Fast, affordable Internet access for all.
What Can We Expect to See in 2023? - Episode 534 of the Community Broadband Bits Podcast
This week on the podcast, Christopher is joined by returning guest Blair Levin. Levin has served as former chief of staff to FCC Chair Reed Hundt as well as executive director of the National Broadband Plan (2009-2010). Nowadays, he's a nonresident senior fellow at Brookings, and joins Christopher to unpack all that we might expect to see at play over the coming year. The show covers a lot of ground, from the renomination of Gigi Sohn to the FCC and the issues likely brought by a complete commission, to how much impact (and where) BEAD will have, to the real benefits and obvious weak spots in the Affordable Connectivity Program, to the upcoming battle between DISH, the cable monopolies, and the fixed wireless offerings from the mobile providers, and much more.
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Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Blair Levin (00:07):
Our problem is how do we get low income people that have the same access to education, healthcare, public safety, job training, et cetera. And if some companies profit from it, I That's okay. We should focus on what problem are we trying to solve and then solve it.
Christopher Mitchell (00:23):
Welcome to another episode of the Community Broadband Bits podcast. First one of the new year 2023, which I gotta say when my tab crashed this morning and the paper I was working on felt lo like the old year. This is Christopher Mitchell at the Institute for a Local Self-Reliance. And I'm here today to talk about some big themes with Blair Levin, the former executive director for the of the National Broadband Plan for the United States of America, an equity analyst on telecom policy, and a non-resident fellow at Brookings, among other things. Welcome back, Blair.
Blair Levin (00:58):
Well, thank you very much and happy New Year to you and to all your listeners.
Christopher Mitchell (01:02):
I I, I was excited when you said that you'd want to join us to talk about some of these big topics that are coming up. I feel like now is a really good time to talk about some of the things that I think are important that people might not realize are gonna be a big deal both this year and in future years. I think a lot of us have been focused on the federal government and a few programs in particular, but there's other things going on. You watch them on a regular basis. and for people who aren't familiar, I feel like your name has been out there as someone who is frequently quoted, a person that people like me often turn to for advice and context. you had been the the federal, the Federal Communications Commission. You were the chief
Blair Levin (01:43):
Of Staff. Chief staff in the nineties. Yeah.
Christopher Mitchell (01:45):
Right. Chief of staff. And so you, you have a good sense of how these things work and and where things are going. someone who I think has a keen appreciation of the power of markets and the power of government to shape things within them. you know, you and I, I think we, we disagree less than we pretend we do sometimes, but where we do, it's always fun
Blair Levin (02:07):
<laugh> that that's probably true. I'll, I'll, I'll simply say that having done equity analysis for, you know, roughly speaking 20 years it always amuses me when people say things like, you know, you can't predict the future because there are a lot of people who are in the business of doing exactly that <laugh>. And a lot of people make capital plans based on their ability to see the future. But of course, the other thing that Wall Street teaches you is you can get it wrong. And I'll, I'll give you my best use of what I think is gonna happen in the future, but there's always surprises,
Christopher Mitchell (02:42):
You know, as someone who reads a fair number of your notes. Whenever I get a chance, I'll say that one of the themes that I see is calm down.
Blair Levin (02:52):
Christopher Mitchell (02:54):
Would say that's accurate. Yeah,
Blair Levin (02:56):
I, I I think that's right. It was, it was really interesting. After the 2020 election there were a number of shall we say Republican governmental types who were telling wall Street types, run for the hills, sell everything. They're coming after you, they're going to kill you <laugh>, your stocks are going to go in the toilet. And in that context, yeah, I think calm down was appropriate. You know if I'd been really smart, I would've said inflation is coming. <laugh>, you know, at the beginning of last year, inflation is coming run for the hills. Cuz it was a, it was a tough year for everybody. And the i p stocks got hurt. They got hurt further reasons too. Yeah. Government tends to move slowly, which is a reason to slow down, but the government can definitely have some very big impacts.
Christopher Mitchell (03:44):
Sure. And I think there are those who would say that people like me were gonna come to power and nationalize everything. And it's frankly, a misunderstanding of what a lot of people want to do. not that there are some people that wanna nationalize everything, but frankly, a lot of the policies that we want to see enacted will not lead to the immediate downfall of the big cable. And telephone monopolies a word that you probably wouldn't even agree with me using <laugh>. Well I, yeah, I wouldn't, but, but as you and I discussed before, there's certainly a lot of market dominance. And these are relatively, these are hard markets to get really competitive forces because you have high capital expenses, low incremental costs. Those, those are traditionally markets where you don't have a large number of competitors. On the other hand, the really, the big story among ISPs in the last year was seeing fixed wireless start to take some market share from traditional wire line what you call monopolies, I would just say wire line players. And I, you know, the, the investment community didn't freak out. it's not like Tesla, which has lost some 70% of its value, but there were definitely losses. And the, the big question on Wall Street is how does that taking of market share by fixed wireless continue? Does it go up or does it start to plateau? And how deep and what are the price cuts? So yeah, those are the issues that the market is constantly dealing with that, by the way, I hear almost no discussion of in Washington DC
And, and as someone who I think may be fairly and unfairly depending on the context accused of oversimplifying some of the wired versus wireless stuff I, I do, it is interesting to me how people do kind of gloss over that there are such situations in which wireless is better. There are situations in which wireless I think is not competitive. There are timeframes. There's all kinds of things that we can, we can talk about on that. to, to just hit a, hit something, put a fine point on something that you noted in the history of Comcast offering broadband. It had never posted a quarter where it had not gained customers. Right. And that happened last year. So that was pretty remarkable. I, you, and you know, and I, you're, you are of a passion for making sure that people are well connected in both rural and urban areas.
