Monthly Archives: April 2017

Leasing Rural Cellular Spectrum

I don’t write often about potential legislation since there are numerous bills submitted to Congress every year that never make it out of committees. But there is a recently proposed bill that could create both an opportunity to expand rural broadband and also a threat to those already serving rural areas.

The bill is H.R. 1814 the Rural Spectrum Accessibility Act.  It has been introduced as a bipartisan bill by Congressmen Adam Kinzinger (R-IL) and Dave Loebsack (D-IA). It’s a very short bill, with the full text here. The bill is currently being considered by the House Energy and Commerce Committee.

The bill proposes to encourage owners of cellular wireless spectrum to partition or disaggregate their spectrum for use in rural areas and to lease the spectrum to small carriers. In this case a small carrier is defined as any carrier that has fewer than 1,500 employees (which most of the folks reading this blog would consider as a pretty large carrier!).

The bill would instruct the FCC to extend the license for three years for any wireless license holder that agrees to lease spectrum under this new law. That is a major boon to wireless spectrum holders and one would imagine that many of them would look for opportunities to take advantage of this offer.

The leased spectrum could only be used in rural areas, which is defined in the normal definition used for most other regulatory purposes as towns or with populations less than 20,000 and all areas that we think of as rural.

The Opportunity. The opportunity would be a new way for rural carriers to provide broadband. Numerous rural carriers are now offering wireless point-to-multipoint broadband using unlicensed spectrum. But the range of coverage with this technology is relatively short with the strongest signals only carrying for a few miles. Unlicensed spectrum is subject to interference by foliage or any physical barrier like a hill.

But cellular spectrum carries up to three times further when used for point-to-multipoint data. Depending upon the density and the number of customers to serve, this spectrum could be used to deliver fairly robust broadband. I’ve talked to customers on the new point-to-multipoint service offered by AT&T that receive data bursts as fast as 30 Mbps. But in really rural areas with a handful of customers, speeds could be considerably faster than that. I’d note that AT&T apparently only offers the faster speed in short burst, but a rural carrier could establish that as a permanent speed. In addition to greater distance, the cellular spectrum also travels well through foliage, through walls at homes, and even bounces over hills fairly well.

The opportunity is for rural carriers to be able to bring data services to customers at a greater distance from a tower, but probably most importantly would offer a wireless option for carriers operating in heavily wooded areas like Appalachia or the Pacific Northwest. Unlicensed spectrum is a poor alternative in those places.

The Threat. Of course, there also exists a threat to every existing rural carrier in that some other carrier can now compete with them in rural areas. The bill says that the spectrum would be available to any small ‘carrier’ and that generally means anybody that is certified by states – meaning not only ILECs, but competitive CLECs.

If this becomes law I would envision rural CLECs asking to lease spectrum. I also envision carriers like WISPs becoming carriers in order to use this spectrum.

It certainly is an interesting idea. Wireless license holders have always had the ability to lease spectrum in rural areas. I have three clients who have been able to lease cellular spectrum from Sprint, for example. But for the most part it’s always been difficult to get the attention of rural spectrum owners, and I know several clients have been unable to lease spectrum from any of the existing license holders. For the most part the cellular license holders aren’t interested in dealing with small carriers. This legislation would still not guarantee that spectrum would be made available, but it would add an incentive for license holders to make such leases.

How Cities Affect Fiber Construction

Yesterday I wrote about the wish list cities have for the deployment of broadband. That got me to thinking about the ways that cities influence the fiber construction process, so today I am going to write about the flip side of that and talk about all of the ways that cities are involved in the fiber construction process. For anybody who has not been involved in fiber construction this will probably be an eye-opener. But let me preface this whole discussion by saying that the involvement in cities varies widely – some large cities can be relatively easy to work with and some small ones difficult – but generally the larger the city the more of the following processes are involved:

Rights-of-Way. Some cities require that anybody that wants to construct any utility in their city first get permission to use the rights-of-way. This process goes by various names and might be called a franchise agreement (which is different than the agreement to provide cable TV) or a right-of-way agreement. But for cities that require this, nothing else can be done until this is first approved. Some cities extract a ‘pound of flesh’ in the franchising process and may ask for use of fiber pairs or some other concession before granting approval to build fiber.

Permitting. Permitting is the process that can be the most time-consuming for a fiber builder. A permit generally requires getting approval for specific construction done at a certain time. Permit requests may require engineering drawings (something that most builders prefer to do only after the construction). Permitting can become onerous if too many permits must be filed (such as one for each block of construction), or if the permits are for short discrete time windows that can expire when there are construction delays.

Locating. Many cities do the locating of existing utilities. This is the process of marking where existing utilities are supposed to be before a fiber builder can dig up the street.

Traffic Control. Cities often get involved in traffic control. For example, they may require that parked cars are moved before construction. They might provide police or other traffic control when building on busy streets.

