How Rural America Gets Left Behind - Episode 660 of the Community Broadband Bits Podcast

Christopher Mitchell (00:12)
Welcome to another episode of the Community Broadband Bits Podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance and we're recording and we're gonna do a video, I guess now, on Riverside. So we're doing something new. I'm back with John Chambers, one of our most frequent guests, but it has been too long since you were on John, a principal at Conexon and someone who has given a ton of thought to how to solve

broadband Internet access challenges in rural America and happens to have come out largely where we did. So that's why I like having you on. How's it going, John? tell us for people who are new, what is Conexon?

Jonathan Chambers (00:51)
Yeah, thanks, Chris. Great to be with you. This is, I have been with you several times, but I think it's maybe been two years or 18 months. And this is the first time I'm looking into a camera and seeing myself while this is being recorded video, not just audio. So it's a little disconcerting to see what I look like at 9:48 my time in the morning.

Conexon is a company that was formed to do one thing, work in rural America with rural electric cooperatives to fill a need, the need being the gap between what was available in telecommunications, broadband services in rural areas, that gap, the lack of

true broadband services in rural America. We started in 2015, so we just turned 10 years old. That gap back in 2015 was real. The gap today is real too. So that if you have, as I have most of my life when I've lived in suburban areas or urban areas and not when I've lived in rural areas,

One of the real differences is that you don't have the same level of cell phone service, cable television availability, broadband service. It's not to say that you have nothing. There's been satellite service for a couple of decades. There has been a slower and a ⁓ spottier cell phone service for decades. There has been copper based service.

for what isn't really broadband anymore, at least defined as broadband, used to be for decades. And what there hasn't been is the same level of broadband as is available in urban and suburban areas. so Conexon was founded, formed, dedicated to delivering to rural areas the exact same service or even better sometimes service that's available.

to the rest of know, people talk about a digital divide, you have, I have, it's more meaningful than just a word like divide. Because while we were building networks in the midst of at the beginnings of our company, COVID happened. And COVID for all,

that occurred during COVID. One thing that occurred was rural areas realized that the gap in availability of broadband service meant they didn't have the ability to telework or do work from home when everybody was told to work from home. Their kids couldn't participate in schooling from home when everybody

was when the schools were shut down. You couldn't get telehealth services when everybody else was doing some level of health services online through broadband. That wasn't occurring in rural America, and the recognition that it wasn't occurring was real, observable, palpable. We were working with a lot of rural electric cooperatives at the time.

who themselves had been founded to do one thing, which is deliver to rural areas that lacked electricity in the 1930s and 1940s that same level of electric service that was available in urban and suburban America. This was a repeat in the, you know, sort of in the most pure and, not as simple as the word that came to mind, but simple in this sense.

There was a problem that people were dedicated to fixing and it got about fixing the problem. And that's what we did for years. That's still what we do today. We work in rural America. We work with rural electric co-ops. We build broadband networks to serve the unserved and underserved in the country. And it's been a of a privilege to have done this work for the last decade.

Christopher Mitchell (04:37)
When you and I were talking in 2018 and 2019, we were talking about the disaster of the Connect America Fund, significant part of the Universal Service Fund, which had been mandated sort of top down and given to big historic telecommunications companies. We dreamed of a reverse auction and the Rural Digital Opportunity Fund was supposed to be that, a 10 years of support reverse auction.

⁓ in which we expected to see, I think, fiber optic technology from electric co-ops be tremendously competitive. The FCC administered the auction in a way that was, at best you could say suboptimal, and invited gaming. We've talked about that on numerous shows and people could go back to get the replay on that. But here we are in 2025. And what I wanted to spend some time talking to you about today.

was what do we know now based on the defaults about sort of like what entities performed? Can we say some entities did better than others? You know, we know that LTD for instance was fully defaulted, Starlink was fully defaulted. Those were very big winners. So I should also say I didn't give people a warning at the beginning. We're gonna talk about RDOF and then we're also gonna end up talking a little bit about other programs like BEAD and what states are getting right.

But John, as we know today with so many defaults, think like more than a third of the awards have been defaulted or close to that. What do you look at in retrospect?

Jonathan Chambers (05:58)
So this will sound maybe strange to some people, but in retrospect, I think the Rural Digital Opportunity Fund auction was run more efficiently, produced more positive outcomes than the programs that have been developed since.

Christopher Mitchell (06:14)
I don't like hearing that. I'll be interested to hear your case for it.