I think sometimes people like to take your words and twist them into other things when you're talking about what a good strategy is for that. But I'll say that having known you for a lot of years, that I've, I've seen your passion for that. I feel like it's interesting when we are planning for this show, you feel like the dish build out is one of the most important things that'll be happening in the next year. And it's kind of surprising to me as someone who is focused on how we can get more wires to more homes. so, so make the case to me that I should be interested in, in how, whether dish sort of fails in the way that Carl Botie and other people are expecting it to, or whether it's gonna succeed in the way that they've told the courts and the executive agencies that are in charge of, of mergers that they will succeed.
Blair Levin (06:56):
Yeah. Look, I, I think the dish bill, that is the single most important development that's likely to occur in 2023. and, and I would articulate it this way, and again, I I I come from the perspective that what matters is faster, cheaper, better. That is to say, what are the things are gonna happen that either the result in communication meaning faster, better, or cheaper. And if you're doing those things, they're important. And if you're not doing those things, they might be important, but they, they may not be. most of the policy discussion you and I are involved in revolves around things like the bead program which is a very large and very important program. I'm very glad Congress passed it in that sense. Spends 42.5 billion of deploying rural broadband networks. And there's a bunch of other money going into that. But remember the rural networks that we're talking about, the federal government financing are gonna reach approximately 10 to 20% of the population.
It, and it won't really affect the others that much other than what you might think of as national solidarity and social justice, which are very important and unformed. But I'm just saying something really gonna affect the lives of those who are currently connected. The Dish build out, on the other hand, will, number one, supposed to reach 70% of the population. It's a new entrant, a new opportunity for a much larger group. Number two, when you have a fourth competitor and they'll be the fourth competitor in the wireless market, you tend to see price competition in a way you don't see with three, and you almost never see with two. Right? And so there's a real price pos it, it could cause a price deflation across the entire sector. I'm not saying it's gonna be huge, but it does have that potential. Also. It's going to be a whole, they're gonna do wholesale offerings that could create all kinds of different interesting opportunities in terms of bundles and products and things like that. So,
Christopher Mitchell (08:50):
And you're talking about real price declines, not like this US telecom, you squint your eyes and black out for a little bit. You can sort of fake that prices have gone down on broadband.
Blair Levin (09:00):
Look, what US Telecom says is that if you look at it a per bit basis and, and back, you know, back in the old days, cable did it on a per channel basis and all that kind of stuff. But, but I'm, yes, I'm talking about people actually spending less per month as a result of what Dish is, whether or not Dish is their provider. A a third thing is it affects technology cuz they're using a different technology. Something called open ran, open Radio access networks, if that works, that could affect how the rest of 5G is rolled out and more importantly how 6 G is rolled out. So the Dish network is actually a bigger thing. But here's the important thing that I think people miss. If I'm right, it definitely affects policy because if you have four wireless providers offering a broadband service, that's actually faster than what Wired was doing a few years, just a few years ago, that's a big deal. If I'm wrong, it also is a big deal because that, you know, there's a lot of policy that's dependent on thinking that we have competitive markets. If we end up saying, oh my God, dish failed, one of the top three is just gonna have to buy 'em, there's no hope for a fourth, well then that changes policy. So from the perspective of let's say 2030, what happens in 2023 in Dish is gonna be very important for how we, how we are connecting for the rest of this decade.
Christopher Mitchell (10:22):
And there's one additional factor that is a, it's a kind of a joke that Travis, my co-host for the Connect This show throws out, which is that if you have a fourth wireless in a lot of these neighborhoods, all of the wireless gets better because it's more distributed. Every time you build a fiber network and take customers off of Charter or Comcast, their network remarkably improves because you're removing congestion. And so it actually, perversely wireless will take more homes if there's more providers because they will have more traffic availability or they'll have more, less congestion to contend with. I presumably, well,
Blair Levin (10:59):
What he's saying is actually being reflected in the market in, in a different way. But it's the same phenomenon, which is T-Mobile and AT&T are both engaging in a variety of, of what you might say explorations to build out fiber in lots more places, really for the purpose of helping their wireless network, but also for the purpose of offering a, a wired service. So the relationship, the convergence of wired and wireless, which we've been talking about for many, many years is accelerating. and he's a hundred percent right. The more we get wires out there, the the better the wireless service will be. Now again, the bead program doesn't really affect that because they're, they're building out to areas where you don't have it today. What he's talking about is building it out in the denser areas.
Christopher Mitchell (11:52):
Right? T-Mobile has like, I think 2 million home subscribers Right? Said that in that neighborhood, I think. Is that right?
Blair Levin (11:59):
I actually don't know the number. I think I, I I think that's about right. Yeah.
Christopher Mitchell (12:02):
Let's assume it's right for a second. <laugh>, I feel like it's both kind of a small number based on what we were told to expect with 5G and the hype back in the day. But also it's a lot like, and, and it's growing. And so you have fixed wireless, you have the, this, which is also, this is, it gets in my head a little bit, it's whether we're this is mobile or fixed wireless, it's, it's that is technically a fixed wireless service that seems to be using the same resources as the mobile wireless network. but my, my point is just that these things can change somewhat quickly and and so it's gonna be an interesting, I think, somewhat dynamic environment.
