Trump Infrastructure Plan Just One Piece of Vast Federal Broadband Vision

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By Kyle Daly

The 115th Congress is gearing up to launch efforts to expand high-speed internet access to an under-served swath of the population, an initiative that could dovetail with President-elect Donald Trump’s plan to make broadband a pillar of his larger infrastructure investment plan.

But federal lawmakers also could carry on with their efforts independent of Trump’s infrastructure ambitions, should those fail to be realized.

The Federal Communications Commission’s most recent broadband progress report, released in January 2016, found that 53 percent of Americans and 87 percent of rural Americans had no access to high-speed wireless service. Both the relatively limited availability of fast wireless internet nationwide and the rural-urban disconnect on availability have often been cited as factors in the so-called “digital divide” shunting low-income and rural consumers to limited or absent internet service.

Wireline broadband is more broadly available but still has considerable gaps throughout the country. The FCC report found that 10 percent of Americans and 39 percent of rural Americans had no access to wired speeds of at least at least 25 megabits per second (Mbps) downstream and 3 Mbps upstream -- the agency’s current definition of broadband service.

A multiple-front government push would benefit communities lacking access to broadband networks and help meet surging consumer and business demand for both wired and wireless data services.

“We talk a lot about the importance of a healthy economy, but one of the key components now to a healthy economy—to creating business opportunity—is broadband,” Sen. John Boozman (R-Ark.) told Bloomberg BNA. Boozman is a leader of the Senate Broadband Caucus launched this summer to focus on expanding broadband deployment around the country.

Along the way, tax credits, government dollars and other incentives could be a boon for broadband providers, especially smaller companies operating in underserved markets. Large backbone network providers such as Verizon Communications Inc. and CenturyLink Inc. and wireless tower owners like American Tower Corp. also could benefit.

Achieving the vision of a nation ubiquitously connected by high-speed wireless and wireline networks would present opportunities to a wide range of digital economy giants such as Alphabet Inc.'s Google Inc., Netflix Inc. and myriad smaller companies, and enable nascent sectors like telehealth, allowing doctors to see and treat patients over the internet.

Broadband as Infrastructure

Details of Trump’s infrastructure plan remain hazy, despite bipartisan interest in kickstarting internet network investment. Given the multi-pronged nature of what lawmakers and internet industry players envision, it’s likely that certain government efforts to encourage broadband expansion can survive the failure of others.

But even partial failure could mean trouble for interconnected industries racing to address rising demand for data and stagnant broadband availability in many parts of the country. The interconnected industries hoping to address surging demand for data and stagnant broadband availability in many parts of the country are counting on Congress and federal agencies to ensure that the government keeps pushing on broadband expansion regardless of the fate of Trump’s infrastructure plan.

Trump envisions pumping $1 trillion into the nation’s sagging infrastructure over 10 years, an indeterminate portion of which would go toward broadband. But it remains unclear just how much support the overall plan has in Congress, where Republican lawmakers have staunchly resisted deficit spending, irrespective of the mechanism used to support it. At a September event, House Speaker Paul Ryan (R-Wisc.) reportedly responded to question about Trump’s infrastructure spending ambitions by simply laughing. But if the infrastructure package does materialize, a number of lawmakers want to make sure broadband is part of it. “If we can work out a situation where we have an infrastructure package,” Boozman said, “then certainly I feel very strongly that broadband is just a necessary component along with roads, bridges and waterways.”

Hazy Economics

One approach to funding infrastructure investment suggested by Wilbur Ross, a senior Trump campaign policy adviser and the president-elect’s nominee for commerce secretary, proposed relying on private investment that would be eligible for tax credits. Ross envisions those tax credits being counterbalanced by federal tax revenue the infrastructure projects would generate.

However, traditional infrastructure projects like roads, bridges and sewer systems don’t tend to directly generate significant revenue once construction is complete. Unless the Trump White House can sell Congress on a plan that might depend on a vast nationwide network of tolls to achieve financial goals, it may need to find an as-yet unformed alternative pitch for infrastructure investment.

