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The Infrastructure Guessing Game

As U.S. Congress inches closer to an infrastructure bill, the industry is feverously speculating how a broadband infrastructure plan might work. There is still a lot of compromise and wheeling and dealing to be done, so nobody knows how a final broadband program might work, or even definitively if there will be one. But since this is the billion-dollar question for the industry, it’s worth a review of the possibilities.

At this point, I think we know where the White House would come down if they were the decider in the issue. We can see the White House’s influence in shaping the policies concerning ARPA grant monies. The White House has pushed to ignore the FCC’s outdated 25/3 Mbps definition of broadband and has quietly pushed for rules that would let broadband money solve the urban broadband gap and not just the rural gap. The White House’s original proposal was for $100 billion to built state-of-the-art broadband infrastructure. Other than that, the original White House plan avoided talking about the mechanics of how to use broadband funding—and that is the real billion-dollar question.

But the White House does not get to decide the details of how infrastructure spending will be done—that responsibility lies fully with Congress. There have been two radically different broadband plans suggested in Congress.

Last year, an $80 billion infrastructure plan was proposed with the Accessible, Affordable Internet for All Act sponsored by Rep. James E. Clyburn of South Carolina and Sen. Amy Klobuchar of Minnesota. This bill included a lot of unique ideas. Most of the funding was to be awarded in one gigantic reverse auction of at least $60 billion. We saw the perils of using the reverse auction last year when much of the FCC’s reverse funding awards went awry. We saw companies with no balance sheets winning huge dollars. We saw grant awardees claiming technologies like gigabit rural wireless that don’t exist. We saw money going to an unproven low orbit satellite business. We also quietly saw many of the big incumbents claim huge funding.

The Accessible, Affordable Internet for All Act also had a big emphasis on affordability. This was the act that suggested a $50 monthly discount for low-income broadband that materialized this year in the EFF program. The Act also promotes the idea of open access—an idea that is anathema to many ISPs. Altogether, the mechanics of this Act are troublesome.

Just this month, three Senators—Michael Bennet, D-Colorado, Angus King, I-Maine, and Rob Portman, R-Ohio—reintroduced the Broadband Reform and Investment to Drive Growth in the Economy Act (BRIDGE Act). This would allocate $40 billion for broadband infrastructure. The bill promotes gigabit broadband and would require that funding only be allowed for technology that can deliver symmetrical 100 Mbps speeds. The bill lifts the ban on municipal participation in creating a broadband solution. The BRIDGE Act takes a drastically different approach in allocating funding and would give money to States to choose funding priorities.

We now hear that a bipartisan group of Senators and the White House have hammered out a compromise infrastructure plan that would allocate $65 billion for broadband infrastructure. The plan at this point doesn’t talk about the mechanics of how the funding would be awarded. Nut it seems likely that a bipartisan compromise bill would be something different than the bills discussed above. For instance, it’s likely that a bipartisan bill would not support municipal broadband. This compromise is still far from a done deal by all news accounts, and a Democratic-only infrastructure bill is also being considered. But the passage of that is far from assured.

I predict that for the rest of the summer, we will continue to see different dollar amounts and different ideas on how to spend the infrastructure money—and that’s assuming there even is an infrastructure bill passed. We are now down to the sausage-making, and anybody who thinks they know how this will turn out has a better crystal ball than mine. There is still a lot of time for DC lobbyists to suggest tweaks that benefit their clients. One thing I think we can count on is every Senator telling us how much they care about solving the digital divide. For the broadband industry, this is great theater. There will be continuous headlines, but it is also serious business since the plans that are already on the table vary significantly in the details that matter.

By Doug Dawson, President at CCG Consulting

Dawson has worked in the telecom industry since 1978 and has both a consulting and operational background. He and CCG specialize in helping clients launch new broadband markets, develop new products, and finance new ventures.

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