Blair Levin (12:38):
If you and I do this show on, I'm just gonna call it 2025, but I'm not gonna be a hundred percent right. What I might be telling you is one of the big things that might happen this year is that charter and T-Mobile may try to merge. And the reason I say that is eventually there will be a time when a large mobile company and a large cable company do something that looks like a merger, right? Can't predict when, can't predict exactly who, but it just kind of makes a lot of sense. And then the antitrust regulators have a really interesting problem. If you say to them, no, you can't move, merge because you're actually competitors, then their answer will be, well, if that's true, then the mar every market that we're in, every geographic market we're in already has five other competitors. So why can't you let us merge? On the other hand, if you say you're actually not competitors, then you go, well then why can't we merge? Right? So it's a, it's a tricky thing. but look, the facts will change. we'll, we'll see what happens. But that's, that's certainly something that is a safe prediction for some time this decade.
Christopher Mitchell (13:45):
Yes. And I, I, I love those kinds of paradoxes and it makes me make sure that I try not to get too caught up in the talking points and I come back every now and then to hit the, the core assumptions and beliefs. Yeah. let me ask you, what is gonna be, what people are gonna be talking about in 2030 related to communications networks? Cuz I don't think it's gonna be 6g.
Blair Levin (14:06):
I I don't think it's gonna be 6g. I, I'll I'll tell you I have a very strong opinion on this that <laugh>, like all my opinions may be wrong, but this one just seems to be so obvious. And I'm gonna start from the premise that in my two stints in the government, I found that maybe the most valuable things I worked on were avoiding the problems that no one will ever know we avoided as opposed to solving a problem that was a crisis right in front of us, upstream and upstream solutions. The dream of all the wonks
<laugh>, right? Right. So here's the problem. We know it's going to exist. It involves telecommunications and we are doing nothing about it. And that is the problem of the social costs of online realtime gambling. It's addictive. It's going to happen. It's, you know, I don't do it, but there are lots of people who do, and you're gonna have a whole cadre of, I I'm gonna be stereotypical here, but some of the studies suggest this young men, you know, between the ages of 18 and 30, who are not gonna have the impulse control to stop gambling and they're gonna run up huge debts. And look, it's, it's one thing to bet in Vegas where, you know, the house has the odds, but if you think, you know who's, you know, whether the quarterback's about to throw a pass, y you're gonna wanna bet on that. And that's a big problem. And the industry, which includes the phone manufacturers, that is to say Android and, and, and Apple as well as the carriers should be thinking about how we avoid a massive social problem in the years to come. But as far as I can tell, that's not what's going on. Everyone's trying to figure out how to get the high economic ground as well. They should. You, I mean, it's going to be a huge business. Whatever the Super Bowl advertising was, the gambling on it will be much, much bigger.
Christopher Mitchell (15:59):
Let, let's pause for a second to let me bring on good. On a side, an alley that I think connects <laugh>, which is, I'm reading a, a fascinating book. Are you familiar with this? The dawn of everything by Graeber? Yes.
Blair Levin (16:11):
Yes. As a matter of fact, I, I read the dawn of everything because my son Jacob who you know, of course, recommended that I read it and I found it really useful. And I'm gonna tell you something really quick. There was something that he talked about, about how different tribes reacted in opposition to each other, and they used a certain word. and I used it in one of my notes to describe what the states, the blue states and the red states, particularly California and Florida are now doing. And I got a note from an FCC commissioner really going into the details of like, <laugh>. It was really, it was quite amusing. So it's a, it's a wa the book is too long, but it's a great book.
Christopher Mitchell (16:52):
Yes. And, and this is actually right where I am in the book. And I am someone that has been quite ignorant of of what American tribes were doing when the continent was beginning to be colonized. And reading the book was really kind of fascinating to get a sense of how the society were set up in different tribes. You know, there's different arrangements and, but specifically around the Iroquois, and then getting a sense of, of alcohol being introduced into that and how alcohol, and this is something I know even less about, but as I, you know, I have a sense of, of of general history that alcohol really was quite ruinous for a lot of a lot of tribes. And I feel like we are there right now, and I feel like we are a population that has social media and soon the no limits, no friction sports betting and things like that.
And I feel like it is tearing through our society. And I take, Jonathan Haidt, I think is mostly ignored by people on the left. And I think it's really the wrong thing to be doing. His, his look at how people since 2012, basically the particularly teens that are, that have been raised during that time, how they've been affected and the way our society has been changing in the past 10 years, I feel like this is doing much greater damage than anyone appreciates. And I don't wanna blame the internet, but like the part I sort of wonder sometimes about the culpability of people like you and I.
Blair Levin (18:17):
Yeah, no, look, I, I think it's a really good point. I, I would note that Brendan FCC Commissioner, Brendan Carr as well as the likely incoming house Republican who will share a select committee on China, Mike Gallagher, have referred to TikTok as digital fentanyl. And I, I think that's a little bit strong, but nonetheless, there's a truth behind it. But the bigger truth is, if you think that's digital fentanyl, then why aren't you going after Instagram for what it does to the mental health of young men and women? But also, why aren't you going over online? Aren't you concerned about online real-time sports gambling? this is not just a TikTok problem. This is a social media problem. This is having those devices, which are fantastic and wonderful, but we ignore the problems at our peril. And my fear is we are ignoring them.
