Fast, affordable Internet access for all.
Transcript: Community Broadband Bits Episode 381
This is the transcript for episode 381 of the Community Broadband Bits podcast. In this episode, Christopher speaks with JonT Sallet from the Benton Institute for Broadband and Society about their new report Broadband for America's Future: A Vision for the 2020s. Listen to the episode, or read the transcript below.
Jon Sallet: We've tried to offer a vision for debate, for discussion on how to move forward in the next decade.
Lisa Gonzalez: Welcome to episode 381 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Last week, the Benton Institute for Broadband and Society released a detailed and groundbreaking report titled Broadband for America's Future: A Vision for the 2020s. This week we get to hear author Jon Sallet discuss the publication and the organization's reasons for producing the report as he elaborates on some of his findings. Jon has had a long and illustrious career in Internet policy. He was around when the term information super highway was all the rage and gives us a five minute recap about his work. During the interview, Christopher and Jon cover the four main takeaways in the report along with some special conversation about competition, the term overbuilding, and how encouraging competition could help solve some of the problems we now face. Be sure you download the report and dig deeper into its text, where you're likely to find some familiar stories about local communities and their work on improved connectivity. You can download the report at benton.org/publications/broadband-policy2020s. Before Jon and Christopher get started, however, you'll get to hear a little more about the Benton organization's recent transformation from foundation to institute. Christopher spends a few minutes talking with Adrianne Furniss, Benton's executive director. Adrian explains the evolution of this organization that has been instrumental in our work as well as the work of other broadband advocates. Now, here's Christopher with Adrianne Furniss and also Jon Sallet to talk about the Benton Institute for Broadband and Society and about the institute's recent report.
Christopher Mitchell: I'm sitting here with Adrianne Furniss, the executive director of the Benton Institute. I'm confused because I'm familiar with the Benton Foundation, but I've never heard of this Benton Institute. So tell me what's going on.
Adrianne Furniss: Sure, so we've been for almost 40 years known as the Benton Foundation, and recently we started to say that for the generation of people who were familiar with my father, who had been around and sort of equated the foundation with him, they're all getting older, they're starting to retire, and a new generation of people are obviously coming up through the ranks. And the Benton Foundation doesn't really say what it is we do, and so by focusing — our mission really has remained unchanged around the values of access, equity and diversity in communications technology, obviously now primarily broadband. We felt that by having our name reflect exactly what we do, we'd pull in more people to the family. So the full name is Benton Institute for Broadband and Society.
Christopher Mitchell: Wonderful. And I should note, my first major report was supported by Benton, published by Benton, and really made possible by Benton, now the Benton Institute for Broadband and Society.
Adrianne Furniss: And I remember that report, Chris. It's a fantastic report because it focused on those three cities that were really early adopters or early in on the municipal broadband wave.
Christopher Mitchell: That's right. Chattanooga, Wilson — no, I'm sorry, Chattanooga, Bristol, and Lafayette, and you probably remember that last year I told you we're gonna update it.
Adrianne Furniss: Yes.
Christopher Mitchell: Most of the writing's been done, but I just haven't finished it. So please, Chattanooga, and Lafayette in particular, don't do anything different. We have to get this updated.
Adrianne Furniss: Yeah, I would love to do that. Actually I do want to add one other thing about the "and Society" part, which was — you know, Jon's report really spends a lot of time talking about how technology is great, but it is really about how it is used. So if you care about all of these various topics that lend themselves to a healthy — or lend to a healthy society, so whether it's community development or education or health care, all of those things, broadband enables solutions to ride on top. And so, that's why we chose the "society" word. It just seemed to be an all encompassing umbrella for all the things that make up for a healthy community.
Christopher Mitchell: Well, I remain a fan. All of us Midwest types have to stick together. And now, I think we'll roll into your regularly scheduled podcast introduction.
