FCC authorizes $524 million for broadband CAF Auction ($3.5 million in MN)

The FCC reports

The FCC today authorized over $524 million in funding over the next decade to expand broadband to 205,520 unserved rural homes and businesses in 23 states, representing the third wave of support from last year’s successful Connect America Fund Phase II auction. Providers will begin receiving funding this month.
In total, the auction last fall allocated $1.488 billion in support to expand broadband to more than 700,000 unserved rural homes and small businesses over the next 10 years. The FCC has already authorized two waves of funding in May and June, and funds from those first two waves are expanding connectivity to nearly 100,000 homes and businesses that lack service. Today’s action brings total authorized funding to nearly $803 million, or over half of the $1.488 billion allocated through the auction, expanding connectivity to 305,518 homes and businesses.

In the coming months, the FCC will be authorizing additional funding as it approves remaining applications of the winning bidders from the auction.

Here are the awardees in Minnesota:

  • Federated Telephone Cooperative receives $1,431,039 (over 10 years)
    to bring minimum speeds of 1 Gbps/500 Mbps to 808 locations
  • Roseau Electric Cooperative receives $2,081,770 (over 10 years)
    to bring minimum speeds of 1 Gbps/500 Mbps to 326 locations

FCC Approves Priority Window For Tribes To Expand Broadband

CBS reports on tribal access to licenses…

The Federal Communications Commission has approved a priority filing window for tribes to obtain licenses that could boost internet service in rural communities.

The commission voted 3-2 Wednesday in favor of the filing window for federally recognized tribes.

The 2.5 Ghz-band of spectrum largely is unassigned in the U.S. West and is seen as key to expanding 5G access.

The licenses could help tribes establish or expand broadband coverage in underserved areas. Tribally owned entities, including colleges and universities, also would be given priority for licenses.

San Francisco Mayor says whoa to FCC proposal to allow landlords to limit broadband competition

The San Francisco Chronicle reports…

San Francisco Mayor London Breed has spoken out against the Federal Communications Commission’s attempt to overrule a provision of a city ordinance.

In a letter sent on Tuesday to House Speaker Nancy Pelosi, D-San Francisco, Breed wrote that the FCC’s proposal to preempt part of a city law that prevents landlords of multi-unit buildings from blocking tenants from accessing the internet service provider of their choice would hurt residents by reducing competition for communications services.

The provision of the ordinance, known as Article 52, says property owners can’t deny internet service providers access to existing wiring within multi-unit residential and commercial buildings. It was the first such rule in the nation when the Board of Supervisors unanimously passed it in 2016, according to then-supervisor Mark Farrell.

I mostly write about rural broadband – so why the notice of an urban post dealing with multi-unit homes? Because rural areas can feel the same pinch when policy impedes competition. It looks a little different – but the result is the same: lack of choice.

We’ve seen that with CAF II funding where incumbent providers had access to federal money to upgrade to a minimum of 10 Mbps down and 1 up. Once the incumbent accepts that money, they have dibs. (To use a playground term.) Another provider will have a hard time getting federal funding to move into that area – even if they promise better connectivity.

And the even more difficult part of it is that the CAF II is that it isn’t a clear win for the incumbents. The funding isn’t enough to offset the real cost, nor enough to spur a real focus on unserved areas when there are areas with a better return on investment. But there are providers, often cooperatives, whose business model do allow for broadband upgrades that do meet customer need and sufficient ROI. (Last fall, tax changes were suggested that would have made it even more difficult for cooperative to offer broadband.)

The policy impact on rural communities may be familiar to more readers but again the result is the same. One choice! And with one choice, you run the risk of service, speed and prices that suit the provider. In rural areas, it’s federal funding or tax changes. In urban areas, it’s giving that power to one landlord – who may be compensated for making a broadband choice for the building.

There is one proposed budget amendment that may get in the way of the FCC plan…

The FCC proposal has hit at least one bump: The House of Representatives last week approved a budget amendment introduced by Rep. Katie Porter, D-Irvine, that would prevent the FCC from finalizing a draft rule that would overturn a provision of San Francisco’s local ordinance. The amendment was passed as part of a group, but it could still fail in the Senate.

“The communications industry is in dire need of more competition,” Porter said in a statement. “San Francisco’s Article 52 has been incredibly effective in promoting broadband competition — giving residents the benefit of competition and choice in the market, increasing their service quality while decreasing their monthly bills.”

FCC’s Consumer Outreach team visits Minnesota

If only I could be in two places at once, but today I’m up in the broadband meeting in St Louis County but the FCC is traveling to other places in Minnesota and Wisconsin. The Benton Foundation reports

Members of the FCC’s Consumer Outreach team will take to the road again for the next in a series of Rural Tours, this time journeying to the Upper Midwest states of Minnesota and Wisconsin.