Christopher Mitchell (19:12):
Yes. So I wanna, I wanna get that this is not a, a show where we can specialize or spend a lot more time on that, but I think it's an issue, and I commend those who are doing the work down, reaching down into that and helping us to understand that and what a good policy response is in these, these situations. but I wanna ask, there's a, a major thing brewing. I feel like there's these court cases that are dealing with the Universal Service Fund and whether the way the f CCC deals with the universal service fund, which is to say that the FCC more or less has a powered attacks to achieve universal service. And it's, and it's basically allows a private company to, to do a lot of the work around that, the Universal Service administration company, usac. And as I've been watching the court cases, I feel like it doesn't look like we're heading to a situation where the courts are gonna say that the FCC and USAC have to be shut down, but that is still in the air. It's, is that your read of it? The,
Blair Levin (20:09):
The, the current universal service program has three different problems. I think we ought to be clear about what those are. One is the legal problem. There's a challenge in the fifth, sixth, and 11 circuit in which people are arguing what you just said, which is the FCC is exceeding its taxing power. They make a number of different arguments, major question doctrine, delegation, doctrine, et cetera, et cetera. I think that there's a decent chance the fifth Circuit argument went very well for the fcc, but there's a decent, if you get the wrong panel they could shut down the universal service program, or at least say the FCC has only one more year, and then it's gotta change it or whatever, and Congress should fix it, et cetera. So that's a legal challenge. And I'll simply say that there is a majority at the Supreme Court that wants to use the delegation doctrine to which, which basically says Congress can't delegate certain powers, or that the agency has gone beyond its delegated powers, et cetera that, that, that wants to essentially affect federal agencies and shut and, and, and very much limit them.
So I think that that is a distinct possibility, not a certainty, maybe not even a probability, but a distinct possibility. The the second thing is that the economic foundations of universal service, that fund that we are taxing essentially, or assessing that's going down and the needs are going up. So there's a big economic challenge, which the FCC has not yet addressed. There's a variety of different proposals, but the FCC actually doesn't have any rulemakings pending to address tho that that set of issues,
Christopher Mitchell (21:44):
And this is specifically so people are aware, there's four programs within universal service. I'm not gonna go over them. People can, can dig it out if they're interested. But basically what's important to know is that when it comes to getting subsidies out for low income folks or some rural broadband expansion money, that money doesn't have to be appropriated by Congress. The FCC has been able to raise that itself, and this may or may not be able to continue. Whether or not that's because of legal challenge or because it's been paid for by taxing telephone conversations, more or less in ways that is unfair and falls on a smaller and smaller number of providers that are doing that, something has to be fixed, I feel like for three or four years, and even longer, people have been saying, well, we gotta fix it. And, and yet, as you said this fcc, like the last one I think is just keep whistling past the graveyard, is the is the word that, or the phrase that comes to mind.
Blair Levin (22:37):
So what, what you were just talking about is that we assess what's called the contribution factor on certain kinds of conversations. This one, for example, is not being assessed, but if we were on the phone and talking, it would be the former chair Ajit Pie. It basically doubled during his watch. It doubled in four years, but the first time he really talked about it was on his way out to say, oh, by the way, that that is a problem. <laugh>, have a nice day. It is something which needs to be done, but it's not a crisis that is right at our doorstep, and therefore everybody seems to be willing to kick it down the road eventually. That's a problem that has to be fixed. and then the third problem goes right to the low income one, the federal government and Congress is funding something called the Affordable Connectivity Program.
It was through the infrastructure bill Congress made what I believe to be a correct finding, that you cannot participate in the, you cannot fully participate in the economy or society without access to broadband. So we are going to subsidize low income people, but that money's gonna run out probably in the second quarter of next year, not this year. And what is the FCC gonna do? No one is gonna be happy with the notion. Right now we have 15 million homes utilizing it. The number's gonna go up. That means, you know, I don't know how many people are each home, but tens of millions of Americans could face the threat of losing their broadband connectivity in the spring of 2024. It would be nice to solve the problem before that <laugh>. There are various ways to do it, but as far as I can tell, that's not on anybody's radar screen or agenda except in the most peripheral way.
Christopher Mitchell (24:20):
Right? And I think that's spending on the order of four to 5 billion a year right now. which is to say I actually think it's an indictment of a failed market that we're having to put that much in, frankly, for as few as like 12 fif 13 million families, I think, that are using it right now. but at the same time, we don't wanna cut them off cold Turkey. We frankly need federal Communications Commission and Congress to take this seriously and to basically do more work around this bead. As you've said earlier, bead is not going to fix this problem. <laugh>. Yeah. and if anything, there's
Blair Levin (24:58):
A really interesting relationship between BEAD and this problem that I think is also almost entirely ignored at the federal
Christopher Mitchell (25:06):
Can, I guess what it is,
Blair Levin (25:07):
Christopher Mitchell (25:08):
Can I guess what it is? Sure. Is it that a lot of companies are building these networks, assuming that they're gonna have the take rates based on the bead subsidy, making it more available to folks. And if bead runs out, a lot of these networks won't be able to perform financially under the assumptions that they've been made. they've made
Blair Levin (25:26):
It's very, yeah, it's very close to that. But your point is right, which is if you assume that you're gonna have a low income subsidy, the economics of the network are much better. The BEAT program does not fund the total cost of construction. It funds the difference between what the private market would pay and what it costs. And if you assume that you're gonna have, you know, this 30% low income having access to 30 bucks a month, well then it's you, the funding gap is a lot less. Unfortunately. I think the, the greater truth is the companies should assume it's not gonna continue. Because if you're wrong, you make a, you make a financial mistake you can never recover from, and, and if it turns out you're right, then you're okay. And if it turns out you, you get the bid, even though you assume that it would, the funding wouldn't continue, well then it's just gravy for you. Right? So whenever you have what is essentially an auction, a competitive bid, but everybody's guessing about the meaning <laugh> of the future, that's, that's a very problematic way of doing a competitive grant program. But as far as I can tell, people are not focused on them.
