Op-Ed: Canadian private equity blocks rural Americans from getting fiber broadband

  • Fierce has published several articles about Mercury Broadband potentially overstating its coverage on the FCC's broadband map

  • Mercury is majority owned by a Canadian private equity firm

  • It’s a shame that a foreign private equity firm may prevent rural Midwesterners from getting fiber broadband

In my humble opinion, private equity has done more harm than good in many industries. Take nursing homes, for example, where compassion seems to have gone out the window in favor of bean-counting. Now, a private equity firm based in Toronto, Canada, may prevent a lot of rural U.S. Midwesterners from getting fiber broadband. But that’s OK with the FCC and NTIA because it’s all perfectly legal.

Mercury Broadband, which is majority owned by the private equity firm Northleaf Capital Partners, has claimed it covers vast swathes of Michigan, Kansas and Indiana with its fixed wireless access (FWA) broadband service. And as a consequence of its claims on the FCC’s broadband map, many areas may not be eligible for Broadband Equity, Access and Deployment (BEAD) funding.

The problem is that Mercury’s claims may be grossly overstated. I’ve written several stories explaining that independent consultants as well as the state broadband officers for Kansas and Michigan think that Mercury has overstated its fixed wireless access coverage claims on the FCC’s broadband map. But due to legal loopholes, the company is getting away with blocking other providers in those areas.

The NTIA has expressed a preference for fiber when it comes to BEAD. But then, counter to that, it allowed wireless internet service providers to claim large circles of coverage via the use of CBRS spectrum.

You would think that the FCC and the NTIA would not want a foreign entity from blocking rural people in the American Midwest from getting high-speed broadband. After all, the U.S. government has famously banned Huawei and ZTE equipment from telecom networks because it thinks the Chinese gear might pose a security threat.

Granted, there’s a big difference between the U.S.’s relationship with China compared to its relationship with Canada.

For its part, Northleaf Capital partners has its roots in Canada and its CEO and other top executives work out of the company's Toronto office. Perhaps the Committee on Foreign Investment in the United States (CFIUS) should review whether the private equity firm is negatively impacting the goal of BEAD.

BEAD was created to bring broadband with speeds of at least 100/20 Mbps to unserved locations in the U.S. But by tapping into legal loopholes, specifically related to the use of CBRS spectrum, Northleaf will protect big areas of the midwest for itself, essentially staking a claim in order to protect its future FWA business.

I’ve reached out to Mercury Broadband and Northleaf Capital for their perspective. But Mercury declined an interview, and Northleaf didn’t respond.

I did speak with Courtney Dozier, NTIA Deputy Director for BEAD, and I asked her whether NTIA would investigate Mercury. She said, “That would be a question for the FCC.”

The FCC has not responded to questions I’ve sent them on this matter.

In the meantime, the BEAD clock is ticking. Of the 56 states and territories that have received BEAD funds, eight have already ended their 30-day state challenge processes. Ten more have opened their state challenge portals and either are, or soon will be, taking challenges on their FCC maps for 30 days.

Once the mapping challenge processes are over, the BEAD-eligible locations will be mostly set — unless the FCC or NTIA were to step in and override areas where gross coverage overstatements will prevent people from getting fiber broadband via BEAD.

In my opinion, it’s a shame that a foreign private equity firm seems to be gaming the maps with the result that many rural Americans won’t get fiber broadband to their homes.

Americans without good broadband access are cut off from most opportunities for affluence in this country.

Do you agree or disagree? Let us know in a letter to the editor.