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Blair Levin & Gregory Rosston on Broadband Subsidies

Blair Levin & Gregory Rosston on Broadband Subsidies

Scott Wallsten:

Hi, and welcome back to Two Think Minimum, the Technology Policy Institute’s podcast. Today is Wednesday, January 5th, 2022. I’m your host, Scott Wallsten, President & Senior Fellow at TPI. I’m here with TPI Senior Fellow Sarah Oh, and today we’re delighted to welcome Blair Levin and Greg Rosston to talk about broadband subsidies.

Blair is the Policy Advisor to New Street Research and a Senior Non-Resident Fellow at the Metropolitan Policy Project at the Brookings Institution. He also served as Chief of Staff to FCC Chairman Reed Hundt, directed the writing of the United States National Broadband Plan, where I worked for him, and was a Policy Analyst for the Equity Research Teams at Legg Mason and Stifel Nicolaus, in addition to many other activities. 

Greg is the Gordon Cain Senior Fellow at the Stanford Institute for Economic Policy Research and Director of the Stanford Public Policy Program. He served as Deputy Chief Economist at the Federal Communications Commission, working on the implementation of the Telecommunications Act in 1996, and he helped design and implement the first-ever spectrum auction in the United States. Thank you both for being here.

Blair Levin:

Great to be here.

Scott Wallsten:

So, we’re going to get into some of the issues with having states distribute money for broadband subsidies, but first, I wanted to talk a little bit about the bigger macroeconomic implications or questions about the broadband subsidies. 

We know, right now, it’s a historically tight labor market. There are supply chain problems, and with the broadband subsidies and the other trillion dollars from the Infrastructure Act, we’re hoping to get additional things. You know, projects in addition to what’s already planned, what’s already on the books, and to really move things on the margins, but where will this labor come from? Where will the equipment come from? Is it possible that we’re going to see the money drive up wages, which is great for workers, but will mean much less progress than we hope to get from the act? Any thoughts?

Blair Levin:

Well, I think the most important thing to understand is that generally speaking, when private enterprises make decisions about capital allocations, they’re reflecting a lot of different activities within the market structure. When Congress makes decisions about capital allocations, they’re reflecting largely political capital. They would’ve been, to make an obvious point far better, Scott, when you and I were writing the National Broadband Plan for Congress to spend the money then, <laugh> because for lots of reasons that I’ll describe in the second, but that’s not the way Congress operates. There was no political capital to spend $65 billion, or more like $100 billion, on broadband back in 2010, and there were a lot of good reasons why that was true. There were a lot of other needs. 

Broadband wasn’t as important, and COVID demonstrated to the country, including lots of Republican governors, the critical importance to education, to healthcare, to other things, from making sure that there were broadband networks everywhere and that everyone was on. But Congress chooses to spend money, when it chooses to spend money, approximately once a decade. So, that’s when it’s going to get spent.

I’m delighted that they’re spending the money, but to your point, number one, there’s a lot of activity going on in terms of constructing broadband networks that were being driven by market forces. There are three major wireless companies, incumbent companies, building out 5G networks. Some of the labor is the same. There’s a fourth, Dish, building out a greenfield network. The labor is the same. Wall Street has changed its valuation of copper versus fiber. It now, basically, is writing off copper, which is the say DSL, valuing an order of magnitude of $1000 to $1500 at home. Whereas fiber’s giving $4,000, if it costs $2000 to get it done, of course, Wall Street, the companies are going to do that. And that’s why you see AT&T increasing their fiber goals. You see Windstream, you see Frontier coming out of bankruptcy, increasing fiber goals. You see, so those things were really being driven by market forces. 

You also have FCC action with RDOF, spending money on fiber, and now you have Congress adding to that. So, it’s going to have an effect of both raising the cost and also delaying the time. But here we are, and so the question is not that Congress act wisely, but rather how do the states act in a way that makes Congress look as good as possible, and more importantly, achieves the broadband goals that I think there’s a very good bipartisan consensus to do.