Christopher Mitchell (26:38):
I think you're right. Although I think the signs we're seeing is that public interest groups are aligned with the big cable and telephone companies in lobbying to extend that program. Yes. I think many of us in the public interest community want to see a better solution rather than just an indefinite extension of billions of dollars going to Comcast and at and t as they're engaging in share buybacks, but <laugh>. but nonetheless, in the short term, we are all in favor of expanding it. So hopefully that will help to to make sure Congress doesn't wait too long to do anything so that it runs out.
Blair Levin (27:12):
It is, to me, the single most important policy issue because it affects the most people. And Congress is a hundred percent right. You can't really participate in the economy. You can't get an education, you can't have access to healthcare. That's good. Un unless you have it. And it's hard for low income folks. So it's a good program.
Christopher Mitchell (27:32):
So if we jump back two years, I don't think we would've anticipated that we would be questioning whether or not the the, the, the third vote for the president on the FCC <laugh> will still be up in the air. But when this show airs I believe we both think Gigi so will be renominated and moving forward.
Blair Levin (27:54):
Well, I no, as of today, we know she will be renominated. We
Christopher Mitchell (27:59):
Hadn't, that's the part I hadn't seen yet to make sure it was verified. So yes,
Blair Levin (28:04):
I'm happy to be your source for that.
Christopher Mitchell (28:06):
Well, terrific. So so that is happening. Yeah. and I think is is crucial. I mean, I think I, you know, I'll, I'll say candidly that I, I feel both that Jessica has gotten a fair amount done with a difficult two, two commission. And also that this is an embarrassment. The FCC is like the maps the digital discrimination, like a lot of this stuff is just like, this is not an agenda that the Biden administration can be proud of f from the fcc. So I'm very excited about Gigi moving forward. I am deeply concerned that if the industry and, and by industry, I don't just mean the broadband, but others that are opposed to Gigi are able to derail her. I don't really know what to expect, frankly from an FCC at all under in the next two years. so what's happening with Gigi that I'm, that I missed from that short encapsulation?
Blair Levin (28:57):
well, number one as we record this, it's the first day of new Congress, the Wall Street Journal earlier today reported correctly that Biden is renominated a number of different people that he had previously nominated. What I think is I in, in, in including Gigi. Gigi has two advantages in this Congress that she did not have before. Number one, she's got a cushion. she can afford to lose one Democrat. She can't afford to lose anymore. I don't think any Republicans are gonna vote for, but I think she's got a good chance of getting the necessary Democratic votes. But the second one, which is just as important actually, is in the last Congress, Chuck Schumer had to spend a lot of time, and it's not always time you see in the Senate floor working on legislation. And really the, the record of the last Congress and legislation is quite remarkable.
Christopher Mitchell (29:47):
Blair Levin (29:48):
Pelosi, Schumer, and Biden all deserve a huge amount of credit,
Christopher Mitchell (29:50):
Deeply critical of Senator Schumer. I'm disappointed in the Biden administration, and when I look at the last year of the programs that were created and and done, there's a part of me that just wonders like, why am I so critical of the Biden administration? <laugh>, like, I mean, they, not, not so much on my issue, although certainly, you know, the, the investment in broadband is historic. I have plenty of things to complain about, but like, really what a, what a remarkable set of investments generational. And and so I don't wanna, I don't wanna bury that with the disappointment of other things here and there that I would've liked to have seen done differently.
Blair Levin (30:25):
Yeah. No, I mean, I think everybody feels the same way, but Ron Klain is chief staff truly be saying to you, yeah, Chris, why are you so critical, <laugh>? Anyway, but the, but the point is, nobody believes, nor should they believe that this Congress, particularly given what's gonna happen in the house nobody believes that any major legislation will pass. Well, Schumer knows that, and he's gonna focus on nominations and, you know, I think Gigi probably gets outta committee in January, and if he gets to the commission February, March, something like that. And yeah, I mean, I think that when you look at issues like net neutrality in individual discrimination she can play a big role. I think Gigi's biggest influence will be on something that we don't see yet, because it's usually something that comes up and her way of articulating it. You and I have known her a long time. She's very smart, she's very practical. you can agree and disagree on various points of view, but she certainly knows this stuff really well. And it's almost inevitable that every year something comes up that you don't anticipate. And her ability to articulate what needs to be done, I think will be very, very helpful.
Christopher Mitchell (31:33):
I will, I will say that it, it will not be price regulation
Blair Levin (31:38):
<laugh>. Yeah. It won't be price regulation,
Christopher Mitchell (31:40):
Although that's one of the reasons some people are opposing her, apparently. But I do not foresee Gigi leading a charge on price regulation.
