Signs of Trouble for ISPs?

It’s always difficult for ISPs to fully understand how changes in the economy might impact them. Folks in the industry see the usual statistics on unemployment and inflation, but those don’t really tell much about the future as it relates to broadband adoption. I’m not an economist, and this blog is not a prediction, but in the last few weeks, I’ve heard a number of unrelated economic statistics that I find troublesome when taken as a whole.

  • MVPDs like Hulu, Sling TV, and Fubo are all reporting a significant loss of subscriptions. At the same time, the free ad-supported video services like Pluto TV and Tubi are seeing big customer gains. The press that covers these companies believe that subscription losses are mostly due to households cutting back on spending.
  • A Washington Post article reported that the number of households being cut off for nonpayment of electric and gas utility bills is climbing.
  • The delinquency rate for mortgages has been increasing. In the fourth quarter of 2025, the national rate was 4.26%, up 28 basis points from a year earlier.
  • Auto loan delinquencies are at the highest level in thirty years, and in early 2026, 6.9% of loans were 60 days overdue. More than 3 million cars were repossessed in 2025, a huge increase over prior years.
  • The U.S. consumer sentiment survey taken in April 2026 showed an historically low level of consumer confidence. This survey has been conducted monthly for the last 74 years by the University of Michigan. 22% of the respondents to the April survey reported deteriorating personal finances.
  • It seems like I’m seeing a new announcement almost daily from companies that are laying off thousands of employees or shutting down outlets or factories. Meta, Microsoft, and Oracle all recently announced huge layoffs. While there are always announcements of this sort, even in a robust economy, I can’t remember the last time I saw this volume of announcements.

None of this sounds like good news for ISPs. There has always been a general consensus in the industry that broadband is somewhat recession-proof. But is it really? The question of whether broadband is recession-proof is really asking if people will willingly give up the many things that they do online. Is there a point in people’s lives where broadband becomes a necessity that they will fight to keep when times get tough?

We already have strong evidence that broadband is related to household income. A recent Pew Survey showed that most households have smartphones. It also showed a strong correlation between household income and broadband adoption. The survey showed that 14% of homes with household incomes under $30,000 don’t have home broadband, while only 4% of homes with household incomes over $100,000 don’t have broadband. This leads to the fairly obvious conclusion that households will give up a broadband connection in favor of a smartphone subscription if money gets really tight.

Another thing to consider is that even if broadband is recession-proof, it doesn’t mean that people will continue to pay high prices for broadband. Consider the FWA cellular broadband sales from AT&T, T-Mobile, and Verizon. The three carriers have consistently been adding around one million new subscribers each quarter. The main attraction of FWA is broadband priced between $20 and $30 per month for customers who will bundle broadband with a cellular plan.

Of course, a recession is not inevitable and may not happen this year or next. But the statistics cited at the beginning of this blog tell the story that a lot of homes are in financial distress, even if the overall economy might not be in a recession. It’s possible that the traditional paradigms of what defines a recession no longer apply. Perhaps we’re seeing the economy collapse for the bottom earners in a way we haven’t seen before.

I suspect most of the people who read this blog think that broadband is essential for daily life. But the big question that will have to be answered is how many customers find home broadband to be indispensable. It’s easy for those of us live and breathe broadband to suppose that people think of broadband as a necessity – but is that really true for homes that can’t afford electricity or who can’t make car or mortgage payments?

Life Left in HFC Networks

There was a time when it seemed certain that cable companies would have to bite the bullet and spend the money to upgrade to fiber. While there have been some upgrades by cable companies like Cox and Altice, most cable companies seem to be deciding that there is still good life left in DOCSIS cable networks. As you might expect, CableLabs has been quietly working behind the scenes to improve existing HFC technology.

DOCSIS 3.1 networks have become standard across the industry, and it’s now rare to see older technologies except for some small cable companies. Cable companies have been using DOCSIS 3.1 networks to deliver gigabit or faster download speeds, with the top speed depending on the overall size of the bandwidth being utilized in the internal radio network that controls the signal.

The whole cable industry got a shock during the pandemic when it became obvious to many of the millions of students and employees who began working out of homes that the slow upload speeds on DOCSIS 3.1 were a bottleneck. I think the inadequacies of this technology and slow upload speeds are what gave a big jumpstart to the public perception that fiber is far superior to cable technology.

