Creating a favorable business environment for telecos - ETI

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October 28, 2022

Creating a favorable business environment for telecos

The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software.


Hello, and welcome to another episode of The Broadband Bunch. I’m your host today, Jeff Boozer. Today, we’re speaking with Brett Kilbourne, the Utility Technology Council’s senior vice president for policy and general counsel. Brett provides legal guidance to utilities on telecommunications issues, before the federal and state agencies, and those being considered in Congress. Mr. Kilbourne is licensed to practice law in the state of Maryland and is a member of the American Bar Association as well as the Federal Communications Bar Association, Brett, welcome to The Broadband Bunch.


Thanks, Jeff. And just want to take this opportunity to say thanks to the folks at The Broadband Bunch for the opportunity to talk a little bit about utility broadband. So without further ado, let’s go ahead and kick it off.


All right. Let’s start out with this. Maybe you could give us a little overview of the Utilities Technology Council and the activities that they take on behalf of their membership, for those of us who may not have much familiarity.


Okay. So UTC, the Utilities Technology Council, was established in 1948. Our bread and butter issue was private wireless. At the time, UTC was one of several different “FCC certified frequency coordinators,” and from those humble beginnings, we have now evolved from just simply private wireless to address all kinds of telecommunications and IT issues, for all kinds of electric, gas, and water utilities, and other critical infrastructure industry companies. So we’ve got offices in the United States, we’re based in D.C., but we also have affiliates throughout the world, over in Europe, South America, and Africa. So we’re a global organization. We’re kind of unique in the utility industry because we represent all kinds of utilities, not just the investor-owned utilities or the municipal utilities or the cooperative electrics, but all kinds of utilities. And we only focus on telecommunications and IT. So that makes us kind of unique in terms of trade associations.

We hold meetings throughout the year. We’ve got an annual conference, but then we also hold regional meetings. And then we also have, and we’ll talk about this later, broadband workshops that we hold in various parts of the country. And the next one coming up, and we’ll come back to this later, is our broadband workshop in Spokane, which is going to be held September 7th through the 9th. So I hope that provides a quick overview of UTC.


Yeah, that’s great. And it’s interesting that, even as far back as UTC got started, you’ve been focused on communications as it relates to the utility industry. And I know from talking with you that broadband in particular has been a focus of the group for well over a decade, I guess, and you guys were early to that conversation, especially as it related to utilities. Tell us a little bit about how that broadband focus has evolved over the last decade in particular.


Sure, I can tell this from a personal standpoint. So before I came to UTC, utilities were viewed as the third big competitor with the ILECs at that point, to come in and provide competition in the telecommunications marketplace. So I came over from BellSouth, and that was in part because UTC at that point was trying to staff up as the big electric utilities were entering the telecommunications marketplace. And while that period in time was relatively short and limited in terms of the utility entry into the telecommunications marketplace, the point of broadband was always something that we had in view, even stretching back to those late 1990 days. And so as utilities needed to be able to support not only their own private internal communication networks but also some of these ancillary services, for lack of a better term, they needed more and more bandwidth.

And so the whole concept of broadband, even though it didn’t have a name at that point, is something that utilities have been pursuing for quite some time. We’ll talk about this a little bit more in detail, but one of the things that utilities were out in front of when it comes to broadband was actually developing a technology that would use electric power lines to provide internet access. And that term of art that was created back in those early days was called broadband over power lines.

So moving forward to current developments, around the 2011 timeframe, we had a number of electric utilities, especially the electric cooperatives that came to UTC humbly, just basically saying, “We’d like to try and tell our story to the FCC.” And when they did, the FCC at first I guess was a little skeptical that what utilities were doing was even possible, because they were providing fiber to the home in areas that were otherwise completely unserved. And so after hearing these electric cooperatives basically achieving the impossible, the FCC developed what was then called a rural broadband experiments program, and this was initial toes in the water for the FCC to consider whether its broadband funding programs at that point, which were tied to universal service, should be opened up and made competitive.