Blair Levin (31:50):
No, I, I, I completely agree with you. Actually, in the summer of 2021, there was a rumor that came out that the White House was thinking of nominating her to be chair, and the, the i p stocks went down. And a lot of the investors who I talked to said, oh, we're all really concerned about price regulation. And I just said, you know, I, I won't go into everything that I said, but it basically was like, what are you talking about <laugh>? Like, what is your evidence for that?
Christopher Mitchell (32:19):
And I don't, I don't want to, I mean, I don't wanna laugh at people that want price regulation. I, I just think that you and I, without going into it, recognize that the structure of the United States would mean so many years of, of working on that, and then fighting in the courts about it. And it's so complicated for people who have looked at what happened under the cable regulation. we just don't think it's feasible. Even if everyone wanted to do it, it, it would be so incredibly difficult. So that's,
Blair Levin (32:47):
Yeah, when you had the advantage that you could look from the outside, I was at the FCC <laugh>. I still have scars in my back from that experience, but one of the things that taught me was, you, it's, you cannot price regulate a complex bundle of services. And everything in broadband now involves lots of different attributes. And so you can say, well, you just do this or you do that. But the truth is, you're doing 10 different things and you want the companies to offer different kinds of bundles to appeal to different kinds of populations that have different interests. You can't price regulate that.
Christopher Mitchell (33:18):
Yep. I wanted to talk about poll access. what do you see happening around poll access?
Blair Levin (33:25):
So in, in the spring, the FCC was doing, was starting a proceeding. There's been a lot of filings with it. it's really being pushed interestingly by the cable industry, and particularly charter because charter has an interest in building out its network to more rural areas, and they need access to poles. And it's a complicated thing because the polls are often owned by utilities, particularly power companies. Some of the co-ops, which while also wanna go into the broadband business, it's very complex because there are certain things like their replacement rules. Like if we have to put in a new poll, the new entrant has to pay for a hundred percent of the replacement or something like that. So there's a lot of different issues. I, I will just say, I, I think the FCC X on it this year, this is another issue where I think Gigi can have an impact.
And I don't know what direction she'd vote in. I'm just saying that if you have a three, two commission, the dynamics are very different cuz you don't essentially need everybody, you just need three. But look, the cable industry scored a huge victory in 1978 with what were called the Poll Attachment Rules led by their lobbyist to then young man named Tom Wheeler. It really helped make the cable industry a viable thing across the country. And I think it's been very, very good for American Communications, but it's not without its complexity, but I think it's particularly important for certain companies like Charter,
Christopher Mitchell (34:54):
Right? Who I would say basically won a bunch of art off awards and then looked around to say, how can we get everyone else to pay all of the costs of us building to these areas that we're, frankly, most of us are surprised Charter even bid on
Blair Levin (35:07):
<laugh>? Well, that, that would be a way of looking at it. Another way of looking at it is they bid on them with, with certain kinds of assumptions and expectations. And it's a lot like we were talking about before, with the Affordable Connectivity program. You have to make certain assumptions about what it will cost you. Sometimes that involves a policy. There are lots of other companies that do the same thing. The whole industry. It is a shared network. The entire industry is a shared network. And there in policy, you are constantly kind of refereeing debates between people saying, we're paying more than our fair share. You have this with the tech industry versus the ISPs. You have it with cable versus electric utilities. That is the purpose of the fcc. And they're supposed to be expert at refereeing those disputes. I sometimes worry that we're replacing expertise with kind of like political you know, just, just political interests, but, but whatever.
Christopher Mitchell (36:05):
I think your old boss said that people would always come to you and say, we're just looking for a, a, a level playing field.
Blair Levin (36:11):
He didn't believe really, it was a wonderful lobbyist who was, was very tough on us, but also very honest. He said, look, Blair, all I want is a level playing field where my team gets to run downhill. <laugh> not too much to ask <laugh>.
Christopher Mitchell (36:26):
And then that, and I didn't say his name, but Reid Hunt, who is the chair at the time in his book, he had referenced that once or twice as well, I think. Yes,
Blair Levin (36:33):
Christopher Mitchell (36:35):
digital discrimination. Yeah, I've I feel like I'm taking this, I, I'll just be candid. I I, I didn't have a lot of expectations. I am deeply concerned and, and for reasons similar to poll attachment, which is that I want one set of rules when a cable that I, when a company that I don't like is attaching to the, to the poles. And I want a different set of rules when I, when a company I do like is attaching to the polls digital discrimination, I feel the same way. I'm deeply concerned about, about the ability of big companies to avoid investing in low income areas. And I'm also concerned about build out requirements that will make small business models untenable. because there's a different situation when you have, not unlimited capital, but approaching unlimited capital versus when you're trying to get your 20,000 subscriber or something like that.
Blair Levin (37:24):
So what you're referring to is in the infrastructure bill where Congress said the FCC should run a proceeding to avoid, originally used the line or the word digital redlining, and then it switched to digital discrimination. and it said the FCC should a, define it but also figure out a way to make sure it doesn't happen though any company can use as a defense technical or economic feasibility. So that's the context that we're having this discussion in. The FCC is out with the rulemaking or a notice and, and, and getting people to put in things. As far as I can tell, there are three very different kinds of discrimination that people have level of concerns about the first exists because whereas the cable network is a shared network that was built out everywhere, the telephone network is fundamentally built kind of neighborhood.