Adrianne Furniss: Thank you Chris.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance. Today I'm in Alexandria, which is right near Washington D.C. in Virginia, at the Broadband Communities Economic Development event, and I'm very excited to be speaking to the person who just keynoted wonderful discussion about a brand new paper, Jon Sallet, senior fellow for the Benton Institute. Welcome to the show.
Jon Sallet: Thank you Chris. And let me just repeat the most important sentence from the speech I just gave. It's this: Chris Mitchell and Lisa Gonzalez of the Institute for Local Self-Reliance continue to publish the story of municipal broadband as new chapters continue to be written. Really Chris, in the course of all work over the last year, our research, time and time again I would come to your writings, to your fabulous map of the United States showing different ways experiments are playing out in different places — an invaluable resource. So thanks for the chance to be here.
Christopher Mitchell: Thank you. It's really wonderful to hear that the approach we take has been very valuable because I mean, in some ways I feel like I and Lisa get a lot of credit when what we're doing is reporting on what all these local communities are doing. And these are really, really outstanding people who are taking an interest in improving this, and it's just great to be kind of an intermediary telling that story.
Jon Sallet: It's important because one of the things we talked about today was that a lot of municipalities have figured out how to get it done, but the more that story is told — and you're the chief storyteller for that — the more people around the country and at different levels of government will understand what broadband policy needs to look like.
Christopher Mitchell: So, Jon, who are you, aside from someone I paid to come in here and compliment us?
Jon Sallet: No, no, no. It's really free. So I've been around the world of sort of telecom and communications for a very long time. Maybe longer than one should admit. I was in the Clinton administration. I was somebody who had worked for Al Gore. I was in the Commerce Department running the office of policy and strategic planning. I was part of a breakfast group that Gore had meet once a week in the vice president's office in the West Wing to think about Internet and telecom policy. You remember, this was right at the moment that the Internet was being privatized and went from NSFNET to the Internet .
Christopher Mitchell: Right, when it went from academic to being for commercial use.
Jon Sallet: Exactly right, and at the time that Congress was writing the 1996 Telecommunications Act. And when we first started thinking about educational technology, I headed the first interagency task force out of the White House on education technology. One of the things I got to do with it, which was sort of a once in a lifetime experience, was to go to San Francisco and ride with President Clinton in his limousine alone with him in the back of the presidential limousine from his hotel to an event he did in San Francisco to celebrate educational technology at a very early moment, even before the E-Rate program was enacted. It's unusual to be sitting in the back of a limousine with the President of the United States.
Christopher Mitchell: I'll bet he quized you, too, from what I understand. I mean, he took an interest in this stuff, but he loved asking questions.
Jon Sallet: He was really interested in it. Gore was very interested in it. I did that, and then I did other work. Tom Wheeler, when he became chairman of the FCC in 2013, asked me to come back to government to become the general counsel of the Federal Communications Commission. I did that for a few years and then went to the antitrust division of the Justice Department, which reflects my long term interest in competition, where I was the senior deputy at the end of the Obama administration.
Christopher Mitchell: Okay. And then you found yourself at the Benton foundation.
Jon Sallet: Correct.
Christopher Mitchell: And it transitioned into the Benton Institute.
Jon Sallet: Right. I mean, it's not uncommon of former governmental officials to think they still have something to say, but the Benton Institute was nice enough to give me a forum. And it was something I had experienced — to give you an example about rural broadband. When I was at the FCC, my wife Lori and I were living on the Eastern Shore of Maryland in a USF eligible area.
Christopher Mitchell: Okay.
Jon Sallet: And we currently have a little farm, an organic farm on the Eastern Shore, and there is no broadband at it. I blew through a lot of wireless data over this past summer writing up the report, so it gave me very personal experience. And I was lucky enough that the Benton Institute supported my work, supports it in competition, supports it in broadband. We thought it was time to do another report. Let me just give you a minute on Benton's background. Charles Benton, of course, was the great leader of what was then the Benton Foundation for decades.