Jonathan Chambers (06:18)
Yeah, so that isn't,

that isn't exactly to say that, you know, wow, what a, what a fantastic program that was. That is to say the program since had been awful by and large. We participated in every federal and state program in the states we work in and the federal level since we are founding in 2015. So,

I think I'm a pretty good judge as to what worked and what didn't work as far as federal programs. The core problem with RDOF has continued over the years. the core problem is one of, I'm going to use a simple word, which is sort of a lofty meaning. It's a problem of truth. What is true?

And you can apply that in a lot of different contexts. So I'm going to apply it just to broadband. So what I mean as to what is true is you start with what you're trying to accomplish and you're trying to accomplish that is let's get broadband service to areas that are unserved and underserved. And in order to do that, you've got to do some work initially to figure out one

What is the meaning of unserved or underserved? Otherwise, you don't go anywhere. Once you've determined what you mean by unserved and underserved, and in order to do that, you have to define broadband. That's the core. You have to define broadband. And then once you've defined broadband, and it has variously been defined by the federal government over the past almost 15 years now, 13, 14 years.

It has been variously defined as, out of wait for it, four megabits per second down, one megabit per second up. That came out of the 2010 National Broadband Plan and the original Connect America Fund program. 10 down, one up, 25 down, three up, 100 down, 20 up, gigabit down, 500 meg up.

always asymmetrical, which is a technology specific definition. That is for all the talk you hear over the years that the government should be technology neutral. None of those programs were technology neutral. And again, sort of wait for it. None of them favored fiber. None of the program in the definition of broadband favored fiber. They always favored less capable technologies, those technologies that were incapable.

of delivering symmetrical speeds. I'm not here to say that symmetrical speeds are the only way you should evaluate it or the way you should evaluate it. But to define something as four down, one up, 10 down, one up, 25 down, three up, those core definitions that lasted throughout the 10s, 2010s, was always something to allow for the participation in all those programs by copper-based and spectrum-based solutions.

The move to 100 down, 20 up in RDOF and gigabit down, but the 100 down, 20 up was a move to allow for the participation in spectrum-based solutions. So you want to have sort of electrical pulse copper, you want to have radio waves for spectrum rather than light. And as an old mentor of mine told me when he was first working in fiber,

in the 1970s and visited Bell Labs in the 1970s and took a tour of Bell Labs. what they were touring was the development of fiber, fiber as a transmission medium. And my old mentor asked the president of Bell Labs what the successor technology was going to be. And the president of Bell Labs said, there is no successor technology to fiber. And my mentor said, well,

That's not true. There's always a successor technology. The president of Bell Labs said, no son, fiber is light. And until we create something that can move faster than the speed of light, there will be no successor technology to fiber.

Christopher Mitchell (10:08)
The successor is better fiber, probably in the same conduits.

Jonathan Chambers (10:12)
Yes, so if you're just talking about transmission medium, not a technology. Fiber is not a technology. People use it in shorthand to mean a technology, but fiber, like spectrum, like copper, coax, hybrid fiber coax, those types of sorts of things, those are all transmission mediums. The ecosystem of the technologies in fiber terms, G-PON, XGS-PON, X-generation PON2, those

or the other PON technologies, those are technologies.

Christopher Mitchell (10:41)
Right. If I could just make

an analogy for people who are, might be less technologically savvy on this. Imagine a pipeline. And what John's talking about is like, you have a long section of pipeline that you could pump some form of air through their liquid gas. The point is, is that the pipeline is capable of doing any number of things. That's the fiber. What we put on the ends to move stuff and what we choose to put in it is the analogy breaks down a little bit what we put in it. But the point is with fiber, you put fiber in the ground.

You change the endpoints, you're changing the technology, but the transmission medium will remain the same for as long as we can imagine.

Jonathan Chambers (11:16)
Right? Again, there are around all of the other transmission media, spectrum or copper or the coax networks that were deployed by the cable companies back when I was working in cable in the 90s. Well, again, they all have technologies around their transmission medium. But to suggest as people were doing,

back in during the Connect America Fund II auction, the RDOF auction, the subsequent programs, auctions, everything else that to be technologically neutral, you have to allow for all transmission mediums, but then to define it in terms of speed. is no program that was developed in all that time that was that defined speeds that favored fiber. They all favored the lesser

capable technologies because that was an explicit decision made by the FCC by other parts of the federal government and then adopted by state governments as to say okay in order to allow everything to do we will go to the lowest the lowest and least capable type of Transmission medium and that's what we'll adopt in order to say it's technologically neutral me. I've always said I

Technologically neutral is a dumb phrase for people to have used. Me, when I'm investing my money, when I'm buying something, if I'm buying a new phone, a t-shirt, anything, I don't look for what's the lowest worst thing I can get. I'm always looking for the best thing. If I can afford it, if I can afford it, I buy the best.

