Federal Communications Commission Chairman Ajit Pai.
Federal Communications Commission Chairman Ajit Pai. Aaron Bernstein/Reuters

The FCC Is Leaving Low-Income Americans Out of the 5G Rollout

San Jose, the National League of Cities, and the U.S. Conference of Mayors agree: The FCC’s order on 5G rollout will leave millions of Americans behind.

Last month, San Jose filed a lawsuit against the Federal Communication Commission's September order on “speeding broadband deployment.” More than 20 cities have done the same, and the U.S. Conference of Mayors, the National League of Cities, and the National Association of Counties, representing tens of thousands of rural and urban communities across the country, have come out against the FCC’s order. Why?

Justified as the key to speeding 5G small-cell deployment, the order provides close to a $2 billion taxpayer-funded subsidy to corporate interests, with no requirement for them to provide affordable broadband access to America’s rural and low-income communities. I wish I were surprised, but I’m not. This is the FCC that gutted the Lifeline program that provided discounted cell phones to our most vulnerable and rolled back net neutrality and privacy protections for millions of Americans.

I had a front row seat to this behavior when serving as a representative on the FCC’s Broadband Deployment Advisory Committee on behalf of Mayor Liccardo—before we publicly resigned the seat in recognition of the fact that the FCC was putting its fingers on the scale in favor of big telecom. The espoused goal of the committee is to speed the deployment of high-speed internet networks throughout the country, but we were the only city government in a group of nearly 30 representatives when it launched. Instead of creating a balanced, representative, perspective of a cross-section of Americans, the committee heavily favors industry groups. In other words, the FCC sold us out.

The current debate pits cities against the Trump-appointed FCC in an unproductive, combative debate where the public loses out. Disturbingly, this debate is filled with false claims around the support for, and reality of, building expensive, vast 5G networks. The 5th generation of wireless broadband, 5G is expected to expand speeds dramatically and to support millions more devices on a network, but requires dense networks of “small cells” close together to be deployed in communities across the country. No doubt, a 5G rollout is essential to the economic competitiveness of the country. It can bring immense benefits and serve as a key component of building our digital future. However, we must do it equitably for fear of leaving over 34 million low-income and rural Americans in the digital desert, with no access to the broadband they’ll need to survive—and thrive—in a 21st century economy.

In San Jose, the largest city in Silicon Valley, we are no strangers to technology, and the benefits it brings our economy. Partnering with the private sector is a consistent theme across our work—one that advances technologies to allow our economy to thrive. After resigning from the FCC committee, San Jose began creating partnerships with industry and secured the country’s largest broadband investment in small cells. Our partnerships would not only speed deployment, but secure millions of dollars for the nearly 100,000 San Joseans who still live on the wrong side of our city’s digital divide.

We work with companies on autonomous vehicles, Internet of Things (IoT) sensors, artificial intelligence, and fixed wireless technology to lower the costs for deploying fiber networks—all technologies that will benefit from the advent of 5G. Our local city government partners with companies like Facebook, Box, and Airbnb to not only help these companies use our city as a platform to test and enable next generation technologies but, more importantly, to make life better for our residents through higher quality of service at a fraction of the cost.

At the same time, we know that the benefits of these new technologies need to reach all corners of our community. Last year we conducted a study with Stanford University that showed over half of San Jose’s low-income population has no internet access at home. At a time when homework frequently requires internet access, these kids won’t have the resources they need to thrive or develop the skills to compete for Silicon Valley jobs, leaving them even further behind. For Silicon Valley to have a digital divide like this is as shocking as it is heartbreaking.

In the absence of federal support to help us bridge this divide, we turned to our corporate partners for help. As part of our broadband partnerships, companies will contribute to a “Digital Inclusion Fund” to fund connectivity, devices, coding camps, and digital skills training for kids living in low-income and typically underserved communities, in addition to investing in fiber and deploying thousands of small cells to usher in the 5G revolution. Companies like AT&T have embraced this model. Their investment includes upfront payments that go into “lean” process redesigns and additional safety inspectors and planners needed to process permits to safely speed time to market—even faster than FCC “shotclock” guidelines. We also offer a “one-stop-shop” for interacting with us, and the opportunity to use our infrastructure to test new IoT products. In short, we were able to negotiate deals that are good for business, and good for the city.

This recent FCC order, however, puts partnerships like ours at risk by artificially capping fees at below-market rates, forcing local taxpayers to subsidize the difference. The FCC’s misguided theory suggests that if fees are capped in larger cities, the capital savings will instead be used to build networks in rural areas. But, this flimsy theory fails to recognize the basic economics of building networks, i.e., density drives investment.  In rural areas, the cost of bringing 5G to a single resident could be up to $30-50K per user—many times more than the cost of servicing an urban dweller. Because of this immense hurdle, the $2B industry subsidy received for artificially capping fees in big cities is more likely to go to shareholder profits or stock buybacks rather than rural areas.

But don’t take my word for it, just ask the industry whether this subsidy will speed deployment to new areas. And, Wall Street is not buying the FCC’s theory either—their forecasts show the largest telecom companies are reducing, not increasing, their deployment of networks this year. In other words, these policies that hurt taxpayers, do nothing to speed deployment of networks.

In the end, what does that leave? Lengthy court battles over the constitutional authority of the unelected officials at the FCC who have (unilaterally) imposed these overbearing rules on every community in America. Unless these rules are overturned, the more than 10 million American households left on the wrong side of the digital divide will remain there.

It’s unsurprising that the FCC remains painfully out of touch with the real challenges facing the communities they claim to serve, but San Jose and countless communities across America don’t have that luxury. The 5G revolution is on our doorstep, and our residents need solutions to close the digital divide now if we want to give everyone a fair shake. In the end, how we will be measured is not by the stock price of big telecom firms, but in whether we created opportunities for the millions of rural and urban Americans who have been left behind.

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