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Ask Me Anything! with Blair Levin, Former Head of the National Broadband Plan

Ask Me Anything! with Blair Levin, Former Head of the National Broadband Plan Banner Image

Jan 12, 2024

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About Our Distinguished Guest

Blair Levin has worked for the past 30 years at the intersection of broadband policy and capital markets.

From 1993-1997 Levin served as Chief of Staff to Federal Communications Commission Chairman Reed Hundt and subsequently oversaw the development of the 2010 United States National Broadband Plan as its Director.

He has also worked as a policy equity analyst, which he now does for New Street Research. He also serves as a non-resident Senior Fellow of the Metropolitan Policy Project of the Brookings Institution.

Event Transcript

Drew Clark: Welcome to, Ask Me Anything! My name's Drew Clark. I'm really excited to welcome our guest, Blair Levin, former head of the National Broadband Plan. We're just waiting for Blair to get on. There's a couple of minor technical difficulties, but while we do, I'm going to just say a few things about Blair to introduce him while we troubleshoot to get him on. Blair, as I just indicated, was the head of the National Broadband Plan, but that really doesn't do justice at all to the depth and extent of his role at the Center of Broadband Policy for more than 30 years. And we obviously had a little profile of Blair that we posted here in broadband.io. And the story, the news that I got from that is Blair with us. Let's just change our view here. We do have some feedback, but hopefully we'll get that resolved while we sort it out. But I do see a Blair Levin on here while you get your camera going. You're with us.

[chuckle]

Blair Levin: I'm here. Yeah. Obviously I'm a policy guy, not a tech guy.

Drew: Like magic. Thank you so much for being with us and spending this time. I just barely introduced you to say, yeah, okay. Headline. He's the head of the National Broadband Plan, but that doesn't really begin to do justice at all to the extent of your engagement in broadband policy and investment and deployment for more than 30 years. And I was just saying in the little mini profile that was posted about you on broadband.io, it gave that little story about you were running or your friend was running for city council in Portland, Maine. This college classmate had gotten you involved and his name was Reed Hundt. Like da, da, and then of course, Reed Hundt, one of the most consequential, if not the most consequential FCC Chairman of all times in the period of time and the lead up to and just after the telecom act.

Drew: And so you obviously had a huge role from that vantage point, and obviously your career has taken many different twists and turns. Why don't I let you tell a little bit about the story of what got you into this field other than knowing Reed Hundt and getting asked to be involved in a campaign that he was working on. What is this now, 40 or 49 years ago? 

Blair: Yeah, a long time ago. So one of the weird things about my life is when I left the FCC about a year later, there was a news report that said I was the first Reed Hundt alumni to make a million dollars on a company. The story was not true, though. I was with a company that sold out and it was perfectly fine, but it caused many people leaving the FCC to ask me for advice. And I've always felt odd about giving it because the real advice is just get lucky, of course. What else can you do? 

Blair: The story is complicated in a lot of ways because another element of my luck was because I worked in a failing political campaign for governor of California. I decided that my then girlfriend, now wife of 40 years should decide to do her residency wherever she wanted, which was North Carolina. So I ended up practicing law in North Carolina and started hanging out with a group of largely New Yorkers who had moved down there for various reasons, but who were very entrepreneurial, and one of them was starting a cellular rural rollup, and I ended up being his lawyer. And so I did a lot of transactions, but I was really on the finance and corporate side, not on the regulatory side, but it was enough of excuse that Reed could say, oh, come on, Blair, just come on over to the FCC. I said, I don't know anything about regulation. And he said, we're going to change it all anyway, so it doesn't matter. So I don't know how to tell the story in a way that is helpful to people.

Drew: Well, let me suggest this way, Blair. Okay. Let's talk just a little bit about the FCC and about why it was important both in the lead up to the Telecom Act of 1996 and beyond. Then I wanna get your specific take on the Cable Act and the role that played in spurring on competition. That's one phase of the conversation, if you will. Then I want to talk a little bit drill into the National Broadband Plan. Okay. 'Cause you were the architect of it. So what went right, what went wrong? Looking back now, how many years, 13 years, does it hold up what well, right? And then I definitely wanna about...

Blair: Nothing holds up well after 13 years. Go ahead.

Drew: The post-broadband plan roles, particularly gig you, but also many, many other things you've been involved in. And LAT will kind of veer us into the future, right? Not just future, the present, like the BEAD, the Broadband Equity Access Deployment, as well as many other parts and pieces that are in the process. So let's do chronological here. Talk about the FCC. What was it like in 1993 when you joined it, and what do you think were the most consequential things that happened from your time there with Chairman Hundt? 

Blair: So when I got to the FCC with Reed in very late '93, the biggest single issue was censoring Howard Stern on radio. That's what got the most male and most publicity, the biggest concern most folks was long distance rates were really high. The local guys wanted to get into long distance, but the long distance guys wanted to get into local. And in addition, you had cable rates and the cable rate, the cable act had passed to '92. We'll get into that later. But what Reed said to me, and we were a little bit quiet about this, but we were following this path, is like, look, the most consequential thing that matters is what just happened with this company called Netscape. And the most consequential thing Congress gave us to do, even though they don't realize it is to be in charge of the transition of cellular from analog to digital, but also to create competition in the wireless market. Because at that time, what you had was you had a series of single purpose networks for video or for voice operating on a single conduit, wired or wireless.

