Any time there is talk about government funding for broadband, arguments arise that wireless broadband is just as good as wireline broadband. But it is not the same and is not a substitute. I love wireless broadband and it is a great complement to having a home or business broadband connection, but there are numerous reasons why wireless broadband ought not to be funded by government broadband programs.
The most recent argument for wireless broadband comes the Minnesota House which is currently in session. In last year’s legislative session, Minnesota approved a $20 million grant program to help expand broadband in rural areas of the state. That grant was distributed to a number of broadband projects, all wireline, which required a significant matching fund from an entity building the wireline facilities. The 2014 funding, which mostly went to independent telephone companies, is being used to bring broadband to thousands of rural residents as well as 150 rural businesses and 83 rural schools and libraries.
But the chairman of the House Job Growth and Energy Affordability Committee in Minnesota killed an additional state grant; it’s been left out of this year’s House budget. Rep. Pat Garofalo, R-Farmington, said that wired broadband is too costly in sparsely populated areas and believes that wireless and satellite technologies are more financially effective.
In another case, Verizon recently got the New Jersey State Board of Public Utilities to agree that it could use LTE data plans as substitutes for homes that are losing their copper or DSL services.
Another place where this same argument is being made concerns the upcoming funding from the Connect America Fund, which is part of the federal Universal Service Fund, and that is being directed towards expanding rural broadband. As written several years ago, the Fund is allowed to consider investing in wireless as well as wireline broadband networks.
There have been numerous parties lobbying to try to get these billions get directed towards landline networks and not towards wireless networks. The NTCA, which is now called the Rural Broadband Association, sponsored a report from Vantage Point Solutions that compares wireless and wireline technologies, and which argues that government funding should only be used to fund wireline networks. This whitepaper makes many of the same arguments I have been making for years about the topic, and included a few I had not considered. Here are some of the major arguments made by the whitepaper:
- Even without considering the cost of spectrum, it costs far more to build a wireless network when comparing construction cost per megabit that can be delivered to end users. Modern fiber networks rarely cost more than $10 per Mbps capacity created, and often far less than that, while it costs several hundred dollars per effective megabit to construct a wireless network using any of the common technologies like LTE.
- From a physics perspective, the amount of frequency available through US allocated spectrum is not large enough to deliver large symmetrical bandwidth, which is the goal of the National Broadband Plan. This limitation is a matter of physics and not of technology. That limitation is still going to be there with 5G or later wireless technology unless the FCC massively reworks the way it allows frequency to be used.
- At least in today’s world, the prices charged to customers are drastically different for wireless and wireline data. Already today, 25% of residences are downloading more than 100 gigabits per month in total data. That can be affordable on wireline, but almost every current wireless provider has monthly data caps that range upward from just a few gigabits per month. A customer on a capped data plan who uses 100 gigabits in a month would face an astronomical monthly bill.
- The report also made the economic argument that the shelf-life for wireless equipment and networks is relatively short, in the range of seven years, while fiber networks can have an incredibly long economic life. The report argues that the Connect America Fund should not be investing in technology that will obsolete and potentially unusable just a few years after it’s built. There certainly is no guarantee that the large wireless carriers will make needed future investments once they stop getting a federal subsidy.
- The report also made all of the normal comparisons between the two technologies in terms of operating characteristics such as available bandwidth, latency times, and high reliability, all of which tilt in favor of landline.
I agree with this report wholeheartedly. I know that when I first read the language in the Connect America Fund my initial reaction was that the money would all go to cellular companies who would use the money to build rural cell towers. But fiber technology has gotten far more efficient in just the few years since that order. Also, the wireless businesses of Verizon and AT&T are the two most profitable entities in telecom, by far, and it makes no sense to flow billions of federal dollars to them to build what they will probably build anyway with their own money.
Certainly, expanding rural LTE would get some broadband to more people, but in the long run we would be better off directing that same money to bring a permanent solution to some rural areas rather than a poor solution for all of it.
Fear, Uncertainty and Doubt (FUD): The report is not about technology, its about “subsidy farming” (Blair Levin’s term) by NTCA members. Consider this:
1. If NTCA members are so smart, why do CO tax and rate payers have to hand over $150 million a year to CenturyLink in High Cost Support Mechanism (landline telephone only, forget broadband)? Note: for Custer County, pop. 5,000 (most clustered in town of Westcliffe, 1 square mile) CenturyLink takes $2 million per year in subsidies to provide landline services (for that $ everyone SHOULD have FTTH). We’ve been throwing $billions at NTCA members for decades and the best they can do with HCSM is offer dial-up? Multiply that by thousands of rural counties, school districts, and libraries and you can easily follow the money for this report.
