Daily Digest 5/24/2023 (Oversight)

Benton Institute for Broadband & Society

Table of Contents

Broadband Funding

FCC Eases Budget Restrictions for Rural Rate-of-Return Carriers  |  Read below  |  Marlene Dortch  |  Public Notice  |  Federal Communications Commission
Etheric Communications Defaults on Rural Digital Opportunity Fund Bids in California  |  Read below  |  Public Notice  |  Federal Communications Commission

Data & Mapping

How the FCC National Broadband Map Impacts the BEAD Program, Part 3 of 3: Meeting the Urgent Need  |  Read below  |  Press Release  |  National Telecommunications and Information Administration

State/Local Initiatives

BEAD Initial Proposal  |  Read below  |  Veneeth Iyengar  |  Public Notice  |  Louisiana Office of Broadband Development and Connectivity
Louisiana Draft Digital Equity Plan  |  Read below  |  Public Notice  |  Louisiana Office of Broadband Development and Connectivity
How State Broadband Offices Are Using Initial Dollars from Capital Projects Fund  |  Read below  |  Jake Varn, Lily Gong, Colby Humphrey  |  Analysis  |  Pew Charitable Trusts

Shentel begins work to bring new cable option to Williamsburg, Virginia area  |  Virginia Gazette

Red Hook’s mesh network survived Hurricane Sandy. Today, it’s in limbo.  |  Vox

Oversight

Benton Foundation
Communications and Technology Subcommittee Hearing Examines the National Telecommunications and Information Administration  |  Read below  |  Kevin Taglang  |  Benton Institute for Broadband & Society

Wireless

The Rural Cellular Crisis  |  Read below  |  Doug Dawson  |  Analysis  |  CCG Consulting
Viasat acquisition ready for launch as SpaceX challenge fizzles  |  Read below  |  Julia King  |  Fierce

Social Media/Platforms/AI

Social Media and Youth Mental Health  |  Read below  |  Public Notice  |  Department of Health and Human Services
Teenagers Resent Social Media. They Also Resent Efforts to Take It Away.  |  New York Times
Facebook Parent Meta Agrees to Sell Giphy to Shutterstock for $53 Million on Order by U.K’s Competition and Markets Authority  |  Wall Street Journal
Meta Loses Court Fight Over EU Hunt for Antitrust Evidence  |  Bloomberg
The Dire Defect of ‘Multilingual’ AI Content Moderation  |  Wired

Journalism

Knight–Georgetown Institute seeks to shape how technology is used to produce, disseminate and access information  |  John S. and James L. Knight Foundation

Industry/Company News

AT&T’s rate of fiber penetration is twice as good as expected  |  Read below  |  Linda Hardesty  |  Fierce
Private equity can move faster on fiber deployments than government  |  Read below  |  Linda Hardesty  |  Fierce
Grain says not all private equity broadband investors are created equal  |  Read below  |  Diana Goovaerts  |  Fierce
Cable One’s Sparklight invests $12M to upgrade Sioux City, Iowa, network  |  Fierce
Apple Strikes Multibillion-Dollar Supply Deal With Broadcom  |  Wall Street Journal
Netflix’s password-sharing crackdown is here — and it costs $7.99 per month  |  Vox
Today's Top Stories

Broadband Funding

FCC Eases Budget Restrictions for Rural Rate-of-Return Carriers

Marlene Dortch  |  Public Notice  |  Federal Communications Commission

The Federal Communications Commission temporarily waives, on its own motion, the application of the budget control mechanism for rate-of-return carriers that receive high-cost universal service support from legacy mechanisms. The FCC adopts instead a budget constraint of 0%, i.e., a full waiver of the budget constraint, for the July 2023 to June 2024 tariff year, and directs the FCC's Wireline Competition Bureau to work with the Universal Service Administrative Company (USAC), the administrator of the federal Universal Service Fund (USF or Fund), to implement the budget control mechanism using 0%. Absent a waiver, the projected budget control reduction factor would exceed 18%, resulting in a substantial reduction in support for most legacy rate-of-return carriers at a time when they continue to face cash flow issues and increased expenses as they emerge from the pandemic. The FCC’s rules expect that carriers would have an opportunity to make up any reduction to Connect America Fund Broadband Loop Support (CAF BLS) through higher consumer broadband-only revenues.  CAF BLS supports voice and broadband-only lines to the extent that the carrier’s interstate common line and broadband-only line costs (i.e., revenue requirements) exceed its revenues.

