Automation and Fiber

We have clearly entered the age of robots, which can be witnessed in new factories where robots excel at repetitive tasks that require precision. I read an interesting blog at Telescent that talks about using robots to perform routine tasks inside large data centers. Modern data centers are mostly rooms full of huge numbers of switches and routers, and those devices require numerous fiber connections.

The blog talks about the solvable challenges of automating the process of performing huge volumes of fiber cross-connects in data centers. Doing cross-connects with robots would allow for fiber connections to be made 24/7 as needed while improving accuracy. Anybody who has ever been in a big data center can appreciate the challenge of negotiating the maze of fibers running between devices. The Telescent blog predicts that we’ll be seeing the accelerated use of robots in data centers over the next few years as robot technology improves.

This raises the interesting question of whether we’ll ever see robots in fiber networks. As an industry, we’ve already done a good job of automating the most repetitive tasks in our telco, cable, and cellular central offices. Most carriers have automated functions like activating new customers, changing products and features, and disconnecting customers. This has been accomplished through software, and the savings for automation software are significant, as described in this article from Cisco.

But is there a future in the telecom industry for physical robot automation? I look around the industry and the most labor-intensive and repetitive processes are done while building new networks. There probably is no more meticulous and repetitive task than splicing fibers during the construction process or when fixing damaged fibers. Splicing fiber is almost the same process used in the past to splice large telephone copper cables. A technician must match the same fiber from both sheathes to create the needed end-to-end connection in the fiber. This isn’t too hard to do when splicing a 12-fiber cable but is challenging when splicing 144 or 288-count fibers in outdoor conditions. This is even more challenging when making emergency repairs on aerial fiber in a rain or snowstorm in the dark.

This is the kind of task that robots could master and perform perfectly. It’s not hard to imagine feeding both ends of fiber into a robotized box and then just waiting for the robot to make all of the needed connections and splices perfectly, regardless of the time of day or weather conditions.

I had a recent blog that talked about the shortage of experienced telecom technicians, and splicers are already one of the hardest technicians for construction companies to find. As we keep expanding fiber construction, we’re liable to find projects that get bogged down due to a lack of splicers.

I have no idea if any robot company has even thought about automating the splicing function. We are in the infancy of introducing robots into the workplace and there are hundreds of other repetitive tasks that are likely to be automated before fiber splicing. There might be other functions in the industry that can also be automated if robots get smart enough. The whole industry would emit a huge sigh of relief if robots could tackle make-ready work on poles.

Quantifying the Benefits of Fiber

Dr. Bento J. Lobo, an economist at the University of Tennessee at Chattanooga undertook a study to quantify the benefits of the municipally-owned fiber network in Chattanooga. Any citywide fiber network brings economic development to a community, but a municipally-owned system brings additional benefits because of the way that the business is more deeply integrated into the community.

The study estimates that the network has generated nearly $2.7 billion in benefits since the network was constructed a decade ago. I’ve always felt that you have to take the claims from economic benefit studies with a grain of salt. Many of the benefits are easily measurable, but other benefits rely on assumptions that are hard to prove or disprove. But the big story is that even a conservative economic analysis (and this analysis might already be conservative) would still demonstrate a huge benefit to the city from fiber.

Chattanooga is a bit of a unique case because it was one of the first municipally owned citywide fiber systems and is also the largest. Being first to market with fiber brought some benefits to Chattanooga that might not come in the same magnitude to other cities building fiber today. For example, EPB – the municipal utility, offered affordable gigabit broadband when the cable company still had speeds of 30 Mbps download.  With that said, here are some of the benefits that the fiber business brought to Chattanooga.

