Bandwidth Hawk
Federal broadband programs seem destined to be run competently, but not necessarily in the best interests of consumers or smaller carriers.
But the year ahead poses worries about whether carriers will be able to easily match federal funds that become available, or cope with inflation, network security challenges, equipment and labor shortages, and tariffs.
By: Steven S. Ross, Broadband Communities
Many broadband activists may not like it, but President Donald Trump’s appointees to key broadband-regulating and funding agencies are at least competent and have long experience in government, as well as in the broadband business.
It may not be enough.
There’s a shakeup in progress and there are serious financial and technical issues that providers will have trouble overcoming. Already, the U.S. Department of Agriculture (USDA) has canceled planned outreach meetings for its rural ReConnect program while right-wing media and the White House decry wokeness and non-existent delays in federal broadband funding, notably the Broadband Equity, Access, and Deployment (BEAD) program.
A new direction at the FCC
Brendan Carr, a longtime Federal Communications Commission (FCC) member, is now chair of the commission. Carr can be bombastic — he wrote the chapter on broadband in the Heritage Foundation’s Project 2025, calling for social media sites to have more freedom to disseminate nonsense without regulatory oversight.
Carr is also against special considerations for the disadvantaged, saying they make deployments more expensive. He’s (correctly) for the Pentagon giving up more of its reserved spectrum, and (arguably, correctly) for using FCC spectrum sales to help pay for a revised Universal Service Fund.
Carr basically wants the FCC to allow big carriers to make the decisions on how to serve their customers, and at what price, even at the expense of smaller carriers who often find themselves at the mercy of high interconnect charges where a big carrier has a monopoly. This clashes with the stated BEAD goal of using universal broadband to make the economy more resilient in times of pandemic or natural disaster.
Carr is expected to be joined by Olivia Trusty, who would replace Jessica Rosenworcel on the commission itself. Trusty has been a congressional staffer since 2013 (after working for Verizon and Qwest). She’s an expert on cybersecurity and is well liked by just about everybody.
Arielle Roth, the telecommunications policy director for Sen. Ted Cruz (R-TX) on the U.S. Senate Committee on Commerce, Science, and Transportation (now headed by Cruz), seems in line to run the National Telecommunications and Information Administration (NTIA).
The NTIA is the U.S. Department of Commerce office in charge of overseeing spectrum use and (of course) in charge of coordinating the BEAD program, a frequent Cruz target. Cruz has, however, supported some form of an Affordable Connectivity Program, as Vice President JD Vance also did while he was in the U.S. Senate.
Less fiber in the broadband diet?
There’s already a strong push to empower national carriers to get more BEAD money and to de-emphasize the envisioned role of fiber deployment, often in favor of cellular, point-to-point wireless, and low-earth-orbit (LEO) satellite communications. The national media, when it covers this at all, takes shots at Elon Musk. But compared to terrestrial wireless, LEO seems destined to grab only a small part of the pie.
I described one such scurrilous effort, by the Information Technology and Innovation Foundation (ITIF), last month.
ITIF is back with another silly report as well, claiming that fiber is just too expensive.
The Free Press, a right-wing mouthpiece, calls BEAD a boondoggle and insisted it is far off-schedule, even though the NTIA has met every statutory deadline in the BEAD legislation.
Make no mistake. This propaganda is stimulated by large-carrier money, not just left vs right opinion mongering.
There is also appetite among Republicans who care about broadband – folks like Sen. Cruz – to cut BEAD construction funds and use the money saved to subsidize low-income access to existing or lower-quality new network deployments. That, in turn, would destroy the point of BEAD and other deployment programs such as USDA ReConnect, which is aimed at improving resilience in the face of natural disasters or pandemics.
Financial choices
No one is talking about abrogating co-op rules that often force them to serve all customers with the same technology, even when that creates awkward financial issues. Would co-ops be encouraged or even forced outright to allow, for example, cellular/satellite-fiber mixes rather than serve all customers equally?
Cruz realizes that major carriers are positioned to get the bulk of the subsidies but would get only somewhere around half the construction funds – and maybe far less. So much for Republican opposition to entitlements.
One major carrier, AT&T (which has lagged its peer competitors on fiber deployment in favor of deploying great cellular service) has said it hopes to finish replacing all copper with fiber in the next five years. That’s the very strategy ITIF decries for BEAD.
And what about the Universal Service Fund?
It needs a new funding source, about $8 billion a year, mostly to be spent in rural Republican areas. But it’s an entitlement, too. Does BEAD money meant for building networks end up funding temporary subsidies through USF instead?
Money supply is getting tight
Finally, will carriers – small or large, public or private – have access to capital, at least the capital needed to match federal grants? And at what price? Already, builders of new data centers seeking to capitalize on demand driven by artificial intelligence often find they have to fund network improvements themselves.
As the Federal Reserve cut short-term interest rates last year, long-term rates did not fall. In fact, until mid-January, they rose. Most Trump Administration policies such as tariffs, restrictions on tech imports, needed network security strengthening, and reduction in possible labor supply with deportations, are inflationary. But Trump hopes to reduce world energy prices and to abandon what his Administration calls costly “woke” favoritism (DEI, for diversity, equity, and inclusion) toward certain populations. Digital equity could disappear as a goal as well.
At the time of this writing, the stock market is holding steady or rising. That also means less money for traditional loans or private equity funding for smaller carriers, but more funds for publicly held carriers with Wall Street access.
The verdict?
In 2025, times will be especially perilous for smaller carriers and for public network providers. But, compared to the clown cars being approved by feckless, clueless Republican senators aiming to destroy our military and public health programs, our industry is lucky – and barely mentioned in the popular press at all.
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