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The BIF Offers a Good First Step for Broadband, but the Devil Will Be in the Details

Capping months of inter-chamber legislative wrangling, President Joe Biden on Nov. 15 signed the $1 trillion Infrastructure Investment and Jobs Act (also known as the bipartisan infrastructure framework, or BIF), which sets aside $65 billion of federal…

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Capping months of inter-chamber legislative wrangling, President Joe Biden on Nov. 15 signed the $1 trillion Infrastructure Investment and Jobs Act (also known as the bipartisan infrastructure framework, or BIF), which sets aside $65 billion of federal funding for broadband projects. While there is much to praise about the package’s focus on broadband deployment and adoption, whether that money will be well-spent  depends substantially on how the law is implemented and whether the National Telecommunications and Information Administration (NTIA) adopts adequate safeguards to avoid waste, fraud, and abuse. 

The primary aim of the bill’s broadband provisions is to connect the truly unconnected—what the bill refers to as the “unserved” (those lacking a connection of at least 25/3 Mbps) and “underserved” (lacking a connection of at least 100/20 Mbps). In seeking to realize this goal, it’s important to bear in mind that dynamic analysis demonstrates that the broadband market is overwhelmingly healthy, even in locales with relatively few market participants. According to the Federal Communications Commission’s (FCC) latest Broadband Progress Report, approximately 5% of U.S. consumers have no options for at least 25/3 Mbps broadband, and slightly more than 8% have no options for at least 100/10 Mbps).  

Reaching the truly unserved portions of the country will require targeting subsidies toward areas that are currently uneconomic to reach. Without properly targeted subsidies, there is a risk of dampening incentives for private investment and slowing broadband buildout. These tradeoffs must be considered. As we wrote previously in our Broadband Principles issue brief:

  • To move forward successfully on broadband infrastructure spending, Congress must take seriously the roles of both the government and the private sector in reaching the unserved.
  • Current U.S. broadband infrastructure is robust, as demonstrated by the way it met the unprecedented surge in demand for bandwidth during the recent COVID-19 pandemic.
  • To the extent it is necessary at all, public investment in broadband infrastructure should focus on providing Internet access to those who don’t have it, rather than subsidizing competition in areas that already do.
  • Highly prescriptive mandates—like requiring a particular technology or requiring symmetrical speeds— will be costly and likely to skew infrastructure spending away from those in unserved areas.
  • There may be very limited cases where municipal broadband is an effective and efficient solution to a complete absence of broadband infrastructure, but policymakers must narrowly tailor any such proposals to avoid displacing private investment or undermining competition.
  • Consumer-directed subsidies should incentivize broadband buildout and, where necessary, guarantee the availability of minimum levels of service reasonably comparable to those in competitive markets.
  • Firms that take government funding should be subject to reasonable obligations. Competitive markets should be subject to lighter-touch obligations.

The Good

The BIF’s broadband provisions ended up in a largely positive place, at least as written. There are two primary ways it seeks to achieve its goals of promoting adoption and deploying broadband to unserved/underserved areas. First, it makes permanent the Emergency Broadband Benefit program that had been created to provide temporary aid to households who struggled to afford Internet service during the COVID-19 pandemic, though it does lower the monthly user subsidy from $50 to $30. The renamed Affordable Connectivity Program can be used to pay for broadband on its own, or as part of a bundle of other services (e.g., a package that includes telephone, texting, and the rental fee on equipment).

Relatedly, the bill also subsidizes the cost of equipment by extending a one-time reimbursement of up to $100 to broadband providers when a consumer takes advantage of the provider’s discounted sale of connected devices, such as laptops, desktops, or tablet computers capable of Wi-Fi and video conferencing. 

The decision to make the emergency broadband benefit a permanent program broadly comports with recommendations we have made to employ user subsidies (such as connectivity vouchers) to encourage broadband adoption.

The second and arguably more important of the bill’s broadband provisions is its creation of the $42 billion Broadband Equity, Access and Deployment (BEAD) Program. Under the direction of the NTIA, BEAD will direct grants to state governments to help the states expand access to and use of high-speed broadband.  

On the bright side, BEAD does appear to be designed to connect the country’s truly unserved regions—which, as noted above, account for about 8% of the nation’s households. The law explicitly requires prioritizing unserved areas before underserved areas. Even where the text references underserved areas as an additional priority, it does so in a way that won’t necessarily distort private investment.  The bill also creates preferences for projects in persistent and high-poverty areas. Thus, the targeted areas are very likely to fall on the “have-not” side of the digital divide.