  • One of the most immediate benefits is a sizable saving to consumers. EPB charges $57.99 for a symmetrical 300 Mbps connection and $67.99 for a symmetrical gigabit. EPB charges $9.99 for a whole-house WiFi network. These prices are far lower than Comcast’s basic product in most markets that is $76 for up to 200/25 Mbps connection plus $14.95 for the WiFi modem. EPB also offers low-income broadband for qualifying homes at $26.99 per month. The study quantifies the benefit to consumers of over $144 million.
  • Chattanooga was one of the first places in the nation that touted the ability to bring an affordable gigabit to anybody. This resulted in attracting entrepreneurs to the city that were enticed by cheap and fast broadband. The study estimates that the fiber network has gained or saved over 9,500 jobs. The city has gained a reputation as a good incubator for start-ups and now has an innovative business community – where nothing like it existed before the network was built. Cities building fiber today are not going to duplicate this results, at least not to the extent seen in Chattanooga.
  • The study also credits the fiber network with attracting nearly $1 billion in new investments by businesses in the city – from start-up or existing corporations that moved to the city or expanded existing businesses.
  • There are a few direct benefits that come from operating a new municipal business. For example, the fiber business has paid around $60 million into the city coffers for in-lieu-of-tax payments (payments that mimic taxes). The fiber business has also absorbed $338 million in overhead costs that would have otherwise been charged to the electric utility – a saving that translates into lower electric rates.
  • The study assigns a $750 million benefit to an electric smart grid. Fiber allowed a number of beneficial changes to the operations of the electric business. This includes automated meter reading that significantly lowered labor and vehicle costs. The fiber network has been credited with reducing the duration of electrical outages. The use of automated electrical switching devices has shaved the peak load (the biggest cost of power is to satisfy the peak during heavy usage times). Smart metering has saved the city over $50 million in electricity theft.
  • The study calculated $74 million in benefits to businesses for having faster and lower latency broadband due to automation and increased efficiency. This is the kind of benefit that is clearly real, but difficult to quantify.
  • The study also took a stab at quantifying more esoteric, but real benefits. For example, it’s incredibly hard to quantify the impact of having good broadband on education both before and during the pandemic. The city has done more than most cities in getting broadband to low-income and student households. There are also significant societal benefits from telecommuting, which was booming in Chattanooga even before the pandemic. Chattanooga was also pioneering telemedicine before the pandemic.
  • Finally, the study even assigns a value to the publicity generated by the fiber network. The city went from obscurity to appear on nationwide lists of the best places to live and retire, all credited to the fiber network.

Again, Chattanooga is somewhat unique by being an early adapter to fiber. But the city has also done a lot more than just offering affordable broadband. New businesses didn’t just magically appear in the city and are the result of the hard effort of economic development folks – but such efforts would have gone nowhere without the fiber network. Chattanooga is ahead of most cities in adopting the benefits of smart grid – but again, because it decided to take maximum of advantage of the fiber network.

My guess is that this study is a little conservative. For example, what’s the benefit from higher property tax revenues due to having Chattanooga listed as one of the best places in the country to live? I can’t even begin to imagine quantifying the true long-term benefits that come from using fiber to reduce the number of students that drop out of school or fall through the cracks. What’s the value to society from a student who goes to college, but without home broadband wouldn’t have?

No other city is likely to see some of Chattanooga’s early adopter advantages, but most of the advantages realized by the city can be duplicated. There is also a big lesson to be learned from Chattanooga – building fiber is only part of the story and a community has to take the extra steps to make sure that all of the constituencies of a city see the advantages of fiber. Too often, cities analyze the feasibility of a fiber network by looking only at the financial performance of the fiber business. Chattanooga’s example shows that the biggest advantages to the community don’t appear on the books of the fiber business, but in the pocketbooks of the citizens and businesses in the community.

Disappointment with the New FCC Mapping

The FCC took its latest shot at reforming the notoriously inaccurate broadband maps in January.  I put off writing a blog on this until now because I kept hoping that as I reread the new rules that I’d see something positive. But as I’ve reread the details of the proposed new mapping process, I see little improvement on the way. I’m not going to go through all of the details of the FCC order, just point out the proposed areas of the most impact.

The best change in reporting is to require ISPs to draw polygons around areas where customers either have service or where the ISP is willing to provide service within 10 days of a request. This will clean up two problems. It will draw lines around areas where cable company coverage stops in towns and create a clear border. Today, reporting by Census block often shows cable coverage extending far into the rural areas surrounding towns. Second, the consumer challenge process ought to eventually chop down over on rural WISPs and telcos that claim coverage where they can’t provide service.

The FCC totally blew the most important issue with poor mapping because it will continue to allow ISPs to report the fastest advertised broadband speed. This is the primary problem in rural areas today where the big telcos claim 25/3 Mbps advertised speeds and then deliver a 2 Mbps download speed. By not tackling the misrepresented speeds, the FCC really is wasting everybody’s time because this will produce a rural database that is no better than what we have today. Who cares what Frontier or CenturyLink advertise in rural America? We care about the poor speeds the telcos deliver.

The new rules include a two-tier challenge process, One form of challenge can come from governments or Tribes. The government challenge is complex in that anybody that wants to challenge must draw their own versions of the polygons in an area they are challenging. It will be difficult for governments to gather the huge volume of consumer data needed to make such a challenge. A government might gather a thousand speed tests in a rural county and still be unable to draw an accurate polygon of the coverage area. I foresee governments undertaking these challenges, but the process looks to be heavily slanted in favor of ISPs.