Up until that point, the FCC had established a policy of allowing the ILECs to have a right of first refusal to all the funding that was going to be made available through USF for broadband deployment. And so the rural broadband experiments were a relatively low-level funded program. It was really just designed to see how much interest was out there. And a lot of the utilities stepped forward. And that basically was enough for the FCC to say, “Maybe we should expand this even further.” And that then opened up opportunities for utilities to be able to access and compete with others, not just the ILECs, they opened it up more broadly for access to the Connect America Fund Phase II funding, which at that point was a little over $1.5 billion over a period of ten years, which we thought was just amazing amount of money.

So that was one of our, I guess, biggest achievements was getting afoot in the door, and actually, we helped open the door for a lot of other folks at the same time, to be able to make that a competitive broadband funding program. So that’s how we got our start. And since that time, you’ve seen a lot more utilities getting into providing last-mile broadband, and more recently we’re seeing some of those big IOUs, the investor-owned utilities, that back when I started at UTC in 1998, were doing fiber leasing on a wholesale basis, now they’re doing something similar where they’re providing middle mile, but it’s a little different in the sense that, back in those ’90s days, they were basically trying to connect up major metropolitan areas and provide long haul backhaul between those urban areas. Now, what they’re doing is they’re providing the middle mile into areas that are completely unserved. So it’s a little different, and it’s nice to see things come full circle with those folks.

But the municipal utilities, even when I started in 1998 at UTC, those folks were out in front and they were providing telecommunications competition in certain urban areas for the most part. And since that time they’ve continued to provide not only telecommunications but also broadband in a lot of areas too. So a lot of this stuff all comes together at this time, which is exciting for broadband in general and utility broadband specifically.


So at the moment… Let me follow up on a little bit with that. At the moment, there’s a lot of money obviously coming toward broadband investment in the country, and a whole lot more than that original amount we talked about ten years ago. And there is some obvious preference or favor for the utility business model to help fill the broadband gaps that are out in various parts of the country. Why is it that policymakers and the people managing the funds are switching to that preference for a utility business model? Can you fill in some information about that?


Sure. I think they’ve just seen the utilities doing this on their own and they’ve suddenly realized, utilities are a potential resource to help solve this digital divide that for the longest time they were having a hard time cracking. So some of the things about utilities that position themselves uniquely to help solve the digital divide, I guess first and foremost, it’s a cultural issues. Utilities have a commitment to their communities. They’re very much driven that way. I think it’s partly because, as electrics, they’re accustomed to providing essential services. And I guess the point here is, up until now, most folks didn’t really think about broadband as being an essential service. And back when utilities were getting into this, in some ways it was because nobody else would. And I’m telling the municipal and the electric cooperative story from that standpoint.

So for folks that are unaware, electric cooperatives are basically owned by their own customers, their members, as they refer to them. And so those members were literally coming to the electric cooperatives and begging them to provide broadband. And so you started out with a handful of them that said, “We’ll go ahead and try this out.” And when they did, they did it in such a way that they wanted it to be future-proof. They didn’t want their members to be served with marginal services, and they also wanted to make sure that all their members were served, and not just cherry-pick the ones that were the most profitable. So that ties into the cultural issue, I guess, that sets utilities apart from other types of broadband providers.

So they’ve deployed these networks that are, as I said earlier on, unthinkable at the time that anybody would deploy fiber to the home in these unserved areas. At the time, the FCC was thinking, be lucky if you could get away with DSL or wireless. So are the state-of-the-art fiber to the home networks. And the other thing that came out in the course of talking to the FCC about what the utilities were doing was affordability. And so from the utility standpoint, it wasn’t like we were trying to do this on a cost basis, although that’s the way it worked out. Really, it was, like I said, trying to provide a service back to these communities and promote economic growth and better opportunities for the folks that were in those communities. But what they were doing was providing these gigabit networks at speeds for less than 100 bucks a month, which at the time was far below the national average. Heck, I can’t even get that kind of speed and service at that price in my area where I am here in New Jersey.

