NAA & NMHC Submit Comments to the FCC on Implementing the Infrastructure Investment and Jobs Act: Prevention and Elimination of Digital Discrimination

Hubacher Ames & Taylor, PLLC

Mathew C. Ames

Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of                                                         
Implementing the Infrastructure Investment and                
Elimination of Digital Discrimination

GN Docket No. 22-69 Jobs Act: Prevention and

Reply Comments of
the National Multifamily Housing Council and the National Apartment Association

Matthew C. Ames
HUBACHER AMES & TAYLOR, P.L.L.C.
4084 University Drive
Suite 101
Fairfax, Virginia 22030
(703) 345-1179
Counsel for:
the National Multifamily Housing Council and
the National Apartment Association

June 30, 2022

SUMMARY

The National Multifamily Housing Council (“NMHC”) and the National Apartment Association (“NAA”) submit these Reply Comments in response to the comments of other parties filed pursuant to the Notice of Inquiry (the “NOI”).1 NMHC and NAA urge the Commission to adopt a narrow reading of “digital discrimination of access based on income level,” as the term is used in Section 60506 of the Infrastructure Investment and Jobs Act, 2 so that its rules are tailored to fit the comprehensive plan laid out by Congress.

Section 60506 Is One Element of a Much Larger Congressional Mechanism. Division F of the IIJA contains a full set of remedies aimed at every element of the broader problem of extending adequate broadband service to all Americans. Congress did not intend for Section 60506 alone to remove every conceivable obstacle to the delivery of broadband service. Section 60506 is only one provision of Division F, and it must be interpreted consistently with the rest of the Congressional plan. That plan is centered on a broad range of subsidies that will reduce costs for service providers and subscribers, thereby largely eliminating any incentives for discrimination based on income level and the effects of past discrimination that may result in discrimination based on income level today. The Commission’s new rules should apply only when a provider fails to comply with some aspect of the new Congressional vision going forward.

The Broadband Equity, Access, and Deployment (“BEAD”) Program established by Section 60102(f) of the IIJA lies at the center of the Congressional plan. The IAJA authorizes over $40 billion in subsidies for the expansion and upgrading of broadband infrastructure because Congress understands that an enormous investment is needed to ensure adequate broadband service for all unserved and underserved communities. In defining the permitted uses of BEAD Program funding, Congress also expressly recognized that improving infrastructure within multifamily buildings is a critical need and that property owners will play a central, positive role in promoting further deployment. Property owners – especially providers of workforce and lower-income housing – do not have the financial resources to directly invest in broadband infrastructure. Existing demands for property operation and maintenance funds, exacerbated by the financial strain of COVID-19 on operating budgets, puts the cost of any new broadband infrastructure out of reach in most circumstances. Any significant investment in broadband infrastructure (or any large capital expenditure, for that matter) by rental property owners will ultimately put upward pressure on rents, at a time of serious housing affordability challenges across the country. Nor do housing providers have the technical skills to build, operate, or maintain networks. Consequently, it is up to the broadband providers to extend their networks to reach unserved communities and to upgrade facilities to deliver adequate broadband service in underserved properties. Properly targeted BEAD grants alone will go a long way towards addressing the significant need in low-income rental housing communities.

In determining which entities should be governed by the Commission’s new rules, NMHC and NAA urge the Commission to reject the arguments of a handful of commenters, which suggest that property owners engage in income discrimination and therefore should be subject to the rules. Property owners have no control over the terms of a provider’s service or the cost of infrastructure, and therefore cannot “discriminate” as the term is used in Section 60506.

Subsidizing Network Expansion and Upgrades Is the Only Practical Way to Solve the Inequities in the Availability of Broadband Service. The problems with broadband service in low-income and affordable communities stem from the economics of building communications networks, not from the actions of property owners. Service providers need to be able to reach their return-on-investment targets, and the reason that low-income communities suffer from a lack of adequate broadband service has to do with the multiple cost factors that affect a provider’s return on investment.

Those factors are: (i) the cost of extending a network to pass a particular property; (ii) the cost of installing a new distribution network (wireless or wireline), or (more commonly) upgrading existing wiring in an older building; (iii) the cost of end-user equipment allowing individual residents to make effective use of the broadband capability; and (iv) the recurring cost of subscriptions for every resident.

Property owners contribute to the deployment of broadband networks in many ways, as explained in detail in the real estate industry’s comments in GN Docket 17-142 (the “MTE Proceeding”). Apartment owners routinely contribute to the cost of new inside wiring, or the upgrading of existing facilities. On the other hand, housing providers have no control over the cost of extending a network to reach a property, the actual cost of the infrastructure they help fund, the cost of equipment, or the recurring cost of monthly subscriptions. And as noted above, providers of workforce and low-income housing, where infrastructure investment is so badly needed, simply do not have the resources to contribute to the cost of facilities.