On its face, the subsidy and grant approach taken in the bill is, all things considered, commendable. As we note in our broadband report, care must be taken to avoid interventions that distort private investment incentives, particularly in a successful industry like broadband. The goal, after all, is more broadband deployment. If policy interventions only replicate private options (usually at higher cost) or, worse, drive private providers from a market, broadband deployment will be slowed or reversed. The approach taken in this bill attempts to line up private incentives with regulatory goals.

As we discuss below, however, the devil is in the details. In particular, BEAD’s structure could theoretically allow enough discretion in execution that a large amount of waste, fraud, and abuse could end up frustrating the program’s goals.

The Bad

While the bill largely keeps the right focus of building out broadband in unserved areas, there are reasons to question some of its preferences and solutions. For instance, the state subgrant process puts for-profit and government-run broadband solutions on an equal playing field for the purposes of receiving funds, even though the two types of entities exist in very different institutional environments with very different incentives. 

There is also a requirement that projects provide broadband of at least 100/20 Mbps speed, even though the bill defines “unserved”as lacking at least 25/3 Mbps. While this is not terribly objectionable, the preference for 100/20 could have downstream effects on the hardest-to-connect areas. It may only be economically feasible to connect some very remote areas with a 25/3 Mbps connection. Requiring higher speeds in such areas may, despite the best intentions, slow deployment and push providers to prioritize areas that are relatively easier to connect.

For comparison, the FCC’s Connect America Fund and Rural Digital Opportunity Fund programs do place greater weight in bidding for providers that can deploy higher-speed connections. But in areas where a lower speed tier is cost-justified, a provider can still bid and win. This sort of approach would have been preferable in the infrastructure bill. 

But the bill’s largest infirmity is not in its terms or aims, but in the potential for mischief in its implementation. In particular, the BEAD grant program lacks the safeguards that have traditionally been applied to this sort of funding at the FCC. 

Typically, an aid program of this sort would be administered by the FCC under rulemaking bound by the Administrative Procedure Act (APA). As cumbersome as that process may sometimes be, APA rulemaking provides a high degree of transparency that results in fairly reliable public accountability. BEAD, by contrast, eschews this process, and instead permits NTIA to work directly with governors and other relevant state officials to dole out the money.  The funds will almost certainly be distributed more quickly, but with significantly less accountability and oversight. 

A large amount of the implementation detail will be driven at the state level. By definition, this will make it more difficult to monitor how well the program’s aims are being met. It also creates a process with far more opportunities for highly interested parties to lobby state officials to direct funding to their individual pet projects. None of this is to say that BEAD funding will necessarily be misdirected, but NTIA will need to be very careful in how it proceeds.

Conclusion: The Opportunity

Although the BIF’s broadband funds are slated to be distributed next year, we may soon be able to see whether there are warning signs that the legitimate goal of broadband deployment is being derailed for political favoritism. BEAD initially grants a flat $100 million to each state; it is only additional monies over that initial amount that need to be sought through the grant program. Thus, it is highly likely that some states will begin to enact legislation and related regulations in the coming year based on that guaranteed money. This early regulatory and legislative activity could provide insight into the pitfalls the full BEAD grantmaking program will face.

The larger point, however, is that the program needs safeguards. Where Congress declined to adopt them, NTIA would do well to implement them. Obviously, this will be something short of full APA rulemaking, but the NTIA will need to make accountability and reliability a top priority to ensure that the digital divide is substantially closed.

The post The BIF Offers a Good First Step for Broadband, but the Devil Will Be in the Details appeared first on Truth on the Market.

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Science

Life Sciences Expansions Take Off as 2021 Wraps Up

Several life sciences companies and life science-focused real estate firms announced expansion plans as 2021 comes to an end.

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Life Sciences Expansions Take Off as 2021 Wraps Up

Several life sciences companies and life science-focused real estate firms have announced expansion plans as 2021 comes to an end. Here’s a look.

Novavax to Expand Maryland Campus

Novavax, on the cusp of getting its COVID-19 vaccine authorized in numerous countries around the world, is expanding its footprint in Gaithersburg, Md., where it is headquartered. The European Medicines Agency (EMA) is expected to authorize the company’s vaccine soon, and so is the U.S. Food and Drug Administration (FDA). Czechia has already ordered 370,000 doses, with deliveries expected at the beginning of 2022. The company also has a deal with Fujifilm Diosynth Biotechnologies to manufacture millions of doses of the Novavax vaccines at its facilities in Billingham, U.K., with a £400 million investment in expansion.