There is also a direct consumer challenge, but I think this public is going to be quickly disappointed by the process. A consumer can challenge that a broadband product is available at their home, and if they win, the carrier simply must redraw the polygon to exclude them – consumer challenges won’t bring anybody better broadband. Consumers are mostly going to want to challenge broadband speeds being delivered, but it’s highly unlikely that consumer challenges will succeed since ISPs are perfectly justified in reporting advertised speeds.

The FCC has a testing regimen that it says can be used to resolve major differences between the ISPs and the public – and they tout currently performing a few thousand speed tests per year. Does the FCC not realize that there are millions of homes that are misclassified in today’s mapping? The FCC would have to oversee millions of tests to respond to the flood of challenges that are going to be coming to the public under the new mapping system – and that’s not going to happen.

The proposed FCC mapping rules are not going to fix the problem that the public most cares about. By accepting advertised speeds today, the FCC has excluded huge areas with dreadfully poor broadband from being eligible for federal broadband grants. As long as the FCC defines grant areas by speed rather than by technology, and as long as the FCC keeps allowing ISPs to report advertised speeds, the FCC databases and maps will continue to ignore the reality of rural broadband and will continue to exclude areas from grant availability.

If the FCC moves forward with the recently adapted mapping rules it is headed for a disaster. The agency is foolish to establish a process to allow the public to challenge ISP reporting if it ends up ignoring the vast majority of those challenges. The agency is in for a public relations disaster of epic proportions. I seriously doubt that the FCC understands how irate the public is over poor treatment by ISPs in rural America – and a poorly managed challenge process is going to redirect that anger towards the FCC.

I can already imagine the response the public is going to get to an FCC challenge. “Dear Consumer: We’re sorry you are only getting 2 Mbps broadband service. Your ISP is properly reporting speeds in your area where it advertises a speed of ‘up to 25/3 Mbps’. We are not planning on funding any broadband grants in your area because we are happy with any ISP that advertises 25/3 Mbps broadband. Further, your ISP tells us that you did not properly perform the speed test, so we must reject your challenge. We hope this email is able to reach you. Have a nice day. Sincerely, the FCC”.

Why Do We Assume Cable Broadband is Always Good?

One of the oddest aspects of FCC monitoring of broadband is that the agency has accepted the premise that any broadband product faster than 25/3 Mbps is adequate broadband. This means that the FCC has completely accepted that broadband provided by cable companies is adequate and is something the agency doesn’t have to be concerned with. The FCC makes the automatic assumption that broadband from cable companies is good broadband and that anybody that has cable broadband is ‘served’ with broadband. The realities of the marketplace tell a different story, and cable broadband is often not adequate for homes and businesses that often have no other broadband option.

This became crystal clear during the pandemic when many homes found out that their cable broadband connection would not support the family for working and schooling from home. Families that were paying more than $70 per month for a broadband connection found that no more than one or two family members could work from home at the same time. This is all due to the decision of most cable companies to not upgrade the upload link when they implemented the upgrade to DOCSIS 3.1. Instead, cable companies stayed with the older DOCSIS 3.0 upload technology, and most homes get between 10 and 20 Mbps upload speeds, with some unlucky homes getting slower speeds. What no cable company ever talks about is the fact that upload bandwidth is jammed into the noisiest and part of the cable TV system that suffers from various kinds of interference that can further degrade performance.

We shouldn’t let the cable companies off the hook by blaming upload problems on the pandemic. Many cable company networks had big problems long before the pandemic. We recently did speed tests in a city where 75% of households in the city were seeing download speeds that were lower than the published target 100 Mbps target speed. 40% of the customers in that city were seeing speeds under 50 Mbps, with 15% seeing speeds under 25 Mbps. These kinds of speed test results demonstrate a network with problems. What are some of the problems that can lead to poor performance in a cable network?

