By Ajit Pai

On April 4, AEI hosted a web event on how states can best use the $65 billion for broadband build-out apportioned by the Infrastructure Investment and Jobs Act (IIJA). I was joined by Sen. Deb Fischer (R-NE), who supported the IIJA’s passage, for a one-on-one conversation, followed by a panel discussion with John P. Bailey and Mark Jamison of AEI, Evan Feinman of the National Telecommunications and Information Administration (NTIA), Sarah Oh Lam of the Technology Policy Institute (TPI), and Brent Skorup of George Mason University’s Mercatus Center.

Below is an edited and abridged transcript of key exchanges from our event. You can re-watch the full livestream on AEI.org and read the full transcript here.

Ajit Pai: Sen. Fischer, since you were a
leader on many of the negotiations surrounding the IIJA, could you tell us a
bit about why you supported it, what behind-the-scenes work it took to get it
passed, and what developments you hope to see now that it’s been signed into
law?

Sen.
Fischer: I was very proud to be able to support this bill because I think it is
so important to make these investments in infrastructure—including roads,
bridges, waterways, airports, and especially broadband. As you know, the IIJA
provides a large sum for broadband; I also had an amendment to look at
providing oversight and transparency, which I think is definitely going to be
needed for the deployment we see with broadband across different agencies.

I was not a member of the core group. However, I worked with several members of that group in order to get some things done, like that amendment. The final bill also includes a couple amendments that we did in committee. But the broadband part didn’t go through committee, so it was really important that we were able to make sure we could incorporate those lessons we’ve learned over the years from existing programs. For example, the technology-neutral speed requirements of 100/20 megabits per second (Mbps) and prioritizing unserved areas—I thought those were extremely important.

Those are
some of the priorities I had for the bill, and I’m looking forward to it being
implemented in a wise way.

Evan, you’re now deeply immersed in NTIA’s
deliberations on this bill’s provisions. Can you give us an overview of where
we are, and how NTIA thinks about the criteria states should use in order to
secure funding?

Evan
Feinman: We’re currently in the midst of writing the Notice of Funding
Opportunity—the core legal document that lays out the basics of the Broadband
Equity, Access, and Deployment program, as well as other programs authorized by
the IIJA. This model contemplates each state and territory having a state
broadband office to work with the different stakeholders inside and outside of
government, inside the industry, and with everybody else who has an interest in
universal broadband connectivity. They’re going to create a program tailored around
their state-specific challenges and opportunities in existing digital
infrastructure so that we can get, in this priority order, every single
unserved American online and every single underserved American high-quality
connectivity. Finally, we want to use the remaining resources to ensure
community anchor institutions and other marginalized groups get better access
to digital connectivity through strong digital equity and inclusion
programming.

All of that
can happen in concert, and in fact, each state is going to first submit to us a
letter of intent. That’s effectively what they need to do to unlock a quick $5
million “help support your growth and setup” plan, after which the construction
process of their overall state broadband plan will begin. They’ll be able to
submit a couple different versions of that plan, and of course, we’ll accept revisions
as conditions change over time.

Our partners
in the states and territories should be thinking about: One, are you currently
in possession of a state broadband office that has the capacity to implement
multiple hundreds of millions or billions of federal dollars? For a majority of
states, the answer to that is still “no.” Second, do you know who your contact
is going to be at NTIA? Third, have you started talking to the stakeholder
communities in your state who care about this? In particular, you want to focus
on telecom leaders, education leaders, and local governments—especially those with
significant numbers of unserved folks. Finally, you need to be ready for the
forthcoming Federal Communications Commission (FCC) broadband maps.

Sarah, you’re an expert on the importance of improved broadband mapping at the FCC and elsewhere. In particular, how can your latest project, TPI’s mapping and connectivity index, help inform this discussion?