For the BEAD Program and other initiatives addressed in the IIJA to succeed, NMHC and NAA believe that the Commission and other agencies should begin by assessing the underlying nature and full scope of the problem. There are approximately 20 million households in the United States living in multiple tenant properties. Roughly 75% of those households are served by two providers and very likely have up-to-date broadband service from at least one provider. Any building over 20 years old, however, probably does not have wiring suitable for transmitting adequate broadband service, and a very large proportion of lower income Americans live in such older buildings. Even if broadband service is available in the vicinity, the wiring must be upgraded. Therefore, the government’s efforts, including subsidies, should be concentrated on the five million or so apartment households that are served by a single provider, which is frequently a local telephone company offering low-speed DSL service. These households are essentially all in low-income housing. Those residential communities should be specifically identified, and funding directed towards building infrastructure to and within them. Upgrading the wiring in those buildings is essential to solving the overall access problem.

Of course, low-income residents need other kinds of assistance, because they often cannot afford suitable devices or monthly subscriptions. Congress and the Commission have adopted programs for those purposes.

Section 60506 Does Not Address Competition.

Section 60506 does not require that subscribers have service from any particular number of subscribers, nor does it refer in any way to competition. The Commission’s rules, therefore, should not take competition into account. In fact, doing so would be counterproductive because granting subsidies to fund duplicative infrastructure could result in some communities being served by multiple providers, while others would still have inadequate service.

Furthermore, promoting and protecting competition is not actually an issue in this context. As we have demonstrated in the MTE Proceeding, as many as 80% of apartment communities are currently served by two providers, and the Fiber Broadband Association has found that 68% of apartment residents have access to at least two broadband providers. In other words, roughly three-quarters of apartment residents have access to competitive broadband service. The question is how to improve the situation in those communities that lack adequate service.

The Commission Should Protect Bulk Service.

The Commission must also be careful to ensure that its new rules do not affect agreements for the delivery of bulk broadband service. As the Commission has long recognized, bulk service offers multiple benefits; these include lower rates, elimination of credit checks and deposits, seamless property-wide service, and access to a range of IoT applications. Bulk service can be a cost-effective way of providing high-quality broadband service in senior and low-income housing, as well as other environments.

No Further Action in the MTE Proceeding Is Required.

Only WISPA has proposed any further concrete action in that docket. WISPA has proposed only that the Commission (i) ban exclusive rooftop agreements, and (ii) develop model policies designed to ensure that states and localities amend or repeal certain mandatory access laws. NMHC and NAA oppose any action regarding rooftop agreements because Commission regulation would interfere with a thriving real estate market over which the Commission has no statutory authority. NMHC and NAA agree that some mandatory access laws are unfair, but the real problem with such laws is that they are outmoded. They do nothing to address the digital divide or to improve broadband service in low-income communities. Any model policy issued by the Commission should call, not for the reform of such laws, but for their repeal.

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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

In the Matter of 
Implementing the Infrastructure Investment and           
Jobs Act: Prevention and Elimination of                                                            
Digital Discrimination   

GN Docket No. 22-69                                            

Reply Comments of
the National Multifamily Housing Council and the National Apartment Association

Introduction

The National Multifamily Housing Council (“NMHC”)3 and the National Apartment Association (“NAA”)4 respectfully submit these Reply Comments to address issues raised by other parties in response to the Commission’s Notice of Inquiry (the “NOI”),5 particularly with respect to the overarching goals of Division F of the Infrastructure Investment and Jobs Act (the “IIJA”),6 of which Section 60506 is only one component. NMHC and NAA respectfully urge the Commission to adopt a narrow interpretation of the phrase “digital discrimination of access based on income level,”7 and to recognize that the various subsidy programs provided for by other provisions of the IIJA will be the most effective mechanisms for addressing that type of discrimination.

I. THE INFRASTRUCTURE INVESTMENT AND JOBS ACT EMPLOYS MULTIPLE TOOLS TO ENSURE THAT ALL AMERICANS HAVE ACCESS TO AN ADEQUATE LEVEL OF BROADBAND SERVICE.

Section 60506 is not the only provision of the IIJA. In enacting the IIJA, Congress designed a comprehensive mechanism for extending adequate broadband access to all Americans. Congress created new tools and expanded existing ones in a series of statutes that must work together for the entire mechanism to perform as intended. Some commenters, however, have urged the Commission to use this proceeding to adopt rules so broad that the agency would effectively regulate every aspect of the provision of broadband service – from subscription rates to customer service support to build-out obligations -- in the name of preventing discrimination.8 But Section 60506 cannot be interpreted in isolation. That single statute does not direct the Commission to adopt rules that would address every conceivable impediment Americans face in subscribing to broadband services, because other components of the IIJA address other barriers. Section 60506 addresses only issues narrowly related to access arising from the discriminatory policies of service providers.

The following provisions of the IIJA address the other aspects of the larger problem:

1. Section 60102 establishes the Broadband Equity, Access, and Deployment (“BEAD”) Program with the express purpose of bridging the digital divide by funding the construction of infrastructure;
2. Section 60103 is intended to improve the quality of broadband mapping by directing providers to submit any information requested by the Commission for that purpose;
3. Section 60104 requires the Commission to recommend actions for achieving the goal of universal service for broadband;
4. Section 60201 revises the funding mechanism for the Tribal Broadband Connectivity Program;
5. Section 60304 establishes the State Digital Capacity Equity Program, with the purpose of promoting digital equity and digital inclusion activities conducted by the states;
6. Section 60305 establishes the Digital Equity Competitive Program, which will make grants for the purpose of promoting digital equity and digital inclusion and spurring greater adoption of broadband by covered populations;
7. Section 60401 creates a program for supporting the construction of middle mile infrastructure;
8. Section 60502 extends the Emergency Broadband Benefit Program, which provides consumer subsidies for broadband service and devices, and renames it the “Affordable Connectivity Program;” and
9. Section 60504 directs the Commission to promulgate broadband consumer labelling regulations.

