Three reasons FCC 5G proposal won’t work according to Blair Levin

The Coalition for Local Internet Choice and the National Association of Telecommunications Officers and Advisors recently asked Blair Levin for his take on the FCC’s proposal to cap the fees that state and local governments may charge for small-cell attachments. The FCC says this will save the industry $2 billion and result in $2.5 billion in investment in rural areas.

He has three reasons this won’t work. Here’s a very abbreviated version below…

First, focusing on state and local government fees and processes is a distraction from the real obstacles to accelerated and ubiquitous deployment of next-generation mobile services, which are that broadband deployment economics are very challenging and have to be addressed at all levels of government and through creative collaboration with the private sector. Fees for access to public property represent only one of many, many costs of doing business a carrier will encounter. A focus on reducing or eliminating one (relatively marginal) cost of doing business does not solve the challenging economics of broadband deployment and serves only to obscure the true challenges. Indeed, even if one accepts the FCC claim about the $2.5 billion—which is highly questionable—that amount is about 1% of what the FCC and industry claim is the necessary new investment needed for next-generation network deployments, and therefore is not likely to have a significant impact. …

Second, local governments have a strong recent track record of endeavoring to enable and facilitate broadband deployment, as the Google Fiber experience conclusively demonstrated. Vilifying them based on fees for use of public property is not only a distraction but also unfair. Indeed, rather than acknowledging that carriers have a proven ability to negotiate advantageous fees with localities, the FCC’s draft order infantilizes carriers by preempting state and local government, presumably on the theory that carriers cannot protect themselves in negotiations with states and localities.

This is absurd. As the carriers themselves have acknowledged, they have sufficient leverage to walk away from any locality that creates too many obstacles to deployment and that leverage has led them to strike the same kinds of deals that numerous fixed broadband providers were able to strike in the wake of the Google Fiber efforts.  …

Third, the FCC’s draft order is based on a fallacy that no credible investor would adopt and no credible economist endorse: that reducing or eliminating costs for small cell mounting on public property in lucrative areas of the country (thus reducing carriers’ operating costs), will lead to increased capital expenditures in less lucrative areas– thus supposedly making investment more attractive in rural areas.

That simply is not how investment decisions are made. …

This entry was posted in Policy, Wireless by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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