StateScoop – January 10, 2017
Commentary: Christopher Mitchell of the Institute for Local Self-Reliance predicts new connectivity opportunities and an altered broadband landscape as a pro-business Trump administration prepares to disrupt the status quo.
This may well be the year of local government broadband solutions. For some communities, it will be because they are prepared to step up and are excited about ensuring all residents and businesses in the community have the tools to thrive in the digital economy. For others, it will be a last resort in the face of new political and economic challenges — but many will be taking action.
There’s a new landscape for broadband
For years, improving internet access has been — at best — an afterthought in Congress. Now with Rep. Marsha Blackburn chairing the House’s telecom subcommittee and Donald Trump widely expected to appoint a pro-incumbent FCC leader, AT&T and Comcast are setting the agenda and I do not expect any federal actions will improve the competitive landscape in telecommunications.
While nearly every state has elected officials talking about how important connectivity is, very few have the will to put serious money up for network investment following recent programs with questionable outcomes. New York is putting $500 million into a complicated broadband program and Massachusetts has thrown tens of millions of dollars at consultants and a massive middle-mile ring that hasn’t done much to solve its connectivity problems because it attempted to micromanage solutions in an industry it barely understands. Wisconsin is actually taking money out of a smart energy efficiency program in a poorly-designed one-time giveaway to internet service providers (ISPs).
Cable and telephone companies have scale that makes them strong in the market, but stronger still in lobbying. They will push for new rules and limits on local Internet choice. They will seek mergers to make competition even more unlikely.
They will also invest in some fiber, but put more energy into touting those investments than actual construction. I predict the big firms will continue to raise prices and alienate many of their customers, creating a still stronger demand on local governments to take action.
Local governments have an opening
That leaves local governments — the folks responsible for making sure their businesses have competitive infrastructure and that their residents have a high quality of life.
If you bring up local governments and broadband, most people think first of Chattanooga, Tennessee — one of the best places in the U.S. to get Internet access due to its affordable prices, great support and 10 gigabit speeds. But they should also think of Lincoln, Nebraska, where smart conduit investments led to more competition and where two local ISPs are building fiber-to-the-home network — one with a citywide vision and franchise offering important community benefits like universal service.
Minnesota and Colorado have small but impressive programs matching local dollars for next-generation rural connectivity that encourage grassroots planning and involvement. Much of the investment has gone to networks that are locally owned, which makes them more likely to continue investing locally rather than focusing solely on extracting profits from the community.
As local governments step up, we’ll see more of these kinds of investments. They will invest in passive network elements like conduit or dark fiber. That’s a perhaps unnecessarily specific way of saying parts of networks that can be leased to multiple ISPs, lowering their cost of connecting subscribers. Ammon, Idaho, is a good example of this approach, which has saved money for the city while allowing many ISPs to compete on municipal infrastructure.
But as local governments take these actions, expect a major pushback. Some of this will be in rhetoric — claims that wireless is making fiber-optic investments unnecessary or that because “Google failed,” local governments should do nothing. This is nonsense. Google continues to invest in fiber optics and wireless, just with far fewer immediate ambitions.
But more importantly, whether Google regards its approach as a success or not, local governments are not Google. They have to choose between making investments in fiber optics or losing businesses and residents to communities that have. Google has to choose between investing in fiber or Artificial Intelligence and driverless vehicles. Different opportunity costs.
Fiber isn’t going anywhere
Expect the 5G drumbeat to continue. 5G is the next super-exciting thing that few understand. The actual spec is years away from finalization, to say nothing of gear in a time when most carriers still don’t meet the full 4G specs. But speculation on wireless is a gift that keeps on giving — people just love to click on stories about the next big thing.
When I started in this field 10 years ago, I was told my focus on fiber was antiquated — didn’t I know that Wi-Fi had made fiber unnecessary? A few years later, people would say very seriously that while Wi-Fi didn’t hit its hype, WiMax was the real deal and made fiber straight up foolish. That didn’t last long , but it wasn’t a big deal because 4G LTE would meet all of our needs. But it hasn’t. Wireless is a strong complement to fiber, but not a substitute. This is unlikely to change soon, given that 5G will depend on a deep fiber-optic network connecting its many nodes.
Fiber is as relevant today as ever. The forces at work in big telecom and in Washington have created a self-reinforcing circle that will lead to more local governments taking action, even though it may be more difficult today to make these investments. In time, we’ll see more elected officials willing to stand up to the big cable and telephone companies, but we still have a few more years to go.
Commentary originally published on StateScoop.