Greg Rosston:

I just have one thing to clarify about what Blair said. Blair talked about when Congress decides to spend money, and I think it’s when Congress decides to allocate money, because the spending is not going to be this year. The spending is probably not even going to be next year. It’s going to be over the next five-plus years to build out the broadband networks that this money has been allocated for, and it’s going to take states a long time to figure out what to do. And we’ll talk about that, I’m sure, but this is not a one-time thing. So, I think that looking at supply chain issues in January of 2022 is going to be very different than in January of 2024 and what we’re going to have. I think that we do have labor issues and we need to have people who are trained to do these kinds of capital improvements in all sorts of areas, and there are a lot of people who are substitutable across different types of infrastructure projects, but the labor market for construction and people who can do this kind of thing is probably going to be pretty tight, but it’s going to last for a while. 

And then also to think about what kinds of projects get done. Blair talked about fiber and, and fiber is one way of getting this done, and Wall Street is valuing fiber quite highly, but it probably wouldn’t value fiber highly going to very remote areas in a private capital allocation. But if the FCC and or states say, you have to put fiber into these areas, that’s going to use up a lot of the money.

Scott Wallsten:

So, you think worrying about supply chain and labor and where the resources come from is, at the moment, is it second-order because it’s a little bit too far in the future to try to think about?

Greg Rosston:

I think we need to worry about training people to do some of these tasks and getting the labor supply ready, but it’s not today. It’s off in the future, I think.

Blair Levin:

I was going to say it’s really third order in the sense that the decision-makers [have to decide] about how to allocate the money, and Greg’s right, money’s not going to be spent for a while. The states themselves cannot do much about that. But I do think the Department of Labor and the Department of Commerce, and there are some things in some of the legislation about this, should be ramping up apprenticeship programs and other kinds of programs to bring more people into the particular field of both deploying and then operating advanced communications networks.

Scott Wallsten:

Well, since it’s third order, let’s start talking about things that are even less important. Let’s talk about the magnitude of the subsidies. It’s still kind of hard to get a handle on exactly how much is going to be spent, but it’s over 10 years. So, it seems like is it kind of effectively doubling the amount we spend on high-cost areas for those 10 years? If we spend $4.5 to $6 billion a year, let’s say.

Blair Levin:

I think it’s probably more than that. Remember that it’s not just the $42.5 billion that’s going to the BEAD Program, which is the state’s deploying to unserved areas as top priority, and then underserved, and then some others. It’s also the $10 billion that was in the treasury… I can’t remember which… in the bill that passed in February of last year. And then in the bill that passed at the beginning of last year, there was $350 billion going to states and local governments, for which broadband was one of five eligible uses. 

My sources tell me that they expect somewhere between $30 and $40 billion to be spent out of that for broadband, but that’s not all rural. Then there’s a bunch of other programs. There’s tribal programs. There’s Department of Agriculture programs. So, I think the right way to think about it is approximately $100 billion over a 10-year period for deployment, and that would be slightly more than doubling.

Scott Wallsten:

So, that is a large amount, and going to the topic that we were going to talk about from the beginning, is the states. The last time there was a standalone federal program, the BTOP program, it was done by the federal government. The NTIA oversaw it, and we can talk about issues and problems with it. Sarah has written some interesting papers about that, but it was still the federal government. This time, that’s not happening. What was the process that led to it going to the states instead of the Feds?

Blair Levin:

Well, history has many causes. I was in some of the discussions with various folks. As Scott, you will remember from the National Broadband Plan, we were both advocates of reverse auctions. Greg, I think helped advise us on that, and Greg certainly is one of the world’s leading experts on auctions. We love auctions, but the single biggest factor that I could see in my discussions with folks on the Hill was the perceived failure, and I think a correct perception, of the RDOF auction that occurred just before the Senate started seriously considering how to spend money on rural broadband. 

There are a number of different problems we could go into, but it was a combination of those problems. Communities calling up their senators and saying, “Oh my God, there’s this company I’ve never heard of. We’re not going to get broadband for years. We may never get it forever, but what is this company that we’ve never heard of that’s now won the exclusive right to give us broadband?”

There were concerns about that, but also the Chair of the FCC. It was kind of what he was doing as he was going out. So, he was saying it was a great and fantastic success, and that was so at odds with what various people in the Hill were hearing, that they just said, “We can’t trust the FCC as an institution.”

