Fri, 05/14/2021
This post is a summary of Episode 17 of The Nebraska Governance & Technology Center’s (NGTC) Podcast Series, Tech Refactored. Host Gus Hurwitz, Director of the NGTC was joined by Kent Urwiller, founder of Prairie Hills Wireless Association, Christina Mason, Vice President of Government Affairs at the Wireless Internet Providers Association, and Michael Romano, Vice President of Industry Affairs and Business Development at NTCA, the Rural Broadband Association.
Closing the rural digital divide, and the particular challenges and opportunities posed by doing so doing a pandemic, have recently been top of mind for individuals who follow these issues closely. Congress passed the Cares Act in response to the Covid-19 pandemic to assist states in pandemic response, and some states have used a portion of the money to help close the digital divide. On the other hand, the urgency of the pandemic has at times made it difficult to carefully target where this funding is going or adequately track how it is being used.
Gus began the podcast by speaking with Kent Urwiller, founder of Prairie Hills wireless, an outfit that provides high-speed internet to rural Nebraskans. The idea came as a result of Urwiller hearing from community members that they needed another internet option that was lower cost and faster than what they were currently getting. Urwiller actually sold one of his cars to get the cash to get started; he had $19,000 to invest and that bought he and his wife (they are partners in the venture) their first set of access points and allowed them to put up five towers in Ravenna, Nebraska. After quickly getting 300 customers, he and his wife then sold their house to get more capital into the business, the goal was to operate with no debt. They now have grown their business to more than 3,000 clients, set over a series of small towns in Nebraska.
When asked whether fixed wireless is a stop-gap filler until fiber companies can come in and install fiber optic cables, Urwiller is adamant that that is not the case. “Really, for the consumer, fixed wireless can do what is required for the typical home and business today. And it’s progressively getting better. Just in the short timeframe that we have been in business, it has gotten so much better. The gear has gotten better; there’s more competition in that space for manufacturers, and they’re competitive and they’re coming out with products faster and the products are more reliable.” And critically, “we can deliver the speeds to compete against the big wireline services. I couldn’t say that 20 years ago when everything was brand new, but today, with the market as competitive as it is as far as manufacturers go, it can do what anybody needs in a home.”
A recent frustration for Urwiller has been a decision to allocate Care’s Act money to put in fiber capacity where he was already providing service, essentially creating a redundancy and making it much harder for Urwiller to compete because he had to invest the money himself to install the infrastructure to provide his company’s service, whereas this new fiber company is essentially having the government foot the bill for the installation of infrastructure, allowing it to offer services at costs that don’t the cost that would have been necessary had they paid to install the infrastructure in the first place. Urwiller is unsure how that happened, “I’m amazed it happened really, because I thought there would have been a little bit more oversight on that. Obviously somebody didn’t do their homework or something.”
It’s frustrating for Urwiller, both as a businessman but also as a taxpayer. “There are a lot of areas in our county or surrounding counties that have little to nothing for internet options and that money could have been used to put fiber or fixed wireless, whatever, to get those people better access,” rather than use that money in an area where it is essentially a redundancy with the service that Urwiller is already providing.
The interview next turned to Christina Mason, whose association represents “about a thousand fixed wireless providers.” In point of fact, says Mason, many of these providers have begun deploying “hybrid networks,” which means that their networks utilize both fiber and fixed wireless. Also speaking on this segment was Michael Romano, whose organization, the NTCA, the Rural Broadband Association, represents about 850 small rural broadband providers based in the communities they serve. This means that they are primarily cooperatives and family owned companies that popped up, sometimes 50 to 100 years ago, to provide telephone services, “doing their own wiring along fence posts.” “Today, they’re all broadband providers. NTCA members also utilize a number of technologies, “roughly 70% of their customers in our last survey are able to get service via fiber to the premise network, but they do use every tool in the tool kit. There are many others who are still served by copper lines; there are a number who are served through fixed wireless.”
Turning to the impact of Covid on the services these associations provide, Romano noted that “the thing that jumps out most to him is that there has been an increase in both demand and usage.” Demand in this context means individuals who previously weren’t connected to the network installing new fiber drops. The increase in usage has in some cases been enormous, “we had a member testify before the th House Agriculture committee last week, who testified that she had seen 200% growth in usage on upload and download over the last year.”
And the simple reality is that while there are people who are underserved, in that they have a connection that is inadequate in its capacity, there are others who have no connectivity at all. Mason noted that “we hear stories, unfortunately, about folks having to go to a McDonald’s parking lot or a Walmart to do their homework. So that’s where our guys really came into play, on a quick basis, where maybe your kid was in school on a Friday, and then the following Monday, they were remote learning” because technicians had come in and installed the capacity that fast.
The panel agreed that the scenario Urwiller described at the beginning, of government entities failing to coordinate to maximize the utility of expenditures, and instead overbuilding in areas where infrastructure is already present, is not unique. In the past this was often a function of agencies not even having reliable information about where infrastructure was already in place. As we move into an era where maps detailing the parameters of existing infrastructure become available that should help with the problem, but as Mason notes, “maps wil help, but even at the same time, everybody has got to be taking stock in the same map, which some states may not be. And everyone needs to be aware of what another program has done (or is doing) that might not yet appear on a map because somebody is in the process of building it.”
Regarding the question of whether the federal government directly administering subsidy dollars is an efficient way of allocating resources, Mason notes that “there’s a balance to be struck. Part of the problem is that you have to have accountability; every time a program gives out funding without the kinds of rules that unfortunately make (recipients) jump through some hoops, you end up with a congressional hearing that says that they didn’t administer the program properly, which then results in them creating more paperwork the next time round. So there is a catch 22 here.”
Romano agreed regarding the tension between accountability and the creation of red tape, but noted that “it’s true that these programs can be complicated, at the same time, if you look at a number of the programs that have come up in recent years, and even prior to that, there were a lot of smaller providers playing in the space. (...) I think, by and large, when you look at the sort of cross section of the population that’s applied for these funds, and receive these funds, it actually shows a pretty high level of participation by relatively smaller businesses.
Hurwitz shared his concern about the possibility that in some cases, subsidy dollars could be playing the role of pushing out providers who do not have the benefit of receiving a subsidy within a market, effectively creating a monopoly by allowing the actor that received the government dollars to offer faster service at a lower cost because of the costs that they did not incur, that therefore do not need to be passed on to consumers. Hurwitz gives the example of a theoretical market that has six providers, each providing arounding 100 megabits symmetrical, where one of the market actors gets a grant to provide a fiber line that can provide a terabit. That actor will be able to do that at no additional cost, providing faster service without having to pass on any additional costs, effectively running the competitors out of business.
Finally, there is the question of whether entities that are receiving these sizeable grants from the government have the knowledge and know-how to implement the projects for which they receive funding. Mason argues that most of the entities have at least some degree of experience across a number of technologies, be they fixed wireless or fiber based. “I’ll leave it up to the FCC to determine if these folks can do what they say they can do. That’s why we have the FCC. That’s why we have oversight. And that’s why we have the experts in the room examining these cases.”
Tags: Tech Refactored Review