  • Some cable companies still have network nodes that are too large, meaning too many households are sharing a fiber connection back to the node. It’s easy to spot such networks because they still bog down at prime time in the evenings when most households are using bandwidth. To give credit, most cable networks have licked this problem, but not all.
  • A common problem is poorly functioning cascading. Cable companies routinely have to amplify the signal between homes and the network core, and cascading problems occur when multiple amplifiers in a row serving a given neighborhood are not properly in sync, resulting in loss or distortion of data.
  • Everybody in the country talks about the poor condition of the telephone copper networks because of age. But the copper coaxial networks of the cable companies are also old and near the end of economic life. The majority of cable copper was built in the 1970s with some neighborhoods even earlier. Age is a problem with cable networks because a coaxial copper network acts like a giant antenna and picks up interference from numerous sources in the environment. New coaxial networks are ‘tight’, meaning that cable splice points don’t let in much interference. But over time, as cables are cut and repaired and as connections naturally loosen over time, the networks get noisier and noisier, meaning degradation of signal quality.
  • One of the most susceptible parts of the cable network are drops. They get whipped by the wind and degraded by weather.
  • There can also be tons of small network issues that never get fixed. There might be bad power taps or amplifiers that should be replaced. These devices might not have been properly installed and have been causing local problems for a few customers for decades.
  • There are documented examples of cable companies who have upgraded the network but didn’t upgrade modems. The most notorious such case was Charter in upstate New York where the company went for years with outdated modems, even after promising regulators the problem would be fixed. The company nearly lost its statewide franchise due to sticking with outdated customer technology.

A big part of my practice these days is working with cities that are fed up with inferior cable broadband. In some cities the strength of the broadband signal varies widely throughout the day. Some cities complain of nagging small outages that occur daily, with broadband dropping out of service for a few minutes or an hour or two at a time. As evidenced by the speed tests I’ve mentioned, some cities have broadband speeds that are far slower than what the cable company advertises. I’ve done several surveys this year where a third of homes say that cable broadband is not adequate for working or schooling.

Unfortunately, we have an FCC that assumes that everything faster than 25/3 Mbps is adequate broadband and there has been virtually no discussion at the FCC about cable companies that deliver lousy broadband. As household demand continues to grow, there is a growing number of customers who are unhappy with the broadband they are receiving from cable companies. City governments hear numerous complaints from the public about poor broadband but feel powerless in eliciting changes from cable company monopolies that could improve performance but refuse to do so. In most cases, the cable companies know exactly what their problems are in a given market but have elected to not spend the money to fix issues.

The State of the Internet

The Mozilla Internet Health Report is packed with interesting statistics about the state of the Internet. Reports like this one remind us that broadband is a worldwide issue that is much larger than the US broadband industry I write about every day.

The report contains a lot of interesting facts:

  • A little more than half of the planet is still not connected to the Internet. As a planet, we still have a long way to go. While the largest percentage of a region still not online is in Africa, by sheer numbers, most of those still not connected are in Asia.
  • Worldwide, men are 21% more likely to be online than women.
  • Much of the world connects to broadband through cellphones, and the cost of broadband is a huge issue in many parts of the world. In Middle Africa, a gigabit of cellular broadband costs almost 12% of the average monthly income. In Western Africa, it’s over 8% and in Eastern Africa, it’s over 7.4%. Closer to home in Central America it’s 4%.
  • Much of the world can’t afford smartphones. For example, in Sierra Leone it takes six months of an average salary to buy a smartphone. In India it takes 63 days of the average salary.
  • Seven of the top ten largest companies in the world, by market capitalization, are Internet companies – Apple, Microsoft, Amazon, Alphabet (Google), Facebook, Tencent, and Alibaba.
  • Five of those companies – Amazon, Microsoft, Alibaba, Google, and Tencent – control 80% of all of the cloud traffic in the world, meaning that most other web applications run through these companies.
  • Four of the top six social media platforms, in terms of users are owned by Facebook – Facebook, WhatsApp, Facebook Messenger, and Instagram.

The report also contains many stories about some of the negative aspects of the web. A few include:

  • The states of Rakhine and Chin in Myanmar have been blacked out from Internet access for over a year. Governments routinely block Internet access as a way to punish or control people. In addition to these two places, there was at least one other place in the world with blocked access every day in 2020.
  • 2020 might go down as the year when Internet disinformation was weaponized with governments all over the world using social media to spread propaganda.
  • The pandemic magnified the extent of the digital divide across the world. In many parts of the world, the education systems have effectively shut down for rural and poor urban students.
  • Government data has been hacked. A good example is a hack in Chile where over 19 gigabytes of citizen data including passwords and personal identifying data was stolen.
  • There are practically no binding guidelines anywhere in the world that set limits or define ethics for the newly developing artificial intelligence technology.

Of course, there are also positive things happening with the Internet:

  • In the US and Europe, there is a major push to tackle antitrust abuses by the largest web companies.
  • Europe is leading the world, but others are catching up in creating rules to enforce consumer privacy.

It’s easy to forget that the web only became a real thing in the mid-1990s. While there are clear problems associated with the web, it’s also amazing that in a little over 25 years we’ve connected half of the people on the planet.

