Microsoft’s rural internet strategy – good citizenship or plain old power grab?

SUMMARY:

Microsoft has a five-year plan to deliver broadband internet access to rural America by deploying the internet over unused TV spectrum.  Broadcasters are screaming foul.

ozarks broadbandNo good deed goes unpunished, it is often said, and that’s the case in Microsoft’s just announced plan to provide broadband internet coverage to the 23.4 million Americans who live in rural parts of America and where broadband is still unavailable. Reliable, fast internet connectivity has become as essential to modern life as electricity and the automobile.

Areas without it—even in a country as rich as the United States–risk falling into a “fourth world” status, as sociologist Manuel Castells calls it, where economic development remains in permanent limbo. Microsoft wants to help.  Said President Brad Smith:

The time is right for the nation to set a clear and ambitious but achievable goal – to eliminate the rural broadband gap within the next five years by July 4, 2022. We believe the nation can bring broadband coverage to rural America in this timeframe, based on a new strategic approach that combines private sector capital investments focused on expanding broadband coverage through new technologies, coupled with targeted and affordable public-sector support.

All good and positive.  Who could possibly be against providing remote American communities with the vital piece of 21st century technology that allows companies and individuals to compete in the global economy, gives citizens access to the news and information they need to make wiser political decisions, educates, entertains and provides access to millions of goods and services?

Microsoft is getting a lot of blowback from the broadcasting industry.

The company’s plan is based on a technology model that employs mostly, but not entirely, unused spectrum in the UHF television bands called TV White Space.  Using fixed wireless, and satellite coverage as supplements where “white space” is not available, Microsoft says it can reduce the initial capital and operating costs by roughly 80 percent compared with the cost of using fiber cables alone, and by approximately 50 percent compared with the cost of current LTE fixed wireless technology.

In addition, Microsoft already has lots of experience working with this spectrum, having deployed 20 TV white spaces projects in remote areas of 17 countries that have served 185,000 users. Brad Smith was careful to point out that the colossus of Redmond is not getting into other companies’ business.

We will invest in the upfront capital projects needed to expand broadband coverage, seek a revenue share from operators to recoup our investment, and then use these revenue proceeds to invest in additional projects to expand coverage further.

As an added inducement to internet providers and other partners, Microsoft is offering the use of 39 of its white-space patents to partners to implement their own projects.

Connecting people using TV white-space technology would cost between $10 billion and $15 billion, according to a Microsoft-commissioned study by the Boston Consulting Group.  Using 4G wireless networks to achieve the same goal would cost $15 billion to $25 billion, the study estimates. Deployment of fiber-optic cable would cost $45 billion to $65 billion.

Broadcasters Cry Foul

Broadcasters are extremely unhappy with the initiative.

Designating airwaves for free use as Microsoft suggests would “threaten millions of viewers with loss of lifeline broadcast TV programming,” said Dennis Wharton, a spokesman for the National Association of Broadcasters whose members include CBS Corp., NBC owner Comcast Corp., ABC owner Walt Disney Co. and 21st Century Fox Inc.

TV broadcasters have argued for years that devices on the unused airwaves can interfere with the broadcasts run on neighboring channels. The NAB also filed comments with the Federal Communications Commission arguing against Microsoft’s request for a nationwide channel to be set aside for white-spaces use.

Calling the Microsoft plan “yet another heist movie based on a con game that’s too clever by half,” Patrick McFadden, an associate general counsel for the association, wrote:

Microsoft also claims that only the reservation of spectrum can provide the regulatory certainty that Microsoft needs to increase investment in white space technology. But the truth is the Commission just held a lengthy auction of the very spectrum Microsoft claims it so urgently desires.

If Microsoft were interested in increasing investment, it had an unprecedented opportunity to get guaranteed access to 600 MHz spectrum with a nationwide footprint. Instead, Microsoft is trying to convince the Commission to give Microsoft a backdoor frequency allocation with exclusive access to that spectrum for free, and on better terms than winning auction bidders received.

Harvard Law Professor Susan Crawford, a columnist for Backchannel and a professor at Harvard Law School, wrote in Wired that Microsoft’s plans “aren’t really about consumer internet access, don’t actually focus on rural areas, and aren’t targeted at the U.S.–-except for political purposes.”  In her more cynical view, the project is a thinly veiled power grab:

 Microsoft is aiming to be the soup-to-nuts provider of Internet-of-Things devices, software, and consulting services to zillions of local and national governments around the world. Need to use energy more efficiently, manage your traffic lights, target preventative maintenance, and optimize your public transport–but you’re a local government with limited resources and competence? Call Microsoft.

Microsoft doesn’t want to have to rely on existing mobile data carriers to execute those plans, she writes, because the carriers will want a percentage in exchange for shipping data generated by Microsoft devices from Point A to Point B.  These costs, Crawford says, “can become very substantial over zillions of devices in zillions of cities. The carriers have power because, in many places, they are the only ones allowed to use airwave frequencies—spectrum–under licenses from local governments for which they have paid hundreds of millions of dollars.”

The payoff for Microsoft, Crawford believes, is having  unlicensed spectrum available everywhere to eliminate that bottleneck, and cheap chipsets and devices available that can “opportunistically take advantage of that spectrum.”

The Rural Airband Initiative—as the plan is officially called—might provide just those opportunities.

My take

The battle lines are drawn. Massive amounts of money will be spent by Microsoft and the broadcasting companies lobbying Congress over the next few months and–as usual–the deepest pockets are likely to win. Although I may yet be proven wrong.

For rural and very remote areas with low-population density, the obvious favorite is Microsoft since big broadcasters are unlikely ever to spend the enormous amount money it would take to get all Americans connected.  There is simply no market to justify the investment.

I’m rooting for Microsoft because I’m one of those who believes that health care, education and internet access are basic human rights.  And, as Gizmodo headlined its story on this plan: “Microsoft’s Plan to beam internet over tv frequencies is so crazy it might work.”

Image credit - via OzarkGo