Blair: And what we wanted, what Reed wanted to do was not just what was called the Negroponte switch, which was everything was going on wires should go over to wireless and everything going on wireless should go to wire, but rather to change everything into data, everything becomes digital. And everything rides over converged networks that combined both wired and wireless. And this required a number of things that people didn't recognize. One of the single most important things we did, and nobody recognized it at the time, was we just cut the prices that the wireless guys paid to connect to the wireline network, which was the dominant network. You only had about 10 million wireless subscribers was astronomical. And when we cut that AT&T announced the one rate, it suddenly made wireless voice an alternative to fixed line voice. And you can see what has happened since then. But we also wanted to make sure that there wasn't a bottleneck in wireless.

Blair: So we pushed very hard for wireless number of portability. We had a very sophisticated, smart political operator opposed to us. He was head of CTIA, his name was Tom Wheeler. Tom's a great guy. And Tom [0:08:11.6] ____ said, look, and of course I was representing my clients, and of course he was, and that's what he should have done. But we were able to get that. And if you think about how much would wireless competition be, if you could not have that portability of your phone number. By the way, fun fact, yesterday Google announced that they're going to allow data portability in the cloud.

Blair: I think that's actually a highly underrated achievement by the chair of the FTC Lina Khan, who started an investigation into that in the spring. And people didn't notice it, but some of us noticed it, anyway. Anyway, I think that that transition of the networks is by far the most important thing. We're not quite done yet, but we're getting there. And so that was really important. Obviously the 96 Act was really important. We can talk about that.

Drew: Yeah. Just before we get to the 96 Act, let me just ask about both what you glossed over it a little bit. One is the auction, right? Auctions did not exist until 1993. Talk a little bit about that. Talk about what led to that. And then the second point, and just to get... I know you've said this before maybe many times, I've heard you say it many times, which is the key thing about the Cable Act was it basically gave some competition to the cable industry because of DBS, Direct Broadcast Satellite. Could you just speak to those two points, both wireless, if you will, and how they impacted this market we're living in today for 30 years later? 

Blair: Yeah, so as to the auctions, spectrum auctions are the single most successful communications policy initiative since I don't know what forever. And what I mean by that is, the auctions that we did starting in the mid 90s have been imitated all around the world. They are not the normal kind of auctions. In fact, they're really complicated. I'm not sure I understand them at all. But there are certainly people at the FCC, like Evan Corll who do auctions. The auctions we did in the mid 90s caused someone to win a Nobel Prize in economics world deserved and caused the FCC to be mentioned on an Oscar winning movie. I'm not sure that was so deserved, but it was nice. And part of it was about creating competition.

Blair: At one point, we actually had seven, which you might think of as national competitors. We're now down to three, but we certainly ramped up from two. And that was a big point. But the other point was, it really speeded up the allocation of spectrum. And what was happening before was you had this lottery system, and I should disclose it as a young lawyer, I invested all of my savings, which was to say a thousand dollars and invested in a cellular lottery, and it paid off 50 to one. And we got a new kitchen in our house in Chapel Hill. And I say, there was no pride. I thought it was the stupidest thing I'd ever heard, that you could actually do something like that.

Drew: You invested in what Reed? 

Blair: There were a bunch of what... It was a lottery system where a bunch of lawyers and dentists and doctors would get together and form these collectives and they would file and say, yeah, give us the license in Arizona. And we won. And we turned around and sold it nine months later. It was stupid. But my point is, from a policy perspective, it wasn't just that you made lawyers wealthier, though I was a young lawyer, not that wealthy. But what it did was it delayed the inevitable process of the market finding the economies of scope and scale that they needed to really invest well.

Blair: And so auctions are a terrific device for allocating and reallocating spectrum very effectively. And by the way, one of the things about the National Broadband Plan, I know we'll talk about it later, was the incentive auction, which also helped win a Nobel Prize for somebody, which I think was enormously successful in achieving policy goals much faster than any other mechanism one can think about, but that...

Drew: And here we're with the FCC not having Spectrum Auction Authority, right? I mean, what an irony, right? 

Blair: Right. Oh yeah. Well, that's an interesting story too. And I think I have to say, I do not understand the politics of the leadership of the FCC would seem to me that they have been saying, please give us auction authority. Please give us auction authority. Please give us. They're not going to get it. Why? Because they're up against the Department of Defense. Let me state very clearly. The FCC does not beat the Department of Defense very often. [laughter] They're not gonna beat them on this one.

Blair: I don't know why the FCC didn't say, look, can you just give us auction authority for everything but the spectrum that the Department of Defense cares about? Because then you might have a chance of winning. Or you could say, can you give us authority for, we have this spectrum. We have the AWS-3 DE license, we wanna re-auction, and can you just give us, look, T-Mobile got through a bill to get their spectrum licenses. Can't the FCC get a limited bill through, I don't...

Drew: Right. Well...

Blair: But they don't seem to think that way.

Drew: Let's get to that other point about DBS. Am I overstating this, Blair? What...

Blair: No. You're understating it for a very interesting reason. What the Cable Act did was... The most successful part of the Cable Act was the program access rules. And that allowed... The DBS technology had been working for a while, but they didn't have access to programming because during the '80s, John Malone, the owner of the largest cable company, very adroitly said, look, we'll give you distribution if you give us 20% and you give us veto rights over who else you sell to. So effectively, you had a situation where DBS couldn't get access to the popular programming. So the Program Access Rules changed that and said, you have to sell unequal terms to any multi-channel video distributor. And it worked fabulously well, and it was not difficult to implement unlike the price regulation provisions which we had to do. And that did not work out very well.