CableLabs and vendors responded to the upload speed bottleneck by introducing two solutions that can add to the upstream portion of the cable network. Labeled as midsplit or highsplit, both solutions require some upgrades in the outside plant electronics, along with upgraded cable modems in homes. The midsplit upgrade is accomplished by increasing the frequencies used to support upload from 5-42 MHz to 5-85 MHz. The highsplit upgrade allocated even more frequency to uploading, as much as 204 MHz. Both of these upgrades increased upload speeds to 100 Mbps or faster, which eliminated the bottleneck for the average customer. In 2025, CableLabs offered an even better version of the midsplit upgrade by offering a new cable modem that can handle up to four more channels of bandwidth.

CableLabs is also improving DOCSIS 4.0 technology. This is an upgrade that became available for cable companies in early 2024 that can provide symmetrical broadband speeds. While the upgrade can deliver speeds up to 5 Gbps, most cable companies are using it to offer symmetrical 2 Gbps broadband. This upgrade makes it practical for a cable company to say it can match fiber speeds – or at least it did in 2024. There are now fiber ISPs offering residential broadband at speeds up to 10 Gbps.

CableLabs has demonstrated an upgrade to DOCSIS 4.0 that can mimic the faster advertised speeds of fiber providers. CableLabs recently released a new standard it is calling DOCSIS 4.0 Optional Annex. This standard works by increasing the network bandwidth inside the coaxial cable to 3 GHz. Cable networks operate by using radio frequencies inside the coaxial wires. Most DOCSIS 3.1 networks use 1.0 to 1.2 of total frequency. Some companies have upgraded to 1.6 GHz for DOCSIS 4.0. This new optional Annex, double that bandwidth and will supposedly support speeds up to 25 Gbps. CableLabs is also looking at a version of the new technology that would increase total network bandwidth to 6 GHz, which might support broadband speeds up to 50 Gbps.

These new options will give pause to any cable company thinking about upgrading to fiber. These new technologies provide a realistic alternative to fiber with DOCSIS 4.0.

Restart on Digital Discrimination Rules

On May 6, the U.S. Court of Appeals for the Eighth Circuit vacated the FCC’s digital discrimination rules. The discrimination rules were required by the Infrastructure Investment and Jobs Act (IIJA). The FCC took an interesting approach to the issue and defined discrimination in two ways. The FCC prohibited intentional discrimination – meaning that ISPs can’t have policies and practices that are clearly intended to discriminate against any portion of the public. The FCC also prohibited disparate discrimination, which measures discrimination by looking at the results of ISP practices in the market rather than trying to judge the intentions of ISPs.

As was expected for almost all FCC orders these days, ISPs quickly banded together and sued to stop the FCC order. The U.S. Chamber of Commerce brought the first suit in the Fifth Circuit Court of Appeals in January on behalf of big ISPs like AT&T, Charter, Comcast, T-Mobile, and Verizon. Twenty industry groups like NCTA, WISPA, ACA Connects, and US Telecom entered the fray, and the suits were eventually joined into one case in the Eighth Circuit.

The ISP industry threw a number of arguments against the wall, hoping one would stick. The primary complaint was that Congress didn’t intend to impose a disparate discrimination test, and that disparate discrimination is rarely applied anywhere in the regulatory world. The ISPs also argued that the FCC violated the major questions doctrine with its ruling. This concept was based on recent Supreme Court rulings that prohibit federal agencies from adopting regulations that have “vast economic and political significance” without clear authorization from Congress. ISPs argued that the FCC went further in its discrimination rules than was specifically authorized by Congress. Finally, ISPs said the ruling was too widely applied, and should only have been applied to last-mile ISPs, while the FCC rules applied to a wider market, such as MDU owners who provide broadband in their buildings.

The Court made a number of rulings. It said the FCC had overreached its authority since Congress had not explicitly allowed a disparate discrimination test. The Court also ruled that the FCC had exceeded its authority by applying the discrimination rules to entities other than last-mile ISPs.

The Court completely vacated the FCC’s 2023 discrimination order, which means it is the same as if it didn’t exist. The FCC is still obligated by the IIJA to implement discrimination rules, so we can expect the FCC to restart the process. Any new FCC proposed rules will undoubtedly acknowledge the Court rulings.

The natural question to ask is what the court order means in the market. There should be little immediate impact since the FCC’s 2023 discrimination rules never went into effect when they were immediately challenged in court.