Sarah Oh
Lam: At TPI, we’ve been building a broadband map with analytical tools to help
answer the questions many folks around the country will be asking of the new
broadband maps and of the current maps. A lot of what states are going to have
to decide in their broadband plans is what speed thresholds to consider for
subsidies. There’s a lot of talk about setting aspirational goals and
future-proofing. So maybe the speed threshold should be higher, like 100 Mbps
for both downloads and uploads, or 100 Mbps downstream and 20 Mbps upstream. I
think the statute actually mentions the 100/20 threshold.

Currently, high-speed
broadband is defined as 25 Mbps downstream and 3 Mbps upstream, but there’s a
lot of space between 100/20 and 25/3. Let’s say a state sets a threshold very
high, like 100/100. That actually affects where subsidies can go. It might have
unintended consequences. Subsidies will go to areas that already have 90/30
over places that have 30/10.

States are
going to have to make these decisions, and our broadband map helps provide the
calculations that will be needed. I think any state should probably measure
trade-offs. If we set a threshold at this level, where will subsidies go and to
how many households? If we set the threshold at a different level, what would
that map look like? So while the underlying map data is being improved and
updated, there are also major decisions that need to be made based on thresholds
to determine where subsidies will go.

Brent
Skorup: To chime in, my big concern is states not being prepared. This issue of
mapping has been a problem for over a decade, and part of the problem is people
whose coverage changes every month. Every month, according to the FCC, between
three and four million rural people are covered every year, so they don’t break
it out by household, but that’s about 100,000 households that are covered every
month by a rural provider.

Mark, how can states leverage existing
models when setting up their programs to distribute this funding?

Mark
Jamison: That’s an excellent thing to be thinking and talking about. One thing
I’d focus on with respect to distributing funds for broadband development is
making sure we’re getting the most efficient providers with those funds in
their hands to deploy those services, then holding them accountable for it.

We’ve had
great success in this country—and all over the world, in fact—with this idea of
reverse auctions, which simply make people compete for a well-known product.
You design the program so that you say, “Here’s the type of broadband we want.
Here’s the deployment schedule. These are the things you have to do.” And then
people participate in this interactive auction to determine who’s going to be
most efficient at that.

I think if
we can have ways to work with the FCC, states could work together on it. A good
auction is really hard to run and make work at the local level. In Florida,
we’re trying to make sure our local technology planning teams at the county
level are working well together to say, “Here’s where we’re going to be trying
to deploy services. Here’s how that competitive process will work. Can we
partner with other states to have really good, efficient auctions? And are we
going to make sure that when someone gets that award, they do the work and get
paid?”

In addition to where the funding is going
in terms of location, another important question is what types of programs the
funding is going toward—and the logistical hurdles said programs may entail.
John and Brent, can you elaborate on this?

John P.
Bailey: I worry about this because, to Evan’s point, so few states currently
have a broadband office to help them think through these really complex
technical issues, in addition to the blocking-and-tackling problem of how you
get the money out. Mark’s points on using reverse auctions are great, but
that’s another type of complexity that some states lack the expertise and
experience to handle.

There’s also
a question about whether an entity receiving these funds is subject to federal
taxes. This remains an open question per a small tweak in the 2017 tax plan. I
know the Department of the Treasury is working really hard to hopefully
establish a bit of a safe harbor to keep the projects free from taxation.
Because if this money is taxable, every single grantee that receives some funds
is subject to a potential 21 percent tax. It just mutes the impact of the
project. It feels to me that none of this was intentional; it feels like a
drafting oversight in Congress, but it’s going to require some nimble
policymaking to clarify the rules of the road going forward.

Brent
Skorup: To your point about specific programs, I’ve written a substantial
amount about the idea of broadband vouchers for rural households. Many states
that are not well prepared are some of the most rural states that really have
some severe connection and deployment issues. Vouchers essentially put a pot of
money at every rural household, and providers have to race to sign up those
customers. And they get a guaranteed stream of income through the voucher.

I think this
could eliminate a lot of the foreseeable problems we’re talking about,
particularly staffing up at every state, and managing and overseeing all these
programs. There’s a lot of debate about private carriers versus municipalities
and nonprofits. Vouchers would let consumers make the choice about who they’re
going to let serve them.

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