An Alternative Path and Additions to the NTIA and State 5-Year Broadband Plans
Just how many billions of dollars in installed but unused, also known as “dark” fiber are there? Just how many billions of dollars of wireline telecommunication utility construction budgets were diverted to buildout the wireless infrastructure? How many billions have ratepayers been and continue to be overcharged for fiber networks they never received?
In what may be the largest telecom government boondoggle in America’s history, at least $150 billion is being given out by the NTIA, FCC, Treasury, USDA and the newly created State Broadband Offices (SBOs), besides all of the other tax and regulatory perks possible.
In fact, this next chart, provided by the Senate Commerce Committee, shows over $125 billion in federal subsidies to solve the digital divide and digital discrimination issues.
The IRREGULATORS present this series of articles to detail how America’s SBO and the NTIA have failed to examine basic, hiding-in plain-sight, material facts that could lead to major additional funding to help solve the Digital Divide and fund the build out of fiber to the home (FTTH) infrastructure in America.
Why is doing a factual, well documented workplan a problem? We, the Irregulators, request that the SBOs start on this alternative path, and we realize it requires them to start re-evaluating their workplans and adding additional tasks to their 5-year plans, something they will not be inclined to do.
The Irregulators are also concerned that what is being done in these workplans does not ‘solve the divide’ or provide digital equity because it never addresses how the Digital Divide was created over the past 30-years, which has left America with some of the most expensive services in the world, reducing the word “affordability” to a punchline of a bad joke. Giving billions to these same monopoly telco and cable companies and the leaving the hidden controls over the entire wireless infrastructure by AT&T and Verizon will only strengthen their control.
But there is another red flag--too much money controlled by too few. What we are seeing is the creation of new areas of funding through the government programs that allows for a new massive payola scheme to fund nonprofits to help the companies block competition and investigations that, in the end, must be dealt with and is part of the alternative path.
Background
The pandemic of 2020 revealed that America did not have sufficient high speed broadband internet, especially in rural areas and lower income inner cities. And instead of investigations of who are the players and how this happened, the government decided to throw money at the problem. Every state in America has created a State Broadband Office (SBO) to give out grant funds to solve the Digital Divide, and these agencies must do a 5-year plan to make this happen. These plans must follow the NTIA guidelines as there is over $42.5 billion being given to buildout wireline and wireless infrastructure to serve the unserved and underserved areas of the state, but there is over $150 billion from the state and federal subsidies on the table. The previous chart detailed federal subsidies alone come to over $125 billion
When we reviewed these plans, we found that not one state even mentioned or examined the fact that in every state there are incumbent telecommunications public utilities, and many have been in place for over 100 years.
Moreover, they all have or had plans to replace the existing copper wires with fiber optic wires, starting around 1992. Over these 3 decades, there have been mergers and what we have now are three non-competing holding companies -- AT&T, Verizon and CenturyLink, (now Lumen Technology) -- that control most of America’s telecommunications infrastructure utilities. For example, AT&T controls 21 state utilities and calls this collection their ‘footprint’.
And, so far, what has occurred is a plan that supports these same companies and the cable companies that worked together to create the digital divide. Specifically, the 5 year plans, instead of investigating how these three Holding Companies failed to deliver the highest quality critical infrastructure in the state and over these three decades let the networks deteriorate, are rewarding the companies with government subsidies.
And it is much worse than throwing money at the Digital Divide.
But, at the core, the companies have captured the regulators, state and federal, and this means almost all decisions about policy have been created by the telco and cable companies, now working together in ways the government should have been investigating.
Very brief background: Who is AT&T et al? ?
This is a map of the AT&T, Verizon and CenturyLink (now Lumen), and an overlay of the FCC’s Digital Divide underserved and unserved areas.
The telecommunications public utilities were originally part of the original AT&T, also known as MA Bell, which was broken up in 1984 because of its monopoly power over telecommunications. The state utilities were divided up and given to 7 holding companies, like Bell Atlantic or Southwestern Bell. ?Please note that there have always been requirements for 100% coverage in their territories, known as “carrier of last resort”, and this had been in place since the Communications Act of 1934. These utilities were and still are based on a copper wire to all households and businesses in their coverage area.
Starting around 1992, these wires were to be replaced with a fiber optic wire, and state laws were changed to fund this via rate increases and tax perks, billions per state. By 2010, America should have been a fiber optic nation.
This meant that the fiber optic wires were supposed to go directly to the home or office, and cover the entire telecom franchise area, and while each state was different, some states, like New Jersey or Pennsylvania, had requirements to do the entire state. ?
This first wave of calling for fiber optic upgrades started in 1991, after the Clinton-Gore presidenial campaign (and adminstration) called for an “information superhighway”, and while there was talk of the government running this new fiber optic future, what is now Verizon, AT&T and CenturyLink (Lumen), all claimed they would do the upgrades of their territories.
Unfortunately, without serious oversight and other important items of note, such as the Telecommunications Act of 1996 that opened the utility networks to competition, there was virtually no state or utility that had been upgraded, even though customers were charged an estimated $200 billion by 2004.