Etheric Communications Defaults on Rural Digital Opportunity Fund Bids in California

Public Notice  |  Federal Communications Commission

The Federal Communications Commission announced that Etheric Communications defaulted on its Rural Digital Opportunity Fund (Auction 904) bid. Auction 904 support will not be authorized for the winning bids in California. The FCC considers winning bidders and assignees to be in default for these bids and subject to forfeiture. The agency will refer these defaulters to the Enforcement Bureau for further consideration. The FCC also denied Wavelength LLC’s petition for waiver of the June 7, 2021, ETC designation documentation deadline. Wavelength has proposed to deploy gigabit, low latency service to more than 68,000 locations in California and Arizona. But on February 2, 2023, the California Public Utilities Commission (CPUC) issued a decision denying Wavelength’s request for an ETC designation covering its Auction 904 winning bids in the state. As a result, Wavelength has been unable to obtain an ETC designation covering its winning bid areas in California. On this basis alone, Wavelength cannot be authorized to receive Auction 904 support in those areas.

Data & Mapping

How the FCC National Broadband Map Impacts the BEAD Program, Part 3 of 3: Meeting the Urgent Need

The National Telecommunications and Information Administration is preparing to enter a crucial phase for the Internet for All initiative. Soon, it will notify states and territories of their BEAD program allocation amounts. Once those notifications are made, states and territories will have 180 days to submit their initial proposals. NTIA is confident it will have the data it needs to take that step when it makes the allocation announcement by June 30. NTIA has seen the work of states, territories, Tribes, municipalities, nonprofits, Internet service providers, individuals, and other stakeholders across the country who have engaged with the Federal Communications Commission's National Broadband Map and provided input to ensure a better picture of Internet availability. To understand the impact of the challenge process and additional work that the FCC and its vendor CostQuest have been doing to improve the map, NTIA analyzed the change in broadband serviceable locations between version 1 and version 2 of the Broadband Fabric. The number of serviceable locations between version 1 and version 2 increased from 113 million locations to about 114 million locations, which accounts for a less than 1% net increase in the total number of broadband serviceable locations across the country.  Note that this net change reflected both additions and subtractions from the fabric—the FCC added nearly three million locations while removing nearly two million for reasons ranging from updated data to the use of more sophisticated tools to identify and remove structures like garages and sheds. This tells us three things: 

  1. The changes between version 1 and version 2 of the Fabric were relatively modest, and we can expect that changes between future versions of the FCC map will likely continue to be modest. 

  1. These modest changes go both ways. States, territories, and the District of Columbia (“Eligible Entities”) could gain or lose locations from version to version.  

  1. If the changes to the total number of broadband-serviceable locations is modest—and at less than 1% they were—then it is likely that the impact on the allocation is modest, because the key variable in the BEAD allocation formula is the number of unserved locations in a state or territory relative to the total number of unserved locations nationwide. 

State/Local

BEAD Initial Proposal

Veneeth Iyengar  |  Public Notice  |  Louisiana Office of Broadband Development and Connectivity

In collaboration with the National Telecommunications and Information Administration, ConnectLA has developed a first volume of Louisiana's proposal for how the state plans to use Broadband Equity, Access, and Deployment (BEAD) Program funds to address Louisiana’s digital divide. This volume outlines current efforts to deploy broadband, a breakdown of unserved and underserved locations, and an overview of the process to challenge a provider’s service availability and performance. The public comment period will close on June 23, 2023, at which point ConnectLA will use suggestions to create an updated plan.

Louisiana Draft Digital Equity Plan

This plan outlines Louisiana’s first coordinated effort to assess the state’s digital divide and move Louisiana toward digital equity. Louisiana’s vision is that digital equity will be achieved for all residents and communities. Digital equity for Louisiana means that all residents will have access to affordable broadband, opportunities to obtain the appropriate devices, accessible applications, and support to acquire the digital skills needed to improve their quality of life. By 2029, the necessary structures will be in place to sustain Louisiana’s work toward digital equity for all Louisianians.

