BROADBAND NATION EXPO, WASHINGTON, DC – The United States could be on the cusp of a “digital Pearl Harbor” which will expose the fragility of the country's communications systems, according to Brookings Institution non-resident senior fellow Blair Levin, who delivered a keynote at a pre-event workshop on Wednesday at Broadband Nation Expo.
Levin’s “digital Pearl Harbor” reference harkens back to comments from former Defense Secretary Leon Panetta, who first coined a variation of the phrase in 2012. At the time, Panetta warned the U.S. could suffer a disastrous digital attack if it didn’t strengthen its cybersecurity posture.
A recently reported hack of telecoms networks by China could fit the bill. But Levin also argued that the same principle could apply to other forms of resilience in the face of natural disasters – for example, Hurricane Milton, which is currently bearing down on Florida, and Hurricane Helene, which left more than a million citizens across seven states without broadband connectivity.
Unfortunately, the destruction caused by these hurricanes might just be the thing that makes network reliability and resiliency a “front burner issue.”
“One of the really horrible stories one kept reading about North Carolina is the failure of the communications network,” Levin said, adding similar stories are likely to emerge from Florida in the wake of Hurricane Milton.
However, he noted there’s still one very important question state and federal government officials will need to answer before anyone springs into action: Who will foot the bill?
“Anytime you build in resiliency, it’s expensive and somebody has to pay for that. And nobody wants to add cost for the consumers,” he said.
Satellite apocalypse?
With so much infrastructure literally washed away in North Carolina, Levin said satellite connectivity could be considered as a backup option for bridging the digital divide going forward. But it remains to be seen whether or not it will become a mandatory requirement for operators or an add-on selling point.
Additionally, satellite broadband could actually end up being a threat to fiber players, but it largely depends on who is elected as U.S. president in November, Levin said. Indeed, rumors have swirled that nominee Donald Trump could initiate a review of the $42 billion Broadband Equity, Access and Deployment (BEAD) program, and ultimately end up diverting billions of dollars to satellite connectivity instead of fiber.
It’s not clear at the moment exactly how much capacity Elon Musk’s Starlink service – the primary provider of consumer satellite broadband – has to offer. But Levin noted that Musk has been lobbying to secure more spectrum, which would ultimately boost capacity if he’s successful.
USF in limbo
A boom in satellite broadband could also impact the already-ailing Universal Service Fund (USF), which is currently fed by contributions from telecom operators. Levin noted that Musk has a “fundamentally different business model than USF was designed to address.”
The uncertain fate of the USF also surfaced in other panels later in the day.
Rachelle Medalia, Manager of Government Relations at broadband-mapping company CostQuest, said during one panel that more ISPs need to start thinking about what would happen to the rural operator business model if USF goes away.
“I was at a state rural broadband association meeting and one of the women on the stage was like ‘hey guys, raise your hand if you’ve thought about what happens to your business if USF funding goes away or is not as reliable and what that looks like,’ and nobody raised their hand,” she said.
And then there’s BEAD
Speaking of funding, BEAD money may be about to pour into broadband builds, but several panelists noted the money provided by the program won’t cover everything.
As GWI Chief Strategy Officer Fletcher Kittredge noted, BEAD comes with a 25% funding match requirement as well as additional stipulations calling for grantees to supply letters of credit, performance bonds and sufficient operating capital.
Kittredge added that revenue bonds are one of the best ways to secure capital at a low cost – especially for municipalities.
“Revenue bonds are one of the cheapest costs of money and they play well with other sources of capital because you don’t pledge the underlying assets you pledge the revenues,” he said. “If you’re a municipality, they’re particularly cheap because if you do them right they can be tax free which cuts the cost usually by about a third.”
Stay tuned to Fierce Network for more coverage live from Broadband Nation Expo in Washington DC this week! Catch all our stories from the conference here.