Mapping and Deploying High-Speed Broadband

Monday, February 11th, 2008

http://www.progressivestates.org/dispatch

Growing-Economy

BY Julie Schwartz

Mapping and Deploying High-Speed Broadband

The Bush administration recently declared it has largely succeeded in supplying affordable high-speed Internet access to all Americans, despite the fact that most Americans would probably describe their Internet access as slow, expensive, and frustrating.  Most analysts are nowhere near as optimistic as Bush's "Networked Nation: Broadband in America." These analysts highlight that the U.S. has fallen to 15th in world rankings for broadband connectivity and that Americans pay much higher fees for much slower speeds than most of the industrial nations in the world.  Misguided regulatory policies and substandard infrastructure have helped create a sub-par broadband network in the United States.  

As we have discussed in the past, broadband is an essential component of economic development, long-term energy savings and health care cost containment.  With studies showing economic growth happening disproportionately in communities with strong broadband deployment, the lack of affordable and accessible broadband Internet in much of the United States is unacceptable.   

Since federal broadband policy is not working, states have taken steps to determine which areas and residents are under-served and created policies to make affordable and reliable broadband Internet a reality for their citizens. For example, California, Illinois, Kentucky, Maine, Maryland, Michigan, New York, North Carolina, Ohio, South Carolina, and Vermont have created new bodies to focus on broadband.  On the other hand, some states have adopted "state video franchising" legislation that has undercut local protections without creating the needed state regulations to bridge the digital divide. This Stateside Dispatch will highlight new state initiatives that are addressing these challenges of mapping broadband access, increasing broadband deployment in the states, and what standards video franchising bills should meet to maintain essential consumer protections. 

 

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Broadband Mapping

Today, there is a digital divide between people who do and people who do not have access to - and the capability to use - broadband Internet. Too many Americans, especially those in rural areas or low-income households, do not have any Internet access. Since the federal government's data on who has Internet access is notoriously incomplete, the first step to providing broadband Internet to under-served residents is for states to create broadband maps, to track broadband penetration levels, and determine where broadband Internet access is lacking.

Only a handful of states have attempted to map broadband service.  The most publicized and celebrated model for bringing broadband connectivity to rural and under-served areas is ConnectKentucky. ConnectKentucky produced the first comprehensive Geographic Information Systems (GIS)-based county-by-county inventory of existing broadband infrastructure and service availability. The map identifies the specific communities where additional efforts are required to stimulate broadband investment and was the first step by the state in increasing access by 45% in two years. Due to its initial success ConnectKentucky has renamed itself Connect Nation and is replicating its Kentucky model across the country. States such as Maine, Arizona, Illinois, Tennesse, Washington, and West Virginia, have or are considering utilizing the Connect Nations model.

Some critics of the ConnectKentucky model think it has overstated results, that the data produced is not fully in the public domain, and the measurements of "broadband access" do not fully distinguish between fast broadband and bare minimum broadband. To address these concerns and to counteract the fact that broadband providers exercise large degrees of control over the mapping, state legislatures need to create clear regulatory guidelines in new legislation to assure that carriers give more detailed information. 

Other states have improved upon Kentucky's model and utilized more granular data to map broadband infrastructure.  This more granular data provides a more accurate picture of who has broadband access in their states and how fast that access really is:

• In California, Governor Arnold Schwarzenegger's Broadband Task Force, offers household-level information about broadband service availability. The California report contains a series of maps that show where broadband is available and at what speeds. All of California's broadband providers cooperated with the task force to create the maps. Broadband providers in the past have expressed concern about providing such precise information, claiming it would give away their trade secrets. The task force alleviated these concerns by allowing the providers to give their data confidentially to a third-party aggregator.

• Another useful model, from the 2007 session, was Maryland's House Bill 1069.  This bill, if enacted, would have required any company offering high-speed broadband (defined at a more realistic level of at least 768kbps) to report down to the zip code-plus 4 level who has access; the percentage of households that subscribe to the provider's broadband service; the upload and download data transmission speeds that are available to customers in the broadband provider's service territory; the average price per megabyte; and report new services and upgrades to existing broadband services.