How State Broadband Offices Are Using Initial Dollars from Capital Projects Fund

Jake Varn, Lily Gong, Colby Humphrey  |  Analysis  |  Pew Charitable Trusts

States are implementing a variety of strategies as they allocate the initial rounds of federal Capital Projects Fund (CPF) dollars to help expand access to broadband services. The U.S. Department of the Treasury has officially released more than half of the CPF dollars, with $6 billion awarded to 40 states as of May 2023. Approaches to using the funding differ widely depending on states’ needs and resources, but in many instances, officials are making these decisions while planning how best to use other federal funding still to come in order to ensure that more residents will have high-speed internet. As of April 2023, the majority of CPF funding announcements have involved states using funds to expand or create programs that target what is known as last-mile service—the broadband connections available directly for customers’ homes or businesses—in unserved and underserved areas. Those are typically areas without access to internet speeds of 25/3 Mbps or 100/20 Mbps, respectively, depending on the definitions used by each state and territory.

Wireless

The Rural Cellular Crisis

Doug Dawson  |  Analysis  |  CCG Consulting

Some counties have a bigger cellular coverage problem than they do a broadband problem. There are often a much larger number of homes in a county that don’t have adequate cellular coverage than those that can’t buy broadband. I always knew that the cellular coverage maps published by the big cellular carriers were overstated; now I know that they are pure garbage. Before the pandemic, the Federal Communications Commission came up with a plan to spend $9 billion from the Universal Service Fund to build and equip new rural cellular towers—using a reverse auction method. This process derailed quickly when the biggest cellular companies produced bogus maps that showed decent coverage in rural areas that were close to some of the smaller cellular carriers. The FCC was so disgusted by the lousy maps that it tabled the subsidy plan. The big cellular companies have clearly not invested in many new rural cell towers over the last decade because they’d rather have the FCC fork out the funding. I haven’t the slightest idea if $9 billion is enough money to solve the problem or even put a dent in it. No doubt, the FCC will saddle the program with rules that will add to the cost and result in fewer towers being built. But whatever is going to happen, it needs to start happening soon.

Oversight

Communications and Technology Subcommittee Hearing Examines the National Telecommunications and Information Administration

The House Commerce Committee's Subcommittee on Communications and Technology convened to conduct oversight of the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA). The subcommittee is considering reauthorizing NTIA for the first time since 1993. Key questions leading into the hearing included:

  • Why is the NTIA’s proposed budget increase necessary to fulfill its statutory duties?
  • What steps is the NTIA taking to prevent waste, fraud, and abuse in its broadband grant programs?
  • What steps is the NTIA taking to improve the coordination and management of Federal spectrum?
  • What steps is the NTIA taking to provide oversight of public safety activities, including the First Responder Network Authority?

[much more at the link below]

Ownership

Viasat acquisition ready for launch as SpaceX challenge fizzles

Julia King  |  Fierce

Viasat will likely be able to move forward with its acquisition of Inmarsat after the Federal Communications Commission signed off on the deal. The transaction was first agreed upon by California-based Viasat and London-based Inmarsat more than 18 months ago, but has been deferred by review processes in both the U.S. and U.K. The FCC’s investigation was notably prompted by Viasat rival SpaceX after the latter was granted $886 million in broadband funding from the government's Rural Digital Opportunity Fund (RDOF). Viasat campaigned against the SpaceX funding with a series of public objections saying the company’s Starlink satellites did not have the capacity and speed to meet FCC requirements. But the FCC issued “unconditional” clearance for Viasat and Inmarsat, and with that blessing the satellite service providers will just have to wait for the European Commission’s (EC) competition review before their union is finalized.