Blair: But the Program Access Rules worked out great, but the thing that they did that people don't understand, which is far more significant, is they created broadband competition. What do I mean by that? What happened was, in the cable industry, cable industry including Malone said, "Holy shit. DBS has a much more efficient mechanism for driving video programming. They just put a satellite in the sky. They hit all these places. They don't have to deal with local governments, they don't have to deal with local taxes." It's much more efficient. If we don't have a new business, we're gonna be dead in a few years. And that led the cable industry to start two different companies. One called @Home, one called Roadrunner that started essentially cable broadband. Now the cable industry would like to believe, and there's some argument for that they were visionary and they were very thoughtful and they were very excited about the internet.

Blair: I happened to be involved in some of those things, not the way history, the way I remember it. I wouldn't say they were brought in kicking and screaming, but they were resistant. But John Dore, the famous Silicon Valley entrepreneur brought in a guy named Milo Medin, brilliant engineer, they created @Home. And it worked fabulously well. And then what happened was the telephone guys took this technology DSL that they had had since the 80s, but they didn't wanna sell it because it would undercut their sale of dial up separate lines, which were much more profitable. And so the modern... I would argue that the most important legislation for the modern broadband competition that we have between cable and telcos and in a way United States is almost unique in this, not quite, but almost has to do with the Program Access Rules of the '92 Cable Act, which was not its intent, but it was the consequence because life works that way.

Drew: Well, so let's talk about the Telecom Act obviously just a bit later. It did a lot to kind of push competition together and bringing a question we've got from Dan Grossman. Hypothetical question, suppose you were asked to rewrite the 1996 Telecom Act from a blank sheet of paper. What would it look like? So two questions here. What did the Telecom Act do, and what should it have done differently, Blair? 

Blair: The primary thing the Telecom Act of '96 was trying to solve was how do we get local into long distance and long distance into local? Getting the local guys into long distance was very easy. You just give them permission. Getting the long distance guys into local, remember this AT&T MCI and Sprint, who were very large companies at that time and had a lot of political clout. And this led to the... Basically, the idea was the local guys have to open up their networks for a while, and then the long distance guys will build competing networks. And I think if we had written it a few years later, we would've had a very different picture because wireless would've been more important and cable more important. And we would've seen everything in the context of digital not in the context of voice.

Blair: So in a way, the '96 Act, which was started... They started writing it, you could say in the 70s, you could say in the 80s, but definitely by the mid 90s. So a lot of the reality reflected was of that single voice network and trying to get competition into that. There's lots of things I could say, well, maybe we should have done this differently or that differently, but ultimately it was very successful. Let me ask you this. How much are we all paying for this call? 

[laughter]

Drew: Right. Right.

Blair: When I was 10 years old showing my age, I went to the 1964 Worlds Fair. AT&T had the famous video phone call with Chicago three bucks a minute. You couldn't have thought of the fact that we could do this this way and basically at no incremental cost. And there were a lot of things that went into that. But my point is that the problems of the 96 Act were largely solved within a few years. In a way, I wish we could have done the following. We would not have allowed the wire line guys to invest in wireless. Now it's way too late. The water is way under that bridge. But partly because what you have now is you have these two very large companies. And this isn't criticism, it's just the way economics works. They're constantly trying to figure out should we be investing in fiber or should we be investing in 5 and 6 G? And if they were just wireless companies, I know which way they would invest in. And if they were just wireline companies, I know the way they'd invest and it would drive a lot of investment into next generation kinds of services. But we don't have that. So.

Drew: So just from the biggest picture, and you've alluded just now to price and the price. There's no price for this call, so to speak, but wouldn't you agree that there's some real problems with affordable broadband access and digital equity in this country? What are we doing right and what are we doing wrong from a big picture perspective looking over the course of several decades, Blair? 

Blair: Well, as the National Broadband Plan rode in 2010, you can't really be a participant in the modern economy and modern society without access to broadband. And there are a number of digital divides. One of them is the networks don't reach everywhere. The BEAD program was fundamentally designed to solve that problem. I think it'll be largely successful. There are definitely going to be places where it's going to be deficient, but for the most part we will be close to 98, 99, 100% of robust broadband network reaching everywhere.

Blair: The second big problem is affordability, particularly for low income. And there we have a big problem. And one of the biggest stories on Wall Street this week was that the FCC announced that it sent letters to Congress saying, we're going to start forcing the companies to tell people that the affordable connectivity program is going to run out of money.

Blair: Now this, I think, is going to be a huge disaster for people, for companies. And by the way, for the United States government. One thing that people don't recognize is we probably make money by funding the Affordable Connectivity Program. What do I mean by that? One of the biggest programs in the United States government runs is Medicaid. Medicaid, like all healthcare providers, benefits from the use of telehealth. It benefits because people use emergency rooms less. It benefits because they do preventative care more and you can provide the services cheaper. There's a lot of evidence to this effect. And by cutting the Affordable Connectivity Program, we are going to raise the cost of Medicaid.

Drew: I don't know if this question has already been asked on the chat there, Robert Fishe asks, he wanted some data and examples of how states can or are using Medicare, maybe Medicaid expansion to fund a low income broadband subsidy. How would you pitch this to the governor of a state, Blair? 

Blair: Well, I was actually at a panel where I was kind of pitching this and the next panel was composed of Roy Cooper, the governor of North Carolina, who basically said, that's a great idea. We're going to do it. I think they're working on it. And what you do, and you see this in a variety of other contexts where you use Medicaid funding to fund what are called social determinants of health, which are those things which are not direct healthcare, but nonetheless lead to better health outcomes and lower the cost to providing healthcare. So sometimes it's housing and sometimes it's food, and there's a variety of different things.

