NARUC Eyes States' Infrastructure Spending Role

As states prepare for a significant role spending broadband funds from the bipartisan infrastructure bill, telecom industry representatives cautioned NARUC Tuesday against applying traditional telephone rules. “States will have a bigger role than they’ve ever had before” since the infrastructure package includes $42.5 billion for broadband deployment that NTIA will distribute to states, said Verizon Director-Public Policy Paul Vasington on a livestreamed, partially virtual NARUC conference panel. State commissioners asked companies to do more to help them resolve customer complaints.

Many details remain unknown about how infrastructure funding will be implemented, but “they’re saying that every state is going to get a minimum of $100 million, so that’s a pretty substantial investment any way you slice it,” said Nebraska Public Service Commissioner Crystal Rhoades (D) in an interview Monday. States will play a role deciding where money goes, and in Nebraska, legislators designated such responsibility to the PSC last year since it oversees USF and other broadband programs, she said. Rhoades plans to push for money to be spent on the “most rural places” that don’t already get state or federal awards, especially areas of her state lacking 25 Mbps download and 3 Mbps upload speeds, she said. “I’m going to be watching very carefully as this unfolds to make sure that we get the outcome that we’re paying for.”

Utility commissions’ involvement with the spending will vary by state, said NARUC President Paul Kjellander (R), an Idaho commissioner who will pass association leadership duties after the meeting to Virginia Corporation Commission Judge Judy Jagdmann. The Idaho Commerce Department has usually led broadband work in Kjellander’s state, and the PUC doesn’t regulate broadband, he told us. The commissioner hopes states don’t rush to get “money out the door” and instead consider where to get the “biggest bang from the buck,” he said. The money has “a lot of potential,” said Kjellander: Each state knows where its gaps are, so it’s time to put “money where their mouth is.”

Michigan PSC Commissioner Tremaine Phillips is excited for the federal money to be used to improve adoption in addition to rural infrastructure deployment, he told us. The EBB is helping historically disadvantaged people gain access in areas that have broadband, he said. The PSC has no formal role in distributing infrastructure money, he said, but the commission has a “very close advisory relationship” with the Michigan High-Speed Internet Office, which will look at how best to deploy federal funding.

States’ role is “to promote and facilitate the success of spending this money and solving the digital divide,” as opposed to “their traditional role of consumer protectors of monopoly services, because those days are gone,” said Verizon's Vasington: It shouldn't be about how to “extend the old utility model into the new world.” As policymakers implement programs required by the infrastructure law including emergency broadband, “also think about things you can then do away with that,” such as carrier of last resort (COLR) obligations for ILECs that have many fewer landline customers now due to cord cutting, Vasington said.

Don’t let the tail “wag the dog,” warned Luke Platzer, a VoIP attorney with Jenner & Block. Policymakers shouldn’t use additional subsidies as an “indirect way to pursue other policy objectives, separate and apart from getting people the broadband that they need.” Oversight “lives organically within [the] subsidy programs themselves,” he said.

It’s state and public money, said Rhoades on the panel. “We can attach whatever standards we want to anyone accepting that money.” It could be reasonable to have a lighter touch in places with more competition, but COLR remains important for rural Nebraska, said the commissioner, noting the rural/urban divide exacerbates today’s political divisiveness.

Some state commissioners in the audience want companies to do more to help their agencies with complaints. The best thing providers can do is to be responsive to help state regulators help customers, said South Dakota Public Utilities Commission Chairman Chris Nelson (R). NARUC Telecom Committee Chair Karen Charles Peterson of Massachusetts added that it’s important that “customers know that we’re here.” Many in her state don’t know her agency exists, she said: Industry can help by informing customers on their bills that they can ask their state commission for help, she said. Rhoades partly agreed with colleagues but urged companies to also fix underlying problems producing the complaints. “Please do all you can to make those networks more reliable so we all have fewer headaches.”

Panelists disagreed if competition is working. View bad service not as a market failure but as a failure to meet customer expectations, suggested Vasington: More customer choice means less need for utility-style regulations, and declining landline use shows customers willingly changing providers. “You should take a bow and applaud what you’ve done, not look at it as a failure of consumer protection.” Platzer sees no “avalanche” of complaints about interconnected VoIP but noted state attorneys general aren’t shy about enforcing companies’ voluntary promises to customers.

Many consumers lack sufficient and reliable alternatives, countered Hooman Hedayati, Communications Workers of America strategic research associate-telecom policy. Comcast and Verizon both sell broadband in Hedayati’s affluent neighborhood in Washington, D.C., but Verizon offers only slower DSL, so it’s not really a choice, he said. CWA technicians fix many VoIP problems, the union official said. AGs "get involved always when it's too late," after hundreds of thousands of complaints, and lack telecom expertise, he said. State commissions should have power to oversee resiliency, seek information on backup batteries and emergency preparedness plans, and collect data and conduct third-party infrastructure audits, he said.

It’s “completely inappropriate to frame this as persnickety customers,” said Rhoades. "To say these customers are just cranky” and “need to adjust their expectations is a really unfair characterization of the scope of the problem. ... If we were going to solve it with competition, I think we would have done that sometime between 2005 and 2021.”