In other words, Division F of the IIJA encompasses the full range of actions that Congress has determined are needed to ensure that every American has access to broadband service, and Section 60506 addresses just one of ten key actions identified by Congress.

The BEAD Program is especially important in this context because Congress has specifically authorized BEAD funds to be used to fund deployment of infrastructure within multifamily buildings, with priority to be given to residential buildings that have “a substantial share of unserved households,” or are in locations “in which the percentage of individuals with a household income that is at or below 150 percent of the poverty line . . . is higher than the national percentage . . . .”9 Such deployment could be performed by a service provider or a property owner, acting as a subgrantee. Congress thus acknowledged both the special nature of the deployment problem in low-income communities, and the central, positive role of property owners in promoting deployment.10

In fact, in creating the BEAD Program, Congress essentially adopted the policy recommended by NMHC and NAA in comments in Improving Competitive Broadband Access to Multiple Tenant Environments, GN Docket No, 17-142 (the “MTE Proceeding”). In that proceeding, we stated that extending service to low-income properties was a discrete problem, separate from the provision of service in the broadband market as a whole,11 and that “infrastructure costs are the paramount obstacle” to deployment of broadband service in low- income properties.12

The need for subsidizing deployment is so critical and central that if the BEAD Program is properly implemented by the NTIA, many of the issues raised in this rulemaking and the MTE Proceeding will be addressed very effectively. The other actions required by the IIJA will also promote deployment and adoption in ways that will ensure equal access and eliminate any reason for a provider to engage in discrimination based on income. The Commission should therefore interpret Section 60506 carefully and limit the scope of its regulations.

I. EQUAL ACCESS IN LOW-INCOME HOUSING IS A CHALLENGE BECAUSE OF THE BUSINESS NEEDS OF BROADBAND PROVIDERS.
 

1. “Equal Access” Under the IIJA Means Access to a Defined, Adequate Level of Broadband Service that is Uniform Across a Provider’s Service Area.

Section 60506(a)(2) defines “equal access” as “the equal opportunity to subscribe to an offered service that provides comparable speeds, capacities, latency, and other quality of service metrics in a given area, for comparable terms and conditions. . . .” It is clear from this definition that Congress intended the Commission’s rules to address access to a service, as offered by a specific provider of service. The “equal opportunity to subscribe” is to “an offered service,” and the “offered service” across a given area is to be comparable in various respects. In other words, Congress intended to require providers to make a uniform level and quality of service available to all of their subscribers and to prevent providers from treating subscribers within a service area differently based on the characteristics listed in Section 60506(b)(1).13

Consequently, this proceeding must be confined to the actions of service providers. The definition of “equal access” is central to the intended scope of Section 60506(b) (Commission’s rules are to facilitate equal access) and Section 60506(c) (Federal policy is to promote equal access). Only a service provider, and not some other class of entity, can “offer” a “service,” and only the service provider can assure the comparability of speed, capacity, latency, and other characteristics of the service. Therefore, those commenters that have argued that this proceeding should address the actions of property owners have misread the statute.14 Because owners do not control the terms of service, they cannot “discriminate,” as the term is used in Section 60506.

For example, CEO Action for Racial Equity argues that the term “entity” should be defined broadly, claiming that property owners can “influence” access, affordability and adoption.15 Section 60506, however, is not so broad. The only “entities” mentioned in the relevant subsections of the statute are “subscribers” and “service providers.” The Commission has acknowledged that it has no general authority over property owners.16 Therefore, without an explicit reference to multiple-tenant environments (“MTEs”) or apartment residents there is no reason to believe that Congress intended for property owners to be regulated under Section 60506. In fact, the mechanism used by the Commission in the MTE Order is not available in this instance: imposing positive obligations directly on owners is not the same thing as regulating them indirectly, by prohibiting service providers from entering into contracts containing certain types of provisions.

In addition, neither the word “influence” nor any of its synonyms appears in the statute; neither do “affordability” or “adoption.” Affordability and adoption are concerns, to be sure – but they are addressed by other elements of the IIJA.

Similarly, the National Digital Inclusion Alliance (“NDIA”) claims that owners can discriminate “by limiting consumer choice to certain service options from certain service providers.”17 It is not clear what NDIA means by this phrase, but it seems to suggest that owners should be required to permit entry by any and every service provider. The statutory phrase “equal opportunity to subscribe” cannot extend that far, however, for two reasons. First, nothing in Section 60506 suggests that Congress intended to adopt a mandatory access requirement, under which every service provider has the right to serve anywhere it chooses regardless of the effect on private property rights. Congress cannot authorize the Commission to order a physical occupation of private property without saying so expressly, and without providing for payment of compensation to the affected owners. And second, forcing owners to accept all comers does nothing to extend access to properties that are uneconomical for providers to serve. In fact, it would exacerbate the problem, because scarce capital would be expended on extending duplicative service, leaving many properties still underserved. Unfortunately, NDIA and some other commenters simply do not understand the economic factors underlying the access problem.