There will be repercussions since the Court considerably weakened the 2023 FCC order by only allowing the intentional discrimination test. It seems likely that it will be nearly impossible to prove that an ISP intentionally discriminated against some subset of customers. The proof would have to be some sort of written documentation or public statement that proves the ISP’s intention to discriminate. The Court eliminated the disparate discrimination test, which is basically an “if it quacks like a duck, it is a duck” test. That’s the kind of test that has routinely been applied to housing discrimination complaints, as was ordered by the Fair Housing Act. The revised rules will also let landlords off the hook since they will not be subject to broadband discrimination complaints.

The Explosion of Machine-to-Machine Traffic

Fierce Networks recently reported that on the earnings call for the first quarter of this year, CEO Justin Hotard of Nokia said that machine-to-machine (M2M) Internet traffic will explode, and in a few years will become the largest source of data transmitted across the Internet. He said that about 20% of all network traffic today, about 80 exabytes, comes from machine-to-machine traffic, and that alone is big news. Nokia is betting its future growth will come from meeting this growing demand.

I went back and looked at older blogs, and in 2020, there were estimates that between 3% and 5% of Internet traffic came from machine-to-machine traffic. In 2020, it was estimated that video streaming accounted for 80% of the traffic on the Internet. I remember a lot of discussion around the industry at that time asking why we were spending so much money to expand broadband networks to support entertainment.

How did M2M traffic grow to be such a big part of the Internet today? There are a lot of different sources of M2M traffic, a few that should be familiar to most of us, but some that are not obvious:

  • Software Driven Usage. Compared to 2020, much of the software we use in homes and businesses has moved to the cloud. It’s not M2M traffic when you save a Word file in the cloud, but it is M2M traffic when the software you use communicates with the cloud behind the scenes.
  • Internet of Things. Consumer Affairs recently estimated that the average U.S. home now has 21 connected devices. That’s double the number of average devices from 2020. A large percentage of these devices transmit data to the cloud without the homeowner’s knowledge.
  • Industrial IoT. Businesses are a big source of M2M traffic. This includes video surveillance cameras and burglar alarms. It includes sensors of many kinds. Industrial IoT includes traffic involved with reading RFID tags, barcodes, and robotic scanners to track inventory and materials.
  • Automative. I think most people would be amazed at the large amounts of data transmitted from your vehicle if you have it connected to your home WiFi. This includes monitoring the sensors in the car as well as transmitting performance statistics every time you drive the car.
  • Healthcare Monitoring. There is a growing use of health monitors that track devices like pacemakers and glucose monitors. Patients are routinely being monitored after having medical procedures.

While the traffic from all of these sources is growing, the huge M2M growth predicted by Nokia will largely be driven by the use of AI. AI is currently driving a huge amount of new traffic. A lot of it is coming from AI datacenters that communicate with each other. There is also huge traffic growth coming on the edge from uses like AI-driven factories and other industrial uses that are using software to replace people.

Nokia sees its own growth coming from supplying the gear needed to provide faster transmission speeds on long-haul fiber and keeping up with the growth to power the growing number of long-haul fiber routes being built. Nokia also expects to see growth at the edge as the need to be able to process huge amounts of M2M traffic keeps increasing.

Interestingly, there is a big push among the companies that operate data centers to create a parallel long-haul network that segregates AI traffic from everything else. This is being done to improve latency by eliminating contention with other traffic and by eliminating intermediate traffic switching points. Data centers also want to use fiber routes with the fastest speeds and largest capacity.

Who Needs Moore’s Law?

I ran across a reference to Moore’s Law the other day. This was named after Gordon Moore, an engineer who later became one of the founders of Intel. In 1965, Moore observed that the number of transistors that could be squeezed into a given area of a circuit board was doubling every two years. He predicted this trend would last for perhaps another decade, but the microchip industry kept fulfilling his prediction for over fifty years, and the general consensus is that the Moore’s Law prediction died somewhere between 2016 and 2018. Chip density has continued to improve, but at a slower rate, and there is general consensus that we are getting close to reaching the maximum possible density of transistors, limited by the law of physics.

For a number of years, there were a lot of predictions that the end of Moore’s Law would mean the end of faster computing. For decades, our devices became obsolete every few years as the next generation of faster chips hit the electronics market. But chip makers have discovered a wide variety of ideas and technologies that continue to improve the speed of computing.

