December 5, 2023
The Infrastructure Act includes $65 billion for broadband deployment. It’s a massive opportunity to finally and fully connect America and is a critical step toward meeting the president’s 100 percent connectivity objective.
Since the Infrastructure Act was passed, some entities have been lobbying policymakers to use that taxpayer funding to pay for their deployment costs in other government funding programs, like the Rural Digital Opportunity Fund (RDOF). In that 2020 reverse auction, some bidders won a lot of federal support to serve numerous homes by significantly underbidding the competition, elbowing out competitors in rural markets across the country. Some observers pointed to the unexpectedly low bids as an example of a successful auction, saving taxpayer dollars. For others, the ultra-low bids raised eyebrows (will the math actually add up?).
Fast forward a few years later and some RDOF winners want to use Infrastructure Act funds destined for unserved homes and businesses to pay for one of their key deployment costs – pole replacements. Thus, some RDOF winners have been asking the government to pay for the pole replacement costs that they either didn’t factor into their bids, or to double recover those costs to the extent they were included.
As one provider has previously suggested, “in areas where a broadband provider has an existing commitment to offer service [i.e. RDOF], states should be permitted and encouraged to use [Infrastructure Act] funding to complement the success of those efforts where circumstances so warrant.” Translation: We’d like to have another agency pay for our pole replacement costs that we incur to meet our RDOF commitments.
This double-dipping is wrong. Building and operating broadband networks is expensive and it involves a lot of different costs – for fiber, equipment, access to poles and rights of way, and workforce. These are all costs that everyone who bids in an auction knows about before placing their bids. Allowing Infrastructure Act funds to pay for those builds is unfair to taxpayers and companies that rationally bid in the auction. It would harm the integrity of the auction system. And it would lead to fewer American homes and businesses receiving broadband.
There are a lot of really productive things state and federal agencies can do to get more Americans broadband access. This is not one of them.
Exploring all possible avenues to reduce their costs, the cable industry has also been pushing the FCC to upend its longstanding rules that govern payment for pole replacements. These parties speciously claim that without radical changes to the existing regime, broadband for all is at risk.
But making the pole owner pay for a pole replacement solely caused by a competitor’s attachment is not removing a barrier to broadband deployment or reducing costs; it’s just forcing one company in the broadband marketplace to subsidize the deployment of their direct competitor. And forcing pole owners to pay for new poles solely needed to accommodate a competitor’s attachments could lead to higher pole attachment rates for all attachers. In other words, it would increase overall deployment costs at a time when we’re all trying to get everyone connected and close the digital divide as quickly as possible. Drastic changes to the current regulations would also increase disputes between pole owners and attachers and slow down rather than speed up deployment.
The reality is that neither competitors nor American taxpayers should have to bail out those who fail to account for the basic costs of doing business in the broadband marketplace. The last time we checked, that’s not what broadband for all is all about.