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Broadband Deployment

Once under-served populations are determined, states must deploy broadband Internet to these individuals. Despite the fact that the Internet has become a standard medium for everyday communication and transactions, most states do not have strong broadband infrastructures and service providers are hesitant to expand their networks to non-traditional sectors that may not be as profitable. 

The Electronic Telecommunication Open Infrastructure Act (ETOPIA), is a model of broadband Internet deployment that garnered a lot of attention when proposed in West Virginia.  The state legislature passed the ETOPIA bill, Senate Bill 748, but the Governor vetoed the legislation.  If enacted, the bill would have created a think-tank to explore the best-practices for creating public-private broadband partnerships. The state would then implement these partnerships for the benefit of the state's citizens and the economy. The bill emphasized how a strong broadband infrastructure would lead to advancements in telemedicine and e-learning. Additionally, the bill would have given county and municipal governments authority to create public-private partnerships to provide cable, telecommunications, wireless and broadband Internet network services. The state would issue bonds to initially fund the technology infrastructure. The long-term goal for ETOPIA legislation is for the infrastructure to become a revenue stream and therefore the infrastructure will not have to be maintained by state tax dollars.

This legislative session Representative Rice of Rhode Island, proposed H 7120, which is similar to the ETOPIA model seen in West Virginia. The bill proposes to create an "Innovation Center" to encourage the development and implementation of technology infrastructure for use throughout the state.  The Center would study technology within the state and recommend upgrades, options, and strategies for encouraging technology partnerships among state government, local government, private business, and institutions of higher education. This bill, if enacted, would be an essential component to ensuring that all Rhode Island residents have access to affordable and reliable broadband Internet. 

State legislators are not the only actors focusing on expanding broadband Internet on a state level. Some governors have taken steps to address the digital divide, issuing executive orders focused on creating affordable and accessible broadband Internet for all state residents. California Governor Arnold Schwarzenegger created the Broadband Task Force to implement proposals to bridge the digital divide; Illinois Governor Blagojevich created a Broadband Deployment Council; Ohio Governor Strickland signed an executive order to coordinate and expand access to the state's broadband data network, and to establish the Ohio Broadband Council and the Broadband Ohio Network; and New York Governor Spitzer recently announced the importance that he places on developing statewide broadband. Comparing the importance of broadband to the twenty first century economy with that of the Erie Canal in its time, Spitzer said that his plan will create jobs and transform New York's economy.  With Governors making broadband deployment a priority and establishing funding to address the digital divide, there is plenty of room for state legislators to make real inroads in expanding broadband infrastructure and capitalizing upon emerging technology.  

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Funding Mapping and Deployment

Recently, states have come to see the Internet as a necessary utility like water and electricity or as critical infrastructure like roads and ports.  Just like any other form of infrastructure, a broadband infrastructure will require funding.  

The most comprehensive state funding plan, to date, was suggested by the California Broadband Task Force.  The plan included a bond program and two different broadband grant programs, as well as, tax credits, expanded use of rights-of-way, and increased resources toward broadband research and development. Additionally, California has an Emerging Technology Fund, a non-profit corporation established through state telecommunication merger requirements, whose objective is to minimize the digital divide by deploying services to under-served communities and populations.  Under the California Public Utilities Commission requirements set by the telecommunications industry merged telecommunication companies in California will contribute a total of $60 million over 5 years to advance broadband.  

Some states, those with less available resources than California, have successfully enacted broadband mapping and deployment programs, by appropriating money from both general state funds and from penalties levied on telecommunication carriers/providers for state law infringements.  