Greg Rosston:

So, I think you’re almost assuredly right on the, “We can’t trust the FCC,” because that’s the perception. But the two failures with RDOF auctions, or two issues, I don’t think it was a failure, but I think these were problems that would occur, whether it was an auction or not, which was the mapping problem, which is the biggest issue right now. 

And that’s going to take, at least I just saw a news report I thought that said, they won’t have good maps until 2023. That’s going to be one of the things that’s going to delay this spending of this money is getting mapping. And that’s going to be a question of whether states are better at doing it or the federal government is better at doing it, or who would be better at doing it, as to whether it should go to the feds or the states.

And the second issue was, as you put, “The company I’ve never heard of, winning.” Well, as long as the company performs, the fact that you don’t have a company that you’ve heard of shouldn’t make a difference as an economist, but definitely politically, these two factors led to the perception that probably led to the states getting the money. My fear is the states have far less expertise than the federal government in terms of trying to figure out how to do this. They do know the local geography better, but I don’t think that knowing the local geography better as a regulator causes you to end up with a better system

Scott Wallsten:

Before we move on, let’s dig a little more into the question of what, exactly, angered people about RDOF since that could affect the available distribution options in the future. Greg noted that the pieces of RDOF that were problematic were actually not related to it being an auction. So, do people see it as, say, a mapping and bidder vetting problem, which might leave political leeway to do reverse auctions, or do they see it as a failure of the auction mechanism itself?            

Blair Levin:

I think, in the minds of governors and senators, there’s no distinction. I mean this is a tragedy, so I will report to you something I’ve never said publicly, which is I was in a number of different discussions with staff, largely on technical issues relating to broadband. But in one of them, I was talking to a person I deeply respect, deeply admire, a very, very smart staffer to one of the critical senators. And I said, I think states can use the reverse auction mechanism appropriately. And I think the FCC can assist them with that, but it might be helpful to write, just put in one sentence saying that the FCC can use its resources to assist those states that would voluntarily wish to use the FCC to run a reverse auction, with the thought that maybe there are 10 or 20 states that want to do it, and the FCC runs an organized auction for them. And he just said, “No effing way. You, Blair, cannot understand the anger at the auctions.” 

And part of it is that Greg is a hundred percent right. The mapping was a disaster, and the reports that came out afterwards just really embarrassed the FCC, and the problem was, and let’s be candid about it, that the then chair wanted to run an auction before the election and did not want to wait until there was a good map. And that has a huge political cost and an institutional cost to the FCC. And some of the inefficiencies we’re bound to see, you know, have roots in that decision. But having said that, I think if a governor wishes to run a reverse auction and wishes to have the FCC assist them, then there’s no bar to that happening. The governors have a huge amount of flexibility, and I don’t think anyone in the Senate is going to say, “Hey, you can’t do that.”

Scott Wallsten:

So, you think that a governor could go to the FCC and say, “Help us run an auction.”

Blair Levin:

Yes, absolutely, and I don’t think the NTIA would object. 

Greg Rosston:

The question is will a governor do that, or a state or agency that has control, give up the control over giving out money?

Blair Levin:

Yeah, and I think the answer to that is no, <laugh>. 

Greg Rosston:

Right.

Blair Levin:

Let’s put it this way. In lots of states, I think the governors look at this as an opportunity, as any elected official would. This is not a bipartisan criticism. It is simply a bipartisan thing that governors like to say. I mean, look in an era in which Republicans are claiming credit for money flowing to their areas that they voted against, and yet they still claim credit. What do you think the motives of a governor are in terms of the distribution of funds?

Scott Wallsten:

Politicians love to hand out money with their name on it. But, I mean, that opens up two questions. One is, the NTIA is responsible for giving out the money, except that the money’s going to the states.

Blair Levin:

No, no, no. The money has been set. And this is a very important distinction with BTOP. There, NTIA decided who got the money. Congress decided the allocation for the states. The formula is not set because the maps aren’t set. The NTIA does not determine how much money each state gets. They simply oversee how the states choose to distribute it.