So that’s one of the reasons I think policymakers are looking at utilities, is because they are positioned out in these areas. They are committed to serving their communities. They are able to provide robust networks that are scalable. And they’re able to do it at an affordable price. Fundamentally the reason that utilities are doing this is that nobody else would, so they’re filling a gap. So that’s where it comes from.

I’ll say a couple of other unique things about utilities that set them apart, and we’ll get into this probably later. I’d said UTCs existed since 1948. I don’t think anybody realized that utilities have had communication networks stretching back that far. So we’ve got a lot of expertise in the communications area. Certainly, our focus is on electric, gas, and water, but these communication departments within the utilities, have a lot of experience in this area. They know how to run networks. And when they do it, here’s another aspect that sets the utilities apart. When they do it, it’s a network that is highly reliable and redundant. It’s got backup power that lasts beyond 72 hours. These are the things that really set our networks apart from a quality of service standpoint. So there’s that part of it. There’s the expertise. And obviously, we have a lot of infrastructures that go along with that.

But then there’s all this other aspect of it, which is… I mentioned before that utilities needed broadband for their own private internal communication needs. And one of the things that have evolved within the utility industry is this whole concept called grid modernization. And that basically got coined into a term called smart grid. And the smart grid is a small part of the overall IoT, the Internet of Things, an evolution that’s taking place. So whereas when I started at UTC, most of the communication networks were designed around radio communications with trucks, and if you were lucky you had automated meter reading systems that were pretty much one-way, slow-speed type of communications, this whole evolution that we’re talking about with respect to grid modernization involves two-way real-time connectivity, all the way to the customer prem. So the utilities were already starting to deploy these fiber optic infrastructure networks deeper into their electric, gas, and water infrastructure. So that they clearly had this infrastructure running to their transmission facilities, but now it’s running to distribution substations, and in these broadband networks where they’re providing services, in some cases, it’s going all the way to the customer prem.

And so that’s a holistic picture of utilities. And getting back to your initial question, why the policymakers are now seeing them as a real solution when it comes to the digital divide is because, at the same time the utilities are basically trying to improve their communication systems for their own internal purposes, they can also leverage that infrastructure to be able to support broadband into these areas that otherwise probably wouldn’t see any broadband, because the economics just don’t work. But we have a lot of good reasons, and these networks are highly sustainable from an economic standpoint because they’re supporting both utility applications as well as commercial broadband. There are a lot of good reasons for utilities to want to do this. The focus is on communities, but there are also some real benefits to going back to the utility.


That’s interesting. So they’re used to operating an essential network for an essential service. They need to have broadband for their own use. So they make a great target for an economic model to deploy to the underserved. Okay. Good. What do you think are the top issues facing utilities out there at the moment, in trying to deploy broadband for their service areas or their membership, if it’s a co-op, or their citizens if it’s a municipal? What kind of things are they facing in trying to build and turn on these networks out in those areas?


Well, for some it’s the regulatory piece. So stepping back, utilities are unique from other communication providers in the sense that everything that they do is highly regulated. Looking at it from my BellSouth days, that was the beginning of what was then referred to as telecommunications deregulation, when Congress passed the 1996 Telecommunications Act. And the idea was that you would spur deployment and competition by virtue of removing regulatory requirements from some of these telecommunication service providers. So they’ve been in a deregulatory environment forever.

And so the electric utilities come from a completely different background. Everything that they do is regulated. It’s called rate regulation. So they literally have to get approval ahead of time from the state PUCs before they make investments in a lot of cases. And so the big IOUs are the ones that are principally regulated at the state level, but it’s a whole culture. And it goes to not only the big IOUs that I mentioned but also those electric cooperatives and also some of the municipal providers as well.