Then we have Verizon’s second fiber optic future, FiOS, which was announced in 2004 or AT&T‘s U-Verse, and both were announced to help push throw mergers, and get new deregulation on the state level.
By 2011, Verizon and AT&T decided that they would pull a bait and switch and instead of actually putting a wire to the home, they decided to take the construction budgets from the utility and use it for wire to the cell sites. In fact, statements by senior AT&T and Verizon executives revealed that they had no intention of upgrading their rural territories; something they did not tell the public.
The failure to do the upgrades to fiber is a failure for AT&T to offer competing high-speed wired services, and thus, the cable companies had no competition to lower rates or even offer choice. Comcast and Spectrum even resell Verizon Wireless under their own brand name.
As the previous map reveals, of the three non-competing holding companies and the state utilities they control, there are massive gaps -- the underserved and unserved areas that over the last 3 decades should have been upgraded.
And yet, in 2023 we have almost $150 billion of government subsidies being distributed in state and federal subsidies, and not one SBO even mentions how the Digital Divide was created in their state or how the state utilities failed to do broadband upgrades.
At the core, the 5-year plans being created and the distribution of billions of dollars are mostly likely going to those who helped to create the Digital Divide.
Lightreading ?details new research studies that claim that AT&T, Charter and Comcast could get the lions’ share of the new money.
“AT&T, Charter have the biggest BEAD opportunity –studies July 3, 2023
“AT&T and Charter Communications are best positioned to benefit from the multi-billion-dollar Broadband Equity Access and Deployment (BEAD) program based on state-by-state allocations and the presence of each operator in those states, reckon analysts that have broken down the numbers. …“Comcast, they added, will also have a "meaningful opportunity for subsidized edge-outs,"…
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North Carolina, for example, has had 2 recent rounds of funding, and Spectrum-Charter, the incumbent cable company, received ? of the funding in 2022, and is the largest recipient in 2023.
The North Carolina 5-year plan never mentions that there is an incumbent telecommunications state utility, BellSouth-AT&T, though it did receive multiple funding grants in NC. But most importantly, AT&T did not show up to compete and expand the BellSouth-AT&T high speed services.
And the ACP monies being given out for low income families as a supplement to cover the expenses for broadband, has a serious wrinkle; America is now subsidizing-paying the retail prices, which can include made up fees, such as the Cost Recovery Charge. Without competition to drive down the prices, ‘affordability’ will smack America’s low-income families when these gov. subsidies dry up.
Missing Critical Data and Analysis Required for All 5-year Plans.
The next series of articles was written to supply not only the data and analysis to make the case that the states must institute a series of audits and investigations, but answer some basic questions. The will cover
Institutional Amnesia:
Most importantly, no state government’s SBO even addresses that there are state telecommunications public utilities so it requires education campaigns to undo the ?Institutional Amnesia and the rewriting of history.
We are repeating history because those who are creating the plans are either ignorant of the past history and/or are part of the corporate regulatory capture. But with the ability to actually rewrite history-- literally-- over a 30 year period, this problem is deep and hard to solve.
Moreover, with billions of dollars being given out by AT&T, Comcast et al., and all are now part of the same trade and business associations and funding many of the same groups, research and consulting pundits, and all forms of non-profits, from Hispanic and black groups, seniors, people with disabilities, LGBT and even tribal groups, the companies are also using the new ACP funds and free computers as their payola scheme. In fact, groups that had traditionally hid their funding sources are now putting it on labels.
But, unless the states start the investigations we suggest, the chart below gives the reader a glimpse of our past and our probable future. ?How many times America had been misled? The Digital Divide has been around for decades and will continue and America will not have made a dent in the core issues that will continue to plague these great United States.
How Much Money are We Talking About?
FREE DOWNLOAD: ?of our new book, “DISS-CONNECTED”, is designed for a quick general public read,
Our second book “Violations & Egregious Acts”, supplies more details and is an alternative path roadmap, laying out how AT&T, Verizon and CenturyLink (with the help of the cable companies), created the Digital Divide. But it also provides details on what should be done to close the Divide and hold the companies accountable. ?(Ironically, Violations & Egregious Acts was started before the pandemic as a summary of 30 years of research and part of ‘The Book of Broken Promises”, series that started in 1998.)
Conclusion
Every SBO that is interested in closing the Digital Divide must start to explain the last 30 years and the failure of the companies to properly upgrade and maintain their state’s telecom infrastructure with the goal of providing universal low-cost connectivity service to all.
The next series of articles will give data and analysis to substantiate why we believe an alternative path must be taken to protect the public interest, and solve the Digital Divide once and for all, and not with government subsidies.
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Same question they were asking themselves in 1995, 6, 7, 8. We are living with their answers. We'll spend and report like we're one thing, but operate like another. "Telcos face an identity crisis: are they going to remain slow-growth utility-like providers, or is there a role for them in the emerging digital IT ecosystem as partners and providers to enable businesses to transform themselves and to make a greater share of consumer spend on tech?” -?Evan Kirchheimer, VP, Service Provider Research & Media at Informa Tech shares his expertise at?Network X."