Scott Wallsten:

Okay. So, that’s the question, and there may not be an answer yet. What does that mean, that they oversee it? What authority will they have? What can they do? Are they responsible for ensuring some kind of transparency, or do we just not even know the answer to that question yet?

Blair Levin:

Well, under the legislation, the states are basically required to do a statewide version of what we did with the National Broadband Plan. There’s a number of distinctions with what we did, but fundamentally, the states are required to collect data, do an analysis, do a map, and present a plan to the federal government, and the federal government has to say, “Yes.” 

So, I think the right way to think about it is the states get to be the hero and decide how we’re going to make sure that every location in the state is connected to a robust broadband network. NTIA plays the accountant and makes sure that the math works and that certain minimum requirements are met, but fundamentally, it’s a huge amount of authority being given to the states with limited authority for NTIA to challenge that.

Scott Wallsten:

One of the things that you wrote at the end of December was the possibility that this makes experimentation possible, and all of us have written about how that can yield big benefits. Do you think states will adopt many different ways of doing things, or is it mostly going to be what’s the best way to give money to your friends?

Blair Levin:

<Laugh> Oh, I think it’s a mixture. Look, I am pessimistic about many things in our political culture, but I will say, in my own conversations with a lot of folks in state government, the COVID was a real wake-up call about the importance of broadband networks being universal and adoption being universal. And I can point to governors who I probably disagree with on everything else, doing really excellent jobs when it comes to making sure that everybody was served. And so, my guess is that for the most part, what most governors want, and this in red states and blue states, is to have every community have a future-proof broadband network, which to order of magnitude 98% to 99% of locations means fiber, in their minds. And that’s what they’re going to build a plan to do. 

There are some states who are going to have excess money. It is hard for me to believe that states like Delaware and Rhode Island won’t have leftover money, given just their geographic size, and that you’ll see certain kinds of experimentation. There are other states which, because of the political dynamic in that state, may want to experiment with, for example, free Wi-Fi to low-income public housing. There are a variety of different kinds of experiments one can see. But generally speaking, most of the money will be spent the same way, which is uncertain.

Greg Rosston:

So, I will agree. Most of the money will be spent. No, all of the money will be spent. And I think you’re going to see a lot of experimentation in, I’m going to be this cynical economist, in different ways of wasting the money. There will be lots of different things that could be done much more efficiently. And you talked about future-proofing networks, Blair, and I think that’s a…

Blair Levin:

Political phrase, not an economic phrase. 

Scott Wallsten:

Good. I’m glad you said that.

Greg Rosston:

Yeah. So, it’s something that… we don’t know how good wireless will be in 10 years, or satellite will be in 20 years, or different things may be just as good as today’s fiber providing things, and maybe at much much less cost. And so, we should think about all these different things when they’re putting in a $100 billion of capital and trying to figure out how to make it work. 

I think that the other is that, you know, getting back to more prosaic things, I think that you will get a lot of different ways of… Sarah, in her paper, looked at the different costs for serving different areas, and Scott and I did something similar. It was not as robust, but the variance of what people paid to connect people is huge, and we’re going to see a lot of money spent to connect a small number of people in certain areas and others who don’t get as much connection. I think that you’re going to see a lot of experimentation in states. That’s good. And we’re going to see different ways of how things can get done.

Blair Levin:

I’m not going to argue with you. I will simply say it is in the nature of our political culture that if you’re spending money on me, it’s not a waste. And if we’re spending money on you, <laugh>, it’s a waste. I don’t mean literally you and me… 

Scott Wallsten:

I think George Carlin had a routine on that. 

Blair Levin:

Yeah. I mean, it’s always been fascinating for me to deal with the rural telephone folks, all of whom are very conservative, all of whom get enormous amounts of federal subsidy, and all of whom think that somehow Universal Service is actually not a subsidy, and that they’re not being subsidized, and that they’re free-market America. Okay?

Well, that is reflected in our current politics where one political party talks about makers and takers when their political strength is in the taker states, right? So, I’m just saying, as a matter of political reality… Greg, you’re not wrong as an economist, but the political reality is rural broadband always attracted enormous support. Whereas low-income support, which I happen to think is more important, but reasonable minds can differ about that, and what the right ratio is, one can argue about, I was delighted that Congress actually funded low-income support at a much higher level than the initial drafts. But you know, wasting money, it is all in the eye of the beholder.

