AT&T’s CAF II Plans

att-truckWe’ve known all along that AT&T was likely to use its cellular network to satisfy CAF II requirements to bring broadband to rural America. But we are now starting to see it happening. AT&T presented its plan recently in California and is probably in the process of doing so elsewhere.

In California AT&T proposes to provide fixed cellular broadband. Many of the rural areas affected by CAF II have not yet been upgraded to 4G LTE, and so AT&T’s first step will be to upgrade cell sites to the higher bandwidth capability. Once that is done, AT&T will offer fixed data to homes and businesses in the effective area using the LTE bandwidth. They will provide a receiver about the size of a dinner plate that will receive LTE data in the same way that cell phones do today. This wireless router will be connected to the home’s broadband network, probably a WiFi router provided by customers.

So it looks like AT&T will use the CAF II money to upgrade cell sites to LTE (something they were certainly going to do anyway). They also might build a few new rural cell sites and build some fiber to feed them. Finally, they will buy the customers the LTE receivers. My guess is that they are going to have a very hard time showing that they spent all of the CAF II money and so I expect some overinflated reporting of CAF II costs to the FCC. But these upgrades are far less costly than the rural DSL upgrades being contemplated by CenturyLink and Frontier.

AT&T promises that the bandwidth will meet the 10 Mbps down and 1 Mbps up speeds required by the FCC’s CAF II order. They also promise that there will be no monthly data caps smaller than 150 gigabits, also a threshold set by the CAF II rules. They have not yet specified specific prices, but say that prices will be at ‘market rate’ for broadband.

Even though we’ve seen this coming, this is a giant disappointment. Already today a 10/1 Mbps connection is inadequate for a large percentage of households. Cisco recently published statistics showing that the average home in the US today wants 24 Mbps to meet their needs, just a hair under the FCC definition of broadband. Cisco predicts that by 2020 that the average household demand is going to grow to 54 Mbps. That means the 10/1 speeds are going to feel really slow even by the end of the CAF II period ending in 2021.

These upgrades will improve broadband in the affected areas, but only by a small amount. Some residents in these areas today can get very slow DSL, under 1 Mbps. There are also numerous WISPs operating in the area offering speeds under 5 Mbps. And everybody always has the option of satellite broadband, which is universally disliked due to the latency and data caps.

The really bad news for these areas is that this upgrade is going to be in place for a long time. The FCC is probably not going to think about the CAF II areas again until well past the end of the CAF timeline, perhaps not until 2025. By 2025 the average household in the country is going to probably want a 100 Mbps connection if the current broadband growth trends continue. The folks in these areas will be just as far behind the rest of the country by then as they today. This whole CAF II program seems like a political sham that pretends to be bringing broadband to rural America, but it’s really nothing more than a temporary bandaid that only makes a marginal change in bandwidth delivery.

I also have no doubt that AT&T is going to use the CAF II upgrades as the excuse to walk away from the copper lines in the affected area. The FCC recently created rules for disconnecting copper, and once the CAF II wireless network is in place people are going to be forced onto the wireless network if they still want landline service.

This is all such a shame. We’ve seen in states like Minnesota that even modest government investments in broadband can bring amazing results. There are dozens of rural fiber networks being built in the state due to modest amounts of grant money from the state’s DEED grant program. The FCC could have used this CAF money to seed huge amounts of rural fiber construction – a solution that would have provided broadband for the next century. Instead they are helping AT&T pay for cellular upgrades that they would have done anyway and are abetting them in cutting down the rural copper networks. As I’ve said a number of times, I don’t know that I’ve ever seen a more wasteful use of federal money.

5 thoughts on “AT&T’s CAF II Plans

  1. “I don’t know that I’ve ever seen a more wasteful use of federal money.” Sure we have – High Cost Support Fund, EAGLE-Net, North Florida BB, etc., etc.
    My question: How are they (FCC), if ever, going to audit for performance?

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  2. It is indeed improper to use subsidies intended to improve landline premise service infrastructure to subsidize LTE mobile wireless service. Additionally, in much if not most of the California areas targeted for this build, there are already existing mobile wireless and fixed terrestrial wireless providers.

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  3. Pingback: Does CAF 2 extend or upgrade the network? Are we investing for the future? | Blandin on Broadband

  4. What’s your thoughts about low-earth orbit satellite broadband? I can’t even keep track of the number of companies that say that they are developing it, but I’ve not yet seen any independent commentary on whether it will really work (from a technology and cost perspective). If it DOES work, it seems like a possible solution for these very hard-to-reach underserved rural areas, and might obviate (all of? most of?) the need for these costly, controversial, inadequate, and frequently disappointing public subsidy programs..

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    • Satellites have a few problems. Even low-orbit satellites are going to have enough latency to make it hard to do real-time things like Skype or do VoIP. And I have a hard time thinking they can launch a satellite that can handle a big pile of residential customers, all watching multiple netflix streams in the evening. It’s hard enough to design a landline network to do that.

      It’s my understanding that the satellites that are planned are aimed at bringing relatively low broadband speeds to lots of people in the third world that have no options for broadband today. I’ve never seen anybody that has ever expected them to compete in the US. There is also the question if they will follow the same path as the current satellite providers and have very tiny bandwidth caps. You can get 15 Mbps download speeds in most of the US right now, but the monthly caps are so tiny, and the latency so poor that everybody hates the service. So how they price and sell it is going to matter a lot.

      Unless we want the folks in rural America to fall far behind everybody else then we need to keep working towards good landline solutions – one neighborhood at a time if that’s what it takes.

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