Christopher Mitchell: One of the people that I met when I first started doing this work who I found quite inspiring
Jon Sallet: I hadn't remembered where I met him, but we found a document that showed he and I were both at a meeting in 1995 talking about the future of the Internet and broadband. What he did several times, including in the 80s and before the National Broadband Plan, was to offer a vision, and we decided it was time to do it again. And that's what we've done today. We've tried to offer a vision for debate, for discussion on how to move forward in the next decade.
Christopher Mitchell: Remind me what the title is.
Jon Sallet: I believe it's Vision for the 2020s. That's a great question, and it would be one that one would think I would know. But if I look at it, it's called Broadband for America's Future: A Vision for the 2020s, because our idea is flipped. There's a lot of day-to-day issues that are being decided — they are very, very important — but we thought we could take the long view. Let's think about broadband over the next decade and what we need to do to get everybody connected.
Christopher Mitchell: Let me just start off by noting that we're going to really do an overview, and we're going to talk a little bit more in depth about competition. There's a lot here, and I suspect we're going to be promoting and talking about this for awhile. So I strongly encourage people to be reading the full report. But I want to ask about the framing of it, which is to say, why do we even want to talk about this? Why is this worth your time to create a document like this?
Jon Sallet: It's interesting. You know, we talk to a lot of people, you and I, everyday who think broadband is very, very important, but when we talk to public officials who have all sorts of issues on their plate, and I mean from the county level to Congress, sometimes they say, "Why is this important enough given everything else that's going on?"
Christopher Mitchell: Right, there's an opioid crisis. There's education challenges.
Jon Sallet: Healthcare, education, right. Here's the thing: broadband is the essential technology of our time. The thing about technologies are they don't solve problems in and of themselves, but they enable solutions. And so, what we came to understand was that broadband itself is not going to solve problems, but we can't solve the biggest problems in America without broadband. If you think about precision agriculture in rural America, if you think about healthcare anywhere, education for people of all ages—
Christopher Mitchell: Equity in general.
Jon Sallet: —equity in general, individual economic opportunity. Broadband isn't the sole answer to any of those, but it is a critical piece of any answer. And that's what we came to understand why we think this is so important.
Christopher Mitchell: So let's run through quickly. You have four major sections.
Jon Sallet: Yes.
Christopher Mitchell: Without describing them, just list them for us quick.
Jon Sallet: Sure. Deployment, competition, affordability and adoption, and community anchor institutions.
Christopher Mitchell: So what is the short version of deployment?
Jon Sallet: Deployment — getting broadband to people who have no fixed broadband. We concentrate on fixed, and there are parts of the country where there just are no fixed broadband connections.
Christopher Mitchell: And how are you defining broadband in this situation?
Jon Sallet: It's an important question. What we urge is that when governments pay money to build networks, capital costs for networks, that are going to last for a decade, that they support the building of 100 megs symmetrical networks — networks that are robust and scalable. There's a lot of people using 100 today. Upstream is increasingly important, and we think the best use, the most fiscally careful use of public monies is to build networks now that're gonna last a long time. Here's an obvious fact: 10 years ago the FCC defined broadband, a new definition in 2010, 4 megs down 1 up. We're only a decade away from that. The broadband landscape doesn't look anything like a world of 4/1. So we can only imagine that 10 years from now we will see similar increases, and we should build networks that are constructed to meet those demands.
Christopher Mitchell: Absolutely, and one of the things that's interesting about picking a speed like 100 megabits symmetrical is that there's not a lot of technologies that can do it, but every one that can do it is going to be scalable.
Jon Sallet: And this is the critical point, Chris. When we talk to experts, "Why pick one speed over another?" what people said to us over and over again is a network that can do 100/100 can just — almost always, right, but as a general matter — be scalable up to whatever demand requires, and that's our real goal. Our real goal is scalability so that we're investing in future-proof networks.
Christopher Mitchell: Okay, we're going to touch a little bit back on rural deployment when we talk about competition, I'm sure, which we're going to save for the end. So affordability and adoption — what are you talking about in that situation?