Blair: And I think telehealth and broadband is one of those things. One of the projects I worked on was with the National Urban League. This was before Biden's election. And we proposed that... We were saying we need something like the Affordable Connectivity Program, didn't call it that, but basically think of it as expanded Lifeline and Medicaid because it is a source of funds and because it can save money, we said this could be a permanent sustainable way of funding this program. Now hopefully Congress will fund it as a policy advocate. I wear the hat of Brookings. I'm totally in favor of Congress funding it as a policy analyst, which I do from history and research. I have to be honest and tell investors, I don't think they're going to refund it. And I think it's a tragedy and it would be very bad for the companies. But if you look at the problems that the House is having, doing things that most people agree on, the notion that they're going to fund ACP, I don't know.

Drew: Scott, are you wanting to jump in and ask? 

Scott Woods: Absolutely. I want to jump in 'cause I have a long history with Blair. Good afternoon. How are you? 

Blair: I'm fine. Good to see you again.

Scott Woods: It's good to see you. Sorry for being late, this DC traffic on a Friday. Can't plan for it. But Blair, I want to jump in with a quick question, not a trick question. A quick question.

Blair: Trick questions are fine.

Scott Woods: Not a trick question. Quick question. Your experience and I've described you as the OG broadband policy godfather here in Washington DC and you have largely opined about your opinion that BEAD will be a success. However, in the broadband industry, there is significant debate, if not disagreement, on the role of fiber versus wireless.

Blair: Yes.

Scott Woods: And so in your professional opinion and your personal opinion, how do you think this should play out? How do you think it will play out and how far should we expect or push fiber into BEAD and into the last mile of homes and businesses and what is the role for fixed wireless and other technologies in connectivity for our country as we move forward? 

Blair: Yeah. First of all, thank you very much for the OG title.

Scott Woods: I didn't have to explain it to you what it meant. You know what it means, so.

Blair: I do know what it means, but I just have to say particularly since we're going to have her on in a few weeks, I think Carol Mattey, who I worked with at the FCC in my first stint that brought back to the FCC for the National Broadband Plan. And she fortunately stuck around to help the FCC transition, its universal service fund to be about broadband and not about voice. I think she qualifies at least as OG as me though she looks a lot younger. But the big point is, look, I don't know any governor who wouldn't rather have fiber to a community than fix wireless and the Senate... I mean the Congress basically gave the job to the governors. There were about order of magnitude 10 states, they're going to have more than enough money to get fiber everywhere and they're going to get fiber everywhere. And that's, because that's their preference and a lot of different reasons for that. And some of them are good and some of them are performative. But that's what's going to happen in those states.

Blair: There are 15 to 20 states that are just not going to have enough money for fiber and they're going to do their best to get fiber everywhere. But they're gonna have to use a significant amount of fixed wireless for the last 2%, 3%, 4%, whatever. And then you have a bunch of states in the middle and I don't know how it'll play out. No one does, 'cause it's like any auction where you don't really know what the competitive bids will say until you do the competitive bidding. And you're gonna have to have fixed wireless somewhere. But let me say again, and this is where I don't think people in Congress understand this.

Blair: If you take away the affordable connectivity program funding, you are going to increase the number of communities that are gonna be forced to rely on fixed wireless. Now that's not a tragedy. There are a lot of tragedies in this world. That is not one. But it's not good. Those communities, I've never been to a community that didn't prefer fiber. So, I'm not opposed to fixed wireless, I'm just saying that each state has a certain amount of money and they're gonna make the fiber go as far as they can and then they're gonna use fixed wireless for the rest. And that's just the way it's gonna work.

Scott Woods: And another debate that's going on, I'm gonna follow up with that, not just the technology deployment, but actual speed. Is the real issue speed, reliability? Is it bluff or bloat? To quote some of the conversations that have been going on in the IO community. What's the real fundamental issue that we're talking about outside of fundamental access for communities that don't have it? 

Blair: Part of it is speed, part of it is reliability, and a lot of it's about the future that we don't know. But you can feel pretty confident that the fiber will be the last investment necessary for a communications network for 30 to 50 years whereas with fixed wireless, might be, you don't know. It might not be. I don't know what the impact of AI will be on the capacity needs of last mile networks in the year 2035. But it might be a lot bigger than fixed wireless can do. Might not be. I remember Google Fiber grew out of discussions I had with Google during the National Broadband Plan and one of the things I was concerned about was, they had all these countries that were doing fiber, and because of the nature of what I thought of as the prisoner's dilemma. Where if cable trusted the telcos not to invest in fiber, they didn't need to invest in a better network. And the telephone guys, Wall Street was telling them, don't invest in fiber. Just be happy in your position as the Walmart and let cable be Nordstrom's. And they were both making a lot of money doing that without having to do CapEx and Google Fiber grew out of that as an effort to kind of...

Drew: Well, let's talk a little bit about the National Broadband Plan. So we've talked about the '96 Act and the other cable laws. And we've obviously jumped to the forward, the future and the present with BEAD and the Affordable Connectivity Plan and we definitely wanna continue on that and we got more questions on that. But just take two minutes or so to give us a quick summary of, what was this job that you got asked to do with the National Broadband Plan? What did you think of the end result? And what would... Were you too ambitious in your goals or not ambitious enough in your in your goals coming out of that? 

Blair: Oh, I don't know. Look, the National Broadband Plan was designed to do three things. Develop a strategy to get networks everywhere, develop a strategy to get everybody on and develop a strategy to use it, use broadband to improve how we deliver essential public goods and services. That's it. Those three things. I think we were about the 35th country to do one. I think ours was at least at that time the best and the most influential. I think we got a lot of things right. I think things like the incentive auction and FirstNet, which were not, I want to be clear about this.