Four Corners Acquired 150,000-Square-Foot Complex in Belmont, Calif.

Four Corners Properties acquired a 150,000-square-foot office building in Belmont, Calif., called the Shoreway Innovation Center. The seller was Westlake Group. Westlake bought it in 2016 for $61 million. The company plans to expand its use for life sciences, noting that 82% of it is currently leased to a mix of tenants with an average of less than three years lease term remaining.

“Shoreway Innovation Center offers the opportunity to bring office and life sciences space to a market where tenant demand is far outpacing available supply,” said Mike Taquino, executive vice president of CBRE’s Northern California Capital Markets team.

Genentech Leases Building Under Construction in South San Francisco

Source: BioSpace

Boston Properties and Alexandria Real Estate Equities are leasing a building under construction in South San Francisco to Genentech. It will be the first phase of a life sciences campus. The building is at 751 Gateway and is 229,000 square feet. The campus will be called Gateway Commons and is a joint venture between the two real estate firms. They expect initial occupancy toward the end of 2024. Genentech has been headquartered in South San Francisco for forty years, with a large corporate headquarters made up of 4.7 million square feet of five neighborhood hubs. The new site is about one mile’s distance from their main campus.

Mispro Biotech to Open New Facility in North Carolina in Early 2022

Mispro Biotech Services plans to open a new facility in Research Triangle Park (RTP), N.C., in early 2022. Mispro is a leading contract vivarium organization (CVO). The new facility, a full-service vivarium research facility, will be central to one of RTP’s biopark campuses.

“Since we first opened our doors here in 2013, we have seen incredible growth in the RTP cluster,” said Philippe Lamarre, chief executive officer of Mispro. “The time was right to expand into a new facility with more space and modern amenities where we can support the influx of biotechs who are seeking in vivo lab space.”

Laura Gunter, president of NCBIO, representing the life sciences industry in North Carolina, noted, “Mispro has become a cornerstone of the Triangle ecosystem as contract research and support companies are finding increased favor. Biotechs of all sizes and therapeutic disciplines are focusing more on their core competencies, which is opening the door to innovation like Mispro’s contract vivarium option. We are pleased to see their decision to expand here and support more North Carolina companies.”

BioSpace source:

https://www.biospace.com/article/life-science-companies-announce-expansion-plans-as-they-wrap-up-2021

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Government

Over 170 companies delisted from major U.S. stock exchanges in 12 months

  Over the years, United States-based exchanges have remained an attractive destination for most companies aiming to go public. With businesses jostling to join the trading platforms, the exchanges have also delisted a significant number of companies….

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Over the years, United States-based exchanges have remained an attractive destination for most companies aiming to go public. With businesses jostling to join the trading platforms, the exchanges have also delisted a significant number of companies.

According to data acquired by Finbold, a total of 179 companies have been delisted from the major United States exchanges between 2020 and 2021. In 2021, the number of companies on Nasdaq and the New York Stock Exchange (NYSE) stands at 6,000, dropping 2.89% from last year’s figure of 6,179. In 2019, the listed companies stood at 5,454.

NYSE recorded the highest delisting with companies on the platform, dropping 15.28% year-over-year from 2,873 to 2,434. Elsewhere, Nasdaq listed companies grew 7.86% from 3,306 to 3,566. Data on the number of listed companies on NASDAQ and NYSE is provided by The World Federation of Exchanges.

The delisting of the companies is potentially guided by basic factors such as violating listing regulations and failing to meet minimum financial standards like the inability to maintain a minimum share price, financial ratios, and sales levels. Additionally, some companies might opt for voluntary delisting motivated by the desire to trade on other exchanges.

Furthermore, the delisting on U.S. major exchanges might be due to the emergence of new alternative markets, especially in Asia. China and Hong Kong markets have become more appealing, with regulators making local listings more attractive. Over the years, exchanges in the region have strived to emerge as key players amid dominance by U.S. equity markets. As per a previous report, the U.S. controls 56% of the global stock market value.

A significant portion of the delisted companies also stems from the regulatory perspective pitting U.S. agencies and their Chinese counterparts. For instance, China Mobile Ltd, China Unicom, and China Telecom Corp announced their delisting from NYSE, citing investment restrictions dating from 2020.