Why We Need Broadband Regulation

Anybody that reads this blog knows that I am in favor of broadband regulation. I’m sure ISPs read this and wonder why – because who doesn’t like being unregulated? My feelings on this go back to basic economics – monopolies must either be regulated or split up. By definition, monopolies always end up taking advantage of consumers – unregulated monopolies really can’t help this behavior, because employees and management of monopolies will inevitably take advantage of monopoly market power.

Of course, I’m also fine with breaking up monopolies. It’s actually surprising that stockholders of companies like Comcast aren’t clamoring for this. Comcast stock would be worth a lot more if the entertainment, sports, and cable businesses were separated into separate stocks. We know from seeing the split-up of AT&T that the stocks would be worth even more if the Comcast ISP properties were broken up into regions. Unfortunately, cable companies have gained such a dominant monopoly position in most markets that breaking Comcast into a half dozen smaller ISPs would just result in smaller monopolies.

The only other alternative is to regulate monopolies. Such regulation needs to take the form of protecting the public from monopoly abuse. We know that regulation of broadband companies works. Back when telephone companies were regulated, the public had a favorable opinion of Ma Bell because regulation forced decent customer service and prices. AT&T was far from perfect, but everybody who worked at the company was aware that the company had to answer to regulators – and that’s what stopped the kind of poor treatment that cable companies heap upon the public. There are no repercussions for Comcast or other big ISPs to treat customers poorly today.

Recently we got a glimpse of why regulation works. Charter had asked the the Ajit Pai FCC to implement data caps two years early. The company was prohibited from using data caps until 2023 as part of its agreement to buy Time Warner Cable. When the administration flipped and Chairman Ajit Pai left the FCC, Charter quietly withdrew the request because they knew that the new FCC would reject the request. Just the mere hint of a regulator saying no was enough to stop Charter from asking to implement data caps two years early – which means a savings of millions for customers over the next two years. It’s not hard to imagine big ISP being better citizens if FCC regulation had any teeth.

There are stories in the press every week showing why we need regulation. The latest example I read is that Frontier raised its Internet Infrastructure Charge from $3.99 to $6.99 for every broadband customer. This fee is a great example of an ISP hidden fee. There is no basis for this fee – Frontier instead uses this fee to bill more for broadband so that the company can continue to advertise that it has inexpensive broadband. Hidden fees are dishonest because ISPs can advertise low base fees and then hit customers with the hidden fees on the first bill.

I’m hoping the new FCC implements truth in billing rules and does away with hidden fees. Frontier has every right to increase its broadband prices – but it should do honestly and tell customers the real cost of broadband. The big ISPs have hidden fees on all of the triple play services and get away with this because no regulator tells them to knock off the nonsense.

I opened up this blog saying that small ISPs probably wonder why I’m always asking for more regulation. There are two reasons. My primary reason is that the vast majority of the public has no choice but to buy broadband from one of the big ISPs.

But another important reason is that the vast majority of small ISPs have nothing to fear from basic regulation. They already treat their customers well and don’t engage in the shady practices of the big ISPs. Small ISPs will be better off if their big competitors must be truthful. How much easier would it be to compete against Comcast if the company had to honestly tell customers that standalone broadband costs nearly $90?

This is not to say that there are not bad actors among small ISPs. There are, and we’d all be better off if these companies are also brought to task. The basic premise of regulation is simple – regulators are supposed to protect the public against abuses by regulated companies. This is not to say that regulators can’t go too far in being too pro-public – because regulators’ second role is to foster the industry they are regulating. If regulators go too far, you’ll see me writing blogs about the regulators. But as long as regulators tackle the role of watching out for the public, paint me as pro-regulation.

The Need for Training Telecom Technicians

Eleven different industry trade associations have written a joint letter to Congress and the new administration asking that any new infrastructure funding include training for telecom technicians. I can’t recall a time when so many associations aligned like this on any issue.

The letter included support from the Competitive Carriers Association (CCA), the Fiber Broadband Association (FBA), INCOMPAS, NATE: The Communications Infrastructure Contractors Association, NTCA – The Rural Broadband Association, Power & Communication Contractors Association (PCCA), the Telecommunications Industry Association, USTelecom – The Broadband Association, the Wireless Infrastructure Association (WIA), the Wireless Internet Service Providers Association (WISPA), and the CTIA.

The letter says that the industry expects to create 850,000 new technician jobs by 2025 to support wireline and wireless deployments. To put that number into perspective, the industry currently employees 672,000 technicians with an average salary of $77,500. The industries also collectively expect to add another 2.1 million jobs to support the new industries like 5G and new fiber ISPs.