Consider some of the techniques that continue to improve computing power:

  • ASICs (Application-Specific Integrated Circuits): These are specialized chips designed for one specific task. For example, there are ASIC chips in data centers that are specifically designed to handle specific tasks related to processing masses of data.
  • GPUs (Graphics Processing Units): These chips take the opposite approach of ASICs and are designed to handle parallel tasks and tackle multiple functions at the same time. First designed for gaming, a GPU breaks a task into many independent threads and executes each thread using a different small core. GPUs keep improving as chip makers and software designers find better ways to coordinate and control the many threads.
  • 3D Stacking. Another new technique is stacking transistors and memory vertically as well as horizontally. This provides a huge boost to computing power. One of the more widely used 3D stacking technique is the use of chiplets, which are small chip components that can be stacked and fused to create a multi-layer chip. Chiplets benefit from Through-Silicon Vias (TSVs) that enables fast low-power communications between layers.
  • Memory Integration. One of the biggest bottlenecks for any chip is the process of moving data into and out of the chip core during the computing process. Memory integration creates temporary memory directly on the chip to store data that is still needed for the specific calculations being handled. Pulling needed information out of the chip’s own memory bypasses the normal data transfer issue.
  • Optical Computing. Optical computing uses light instead of electrons to transfer data around a chip. The primary benefit of light computing is that different colors of light can be used to allow for multiple streams of data transfer at the same time, instead of the single stream that comes from electrons. I recently wrote a blog that talked about a technology that can generate multiple wavelengths of light directly on a chip, which eliminates the need for bulky external lasers.
  • Optimized Algorithms: Some of the biggest improvements in chip speed come from rewriting software to be “hardware-aware”, meaning it perfectly aligns with a chip’s architecture.
  • Reconfigurable Computing. This is an architecture where portions of the chip can be programmed to change function or spatial configuration during the computing process.
  • Quantum Computing. Quantum computing increases computing power using qubits and the principles of superposition and entanglement. Qubits exist in multiple states instead of the two states of 1 and 0 for digital computing, which provides an exponential increase in calculation power.

We’ve just barely begun exploring many of these ideas, and there are likely many breakthroughs still to come. Picture what something like a reconfigurable architecture using multiple colors of chip-generated light waves in a quantum computer might mean.

The Myth of Cellphone-only Users

A recent survey by Pew Research shows that in 2025, 16% of Americans used a smartphone as their only source of broadband. The percentage has grown a bit over previous surveys. I’ve seen articles in the popular press that tout this, and similar surveys, as proof that young people find cellphones to be equivalent to home broadband. These articles imply that, as today’s youth become a bigger segment of the population, broadband will wane in popularity.

Anybody who is touting this idea didn’t take a very hard look at the Pew survey results. A deeper look at the survey results shows that the percentage of people relying on a cellphone as the only source of broadband varies by household income. 34% of people with household income under $30,000 use a cellphone as the only source of broadband, while only 4% of people with a household income over $100,000 choose a cellphone as the only source of broadband. The survey shows that as household income climbs, a greater percentage of households subscribe to broadband. It’s not hard to infer that most of those who live in homes with incomes under $30,000 would choose to buy home broadband if they could afford it.

This is not to say that there are not people who choose to use a cellphone as the only source of broadband. This might include people who are light broadband users and don’t need a lot of data per month. It’s likely that cellphone-only subscribers don’t watch much video or play games using a cellular data plan. But the survey suggests this might be something in the range of 4% of households.

It’s likely that a lot of the people who use a cellphone for broadband have access to WiFi from other broadband connections – at work, school, or other places that offer free WiFi access. We can infer this by comparing the average monthly data usage on cellphones versus home broadband connections.

OpenVault publishes statistics every quarter showing the average broadband usage for homes and small businesses. At the end of 2025, the average U.S. broadband customer used 767.4 gigabytes of data per month, which was 711.5 gigabytes of download data and 55.9 gigabytes of upload data. Average data usage has been climbing steadily every year, and the average household used 69 more gigabytes of data per month at the end of 2025 than they used at the end of 2024.

Contrast this with the average cellphone customer who consumes an average of around 23 gigabytes of cellular data per month from the cellular network. Cellphone plans don’t support the kind of data used by the average household, and most plans, even those touted as “unlimited”, are capped or have restricted speeds after reaching around 50 gigabytes of data usage in a month. The chances are high that the average cellphone user consumes a lot more data than the national average of 23 gigabytes per month, with the extra usage coming from connections to broadband-backed WiFi. Several recent surveys show that the average cell phone user in the country uses their cellphone for over 5 hours per day. They are not spending that much time connected to cellular data.