• For example, in Illinois the legislators funding of the High Speed Internet Services and Information Act came from re-direction of $4 million from the Eliminate the Digital Divide Infrastructure Funds from Illinois Commerce Commission, coming from the Telecom Rewrite Act of 2001, and of which $5 million was invested last fall by ICC in local and regional broadband deployment projects in rural Illinois.  The money for the Digital Divide Infrastructure Funds came from a few sources. Forty percent of all civil penalties paid by telecommunication carriers for violations of the state Public Utilities Act were put in the Digital Divide Infrastructure Funds. Funds also came from voluntary contributions from telecommunication consumers. 
• In Maine, the funding mechanism for the ConnectME Authority (the agency running the ConnectMe) is a 0.25% surcharge on all communications, video, and Internet service bills for retail instate service. The fund received $500,000 in "seed money" from the Maine Universal Service Fund. It is expected to generate between $750,000 and $1 million per year. The quarterly assessments are paid to an independent fund administrator the month after the end of the quarter.  Based on the expected cash flows and the estimated expenses, the Authority awarded $787,174 to seven grant applicants for payout over the next few months.
• The Michigan Broadband Development Authority (MBDA), an independent state government agency created to help Michigan attract more private sector investment in broadband, chose to initially capitalize broadband programs by tapping into the the state's housing authority.  MBDA received its seed money through a housing authority $50 million bond sale. Then in 2005, Governor Jennifer Granholm of Michigan released her Rural Broadband Initiative (RBI). The goal of RBI was to expand high-speed Internet access to rural and under-served areas. Since inception, the MBDA has approved approximately $30 million worth of loans.
• In Kentucky, broadband mapping and deployment began under unique circumstances. The Public Service Commission chose instead of providing customers with modest refunds due to overcharges, that BellSouth should reinvest the money to build-out broadband, increasing access to subscribers in under-served areas. At the end of the first three-year evaluation period for the plan, an audit performed for the PSC found that BellSouth had exceeded its goals. Kentucky regulators ordered that the reinvestment program be continued. Two-thirds of ConnectKentucky's funding came from a general state fund; the other 1/3 is funded by telecommunications companies.

Other states have utilized matching funds as a way to spur investment in broadband. For example, in 2006, Idaho created a $5 million broadband development matching fund for the deployment of last-mile broadband service. The state awarded $4.9 million in matching funds to four broadband providers (Verizon, Qwest, SpeedyQuick, and First Step Internet) to provide the equivalent of DSL capability to about 50,000 residents in 79 projects.

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Regulatory Standards for Video Franchise Legislation

In theory, statewide video franchises, which create a single statewide simplified process of offering video services, could have benefits for the public, such as increasing competition.  Unfortunately, however, the legislation enacted so far does not include strong enough consumer protections or broadband deployment requirements.  The public services lost by state video franchising bills, outweigh any potential gains that might result due to increased competition. 

Under state video franchises, providers need to secure only one permit for the entire state instead of one for each individual community. Therefore, state video franchising take control away from the local municipalities, reduce consumer protections, and undermine local deployment requirements.  In the past, municipalities have leveraged permits for cable companies to use public rights-of-way, as a means to demand carriers supply certain public interest services. States have not taken the same initiative to negotiate franchise agreements which protect necessary public services that are in the public interest. At the close of the 2007 legislative session 15 states had signed into law video franchising bills. While some of these bills offered limited PEG (public access and government channels) or build-out requirements, all fell short of adequately protecting the public interest.

The major public interest elements that should be included in any video franchising bill protection of PEG channels; broadband access provided for government offices and schools; strong build-out requirements; and ongoing regulation of the industry by state authorities to ensure that the entire community, not just the wealthy are offered service. If states must consider state franchising bills, they should set higher consumer protections standards in the legislation.  

The best model video franchise bill proposed so far is New York's AO1423, sponsored by Assemblyman Richard Brodsky, which has reasonable build-out standards, requiring statewide franchisers to make service available across New York within 3 years for larger communities and 6 years for smaller communities. The bill would also protect certain municipal regulatory powers, strong local franchise fees, a set number of PEG channels, provide other high-speed Internet services for local communities, and establish network neutrality provisions.

In Pennsylvania, the Communication Workers of America is supporting bill HB 1490 that has some consumer protections, at least some build-out provisions, and a basic statewide high-speed broadband assessment and development provisions. The bill requires new cable service providers to pledge the same amount of PEG access channels or programming hours as incumbents. If a municipality does not have PEG access channels, a new provider must grant such a service upon request. The proposed bill ensure some build-out and that cable providers cannot completely ignore low-income households. Within six years of issuance of the statewide license, the operator must provide access to at least 70% of customer households in the franchise holders area. 30% of households with access to the providers service should be low-income.

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Conclusion

After years of neglect by federal leaders, states are taking action on broadband policy but they need to leverage opportunities for success: mandatory mapping of what broadband services are really available to their citizens, requiring real build-out requirements in any video franchising laws, and creating comprehensive state plans for broadband expansion.

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