And so getting back to your earlier question, how are policymakers trying to encourage utilities to be able to provide broadband? One of the most basic things that they do is provide a green light to utilities to basically say, “It’s okay, guys. We really want to see you do this.” And that message has been heard loud and clear in a number of different states that have gone to the big IOUs and said, “We want us to try and see this happen.” And so with those folks, what they’ve done is they’ve deployed these middle mile infrastructure build-outs, and the state PUCs have approved the cost recovery on some of those deployments. And so the other IOUs are looking over their shoulders and saying, “That’s a pretty nifty idea.” So you’re seeing other utilities in other states basically doing the same thing.

And then from the co-op standpoint, there some of the states had restrictions against co-ops providing broadband or any other ancillary type services. So they would basically pass laws that would tell the co-ops, this is something that is permissible. And then secondly, one of the things that were part and parcel of those laws was clarification that, if they did use their rights of way to provide broadband, that was okay too. So that was another big issue I guess for the co-ops to try and get clarification on that. And so you’ve seen a lot of electric cooperatives that have gotten into the broadband space subsequent to those laws being passed and their rights of way being cleared, to be able to provide those types of services.

And then finally with the municipals, I mentioned this, back when I first started in 1998 with UTC, one of the first matters that I had to address was state restrictions that prevented or prohibited municipal utilities from providing telecom. And so we went to the FCC, we sought preemption. The FCC basically had to come up with a decision that said, our authority to preempt these kinds of barriers to broadband or telecommunications competition doesn’t extend to municipal entities, including municipal utilities. So we had to appeal that decision, went to the D.C. Circuit, and lost. And in a lot of cases, those restrictions still stayed on the books.

And what we’re seeing now is, a lot of states are coming to the realization that those types of restrictions against municipal providers being able to offer these competitive telecommunications and broadband services were really wrongheaded. And so they’ve removed them, and they’ve allowed some of these utilities that were previously either completely prohibited or just restricted from providing retail and only can provide wholesale, those restrictions now are being lifted as well. They haven’t been lifted completely, so you still got some states that have these restrictions on the book, but they’re starting to go away.

And interestingly enough, there was a period in time there at the FCC where even the FCC itself tried to backtrack on its own policy, and unfortunately in their attempt to do so, the big ILECs basically appealed the FCC’s decision along with the cable companies and got that decision by the FCC overturned. So there’s a lot of different things that are going on, but those are the things that, to your question, we’re still working on, but we’re making headway in terms of promoting policies that promote utilities to be able to provide broadband. Because quite frankly, it goes back to the fundamental culture of utilities and being heavily regulated types of companies and industries. So to the extent that policymakers provide that green light, it helps significantly. It encourages them to do what they would otherwise be doing, except for the concern that they might be overstepping their authority.


So as a guy with some inside view real quick, there are still a number of significant states that prohibit retail broadband to be provided by a utility. How quickly do you think the rest of these states will come around?


Pretty quickly. One of the other things I should mention is, NARUC established a broadband deployment task force, and that task force, amongst its various recommendations, went out of its way to say that they want to encourage non-traditional providers, including electric utilities, to be able to enter the marketplace. And while they didn’t say that they outright were opposed to these restrictions that were on the books, they certainly said that they would offer to help. So it was a significant shift from their national organization towards some of these state restrictions. It’s a mind shift and it’ll definitely take place. I just can’t say how fast.

COVID has changed everything. I guess that was the other point I should have made. The utilities basically went into this for all the right reasons before COVID, and then the ones that did provide broadband are certainly patting themselves on the back that they did the right thing, because post-COVID, they all realized that this is so important for these communities. If they had been without broadband through COVID, God knows what would’ve happened. But they certainly went out and did it on their own, in some cases without any subsidies whatsoever. And those investments were really wise investments and paid off.


Yeah. No doubt. You mentioned earlier that one of the events that UTC does is broadband workshops, and I know there’s one coming up in September. Tell us a little bit about what you do in the workshops, how they’re structured, and what the value is to those.