During their travels to various cities and towns, the team will meet with community leaders and groups to share information and resources regarding telecommunication issues that affect daily lives. The team will also discuss the latest telecom scams targeting consumers’ privacy and pocketbooks, particularly in rural areas.

The Upper Midwest Region Rural Tour is the fourth in a series of trips designed to build partnerships with local consumer groups and hear directly from local consumers and community members.

Topics include:

Tour Schedule as of June 14, 2019:

All events listed below are free and open to the public unless noted otherwise.

Day 1:  Monday, 6/24

  • 9:30 am
    Presentation at the Chaska Community Center – Download Event Flyer
    1661 Park Ridge Drive, Chaska, MN 55318
  • 1:00 pm
    Presentation at Nicollett County Health and Human Services – Download Event Flyer
    622 South Front St., St. Peter, MN 56082
  • Meetings with local leaders in Blue Earth County, MN; Chaska, MN and Le Sueur, MN – closed to the general public

Day 2:  Tuesday, 6/25

  • 1:00 pm
    Presentation at the Semcac Senior Dining – Download Event Flyer
    Dodge County:  Sunwood Manor, 200 1st St. NE, Kasson, MN  55944
  • Meetings with local leaders in Owatonna, MN and Waseca, MN – closed to the general public

Day 3:  Wednesday, 6/26

  • 6:00 pm
    Presentation at La Crosse Public Library – Download Event Flyer
    800 Main Street, La Crosse, WI 54601
  • Meetings with local leaders in St. Charles, MN – closed to the general public

Day 4:  Thursday, 6/27

  • 12:00 pm
    Presentation at the Kupper Ratsch Senior Center – Download Event Flyer
    10025 Superior Ave., Tomah, WI 54660
  • Meetings with local leaders in in Mauston, WI; New Lisbon, WI; Sparta, WI and Tomah, WI – closed to the general public

Day 5:  Friday, 6/28

  • 12:00 pm
    Presentation at DeForest Senior Center – Download Event Flyer
    505 N Main St., DeForest, WI 53532
  • 3:00 pm
    Presentation at Portage Public Library – Download Event Flyer
    253 W. Edgewater St., Portage, WI 53901
  • Meetings with local leaders Portage, WI and Wisconsin Dells, WI  – closed to the general public

 

Illinois Congressional Delegation To FCC: Improve Rural Broadband Maps

Having just spent the last few days looking at maps and data from the Office of Broadband Development, I can tell you how important it is to have good benchmarking. It tells us where we need to bring better service but also historically we can look to see which areas are doing well, when they started to do well and perhaps figure out a why. Same for areas that are doing less well.

If we are going to spend federal, state and local money of broadband (and to reach the high cost areas, we probably need to) we should know where we need to go and what’s happened to areas where we have invested. So it was interesting to see the entire Illinois Congressional Delegation tell the FCC, we need better maps…

Today, the entire Illinois Congressional Delegation sent a letter to Federal Communications Commission (FCC) Chairman Ajit Pai and the four FCC Commissioners urging the FCC to improve the nation’s broadband maps by reforming the mapping process for broadband services. The members noted that currently the mapping process lacks detail, accuracy, and granularity, meaning many underserved areas, including many rural communities in Illinois, could go without critical funding to improve broadband services.  The Commission’s recently released 2019 annual Broadband Deployment Report found that more than 21 million Americans still lack access to high-speed internet service, though this number may be much higher due to inaccuracies in broadband maps.  According to the FCC, only about 61 percent of rural areas in Illinois have access to fixed broadband at speeds of 25 Mbps/3 Mbps.

“As we work to repair and rebuild our nation’s infrastructure, we must ensure that those in rural America have access to high-quality and reliable fixed or mobile broadband.  In addition to developing our nation’s rural economy, broadband helps expand educational horizons for students and allows rural health providers to offer more flexible and cost-effective delivery approaches,” the members wrote in a letter to Chairman Pai.

Today’s letter was signed by the entire Illinois Congressional Delegation: U.S. Senators Dick Durbin (D-IL) and Tammy Duckworth (D-IL), and U.S. Representatives Bobby Rush (D-IL-01), Robin Kelly (D-IL-02), Dan Lipinski (D-IL-03), Chuy Garcia (D-IL-04), Mike Quigley (D-IL-05), Sean Casten (D-IL-06), Danny Davis (D-IL-07), Raja Krishnamoorthi (D-IL-08), Jan Schakowsky (D-IL-09), Brad Schneider (D-IL-10), Bill Foster (D-IL-11), Mike Bost (R-IL-12), Rodney Davis (R-IL-13), Lauren Underwood (D-IL-14), John Shimkus (R-IL-15), Adam Kinzinger (R-IL-16), Cheri Bustos (D-IL-17), and Darin LaHood (R-IL-18).