Christopher Mitchell (12:50)
Yeah, what's going to meet your needs over the long term likely. Can I just for one second, like I do feel like there's a piece of this that I think gets under your skin, which is worth talking about that I've never mentioned before, which is there's a way in which one might be an admirer of Friedrich Hayek and say, you know what, like a bunch of government bureaucrats deciding what the technology of the future is, there's a lot of reasons to be suspicious of that. And so we should have technological neutrality because of a humility of what we don't know about what's coming.

Now that's true for a number of things, but then there's other times in which one might say, it is so clear that this is the transmission medium that there is no need. And there we adopt technology neutrality because of corruption, because we don't want to take on the power of the cable company, of the spectrum companies. That's the reason we have technology neutrality, not because of philosophy, but because of that ⁓ corruption of decision-making, I think.

Jonathan Chambers (13:46)
Yeah. you know, I, I think the FCC and I've been a critic, but also I've been, ⁓ in a position where I had oversight responsibility for the FCC and I've worked at the FCC and senior position, never really viewed the FCC as a, as a corrupt institution. They are as other

of economists have written about, they at times are sort of captive agency, captive to the industries, they regulate. hesitant to attribute such a loaded phrase as corruption, not that corruption doesn't occur in, know, all forms. Here's the way I look at it. I'm not disagreeing, I'm just saying here's the way I've looked at it, which is...

Christopher Mitchell (14:22)
No, to be a mean... Yeah.

Jonathan Chambers (14:28)
It sounds, I would think it sounds to people like I'm talking about theoretical or philosophical or I'm not because when I say you could use evidence to determine what you should do upon which you should make decisions, what I mean, and I'll give you one example since nobody wrote the in rules or law the

the technologies or transmission medium, what everybody wrote were speeds. So if you fall into that world and you say, okay, we're going to define broadband by speeds, here's my pro.

The FCC always had and has today. Ookla and other organizations that collect speed tests had then have today the real demonstration of the speeds of different technologies. And let me give you one example because this is the most pertinent example today. Under the BEAD program, a lot of money is being awarded to satellite providers.

both Starlink owned by SpaceX and Amazon's Project Kuiper. Amazon doesn't have any service yet, you can't measure them. You give them a lot of money, you can't measure them, you know, go figure. Starlink is not only measurable in terms of its service, it is measured all the time. And in June of this year, to give one, again, concrete

example. At a time in which every state broadband office had been told to redo their BEAD programs and come up with programs, new auctions, application processes that would be technologically neutral so that all participants could play the game. In June, Ookla released

speed tests for the existing customers of Starlink. And again, I'll give you one example. In those speed tests, Ookla found that across the country, Starlink was capable, was performing, not capable of, but performing the 100 down, 20 up speed. That is the definition of broadband that was put in the

BEAD program in the Infrastructure Act adopted by NTIA adopted by the states that that Starlink was performing that hundred down twenty up 14 % of the time and and in states like Louisiana, Mississippi, places that I work a lot in the single digits seven eight percent of the time. Now the BEAD rules also said that that in order to be a sort of

qualified, that is, if you get the money, what are you going to have to do? They adopted the FCC's speed test protocol, is in broad terms, it won't go into it, but which is in tests measured in peak times, you have to deliver the requisite speed 80 % of the time. we have to submit. So does everybody else that participates in these federal programs have to submit our speed tests according to the FCC protocols.

The last one we did was 99.9 % of the time kind of a thing. There's a big difference between performing 7 % of the time and performing 99 % of the time. And it's not something that is speculative. It is not something that is theoretical. It is evidence-based. And so for people to say like, well, we think it will be fine for rural America to get a service and we're going to define the service. But they're not even getting the lower service that gets defined.

We don't even have a service that we sell that's 100 down. We don't even have that service. We don't consider 100 down, 20 up to BEAD broadband, but fine, the federal government does, the states do, that's fine. So if you're gonna define it, then at least take the baby step to say, you know what, we're also going to at least do a little bit of due diligence, a little bit of vetting that the technologies using the transmission media.

that the participants in the program dig, that they can actually deliver that thing. It's measurable. And right now, what the government is doing is giving money for no investment in rural America, for no jobs created in rural America, for services that will not deliver because they demonstrably, they do not today deliver the service for which they're being given.

Tens of millions, hundreds of millions of Billions of dollars.