Sure. We’re trying to bring the subject matter experts and the policymakers out to the utilities where they’re deploying. So we usually have these workshops in various parts of the country to make them accessible. The fact is these are national events, but this one that we’re holding in Spokane is the most recent example of workshops that we’ve had regionally around the country, going back to 2014. So the idea behind them is, we usually have folks talking about broadband funding, this one will be no different, and we’ll have folks not only from the federal level but also from the state level as well.

And so those folks will be able to answer questions for utilities, which is critical at this point because they got the NTIA funding coming out, you got the Treasury Department funding coming out, USDA RUS has more funding that’s being made available. And a lot of this basically is managed at the state level too or will be, because the NTIA broadband funding programs are largely designed where eligible entities are the states, and then they distribute the money to “sub-grantees,” who are the ISPs for lack of a better term, and those electric utilities are some of the eligible entities as sub-grantees to get access to that funding. So the broadband workshop is going to have folks at the state level too. These states have set up broadband offices, so we’ll have reps from the various different broadband offices in the area.

And then also the other thing we try and impart as part of these workshops is information from a practical standpoint. So a lot of peer-to-peer sessions, where we have utilities talking about how they were successful in deploying broadband, and then also technology companies talking about what they’re doing in terms of equipment and then addressing some of these issues around the supply chain. We’ve got topics on cyber security. That’s a big issue for utilities in general. And so we try and cover a broad range of issues. And then the nice thing about it is, it’s not just all work. We have networking opportunities during the conference, and then in the evening, and then we also have exhibiting and sponsorship opportunities as well for those companies that want to try and engage with utilities. And there are a lot of them because as we’ve discussed, they see utilities as a big third player too, and some of those same equipment manufacturers have been working with utilities for decades to support their private internal. So this is just a natural extension of some of the things they’ve been doing for decades.


That sounds really good. Opportunities for networking, especially after the last couple of years, are really valuable right now. So that sounds like an interesting event.


Yeah. If you are interested in learning more about the event, it’s on our website, www


Great. So we’re coming to the end of the session here, but we have a tradition at The Broadband Bunch. We like to always end with what we call the Back to the Future question. So Brett, if we were to hand you the keys to the DeLorean and you could go back in time, 10 years, 15 years, whatever it might be, where would you go, and what would you tell us?


Okay. If you go back that far, I guess hindsight is always 20/20. We would’ve said, “Really need to be deploying broadband facilities now instead of waiting for the future.” I guess one of the points that we learned along the way… And I mentioned broadband over power lines is one technology that we were trying to use to overcome that digital divide and the last mile barrier. But one of the lessons we learned along the way was, don’t just deploy marginal facilities that are only able to meet your current needs. So the electric cooperatives can probably speak best to this story. They started out trying to provide technologies that quickly became oversubscribed and weren’t able to meet their members’ needs. And I won’t mention the technologies, but that was one of the reasons that they quickly shifted gears and said to themselves, “We’re going to deploy networks that are better than what is deployed in some of these urban areas.”

And it was not only a lesson in meeting their customer needs and making sure that they were satisfied, but it was also a recognition that, if they were going to stem these population losses that they were seeing for the first time in our nation’s history, they needed to deploy a robust network that was going to attract businesses back into some of these rural areas. And some of the things that they were looking at that point were people that were working from home, even back then before COVID. And they realized that having a robust, reliable, and affordable broadband network was a wise investment. That would have been, to answer your question, the one thing that we probably could have done differently earlier on, but they certainly did learn their lesson. And here we are today, and everybody’s basically saying utilities are the answer when it comes to providing broadband in these really unserved areas.


That’s a great ending statement as well. Brett, it’s been a great opportunity to sit and chat and listen to some of the stories and the information that you have. Looking forward to talking again with you and getting more from UTC in future episodes if we can. Everybody remembers the broadband workshop that they’re doing, take a look at that. We will be talking about that in the future as well. So, Brett, thanks again for the visit. That’s going to wrap up this episode of The Broadband Bunch. Until next time, have a great day. So long, everybody.