There are other reasons why a cellphone is not a substitute for a broadband connection. A cellphone data plan is not adequate to support a household with multiple broadband users. A cellphone data plan can’t support somebody working or schooling from home. Try writing a term paper or creating a complex spreadsheet on a cellphone. While a cellphone can be tethered to a computer or other device for these kinds of functions, most cellphone plans cap the amount of tethered usage to 20 gigabytes per month or less. The average home broadband connection uses more data in the average day than what most cellphone users consume from the cellular networks in a month.

The Pew survey demonstrates a strong relationship between income and broadband usage. A lot of people from low-income households choose a smartphone as the only source of broadband because they can’t afford both the cellphone and the home broadband connection. It’s fully understandable why somebody would choose a cellphone if they can only afford one connection. There is a lot of value in the mobility function of a smartphone that can provide voice and broadband from anywhere. But as household incomes rise, the Pew survey shows an increasing number of homes choose to buy both a smartphone and a broadband connection.

Millimeter Wave Broadband

For those who follow everything about broadband speeds, Ookla published a recent article talking about the deployment of millimeter wave spectrum in U.S. cellular networks. You might remember the big burst of marketing in 2000 when Verizon commercials bragged about gigabit speeds on cellphones. These fast speeds were enabled by millimeter wave spectrum that had been deployed at the time in a handful of urban business districts. At the time, Verizon told investors that millimeter wave was going to be the future of cellular, and that cellular broadband was going to be able to compete head-on with cable and fiber networks. They had plans on the drawing board to deploy the technology deep in neighborhoods.

As a reminder, millimeter wave spectrum uses much higher frequencies than are normally used for cellular service. Before the Verizon marketing blitz, the company had purchased a lot of 28 GHz spectrum from Straight Path and XO Communications. That’s a significantly higher frequency than the mid-range spectrum (1 – 4 GHz) used for cellular service. It’s called millimeter wave spectrum because the radio waves for 28 GHz are extremely short. AT&T also dipped its toe into millimeter wave spectrum with the acquisition of 29 GHz spectrum.

The Ookla article points out that many of Verizon’s millimeter wave spectrum deployments are still in use, and the use of millimeter wave spectrum is growing. Ookla cites statistics compiled by its RootMetrics effort, where the company sends people to take random cellular speed tests in markets around the country. When those in-person tests are combined with the normal Ookla speed tests conducted by the public, the Ookla article shows that in the second half of 2025, that 2.2% of Verizon cellular speed tests used millimeter wave technology, while 0.2% of AT&T used the higher spectrum. T-Mobile had virtually no millimeter wave usage.

The report demonstrates the issues with using millimeter wave spectrum. The technology can deliver gigabit speed, but the effective distance from a transmitter is very short. RootMetrics found millimeter wave speed test connections mostly within 500 feet of a transmitter, even though the spectrum can theoretically carry for a half mile. That short distance limits the use of the spectrum to high traffic areas where the extra spectrum can help relieve pressure on the other cellular spectrum bands. In case you’re wondering, most high-end cellphones manufactured since about 2001 include the ability to receive the millimeter wave spectrum. Most of the rest of the world, other than South Korea, never activated millimeter wave spectrum in networks or cellphones.

Interestingly, this report also tells a similar story about C-Band spectrum (3.7 – 4.2 GHz). Most RootMetrics speed tests for connection using C-Band were found within a half mile from a tower, although the spectrum can theoretically carry for two miles. This is good proof that, while cellular speeds are improving, the fastest speeds are found relatively close to towers. The older spectrum bands used for cellular, like 700 MHz and 900 MHz, carry for many miles, but carry far less bandwidth.

The Ookla report goes into detail about the coverage found in a few markets. For example, the  report includes a map of millimeter wave just south of downtown Denver that shows small pockets of good coverage next to areas with poor coverage, again demonstrating the distance limitations on the technology. The report is well worth reading.

We’re Drowning in Data

The analytic company IDC says the U.S. economy will be generating 394 trillion zettabytes of data annually by 2028 (a zettabyte is a trillion gigabytes). The majority of the energy used in data centers today is for storing some of this data in an accessible format. We don’t try to make all data available, and about 20% of the data we generate today is considered to be “hot data” that AI systems might want to draw on quickly. The remaining 80% of data is “cold data”, which we don’t put in data center storage, but which we also don’t discard, since it might still be of use in the future.