Christopher Mitchell (18:50)
John, we're

on this and you just mentioned comparing your speeds, I wanted to highlight your clients offer service and then you offer service, Conexon has its own service as well. What do you charge? I know that charges vary, but what is, if you did a quick average in your head for the introductory, I'm going to guess it's on the order of like 300 or 500 megabits symmetrical. What is a person paying in rural America for that service? From you.

Jonathan Chambers (19:17)
I'll answer

your question directly, but first let me say that two thirds of our customers take gigabit and two gigabit service. don't yet, we could offer a higher tier than two gigabits per second symmetrical service, but this is the rural America. And we work in some of the poorest places, in some of the poorest counties and parishes, in some of the poorest neighborhoods, communities.

in the country, guess what? Two thirds of people take gigabit, a third of our customers take two gigabit service for which we charge $99. Now we have a $59 service for 200 megabit symmetrical service and for low income households, we have 100 megabit, $49 package. But that's not what people buy. They don't buy the cheapest. They don't buy the worst.

Christopher Mitchell (20:06)
So, but to be clear, to

Jonathan Chambers (20:09)
They don't buy the less.

Christopher Mitchell (20:09)
be clear though, like, I mean, the point I wanted to make, and I think your data on this has been fascinating. And I remind people of this all the time because it breaks what they expect out of what people will select and what people in rural America are willing to pay for. We're going a little bit off topic, but this is the thing that drives me crazy. I can't figure out why people who have no other option take Starlink. And so, so to be clear, like if we skip ahead just a second to where there's a lot of people in rural America.

There's 2 million people using Starlink. It is better than anything they've ever had before because before the satellite was so bad and this is much better than that. But one thing I hear from people is, it's too expensive. And so a lot of people aren't gonna adopt it, but we're talking about an adoption rate of like, I don't know, like less than 10 % of like the market that has no other option is taking Starlink from what I can tell in rural America. We know that people are willing to pay $100 a month because they will pay you more than the base rate. They have chosen to get more from you.

And so I'm just curious, so as we talk about this, nearly every one of your customers, I don't know how much you charge for two gigabit service, ⁓ you charge 99. So every single customer that you have is getting speeds that are far greater than Starlink can deliver at far better prices. So one thing, just making sure people are aware, Starlink is a terrible deal from that point of view. But if you put your head into the shoes, if you put your mind into the head of other people,

Jonathan Chambers (21:09)
99, 99 for 2 gigabit.

Christopher Mitchell (21:27)
Why do you think people who have no option are not taking Starlink based on what you know of the rural markets?

Jonathan Chambers (21:32)
Too expensive? Too expensive? $120 a month for service that doesn't even deliver $120 up.

Christopher Mitchell (21:39)
So it's a value proposition as opposed to the pure expense, think.

Jonathan Chambers (21:43)
is too expensive. And for that, we deliver 100 times the speed for less price. you know, Starlink's original, their self-identified service, what they call the original Starlink launch was the better than nothing service. It is better than nothing. Certainly. Look at, I live in rural America.

Christopher Mitchell (22:02)
Well, it's better

than 4G, which is what a lot of people have been going to or the 5G or whatever that's available. Cause a lot of people will be on cellular networks and clearly Starlink is superior than that. Starlink is better than nothing. I agree with you, but I also want to say I've heard from so many people who are like, my God, it's great because they'd never had anything that good before, but it is not nearly as good as what you do.

Jonathan Chambers (22:19)
No, no.

Let me take a half step back to say, look, I don't.

Starlink is an amazing technological development deployment, low earth orbiting satellite circling the globe every 90 minutes, thousands and thousands of them launched and operating efficiently. Fantastic.

My reading of the Infrastructure Act that was adopted by Congress nearly four years ago was that it was the title, Infrastructure and Investment, that the whole idea behind that piece of legislation, that $42.5 billion appropriations, was to invest in rural America, invest and create jobs in rural America, to bring

rural America and in broadband up to the level of the rest of the country. It was an investment program. so while one could say, okay, we're going to and back then, by the way, I'm on record consistently saying we didn't need more than 20, 25, maybe $30 billion. But the number I usually cited was about $25 billion to get this done. Now, as it turns out,

All the states combined will probably spend less than 30 billion, maybe less than $25 billion. Good, fine. The programs will run efficiently about what I thought would occur.