The neighborhood. And so what happened was they built out the telephone companies build out their network, the cable companies build out their network to everybody. But now the telephone companies and then the cable companies upgrade to Dous and start off in broadband. So the online access that gave us AOL and all that, the telephone companies say, oh shoot, now we have to upgrade our networks. We're making so much money <laugh> by selling 2, 3, 4 lines to everybody. But now we're gonna do dsl, which they had had 20 years earlier. and then cable upgrades again. And then they start to do fiber in the mid two thousands, Verizon in particular. But they don't do it everywhere. They do it in the high income areas as you would. That's where the economic motive would be. And you do have situations where the wealthier suburbs would get fiber and the low income urban areas wouldn't.
And that's a problem. I think the market is actually solving that problem fairly significantly. And the reason it is, is about three or four years ago, the market shifted from thinking that DSL was fine. Don't invest in fiber to, oh my God, DSL is shrinking faster. If you wanna have a business forever, you have to build more fiber. Whether that's gonna hit every low income area, don't know something. It's certainly something to watch. But frankly, what the companies did then, I'm pretty sure is covered by that economic feasibility. You know, the, if the economics don't work, the economics don't work. Furthermore, I'm not sure the FCC can force any company to build in a particular area. So that's a, that's a problem. We'll see how it works out. But I'm, I think the market's moving faster than the government or policy to address that one.
Christopher Mitchell (40:03):
I am not as positive on that as you are. and this might be jumping ahead and if so, I'm sorry. And you might get to it like, but I feel like this gets into an issue of, of the way the network is operated as opposed to just whether the network is in the neighborhood or not. and so even if we have Verizon and at and t building out more in these low income neighborhoods, I'm not as sure that that solves as much of the problem as some people seem to think it might.
Blair Levin (40:29):
There's a lot of data here. I certainly agree that with Congress, that there should be an inquiry and we should know it. There's a lot of historical discrimination that comes out of, you know, it's not, I'm, I'm glad they changed the word redlining cuz redlining was actually a policy which overtly discriminated on the basis of race. I don't believe the phone companies have done that, cause I've not seen any evidence of that. But their build out reflected that prior history of discrimination in housing and in lending. So, you know, we have to deal with a lot of different histories. I think the FCC should be a repository of information about it. It should be studied anyway. The, the second, there's a question of pricing, and this shouldn't surprise anyone. Prices for the high end are lower in wealthier areas than they are in some low income areas because you have a fiber competing with cable for the high-end market. And so there's all kinds of promotional things. a third is customer service. Do people in higher income areas get their lines fixed faster and stuff like that? Look, the FCC is gonna go through all these things. we'll see whether that plays out from me personally, and I'm just wearing my policy hat here. I care much more about the low income benefit running out than I think that's a greater risk to more people than digital discrimination. But the record may prove me wrong in this,
Christopher Mitchell (41:57):
And this is where I, I want to see local governments taking this seriously and collecting data themselves, not assuming the FCC will put it all together. I think we've had too much of local governments hoping the federal government would figure this out, and particularly the fcc without it doing so. And I feel like if anything local governments should err on the side of collecting more data and getting going on it so they can actually have some longitudinal data as opposed to just some like snapshot and time data.
Blair Levin (42:27):
Yeah. What you're saying is actually really important for a reason that's often missed. There are three fundamental broadband problems, networks everywhere, everybody on 'em. How do we use 'em to improve how we deliver essential services? The, the federal government made a huge investment in the first, I think it's gonna solve the problem. We may be off by a couple of places, but fundamentally, we are now focused on that problem. We've talked about the low income subsidy that's designed to solve the second problem. it doesn't solve it entirely and we need it to be permanent. But the third is really where the joy is tho that's the fun part where you can improve outcomes in education, healthcare, public safety, job training, et cetera. Those are largely done by local governments. If, if, if a local government knew a hundred percent of its people were online, you could dramatically improve how that local government operates.
Christopher Mitchell (43:20):
Blair Levin (43:20):
That's great. And by the way, artificial intelligence, which will probably be the big tech story of this year, makes that also so much easier to do. There are a lot of problems with artificial intelligence. I'd hate to be a college professor trying to grade papers, you know, but there's a lot of upside to it. And local government should really capture that.
Christopher Mitchell (43:40):
Yes. And, and for that I feel like that's where we do need to see more significant investment in digital equity from the federal government, from states and from local governments. Like every level of government needs to take that more seriously to make sure that people have devices, people have the training. And then, like you said, I mean, in, in two years that might be a little bit premature, but in two years I feel like the federal government should be able to assume nearly everyone has a device. Nearly everyone has a connection. And nearly everyone can communicate using that no matter what language they're using. I mean, that's where the AI stuff comes in, right? The fact that like, government can instantly translate all of its stuff to any language. Well, that's amazing. And yeah, good <laugh>, like really result in improved services at lower costs.
Blair Levin (44:25):
Yeah, yeah. No, we did a lot in the national broadband plan about how you actually improved general government services. Other people have done a lot since then. You know, government is fundamentally in the information business and artificial intelligence dramatically changes that customer service for the government should be 24 7, that people are working jobs and they can only, you don't want them to have to go to the DMV or these other government offices and take off from their place of employment. They should be able to do it when they're at home at any hour.