The associations are asking for the federal government to expand existing apprenticeship programs and create new ones that combine class learning along with field experience. There are some such programs in the country, but nearly enough to handle the upcoming needs of the telecom industry. To letter asks that in order to promote diversity that training programs be established at Historically Black Colleges and Universities and Tribal Colleges and Universities along with community colleges, public universities, and other institutions.

The industries suggest that training institutions form public/private partnerships with the industry to help develop the programs in a timely manner and to make sure that training is covering state-of-the-art technologies and techniques.

We are not currently prepared to double the number of fiber technicians – but we’re going to have to find a way to do it. There are some formal training programs for fiber technicians, mostly being done by trade schools or technical colleges that sponsor apprenticeship like the CFOT or CPCT certification process sponsored by the Fiber Optic Association. But the majority of fiber technicians today are trained on the job with new employees starting as hands-on journeymen.

I’ve written about this issue before. We’re facing a shortage of technicians for several reasons. First, the large telcos have been downsizing technician workforces for the last two decades, meaning they did not train a lot of new technicians. These big ISPs have historically been the primary drivers for training new technicians. Unfortunately, this also means that a lot of the technician workforce are baby boomers who are now retiring, causing additional shortages.

We must find a way to make this happen or the wireless and broadband industries will be forced to cut back on expansion plans. We’ve been building fiber and new small cell sites at a furious pace for the last few years and are likely to continue to do so as long as we have the technicians needed to construct the new networks and to maintain them after they are built. Fiber and wireless technicians are the kinds of solid middle-class jobs our economy needs and hopefully, we can kick training programs into high gear in a hurry.

Another Idea for Federal Broadband Funding

It’s obvious that we need better broadband in the country, and much of that broadband is in rural places that are going to require financial assistance to build. The new White House and Congress are finally talking about the need for an infrastructure package that will create jobs and that will build rural broadband along with fixing roads and bridges. However, deficit hawks worry that too much spending will increase the deficit to an unsupportable level.

There is an idea from our past that can build better broadband while not increasing the permanent deficit. As a nation, we solved a similar problem when we figured out a way to bring electricity to everybody in the country. The challenge of bringing broadband to everybody is amazingly similar to what happened with electrification.

Franklin D. Roosevelt campaigned on the issue during his 1932 presidential campaign, and after he won, he worked with Congress to create the Rural Electrification Administration (REA). Rather than the government directly funding electric infrastructure, the REA offered 30-year loans to electric cooperatives to electrify rural America. Citizens from all over the country came together and formed cooperatives, borrowed the federal money, and electric grids sprang to life all over rural America.

There is no reason this same idea can’t work for rural broadband. The challenge is nearly identical. The best long-term infrastructure solution for broadband is fiber. Fiber provides enough broadband capacity to meet the needs of homes today and will meet broadband needs decades from now. No other technology can scale to the needed bandwidth demands over the next century.

The basic funding method used for electrification still makes sense, as does the idea of doing this through cooperatives. Cooperatives owned by the customers are willing to take on the long-term debt needed to make this work. Cooperatives are largely non-profits since any profits generated by the business must be rolled back into the business. It makes far less sense for the government to subsidize the giant for-profits ISPs like AT&T, CenturyLink, or Frontier – those big companies care about the bottom line and are not willing to operate a business with slim margins. We’ve seen these companies in the past improve rural profitability by cutting back on staff and maintenance.  That’s not the kind of stewards we want operating rural broadband networks for the next hundred years.

There are a few differences between now and the 1930s that we have to recognize. There has been a lot of years of inflation since 1932 and it doesn’t look feasible in many cases to build broadband networks and repay the money with 30-year loans, even at low interest rates. A new program would need to consider longer loans like 40 years, and maybe even 50 years. There is no reason a coop wouldn’t accept longer loans if it means getting fiber broadband. It’s also likely that in the highest-cost places that there would have to be some grant funding to accompany the loans.

These loans could go almost immediately to existing telephone and electric cooperatives. In areas where there are no cooperatives, or where the existing cooperatives don’t want to tackle broadband, the government could help with the formation of new cooperatives, just like they did in the 1930s. I’ve been working in rural areas all over the country and I can’t think of a community that would not be excited about this idea.

One of the best features of this plan is that most of the money spent by the government is in the form of loans that will get repaid. That means that the expansion of broadband doesn’t have to be a big burden on the taxpayer.

There are some obstacles to overcome to make this work – but mostly it just requires the will of the White House and Congress to solve the rural digital divide. There will be lobbyists from all of the big ISPs moaning about how this unfairly competes with the private sector. That argument falls apart quickly when you visit a rural county and can’t find even one rural home that has broadband speeds of 10/1 Mbps. The big companies have completely failed rural America and their lobbyists must be ignored.

