“A-number one importance.”

On September 15th, the Senate Commerce, Science and Transportation Committee gathered to discuss FCC oversight and telecommunications issues. Among those issues, the Committee discussed municipal networks.

Senator Cory Booker (D - NJ) asked FCC Chairman Tom Wheeler to provide his thoughts on how important it is that Congress takes action. The matter he put before Wheeler was the prospect that Congress act to allow local communities to have local authority on issues relating to Internet infrastructure and advanced telecommunications capabilities. How important is it?

Wheeler’s answer: “A-number one importance.”

Wilson, Pinetops, And A Harmful State Law

Booker, who introduced a bill in 2015 to restore local authority, brought up the subject of Wilson, North Carolina, and nearby Pinetops. When the FCC rolled back restrictive state laws in 2015, Wilson’s electric utility finally had the legal authority to help their neighbors so began offering high-quality Internet access through it’s municipal Internet service, Greenlight. Earlier this summer, the Court of Appeals found in favor of the state, which challenged the FCC decision. As a result, Wilson must cut off service to Pinetops or risk losing the legal ability to serve anyone. The FCC has announced that it will not pursue further review of the decision and will focus its resources on other areas. 

Booker described the situation in Pinetops as “disturbing,” but went on to praise Wilson for investing to solve the need in the region and pointing out how local businesses, including those in Pinetops, came to depend on those investments. He went on to say he was “disappointed, if not angered” by the Court of Appeal’s decision.  

Watch a clip of the hearing:

In order to allow local governments to help communities get the connectivity they need to compete, Rep. Anna G. Eshoo (Dem.-CA) introduced the Community Broadband Act of 2016 on September 13. The bill is designed to preserve local authority for municipalities, tribal, and local governments that wish to serve community anchor institutions, businesses, and residents with advanced telecommunications capability.

From Rep. Eshoo’s official statement:

“I’m disappointed that a recent court ruling blocked the FCC’s efforts to allow local communities to decide for themselves how best to ensure that their residents have broadband access. This legislation clears the way for local communities to make their own decisions instead of powerful special interests in state capitals.”

“Rather than restricting local communities in need of broadband, we should be empowering them to make the decisions they determine are in the best interests of their constituents. Too many Americans still lack access to quality, affordable broadband and community broadband projects are an important way to bring this critical service to more citizens.”

Rep. Eshoo introduced “dig once” legislation last fall and has long advocated for federal legislation to support Internet network deployment and increase universal access. This legislation would pair with Senator Cory Booker's 2015 Community Broadband Act.

When Christopher spoke with Sam Gustin for Motherboard about the bill, he said:

[He’s]“excited to see Rep. Eshoo's bill that would restore local authority to communities. Local governments need to be empowered to decide how to improve internet access rather than leaving their businesses and residents at the mercy of a few big monopolies.”

The Coalition for Local Internet Choice also responded positively:

CLIC applauds Congresswoman Eshoo for her efforts to protect local Internet choice and the options of all local communities to deploy critical broadband infrastructure.

In late July, the FCC released a Notice of Apparent Liability (NAL) in which it found the telecommunications giant AT&T Southeast liable for a $106,425 forfeiture. The agency also ordered the company to return $63,760 of E-rate funds it described as “improperly disbursed.” AT&T overcharged two school districts in Florida and, in a response released last week, are trying to justify their pilfer by blaming the E-rate rules and the schools themselves, much as a criminal blames victims for being such easy targets.

Funded By Phone Users

E-rate funds are collected as a surcharge on telephone bills; the funds go to schools to help pay for telecommunications costs at schools, including telephone, Internet access, and infrastructure costs like fiber network construction. The amount a school district receives depends on the number of students in the district that qualify for free and reduced lunches; schools with higher numbers of low-income students are reimbursed at a higher rate. Given that many of our schools are funded through property tax rolls, this means that schools in poorer neighborhoods that are more likely to need help with their budgets receive the higher reimbursement rates.

According to the program rules, phone companies and Internet Service Providers (ISPs) that participate are required to offer the “lowest corresponding price” to schools. Providers aren’t permitted to charge rates that exceed the “lowest corresponding price” or bid higher than that price on contracts to serve similarly situated entities if those entities are eligible to receive E-rate funds. School districts do not carry the burden of getting the lowest corresponding price - telephone and Internet access providers are responsible to ensure that they offer the lowest price in exchange for the opportunity to participate in the program. Between July 2012 and June 2015 alone, AT&T received $1.23 billion in E-rate funding nationwide.

Filching In Florida

The U.S. Department of Housing and Urban Development (HUD) recently asked for comments about a proposed rule to expand low-income access to high-speed Internet. The regulations would require building owners to install high-speed Internet infrastructure in HUD-funded multi-family rental housing during new construction or substantial rehabilitation, improving Internet access by promoting competition. Because the Internet infrastructure is not owned by one company, many Internet Service Providers (ISPs) can compete to provide residents with better options.

A variety of individuals and groups provided feedback for HUD, including local governments, nonprofit advocacy groups, ISPs, and professional associations. The majority of comments support HUD’s proposed rule, with many encouraging HUD to go further in their efforts to close the digital divide.