Christopher Mitchell (44:57):
Yes. And, and the idea that like chat G p T four, which is supposed to be coming out next year, it'll be fascinating to see how government adopts it. And and this could be some very exciting times, but need to make sure we get all the other pieces right.
Blair Levin (45:11):
Everything you said just now is right, except for the fact that if we don't continue that subsidy for low income people, it could go horribly wrong.
Christopher Mitchell (45:19):
Right. And I think a conversation for future that I'll just, I'll, I'll note is that I think both you and I wanna make sure that that subsidy is successful, right? I mean, the cable and telephone companies, to their credit, thousands of them, I think something like that have come up with with low priced plans as well. Yeah. They're not just doing what we saw a little bit of with E B B, which was raising their prices and engaging in gimmicks to try to take more of that away. But yeah. I, I feel like we need to, we need to make sure that we are, if we're putting billions of dollars into these networks every year we need to make, we need to talk about how to efficiently do that rather than just cutting a check to those who are best at getting people to sign up for the government program. which is one of my things
Blair Levin (46:00):
Right now. No, I, I, I agree with you and hopefully that's something else the FCC is studying and course correcting. These programs are never easy. And you have to do the one thing I'll note when, when I was talking with people early on particularly my friends in the progressive community about the affordable connectivity program, and they would say, yeah, but you know, Comcast and 18 or at and t are gonna make all this money. And I, you know, my reaction is, okay, that's not our problem. Our problem is how do we get low income people that have the same access to education, healthcare, public safety, job training, et cetera. And if some companies profit from it, I That's okay.
Christopher Mitchell (46:37):
Yeah. I'm with
Blair Levin (46:37):
You, by the way, by way that's gonna happen. That happens in Medicaid,
Christopher Mitchell (46:41):
Blair Levin (46:42):
You know, it happens with the SNAP program. It happens anytime the government invests some money. Probably somebody makes money
Christopher Mitchell (46:49):
Blair Levin (46:50):
Now, should they make outrageous amounts and should we be efficient? Of course. Yeah. But we, we shouldn't get hung up too much. We should focus on what problem are we trying to solve and then solve it.
Christopher Mitchell (47:01):
Blair Levin (47:01):
Agree with you,
Christopher Mitchell (47:03):
And I think you'd agree with me, and I think you probably disagree with how we would get there, but my, what my biggest concern with ACP is not that Comcast or at and t make money, is that if we're gonna spend 50 or 60 billion over the next 10 years on subsidizing primarily urban connections, is what I'm thinking about. Although ACP certainly goes to many people in rural areas as well. A lot. Yeah. But if we're gonna spend on the order of, let's just say on the order of 40 or 50 billion over the next 10 years on Urban Connections, how can we spend that money in a way that results in more competition and not less is what I'm interested in. And I feel like that's where I would be a little bit more aggressive in tweaking the program or developing a new one rather than simply discounting you know, the the, the products of a, of a, what I would call is a failed market.
Blair Levin (47:50):
Yeah, no, look, I, it's interesting when the White House put up its proposal for the infrastructure bill, there was an FAQ and one of the questions related to low income subsidies, and it said that in the short term, we may have to rely on low income subsidies, but in the long term, we wanna have competitive markets drive prices down to where everyone can afford them. And I have to say, I think that does not, do not demonstrate an understanding of the market by competition. They meant fiber versus cable. Well, we have, you know, tens of millions of homes, I think the number's up to like 50 million, but I, I can't remember the exact number of homes where you have fiber, fiber competing with cable. And if you l i I can show you several studies that show you that low income adoption is exactly the same whether it's D S L competition or fiber. And the reason it's simple, you build fiber to compete for the higher end. that's, that's the way it works. Look, it's, it's not dissimilar to Medicaid or food, food stamps, the SNAP program in that if there's something that, if there's something we want everyone to have, it often is the case that we need to subsidize it for that low income population.
Christopher Mitchell (49:09):
Blair Levin (49:11):
I, I, I don't know of examples where you have more markets where suddenly the low income, you get to a level where there's a really a $10, you know, there are special programs for low income where you get $10, but not just competition.
Christopher Mitchell (49:26):
I agree with that. I, I think though the Biden administration was right and in its desire to lower prices for the vast majority of people who can afford the connections today. And I think that is a reasonable goal, although it will be incredibly challenging, particularly in a high inflationary environment. but I agree also, and I think that a lot of the folks who have done serious work on digital inclusion would say, we do not have any hope that competition will allow the lowest income, 20% of Americans to then afford a connection, absence, some subsidy. And so the question then in my mind is what subsidy can we craft to make sure that it is maximally effective at that point?
Blair Levin (50:08):
Yeah, I agree with that.
Christopher Mitchell (50:09):
Well, I could talk to you about a lot more, but I think you need to get out and walk your dog and <laugh>
Blair Levin (50:15):
<laugh>. Well, my dog, thank you. always great, great fun talking with you. And I really, your organization does great work. I hope everyone listening here appreciates how important your voice is but also important how the studies you do and all that other stuff to policy won. Cause I've been on the inside of, been on the outside. Y you're a very important player in all this and thank you very much for doing what you do.
Christopher Mitchell (50:40):
Well, thank you. And and I did wanna say that your dog is beautiful, so <laugh> one of the, one of the most
Blair Levin (50:45):
Beautiful. Thank you very much.
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