Sen. Shelley Moore Capito (R-W.Va.), another leader of the Senate Broadband Caucus, told Bloomberg BNA that conversations with Vice President-elect Mike Pence and Elaine Chao, Trump’s pick for Transportation Secretary, have not yet generated any “fleshed-out details” on the structure of infrastructure investment.

Limited internet availability is considerably less visible and dramatic than the crumbling roads and outdated airports that Trump discussed on the campaign trail while talking up the need for infrastructure investment. Broadband projects could be a casualty of any scale-back in infrastructure plans stemming from that uncertainty.

“There may be some broadband in it, but not much,” George Ford, free-market think tank The Phoenix Center’s chief economist told Bloomberg BNA. “Construction work is really what Trump is after, and that’s probably more related to roads and bridges and infrastructure that is in dire need of repair.”

Multi-Pronged Effort

Yet an omnibus infrastructure spending plan is not the only anticipated vehicle for government action on extending broadband access. Capito said she views such a stimulus package as a “boost” to encourage providers to push into areas where broadband deployment doesn’t otherwise provide an acceptable return on investment. But she would be receptive to any combination of federal, state and local efforts and partnerships with the private sector that might reliably get internet access out to rural Americans.

“At this point, I couldn’t dictate” what broadband expansion efforts look like, she said. “It’s just got to be affordable.”

Commerce panel aides from both parties and houses of Congress have said there’s strong bipartisan interest in working in the next Congress to pass a “dig once” measure, either as a standalone bill or as part of broader infrastructure legislation. Such a measure would require federally-funded highway construction projects to install conduits for fiber-optic broadband alongside roadworks. Sen. Amy Klobuchar (D-Minn.) introduced a dig once bill (S. 2163) in the last Congress, but it failed to advance out of committee.

Industry stakeholders already are suggesting additional options. Matthew Polka, president and CEO of the American Cable Association, which represents small and midsize cable companies, told Bloomberg BNA his organization is hoping changes to the tax code could include elements specifically designed for companies investing in broadband. Some combination of tax credits, tax breaks and rule changes could make it more economically feasible for internet providers to expand and improve their networks, he said.

Wireless, Wireline Efforts Both in Offing

Jonathan Adelstein, president and CEO of the Wireless Infrastructure Association, told Bloomberg BNA his group is especially interested in anything the government can do to streamline the process for getting local and state approval for broadband construction projects. This could include lowering barriers to wired broadband deployment, Adelstein said, because connecting wireless towers and cell sites to the internet and each other is critical to increasing wireless broadband speed and signal coverage.

A change to the FCC formula for determining rates that utility pole owners can charge internet companies to attach cable or fiber to poles is a possible solution, with the aim of making it cheaper for broadband providers to use existing poles. The agency’s senior Republican commissioner, Ajit Pai, who is widely expected to be named interim FCC chairman in the Trump administration, has advocated making that change.

But, Adelstein said, the wireless industry particularly hopes for an overhaul of state and local wireless facility zoning and approval rules. Next-generation wireless internet will require dense networks of thousands of small antennas to handle bandwidth—as opposed to the current model rooted in a much smaller number of large towers. Nearly all existing state processes for approving wireless facilities are based on that existing model and obtaining approvals usually takes a considerable amount of time.

It’s not immediately clear just what the federal government would do to meet that demand for process reform, however.

The FCC’s last attempt to circumvent state laws to encourage broadband deployment—when the agency tried to preempt state-imposed limits on municipal broadband networks in Tennessee and North Carolina—drew heavy criticism from Republicans in Congress and within the FCC and was ultimately struck down in court. For his part, Pai has suggested that the agency might come up with a simple application and approval process for wireless facilities that localities could voluntarily adopt, while also implementing a policy that would consider any wireless facility construction application automatically approved if a state commission doesn’t review it in a timely manner.

It’s unclear just how quickly any of these efforts would materialize, or if the specifics—offering tax cuts for big broadband companies, for instance—could draw enough resistance to sink certain elements of the broadband push. But many policymakers are hopeful that there will be a serious bipartisan lift to expand access, and soon.

“I think 2017 bodes really well for digital infrastructure, highly consistent with what the president-elect has called for, and especially what those in rural America have called for,” Pai said at a recent Washington, D.C., event.

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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