Greg Rosston:

So, by wasting money, I meant that even serving rural areas, they could serve them at very different costs. Governors and states will favor people who may be higher-cost providers of things because they’re known. This was the old police departments that bought Motorola radios, even though they were many factors greater in terms of expense than other things. This will happen in states almost assuredly, that things will cost more than they should. I definitely agree with you on the low-income support. It is something that I’ve written about that I think is probably much more important to spend money on. When we were at the FCC, John Nakahata had Nakahata’s rule about rural broadband, rural telephone companies. And he said, rural telephone companies like change because no matter what the change is, they are either held harmless or get better. They get more money. And so, this was his rule, and I’ve never seen it violated. 

Scott Wallsten:

Well, I mean, that seems like a pretty good prediction, or maybe I guess I’m asking, is that a prediction? The rural telephone companies have always hated reverse auctions. They’ve argued against them ever since Peru first did it in the 1980s. And you know, they’ve got to be thrilled that it’s not officially a part of getting out this money. Are they just going to be the beneficiaries of it, like they always have been, and we’ll find no big net effects of improved coverage as a result?

Blair Levin:

I think the answer is no. Because even though the technique of reverse auctions may not be utilized by the governors, I think the governors are going to want to use some form of competitive process, that is to say, competitive grants, and there are all kinds of problems with them. And I think, you know, look, the maps are very different, and we don’t have good maps, but I think what you saw in RDOF, which did work in its own way, was that you have companies like AT&T and Charter thinking about a strategy in which they’re essentially extending into adjacent geographic markets with government support. Now, part of that’s an offensive strategy, new markets. Part of it’s a defensive strategy. You don’t want the government to support a potential provider who could then enter your adjacent market. So, I’m not saying that anyone’s motives are clear here, but I do think that there are market mechanisms. I suspect, you know, one of the interesting things is that Charter and AT&T in particular, because of their footprint, but other large companies are saying, “We’re very interested in obtaining some of this government money.”

And so, I do think the rural folks are going to have more competition. And in addition, I think we need some fixed wireless providers who could make that case to the governor. Different governors are going to do different things. The mechanism for creating a competitive program that’s not a reverse auction is complicated, but I don’t think this will be, you know, the three of us have a common history of disliking the simple rewards under the old high-cost fund model where the rural phone companies say, “It’ll cost us, oh, I don’t know a billion dollars to do this.” 

And, and the FCC goes, “Well, plus I’ve got to give you 10% on top of that.” You know, here’s your model and we’ll just give you the money. I mean, I think that those days are gone. 

Scott Wallsten:

Greg, do you agree?

Greg Rosston:

Yeah. I mean, this is something where the rural telephone companies, part of it is whether they do have robust broadband in their areas, they will argue, to the extent they don’t already have fiber, which I think they’ve been paid several times over to put fiber into their areas already. They will want to try to expand to the areas next to them. Blair’s point about companies expanding out to the edges of where they are. They don’t want AT&T coming in next to them and then possibly going into their territory. So, they’ll want to expand out and they’ll want to go to whoever is doing it and say, “Look, you’ve got to pick us because we’re the most logical person because we have the closest switch, and we have the closest infrastructure, and we can do it,” and they’re going to push politically to do it, I think.

When the BTOP program was being done, I was asked to be on a review panel for grants in California. So, there was some state part of it and I kind of said, “Well, what are the frameworks for doing it?” 

And they go, “Oh, well, there’s this robust scoring mechanism to look at things.” 

So, I said, “Okay, I’ll do it,” and I was given like three or four applications and was told to score it. There were probably a hundred applications in California. So, I was scoring three or four. And, you know, there were two or three other people who were scoring the same ones, and then these scores had to be compared against everybody else’s scores. So, I finally decided that even the mechanism that I was being asked to do was impossible to make scores on. So, I politely declined to do it, but I realized that the three people who were scoring the same grants could have very different scores for the same things.

