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August 16, 2021

State to spend $700 million to extend fiber broadband

Stock Photo
State officials prefer an “an all-fiber network,” rather than satellite or other wireless connections.
Time is of the essence because of the things that are changing with our economy . . . . This year we’re going to fund every good project we have in front of us.
— Evan Feinman, governor’s chief broadband adviser
By Ned Oliver
The Virginia Mercury

Virginia lawmakers agreed to devote $700 million in federal pandemic aid to broadband expansion, a sum of money they say will allow them to connect every household in the state to high-speed internet.

The money is a victory for rural localities that view high-speed internet access as critical to their survival but have struggled to convince companies to build out the infrastructure. It’s also a boon for telecommunications companies, who will receive the lion’s share of the funding to build out private, for-profit networks.

Here’s what we know about how the state plans to spend the money and what consumers can expect.

How many Virginians is this going to help and how soon will they be able to log-in?

Virginia estimates that there are 233,500 households and businesses without high-speed internet access. But the state can’t say for sure exactly how many people lack access because internet providers have refused to provide detailed coverage maps.

Evan Feinman, who serves as Gov. Ralph Northam’s chief broadband adviser, nonetheless says he’s confident in the estimate. And he says the lack of maps, while annoying, shouldn’t stop the state from building out networks because the state has set up a system that requires internet service providers to prove they’re already covering an area if a competitor requests funding in territory they serve.

As for timing, Gov. Northam and General Assembly Democrats have trumpeted the program as delivering universal coverage by 2024. But it could take a little longer than that, Mr. Feinman says. Instead, he says the state expects to have lined up all the fully funded projects by then and underway, but “can’t promise construction will be complete.”

Regardless, he says the massive funding boost sets the state up to be one of the first large states to achieve universal coverage.

“It is a tremendous jump start,” he said.

Is $700 million enough money to make all those connections?

If anything, Gov. Northam’s administration thinks it could end up being more than enough, with some of the funds ultimately returned to the General Assembly to be reallocated.

But the size of the allocation became a matter of debate during the special legislative session that ended last week, with Republicans in the Senate pushing to increase the allocation to a full $1 billion.

Sen. Ryan McDougle (R-Hanover) argued the additional funding would mean connections get made faster — something he called critical as the pandemic continues. “Time is of the essence because of the things that are changing with our economy,” he said. “Particularly in the times when you have to work from home or do education from home or do telemedicine.”

Mr. Feinman responded that he appreciates Sen. McDougle’s perspective, but he’s confident in the state’s projections. “This year we’re going to fund every good project we have in front of us,” he said.

Who is going to get all this cash?

The money will be distributed through the Virginia Telecommunication Initiative, which distributes grants to internet service providers who team up with government entities to apply for funds.

While publicly-owned ISPs, of which there are few in Virginia, will be eligible for the funds, Gov. Northam’s administration expects most of the grants will go to private providers, who will then fully own the infrastructure that the state helped pay for.

“It will be a mixture of medium-sized internet service providers, electric cooperatives and municipal providers,” Mr. Feinman said.

He said major ISPs like Cox and Comcast have traditionally not been significant recipients of grant funding because of their focus on metropolitan areas. Instead, he said midsized providers like Point Broadband in Southwest Virginia, All Points Broadband and the Central Virginia Electrical Cooperative have been some of the biggest funding recipients to-date.

The role of municipal providers has been the subject of intense lobbying, and recent legislation that for the first time allowed government-run internet companies to compete for state funding drew strong pushback from major telecoms.

Mr. Feinman said that while the state is allowing municipal providers to compete for the funds, Gov. Northam’s administration hasn’t emphasized publicly-owned networks because it views them as risky endeavors that duplicate resources like fleets and infrastructure that private providers already have in place. “The reason we have the model that we have is we don’t want localities or the commonwealth to bear the risk of a network not being profitable or to have to replicate services that already exist at scale in private or nonprofit sector,” he said.

“Existing ISPs already exist, so we don’t have to reinvent the wheel.”

What kind of internet speeds are we talking about?

The state isn’t setting hard benchmarks for what speed internet projects will qualify for funding, but as grants are doled out, projects that deliver faster speeds are prioritized in the scoring process.

For a project to be eligible, it must deliver broadband to areas where current speeds are below 25 Megabits per second download and 3 Megabits per second upload.

In practice, however, Mr. Feinman says nearly all of the projects the state is funding deliver fiber connections directly to homes, which is the fastest internet infrastructure currently available.

“Our strong preference is for an all-fiber network,” he said.

Will subscription fees be affordable?

That remains to be seen. The state doesn’t set pricing requirements in conjunction with the grants, though, again, the grant scoring process favors providers who offer low-cost options and equity programs.

“What we’ve seen is that the ISPs going out into rural areas — they want people to take service,” Mr. Feinman said. “They’re usually matching their costs to what the market can bear. They’re usually not just offering high-end service. For example, Prince George Electric Cooperative has $50 package. They charge enough to operate and that’s it.”

For people who can’t afford base packages, Mr. Feinman says he hopes the federal government will continue to offer an emergency broadband benefit to low-income people that it began during the pandemic and covers $50 a month for internet access.

Congress has already taken a step in that direction, with the Senate passing an infrastructure bill that would make the aid permanent, though it reduces the monthly benefit to $30.

What about Elon Musk’s Starlink and other emergent satellite providers?

Finally, the plan has some in rural areas wondering why emergent satellite internet providers like Starlink aren’t included in the program.

The company, founded by Elon Musk, floats constellations of low-orbit satellites that are capable of high speeds that earlier generations of satellite providers are unable to provide. Its currently in beta testing, but has partnered with Wise County to provide free internet service to 45 families who otherwise wouldn’t have access. School officials say they hope to have 3,000 children connected by the end of the year.

Jack Kennedy, the clerk of courts in Wise and an avowed space enthusiast, hopes the state will allow the funds to help purchase the expensive routers and antennas required to provide immediate connection for unserved residents.

“When they can get broadband in months as opposed to years, it makes a difference,” Mr. Kennedy said. “Particularly if we are talking about an economic development initiative, then this region — central Appalachia — needs it now instead of later.”

Mr. Feinman counters that it’s too early to consider dedicating public funds to the technology. For one, he said, the program is still in testing, so it’s unclear if equipment purchased now will still work in the future. He also questions the long-term economic viability of the project and whether space companies would even be able to provide enough connections and bandwidths to make a meaningful dent in the state’s rural broadband problem.

Mr. Kennedy is bullish on the new tech, which he believes could ultimately prove faster than fiber. But he says ultimately, the state can benefit from both.

“This is not a war between space forces and ground forces,” he says. “It’s mutual acceptance of both. And right now my largest concern with policy at the state and federal levels has been a definition of infrastructure that excludes space-based constellations.”
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