Today, hot data is largely stored on hard drives in data centers. This storage for quick retrievable uses a lot of electricity to operate the hard drives, and additional energy is used to cool the data center to offset the heat generated by the electronics. There is a growing trend of storing cold data on magnetic tapes, which also require energy for heating and cooling, since tapes are best stored at temperatures between 61 and 77 degrees. Tapes must also be replaced every 15-20 years by transferring the data – an intensive work effort.

The need to keep so much data at our fingertips to support AI means that we are literally drowning in data, and the problem is growing quickly every year. The solution to this is to find other ways to store massive amounts of data that don’t require a lot of electricity. There are several potential data storage methods on the horizon, and we’re going to need more.

One interesting possibility comes from Peter Kazansky, working at the University of Southampton in the UK. Back in 1999, while working with scientists at Kyoto University, Kazansky encountered a physical phenomenon that might provide the future for long-term data storage. The team at Kyoto found that when writing on glass with ultrafast femtocell lasers (a light pulse every quadrillionth of a second), the light traveling through the glass scattered in a way they could not explain.

It turns out that the researchers had discovered hidden nanostructures within silica glass created by micro-explosions from the lasers. The lasers had created tiny holes 1,000 times smaller than a human hair throughout the glass. The eureka moment came when researchers realized they could take advantage of this phenomenon by using lasers to print complex patterns inside the glass. After many years of research, Kazansky found that he could etch patterns in the glass that could store data in 5-dimensions – the normal x,y, and z coordinates, plus two additional coordinates related to voxels, or the scattering pattern of light.

This allows for storing massive amounts of data on a piece of etched silica glass. A 5-inch glass platter (slightly larger than a music CD) can store up to 360 terabytes of data. Unlike tape or hard disk storage, it looked like this technology creates forever memory that can be stored for the future. While energy is needed to etch the glass and encode the stored data, the process of reading the data uses light and is not energy-intensive. Kazanky founded SPhotonics in 2024 to commercialize the new storage method. Currently, the data can be retrieved at a speed of 30 MB per second, but he sees a path to reach 500 MB per second, which is faster than retrieving data from tapes.

Of course, storing data on etched glass is not without peril. A disc can break, and a fire or other disaster at a storage facility could destroy massive amounts of data, so most data will have to be stored at multiple sites. But at least the raw materials for silica glass are cheap and readily available. Probably the bigger issue facing the world is deciding how and when to ditch data that is no longer useful. Data scientists are already tackling this question today, but they are generally cautious and side with storing rather than destroying data if there is even a slight chance that it might be useful later.

Top-to-Bottom Review of USF

FCC Chairman Brendan Carr has been promising a top-to-bottom review of the Universal Service Fund (USF), and on April 29, the FCC released a Notice of Proposed Rulemaking (NPRM) that looks specifically at the High-Cost fund mechanisms that provide ongoing subsidies to ISPs operating in very rural markets. The High-Cost fund is the USF program that most people in the country (and even the industry) don’t understand.

The High-Cost program was initially created to support rural telephone companies in rural markets with the highest network costs per customer. Over time, the subsidy transitioned to provide support for rural broadband networks. Subsidies are paid today through several mechanisms: Connect America Fund Broadband Loop Support (CAF BLS), High Cost Loop Support (HCLS), and the sunsetting Alternative Connect America Cost Model (A-CAM) I, Revised A-CAM I, and A-CAM II mechanisms. Each of these plans is available to a different set of telcos or carriers, and the rules for participating in these plans are written in legalese that would probably confound most readers.

This new FCC NPRM asks a lot of questions about High-Cost support, with an eye towards possibly radically changing the program. The specific areas of questions asked by the FCC include:

Is Change Needed? The NPRM asks if these programs should be modified. It offers three options for respondents: 1) update the mechanisms to reflect the current rural broadband landscape; 2) create a new fixed-support mechanism to replace A-CAM and the other subsidies, or 3) do nothing and let the current A-CAM plan sunset over time and disappear.

Types of Support Needed. The NPRM asks about the type of support that might be appropriate in different circumstances, such as when a carrier is already providing service in an area, when a competitor appears in a rural market, or when new broadband infrastructure is being brought to a subsidy area by BEAD or other funding programs.

Impact of Satellite. The FCC asks if there should be any recognition or consideration in the subsidy plans to recognize low-orbit satellites.

