By Robin Cowell, Of Counsel to BGR
With multiple proposals in the mix, including President Biden’s $2 trillion American Jobs Plan, hearings on the various sector priorities across the Hill, and aggressive goals set for the legislative timetable, infrastructure is unquestionably the hottest topic in Washington this spring. High speed broadband is one of the top priorities on everyone’s list. The infrastructure push presents a major opportunity to close or eliminate the digital divide and connect all Americans to their communities and the world through secure and resilient modern broadband networks. However, depending on the details, a significant federal investment could fail to make an optimal impact, or could even have harmful effects on the existing broadband marketplace, disincentivizing much-needed private investment in the future.
Here are some of our top takeaways from the digital infrastructure discussion so far.
Broadband a Top Infrastructure Priority
While past infrastructure discussions have mostly centered on traditional transportation infrastructure priorities, with broadband considered a second or third tier priority, this time around digital infrastructure has taken on new importance as a top priority. Congressional and White House proposals include $100 billion to expand high speed broadband, an unprecedented level compared to past federal investments. For example, the Obama-era Broadband Technology Opportunities Program (BTOP), the signature digital infrastructure investment of the American Recovery and Reinvestment Act of 2009, provided $4 billion in funding through a National Telecommunications and Information Administration grant program.
The relative size of the proposed federal investment is commensurate with the vital importance our digital infrastructure took on as Americans weathered the COVID-19 pandemic. Suddenly, instead of representing an alternative way to access distance learning, see a doctor, work, connect with loved ones, shop, or pay bills, broadband became a lifeline through which Americans conducted every aspect of their daily lives. The digital transformation of many aspects of our economy was significantly accelerated out of necessity. This will have many benefits into the future, but the digital divide became a chasm, completely cutting off Americans who lack access to broadband service from education, health care, employment opportunities, and their communities. This experience has cemented a broad bipartisan consensus that broadband networks constitute critical infrastructure. Broadband is being treated as such in the context of the infrastructure discussion, both in the frequency of mentions and in the significant $100 billion proposed investment.
While this new emphasis on digital infrastructure at the very top levels creates a once-in-a-lifetime opportunity to transform U.S. networks, connecting millions of Americans, such a large federal investment must be handled very carefully to maximize its impact and eliminate its potential downside. The much-smaller BTOP grant program was riddled with examples of waste, fraud, and abuse. It will be important to structure a new program to effectively, efficiently, and fairly manage an investment orders of magnitude larger, such as through the Federal Communications Commission (FCC)’s tried-and-true reverse auction mechanism. Further, to the extent that some of the buildout resources are allocated to state governments, or additional federal agencies, strong coordination requirements will be critical to ensure maximum bang for the taxpayer buck.
Administration officials and members of Congress alike have emphasized the need for “future proof” investments across every infrastructure sector, including broadband. While certainly no one would advocate that scarce taxpayer dollars should be invested in networks not equipped to meet expected demands for the foreseeable future, the devil is in the details. It is reasonable to ask what future we are attempting to “future proof” against.
Some discussions have focused on the concept of symmetrical upload/download speeds, meaning that networks should have equally fast speeds for uploads as for downloads. But this kind of symmetry is not possible for many of the network technologies in wide use today, which facilitate much faster download speeds. This architecture matches well with most content-demanding consumer type uses (for example, streaming video). The FCC has continuously recognized this reality through the years with asymmetrical broadband definitions (currently 25 Mbps download/3 Mbps upload).
It makes sense to “future proof” by raising the bar higher than the current definition. However, it will be important not to artificially constrain the options for closing the digital divide by setting requirements that effectively eliminate most current broadband technologies in order to achieve performance levels not projected to be needed by American consumers anytime in the foreseeable future.
The White House infrastructure proposal would preempt state restrictions on municipal broadband networks, built and operated by local governments, usually in competition with private providers in the same areas. The proposal reignites a policy battle from the Wheeler-era FCC, which tried to overrule state laws restricting municipal broadband, only to have its order struck down by the U.S. Court of Appeals for the Sixth Circuit. Nineteen states currently have laws prohibiting or restricting municipal broadband networks, in order to avoid giving these taxpayer-subsidized networks unfair advantages over commercial alternatives, thus disincentivizing private investment.
Further, the White House plan seeks to give preferences to municipal networks in distribution of the $100 billion in funding for buildout. Such a preference would be extremely disruptive to the market, pushing a thumb even harder on the scale in favor of government-controlled projects.
While very much a part of the overall broadband discussion in all other contexts, wireless broadband has seen little emphasis or detail so far in the various infrastructure proposals. This oversight seems incongruent with recent FCC allocations that serve as a good indicator of the bipartisan priorities of this expert agency. For example, in the last few years, the Commission dedicated $20 billion in Universal Service Fund resources to mostly wireline broadband through the Rural Digital Opportunity Fund, with another $9 billion devoted to wireless broadband through the 5G Fund.
The White House infrastructure proposal, in contrast, detailed no separate allocation for 5G, which has been noted by the President as well as members of Congress on both sides of the aisle as a top national security priority as well as critical infrastructure. The White House proposal includes investments in semiconductor manufacturing, strategically important for availability of 5G equipment as the U.S. embarks on this major buildout project. It also includes resources to maintain U.S. leadership in advanced technology R&D. This could serve as a source of funding for programs to accelerate the research, development, and deployment of standards-based, interoperable, and virtualized 5G networks, such as those authorized last year by the USA Telecommunications Act, but not yet funded.
However, a significant investment in 5G buildout at this moment would pay significant dividends, beyond its benefits of providing Americans with the latest broadband capabilities on the go and supporting a U.S. win in the global race to 5G. Accelerating buildout would speed up the formation of a critical mass of users, in order to ensure American leadership in development of the next generation of applications, as we saw in 4G with now-essential apps like Uber and Lyft. And it would send an unmistakable, impactful global demand signal supporting and fostering a diverse and competitive supply chain of trusted 5G equipment vendors, which is a priority both for national security and for U.S. economic growth.
In conclusion, we are pleased to see the strong emphasis on digital infrastructure in the overall discussion. It presents unique opportunities, as well as some potential pitfalls, due to the unprecedented size of the proposed federal investments. BGR’s Commerce practice stands ready to help develop and refine your policy and engagement strategies as this process moves forward.