We submitted comments with Next Century Cities to articulate the importance of having reliable Internet access in the home:

Although Internet access may be available at schools, libraries, and other locations away from home, families with children - in particular single-parent households - face barriers to accessing those facilities. There is no substitute for having high quality home Internet access, where all members of a household can use it with privacy, security, and convenience. This high quality Internet access is what our organizations work with mayors and local leaders to achieve for residents and businesses everyday, which is why we feel so strongly about the proposed steps to close the digital divide and allow more residents to connect online.  

HUD correctly notes that installing telecommunications equipment during major rehabilitations or as units are being built creates an opportunity to ensure high quality access without significantly adding cost to the project. The ongoing benefits from high quality Internet access certainly dwarf the one-time low cost of installing appropriate technology. --Next Century Cities and the Institute for Local Self-Reliance

Promote Competition

As part of a growing interest in expanding fast, affordable, reliable Internet access for low-income families at home, the United States Department of Housing and Urban Development (HUD) has proposed a new regulation requiring high-speed Internet infrastructure to be installed in HUD-funded multi-family rental housing during new construction or substantial rehabilitation. While the proposed rule doesn’t require developers to pay for Internet service subscriptions, it is a step in eliminating barriers that low-income families face in obtaining quality, consistent Internet access. Public comments are due July 18, 2016.

The proposed rule covers HUD’s rental assistance and grant programs, including its Section 8 housing assistance program, Supportive Housing for the Elderly and Disabled program, Community Development Block Grant program, and Choice Neighborhoods Implementation Grant program. Families living in multi-family housing can then choose to purchase full-priced Internet access from local providers or utilize other resources in their community, which include federal subsidy programs in addition to other state, local, and charitable programs.

Getting Wired Up

As for the actual infrastructure, several types of Internet access technologies satisfy the requirement. Developers can install either wireless (Wi-Fi, fixed and mobile wireless, satellite) or wired (digital subscriber lines also known as DSL, power lines or BPL, cable lines, or fiber) infrastructure. HUD expects most builders will elect to install wired access because of the rapidly changing nature of wireless technologies.

Additionally, wired access is more likely to provide meaningful competition between several Internet Service Providers (ISPs), lowering costs and improving service quality for multi-family housing residents. In an open access network, ISPs typically lease space on infrastructure owned by another entity rather than owning the physical infrastructure themselves. If HUD's new rule called for an open access model, multiple ISPs could utilize a building’s wired infrastructure to offer services to residents. According to HUD’s estimates, which are detailed in the proposed rule, the average construction costs for wired broadband access in its multi-family housing is approximately $200 per unit.

It's been well over a year since awards were announced in the FCC Rural Broadband Experiment program, but several projects have not started because funds have not been released. The recipients are ready to commence, but the FCC's own requirements have halted expansion of high-quality Internet access to areas that need it the most.

The Rural Broadband Experiments program has required Letters of Credit from the top 100 banks. Although it may have seemed like good regulation, it completely ignores the reality of small businesses.

They Are Experiments

The FCC touted the Rural Broadband Experiments as the answer for small, local, and nontraditional, Internet Service Providers (ISP). The program had $100 million in funding to encourage innovation in ill-served rural areas. After the FCC provisionally approved 37 of the 200 applications, those providers then needed to secure Letters of Credit to ensure that the projects were secure, reliable investments.

The Letters of Credit for this program must be from one of the top 100 banks, and big banks are not known for lending to small ISPs. Local banks, however, do lend to such projects because they are familiar with the local ISP, the local economy, and the community. These big banks that the FCC wants, however, cannot judge the relative soundness of such projects, especially not “experiments.”

Big Banks Don’t Understand Risk

Why would you require a Letter of Credit from these banks? Last year, ILSR published a chart that shows how banks with more than $100 billion in assets “make poorer lending decisions and write-off more bad loans than do community banks, those financial institutions with under $1 billion in assets.”

Iowa, known across the country for its agriculture, is known in other circles for its exciting community broadband projects. Earlier this year President Obama visited Cedar Falls to praise its municipal network and to support other efforts to improve rural high-speed Internet access. One of those efforts is Wiatel. This small telecommunications coop is beginning a $25 million project to upgrade its network from copper to fiber throughout its entire service area.

Fiber Connectivity

The cooper network that Wiatel uses now is sufficient for basic phone service, but upgrading to fiber will future-proof the network and provide better Internet speeds. The coop is based out of Lawton, a small town of about 1,000 people, but the coop serves an area of 700 miles. Wiatel hopes to start burying the fiber cables in the summer of 2016. Once the project gets started, officials from the cooperative estimate they will connect all residential and business customers to fiber within 24-30 months.

Wiatel is part of a long-growing movement as rural coops build fiber networks or upgrade to fiber to improve services for members. Just check out the Triangle Communications coop in Montana, the Paul Bunyan Communications coop in Minnesota, or Farmers Telecommunications Cooperative in Alabama. They’re providing next-generation connectivity at reasonable prices to rural communities often ignored by the large incumbent telephone and cable companies.

Coops: An Alternative