The fundamental problem is that extending broadband networks is expensive, and sometimes providers determine that extending a network to serve an area or upgrading the wiring inside a building will not produce sufficient revenue to cover the cost.

1. Delivery of Adequate Broadband Service in Low-Income Properties Poses Particular Challenges to Broadband Providers and Housing Providers.

As we have discussed in the MTE Proceeding, extending broadband networks capable of delivering an adequate level of service to and within low-income residential buildings is a challenge for all of the affected parties because of its complexity.18 The problem has four components: (i) the cost of extending a network to pass a particular property; (ii) the cost of installing a new distribution network (wireless or wireline), or (more commonly) upgrading existing wiring in an older building; (iii) the cost of end-user equipment allowing individual residents to make effective use of the broadband capability; and (iv) the recurring cost of subscriptions for every resident. These components have one thing in common: they are all economic in nature.

In most of the residential MTE market, the four factors underlying lack of service in low-income environments are either not present or are substantially ameliorated. On the other hand, the combination of the four creates a very difficult problem for any provider seeing to serve properties with a large proportion of lower income residents or located at a substantial distance from the provider’s distribution network. For example, the high broadband penetration rates in most apartment communities indicate that residents have access to end user equipment and can afford their monthly subscriptions. In addition, the cost of upgrading facilities inside a building can usually be addressed through contractual mechanisms developed by the marketplace, as we explained in the MTE Proceeding.19 The cost of extending the network to the property may still be significant, but if the property owner is contributing to the cost of on-site facilities, and residents can be expected to subscribe in high numbers, the provider can typically justify the investment. The key factor in lower-income environments, however, is clearly that many residents cannot afford devices or subscriptions, and even those that can are unlikely to subscribe to the more expensive premium levels of service. This also makes it very difficult for providers to meet their return-on-investment targets.

Housing providers face even greater challenges than service providers, because they have no control over any of the relevant economic factors. They do not own and cannot build or use outside plant. They do not provide and cannot set the price of any of the devices needed by residents or of the broadband service itself (with the exception of negotiated rates charged in bulk agreements, which are lower than the provider’s standard rate). If a provider happens to be willing to install or upgrade inside wiring, the property owner will frequently bear a substantial portion of the cost of the wiring and related facilities.20 Even if the inside wiring belongs to the property owner, the owner does not control the technical characteristics of the service and therefore must accept the provider’s standards and costs, if an upgrade is required. Finally, owners cannot simply demand service from any provider: a provider must be willing to serve and will not do so if its return-on-investment requirements are not met.

Not only do apartment owners frequently underwrite a portion of a provider’s costs, but owners do not impose significant or undue costs on providers. Owners sometimes negotiate to include performance standards in agreements, but those standards are for the benefit of subscribers.21 In those cases in which owners are compensated by providers, the payments are generally modest.22 In many instances -- especially in lower income communities – the owner receives no compensation.

The foregoing assumes that a provider is actually willing to invest in the facilities needed to deliver adequate broadband service at a property. Often, they are not, as discussed above, especially in smaller apartment communities and in affordable and low-income housing. This is why Congress explicitly called for BEAD Program funding to be used for infrastructure within unserved and low-income residential buildings.23

Several commenters have observed that historical residential redlining may be affecting the broadband market today, because past discrimination may have resulted in a lack of network capacity in the vicinity of many lower-income residential buildings.24 Regardless of the origin of the problem, however, the problem today turns on the needs of broadband providers and is economic in nature, and therefore requires an economic solution.

Each of the four components of the cost problem must be addressed, and the IIJA does that through the various statutory provisions outlined in Part I. The IIJA correctly recognizes that these components are all fundamentally economic problems. The failure to address them may result in a form of discrimination, but an anti-discrimination statute is not an effective way of addressing an economic problem, especially when economic solutions are available.

C. The Scope of the Access Problem Needs To Be Defined in Quantitative Terms.

In the MTE Proceeding, the Real Estate Associations pointed out that if the affordability problem is to be fully addressed, its scope must be properly defined. This issue is largely outside the scope of this proceeding; in fact, if the BEAD Program and other elements of the IIJA are properly implemented, we believe it will be because the NTIA and the Commission will have properly assessed the scope of the problem and assigned priorities accordingly. Nevertheless, we think it is useful to review this issue briefly here because it may help focus this proceeding on the right concerns. The key question is “How many multifamily communities or households are there in the underserved category of lower-income properties?”

The record in the MTE Proceeding shows that there are three categories of households living in apartments that probably need assistance:25 (i) 2.8 million in HUD-assisted apartments; (ii) 5.2 million with incomes under $20,000 (which include the first group); and (iii) 8.8 million with incomes under $35,000 (which include the first two groups).

