bit. You would actually need 6.9 billion to get it to the end of the year, but with the 6 billion to get us to November, which again, anything that we can do to extend the life of ACP is [00:16:30] a good thing. What might have to be compromised, how this will all play out, we don't know, but let's just assume for a moment, and there seems to be quite a bit of bipartisan support in Congress for extending ACP. So I got to believe that there's probably something that will get worked out.
Christopher Mitchell (16:44):
But this is so little. I mean, the fact that this is not a solution. No, it's kicking can down the road, but I want to take issue. You said finally the White House has asked Congress. I don't know if you read the academic literature on the bully pulpit [00:17:00] because I don't, but I did read a magazine article at some point and it suggested that if you look at the Obama administration, for instance, there's this idea that presidents can get out there, they can speak eloquently and change people's minds. And if I'm recalling correctly, and Ry will probably make fun of me if I'm not, because he will have read this in greater depth than I have, that when Obama would prioritize an issue and try to use the bully pulpit, he might increase public support for that issue a little [00:17:30] bit. But what he would really do is harden resistance to it. His opponents would be like, all right, now we're really going to fight that thing.
Sean Gonsalves (17:37):
Christopher Mitchell (17:37):
And that's why I think that's what the Biden administration has been doing. I don't think that they've been, I haven't criticized 'em like other people because they haven't said we're putting a big priority on ACP because I think they felt that if they did that it would be harder to actually get it done.
Sean Gonsalves (17:52):
That's a fair point. And from a strategic standpoint of view, it might actually be the smartest thing to do. Unfortunately, we are still in this [00:18:00] period of, well, if Biden proposed it, then we're automatically against it. Whether or not it's a good idea or not, or what,
Christopher Mitchell (18:07):
That's what I'm afraid of. Now, I got to say, the part that I'm a little bit upset about is that extending the program, let's just say for a second that we did extend the program enough, the 6 billion Congress does appropriate that and it does last until the end of the year, which I agree with you is probably not going to happen. I mean, let's pause for a second and just note that the FCC [00:18:30] just gave out, I forget the exact amount, but I mean it was like a hundred million dollars, $200 million. I mean lots of millions of dollars, let's say to groups to try to spur more ACP enrollment. And the White House projections are that's not going to work. Right. I'm a little bit confused about that. I'm more hopeful. A lot of these folks that got that money, I think they're going to put good use to it and get more people enrolled.
But at the same time, the issue is that if [00:19:00] it is going to run out of money in December, that means that in the summer of 2024, they got to start preparing to shut it down. I mean, we still haven't turned this into something that can get past the election and then be dealt with in the lame duck. It will be supremely disruptive if under the best case scenario we have right now is that it basically almost runs out of money. And then Congress acts to refill it at that point, which I think is even doubtful because we're talking about at that point, maybe 600, 700, 800 [00:19:30] millions million dollars per month to keep this program running. And I think you and I have long felt that this is an important short-term program. There needs to be a longer term thing, but the states and the federal government sure aren't doing anything. You got, Syracuse is stepping up, right? Chattanooga solved this problem a long time ago. A lot of municipal networks are doing their part, but there's no solution in the vast majority of places that is going to take the place of this thing eventually.
Sean Gonsalves (19:55):
Exactly. That in and of itself is pretty discouraging, and I just [00:20:00] don't want to think about what happens if all of a sudden tens of millions of folks no longer have the benefit. It's an important bandaid until we can get some more structural solutions and what have you. But I think also that one thing that I don't hear enough being argued in making the case for why ACP is important, of course it's important for low-income households to be online, but I think particularly as BEAD is rolling out and they're building networks, especially in rural [00:20:30] areas, ACP is going to be really important for the economics on a lot of these networks, tribal networks. But in rural areas, if a significant chunk of a subscriber base needs ACP, that's going to make a huge difference in whether networks are going to be financially sustainable. And I don't hear that case being made often enough, and I think it's an important thing to consider in this Internet for all era that we're in. And as BEAD rolls [00:21:00] out and you've got all these states that are trying to encourage public-private partnerships, now losing the ACP won't be as big of an issue for maybe the big national companies, but for independent ISPs who could perhaps build new networks in rural areas and what have you, the ACP is an important component in financial sustainability of those networks or even whether or not a particular area might be attractive enough to serve.