There will also be a lot of silly discussions about which rural places should be eligible for this money – and those discussions will be couched in terms of talking about the number of homes that have access to broadband speeds of 25/3 Mbps. These speed discussions are a red herring because urban residents have access to far faster broadband. In the 2020 broadband report to Congress, the FCC said that 82% of homes already have access to broadband speeds of 250/25 Mbps. Hopefully, policymakers will agree that rural broadband ought to be as good as urban broadband and that we can stop using speed thresholds – everybody in America deserve good broadband.

Funding cooperatives should not be the only government solution because the solution won’t work everywhere for everybody that needs better broadband. But I can’t think of any reason why the this shouldn’t be part of the solution.

Trying to Understand the RDOF Grant Awards

I live in North Carolina, and in the last few days, I heard a few things about the RDOF grant awards that I found to be disturbing. First, a state politician is claiming that the RDOF awards are going to take care of the rural broadband problems in the state, so there is no longer any reason for the state to be looking at broadband solutions. I also heard from a few county broadband groups who are wondering if they still have a role to play in seeking better broadband.

I had not previously analyzed the North Carolina RDOF winners, so this set me off to gather the facts. The following is what I found about the tentative RDOF awards in North Carolina. I say tentative because the FCC still has to approve each recipient and award and the FCC just recently received the long forms that start the review process.

  • North Carolina has tentatively been awarded $166.6 million in grants, to be paid to grant winners over 10 years or $16.66 million per year.
  • The grants cover 155,137 households in North Carolina or roughly 350,000 people. In a state with 10.5 million people, the grants propose to bring improved broadband to 3.4% of the people in the state.
  • The RDOF grant works out to $1,074 per household.

Here are the RDOF winners in North Carolina:

  • Charter – $142.1 million
  • Starlink – $17.4 million
  • Windstream – $4.2 million
  • Wilkes Membership Cooperative – $1.3 million
  • Co-op Connections Consortium – $721,000
  • CenturyLink – $530,000
  • Mediacom – $304,000
  • Connecting Rural America – $33,600
  • Carolina West Wireless – $460.

Charter is the big winner, taking over 85% of the RDOF award in the state. Starlink got over 10% of the award in the state, and everybody else combined got a little less than 5%.

Recall that RDOF was only awarded in places where the FCC broadband maps say that broadband speeds are less than 25/3 Mbps. In the latest FCC broadband report to Congress, just released in January of this year, the FCC claimed that 456,000 people in rural North Carolina don’t have broadband – and the RDOF only covers one-third of those folks. But we also know that the FCC mapping data is full of problems. The State of Georgia undertook an analysis of the FCC mapping and determined that the number of homes in Georgia without broadband is twice what is claimed by the FCC. It’s hard to know the actual number of people in North Carolina without 25/3 Mbps broadband, but it has to be a lot more than 456,000.

The most troublesome aspect of the RDOF grants in the state is the average award of $1,074 per household. This might be adequate for Starlink if they provide a free receiver for customers (not known if they will do that), but this doesn’t come close to building the technology promised by Charter. Charter has promised to build gigabit infrastructure and that means building either a traditional HFC (hybrid fiber/coaxial) network or fiber. The RDOF grant is bringing broadband to some of the most rural places in the state. As a point of comparison, I’ve analyzed several rural counties in Minnesota recently that have perhaps the lowest rural construction costs imaginable – and the all-in costs in those counties were at least $6,600 per passing. It’s not hard to guess that the costs in rugged Appalachia could easily be as much as $15,000 per passing. Charter has pledged an additional $3.8 billion in equity to match the RDOF funds, meaning $5 billion in total budget. Nationwide, Charter won the grants to cover 1.06 million homes, meaning they have set aside funds of about $4,727 per passing. I have trouble envisioning that Charter has enough money to bring gigabit broadband with that budget.

There are other troubling aspects of the RDOF grants. There have been technical concerns raised recently about the ability of Starlink to meet both the build-out deadlines and the speeds promised for RDOF. In North Carolina, a lot of the Starlink funding is going to Appalachia, and there is a concern about the ability of homes in the mountains and woods to get the needed view of the horizon to see satellites.

Perhaps the biggest downside to the RDOF grants is that grant award winners have six years to build the promised solutions. That’s a long time to wait for households that are hurting without broadband today. And it’s a really long time to wait if some of the RDOF homes never get the promised broadband.

