FCC lines up $16 billion for broadband across entire US. Well, except New York because, screw them, right?

They’ve got money, explains American watchdog that just can’t help itself

The Federal Communications Commission (FCC) is under fire from lawmakers, and one of its own commissioners, for excluding New York State from a $16bn rural broadband fund that is supposed to cover every corner of the US.

“This week, the FCC will vote on a proposal to spend $16bn on broadband for rural communities at risk of being left out of the digital age,” tweeted one of the federal regulator’s five commissioners, Jessica Ronsenworcel, on Monday. “But it plans to exclude rural home and businesses in one state entirely – and that’s New York. This isn’t right and it needs a fix.”

That proposal [PDF] will be voted on at the FCC’s monthly meeting on Thursday, and New York lawmakers are not very happy about being excluded. Last week, a bipartisan group of 23 Congressional representatives for New York sent a letter to FCC chair Ajit Pai complaining bitterly.

“We are deeply disappointed by your recent decision to make all of New York State ineligible for Phase I Rural Digital Opportunity Fund (RDOF) awards,” the letter notes, pointing out that “Phase I” contains the bulk (78 per cent) of the total $20.4bn federal fund.

“This decision will no doubt increase the digital divide, hinder economic growth and opportunity, and stall quality of life improvements for residents in our state, particularly those living in rural communities.”

New York’s two Democratic Party senators – Chuck Schumer and Kirsten Gillibrand – have been even more forthright, sending their own letter and claiming that the “Feds” are “plotting to exclude New York from vital $20bn pot of funds.”

Ok, so, um, why?

All of which begs the questions: why is New York being excluded from a country-wide program?

According to the FCC’s own report, it has chosen to “exclude those areas awarded CAF Phase II support allocated through the New NY Broadband Program, as well as the other areas of New York eligible for funding through that program,” adding that:

“Any areas within a pending CAF Phase II or New NY Broadband Program long-form application that have not been authorized to receive support at the time the Bureau announces the final eligible areas list shall likewise be excluded from eligibility for the Rural Digital Opportunity Fund.”

Which is a typically opaque, policy-wonkish way of the FCC saying that because New York already has some other rural broadband projects in place then it isn’t going to put its money into the same space. This logic reflects a persistent argument put forward by cable giants that money shouldn’t be spent on “over building” broadband networks.

In truth, the “over building” argument has no policy underpinnings and there is no evidence it would result in anything but more capacity being added that would be immediately taken up by those living in the area. If experiences elsewhere in the world have shown anything it's that if you build bandwidth, people will happily use it to the fullest.

What scaling back infrastructure spending does help to do is reinforce the cable industry’s long-standing approach of maintaining local monopolies in order to maximize revenues: when people don’t have a choice between providers, those providers can charge more, for less.

There is a long list of reports and investigations that show exactly how cable companies split up markets at the local level and then use flawed FCC reporting tools to make it look as though there is competition in each market, when in reality most US citizens have very limited choice between ISPs.

In this case, however, the flawed “over building” argument has been applied to rural broadband and, although the lawmakers hint at it, none of them have said publicly what some really think is happening: that the FCC is purposefully excluding New York as part of an ongoing campaign against states that have criticized and blocked policies from the Trump Administration.

Resistance band

The other main target of this petty campaign is California – which continues to actively challenge a host of federal policies, sometime by suing the government and other times by passing its own legislation - net neutrality being the clearest example. But California is so large and has such a massive rural population (many of which vote Republican) that it simply isn’t possible to find a policy justification to exclude the state. New York, on the other hand, is far smaller (New York is exactly a third the size of California) and with less of a rural population.

New York is not just New York City: “upstate” New York has a significant rural area where Americans suffer from the same internet access policy failings as the rest of the country.

“The federal government should be investing - not divesting - in Upstate New York rural internet access,” Senator Chuck Schumer, who regularly spars with the president as Senate minority leader, said in a statement.

“Just because New York participates in certain federal rural broadband expansion programs certainly doesn’t mean it should lose access to others. It makes absolutely no sense to punish New York for taking positive steps to address broadband access.”

The New York delegation went into further detail: “In 2015, Verizon Wireless declined $170m in Connect America Fund (CAF) dollars for broadband build out across New York State. Rather than reauctioning this funding, the FCC allowed New York State to disperse the $170m as part of the State’s existing Broadband Initiative. State officials were never informed that disbursing CAF funding in this way would have any impact on future RDOF funding eligibility.”

In other words, New York is being punished for spending government money on building out broadband after the private cable industry declined to do so. The FCC is arguing that it already has a government program in place and so doesn’t need another one.

New York is arguing that it only set up its program because Verizon refused to take money filtered from the federal government to the cable industry – and it wants the extra federal funds to do what the program is intended to do: expand rural broadband.

Would it really though?

The other big question is: is it really likely that the FCC would be part of a broader White House-led campaign of petty political attacks? And the answer is: yes, sadly, it is.

Just a few months ago, the FCC went out of its way to attack a local ordinance in San Francisco passed in 2016 that prevented property owners from denying ISPs access to existing wiring within apartment blocks. And then it actively blocked the law in a special vote: a decision that confused observers.

That decision follows another one that disproportionately impacted California and New York: the imposition of a flat-rate on state governments over what they can charge mobile operators for sticking 5G towers on their property, even when some cities had already reached agreement with mobile companies.

Large built-up cities on the coastlines can charge more for that right because of the number of potential customers and the overall increased cost of doing anything in those places, as opposed to the rest of the country; the FCC insisted a single fee – a decision that is being challenged in federal court.

And then there is the behavior of FCC chair Ajit Pai, who owes his job to President Trump and has repeatedly gone out of his way to push policies favored by the president and the White House, even when they conflict when previous FCC decisions.

Perhaps the most egregious example of this came when the FCC failed miserably to deal with the aftermath of hurricanes on the island of Puerto Rico, reflecting Trump’s own peculiar response to the tragedy.

By contrast, similar storms in other states including Texas were met with a full federal response. The FCC didn’t even hold a review to dig into the lengthy recovery for Puerto Rico’s mobile network and what lessons could be learnt from it: a common process in such situations.

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Then there was the peculiar proposed $4bn merger of Sinclair Broadcasting and Tribune Media that came with President Trump's public backing but which was so unusual that the FCC's inspector general got involved to see if there was some behind-the-scenes political deal driving it.

Ties between the Republican party and the FCC, Pai in particular, have been far more blatant and transgressive than at any other point in the FCC's history.

In short, the FCC’s justification for removing New York from its massive $16bn broadband fund is shaky at best and makes little real sense: it is a national program and there are plenty of other state-led broadband programs. Why exclude anyone?

The most likely explanation is that the federal regulator saw an opportunity to use policy against perceived enemies of the White House and took it in order to buy favor with the president. Yes, that is where we are in American in 2020. ®

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