Christopher Mitchell (21:24):
And I actually think it may be a significant input for the [00:21:30] big carriers charter I feel like has really strategized around trying to get every single person that could get the ACP to get it. And I think at one point, I think someone did the numbers and Charter was getting a big chunk of it, to the extent of which would be more than a billion dollars a year. Now, that's not all their profit obviously, but it's a significant chunk that if they were to lose it would be a big deal. And that's from, frankly, it makes me a little frustrated. I don't know what Comcast proportion is, but Comcast does a far [00:22:00] better job than Charter does. I'm actually serving low-income folks so
Sean Gonsalves (22:04):
Well, and all the more reason why you need that long-term solution. Because when you're planning and if you've got all of this uncertainty about whether or not the ACP is going to be around, it's just not a good environment to be planning and thinking about spending an enormous amount of capital to build new networks with this big of a part of the economic equation in this uncertainty
Christopher Mitchell (22:25):
Right. Now, the other thing is that one thing that will be good is that the White House has asked [00:22:30] for removing the device payment option, the device, the $100 device credit, that's a part of the ACP. I've talked to some ISPs that have done a good job with trying to use that, but most, I think haven't done anything with it. And a lot of the scammers are using that. And so I feel like getting rid of that would be good. I don't think that is money that is well spent. I think Congress needs to create a good program that would help get devices out there, but just getting the [00:23:00] cheapest thing and giving to people, it's just creating a ton of e-waste and it's unnecessary. And it's really creating it, making it easy for these fly-by-night companies to fool people. And I feel like they're giving out these devices on the streets being like, Hey, get your free device. And then some of those people already had an ACP and they don't know what they're signing up for.
Sean Gonsalves (23:19):
Christopher Mitchell (23:19):
Then it messes with them. And then the folks from NDIA, the National Digital Inclusion Alliance, all those people that are part of that coalition, they're then using their time to try to roll that [00:23:30] stuff back and make sure people can get it back. It's just that device stuff. It's not well thought out. It's not well executed on the whole. And so I'm sorry to the small number of ISPs that have used it effectively, but I think it's smart to get rid of that. And the other thing is I think they're thinking about reducing the eligibility. And this is something that is going to happen eventually. I mean, I think right now, four out of 10 Americans available are eligible
Sean Gonsalves (23:53):
For this, right? 52 million households are eligible. That's a pretty big chunk of America.
Christopher Mitchell (23:58):
And so I feel like [00:24:00] I'm eligible because my son has gone to a Title one school, and so we were eligible. We might not be. So the weird thing is as you change schools over time, it's not always clear. But anyway, that's not an issue. I think it makes sense to continue having that kind of eligibility to make it easy for people. But the 200% above the poverty rate is what I think they're going to be changing. And unfortunately, one of the things I've heard is [00:24:30] that it may make it harder for people to sign up. Then the things that they will be reducing for eligible may be the things that allowed low income folks to be able to sign up more easily, and now they'd have to go through more paperwork and they're not going to do it.
Sean Gonsalves (24:45):
Yeah. I mean, I'm quite certain that to the extent the ACP continues to be funded that or whatever, however they resolve this, there'll be some trade-offs.
Christopher Mitchell (24:57):
Yeah, and I mean that's what's going to happen. And at its best, it's [00:25:00] not that good of a program. It is not going to structurally solve this issue. And that's something that we're trying to push others into reckoning with.
Sean Gonsalves (25:07):
That's right. We've got to walk and chew gum at the same time on this.
Christopher Mitchell (25:11):
So now the other thing, we've ranted about this over and over again, that only describes like a hundred different things probably, but in this case, it's the letter of credit. We've felt like NTIA did not need to incorporate that. It is a barrier for small ISPs and even mid-size ISPs we've seen being able [00:25:30] to potentially apply for these funds. We don't think it will do much to change the rate of default that will occur. Inevitably, there will be some projects that don't end up penciling out, and it is hard to figure out what projects those are ahead of time. Also, I think this is something we've talked about on the Connect This show is that I feel like there's so many things upfront and then none of them are actually enforced on the backend that hard. And so they put more things upfront to try to gatekeep and make sure they only have viable projects.
[00:26:00] But I think they should do fewer things upfront and have better enforcement of the rules that matter down the line. Because I mean, we just saw that with the last round of stimulus funding in 2010. So many of those networks were supposed to allow interconnection at reasonable terms, and they just flouted that and nobody busted 'em on it. And frankly, one of the problems was that no one wanted to call them publicly on it because they had to work with them. And so you need an inspector general [00:26:30] or someone that is actually checking these things out and has a process. That's one of the things I think we don't have.