Jon Sallet: We're talking about the fact that for a lot of low-income people, current broadband prices aren't affordable. Now there will be some low-income people perhaps for whom the affordability is just a very, very difficult issue. But we've heard research from people like Colin Rhinesmith that said that in his work he saw that there were people who could afford $10 to $15 but not more than that. The thing about affordability is we go back to what in telecommunications we called Metcalfe's Law. It's a very simple proposition: everybody on a network benefits when another person comes onto the network. So too with this network of networks.
Christopher Mitchell: Right, and this is — I mean the way to illustrate it I think is with telephones, which is that if there's 10 people on a network, you can call nine other people. If there's 100 people on the network, you can call so many more people, and every additional person has a even more significant increase.
Jon Sallet: Correct. The math is a nonlinear increase. So it works for the network of networks as well. Getting people onto networks, making it affordable, advantages them but it advantages the users as a whole. And it advantages society if people can get better jobs and if they can contribute more to their community. So we offer what we call an affordability agenda. It's got lots of pieces — working with private companies. There are private broadband providers who offering low-income services. We talk about how government can support them, and we talk about how government can think about its own role. But it's an important issue. And then secondly, the category of actions that come under the heading "digital skills" or "digital inclusion" or "digital equity" — a lot of the American population carries around multiple devices everywhere they go, and it may seem to them that using the Internet or using broadband is just second nature.
Christopher Mitchell: Yeah, I have on me right now a laptop, a tablet-type device, my cell phone, and an iPod for podcasts — four devices right there.
Jon Sallet: If that were your only experience, and I said you, you know, there are people in America who don't know how to use broadband, you'd say, "How could that be? I got four of them."
Christopher Mitchell: Right.
Jon Sallet: But in fact, what we've seen is that particularly for people who need new jobs skills, for particularly people who are looking for middle skills job that require digital literacy, there's a lot of people who need training. And there are important training programs going on around the country, and they need to be expanded.
Christopher Mitchell: And now this is one of the things that I don't think people have thought a lot about. I often try to think in terms of one time costs and longterm costs, and training isn't a onetime cost but it's also not a forever cost, in theory. Right, I mean there's some hump that we're going to have to get over and then —
Jon Sallet: Correct, correct. That's right, and there are certain populations that may need in more than others. Imagine a worker in his or her fifties who hasn't had to be digitally literate, who's now looking for another job. It's very important to get another job. Those people may particularly need access to this kind of digital training.
Christopher Mitchell: No, and I have a lot of sympathy for that because I worked in a used bookstore before I went to grad school. One of our employees was a guy whose life was watching hockey — Minnesota — and he asked me to come to his house to help him because he got a computer cause he wanted to do more hockey stuff on the Internet. And he had never used a computer before, and he was just looking at the mouse and the way he even just tried to pick it up, it was sideways and he wasn't sure. I mean, that's not anything to be ashamed of. How would you know if you hadn't come across this before?
Jon Sallet: You've seen on YouTube, right? The video, it's done over and over again. You take two teenagers, you put them in front of a rotary dial phone, right? And they try to figure out how to use it. They can't figure it out. Well, new technologies are a barrier to anybody who isn't used to it — low-income people who haven't had a computer in their home. The point again is that society is better off if more people are connected.
Christopher Mitchell: Right, so I just want to end that period with something that I love: Burt Reynolds. His work in Smokey and the Bandit, he's talking to Sally Field and he says, "When you tell someone something, it depends on just what part of the United States you're standing in as to just how stupid you are." So relativity explained by Burt Reynolds.
Jon Sallet: It's good to have cultural references, right?
Christopher Mitchell: Unfortunately, none of my colleagues get my cultural references anymore. So affordability and adoption leads into community anchor institutions.
