Cares Act Broadband Funding Came With Unrealistic Deadlines, Ruining Good Intentions

from the throwing-money-at-the-problem dept

As our current Techdirt Greenhouse panel is exploring, COVID-19 has shone a very bright light on the importance of widely available, affordable broadband. Nearly 42 million Americans lack access to any broadband whatsoever--double FCC estimates. 83 million are stuck under a monopoly. Millions can't afford service thanks to a lack of competition among very powerful, government pampered telecom monopolies, despite untold billions in federal and state subsidies for fiber networks that routinely, consistently, wind up only half deployed.

Instead of tackling the corruption that makes state and federal regulatory capture possible, or embracing policies that drive more competition to market (AT&T, Verizon and Comcast don't much like either), the U.S. routinely enjoys just throwing more taxpayer money at the problem in the hopes things somehow, this time, improve. While that's sometimes certainly a helpful path, more often than not the money doled out to industry giants gets misdirected and wasted, in large part because (and pardon me for being redundant), nobody bothers to genuinely hold U.S. telecom incumbents accountable for much of anything, ever.

The latest case in point: last March Congress passed the CARES Act, our last (and only) major relief package for those struggling under COVID-19. Included in the bill was $375 million in new funding for various telecommunications related government projects. A chunk of that money ($100 million) was earmarked for additional broadband deployment grants under the RUS’s broadband deployment pilot program, which was originally created in 2018 with $600 million in funding.

The problem: restrictions mean that many locations were forced to rush and spend that money before the end of the year, or it gets returned to the federal government. Given the time-intense complexity of getting broadband deployed to rural areas, the obvious reality that COVID isn't going away, and a broken Congress' inability to pass any more public or infrastructure aid during a historic health crisis, that's obviously pissing some people off:

To be clear, the money is going toward some genuinely good projects in many areas. But the restrictions will force behavior that's not well-aligned with doing things correctly or ensuring that the money is spent as intended (just ask Mississippi, which is currently embroiled in a fight with AT&T after the state said the giant took $283 Million for broadband networks never deployed). Forcing municipalities to rush projects in order to spend the money, lest they lose it, is now pissing off folks from New York to Alabama:

"Congress put tight restrictions on how the funds could be used, including not allowing any expenses other than those directly related to the outbreak and not allowing any spending past Dec. 30. The expenses also have to have originated after March 27, not prior to the virus.

That deadline was set in the CARES Act when many believed the virus would be gone by the end of 2020.

“Right now, I think the time deadline is the biggest challenge (to spending the money)” Butler said.

“Since May, there have been many things that have come across our desk that really look like great things and we would have liked to have done that just don’t get past the allowable use test,” Butler said.

U.S. broadband dysfunction is a problem a generation in the making. We're not going to fix it in a mad dash by throwing taxpayer money at it, then rushing those in charge of building complicated, regional solutions. We're a country that simply refuses to come to terms with the fact that AT&T and Comcast literally write state and federal telecom law always with an eye on hamstringing potential competition and protecting dominance. Fixing the problem requires recognizing the private market alone can't and won't fix it, shaking off lobbying influence, and developing smart, creative strategies that drive additional competition to market.

Instead, the Trump administration gutted the FCC and consumer protections at lobbyist behest, doled out tens of billions in utterly pointless tax cuts to giants like AT&T, and mindlessly rubber stamped job and competition eroding megamergers. The result: more layoffs, less competition, higher prices, and less accountability for some of the least liked monopolies in American industry. Brilliant. Even when America has tried to craft a "national broadband plan" (as we did in 2010 under Obama's first FCC boss, Julius Genachowski), it has comically refused to seriously acknowledge the lack of competition among powerful monopolies as the root cause of the U.S. broadband industry's dysfunction. Largely because timid U.S. leaders don't like making NSA allies AT&T and Verizon mad.

Through the fall, winter, and Spring as COVID-19 surges, pressure will be greater than ever on lawmakers to do more to fix U.S. broadband, and do it right now. It might be nice if, for once, we recognize than mindlessly scattering subsidies around has never truly worked if you're not willing to tackle (or for many "experts," even acknowledge) regulatory capture and monopoly domination in the first place. U.S. broadband policy consistently operates in a state of delusion and denial, and the end result couldn't be more obvious.

Filed Under: broadband, buildout, cares act, covid-19, infrastructure investment, wasteful spending

Cable Industry Proclaims More Competition 'Hurts Consumers' & 'Damages Economic Efficiency'

from the bigger-ain't-better dept

As part of the conditions attached to Charter's $79 billion acquisition of Time Warner Cable and Bright House Networks, the FCC imposed a requirement that Charter expand broadband service to another two million locations, one million of which must already be served by an ISP delivering speeds of 25 Mbps or greater. Unfortunately these kinds of conditions historically don't mean much; merger broadband expansion promises are almost always volunteered by the ISPs themselves, who already planned the expansion regardless of their merger plans.

That isn't stopping a lobbying organization representing Charter's cable competitors from crying and stomping their feet over the condition. In a filing by the American Cable Association (ACA, pdf), the organization's lawyers try to claim that not only would an influx of competition somehow harm consumers, the group claims that adding competitors to what are frequently stagnant markets will somehow "damage economic efficiency":

"That overbuild condition is unlawful. It is not tailored to mitigate a merger-specific harm or confirm a merger-specific benefit. It will exacerbate the merger harms the Order identifies, damage economic efficiency, injure small providers, and harm consumers. The condition should be stricken."

Another coalition of cable providers, the NTCA, tried to claim the same thing in a filing of its own:

"While the commission’s intentions in proposing the buildout requirement were undoubtedly good, the reality is imposing such a condition creates artificial competition in areas that cannot support it, which will ultimately undermine, rather than further, broadband availability and affordability in higher-cost areas in particular."

When is competition "artificial?" When we say it is! The thing is, it's not really competition these companies are worried about. It's the inevitable hoovering up of their businesses by Charter down the road. Charter CEO Tom Rutledge recently made it clear at an investor conference that he won't be targeting cable companies under the condition -- rather, he'll be targeting phone companies. Why? Phone companies, usually unwilling or unable to invest in fiber, make easier targets. There's no need to compete with smaller cable operators, when you can just gobble them up at a later date:

"When I talked to the FCC, I said I can’t overbuild another cable company, because then I could never buy it, because you always block those,” Rutledge said at the MoffettNathanson event. “It’s really about overbuilding telephone companies.” “Why would we go where we could get killed,” Rutledge said.

In other words, Charter doesn't want to compete with cable companies, because the FCC would then prohibit them from merging with them later for fear of lessening competition. Instead, Charter plans to take aim at the already struggling second-tier telcos in these areas, then acquire smaller cable operators down the road. So despite the FCC's intentions, the deal creates another homogeneous giant just like Comcast with little to no real competition to keep it in check, and the conditions are little more than regulatory band-aids for what's ultimately going to end badly for every individual and organization not-named Charter.

While the FCC's conditions do include a few useful nuggets for consumers and small businesses (a ban on caps and net neutrality violations for seven years), with the pace at which the cable industry is looking to defang and hamstring the agency, it's not clear there's going to be much of an FCC left to enforce the conditions during the latter stretch of that window. While the FCC certainly tried to shine up these conditions to downplay the negative aspects of deal approval, it's still abundantly clear that giant telecom mergers like this only ultimately benefit the companies involved.

That's a lesson that for whatever reason we seem utterly unwilling to learn despite our collective disdain for the end result.

Filed Under: broadband, buildout, cable, competition, fcc
Companies: aca, bright house networks, charter, ncta, time warner cable