Deployment Obligations. What should a high-cost subsidy recipient have to do in return for accepting the subsidies in terms of constructing infrastructure or maintaining networks?

Extension of the Current A-CAM? The payments for the current A-CAM programs will sunset between 2026 and 2028. The FCC is asking if all of the various remaining plans should be put on the same timeline.

IP Transition. The FCC wants to know if there is a role for the Universal Service Fund to be used to encourage telcos and carriers to complete the IP transition away from TDM technology.

The FCC is also looking at the other parts of the Universal Service Fund. At the end of April, the FCC voted to implement an online competitive portal where ISPs can bid to provide broadband service for schools and libraries that qualify to participate in the E-Rate program. The stated purpose for going to an online portal is to reduce waste, fraud, and abuse.

In April, the FCC issued an NPRM that asks for feedback about the Lifeline Fund. Among the FCC’s proposals in the NPRM is to end the Lifeline subsidy for telephone-only service. The agency also wants to strengthen the use of the National Verifier database that verifies eligibility. The agency was prompted into action when it was alerted that $5 million in Lifeline funds had been distributed to carriers to support service people who had died.

Finally, in April, the FCC sought comments on the structure and operations of USAC, the non-profit agency that administers the USF.

A Quiet Success

I’m writing this blog in recognition of the 60th anniversary of Merit, a non-profit network operating in Michigan. There aren’t many network entities that can trace their beginning back to 1966 when Michigan State University, University of Michigan, and Wayne State University formed the Michigan Educational Research Information Triad (MERIT) with the goal of networking the universities together. Through a grant from the National Science Foundation that was matched by the Michigan Legislature, Merit successfully networked the mainframe computers at the three universities in 1971.

Merit played a role in the early development of the commercial Internet. In 1987, Merit partnered with IBM, MCI, and the Michigan Strategic Fund to create and manage NSFNet, a venture funded by the National Science Foundation to connect universities to a series of five supercomputers. That network was founded in 1986 and quickly bogged down due to the network speed of 56 kilobits per second. By 1988, Merit had connected 13 nodes on the network to operate at the blazing speed of 1.5 Mbps. From 1987 to 1994, Merit organized a series of Regional-Tech meetings around the country to add 170 other universities and networks to NSFNet. In 1996, Merit joined numerous other universities to create the Internet2 fiber network.

Merit established an early goal to connect all educational entities in Michigan to an interconnected network. This work got a huge boost in 2010 with two federal grants that helped to build 2,287 miles of middle-mile fiber across Michigan. The Merit network today reaches throughout the state, including 70 new miles of fiber funded by a federal grant in 2022 to reach the Upper Peninsula.

This blog refers to Merit as a quiet success, which I think is an apt description. While well-known in the education and government sectors in Michigan, Merit is like other middle-mile networks and is not well-known to the public. This is partially because Merit, like other middle-mile networks, doesn’t seek publicity, but also because it operates quietly behind the scenes. People recognize that their local school, library, or community college has fast gigabit broadband, but don’t know that Merit brought that broadband and manages the underlying network.

Currently, Merit is connected to 3,041 member locations in Michigan, which includes 863 higher ed locations, 633 K-12 locations, 526 government locations, 325 non-profits, 235 healthcare locations, and 212 libraries. Merit is also connected to 247 meetpoints with for-profit ISPs and carriers that use the middle-mile network to spread last-mile broadband throughout the state.

Merit’s reach is huge. The network now brings faster broadband to 1 million K-12 students and 250,000 college and university students. There is still room for growth and expansion. While Merit reaches 100% of public 4-year colleges and universities, it reaches 45% of private colleges and universities, 93% of community colleges, 99% of K-12 schools, and 8% of libraries.

Merit is not just a middle-mile fiber provider. A few years ago, Merit launched the Michigan Moonshot initiative, which aims to benefit communities through data and mapping analysis, infrastructure planning, and digital inclusion research and programs. Merit participates in Eduroam, the worldwide initiative to provide WiFi access by allowing visiting students and faculty to log on with their home-campus credentials from any other participating institution. Merit participates in the Tribal Broadband Bootcamp sponsored by the Sault Ste. Marie Chippewa Tribe, which brings hands-on experience working with fiber technology.

There are other non-profit networks around the country that connect schools, universities, and libraries. But none have been around as long as Merit, and few have have the reach and impact in their state that Merit has achieved in Michigan.