Jon Sallet: Yes, we make three points about community anchor institutions. One, governments should support their ability to get competitive broadband choices. If you look at the price of connectivity to schools and libraries over the last few years, it's plummeted. It's gone down a lot. Secondly, we need to recognize that today community anchor institutions need to reach users, and those users are not always in the building. The best example, but not the only example, is K-12 students. You see kids, middle school kids, with their new school-supplied tablets walking around town. We kept hearing stories about people who go to local fast food restaurants at night — cars full of kids, I saw earlier today such a photo — in order to get on broadband, so we proposed solutions to expand the E-Rate program for low income students. And then finally — and this is gonna come back to competition, this may even be a segue — if you build fiber to community anchor institutions, that fiber can be available for expansion. It doesn't mean the public dollars need to fund the expansion. Private dollars can be used where fiber already exists, but the cost of deployment is cut because the infrastructure doesn't have to go as far to reach a neighborhood.
Christopher Mitchell: I'm curious if you can tell us before we get to the competition — it's a good segue, but I wanted to ask you to tell the story about the library and the people bringing in the devices because I think it's important for people's conception of how these anchor institutions are used.
Jon Sallet: And it actually, I think, Chris, is important for understanding how much broadband people need at home as well.
Christopher Mitchell: Sure.
Jon Sallet: But here's the story. It comes from Gina Millsap, who's the CEO of the Topeka Shawnee Library in Kansas. So, just start with the proposition — we've all seen this — people go into libraries to use library computers, right? They're usually in the middle of the room. People are using them, for example, for job applications. But what she said to us is, "You need to understand that in my library, 3000 people a day come in. They typically have one device. Sometimes they have two or three devices. They're bringing their devices to the libraries." Why? First for the broadband connectivity but also — and we heard this from other librarians — because librarians are natural people to go to if you don't know something, like how to use the device. So we said to her, Gina Millsap, how much connectivity do you need? She said, "It's like water pressure. I need it all." And as I say, that tells us about why community anchor institutions need a lot of capacity, but it's also a story of people at home. Why do speeds need to go up? Why is latency important? Why are monthly usage limits an issue? It's because we are living in a world of multiple devices, simultaneous multiple devices, and that eats up bandwidth.
Christopher Mitchell: The libraries and anchor institutions, particularly on E-Rate, gets right into overbuilding because I think you can actually use this to slide into competition. One of the things that commissioner Mike O'Rielly talks about that drives me nuts is that E-Rate should not allow overbuilding. And it always drives me nuts because there's this presumption that because fiber is physically available, it is also economically available, and I do not think that those things follow.
Jon Sallet: So Benton published a white paper that I wrote earlier this year on the administration of E'Rate, and here's the thing: E-Rate dollars go to the winners of competitive processes. So we've seen examples. A school district for a library puts out a bid to supply broadband. It gets a bid from an incumbent provider whose network is already built. It gets a bid from somebody who wants to lay fiber. Amortized as E-Rate does, the cost of the special construction, that's the term for the new fiber, is lower. So —
Christopher Mitchell: Which seems crazy.
Jon Sallet: But to call that overbuilding would be to eliminate the cheapest option that uses the fewest taxpayer dollars. We don't think that makes sense. We think of it as the most cost effective solution. The question is what benefits tax payers and schools and libraries, and special construction, that's the way the FCC's modernization orders were written. That's the way they ought to be implemented to support that kind of new fiber.
Christopher Mitchell: So as we move into competition, let me just start by asking you to tell me generally what it's about, and I think I'm going to want to focus on a narrower part of it than what most of it is.
Jon Sallet: Well let's take it this way: there's relatively little competition for fixed broadband at today's speeds at a hundred megs down. This is the FCC data and we can talk the problems with the FCC data, but I'm gonna use it because it's what we have right now. At 100 down, 10 up, 71 percent of the country has either no choices, that is to say a monopoly, or only one choice, that is to say a duopoly. That's extremely limited competition, right? Think about it in other aspects. The Justice Department this year told us that it wouldn't allow a four to three merger in the mobile telecommunication sector unless there was a fourth competitor to come in. So people can debate the efficacy of the remedy, but the proposition was the Justice Department didn't think three was enough.
Christopher Mitchell: Sure.
Jon Sallet: But in most parts of the country, and I think it's disproportionately rural, people have one or two providers. That's extremely limited competition, and that's the backdrop against which we discuss a competition agenda.
