AT&T CEO calls for USF reform and more spectrum

AT&T CEO John Stankey on Tuesday expressed optimism about the state of broadband infrastructure investment in the US but also called for a "sustainable way to deal with low-income and affordability issues" as the country prepares to spend tens of billions of dollars building out new networks.

Stankey's comments were shared during a Q&A at an event hosted by Semafor (in partnership with AT&T), held in Washington, DC, entitled Igniting Innovation: America's Digital Future.

Referring to the $42.5 billion Broadband Equity Access and Deployment (BEAD) program, which aims to deliver universal connectivity in the US, Stankey said that – with provider matching funds – the country is on the path to spending upwards of $100 billion on broadband deployment: "We could be talking about $150 billion. It could be $200 billion that has to be deployed," he said.

While that's good news, the CEO pointed to the need for the US to have a "deep spectrum footprint" for broadband to remain resilient and competitive, noting that "the United States is not in an enviable position right now for the next ten years relative to some of our other developed nations and competitors." He also called out the need for sustainable support mechanisms to keep broadband networks affordable.

Related:Study makes the case for spectrum sharing

"We need to think about, how do we get a sustainable way to deal with low-income and affordability issues? We have the ACP [Affordable Connectivity Program] that's about ready to run out. We have a Universal Service Fund that isn't working properly right now. That needs to be done in a sustainable fashion," said Stankey.

Those goals all face several hurdles. To start, Congress also allowed the FCC's spectrum authority to lapse earlier this year, "which is beyond even fathomable," said Stankey.

Further, how to reform the USF, which funds the FCC's high-cost and low-income broadband programs, has been the subject of FCC and Senate inquiries over the past two years. But the legality of the program currently rests with the fifth circuit court of appeals, thanks to a suit brought by a conservative public interest group. While the court ruled against the petitioners earlier this year, the fifth circuit agreed to hear the case en banc in September and has yet to rule.

As NTCA–The Rural Broadband Association's CEO Shirley Bloomfield highlighted on a panel later in the program, how that case gets decided will have serious industry and consumer implications.

"If that court ruling goes poorly, Universal Service stops short ... we will have millions of consumers who will suddenly have the cost of providing broadband to them – which they have been paying $60 a month – could balloon to $300 a month, because that's the actual cost," she said.

Related:Senate seeks input on future of Universal Service Fund

Additionally, if the court rules against USF, the path to save the program is through Congress. "Well, that's gonna be a little bit of a challenge given everything going on," said Bloomfield. Congress currently lacks a speaker of the House, following last week's ouster of Kevin McCarthy from his leadership position, leaving legislative matters in limbo.

Supply and demand

In addition to USF, as Stankey alluded, the industry is also awaiting congressional action on the Affordable Connectivity Program (ACP), which is on track to run out of funding by spring 2024.

On that front, Dr. Nicol Turner Lee, a senior fellow with the Brookings Institution who also spoke at the Semafor event, outlined how affordability is key to BEAD's economic success.

"I think when we look at the pairing of the infrastructure investments and the Affordable Connectivity Program, it's really important for people to see this as supply and demand. It's not supply or demand," said Turner Lee. 

"If we build networks and people do not come, we are going to have overbuilt networks that will have low subscriptions. Because we have 20 million people that are connected [through the ACP], and if we just foreclose on that program, we will have 20 million people who will still remain unconnected," she said.

Related:The Divide: Why the Affordable Connectivity Program is key to closing the digital divide