Worth noting is that the delisting of firms was initiated due to strict measures put in place by the Trump administration. The current administration has left the regulations in place while proposing additional regulations. For instance, a recent regulation update by the Securities Exchange Commission requiring US-listed Chinese companies to disclose their ownership structure has led to the exit of cab-hailing company Didi from the NYSE.

Impact of pandemic on the listing of companies

The delisting also comes in the wake of the Covid-19 pandemic that resulted in economic turmoil. With the shutdown of the economy, most companies entered into bankruptcies as the stock market crashed to historical lows.

Lower stock prices translate to less wealth for businesses, pension funds, and individual investors, and listed companies could not get the much-needed funding for their normal operations.

At the same time, the focus on more companies going public over the last year can be highlighted by firms on the Nasdaq exchange. Worth noting is that in 2020, there was tremendous growth in special purpose acquisition companies (SPACs), mainly driven by the impact of the coronavirus pandemic. With the uncertainty of raising money through the traditional means, SPACs found a perfect role to inject more funds into capital-starving companies to go public.

From the data, foreign companies listing in the United States have grown steadily, with the business aiming to leverage the benefits of operating in the country. Notably, listing on U.S. exchanges guarantees companies liquidity and high potential to raise capital. Furthermore, listing on either NYSE or Nasdaq comes with the needed credibility to attract more investors. The companies are generally viewed as a home for established, respected, and successful global companies.

In general, over the past year, factors like the pandemic have altered the face of stock exchanges to some point threatening the continued dominance of major U.S. exchanges. Tensions between the US and China are contributing to the crisis which will eventually impact the number of listed companies.

 

Courtesy of Finbold.

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Taylor Wimpey share price rises despite announcement CEO of 14 years to step down

The Taylor Wimpey share price has gained 1.2% today despite the announcement the housebuilder’s…
The post Taylor Wimpey share price rises despite announcement CEO of 14 years to step down first appeared on Trading and Investment News.

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The Taylor Wimpey share price has gained 1.2% today despite the announcement the housebuilder’s chief executive Pete Redfern is to step down from his role after 14 years. Mr Redfern took over the role in 2007 having previously been CEO of George Wimpey after brokering the merger with Taylor Woodrow that would turn the company into the UK’s third-largest homebuilder. Legend has it the deal was thrashed out in a motorway café on the M40.

Redfern is credited with being the driving force behind the combined company’s growth over the 14 years since and the Taylor Wimpey share price initially dipped 0.3% on the news before recovering to a 1.3% gain. Despite yesterday’s news the feared activist investor Elliott Management has reportedly begun to build a stake in Taylor Wimpey Mr Redfern today emphasised that did not influence a decision he said he had been considering for some time.

taylor wimpey plc

The company told investors the recruitment process that will settle upon his successor is at an “advanced” stage and that Mr Redfern will stay on as chief executive until the new person moves into the role.

Mr Redfern, who is one of the FTSE 100’s longest-serving chief executives, commented:

“It has been a privilege to work at Taylor Wimpey for the last two decades and to lead a business of which I am so proud, working with so many exceptional people both within the business.” 

“The business is in excellent health and is well positioned for strong future growth. Accordingly, I am confident that now is the right time for fresh leadership as Taylor Wimpey starts the next chapter.”

Taylor Wimpey has bounced back well from the pandemic this year and Mr Redfern admitted that steering the company through the financial crisis of 2007/08 was a more difficult time and his most challenging professional experience. The homebuilder was threatened with collapse at one point in 2009 before the chief executive succeeded in closing a rescue rights issue and refinancing debts.

It has since gone from strength to strength and is currently valued at £6.1 billion and expects to generate an operating profit of around £820 million this year thanks to completing 14,000 new residential properties.

While Mr Redfern plans to take some time out to spend with his family, he has five children, and hobbies that include woodwork and mountain biking, the 51-year-old said he does not plan to retire. He said he anticipates eventually returning to work and would not rule out another chief executive position with a public company or returning to the housebuilding sector.

Taylor Wimpy’s chair Irene Dormer praised his role in developing the company to its current position of strength, commenting:

“Pete has made an invaluable contribution to the business during his almost 15 years as CEO.”

“Pete has led a management team which has overseen the transformation of Taylor Wimpey into one of the largest housebuilders in the UK, with an industry leading landbank, a strong financial position and a clear and deliverable strategy for profitable growth.”

The post Taylor Wimpey share price rises despite announcement CEO of 14 years to step down first appeared on Trading and Investment News.

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