There are roughly 20 million apartment households in the United States.26 As we discuss further below in Part IV, between 68% and 80% of apartment properties in the country have two or more providers. Therefore, using round numbers, taking 75% of 20 million means that around 15 million apartment households in the country have access to at least two broadband providers. These two providers will typically be the local franchised cable operator and the ILEC, although the combination of providers can vary and in many cases there will be three or more providers at any given property. In any event, the real estate industry’s analysis suggests that there are around 5 million households in residential MTEs that are served by only one provider.27 This group must include a very large proportion of the 2.8 million in HUD-assisted apartments. If these properties have any broadband service at all, it is typically low-speed, unreliable DSL delivered over very outdated wiring.28

NMHC and NAA believe that the Commission, NTIA, and other agencies must first identify the universe of multifamily households that are unserved or underserved and then concentrate their efforts at promoting deployment and adoption on that universe. In essence, the problem is that around a quarter of apartment residents live in communities that are underserved because the combination of the cost of extending or upgrading infrastructure and the low incomes of the residents makes it difficult for providers to meet their return-on-investment criteria.

It may be possible to improve on the analysis of the scope of the problem laid out in detail in the real estate industry’s MTE Proceeding comments and we urge the Commission and NTIA to do so. Once that has been done, the Federal agencies and the states can move on to identify specific areas within local jurisdictions and particular residential housing communities (both public and privately-owned) that are unserved or underserved and concentrate their efforts on identifying providers able to extend service at a level defined by the Commission under one of the IIJA’s applicable programs.

III. THE ONLY EFFECTIVE WAY TO ADDRESS DISCRIMINATION BASED ON

Income Level Is To Provide Subsidies.

Unlike other forms of discrimination, discrimination based on income level is fundamentally an economic issue. This means that preventing and curing such discrimination requires some form of subsidy, whether indirect and implicit, or direct and explicit. For instance, the government could require each provider to deliver a certain level of service to all customers at the same rate, regardless of location or any other considerations. To do so, the provider would have to charge some customers a rate substantially above cost to ensure that it covered its costs at other locations. This is, of course, the kind of implicit subsidy mechanism that the Telecommunications Act of 1996 sought to eliminate. The alternative is a direct subsidy of the kind to be provided under the BEAD Program, the middle mile program, and the Affordable Connectivity Program.

Accomplishing the goals of the IIJA will require providing subsidies for extending networks to pass rural and other unconnected communities, to pass lower income properties in otherwise well-served areas, upgrading wiring in older buildings, end-user equipment, and subscription costs. In combination, the various subsidy mechanisms will eliminate much of the incentive providers have to distinguish among residential properties based on the income of their residents.

Nevertheless, the Commission must fulfill the Congressional mandate and adopt rules to provide for equal access and to prevent discrimination. Even though other sections of the IIJA will deal with most of the circumstances that might be deemed income discrimination, Congress has directed that the new rules address income discrimination in some fashion.

Some commenters argue, in essence, that lack of adequate service today is a result of past redlining, which is prime facie evidence of discrimination of various types, including on the basis of income, and therefore must be remedied under Section 60506.29 While this may be true in some cases, it is probably not true in others, and as we noted earlier, the problem today is fundamentally an economic one: what measures are needed to induce providers to extend networks to and within buildings? Furthermore, Congress made no finding in the IIJA to the effect that any present disparities are the consequence of past discrimination. Consequently, it would be unreasonable for the Commission to declare that a provider or any other type of  entity30 is discriminating today in violation of the law, based only on historical circumstances. The rules may take various forms, but they should not impose a disparate impact standard. Instead, they should apply only after a finding of actual, intentional discrimination, as defined in the rule.

In particular, any Commission rule governing discrimination on the basis of income should be prospective and tied to the overall goals and the other mechanisms adopted by Congress in the IIJA. This is one of many areas in which the Commission’s rules under Section 60506 can be harmonized with the other provisions of Division F of the IIJA to create a coherent approach to the problems of deployment and access, consistent with the overall Congressional scheme. For example, a rule could require providers to deliver a standard, basic level of broadband service inside every property to which they have a right of access, regardless of the location or income level of any of the residents. Such a requirement might encourage providers to apply for grants, or to cooperate with grantees, to ensure that they can extend coverage within all of the buildings they have the right to serve. With that kind of rule in place, the Commission would have a clear standard for determining whether a provider has complied with the requirement, and failure to meet the standard could be deemed discrimination under Section 60506. Providers could also be required to participate in designated programs that subsidize equipment or subscription costs for MTE residents. In any case, regardless of the specific requirements of any given rule, the standards should be clearly set in the rule and only applied prospectively.

IV. THE COMMISSION’S MANDATE UNDER SECTION 60506 IS TO ADDRESS DISCRIMINATION, NOT TO PROMOTE ARTIFICIAL LEVELS OF COMPETITION.

Section 60506 does not require that subscribers have access to service from any particular number of providers. The fundamental goal of the IIJA is “to ensure that all people of the United States benefit from equal access to broadband Internet access service.” If equal access meant access to the same number of providers, then the Commission’s rules would have to ensure that residents of rural areas and other high-cost regions have access to the many multiples of providers available in the densest and best-served areas. This is clearly not feasible, and not the intent of the statute. What is required is access to an adequate level of broadband for all, from at least one provider.

In fact, given the very large amount of money needed to fund network construction to reach every unserved and underserved person in the country, without an express requirement to deliver competition, rather than merely service, the Commission must assume that a single provider is sufficient. It is highly unlikely that Congress meant to authorize the construction of duplicate networks without expressly saying so, precisely because it is so important to ensure that every household gets adequate service. It is one thing to encourage competition, but something else entirely to try to require it.