Blair: They were not our ideas, but they were ideas that were residing on the shelves of other folks, and what we did was, we took them, we reformed them, we sculpted them and we developed a political consensus for them. Those are very important outcomes. We help the FCC transition its USF, again, thanks to Carol, to broadband. I think two of the most important things to come out of it were not government policy. Again, they came out of discussions and questions you were asking. Google Fiber, Comcast, Internet Essentials, which in a way is a precursor program to the Affordable Connectivity Program.

Blair: I was very proud of the process. We had a lot of roundtables. We were very clear about questions we were trying to answer. We didn't do everything well. We hit what I think it was bad luck in that just as we were putting out the program and we had a very developed... We delivered it in the middle of March of 2013. Yeah, 2010. In April, the court came down with a decision that I was expecting, but I don't think the leadership of the FCC was expecting. Saying you have to redo your Title II and all of the political energy and political capital of the chairman's office went to figuring out what to do about that. And the most tragic part to me was there was a whole series of things that would have helped how we deliver education, how we deliver health care, how we deliver public service, how we use broadband to improve civic engagement.

Blair: I'm not saying our ideas were brilliant, though some of them were doing good. I am saying that was a lost opportunity. We're gonna end up having to do that again anyway with AI. But that's what the broadband plan was about. It really reflected what I said earlier about Reed's fundamental point, which is, this is not about lowering long distance rates. This is about blowing up the current communication paradigm and replacing it with converged networks that deliver data for an infinite number of uses.

Drew: Well, I love the way you talked about getting broadband everywhere, getting everyone on and then using broadband. And the plan had this kind of national purposes framework that was really quite... I mean quite remarkable, and great in itemizing and showcasing that. Now, just speak a tad more about the things that came out of that. And by that, you referred to Google Fiber and Internet Essential, speak a little bit about the Google Fiber competition and how you might have been expecting 50 or 60 and you got 1,100. What did that do? 

Blair: No, I didn't get anything. Google did it. So what happened was, like, I was talking to Google, I was like, oh, what do we do? I don't think we need a gigabit networks everywhere, will we need them somewhere. Because we've got to experiment. We've got to be on the cutting edge. This is America for God's sakes. And Google said, we have a great idea for you. Get Congress to appropriate $250 million, build a gigabyte network somewhere and people will see it and people will love it, and then the market will do what it does. I said, that's a great idea, but have you looked at this congress [laughter], you think they're gonna give me $250 million? No, they're not. And by the way, if they did, you know where we build a network, South Dakota? 'cause that's where the chairman of the commerce committee is. [laughter]

Blair: I said, I just don't think that'll work. And they came back and they said, you know what? You're right. We'll do it. And so they did this competition thinking they'd get 10 to 50 communities to apply, and they got 1100. And then they said, oh my God, maybe there's a real business here. And one of the things I've always really admired them for, and Milo Medin, who I mentioned earlier as the chief technology officer of @Home, which was an incredibly important company for broadband. He was the first CEO. And one of the things he did was he said to the communities, look, we're not gonna be like the NFL. We're not gonna say, we'll come build a broadband network if you give us a bunch of money. What we want from you is to lower the cost of deployment. We want one person that we can talk to that can solve all of our problems, permitting reform blah, blah, blah. A bunch of different things to lower the cost.

Blair: That in itself was incredibly important to AT&T's own decision, to later start building fiber. And by the way, it's incredibly important for what we learned, for how BEAD will be rolled out and other things. But the most important thing was it caused the telephone companies to understand we either start building fiber or we're gonna get BEAD.

Drew: Right, right.

Blair: So it broke up the prisoner's dilemma, by causing a defection. And then Comcast and Charter were upgrading 3.1 and lots of other things followed. I would argue that one of the reasons the American economy did so well in COVID and huge job losses and lots of problems, but overall, we survived. But if we didn't had the network that we would've had, if we had just had the network of 2010, we couldn't have done this. We would not have worked. So I think that was a... One of the lessons for me is you do these things, not just to come up with the answers, but to ask the questions in a way that causes lots of other people to come up with answers.

Drew: And this is a great kind of segue into, to BEAD and what's happening there. But I wanna make sure to get as many questions as we can. And we have this one here that is really worth bringing up. Stephanie Joyce asks, what is your sense of the relative efficacy of relying on the Universal Service Fund to pay for broadband buildup versus direct congressional appropriations? And obviously this ties into the ACP discussions and debates, but I'm wondering if you could just give your thoughts on how we should use the USF going forward.

Blair: Yeah, so, there are two different problems. One is a CapEx problem. How do you build a network? And the other is an OpEx problem. How do you fund certain people every year to be able to afford it? I mean, you could solve them all, they're related, right? If you've given up OpEx, the price should come down, but it's never gonna come down enough for low income people, I think. So I think that the... I'm a big fan of doing what we're doing with BEAD, which is to say, let's just solve the problem right now.

Blair: Now there are certain problems with doing it this way because you have labor supply problems, you have fiber supply problems, you have permitting and blah, blah, blah. But we'll overcome those and it won't be perfect and we're gonna waste money because anytime you spend billions of dollars, some of it gets wasted. There's no way of avoiding that.

Blair: So I'm perfectly fine doing it through congressional appropriations. I have a problem with congressional appropriations for the ongoing operating expense for the very reason we're about to see which is, elections can change things and you can't really depend on Congress to think the same way it thought two years ago and/or think that it's gonna think two years in the future. And part of the problem we have right now is with the BEAD program, when people put in their bids, what is their assumption about will low income people be subsidized? 

Blair: Because that affects how you wanna BEAD on this. So I think, and by the way, we obviously need to reform universal service. We've known that for a very long time. One of the tragedies of the Pai FCC to me was that the contribution factor doubled while he was there. And the only time he mentioned it was in January of 2021, as he's walking out the door and says, oh, by the way, someone should do something about this. But frankly, I don't see the FCC taking a leadership role in providing Congress with what it needs or creating a political consensus for how we change it.