Full text of today’s letter is available here and below:

June 17, 2019

Dear Chairman Pai:

We write to urge the Federal Communications Commission (FCC) to improve our nation’s broadband maps by reforming the mapping process that illustrates where fixed and mobile broadband services are available within the United States.

What should be of great concern to government, the telecommunications industry, and American consumers is the significant lack of detail, accuracy, and granularity of these broadband maps.  For example, an entire census block may be considered served even though only a single location within the block has access to fixed broadband service.  This misidentification could result in the denial of vital funding which could otherwise bring service to these underserved areas.

Indeed, the Commission’s recently released 2019 annual Broadband Deployment Report found that more than 21 million Americans still lack access to high-speed internet service.  An overwhelming majority of these Americans are living in rural areas.  However, some have called this data into question and argue that broadband connectivity is even worse than the Commission’s data illustrates.  In fact, recent research shows that more than 162 million Americans are not using the internet at broadband speeds of 25 Mbps.

The challenge, in part, lies with the FCC’s current Form 477 process, which is overly reliant upon the data self-reported by service providers.  We urge the Commission to explore developing a process to validate or authenticate the information produced by service providers.  This will lead to more accurate and reliable data collection.  Inaccuracies within the data may currently be translated onto the broadband maps, which are used to allocate important grant funding and federal financing through programs administered by the Commission, the United States Department of Agriculture, and the Department of Commerce to bring broadband access to lacking areas.  A failure to allocate federal investment to where it is needed the most ultimately falls on constituents.  Without sufficient broadband access, small businesses struggle to operate and students are forced to complete their homework in library parking lots just to use WiFi.

Specifically, in Illinois, we’ve seen a variety of cases that may reflect a nationwide problem.  For example, some Rural Local Exchange Carriers (RLECs) have been unable to apply for or receive funding due to inaccurate maps.  These RLECs have provided detailed engineering studies, collected and prepared customer “testimonial” documents, and submitted an extensive FCC petition for reconsideration regarding competitive overlap.  They also have filed comments and documents with the FCC requesting a review of these core issues.  Despite these efforts, inaccurate mapping has continued to hurt the ability of affected companies to expand broadband to rural communities.  In one case, a small Illinois RLEC was initially declared as one hundred percent competitively overlapped due to inaccurate 477 reporting by another broadband service provider; and as a result, was deemed ineligible to receive funding.  Many other small RLEC companies have attempted to secure loan and grant funding to serve our constituents, only to be denied.  As a result, many rural areas, which cannot realistically be served without federal support, remain unserved.  Both rural providers and consumers would benefit from a validation and challenge process to more accurately depict broadband availability and quality standards.

Therefore, as the country looks to close the digital divide between rural and urban communities through the deployment of and robust investment in fixed and mobile broadband infrastructure, the capacity to accurately depict which communities are the least connected is vital.  We ask that the Commission double their efforts to improve the broadband mapping process through three specific proposals.  First, develop more standardized granular reporting of broadband availability – while also balancing the burdens of reporting especially for smaller operators.  Second, establish a suitable validation process by which the self-reported data from service providers can be verified by the FCC.  And third, develop a process through which state and local governments, as well as other interested parties, can challenge the data displayed in the maps for accuracy while not adding unnecessary costs or delays.  These three common-sense reforms would work to collectively improve the accuracy of the data being used to make decisions on billions of dollars in federal funding and financing.

As we work to repair and rebuild our nation’s infrastructure, we must ensure that those in rural America have access to high-quality and reliable fixed or mobile broadband.  In addition to developing our nation’s rural economy, broadband helps expand educational horizons for students and allows rural health providers to offer more flexible and cost-effective delivery approaches.

Thank you for your attention to this matter.  We look forward to working with you as the Commission works to ensure that every American has access to dependable broadband service.

MoffettNathanson says CenturyLink might as well keep residential customers

There’s a lot to unpack here. Back in May, CenturyLink said they were looking at their options for their consumer/residential service…

Could the CenturyLink consumer business be sold or spun off? CenturyLink CEO Jeff Storey said yesterday that CenturyLink has enlisted advisors to assist the company in a strategic review of the company’s consumer business. Although he emphasized that it is “really early in the process,” he noted on the company’s first-quarter earnings call that the company is “very open” in the options it would consider.

“Let me be clear, we’re early in what I expect to be a lengthy and complex process,” said Story, according to a SeekingAlpha transcript of the earnings call.

At that time, Storey elaborated:  “During our review, we will not modify our normal operations or our investment patterns. I can’t predict the outcome or the timing of this work or if any transactions will come from it at all. Our focus, though, is value maximization for shareholders. If there are better paths to create more value with these assets, we will pursue them.”

