As telecoms spend billions on wireless, where does that leave the wired?

Telecom companies are spending a lot of money on wireless infrastructure to support their 5G networks. In a Federal Communications Commission auction announced last week, Verizon spent $45 billion on acquiring new spectrum. AT&T spent $23 billion. But wired infrastructure is not seeing the same kind of love. AT&T has stopped connecting new customers to its DSL network, and a report out last fall found that it has deployed high-speed fiber to only about a third of the households in its network.

Angela Siefer is the executive director of the National Digital Inclusion Alliance, which wrote that report with the Communications Workers of America. I asked her what we’re seeing in terms of investment from the company.

Angela Siefer: We are seeing AT&T not invest in low-income neighborhoods as much as they do higher-income neighborhoods. And we have to understand that in the United States, the internet is a commodity. So they’re looking for highest return.

Molly Wood: And you have evidence of this, right? You have put out a report to this effect that essentially overlays the fiber investment with income, and it seems pretty clear?

Siefer: We did, yes. We released a digital redlining report in 2017, where we found that the really slow old DSL tended to be in lower-income neighborhoods. That went against the general understanding that it was rural areas that weren’t getting the investment. And then more recently, we did a report with the Communications Workers of America, where their data found that there were large portions of AT&T service territory that wasn’t being upgraded to fiber, and there were no plans to upgrade it to fiber.

Wood: And then how does that connect to what we’re hearing, which is AT&T plans to stop connecting even new DSL users in those areas that have this older infrastructure?

Siefer: Right. So AT&T is really switching to a wireless model, where they are relying upon the plans for 5G and their existing wireless, which in a business sense is probably great. But for the folks on the ground, not so great. If, with your internet connection, you had been relying upon a wireline connection, a DSL service, and there’s not going to be an upgrade, you have no chance of getting a faster speed. And your only option from AT&T is to switch to their wireless. Wireless comes with data caps, right? So it’s a lot more expensive to maintain a wireless connection than a wireline connection.

Wood: I mean, we’re talking about AT&T because they’re the biggest and have in some ways been really conspicuous about this sort of weirdly slowing, you know, infrastructure buildout. But is AT&T any different than other telecoms in terms of this lack of investment in widespread fiber?

Siefer: What we’re seeing is the lack of investment in the lower-income neighborhoods by AT&T. With Verizon, we see skipping of whole cities. So they’re each making their own choices as to where they go with their fiber investments. And for the rest of us who end up in any of these places where those investments aren’t happening, we need to say, are we OK with that? Or do we need to somehow be influencing either their decisions or coming up with our own solutions?

Wood: We currently have proposals in Congress, from Republican members of Congress, that would essentially prevent municipal broadband — that would, in theory, expand broadband access but prevent cities from building their own.

Siefer: So those proposals that restrict cities from building their own assume that the incumbents are going to distribute their fiber in a way that makes sense for everybody. But it’s not equitable. And so it really comes down to, are we OK with the inequity? I’m not OK with the inequity. Everybody needs access to fast broadband, and it needs to be affordable. And so if we have places — right now, it’s already state laws, state laws that say no, the local communities cannot build their own infrastructure. And if we do that federally, then it limits all those options. And we as a country, we’re like, “Yes, we build things ourselves.” And then the government’s like, “No, no, no, you can’t build it yourself.” Well, that doesn’t make any sense.

Wood: So then let’s talk about this, the wireless future, the 5G future. Do you think that that will benefit some of these underserved areas? Or might we see the exact same thing where we now have next-generation networks that further entrench inequity?

Siefer: I think we have to assume that 5G will bring further inequities. There’s no reason to think that the current technologies aren’t being rolled out equitably, that the newer technologies will be rolled out equitably. We all know that we should learn from history, learn from the past. And so just changing the technology isn’t going to change the business model. The business model remains the same.

Wood: And currently there is, just to put a fine point on it, you said this is a commodity, right? There are not regulations, there’s nothing to prevent companies from not serving specific areas?

Siefer: Broadband is very lightly regulated. So at this point in time — which of course, Congress and others could choose to change this — at this point in time, there’s nothing to keep companies from rolling out broadband infrastructure where they feel like they’re going to get the highest return.

AT&T and Verizon are in a quiet period following the FCC auction, so they couldn’t comment on their plans for the 5G spectrum. Responding to the CWA/Inclusion Alliance report, AT&T said: “Our investment decisions are based on the capacity needs of our network and demand for our services. We do not ‘redline’ internet access and any suggestion that we do is wrong. We have invested more in the United States over the past 5 years than any other public company. We have spent more than $105 billion in our U.S. wireless and wireline networks, including capital investments and acquisition of wireless spectrum and operations. Our 5G network provides high-speed internet access nationwide, our fiber network serves more than 14 million customer locations and we recently announced plans to add another 2 million locations this year.“

Update (3/1/21): After publication, AT&T sent an additional statement: “We understand the need to close the gap that exists in access to high-speed internet and we encourage legislators and policymakers to act to ensure the educational and economic success of all Americans by making broadband connectivity more accessible, affordable and sustainable.”

Related links: More insight from Molly Wood

AT&T plans to deploy fiber to two million new households in 2021 sounds like it will mostly upgrade areas where it already has some infrastructure, instead of extending fiber into new areas. In the company’s last earnings report, CEO John Stankey said he basically doesn’t think there’s any way to extend fiber to many rural areas at all. Meanwhile, just this past November, Verizon settled a lawsuit with New York City, promising to provide fiber to 500,000 additional households. It had stopped its installation a decade before due to the high costs.

And see, when we talk about how the internet is everything, and we discuss the fact that it’s a commodity and it is ultimately up to companies to determine where it’s most financially viable for them to introduce infrastructure, that means the digital divide doesn’t get closed. Full stop. It’s worth noting that AT&T took out a $14.7 billion loan at least in part to buy some new spectrum, so at minimum it needs to make back that money. 

Now, as a contrast, look what’s happening in Mississippi. CNET has a story about how the state used a huge portion of its coronavirus stimulus and went to independent, member-owned electric utilities and asked them to use the money to build broadband infrastructure, which they did, and now the state is being called a “broadband miracle.” Meanwhile, Ars Technica reports on the GOP proposal in the House to ban states and cities from building their own networks, ostensibly to create incentive for incumbents to build networks in places where they’ve already decided they can’t make any money. But since Democrats control the House, the bill likely has no chance. Apparently the Republicans just wanted to make their opinions on the matter known.