2. Connect America Fund is for rural broadband. The report intentionally avoids addressing fixed wireless broadband using unlicensed spectrum that is quietly (no NTCA lobby here, no subsidy what so ever) meeting the needs of rural America where “harmful interference”, “spectrum crunch” are meaningless as there might be a handful of people per square mile and the cost to tax and rate payers for fiber optic cabling STARTS at $25,000/mile contrast to new gigabit per second radios, unlicensed spectrum, max range 10 miles at $1,000 or $100/mile. Yes, those radios will have a short shelf life as they will be replaced by 10 GBPS radios in a few years. As a tax/rate payer/voter, I really like $100 mile vs. $25,000 + /mile solution. Too bad FCC doesn’t see it this way.
3. Google (market cap equal to all NTCA members combined?) announced its support for the use of unlicensed spectrum in its Project Fi last week. Couple that with cable providers embrace of Wi-Fi (Comcast, Charter, and especially Cablevision’s Freewheel Wi-Fi only mobile phone service, Apple rumored to enter this market soon) and we see the capital markets in full support of unlicensed spectrum in even the most crowded urban markets as alternative to NTCA’s FUD Report.
4. EAGLE-Net, an NTIA boondoggle, took $100.6 million taxpayer dollars supposedly to trench fiber optic cabling to all 178 Colorado school districts. Per FCC records, 5 years later, they have contracts with 25% of those districts. EAGLE-Net’s excuse: fiber optic cabling costs too much…
English 224 Propaganda Analysis (the title of a class I took at Iowa State): Before reading a document, question its sponsorship and motivations. 🙂
What are the advantages and disadvantages of installing the newest Broadband transmittal and swiching systems, but using the existing copper wire. Would this achieve the DSL services we are hoping to achieve in most rural areas… at a fraction of the cost. Modern swithching and transmittal modules; the newest personal modem/routers, and the existing cop[per wire to every household with a phone….
Any problem with this approach?
There are a ton of problems with that idea. First, the wires in rural areas for the most places are forty or more years old and are going bad, pair by pair.
Second, DSL is only good for a few miles with real broadband, and so to extend DSL into rural areas means first extending fiber closer to the farms to support that DSL. This certainly can work, but it’s really expensive when looking at cost per subscriber. This is exactly what Frontier says they are going to be doing.
Finally, the biggest copper owners – AT&T and Verizon both want out of the copper business and they aren’t putting a nickel into those facilities or those technologies. There are a few phone companies like CenturyLink and Frontier who are going to keep the copper going for as long as they can, but it’s an uphill battle to make this old copper do anything acceptable in terms of delivering real rural broadband.
You certainly get no argument from me about handing large amounts of money to CenturyLink for lines that allow only dial-up. But that is from the historic Universal Service and not from the new Connect America Fund. It’s likely that those historic funds are going to be gone within a few years as the FCC keeps directing the funds towards broadband.
I personally have some bias against handing our federal money to build WiFi systems. I lived in a rural area and for ten years I was served by WiFi. It’s a good technology. But within that ten years all of the equipment at both my house and at the base station had to be changed out twice. I’m just not sure of the wisdom of handing out federal subsidies to build broadband networks that might be obsolete before the ink on the paperwork dries. And these WiFi systems need to be fiber fed if they are to have any decent bandwidth, so I’d rather see the federal money go towards expanding fiber which then might be used to feed the rural WISPs.
Finally, EagleNet was funding by stimulus money, not USF money. They are not the only ones who got money from that program who did poorly, and this was due to the speed at which the government rushed to hand out $7 B for broadband. A lot of the companies that got the money were created just to grab grant money and didn’t even exist before then. I can tell you a number of horror stories about the people that were reviewing those grants. Just to test the system I had a friend of mine who was a landscaper and great stoneworker apply to be a grant reviewer and he got accepted. The requirements needed to get USF money are a lot more stringent and, while there will probably still be a failure or two among recipients, the money is mostly going to go to companies with solid financials.
Also, I wrote a blog a few months ago saying that I think it’s a sin for the FCC to hand out Connect America Fund to the incumbents to extend DSL over 40-year old rural copper wires. But the largest incumbents are getting first shop at that money, and that is going to be the next big boondoggle. If the new definition of broadband is 25 Mbps, then federal money should not be used to support technologies that are slower than that.
Finally, almost every report published in this industry has some bias. There are not many people other than us few bloggers who aren’t being paid for their perspective. But that doesn’t mean that a paper with a bias can’t contain good facts, and the facts I mentioned from this report seem to be valid.