Sean Gonsalves (26:36):
Right. I think I heard you say at one point that you were surprised that NTIA hadn't resolved this letter of credit issues a lot sooner, but we should celebrate this is a small victory that we should celebrate. No,
Christopher Mitchell (26:47):
It's a big victory. It makes a big difference for a lot of small ISPs. I mean, the folks I've talked to from Connect Humanity and other organizations that did the hard work to educate NTIA about this and convince them to make this [00:27:00] change, they're happy with it. So briefly, first of all, letter of credit still required, but can be waived under different circumstances. Most importantly, perhaps more entities can offer a letter of credit including a bunch of credit unions.
Sean Gonsalves (27:14):
And then it also allows for the use of performance bonds, which was an idea that was put forward.
Christopher Mitchell (27:21):
And I think mean the best I can tell the difference between a performance bond and a letter of credit is that for a letter of credit, you got to have a chunk of money sitting in the bank basically doing [00:27:30] nothing except for securing that letter of credit. And in a performance bond, it's more like you just make a payment, you're like paying an entity and convincing them that you're going to perform well, but you don't have to set aside a big chunk of money that you're not allowed to put in the ground in the form of network. So that is a better dynamic I think for a lot of networks. They're not going to be happy about that, but they can do that. They can structure these letters of credit and performance bonds to reduce over time as their obligations reduce, right? [00:28:00] So as they've built network and hit their milestones, the letter of credit will be reduced.
And so they'd get some of that capital back or their cost of the performance bond would go down in some way. So there's a number of different tweaks that they've offered. But here's the one that I love the most. States and territories are also free to request waivers for additional circumstances not covered by this programmatic waiver where prospective sub-grantees are able to meet the requirements under the NOFO by other means. So that's [00:28:30] basically saying to the states, Hey, if you're dealing with a sub-grantee and you can make a strong case that they don't need a letter of credit, let's talk about it. I don't know if we'll see that happening, but to me that seems like the kind of flexibility we want to see.
Sean Gonsalves (28:43):
That's right. Finally.
Christopher Mitchell (28:45):
Yeah. Yeah. I mean, it's good news. So high hopes, I don't think that changes that we think the vast majority of this money will still be going to the big cable and telephone companies, [00:29:00] and there's not a lot we can do about that. And it is a path forward at least. It is better to be doing that than to just have 10 million people out there without any network anywhere near them. So we'll move on and we'll keep trying to get those people to have better networks, but this is a place we can move from.
Sean Gonsalves (29:18):
Well said. Yeah.
Christopher Mitchell (29:19):
Any closing thoughts then?
Sean Gonsalves (29:21):
I think we are going to be in for interesting 2024 in broadband, particularly as the BEAD dollar [00:29:30] start to flow out to states. But we shouldn't also allow BEAD to suck all of the oxygen out of the room as if BEAD is everything, as if communities can't do anything if they don't have access to BEAD dollars. I mean, there's still lots to be done and lots that will need to be done. And so I think 2024 is going to be another banner year for broadband.
Christopher Mitchell (29:52):
Yeah, I mean, I've railed against this Internet for all framing because as you know, the majority of people who don't have [00:30:00] high quality Internet access, it's not because there's not a network near them. There's that 10, 16 million range, maybe 18 million, we don't know because the FCC never bothered to create accurate statistics, but there's a heck of a lot of households that aren't near a network. But there's more households that just cannot use the networks that are near them. And often because the network is not designed to solve poverty, and the network is designed to create cashflow to the investors of Comcast and Charter Spectrum, and [00:30:30] we need to get smarter about that and tackle that. So I a hundred percent agree with you,
Sean Gonsalves (30:34):
And I agree with you on that, the framing of the Internet for all. Listen, I'm a big fan of moonshots and high expectations and the whole nine, but the reality is is that inevitably several years from now when people are scratching their head and being like, I thought this was supposed to be Internet for all, and it's really just Internet for some that will end up being used as a way to criticize this effort and [00:31:00] the government and the Democrats or whatever as to why they shouldn't be doing these things. And so I worry about that.
Christopher Mitchell (31:07):
Yes, and I think we could end on this because based on what you were saying, if people want to engineer the perfect government program, it's not going to happen. That is a recipe for a thought experiment. You should go to a university and play around, but in the real world, we got to do the best we can. Try things, move on. And that's how you make a difference, not by coming up with a perfect program [00:31:30] that has no downsides.
Sean Gonsalves (31:31):
Christopher Mitchell (31:32):
Thank you, Sean.
Sean Gonsalves (31:33):
Alright, thank you.
Ry Marcattilio (31:34):
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