But you're not getting the investment. You're getting a lot of the investment. But if it's an investment again, an investment which creates jobs, an investment which creates infrastructure in rural America, infrastructure that then is owned sometimes by communities in place in rural America, that's sort of taxable because it's property in rural America delivers a service which

and fiber will last for 50 years or 60 years. It's lasted 50 years so far. That is not what is happening in lots of places. I'm an admirer of SpaceX and the Starlink constellation. It isn't the same thing though as investing in a rural community because Starlink is there today. One could, this is,

Everybody knows this or should know this. If the government, the federal government under the Biden administration, under the Trump administration, under any administration, if the federal government believed that Starlink was broadband, guess what? There's no need for a BEAD program because if it is broadband today, then there is no need to give money to anybody. That isn't the decision that was made. The decision that was made was a, you know,

a sort of a Schrodinger's broadband decision. It is both Starlink or Kuiper, I guess will be. It is both broadband and not broadband at the same time. And in the Schrodinger's paradigm, it is only broadband or not broadband upon the observation, upon the observation as to what the service is. Now, in this case, what is the observation? That goes back to what I said. The observation is the speed test.

in the observation according to present data, Starlink is not broadband. Hence the decision perhaps to not say that it's broadband so that there could be a BEAD program. If you're going to say though at the same time, it's not broadband, but we're going to say it's broadband for purposes of giving out money and excluding investment in certain parts of the country, by the way, the parts of the country that are most in need, the parts of the country that are usually

the poorest parts of the country. If you can just say, you know what, we have this money appropriated by Congress, allocated by the federal government to the state's state programs that we're running. If you're going to say, okay, we've done all of this work and now at the 11th hour, we're going to say, not for you.

Christopher Mitchell (25:45)
You- you-

Yeah, to be clear, you didn't read this in an article. You're working with people on the ground in East Carroll Parish in Northeast Louisiana, some of the highest poverty in the United States of America, very challenging area. And you're one of the, I don't know if it's your project specifically, but it is that region where they have lost fiber and they are going to be, rather than seeing investment in their community, they're going to have the option of paying for Starlink, which they could do yesterday, which they could do today.

And then tomorrow the federal government's gonna write a check to Starlink in order for them to have the thing they already could get. So I wanna take those points. I feel like people get those. What I wanna make sure that we cover with you, because I think you're the one that can most cover this. You started talking about the transmission. And so I feel like coming out of RDOF in retrospect, there's probably two points. One is the technology. What do we know about the technologies that...

Jonathan Chambers (26:33)
Correct.

Christopher Mitchell (26:51)
competed with each other in RDOF, now in retrospect. And then I want to ask you about the business models and whether the co-ops did the best with the RDOF opportunity. So let's go back, because I think you were going this direction with transmission technology. What do we know related to RDOF about which technologies have performed well and are meeting local needs?

Jonathan Chambers (27:09)
Yeah, so the FCC had a decision to make in 2020. They had set up an auction where there were different bidding tiers. I used to refer to this as a waterfall auction where if there is a bidder at the highest tier within the framework and within the budget that was established by the FCC, the FCC was using a cost model for building fiber networks.

If so, the FCC again didn't talk about it in terms of transmission medium, fiber spectrum, copper. They talked about it in terms of speeds and the highest speed tier was gigabit down, 500 megabits per second up. I don't know why they chose 500 megabits per second up. don't know anybody that offers that, but put that aside. The FCC made that decision.

Gigabit was the highest speed. 100 Mbps was the next highest speed. And then they had a, I don't know, something else. 50 down, 10 up or something. And 25 down, 3 up, I something else. Those are irrelevant. You know why? Nobody won money for those. Everybody won money. 85%, 90%, something like that, won at the Gigabit tier. And then the rest was places where they had 100 Mbps tier. Then the FCC had to decide

what technology is, what the term people were using, but really what transmission medium was capable of delivering gigabit speeds.

This was where I think they made the ⁓ original SIN mistake. The FCC knew. The FCC collects speed test data. The FCC collects other data. They collect data from every single Internet service provider and have for years and years and years. The FCC knew that only Fiber was capable of the gigabit tier. And yet they allowed for the participation in the gigabit tier of

certain companies that said that they would deliver fixed wireless in the gigabit tier. And this allowed other companies, I don't know why, that said they would offer gigabit with fixed wireless. Then they held the auction. the auction, again, this is the sort of second mistake the FCC made.

They understood the urgency of getting a program up and running and money out the door. And so they developed a ⁓ process to have minimal vetting at the front end and very intensive vetting at the back end after the auction. Which is to say, to get into the auction, you had to just prove some very minimal things.

