There is a lot to appreciate in the recently published “Notice of Funding Opportunity” (NOFO) by the Department of Commerce’s National Telecommunications Information Administration (NTIA). It is arguably the first federal government proposal that seeks to promote infrastructure policies focused on the future, rather than the usual subsidizing “good enough for now” access. That means that the American government, or at least part of it, finally recognizes what appears obvious: that the future of internet access is in fiber.
The NOFO contains a strong emphasis on the deployment of open-access infrastructure designed to facilitate competition and meet the growing needs of communities. Lastly, it promotes affordability key priority outcome of the many projects that will get financed with federal tax dollars. Let’s dive into the details here.
Infrastructure That Will Last Decades
Congress was explicit in the bipartisan infrastructure law that it did not want the NTIA to implement a program that built broadband access solutions that would only be good enough for today and unprepared for tomorrow. Learning from past federal policy failures that squandered billions of federal dollars on outdated broadband infrastructure that will need to be replaced entirely, Congress emphasized a priority on projects that can “easily scale speeds over time” while meeting “evolving connectivity needs” and support “deployment of 5G” and “other advanced services” under Section 60102(a)(1)(I) of the bill:
(I) Priority Broadband Project - The term "priority broadband project" means a project designed to -
(i) provider broadband service that meets speed, latency, reliability, consistency in quality of service, and related criteria as the Assistant Secretary shall determine; and
(ii) ensure that the network built by the project can easily scale speeds over time to -
(I) meet the evolving connectivity needs of households and businesses; and
(II) support the deployment of 5G, successor wireless technologies, and other advanced services.
In our filing to the NTIA, EFF provided technical analysis explaining how fiber-optic wires meet these objectives laid out by Congress and where alternatives fall short in one or more of the above categories. This wasn’t because of any type of favoritism towards on last-mile transmission medium over another, this was just plain old physics driving these results. In its explanation of the “priority broadband project,” the NTIA agreed and acknowledged that “only end-to-end fiber” (on page 42 of the NOFO) will meet these policy objectives.
As a result, states will need to draft plans with the understanding that pushing fiber deep into communities seeking access should be the overall objective of state broadband plans with rare exception. That exception, namely defined by an “extremely high cost per location threshold” (page 13 of the NOFO) will allow non-fiber alternatives to be considered in areas determined to be cost-prohibitive to deploy fiber optics. However, states should understand that there is a lot of data now showing that we can basically deploy fiber to the home anywhere we’ve been able to deploy electricity. In fact, because the demand and value of broadband is sky high with people at the same level as water and electricity, that demand results in the ability for local communities to long term finance the same way rural electrification was done in the past.
It may shock a number of state policymakers that 21st-century fiber can actually be a reality for so many people. For years they were told by lobbyists working for the big ISPs, such as AT&T and Comcast, that getting nearly everyone connected to fast multi-gigabit fiber was impossible. What they actually mean is its impossible only for the big ISPs that aren’t willing to make long-term commitments to communities over short-term profit. In other words, they refused to spend money to make money, choosing instead to exhaust their infrastructure and consumer choice.
But policymakers have to make a decision here on whether the Wall Street-driven, three-to-five-year return on investment formula is worth more than long term infrastructure solutions that will actually cost the taxpayer much less money in the end. People will always need access to the internet going forward, and that need will continue to grow without slowing down.
Open Access to Promote Competition and Maximum Value for Public Investment
EFF funded and published a study on how to get everyone connected to fiber infrastructure in the most efficient way possible to find that open-access fiber infrastructure was key. In specific, entities that just build the infrastructure to provide access to broadband providers (and other users), as opposed to selling broadband themselves, were better suited to reaching more Americans with lower subsidies than the traditional method of subsidizing broadband companies. This is because fiber allows the aggregation of data needs in ways other methods of broadband access lack, and due to that flexibility to meet multiple different kinds of needs the infrastructure will be better capable of capturing local revenues. The added benefit is that once those wires are laid and are open for multiple uses, anyone with enough technical knowledge and a small amount of resources could open a small local ISP and sell quality services.
EFF’s research also found that pure infrastructure providers were more willing to adopt longer-term profit strategies in recognition of the value of fiber as an asset, which allows them to assess risk differently than a traditional vertically integrated broadband provider. It is why you are seeing private market actors willing to deploy a lot more fiber than the traditional ISP and for rural local government entities fully commit to fibering up all of their residents with open access infrastructure. It is because they can look at the wires in isolation of services, see its capacity to meet infrastructure needs for decades (potentially as long as 70 years), and rationally rely on very long-term financing vehicles much in the same way people purchase houses with mortgages.
The NTIA appears in agreement with these efficiencies and asked states to seek out ways to promote open access infrastructure providers to participate in the program as a means to maximize the impact of the federal investment. If every state is able to replicate what is happening in Utah where an open-access infrastructure provider delivering access to a dozen ISPs is constantly growing due to local demand for the network, and that local demand more than pays for the network itself allowing it to constantly grow until everyone is connected to fiber, then infrastructure policy will have not only closed the digital divide but vastly improved the competitive landscape for broadband.
Affordability Sits at the Heart of NTIA’s Guidance
In many areas, these infrastructure dollars are going to provide for the first time broadband access, which means it will be a monopoly simply due to the lack of alternatives. Recognizing the value of the access point and the potential for exploitation, the NTIA details (on page 66 of the NOFO) that it expects states to adopt strong affordability provisions for all users, not just low-income users. Given that the taxpayer is actually a major payer in the infrastructure that is being deployed, it is logical for the government to set in place rules to protect the public.
There is also something to be said about how much internet users can trust some companies in broadband access when the current market has given Americans some of the most expensive broadband access in the world, while sadly one of the slowest infrastructures as the advanced Asian countries and the EU transition towards multi-gigabit all fiber access well ahead of the United States. California has already embarked on establishing low-cost access as a priority for its infrastructure program and much like the NTIA’s proposal has prioritized applicants who will commit to offering affordable access to broadband.
As states develop their own plans, a key factor is the level of subsidization that will be provided should factor significantly in how low the price should be for access. The biggest price tag is the one-time sunk cost of constructing the network itself, whereas actual operation of the network costs are relatively low, particular with fiber networks. If the taxpayer is taking on the most expensive portion of deployment, that means the pressure on paying for the network is alleviated in a significant way. Balancing out these factors and how that plays into what should be a deliverable outcome from a NTIA/state infrastructure plan will require a lot of work as cost model analyst experts such as former Chief of the FCC’s Office of Strategic Planning Paul de Sa detailed in a recent white paper. But it is absolutely necessary in order to avoid unjustly enriching a recipient of this once-in-a-generation investment in internet access.
What Happens Next?
The ball mostly moves now into the states and territories that have to signal an intention to apply for funding and develop five-year action plans. Given the emphasis on fiber infrastructure, states will need to update their local policies to maximize their capability to deliver on 21st-century access to all people. That will include removing barriers to public sector infrastructure providers who can tackle the most difficult areas to provide service as well as explore ways to promote efficiencies like Alabama did by merging the interests of deploying fiber by electric utilities and ISPs through joint ventures. Every state will undoubtedly seek its own path that fits its needs, but now they have a partner in the NTIA who can provide technical assistance and resources in ways that were absent in the past.
For years EFF stated the United States desperately needed a “fiber for all” plan citing the data showing increased monopolization by cable, lack of preparedness to meet future needs, and general trend of international competitors such as China. The NTIA has delivered a thoughtful, detailed proposal to the states and territories that chart the course to connect everyone to fiber. Now you must go to your local elected officials to push them to see this vision through.