Trump, Pai, and Broadband Access for Rural Americans

Having broadband, or high-speed internet, is becoming increasingly vital as more and more Americans look towards the internet for commerce, education, healthcare, and recreation. Communities require strong internet infrastructure to draw in and retain business and support schools. However, many rural communities find themselves without adequate options for internet service providers (ISPs) or with none at all. ISPs require a certain population density for provision to be profitable, and in rural communities, this is simply not the case. For the rural communities that do have at least one provider, they face “problems ranging from low download and upload speeds, obsolete technology, poor reliability, high prices, and/or a lack of choice in providers.” Rural communities find themselves “stuck on the wrong side of the digital divide,” unable to attract competitive providers and any businesses that require broadband to operate.

Many communities have turned to municipal broadband initiatives to inject competition into their existing markets. Municipal broadband is an “amorphous term that can signify many different ways that a local government might participate— either directly or indirectly—in the provision of broadband service to the local community.” Most municipal networks can be grouped into three broad categories: public ownership, public-private ownership, and cooperative model; communities create their networks based on their own goals, resources, and needs. Public ownership initiatives are built and operated by local government, either through utilities or city departments. Public-private ownerships can take many forms, but essentially involve municipalities sharing both the risks and rewards of operating a network with “private for-profit companies, local nonprofits, and even local residents.” Finally, utility cooperatives in rural areas follow the cooperative model, in which electric and phone cooperatives build broadband networks in their existing service areas. Municipal broadband initiatives also vary in the services they provide. Some provide “last mile” service directly to customers; some only offer “middle mile” infrastructure on top of which retail providers offer internet; some provide service only to anchor institutions; and others offer service to businesses and residences.

Municipal networks exist in more than 500 cities and towns across the country. Though the number has increased steadily since the 1990s, municipal networks are not without their opponents. In fact, the debate over municipal broadband has become highly divisive. Opponents argue that government-owned broadband networks distort market effects and are inherently unfair competitors for private providers. Municipalities are also unprepared, detractors claim, to manage and maintain commercial broadband initiatives in the long-term and taxpayers are ultimately left with the bill in the case of failures.

Commercial interests of big telecommunications companies like AT&T and Comcast also come into play: Limiting municipal broadband means limiting costly competition. Telecommunications companies have spent millions lobbying state and federal government to block the creation of new municipal networks. "The equation is very simple. Are they going [the companies] to spend the money to upgrade their infrastructure or are they going to hire lobbyists?," Catharine Rice, a project director with the Coalition for Local Internet Choice said. "The cost of one lobbyist, the cost of five lobbyists, the cost of 10 lobbyists is much less than upgrading their infrastructure. They will hire the lobbyists." The lobbying seems to be effective; 19 states prohibit municipal broadband networks outright.

Generally, the split follows party lines. In 2015, President Obama announced a several-point plan to improve broadband access across the country, a plan which included strong support for the development of municipal broadband networks. President Trump has yet to comment on his stance on municipal broadband, but he has chosen Ajit Pai, a Republican member of the FCC, to serve as its new Chair. The previous Chair, Tom Wheeler, resigned before Trump’s inauguration.

The FCC plays a pivotal role in broadband development. Perhaps most importantly, the FCC defines what counts as “broadband.” In other words, the FCC chooses just how fast high-speed internet must be to be considered “high-speed.” In 2015, the FCC voted to change the standard for broadband download speed from 3 megabits per second (Mbps) to 25Mbps and upload speed from 1Mbps to 3Mbps. For reference, streaming Netflix in standard definition requires upload speeds of about 3Mbps; streaming in HD requires 5Mbps; streaming in Ultra HD requires 25Mbps. FCC Commissioner Mignon Clyner explains the choice to up the minimums: "As consumers adopt and demand more from their platforms and devices, the need for broadband will increase, requiring robust networks to be in place in order to keep up. What is crystal clear to me is that the broadband speeds of yesteryear are woefully inadequate today and beyond." The new standards triple the percentage of Americans living without adequate broadband access, crucially altering the conversation about the severity of the issue.

Under Wheeler’s leadership, the Commission had a Democratic majority. Now, however, Mignon Clyner is the Commission’s sole Democrat. Pai has already rolled back a number of the initiatives accomplished by Wheeler’s Commission, claiming that the FCC’s reclassification of broadband as a utility has suppressed broadband investment. However, the industry lobbying group USTelecom reports that capital investment is down by only about 1% from 2014 to 2015. What seems more likely is that broadband providers feel little pressure to increase capital investments because so many providers enjoy monopolies in areas of coverage.

Wheeler’s FCC took a strong stance in favor of municipal broadband networks. In 2014, municipal networks in Wilson, North Carolina and Chattanooga, Tennessee petitioned the FCC to exempt them from state restrictions on the expansion of their service. The Commission granted the petitions in 2015, claiming the authority to do so from Section 706 of the Telecommunications Act of 1996. Section 706 directs the Commission to adopt “measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.” In the official Order, the FCC claimed that allowing Wilson and Chattanooga exemptions from the existing laws would “both remove barriers to deployment and promote competition by bringing additional choices to the marketplace so that consumers are served with more choices, lower prices, and higher quality.” However, both Tennessee and North Carolina fought back, and in August, 2016, the United States Court of Appeals for the Sixth Circuit upheld the restrictive laws. The FCC decided not to the appeal the decision.

President Trump’s commitment to rural America suggests he would support efforts to bring competitive broadband markets to places that lack them, but his actions in the White House thus far suggest otherwise. Trump opposed the AT&T/Time Warner merger during his campaign, but he met with AT&T CEO Randall Stephenson in January. According to Stephenson, the two did not discuss the deal, suggesting that Trump plans to allow the merger to go through. AT&T claims that the merger will give customers “more attractive bundles of broadband and video services, prodding cable companies and other competitors to respond by improving their own services.” Still, Senate Democrats are unconvinced. Senator Edward Markey, a Democrat from Massachusetts, has called for “an objective review from the Justice Department and the FCC to truly evaluate how merging two massive companies into one behemoth will benefit my constituents and consumers from coast to coast.”

In a March 8 Senate hearing, Pai agreed perform an independent legal analysis to determine whether the FCC should any role in reviewing the AT&T merger. However, Pai also reaffirmed his stance that he doubts the FCC will review the merger, as the two telecommunications behemoths have carefully structured the deal to avoid FCC review.

Ironically, the deliberately laissez-faire attitude of Trump’s choice for FCC Chairman concerning increased broadband deployment will harm much of the demographic that voted Trump into office. In Pai’s defense, he has taken some steps to promote broadband development in rural parts of the country. In January, the Commission voted to give up to $170 million to the state of New York as part of the Connect America Fund, a program which subsidizes local ISPs to bring broadband to unserved rural areas. However, if these local ISPs are the only providers in rural areas, rural communities are likely to face a noncompetitive market where providers can charge unreasonable rates for suboptimal service.

If Pai is unwilling to fight for municipal broadband like Wheeler was, telecommunications lobbies may be successful in the effort to restrict and ban municipal networks state-by-state. The AT&T/Time Warner merger represents the kind of dangerous conglomeration that kills competition and stifles broadband development. Municipal networks have the potential to increase competition, expand broadband deployment, and boost economic development in rural areas, but Trump’s presidency and Pai’s chairmanship threaten the very existence of these networks.