Do you have the financial wherewithal? Have you ever, can you demonstrate that you've ever been in the industry before? That kind of thing. So not a very high bar. And now for those who are sort of auction designers, I've had a hand in a couple of auction designs in my career, a lot of auction designers like robust participation in the auction, right? The more bidders, the better kind of thing.

There's always been a bias, a tendency by the FCC running its auctions, which by the way, world class. The FCC is Nobel Prize winning auction designers, world class, invented the

Christopher Mitchell (30:18)
Not just that, they're transparent. just feel like if anyone's going to copy what they're doing, though, the amount

of information they released about how the auction operated, very helpful.

Jonathan Chambers (30:26)
Yeah. And also, small point, but in today's environment, I should say it. This was a Trump administration program. The auctions were Obama auctions, there were Trump auctions, there were Biden auctions, all of this, right? I mean, this was over multiple, all of the auctions combined, over multiple ⁓ administrations, all with essentially the same approach. This isn't a partisan.

thing. It's a truth thing. And so when you want lots of participants in an auction, you err on the side of letting people in who maybe shouldn't be in, and that's what occurred in RDOF. There were bidders who were very aggressive bidders who ended up defaulting because on the back end, the FCC did a solid job over the course of a year to two years vetting then not just your financial capability.

But then they looked at your designs, your business plans, whether the RDOF funding you asked for was sufficient. That is, could you stand on your own after the subsidies ended? Your technical expertise, your expertise in running, all of that was done on the back end. And it took a long time. Because if they had done all that on the front end, they would have excluded a lot of participants who later defaulted.

So in the results,

When you went through this process, the FCC eventually determined after you were a winning bidder, then you had to be an approved bidder by the FCC that is an approved recipient. And that's when money started to flow to you There were some folks who didn't make it past that gate. And there were a significant number of defaults. The largest bidder

winning bidder in the auction never made it past that gate. company called LTD, defaulted. The next couple of largest bidders, Charter and our electric cooperative consortium, that is Conexons called the rural electric cooperative consortium. We respectively were awarded 1.3 and $1.1 billion. We both made it past that gate. Then there were a series of

minor defaults because the FCC revised areas that they thought already had service. And so there was a period of time in which you could say, all right, based on the new information, you could default. So Charter had some defaults. Our consortium had minor defaults. And then you got about the business of building your networks. I am unaware of the electric co-ops in our consortium.

So there were 60 plus our own 70 sort of winning bidders in our consortium. So I'm unaware of any of them that defaulted after they started building networks. Charter, I think similarly, they defaulted in minor ways, but they largely built out the networks that they had bid on. And then there's kind of everybody else.

And there's some smaller players that built out. are fixed wireless providers. I'm now curious about because we're pretty far down the path that received money for gigabit tier. And of the original budget of $16 billion, it's maybe five to six billion that had been awarded and is being spent to build networks. So when I said earlier, you know, it's a

In many ways, it's a better program than some of those that have been run subsequent. It's to say this, the money got out the door. There were a lot of folks who built networks. There were a couple of things that could have been improved in the auction design, such as a next in line winning bidder when there was a default early on, because then you could have had a seamless transition to the next one. So that when, for example, LTD defaulted,

There could have been somebody else that was also bidding and you could have awarded money at their bidding. There was plenty of budget for that But by and large.

Christopher Mitchell (34:03)
Yeah, I mean, the result is that with,

with LTDs defaults, for instance, my own Minnesota basically lost RDOF. I mean, we didn't have any builds then. and that then create an overhang that has, hurt us and BEAD and has gone on to cause not fully the results of the FCC's, errors, or mistakes. Some of that was, own goals, but, but it's a dynamic that certainly had impact in some States more than others.

Jonathan Chambers (34:27)
Yeah, and so again, by and large, I have been a participant. have been somebody who's been involved in rule makings and auction design and federal funding programs, participant in those programs since the mid 90s. this is what surprises me. Number one.

We're only talking about about 5 % of the country in terms of population. Homes, households.

I don't know why there's so many people that care about that. Like it's a narrow slice of the pie for the people who live in those areas. It's hugely important, but, why get it? You know, all of this, all of this energy, all of this, all of these participants, all this controversy, all of that. Because if you just ask the people in East Carroll Parish, Louisiana.

what they want, they will tell you what they want. There shouldn't be in the case again, why? I'll keep using East Carroll Parish because yes, we built a fiber network to parts of East Carroll Parish with some RDOF funds. But then there was a bunch of BEAD funds available to the other parts that weren't part of the RDOF auction. And we applied for that money.

for about the same amount of money that we won in RDOF you know, that kind of thing. And then we, and then the money was awarded instead to Starlink. So in East Carroll Parish, poorest place in the country, one of the, there will be no investment in the future. And this gets to my like, why has there been this intense interest in

Christopher Mitchell (35:37)
Check it out.