Christopher Mitchell: So what can we do about it?
Jon Sallet: I think what we can do is to incent more entry. I think that's the best answer. I think the more the merrier, and why is that? Because if there's new entry, then competition can do a competition always does. It drives companies to do a better job. When a maverick enters in a city — you've seen this Chris, you've written about this a lot — what happens? The people who sign up to a new service that's cheaper or better or both, they're better off. But oftentimes, the people who stay with the incumbents are better off because it's now competition and the incumbents have to respond — that's great. That's great because people are getting advantages. There's a variety of different ways to incentivize new competition, and we go through a variety of different models because not everything will work in every place. And there's not a one size fits all, but the goal is the same: to promote competition.
Christopher Mitchell: Now, when we talk about promoting competition, and this is a question that I just asked you at lunch — for 23 years, I feel like government has said we're getting rid of barriers to entry. It doesn't seem to have resulted in enough competition. I want to give credit to the fact that we do have many more choices. You know, broadband over power lines didn't work out, satellite hasn't really worked out, but fundamentally we do have at least some competition in a fair amount of places. And we all want to do better. And then, a lot of our — we talk about fixed ignoring mobile, which is what people who I often disagree with will say is another form of competition, and I'll say that there are some lifestyles in which people can live off of a mobile only connection that's uncapped as long as it involves untethering — involves tethering rather. And I think it's important to give value to that, but for most of us it doesn't feel like there's enough competition from just removing barriers to entry. So have we not removed enough barriers to entry, or do we need to do something else?
Jon Sallet: I think we need to do two things. I think there are barriers that still need to be removed. I was at the FCC when we issued an order that got struck down, and the order was when I was general counsel to preempt state laws that limited the ability of municipalities to provide broadband.
Christopher Mitchell: Well, who told you that was a good idea?
Jon Sallet: I'll tell you exactly where it came from. We got an order on net neutrality, which threw out the earlier rules, but in a dissent, one of the judges from the District of Columbia circuit said, you know, Section 706 gives authority to the FCC. For example, it could preempt this kind of limitation on competition.
Christopher Mitchell: I believe they called it paradigmatic.
Jon Sallet: Yes, and Chairman Wheeler saw that, and he said, "Well, let's see if we can promote competition." Now we issued an order, and it got struck down by a Court of Appeals. But it taught us about what the benefits of municipal broadband was, focusing on Chattanooga, Tennessee, and Wilson, North Carolina, but not limited to them. Today, there's 19 states that limit municipal competition. Those states we think should repeal those laws, and we want to be careful here. We're not saying every municipality should go into the business. We're not saying that if it wants to promote competition, it needs to do it through its own wholly owned network as opposed to private players. But we think this is the place where experimentation needs to happen because this is how we'll learn, and it's how local circumstances can be improved. So there is an element of removing barriers, but there's also more.
Christopher Mitchell: And that's the first one that you noted, and I don't want to spend too much time on that because if there's any audience that already knows my position on it, it's probably the people who are listening. So what else can be done?
Jon Sallet: Well, I think we can do more work at promoting different forms of competition at the federal and state and local levels. So at the federal level, there's a proceeding going on in which I hope the FCC abolishes exclusivity in multidwelling units, or to speak English, apartment buildings. Right? Because right now an apartment building owner can give one provider exclusive access to the building, and people inside the building can't choose another provider. There's something like a quarter of America's population lives in multidwelling units or similar. That by itself would be an important step.
Christopher Mitchell: And so just to — I think this is an important point, and I want to clarify because the FCC has already ruled that exclusivity contracts cannot be enforced, which doesn't mean it can't happen. It just means it's up to the landlord or the manager of the building how they want to manage it. There is no positive right for a tenant to have competition.