And then comparing them against the other 97 projects scored by different people made it nearly impossible to have something where you had lots of arbitrary scoring things. So, in order to have a competitive bidding process, the RDOF process was trying to make it on two or three… I guess it was, you had to be in different discount tiers for speed and latency and you had money. Those were the two dimensions on which these things were scored, and that made it easy to score. 

When you start getting more dimensions, one dimension might be how long till you service, but another dimension might be what community benefits are you going to provide or different things that are impossible to compare against projects, and I think that’s where these things are going to get very political, and favors are going to get done, and it’s going to be hard to, and this is where the money is going to get wasted because they’re going to try and get these favors in.

Blair Levin:

Yeah. One thing I should have said earlier very quickly is one of the great success stories in the last couple of years is how rural electric co-ops have started to offer broadband, and they’ve been a real positive force, and they’re going to play a big role in this as well. So, that’s why I’m more optimistic. 

Scott Wallsten:

Actually, before you move on from that, Blair, could you expand on that just a little bit? Because broadband over power lines has sort of always been the thing that’s just around the corner. 

Blair Levin:

No, it’s not broadband over powerlines. 

Scott Wallsten:

So, that’s the question. How did they manage to finally get into the market?

Blair Levin:

By laying fiber. But remember, rural electric co-ops have a lot of existing assets which are really valuable for an ISP. They have billing relationships. They have a work crew. They have access to poles, and they know the community. So, they simply have organized themselves in the last five years or so to participate in the auctions and to, in the end, offer the service. And I think that this hasn’t gotten that much publicity, but the number of them doing it is much greater than it was.

Scott Wallsten:

Right? No, I think it’s really interesting. Did they finally get into it because demand has increased, costs have come down?

Blair Levin:

Because broadband is now essential in a way that it wasn’t 10 or 15 years ago. But can I, you know, I hesitate to give you guys a homework assignment, but states have a number of very big challenges before you get to the grant process. There’s a political vision problem. There’s a mapping problem. There’s an institutional problem. No state has an institution that’s actually capable of doing this. Every state has a Department of Transportation that can take a federal check. They have a priority list. They can write a check for a construction company to build a road, priority number one. States don’t have broadband offices that are used to doing that, and plus, this is a one-time thing. It’s not like the federal government’s going to be funding broadband again in 2030 in the way that they are going to be funding roads. So, you don’t want to build a permanent institution.

You have lots of challenges. And then you have a whole economic modeling, which is a huge challenge that states are going to have to contract out for. But once you have done a number of those things, you have to have a competitive process. And if you guys could design a competitive process, <laugh> that all the states could simply adopt an order of magnitude a year from now. That would be fantastic. I know you guys would favor a reverse auction. Just assume the states aren’t going to do that. How can you design a competitive grant program that gets as many of the benefits as possible of a competitive grant program and many of the benefits of reverse auction? That would be a great thing to do. Because I know states, they’re going to have two big problems at the end of the process. One is the competitive grant program. And the second, which is related, is how do you enforce commitments made that may or may not be kept? 

Greg Rosston:

Did you read the Op-Ed that Scott and I wrote where we talked about needing to put the risk in the hands of the people? So, you enforce that they don’t get the money until after they perform, as opposed to getting it before they perform.

Blair Levin:

I did see that. I don’t know that as an economic matter… First of all, there are certainly companies that could do that, right? The larger companies, but there were smaller companies who, you know, governments contract all the time with people, and they pay as work is proceeding. This is not a unique problem. But we could argue about whether it’s done or not. But my big point is as an intellectual matter, solving those two problems for the states or giving them a template by which they solve the problem, I think is a really important task at this moment.

Scott Wallsten:

Part of it seems like you want to find a way for states to do reverse auctions without calling them reverse auctions. 

Blair Levin:

Yes. 

Scott Wallsten:

To say, “Here, you need to buy broadband exactly the way you buy everything else, which is some kind of competitive process.”

Blair Levin:

That’s right. 

Greg Rosston:

Maybe TPI should run a workshop for states on how to implement broadband subsidy money.

Scott Wallsten:

It’ll be a very expensive seminar.

