Former Federal Communications Commission (FCC) chairman Tom Wheeler argued incumbent cable operators are in prime position to scoop up federal broadband funding and have little to fear from potential overbuild activity.
Speaking about the looming congressional infrastructure package during a New Street Research event, Wheeler acknowledged each state will have discretion over how to allocate the broadband funding allotted to them, leaving some uncertainty about what their priorities in terms of speeds and access technology will be. However, he asserted incumbent operators are best positioned to help close the digital divide.
Wheeler said the idea that there are “massive areas of virgin unserved territory” in the U.S. is a “myth” and instead the reality on the ground is that there are “pockets of served areas surrounded by unserved.”
Thus, “you go back to the basic economic of things and you say who is in the best position to serve the unserved,” he explained. “It is not somebody going out and saying ‘well I’m going to build that unserved territory and then oh by the way I’ll come into town and overbuild them.’ It is somebody that has the people, the trucks, the billing system, the infrastructure to expand out.”
The former FCC chair, now a senior researcher at the Harvard Kennedy School, pointed to Charter Communications’ success in the Rural Digital Opportunity Fund (RDOF) Phase I auction as an example of these economics at work.
“So I think there is a very strong position that the incumbents have, particularly the cable incumbents because of their hybrid infrastructure and their reliance on fiber…I don’t think we’re going to see a whole heck of a lot of overbuilds,” Wheeler concluded.
During the session, Wheeler also flagged concerns that President Joe Biden won’t be able to install a permanent FCC chairperson and fifth member before Acting Chairwoman Jessica Rosenworcel is forced to leave early next year.
Rosenworcel’s term expired earlier this year and if she is not reappointed will have to exit in January 2022 when the current session of Congress ends. In that instance, the balance of power at the FCC would shift from an even 2-2 split along political lines to a 2-1 Republican majority.
Any individuals Biden nominates to the FCC must be approved by the Senate. While early on Wheeler said he was understanding of the delay in picking an FCC appointee given all the country’s other priorities, he pointed out there are now just 45 days left on the Senate work calendar.
“We’re now down into essentially a month of legislative business in the United States Senate, and getting somebody through in this environment and in this period of time is difficult,” he said. “So I have a level of concern about this.”