Jon Sallet: Yes, and we should make clear that these kinds of contracts should not be able to limit a consumer's choice. And you wrote about an experiment in San Francisco with the city housing agency, if I recall, and a new broadband provider that brought in better broadband, cheaper broadband to housing units, so I think that's a way to do it. Secondly, let's encourage private participation in any way we can. Any way we can is an overstatement — through good policies, right?
Christopher Mitchell: Through any means necessary. Any at all.
Jon Sallet: You know, I mean, we want local communities to be able to look out for the benefit of their citizens, but we now have a couple of fixed wireless providers, for example, on different coasts I think who are offering urban areas — it's not a solution everywhere perhaps — but urban areas, new forms of competition. This is a great thing. And can I go back to an earlier point?
Christopher Mitchell: Yeah.
Jon Sallet: I said that I think when the federal government invests lots of, lots of money, it needs to go to 100/100 networks because they need to be scalable and fit for the future, but when it comes to competition, we should have everything be an experiment. There will be some people for whom low speeds are what they want, right? There's different kinds of users, different ways that competition can push incumbents and new entrants. We really want many choices, so fixed wireless in some places —
Christopher Mitchell: Right, I just want to clarify because you're putting that thought right after the urban fixed wireless. It's also the case that the urban fixed wireless business model, which often but not always depends on focus on these multi-tenant buildings, is offering hundreds of Megabits per second symmetrical. However, it's not apparently economical in most areas for single family homes for that level of service.
Jon Sallet: We don't know that yet, but you're right. The service that I've seen — and I've seen service, correct me if I've got it wrong, but I think there's 200/200 fixed wireless service being offered in some urban areas
Christopher Mitchell: I think Common is doing that in the Bay area.
Jon Sallet: Yeah. And then there's all sorts of different public-private collaborations, and this is a really fruitful area. It brings in private dollars, private investment to support new entry, but communities are working in different ways. In our report we talk about Lawrence, Kansas, which has a broadband provider that with my accent is hard to pronounce, but it's called Wicked Broadband, that has expanded from some locations to residential. We talk about Champaign and Urbana, Illinois, which partnered with the University of Illinois and then a private company to expand fiber. We talk about Westminster, Maryland, which won an award because of its work with a private Internet provider. A variety of different ways — and there's many more: Ammon, Idaho, for example. What's really vibrant right now and what you write about is the different ways that communities are thinking about how to incent private sector entry, and we haven't even started to talk about rural electric co-ops.
Christopher Mitchell: Yes, which again is a frequent guest of the show. So this is where I really want to — the part that I feel like is the most revolutionary about this is what we're coming to. And you mentioned it in terms of the E-Rate: what is the best use of taxpayer dollars?
Jon Sallet: Yes.
Christopher Mitchell: One of the reasons I like this report so much and the way you frame things is that even I, someone who thinks about this a lot and who I think a lot of people think is as pro-muni as possible, you know, I often think also in terms of what's fair for the incumbents. And is it fair for local government to incent new competition, and under what circumstances is that fair? And I think your framework is different, which is not to say what's best for everyone and we give the special favor to the incumbents, but rather what is the best return on taxpayer dollars?
Jon Sallet: Yeah. What's the best social return on investment? Because competition is designed to serve consumers. It's not designed to protect a particular competitor or not. It doesn't mean that anybody should be subject to unfair competition, right? That's part of preserving competition. But it does mean that the way we think about it is — and I say this in the speech — it's not about counting the number of networks. It's about counting the dollars or the benefits that will come to consumers. What we say is that policymakers should consider the social return from broadband investment, and that includes not just the return to a municipality that may have to spend money, but what the community gets at large. Here's the economic principle — we're all familiar with — broadband creates externalities. Right? Positive externalities. There's commentary about negative externalities but let's concentrate on the positive. Positive externalities don't flow always or completely to the people who are operating the networks, right? People get better jobs. That's a positive externality. People get better healthcare. People get better education. Climate change is dealt with in a more effective way. These are all positive externalities. When governments are thinking about this issue, it should think about all the players in the system, of course including the incumbents but also the challengers and first and foremost the people in the community, to see how and whether they will benefit from a particular governmental action. I think it's a fundamental way of thinking about the issue.