Unfortunately, the facts in a lot of states probably look similar to North Carolina. This has prompted widespread warnings from members of Congress and from various telecom associations that the RDOF awards are troubling. But even if the award winners can somehow reach every pledged home for the grant money as awarded, we know that the RDOF grants will not alone solve the rural broadband problems in North Carolina. Local broadband committees need to keep pressing ahead to find broadband solutions. Politicians can’t use the partial solution brought by RDOF as cover for not supporting broadband solutions.

More Delays on CAF II

In the continuing saga of the FCC’s CAF II program, Frontier and CenturyLink recently notified the FCC that the companies did not fully meet upgrade obligations. The CAF II program flowed $11.2 billion to the big telcos over six years between 2015 and 2020. Frontier, CenturyLink, and AT&T were the three biggest recipients of the funding – but some also went to other big telcos like Fairpoint, Consolidated, Verizon, and Windstream. For agreeing to accept the funding, the telcos agreed to increase rural broadband speeds to 10/1 Mbps – which even in 2015 was slower than the FCC’s definition of broadband at 25/3 Mbps.

CenturyLink was the largest recipient of CAF II funding, accepting over $3 billion to improve broadband speeds to more than 1.1 million rural homes. CenturyLink just told the FCC that it met or exceeded its requirements in 10 states but failed to meet obligations in 23 states. Frontier accepted $1.7 billion to upgrade broadband to over 659,000 homes. Frontier just told the FCC that it met its obligations in only 8 states but didn’t meet the obligations in 17 other states. As a reminder, the companies had six years to make the needed upgrades.

I think that the real story on the street is far different than what these companies are telling the FCC. We have been working with rural counties all over the country, and part of that effort includes conducting speed tests. We have never yet found a rural DSL customer of CenturyLink, Frontier, or Windstream that had a speed of 10/1 Mbps or faster. The more typical download speed of rural DSL is just a few Mbps, with some homes seeing speeds under 1 Mbps. This is not to say there these telcos didn’t upgrade any DSL households – but we’ve never seen one. Our findings are bolstered by customers that have taken speed tests collected by M-Lab which show that a rural DSL customer achieving 10/1 Mbps is a rarity.

I can’t just point out Frontier and CenturyLink. We’ve worked in counties where the telco is Windstream and couldn’t find 10/1 Mbps rural DSL. AT&T claims that it has met its rural obligations through the use of rural cellular broadband. Customers have been telling us that it’s exceedingly hard to buy this product, and in many cases, it doesn’t meet the FCC’s speed requirements. That’s not hard to believe since many of the CAF II areas also have poor cellular coverage.

To add insult to injury, the FCC is flowing a seventh year of CAF II funding this year, with no specific obligations for the telcos to use the money to improve anybody’s broadband. That’s an additional $1.5 billion to the telcos in 2021, including $505 million to CenturyLink and $283 million to Frontier. I’m sure that rural residents are thrilled to hear that AT&T is getting an additional $49.8 million this year in Mississippi, CenturyLink is getting an additional $74.9 million in Missouri, and Frontier is getting an additional $38.1 million in West Virginia.

As if this story could get any worse, the FCC’s plans to police this program is largely a joke. The FCC will be conducting speed tests on CAF II areas to see if customers are achieving the desired speeds. Unbelievably, the telcos get a say on who gets tested. – and will choose the handful of customers that might meet the CAF II requirements. I call the tests a joke because a telco is going to pass the CAF II speed requirements if 70% of customers achieve 70% of the required speeds. That test means that the FCC was never serious about the telcos needing to upgrade to 10/1 Mbps. Even if the tests were given to all CAF II homes, a telco would still pass the test if it had made no upgrades to 30% of the CAF II households and then achieved download speeds of 7 Mbps for the rest. I’m positive that the telcos can’t come close to meeting even this watered-down test.

Rather than flowing extra money to the carriers in 2021, the FCC should be asking for a return of much of the original funding. The FCC doesn’t need to go through the fiction of conducting speed tests on a tiny fraction of the CAF II household. I’m positive that rural county administrators would love to tell their broadband story to the FCC. If the agency asked local officials to do speed tests in the CAF II areas, the agency could quickly get the real picture of the CAF II upgrades, instead of the fictions being told by the telcos.

The FCC is contemplating something along these lines. The agency is finally pursuing revamping the FCC broadband mapping, and one aspect of that revised program is to ask for citizen feedback on actual broadband speeds. If the FCC does that properly, then it will quickly see that much of what the telcos have reported as CAF II upgrades has been a sham. Until then, the FCC really needs to put 2021 CAF II payments on hold. And the agency needs to give serious thought to reclaiming the original funding that padded telco bottom lines rather than being used to upgrade rural broadband.