Drew: Are you supportive of the reverse auction approach that the FCC tried to do in RDOF. It's obviously gotten beaten up quite a bit since then as the reason why most of the funds for Infrastructure Investment Jobs Act are going through NTIA. But could you just speak to, because you have mentioned reverse auctions, you've mentioned that innovation from the National Broadband Plan. So I want you to just kind of weigh in on this controversy that we've certainly heard about.

Blair: So I'm a big fan of reverse auctions as a policy matter, but I will tell you a story which, I'm also a political pragmatist. During the debate on the infrastructure bill, friends of mine on congressional staff would call me up and ask for thoughts about various things. And one of them I said to him, look, the FCC has enormous expertise in reverse auctions. States may want to do reverse auctions. Can you just add a sentence to make it clear that the FCC can use its staff to assist any state that on a voluntary basis wants to do a reverse auction? And this staffer who's very good and a rural policy wants Blair, let me give you some advice. Never out of the words reverse auction again, we hate them. RDOF was such, you cannot overestimate what a disaster it was from the point of view of the United States Senate. And there are a lot of different reasons for it, including the fact that all these communities, the winner was somebody they'd never heard of.

Drew: And now...

Blair: What I said is, look, that wasn't... The problem wasn't reverse auctions, it was the way Ajit Pai did reverse auctions. And he said to me, "Blair, let me give you some advice. Never utter the words reverse auction again 'cause Congress can't tell the difference." And I think that's right. I think there... Which is really unfortunate because they are... I think they could be a very effective mechanism. But RDOF was just the biggest institutional disaster from an FCC perspective that ever happened.

Drew: So speaking of FCC disasters, what is your candid opinion of the FCC's role in broadband mapping? Could you speak to that, Blair? 

Blair: So here's my candid opinion. It was a big mistake to actually redo the maps. Why? Because it cost us two years and the level of inflation, particularly because the private sector is building a lot of fiber networks at the same time. We should have done this all in 2010, but Congress wasn't going to do it back then. As we were waiting for the maps, it would've been much better to just spend the money and the maps wouldn't have been as precise, but we would've spent the money and we would've gotten more done. The second thing I would say is, it was a mistake to use the FCC because the maps already exist. There are two companies that have almost perfect maps. They are called Apple and Alphabet. Why do they have perfect maps? Because they both make the phones that connect not just to the cellular network, but to the Wi-Fi network. They know where everything is and the government could not figure a way to ask them nicely in a way that they could get them. And I mean, we wasted two years. It's really a tragedy to me.

Drew: We have a number follow up. Scott, do you wanna weigh in on that? 

Scott Woods: Lemme follow up on that, Drew, 'cause Blair makes an interesting point and people know how critical I've been personally and professionally on the FCC and Maps. But this historic program and BEAD, and we haven't talked about digital equity yet, but is in part based on bad maps, the faulty maps. So how does that impact the output, the outcome of BEAD, if the state allocations are based on, in part, what we know to be bad maps that should not have been moved forward in the first place.

Blair: So they are bad maps in the sense that they're only 95% accurate instead of 100% accurate. But here's what's really bad. The cost of building out a fiber network is now ordered magnitude 30 to 40% higher than it was when the law was passed. So I would rather go with the map that's 95% accurate with a cost structure that's much lower than go with the higher cost structure and the more accurate map. That's what I'm saying.

Scott Woods: Understand that. Let me ask you a question. You and I have both been in DC for a while. How do we take the politics out of this? 

Blair: You don't. I mean, that's almost like asking how can I avoid death? Maybe I think about it more 'cause I'm older, but my point is there's going to be politics in this. But look, I could tell you lots of stories. Reed wrote a book about it, the politics of telecom in the '90s. There were lots of different ways of dealing with it. I'll just tell you one very quick story. The E-Rate, which was a very important thing, which we haven't talked about, because we knew that the internet would get into the classes of all the middle class and upper middle class kids. And we really wanted to make sure it got to everywhere 'cause we thought it would be a very valuable tool.

Blair: How did we get the votes for that? The most important vote was Jim Quello. Well, we did a lot of things. We had a lot of mayors and we had a lot of school boards and all this. But the most important thing was Reed through Jim Quello, a party honoring him for his 20th year of service on the FCC. And the day after that party, Jim Quello came into Reed's office and said, "Reed, that was the best night of my life. You have my vote on the E-Rate."

Blair: Now it's a much longer, more complicated story. But my point is, that is why we did this party. Reed and Jim were not exactly friends, but he is somehow intuitive that that was the reason we were throwing the party. I don't see that kind of politics happening these days where people are kind of using, shall we say, more creative ways of getting good things to happen.

Drew: So Blair, what are the warning signs or the problems? You've mentioned that you think BEAD will be successful? And we've had other people who are much more critical, who are, well, they were supportive of the idea of the goal. They just see a lot of concerns and comments are going to get too much funds, whatever. What are the kind of problems that you see as the money's starting to hit that next stage and what can be done to bend the arc in the right direction, so to speak, Blair? 

Blair: I think we could definitely take up all the rest of the time and there are better people for that. That's a question to ask Carol. And there are other people who I think Joanne Hovis, Catherine Dewitt, who would know better. But the first problem is really how do you do the map for the areas that you want to fund? If you have the map that's too big, then only the large incumbents can do it. If you have maps that are too small, you're going to lose a lot of economies of scale.