The issue of competition is also important because the NOI asks whether building owners can “digitally discriminate.”31 In response, several commenters have suggested that property owners deliberately limit the number of providers serving their buildings for self-serving reasons.32 This is clearly incorrect. As discussed in the MTE Proceeding, NMHC and NAA data indicate that roughly 80% of apartment communities in the United States are served by at least two providers.33 It is also not uncommon for apartment properties to have three or even more providers on site. Although the Commission has rejected our 80% figure without analysis,34 the Commission has not determined an alternative figure. NMHC and NAA are confident that, were the Commission to investigate this issue in detail, as we have proposed, it would find that our fundamental conclusion is correct. In fact, a survey conducted for the Fiber Broadband Association in 2021 found that 68% of apartment residents have a choice of providers.35 Although lower than the figure suggested by the real estate industry’s filings in the MTE docket, it still demonstrates that a substantial majority of apartment residents have a choice of provider.

Where competition and choice are lacking is in low-income and smaller properties deemed unworthy of investment by providers because of their perceived lack of profitability. In the residential market as a whole, however, the situation is very different.36 That market is very competitive, as demonstrated by the growing number of providers serving that market. Apartment properties at the higher end are often served by three, four, or more broadband providers, and the newer competitive providers are aggressively seeking access to those buildings. The evidence in the MTE Proceeding indicates that three-provider competition nearly doubled in just the two years between 2019 and 2021.37

Furthermore, as discussed in Part II, while there is a lack of competition in the lower- income sector of the broadband market, the critical problem there is that many properties are unserved or underserved. A focus on competition will not ensure that residents of every one of those communities has adequate service: instead, it would lead to duplicative service at some locations and inadequate service at the rest. To accomplish the goals of Congress, it would therefore be wiser to concentrate on assuring that every one of those residents has access to reliable broadband service from one suitable provider, as opposed to setting arbitrary competition targets that providers may be unable or unwilling to meet. The best way to achieve this in affordable housing settings or other cases in which a provider’s return on investment would be too low is often by means of a bulk service arrangement or property wide wifi offering that guarantees connectivity to all residents.

Indeed, over a decade ago, the Commission ruled that bulk service offers many benefits to subscribers, especially in senior housing, student housing, and low-income residences.38 One of those benefits is a lower subscription rate.39 When it last ruled on the issue in 2010, the Commission also noted that bulk billing arrangements promote the deployment of security channels, closed circuit monitoring, and wifi broadband access in common areas, among other benefits.40 In today’s market, bulk billing arrangements allow for property-wide, seamless, always-on broadband service, which is not only convenient for residents, but allows the property owner to implement an integrated set of IoT management tools ranging from security features to energy monitoring. Bulk arrangements also allow service providers to dispense with credit checks and security deposits, since the owner is committed to paying the cost of delivering service to every resident.

We also note that a strict definition of equal access would prohibit most, if not all, bulk agreements. This is because a bulk agreement allows MTE residents to obtain service at a rate lower than the standard rate offered by the provider to customers living elsewhere in the same service area. If “equal access” is defined to mean all subscribers must pay the same subscription fee for the same service, then bulk agreements could be said to result in discrimination against those customers who do not have the benefit of the bulk agreement. Such a result would lead to higher prices for vulnerable individuals, harm subscribers, and hinder deployment. This is clearly neither what Congress intended, nor in line with the Commission’s stated support of the benefits of bulk service arrangements. Consequently, equal access and discrimination must be defined to exclude bulk agreements.

Commissioner Starks has recognized that bulk service is a valuable option that benefits residents. In his separate statement in support of the order adopting the Emergency Broadband Benefit program, Commissioner Starks stated:

The Order we adopt today acknowledges the critical efforts of local governments, community institutions, housing providers, schools, state departments of education, and other organizations that have created their own broadband programs. Many of these organizations connected thousands of households in senior and student residences, mobile home parks, apartment buildings, and federal housing units using bulk or sponsored billing arrangements, in which households receive service through an intermediary. We will need to work with these organizations—frequently serving at the local level—to make sure that we don’t lose eligible families that can and want to move to EBB.4

It would be highly regrettable if the Commission were to undermine the overall goals of the IIJA by treating bulk arrangements, or any other arrangement in which a property is served by a single provider, as a denial of equal access. The key is whether residents have access to service of adequate speed and other characteristics. That is equal access and only one provider is needed for that goal to be met.

1. FURTHER ACTION UNDER THE MTE DOCKET IS NOT REQUIRED, NOR WOULD IT HAVE ANY SIGNIFICANT EFFECT ON THE DISCRIMINATION ISSUES POSED BY THIS PROCEEDING.

The NOI asks whether the Commission should take further action in the MTE Proceeding to address the digital discrimination and equal access issues presented by this docket.42 As discussed in Part II, several commenters suggest that rules adopted in this proceeding should apply to MTEs in some fashion,43 but only WISPA calls for specific further action in the MTE Proceeding.44 With that one exception, the commenters are unanimous: no further action is required in the MTE Proceeding. We agree, and respectfully take this opportunity to urge the Commission to terminate the MTE docket without further action.

Even WISPA does not propose that the Commission adopt extensive new regulations in the MTE Proceeding. WISPA requests action on only two issues: (i) a ban on exclusive rooftop agreements; and (ii) development of model policies and best practices designed to encourage the repeal of certain mandatory access laws.