He added, though, that the company is doing a good job of growing broadband where it invests in improving the customer experience and profitably expanding the network.

The company’s consumer revenues were $1.4 billion in the first quarter of 2019. The consumer business saw a 1.3% year-over-year and a 2.7% increase over the previous quarter in broadband revenues. While the company lost subscribers purchasing speeds below 20 Mbps, it gained subscribers purchasing higher-speed services.

I’ve added the emphasis. Interesting that CEO Storey  revealed  that  while CenturyLink “grow[s] broadband” where they invest,  decisions about where to invest are driven by a focus on maximizing shareholder value, not community benefit.  Because they are a business, profitability, not community needs, drives CenturyLink’s investment decisions.

Fast forward a month and it looks like the analysis is in

CenturyLink wouldn’t gain much by spinning off its consumer business, argued telecom financial analysts MoffettNathanson in a research note issued today. The cost of a CenturyLink consumer spinoff would leave the company with little in the way of financial benefits, the analysts said.

Telecompetitor goes into detail…

Spinning off the CenturyLink consumer business would generate what the researchers refer to as “dis-synergies” that would result from the difficult task of dividing a network and other operations that serve both the consumer and business sides of the house. These dis-synergies would “simplistically imply roughly $300 million to $600 million in value destruction from separating the businesses,” the researchers argue.

Another concern about a spinoff is whether it would receive necessary approvals from state public utility commissions.

The analysts also question how much upside there is for CenturyLink’s consumer business. They argue, for example, that the company’s opportunity to provide connectivity for small cells is limited because small cells will be deployed only in densely populated areas and CenturyLink is the incumbent local carrier in only two of the nation’s 50 most densely populated cities.

Again, the emphasis is mine. The worry about value destruction is real for any business; you don’t want to lose value. BUT the worry for communities is that this isn’t really a rousing rationale for investing in upgrading  residential service, rather a recognition that the cost of disaggregating business customers is just too high.

Also of note in the analysis is recognition that small cell technology (necessary for 5G) will only be deployed in densely populated areas. This is not new news, but does reinforce the fact that 5G is not coming to  rural areas anytime soon.

Finally…

Not all of MoffettNathanson’s analysis of CenturyLink opportunities is so downbeat, however.  For example, the researchers see the recent news about FCC plans for a replacement for the Connect America Fund, due to expire in just a couple of years, as a positive, as CenturyLink was one of the largest recipients of CAF funding.

The “potential upside risk is what keeps us on the sidelines,” the researchers wrote.

The upshot is that MoffettNathanson sees CenturyLink’s consumer business remaining within the merged company, where it would be better off anyway.

Again, emphasis is mine. I have heard  industry insiders question the wisdom of CenturyLink accepting CAF funding. The main problem is that they didn’t receive enough funding to adequately cover upgrades to areas where the potential for ROI is slow or uncertain. And the required buildout speeds aren’t fast enough to satisfy all customers. It’s a lose-lose situation.

To create a win-win for both providers and communities, federal funding must be adequate to incent providers to invest in networks that meet consumer needs. The current CAF II requirements of a 10/1 network don’t meet community needs: economic development is in the upload speed. Minnesota state speed goals of 100 Mbps down and 20 Mbps up by 2026 seem much closer aligned to the community needs than the 10/1 speeds currently required by the Connect America Fund (CAFII).

The final line in the industry analysts’ research note reminds us that this is a look from and for the company of CenturyLink – not for the communities they serve…

The upshot is that MoffettNathanson sees CenturyLink’s consumer business remaining within the merged company, where it would be better off anyway.

Blandin released a report in 2017  that points out that industry ROI and community ROI are different. Households with broadband realize $1850 in economic benefits per year. So, the communities need better broadband. The gap is between that community need and the business needs of the provider to deliver profits to their shareholders.

FCC authorizes $166.8 million in funding over the next decade; $3.3+ million for MN Projects

The FCC reports

The FCC today authorized $166.8 million in funding over
the next decade to expand broadband to 60,850 unserved rural homes and businesses in 22 states, representing the second wave of support from last year’s successful Connect America Fund Phase II auction. Providers will begin receiving funding this month.

Here are the projects authorized in Minnesota…

Minnesota: Paul Bunyan Rural Telephone Cooperative
Minimum Speed: 1 Gbps/500 Mbps
Locations: 315
Support /10 Years: $1,313,543

Minnesota Garden Valley Telephone Company
Minimum Speed: 1 Gbps/500 Mbps
Locations: 95
Support /10 Years: $880,346

Minnesota West Central Telephone Association
Minimum Speed: 1 Gbps/500 Mbps
Locations: 532
Support /10 Years: $611,934

Minnesota Interstate Telecommunications Cooperative
Minimum Speed: 1 Gbps/500 Mbps
Locations: 209
Support /10 Years: $552,330