Blair: But also you don't really know what... When we were doing the spectrum auctions, one of the principles was, we'll let the companies who are bidding figure out how they want to put the pieces together. Here it's you're not doing a multi round auction, and so you kind of have to start with an assumption about how those maps work. Now, the state of Louisiana and the guy running the state there, brilliant and has done a fantastic job. They have done some really creative things on that problem aided by John Wilkins, an FCC alumni, who's also, he would be a great person to ask that question too.

Blair: And so there were solutions, but most of the states don't have that quality of person. Some do, but so I think that that is definitely a problem. You always have a problem when you fund these things that the people BEAD and then like a year later they come back and they say, we thought we could do it for $10 million. Turned out, oh, inflation and oh this, so we need another couple million. What do you do? So there are those kinds of problems. What I mean is that by the end of this decade, we will... The problems that we saw in 2010 where there was a very significant portion of the country that didn't have access to even one robust broadband network, we're going to have robust networks reaching 98, 99, maybe even 100% of locations where there are people.

Drew: What should do state broadband...

Blair: And we'll get there in an ugly way, and some of the states will do it poorly, but we're going to get there.

Drew: What should state broadband offices be doing, what can they do to up their game like beneath Igar at Louisiana and others? 

Blair: I would call him, I would look at that. Look, they all have consultants and I do think everyone who's run it, and a lot of them don't come from a broadband background, but some do. They all want to do a great job for their state, and I think they're very well motivated. And I think in a way, broadband has been a delightfully nonpolitical issue at the state level. That is to say there are very conservative Republicans who are acting in ways that are similar to very liberal democrats because everybody is trying to figure out what's the most efficient way to do this. What I would say is keep talking to everybody and talk to the experts, but the most important thing is how do you design a competitive process that lowers the rates and gives you guarantees and gets people who are going to deliver the networks? 

Blair: I think one of the challenges is, and this is tricky, it's a lot harder for an AT&T or a charter to renege. I think they're going to do what they say. On the other hand, if Charter and AT&T believe that you believe that the only way of guaranteeing a bill is to pick them, they're going to charge a lot more. So one of the things the state has to do is kind of signal, we're going to make sure everybody is involved here in order to get a real competitive dynamic. But that's tricky. But there's a lot of different things that the states have to do, and all I can say is hopefully the communications and you, I know Drew have facilitated them with some of the panels you've run and there's a lot of conversations going on. But if I were running a state office, I'd be trying to figure out what are the best state offices doing? How do we be a fast follower to that? 

Drew: Scott, do you want to weigh in on that? 

Scott Woods: I do. I want to weigh in. I want to jump in. Blair, of some of your other policy work, particularly with the National Urban League and the Latimer Plan. We do have a question from the community. Adam Puckett asked, how do you introduce the concept of equity to folks who may not value it and how can you reach those people? So in this age of politics and broadband infrastructure expansion to a certain extent does have bipartisan support, but we do find various contentiousness with the concept of equity and digital equity. How would you respond to Mr. Puckett's question? 

Blair: I'm going to respond with a statement that you can never quote me unless you quote the whole statement, which is, introduce an epidemic. I was astonished in March of 2020. Look, COVID was a horrible thing. It caused a lot of deaths. By the way, in the United States, we had probably about 250,000 excess deaths we should not have had. It caused a lot of poverty. It was horrible. I do not mean to make light of it, but in March of 2020, all of us who worked on the Broadband Plan were astonished by the number of conservative Republican governors saying what I said at the beginning of the show, oh my God, we need networks everywhere. We need everybody on and we need to use them to better deliver essential public health and education, et cetera. I don't really think the equity piece is that much of a debate anymore. I think prior to COVID it was, but I think now you have a recognition across the board that we need those three things. And so the question is how do you do it? 

Blair: I haven't heard any objections by people saying, we shouldn't fund the Affordable Connectivity Program 'cause that's just a choice. That's a lifestyle choice. They're not saying what Michael O'Reilly, commissioner O'Reilly said in 2015, broadband's a luxury. Mike, I think has changed his mind on that. God bless him. I love people who changed their mind. I've changed my mind on a lot of things. But my point is we're past that. Now, in the Latimer Plan, we did a lot of things that were going to that question of equity, and we were writing it in the context of the epidemic. The Latimer Plan is fundamentally national broadband plan meets COVID, meets George Floyd. But my experience in the politics of the last three years is you don't have to convince people in the same way.

Drew: What are some of the metrics? 

Blair: But I think for the most part that's true.

Drew: What are some of the best metrics to evaluate the role of digital equity in BEAD policies? How can state broadband offices best be thinking about this component piece, Blair? 

Blair: So what I would say is the best component is what is the percentage of the population that is on broadband, not the highest possible speed, but at a speed approximately, and I'm gonna make up a number, approximately 40%, no, approximately 50% of the average speed. And the reason I say that is, at this point in time, most people are buying more speed than they need for any widely used application. And if you have people who are at about 50%, they can do everything that is what we might think of as necessary to look for a job, to train for a job, to do your homework, to get health care information, et cetera, like that. So that would be a metric that I would use.

Blair: There's a lot of debate about what should the broadband metrics be, and we kind of did that. But to me, first of all, it only matters if it's tied to money. When we were doing it before, it was tied to USF, and it mattered. Now Congress has essentially told us what the metrics are. It doesn't matter what the FCC says. But the other thing is I think it should be based on what people are actually doing. And if 90% of America is buying 500 megabits, well, then that tells you something that, I think the average speed now is in order of magnitude of 150. And so I would be perfectly comfortable if 95% of America had 75 megabits.

Drew: So I wanna come back to a good question here. Carl Henry asks that I believe you said that if Congress doesn't provide more money for the Affordable Connectivity Program, it could necessitate increased reliance on fixed wireless to meet the buildout. Could you explain the linkage? He wants to know those steps from lower ACP to more reliance on fixed wireless.

