When I was less gray, I worked on Capitol Hill as Minority Staff Director of the Senate Commerce Committee. At that time, we drafted legislation to bring competition to various markets that had been previously regulated as government-conferred monopolies or duopolies: the cable television industry, the mobile phone industry and the landline phone industry. As the 1996 Telecommunications Act stated, the goal was “to provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced information technologies and services to all Americans by opening all telecommunications markets to competition."
Except for rural America.
Congress expressly exempted rural markets from competitive pressures, and through universal service funding mechanisms limited rural markets to service by monopolies. I lost a debate in the early 1990’s with my colleagues on Capitol Hill about the possibility of competition in rural markets. Twenty years later, I lost again in a debate with my colleagues at the FCC. The one mechanism never tried by Congress or FCC in rural America is competitive pressure. Though the agency was once headed by a man who repeated as his mantra “Competition, Competition, Competition,” neither he nor his predecessors employed competition as a tool to spur investment in rural communications infrastructure.
What has been missing is the pressure of consumer decisions to direct the use of public funds. Whose decisions matter today? The decisions of three people in an office building in northeast Washington, DC. Three people pick the technologies, the type of service available in rural areas, and even which rural areas should get service. They pick winners and losers. They alone decide the type of broadband service that is supported by public funds.
If you live in rural America, how is government planning for broadband working for you? After tens of billions of dollars of public money spent in this manner, and nearly half of rural America still lacking broadband service, I’d suggest it is time to try a different approach.
So, as an alternative and fundamental shift in current policy, I offer below a proposal to move the decisions about rural investment from Washington policymakers to individual rural Americans. If we change the locus of decision making, the power will shift from lobbying and campaign contributions to service and consumer spending. Such a shift would spur rural investment and would also prevent most rural areas from being locked into one technology or one service provider.
Note that these steps use existing administrative structures and FCC tools. As such, implementation could occur within months. The fundamental change in policy resides only in who makes the decisions about the services and technology. Public funding would follow consumer choice, rather than limit consumer choice. The decisions about who gets funded would move from those three people in Washington to millions of consumers in rural America.
In addition, these same policy changes would benefit low-income Americans. When Congress enacted Section 254 of the Telecommunications Act, it did not differentiate between service for rural and low-income consumers. Section 254 states:
Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas. (emphasis added).
I would amend Section 254 in one important respect. I would strike the lawyerly, weaselly word “reasonably” that appears before “comparable.” In my experience, when policymakers read the words “reasonably comparable,” they implement policies for services that are not comparable.
The following is an updated legislative or regulatory proposal for a new Section 254.
To effectuate access to low-income consumers and those in rural, insular, and high-cost areas, there shall be funds appropriated to the Commission sufficient to provide monthly support to households in rural, insular, and high-cost areas as well as low-income consumers.
The Commission shall:
Identify the characteristics of Broadband Internet Access Services (“BIAS”) that are widely available in urban and suburban areas with respect to upstream and downstream speeds, capacity and latency;
Determine the level of service subscribed to by a majority of residential customers through the operation of market choices in urban and suburban areas (“Minimum BIAS”);
Identify rural, high-cost areas using one of the current FCC models, such as the Connect America Model or Alternative Connect America Model;
Calculate an average level of monthly public support (“Monthly Support”) required to facilitate the construction, maintenance and operation of BIAS in rural, high-cost areas, according to one of the current FCC models, such as the Connect America Model or Alternative Connect America Model;
Make available to Eligible Telecommunications Carriers the level of Monthly Support for each low-income subscriber of Minimum BIAS and each subscriber of Minimum BIAS in rural, insular, and high-cost areas, provided that only one payment of Monthly Support is available per household, unless a subscriber is a low-income consumer in a rural, insular or high-cost area;
To streamline administration of this portable subsidy program, the FCC shall direct USAC to combine the lifeline and high-cost programs into a single program, called the Connect All Americans program.
One political point. There has been a tendency in past funding decisions to pit rural against urban, to pit rural interests against those of the urban poor. I believe the 1996 Act meant for those interests to be aligned. I believe further that an explicit combining of the High Cost and Lifeline programs benefits both rural and urban interests and takes a small step to address a different type of divide in America.