NMHC and NAA oppose any regulation of rooftop agreements for the reasons stated in the MTE docket.45 There is an existing and thriving market for access to rooftop space, which depends on freely-negotiated terms between property owner and wireless providers. That market currently ensures that wireless services are available to the full range of wireless customers, and there is no evidence that it is not functioning well. Commission intervention could create distortions that hinder further rooftop deployments in unpredictable ways. Furthermore, the existing system is purely a real estate market: although the lessees are communications providers, the Commission has no more authority to regulate in this area than it would in the market for tower ground leases.

With respect to the repeal or modification of state and local mandatory access laws, we agree that they are outmoded and unfair.46 Mandatory access is outmoded as a concept because it is not needed to ensure competition for broadband service inside MTEs. WISPA argues that such laws are unfair because they typically grant rights only to preferred categories of broadband providers. While this is true, mandatory access laws are also unfair – and unconstitutional – because they impose unreasonable obligations on MTE owners and constitute a per se physical taking of the property.47 Further, mandatory access does nothing to address the digital divide or improve broadband service in low-income communities or at smaller, affordable apartment properties. The existing statutes are often used to gain access to the high-end of the rental market, which is in general saturated with a high number of providers, while offering no increase in service or improved access to broadband by consumers in affordable, low-income, and smaller properties. Consequently, mandatory access laws should not be modified to encompass additional classes of providers: they should be repealed entirely, and any Commission model policy should call for their elimination.

Finally, further action in the MTE Proceeding will not prevent or eliminate any kind of discrimination. As we have discussed, the fundamental reasons that lower-income Americans lack access to adequate broadband service are economic in nature, which means that the solution is also an economic one. The various subsidy programs addressed in the IIJA are the proper remedy.

CONCLUSION

For all the foregoing reasons, the Commission should adopt a narrow interpretation of the phrase “digital discrimination of access based on income level,” tailor its rules to be consistent with the overall plan of Congress as laid out in the IIJA, and move to officially close the MTE docket.

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1 In the Matter of Implementing the Infrastructure Investment and Jobs Act: Prevention and Elimination of Digital Discrimination, GN Docket No. 22-69, Notice of Inquiry (rel. Mar. 17, 2022).

2 Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021). Section 60506 of the IIJA has been codified at 47 U.S.C. § 1754 (“Section 60506”).

3 Based in Washington, D.C., the National Multifamily Housing Council is a national nonprofit association that represents the leadership of the apartment industry. Our members engage in all aspects of the apartment industry, including ownership, development, management and finance, who help create thriving communities by providing apartment homes for 40 million Americans, contributing $3.4 trillion annually to the economy. NMHC advocates on behalf of rental housing, conducts apartment-related research, encourages the exchange of strategic business information and promotes the desirability of apartment living. Over one-third of American households rent, and over 20 million U.S. households live in an apartment home (buildings with five or more units).

4 The National Apartment Association serves as the leading voice and preeminent resource through advocacy, education, and collaboration on behalf of the rental housing industry. As a federation of 141 state, local and global affiliates, NAA encompasses over 92,000 members representing more than 11 million apartment homes globally. NAA believes that rental housing is a valuable partner in every community that emphasizes integrity, accountability, collaboration, community responsibility, inclusivity and innovation.

5 In the Matter of Implementing the Infrastructure Investment and Jobs Act: Prevention and Elimination of Digital Discrimination, GN Docket No. 22-69, Notice of Inquiry (rel. Mar. 17, 2022).

6 Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021). Division F of the IIJA has been codified at 47 U.S.C. ch. 16, and Section 60506 has been codified at 47 U.S.C. § 1754.

7 Section 60506(b)(1).

8 Comments of Public Knowledge, GN Docket No. 22-69 (filed May 16, 2022) (“Public Knowledge Comments”), at 5-9, 29-35; Comments of Lawyers’ Committee for Civil Rights, GN Docket No. 22-69 (filed May 16, 2022) ( “LCCR Comments”), at 3-5.

9 IIJA § 60102(f)(4).

10 NMHC and NAA have also submitted comments to the National Telecommunications and Information Administration (the “NTIA”) regarding implementation of the BEAD Program and the challenges of extending service in low-income communities. Joint Comments of National Multifamily Housing Council, National Apartment Association, National Leased Housing Association, National Association of Housing Cooperatives, Institute of Real Estate Management, Council for Affordable Rental Housing and National Affordable Housing Management Association, Docket No. NTIA-2021-0002 (filed February 4, 2022). These comments are attached as Exhibit A.

11 Further Joint Comments of the Real Estate Associations, GN Docket No. 17-142 (filed Oct. 20, 2021) (“MTE 2021 Further Comments”) at 15-16.

12 Further Joint Reply Comments of the Real Estate Associations, GN Docket No. 17-142 (filed Nov. 19, 2021) (“MTE 2021 Further Reply”) at 17.

13 We note that NTIA has designated two levels of service, a middle-class affordability plan, and a low-cost broadband service. Notice of Funding Opportunity, Broadband Equity Access and Deployment Program, National Telecommunications and Information Administration (rel. May 13, 2022) at p. 66. For the Congressional plan laid out in Division F of the IIJA to succeed, these services need to be available to all subscribers, and there must be no conflict between the NTIA’s program and standards and the Commission’s.