Blair: Okay. First thing to understand, BEAD does not fund the cost of the capital cost of the project. It funds the delta, the difference between the cost of the project and what the free market would pay to build in that area. So if the project cost 10 million and the private market would say, if I could find a way to only spend $4 million, I can make a reasonable rate of return, and I would do it. But I'm missing $6 million. They're gonna say in the BEAD competitive process, I need 6 million bucks, right? What ACP does, and this is according to the consulting firm BCG, it essentially increases or it lowers that 6 million by about 25%. So they don't need 6 million anymore. They need four and change, I think 4.5. So that means the state has more money to spend on fiber projects everywhere, because BEAD is making the private market returns better.

Blair: Now, there are some people, my friends on the left, who are upset by the fact that ACP money goes to help big companies like AT&T and Charter. And my view is, well, if there's a more efficient way to do it, great, but I don't think there is that can get done. So anyway, my point is, as to BEAD, there's that problem. There's also a subtle problem, which we're about to see, which is MTIA, in my view, correctly said, if we're funding you, you have to have a low cost program. Because we're fundamentally funding monopolists and conservatives say, "Oh my God, this is price regulation." Well, USF has always had price regulation, 'cause if you're funding a monopoly, you got to have some price regulation. But it's not really price regulation the way we did in cable '92. But the point is, if you have the ACP program, 50 states are gonna say, here's a good program, 30 bucks a month.

Drew: All right.

Blair: For people who meet the ACP definition. You get rid of the ACP and suddenly it's like every state's going to have their own program. And it's gonna be incredibly complicated. And it's gonna be very controversial as to what it should be. And we're gonna waste a lot of time and energy and political capital trying to figure it out. And there is no mathematical answer.

Drew: So, Blair, I have one more question and then I'm gonna let Scott Woods ask the final question. But before I do, wanna remind everyone that we have an Ask Me Anything on January 26th with Jason Cohen, the CEO of MyBundle.TV. And then as Blair himself has alluded to, Carol Mattey, the principal at Mattey Consulting and former head of a lot of these efforts at the FCC is going to be on February the 9th. Could you just speak about the way, this is David Tate asking this question, how should Wi-Fi be treated in the future? He's obviously asked a lot of points about latency. And I'm just wondering, could you just speak to the role that wireless and latency plays before I give it to Scott for our final questions? 

Blair: Did you mean Wi-Fi or WISPs? 

Drew: Well, he's asked a number of questions about the role of latency and the report, the BITAG report. And I was just trying to get David a question in there. And so you take the one you think is best, Blair.

Blair: I think I saw something about WISP offering 30 bucks. And he's 100% right. And so, but so is everybody else right now. I mean, what the federal government effectively did was to create a price point. Look, Wi-Fi, I think is one of the... It's another great success story. And where the credit lies, there's some engineers in the '80s and adoption was essentially a junk idea. But it turned out to be one of the most powerful and important things. And I think most cellular traffic now terminates on Wi-Fi or something like that. So we're always... We haven't really talked about spectrum policy. I would simply say that I was very proud. Another thing we did in the National Broadband Plan was we essentially had a national spectrum strategy. And that led to two different presidential executive orders and it led to a bunch of auctions. And I thought that was a really good thing. But we're gonna have to continually make an allocation decision about whether the spectrum should go to exclusive mobile use or to Wi-Fi.

Blair: And that is something which, thank God, we have an expert agency to do, and the Office of Engineering and Technology is very valuable and we should have this and we should be cognizant that the Supreme Court is going to decide, as it already has been deciding that they should let any district court in the country substitute its judgment for what's right for the judgment of the expert agency, the FCC. And I think that's going to be very unfortunate. And by the way, I also think that means whatever Congress passes on artificial intelligence may never happen because of the Supreme Court's major question doctrine, which they made up out of thin air, just an opinion. But anyway, David, if I haven't answered your question, you can follow up with me.

Drew: We can continue offline. The time is zoomed through. Scott, let's go ahead and give you a time to...

Scott Woods: Yeah, I just want to ask Blair, just this one final just broad opinion question. Blair, putting your time travel hat, let's look forward 10 years, right? If we get this right, where will we be? If we get this wrong, where will we be in 10 years? 

Blair: Yeah. The most important thing is do we have a society where 100% of what will be 10 years from now the entering workforce, will we have them be educated? Will we have them be digitally competent? One of the great tragedies of COVID is a loss in reading scores. One of the things that states do is they project the number of prison beds they're going to need in 10 years based on fourth grade reading scores. The more kids that can't read at fourth grade level, the more prison beds you need. What does that tell you? 

Blair: Artificial intelligence will give us the ability, if I could write one line in the state of the Union that Joe Biden's gonna give in March 7th, it would be this, or maybe it's two lines. Right now I think it's more than 50% of fourth graders are reading at less than a fourth grade level. By the year 2035 or maybe 2030 using artificial intelligence, we should aspire to have 90% of fourth graders reading at a fifth grade level. That's where we could be. If we get networks everywhere, everybody on, and we use them to improve how we deliver essential services, and I don't worry about the top 25%, they're going to be fine. I worry about people below that and I really worry about the bottom 25% who are occasional users of broadband, and we need to make sure that they have access to it and that they use it in ways that make their economic and social prospects better in the future.

Scott Woods: Well, it's a pleasure to have spent this hour with you, Blair. For those who are watching, don't forget to be back on the 26th for Jason Cohen and February 9th for Carol Mattey, we'll see you in the broadband community. Take care everybody.

Blair: Thank you very much.