All:

<Laughs> 

Greg Rosston:

They have money to attend.

Blair Levin:

<Laugh> I think there will be a number of think tanks that will be doing that. There are a number of foundations that are trying to figure out how to help the states. I think the states are going to find that 80% of the problems are the same. There are certain states, particularly Alaska and Hawaii, which have always been unique situations for the FCC, that are going to be unique here as well. But for the most part, we are going to have 58 different versions of the same thing. The additional eight being the District of Columbia, the Virgin Islands, Guam, Puerto Rico, and stuff like that.

Scott Wallsten:

Yeah. I mean that sort of highlights why states should work together. I don’t think we want Guam to be instituting its own reverse auction.

Blair Levin:

Right. Maybe Greg does. 

All:

<Laughs>

Scott Wallsten:

We’re running out of time. But one last thing, we talked a lot about the importance of good maps. Now here, obviously we’re not totally objective because TPI’s built its own mapping tool, but what do you see as the necessary data? The FCC, and it’s not the FCC’s fault because they’re directed to do it, but you know, has this idea that you need to map every single structure in the United States, which to me just seems completely infeasible to do with sufficiently low error, that it’ll be particularly useful. Then you have to update it immediately. What data should the states be collecting? 

Greg Rosston:

So, at the start, it seems to me there was a lot of blowback on the FCC for areas that were obviously connected. And the states should say to every broadband provider who is providing the state or wants to be part of the system, where do you provide service now? That should be just an immediate thing that we should get.

Scott Wallsten:

But when you say that do you mean at the address level? 

Greg Rosston:

Yes, at the physical address level. So, not a PO box, but the actual address of my house. And this is not a hard thing because at least to me, I’m an economist, I just assume that they must know where these things are, but they do have wires or fiber going to these houses. So, the other is that there are lots of wireless services that know exactly where and what speeds and what frequencies the wireless coverage is at. Almost everyone uses Apple Maps or Google Maps. They have a pretty darn good idea of exactly where signals travel and don’t travel to, probably within five feet. So, we can get ideas of where service is, and the states should require companies to provide them with this information. Then the problem is, we need to know where are all these houses that don’t have service and don’t have wires connecting them?

And yes, there are differences. I advised a bidder in the RDOF auction who had a different opinion than the FCC about where unserved physical buildings were because they were using a different data source, right? The states need to try to figure out how to get where these unserved areas really are. Not unserved areas, unserved locations. Areas are easy. You know, you just kind of map and say. But where are the houses within those? That’s important to understand. Go to the property tax rolls. We have property tax rolls that tell you where all these buildings are, where people live. We have other sources that we can figure out. We deliver mail to a lot of places 

Scott Wallsten:

We used to. 

Greg Rosston:

Yeah. They still deliver the flyers and all those other election materials. So, that’s a first-order problem, finding out where these unserved areas are so that you can then get service to those locations.

Blair Levin:

Greg is a hundred percent right. But it’s not just that the wireless phones know where the wireless signal is. They know where the wire signal is because they also all do Wi-Fi, right? And I am certain that Apple and Google, which have the two major operating systems for wireless, they have tremendously accurate maps about where the networks are and where they aren’t. In addition, the companies do. Look, I know from Wall Street sources, there are decisions affecting billions of dollars being done all the time that are utilizing maps that are much better than what the government has. The government should be able to find a way to get these maps. 

I also 100% agree with Greg that what the states should do, and NTIA, I think, can be helpful in this, is essentially state a requirement to go something like this: “If you want to be eligible to receive funds, you have to tell us where you are currently providing service in the state, and if it turns out you’ve overstated it, like you’ve said you’ve served this broader neighborhood where you only actually serve one home, you will be ineligible. The cost of not telling us the truth is to be disqualified from receiving any funds.” 

I think they should go ahead and do that, and I think that they can collect a lot of very valuable information that way. I think there are some states that are already doing that, and they have been much more successful in getting people to provide information by having those requirements.

Scott Wallsten:

I think we should probably leave it here. We’ve gone on longer than we normally do, but that’s great. Because it’s always fun to talk to you guys. So, thank you so much for coming on today, and I hope we will have you back again soon.

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