Jonathan Chambers (35:53)
and nobody asking the people in East Carroll Parish what they want. Nobody asking the people in rural Mississippi, rural Florida. And when I say nobody asking, I mean explicit in the rules, you cannot ask the people locally. You cannot ask the, that is, I you can ask, but you cannot consider in the award what people want. You cannot ask the public officials that are local public officials.

You cannot ask the people who live there. You can't take surveys. You cannot do that. That was the rules. Like, I don't even understand it. Again, the government had the money. If they just asked for this many, in many respects, left behind population of the country with a virtuous program, a lift up program.

Let's build something meant to last. Maybe it didn't exist in electricity in the 30s. It didn't. And local communities came together and built networks. Didn't have to ask because the local communities did that themselves. Didn't have other, other, didn't have cable television, didn't have the same level of phone service, then didn't have basic Internet access early on, then didn't have broadband service, all that.

So what's going to happen is a lot of effort has gone in over the last four years and will go on for several years more. And then instead of the 5 % of the population that doesn't have it, there'll be two, 3 % of the population that still doesn't have the requisite service because only in those places where you're building for the future will in five years or 10 years, those very places have. And so we'll do it all again.

Christopher Mitchell (37:25)
as we're wrapping up here, I do want people to understand. I think you're right. We are gonna see another program if we give significant amounts of money to Starlink. Those locations will need some kind of investment generally, assuming they don't just dry up. That may happen some of them too, where people will just largely kind of abandon. But for people to understand the economics.

Jonathan Chambers (37:25)
know.

Christopher Mitchell (37:44)
What is it like then for you to like come back then in two years and look at like some portion of East Carroll Parish? I'm assuming it will be costlier just because of normal inflation, but also that the project will be different and you will now forecast a lower pass rate perhaps because of people being hooked on Starlink and just their general inertia of people having other solutions at that point. It seems to me like it is.

The most efficient time to build this at the lowest cost is now. And the more we wait, the more costly it becomes.

Jonathan Chambers (38:14)
I thought that could well be, I, ⁓ for me, is my last rodeo. so it's going to be somebody else who would look at it. And, and once somebody else looks at it, I think what they'll find is that the, pockets of unserved are so scattered that nobody can make an economic case of it. So this was the moment. This was the moments to do.

Christopher Mitchell (38:21)
You're not going to come back in 20 years to finish the job?

Yeah, that's what I'm afraid of.

Jonathan Chambers (38:37)
virtuous. Look, I think the law passed by Congress overstated the need. It needed $40 billion. And then the Biden administration took far too long. It shouldn't have taken three years and not to finish the job. You could have done it all in a year. Money allocated, money assigned, networks built. There didn't seem to be any sense of urgency.

which is puzzling. I'll give the Trump administration credit for having put a sense of hard deadlines. Most of the states submitted their plans to the Trump administration, even though they had to redo all their plans a couple of weeks ago, and there's a few left, a dozen or so left to do. But they changed the program from an investment program.

into a subsidy program. And that has always been the core difference in the way I have looked at these funding programs. Subsidy programs last forever because nobody ever gets off the government teat. They always want more subsidy. Investment programs are one and done programs. And so to change the BEAD program from an investment program into a subsidy program,

is a damn shame and it will leave areas that continue to be under invested, underserved and those it'll just get harder and harder. So what's my real answer to question? What happens? No, people will just move away. People will vote with their feet. They will move to an area where they have broadband in the areas that are left behind now because of the decisions that are being made today. Those areas they will wither.

If you didn't have electricity, if you could turn back the clock and say, all right, I'm going to look at areas where no electric co-op developed, I'm not going to get electricity here because there isn't an economic case.

Christopher Mitchell (40:21)
No, you could. So it's funny.

We're talking about Louisiana. I looked into this. Boy, I might get that a year's wrong, but I think it was like 1896. The city of Lafayette voted on whether or not to build a municipal electric plant. I think it was like a vote of less than a hundred people voted in it. It was mostly people that owned land and they decided to build it. Lafayette was nowhere and the larger towns that were around them over the following 30 or 40 years withered. People moved to Lafayette.

And we saw a change in development there. And so it's not hypothetical that you're saying it. People have studied this. The towns literally disappeared if they did not have good electricity. Lafayette in Louisiana did have that electricity, became the heart of Cajun country. I I'm not saying electricity was the only reason, but there were significant shifts based on who had electricity and who did not in the early 1900s.