Platforms/Social Media

Social Media and Youth Mental Health

Public Notice  |  Department of Health and Human Services

This advisory describes the current evidence on the impacts of social media on the mental health of children and adolescents. It states that we cannot conclude social media is sufficiently safe for children and adolescents and outlines immediate steps we can take to mitigate the risk of harm to children and adolescents. Key takeaways:

  1. Social media use by young people is nearly universal
  2. Social media presents a meaningful risk of harm to youth, while also providing benefits
  3. We cannot conclude that social media is sufficiently safe for children and adolescents
  4. We can take immediate actions to make social media safer for youth

Industry News

AT&T’s rate of fiber penetration is twice as good as expected

Linda Hardesty  |  Fierce

AT&T CEO John Stankey specified the main factors that AT&T considers for a fiber build. For about three years, AT&T has been clearly communicating its two main focuses—5G and fiber. In terms of fiber, it set a goal to pass 30 million locations with fiber by 2025. It closed 2022 with a total of 24 million passings. Stankey said the fiber build and the consumer response to it have been going well. “If it was not performing well we wouldn't have had the conviction to start the Gigapower venture with BlackRock.” Stankey said that AT&T was so impressed by the response to its fiber build within its wired footprint that it decided to extend fiber outside of its footprint with the joint venture with BlackRock. He said that AT&T’s rate of penetration in the first year after a fiber build “is twice as much as what we expected when we did the original business case on this stuff to get to the 30 million customer passes….twice is a lot. He also said that average revenue per user (ARPU) was better than expected. “We're operating right now at what we assumed to be the terminal ARPU. Where we stand in the business right now, we're actually at what would have been the terminal ARPU out at year 10.”

Private equity can move faster on fiber deployments than government

Linda Hardesty  |  Fierce

The prospect of billions of dollars flowing to states from the Broadband Equity Access & Deployment (BEAD) program is causing private equity companies to also flood the market with investment funds for fiber. On a panel at the recent Connect(X) conference in New Orleans (LA), panelists were asked if private equity companies will compete for BEAD funds or if they will add to the overall investment in fiber. Two panelists — Jessica Koch, broadband program manager at Calix and Daniel D’Costa, principal within the Carrier and Reseller Vertical at Zayo — said that private equity will put up their own money. But they will look to partner with service providers who are applying for BEAD funds. In that way, service providers will be able to boost their business models by getting BEAD money as well as private funding. Zayo has already seen a lot of private equity companies coming into the space aggressively, including GI Partners, Blackstone and Macquarie. And D’Costa noted that private equity, by its very nature, can move much faster than government programs with all the red tape.

Grain says not all private equity broadband investors are created equal

Diana Goovaerts  |  Fierce

Private equity (PE) money has been flooding into the broadband market over the past two years. Everywhere you look, someone has a PE partner of some kind. AT&T teamed with BlackRock, Brightspeed has Apollo Management and Mubadala, Ting Internet has Generate Capital and Ziply Fiber has WaveDivision Capital, Searchlight Capital and others. But according to Grain Management, not all PE investors are created equal. “There are natives and there are tourists,” said a representative for Grain Management. Natives, of course, are those who—like Grain—specialize in telecom and have a track record of successful investments in fiber, towers, spectrum or data centers. “This sector has been flooded with first-time investors, but what distinguishes successful investors is a skillset and history in the [telecommunications] space.” Grain has a vested interest in making this argument. The company considers itself a broadband specialist and has already invested in a range of companies including Great Plains Communications, Ritter Communications, Summit Broadband, Hunter Communications, LightRiver and, most recently, Quintillion. Asked what exactly “native” investors bring to the table that first-timers don’t, the representative said specialists can access opportunities that other less specialized firms may not. That’s in large part because of the extensive relationships these companies have built up with vendors and other partners.

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Benton (www.benton.org) provides the only free, reliable, and non-partisan daily digest that curates and distributes news related to universal broadband, while connecting communications, democracy, and public interest issues. Posted Monday through Friday, this service provides updates on important industry developments, policy issues, and other related news events. While the summaries are factually accurate, their sometimes informal tone may not always represent the tone of the original articles. Headlines are compiled by Kevin Taglang (headlines AT benton DOT org), Grace Tepper (grace AT benton DOT org), and David L. Clay II (dclay AT benton DOT org) — we welcome your comments.


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Kevin Taglang

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Benton Institute
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