14 See, e.g., Comments of the City and County of San Francisco, GN Docket No. 22-69 (filed May 16, 2022) (“San Francisco Comments”), p. 6 “Commission should specifically address multiple tenant environments in this proceeding.”

15 Comments of CEO Action for Racial Equity GN Docket No. 22-69 (filed May 16, 2022) (“CEO Action Comments”) at 7; see also Public Knowledge Comments at 19 (“Landlords, homeowners associations, and other entities that can serve as a barrier to broadband access must also be reachable through Commission rules”); LCCR Comments at 29 (asserting that other entities have the capacity to engage in [digital] discrimination”).

16 Improving Competitive Broadband Access to Multiple Tenant Environments, GN Docket No, 17-142, Report and Order and Declaratory Ruling, 2022 FCC LEXIS 684 (2022) (“MTE Order”), at ¶ 43-45.

17 Comments of National Digital Inclusion Alliance GN Docket No. 22-69 (filed May 16, 2022) (“NDIA Comments”), at 13; see also LCCR Comments at 29 (asserting that apartment owners can restrict service options, delay service, or discriminate in other ways).

18 MTE 2021 Further Comments at 20-33; 75-79; MTE 2021 Further Reply at 15-31.

19 MTE 2021 Further Comments at 39-64; Joint Comments of the Real Estate Associations, GN Docket No. 17-142 (filed Aug. 30, 2019) (“MTE 2019 Comments”) at 14-16, 53-67.

20 MTE 2021 Further Reply at 34-35; MTE 2021 Further Comments at 39-42, 48-54; MTE 2019

Comments at 14-15, 57-63.

21 MTE 2021 Further Comments at 15-18, 42.

22 MTE 2021 Further Reply at 31-34; MTE 2021 Further Comments at 54-59; MTE 2019

Comments at 78-84.

23 IAJA, § 60102(f).

24 See, e.g, LCCR Comments at 6.

25MTE 2021 Further Reply at 15-25.

26 MTE 2021 Further Reply at 24, Exhibit A.

27 MTE 2021 Further Reply at 24-25.

28 MTE 2021 Further Reply at 17-19 (existing wiring in low-income housing and other underserved apartment communities is typically too old or of a type that will not support high speed broadband service).

29 CEO Action Comments at 5; LCCR Comments at 6-9, 13-15; NDIA Comments at 11.

30 Public Knowledge claims that “gatekeeper” entities, including property owners, may have contributed to redlining and should be subject to the new rules because they continue to have the power to “frustrate access.” Public Knowledge Comments at 19. This completely ignores the return-on-investment problem we have already discussed, which is a provider problem, and seems to assume both that every consumer must have access to every provider, and that the Commission has the power to mandate access to every property.

31 NOI at ¶ 25.

32 See, e.g., Public Knowledge Comments at 19 (apartment owners can block or give preference to “specific services”).

33 MTE 2021 Further Reply at 5-6, n.14, 7; MTE 2021 Further Comments at 10-14.

34 MTE Order at ¶ 12.

35 What Residents Want!, survey conducted by RVA LLC, on behalf of the Fiber Broadband Association (Sep. 2021) (“FBA Survey”) at p. 30. The FBA Survey is attached as Exhibit B. These Reply Comments are also being filed in GN Docket No. 17-142 so that the FBA Survey will be in the record of that proceeding.

36 MTE 2021 Further Reply at 8-12.

37 MTE 2021 Further Reply at 10.

38 Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, Second Report and Order, MB Docket No. 07-51, 25 FCC Rcd 2460, 2470 (2010) (“Second Exclusive Contracts Order”) at ¶ 26.

39 Second Exclusive Contracts Order, 25 FCC Rcd at 2466-2467, ¶ 19.

40 Id. at ¶ 20.

41 Emergency Broadband Benefit Program, Report and Order, 2021 FCC LEXIS 4563 (2021), separate statement of Commissioner Starks.

42 NOI at ¶ 32.

43 CEO Action Comments at 7 (definition of “entity” should include “landlords”); LCCR Comments at 29 (property owners can “discriminate against tenants”); NDIA Comments at 13 (“The Commission should enforce its existing rules against such practices in MTE’s and ensure that owners of MTEs in addition to internet service providers are prevented from and penalized for engaging in digitally discriminatory practices”); Public Knowledge Comments at 19 (“Landlords, homeowners associations, and other entities that can serve as a barrier to broadband access must also be reachable through Commission rules”); and San Francisco Comments at 6-7 (San Francisco appreciates the policies adopted in the MTE Order but Commission should also address MTEs in this proceeding).

44 Comments of Wireless Internet Service Providers Association, GN Docket No. 22-69 (filed May 16, 2022) (“WISPA Comments”), at 27-29.

45 MTE 2019 Comments at 69-70; MTE 2019 Reply at 28; MTE 2021 Further Reply at 47-49.

46 MTE 2021 Further Reply at 39-41; MTE 2021 Further Comments at 72-74; MTE 2019 Reply

at 26-27; MTE 2019 Comments at 75-77.

47 MTE 2019 Comments at 75-77; MTE 2019 Reply at 26; MTE 2021 Further Comments at 72-

74; MTE 2021 Further Reply at 39-41.