Christopher Mitchell: This gets back to the rural deployment issue because one of the challenges of developing programs to subsidize rural access — I think a lot of the overhead actually goes into this question of, well, how do we know we're not accidentally creating competition with this money? Because it would be really bad if we created competition with this money when we're supposed to be focused on these people who have no broadband today.
Jon Sallet: Yes, I talked about that today. Obviously, it's sensible to have the first priority of spending go to places where there's no broadband. But right now, I think there's too much limit in the name of overbuilding. Overbuilding is just competition, so let's talk about this. For example, there's a current USDA program, the ReConnect program that doesn't provide grant dollars in any place that has more than 10/1 service, but I talked to somebody who lives in a rural place that has 15/2 service and she feels caught in a trap: too much bandwidth to be eligible for reconnect, but not enough to even meet today's FCC definition of broadband. So the real question is, if we're structuring a major effort, can we have funding — some funding, not the highest priority funding perhaps — go to areas who do not have future-proof scalable networks that are going to serve their consumers effectively for the next decade? I think the answer to that should be yes. I think the social return from investment in a place that gets 15/2 is going to be positive.
Christopher Mitchell: Well, that's something that I've long agreed with, so I'm not even going to try to play devil's advocate there. Instead, I want to reserve the last question for a bit of a curve ball, which is that we've been talking about competition and I often talk about competition. There are people — and I think I used to be — I know that I used to be among them. I feel like my thinking has changed a bit — people who say this is a natural monopoly. Fiber is a natural monopoly. This talk about competition is fanciful, it's ridiculous. And frankly what we just need is a good provider, one good provider doing fiber, and the job is over. And I'm curious how you react to that.
Jon Sallet: After I left the Clinton administration, I went to work for MCI. The old — for the people who are listening to you that remember the following term, long distance.
Christopher Mitchell: Right.
Jon Sallet: Right? It was a feisty company. It was created to take on the big incumbents.
Christopher Mitchell: Well, and just to pause, that company led to all kinds of people who came out of there doing really interesting things with great mindsets, maverick ideas, disrupting industries. Just a gold mine of people came out of there.
Jon Sallet: Right, and I met my wife there.
Christopher Mitchell: Well, there you go.
Jon Sallet: So, I don't think these are natural monopolies. I think it's new technologies, new ways of lowering costs — open middle miles, for example. Government builds middle mile, lowers the cost of investment, but doesn't operate as a last mile provider. I think bringing down those kind of barriers can incentivize greater competition, and I think we ought to do everything we can to prove that proposition.
Christopher Mitchell: Is there anything else that you want to say about this report before we end this interview?
Jon Sallet: Just one thing. We said when we put out the report earlier today that it's the beginning of a discussion. It's not the end of a discussion. We want to hear from people over the next year. We're gonna do blog articles, we're going to talk to people, go to conferences, and then a year from now, in October 2020, we're going to reissue our recommendations. We hope they are improved and improved by what we hear in the year to come. So we want to emphasize we are offering thoughts, but we think our work is really just beginning. And we're grateful to you and to other people who've advised us and with whom we will continue to talk during the year ahead.
Christopher Mitchell: Great. Well thank you so much for this interview and thank you for this wonderful collection of work.
Jon Sallet: Thank you Chris.
Lisa Gonzalez: That was Christopher with Adrianne Furniss and Jon Sallet from the Benton Institute for Broadband and Society. We have transcripts for this and other podcasts available at muninetworks.org.broadbandbits. Email us at firstname.lastname@example.org with your ideas for the show. Follow Chris on Twitter. His handle is @communitynets. Follow muninetworks.org stories on Twitter. The handle is @muninetworks. Subscribe to this podcast and the other podcasts from ILSR, Building Local Power and the Local Energy Rules podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter at ilsr.org. While you're there, please take a moment to donate. Your support in any amount helps keep us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thank you for listening to episode 381 of the Community Broadband Bits podcast.
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