Jonathan Chambers (41:12)
So I do want, because I am pretty self-aware. I am aware that I can come across as very negative or complaining or all that. I do want to, if have time, make this one last point, which is really consistent with something that people may not realize about me. I'll describe it in this way. I have ⁓ several tattoos on my body. I have one in my upper left arm.

Christopher Mitchell (41:24)
Yeah, hit it up.

Jonathan Chambers (41:35)
In Hebrew that says, "Od lo avdah tikvateinu," which means we have not yet lost hope. That has been the sort of guiding principle of my life. Here's what I would do if I were the decision maker about proceeding with BEAD I would withhold some of the money. Again, they'll spend 20, 25 billion and they'll still have 20.

you know, billion left over. I'd return some back to the treasury, sure, but I would withhold some money so that if the current awardees cannot deliver over the next 18 months, something, year 18 months, and by deliver I mean deliver the speed that they're required to deliver using the

protocol that's been developed in the rules, the FCC protocols, so that, and I'm not picking on Starlink, I don't care, they're not a competitor of ours, but if in Louisiana, in East Carroll, in the other places in Louisiana, before you give Starlink or anyone else, Project Kuiper, 50 % of their money upfront, which is not technologically neutral because none of the rest of us building any other kind of network are getting our...

upfront. they know this is knowable, look at the speed tests. Hire Ookla to tell you, here's my speed tests during the peak times, during the peak times, that is the hours where you have to have to do the speed tests under the FCC rules. What's the speed? Did because

Starlink doesn't offer multiple services. What they offer is what they're signing up to deliver, 100 down, 20 up. So for those customers of theirs, in the next year, look at the speed tests. If they fail to deliver at least 80 % of the time, 100 down, 20 up.

Then guess what? Don't wait 10 years, the length of the program. Default them right away. And then don't just give somebody else the money because they bid really low. Withhold some of the money in the program. At NTIA, at the state, have the state present to their plan to NTIA, you know what? This is what we've awarded, but we're withholding something. Some money in case people don't deliver. And if they don't deliver, we're then gonna...

I would say we're to ask the people who live there what they want and allow them to participate in this program so that they can build their own future just like electric co-ops did in the 30s and 40s. That at least would save these areas from the original question about all this, from the defaults that occurred in RDOF where there was no next in line bidder being awarded, from the defaults that have occurred in other programs.

Don't wait for a default five to 10 years from now. The evidence is available today. You don't even have to wait a year, but if you want to, wait a year. The evidence is there today. If you can't meet the requisite speed, then get off the train and let somebody else get on.

Christopher Mitchell (44:15)
Mm-hmm.

Yeah, I like that ending. It gives a sense of hope, brings us around to the idea that local folks should have some agency in their future. I like it.

Jonathan Chambers (44:37)
⁓ I forgot, I'm talking to the very group of people that advocates for local communities to have a say in their future.

Christopher Mitchell (44:45)
I've made the point that I am deeply frustrated in a world in which I was thrilled to see West Virginia was still going to significantly move forward with fiber. And until I saw that I was going to Frontier, I know the feelings that people in West Virginia have about Frontier. And I was just like, what a complicated world where like this is the best scenario for them. Just sad.

Jonathan Chambers (45:06)
I am not, and I know it'll come across, I'm not being critical of or dinging anyone else's business, deployment, technology, service, I'm not. I'm saying that under some truth-based, evidence-based, I realize we live in a post-truth society, but

There's still evidence, there's still numbers, there's still measurements you can make. Just rely on that and don't, you know, don't leave people behind because you moved forward and then you look back and say, oops, oops, oops, LTD couldn't deliver, oops. Now what do we do with all those areas in Minnesota and the rest of the country? Let's not have an oops moment here. Protect the most vulnerable.

parts of rural America that still have not gotten an investment and invest there. It probably won't be me doing it in the future. I'm just like an old man reflecting upon what I have seen happen in this industry over the last 35 plus years.

Christopher Mitchell (46:09)
Well, I'll tell you, I need to figure out how to translate it to another language where it might be more succinct. But if I could get a tattoo that read one of my fundamental beliefs that carries me through dark times, it's ⁓ all hope is lost, there is nothing left to worry You might appreciate that.

Jonathan Chambers (46:26)
Yeah,

I'm not that dark,

Christopher Mitchell (46:30)
Well, thank you, John. Appreciate your time today and

Jonathan Chambers (46:33)
Thanks, Chris.