Placement of Devices. Many cities want approval of the placement of any hut, cabinet or other device. They may have rules that prohibit certain kinds of devices in certain neighborhoods. Probably one of the best examples of a poor policy was one in a western city that gave homeowners in a neighborhood the right to veto the placement of any cabinets. This meant holding mini-elections in neighborhoods.

Inspection. Cities generally inspect the construction process. They may inspect during the construction process to make sure that specifications from the permits are being met. They also usually inspect after construction to make sure that debris and dirt are cleared and that streets, sidewalks, and yards were returned to a clean condition. Just like any other kind of inspection, the in-process inspections often require the stoppage of work until inspectors do their job.

Paperwork. Many cities require specific paperwork to document the ‘as-built’ network. These are detailed engineering drawings that show what was built and where. Today some cities are starting to ask for electronic records instead, generally in an ESRI format to incorporate into their GIS systems.

Other Issues. Cities might have all sorts of other ordinances and rules that affect the construction process. For example, they might have a dig once, policy (something I discussed last week). They might require a fiber builder to use existing excess conduit. They might have aesthetic rules that require somehow hiding huts and cabinets.

Every one of these steps requires time, interface with city employees and paperwork. If done poorly, these processes can greatly slow the pace of fiber construction. For example, construction might be delayed until a city employee locates existing utilities. Then construction might only be able to proceed so far until an inspector approves. Or a rain delay might mess up a traffic control plan and create significant delays until that is reset. With so many different steps and processes there are ample opportunities for problems to arise. Often cities are not staffed to be able to accommodate a citywide fiber construction program and will need time to get ready.

I’ve found that cities who are active partners in getting a fiber network are usually willing to work to make the processes flow smoothly. But I’ve also seen cases where the city is a major impediment to timely fiber construction and can introduce significant delays and costs in the construction process. One function not listed is the liaison process with a city. We’ve seen it works best to ask the city to have a single point of contact to work through various issues during the construction process.

The Vision of Next Century Cities

Next Century Cities is an organization comprised of 166 mayors of cities that have the mission statement to make sure that all of their citizens have access to fast, affordable and reliable Internet access. The members range from small towns to NFL cities. They recently published their 2017 Policy Agenda that highlights the issues that they think are the biggest impediments to meeting their broadband goals. These goals are worth some thought since they differ from the wish list of most other stakeholders in the industry.

Restore Local Authority. Cities want to have a hand in finding their own broadband solutions and they don’t want to be restricted by state or federal law from doing so. I would note that the vast majority of cities do not want to be a retail ISP, but they still want to have the ability to make the investments needed to meet their broadband goals. They want to be able to form meaningful public-private partnerships. And more than anything else they want the legal authority to find broadband solutions.

Competition in Multi-Dwelling Units (MDUs). Cities with any significant percentage of citizens living in MDUs are concerned that those citizens are often not getting the same quality broadband products or having the same array of choice as single family homes. For example, even where fiber has been built, overbuilders often skip MDUs that present construction or operational issues. Cities are also still concerned about the proliferation of exclusive contracts between MDU owners and ISPs.

Anti-Monopoly and Competition. Mayors are concerned by what they see as shrinking competition. In many cities the cable companies have won the broadband battle against the telco. Where there are no significant third-party fiber overbuilders the mayors see broadband becoming a monopoly product. The cities generally are against the mergers of gigantic ISPs.

High-Quality Low-Income Internet Access. Cities are still looking for ways to solve the digital divide. They understand that there is a significant percentage of the population that doesn’t have broadband because they can’t afford it. They are currently dismayed by what they perceive as the FCC walking away from the Lifeline program that can subsidize broadband service in low income households.

Small Cell/5G/DAS. Cities are grappling with how to best foster and physically accommodate the coming proliferation of wireless transmitters that will be spread through the community to distribute 5G and millimeter wave spectrum. They are anticipating a host of new wireless broadband products, but they have concerns about how to deal with numerous wireless providers wanting to utilize the same key locations.

One Touch Make Ready. Cities are in favor of regulatory changes that make it easier for fiber overbuilders to get onto poles or into existing conduits. The ‘one touch make ready’ concept would greatly speed up the process and reduce the costs of the pole attachment process. It would give a new fiber builder the ability to more easily move wires of existing carriers to speed up the construction process. In cities with numerous existing carriers on pole lines the cost and time involved in gaining approval and of implementing the changes needed to accommodate a new carrier can be numbingly slow.

Infrastructure Investment. Cities want to be included in broadband infrastructure spending that might come from any federal infrastructure plan. They fear that any broadband money will be aimed only at rural areas and the FCC still estimates that there are more than 10 million people in large urban areas that can’t buy bandwidth that meets the FCC’s 25/3 Mbps threshold. And while smaller rural towns and cities might have broadband that meets that test, they often have older networks that are far below the standards of metropolitan areas.

Summary. Of all of the various stakeholder groups involved in broadband infrastructure deployment, cities the most focus on getting quality broadband to everybody. That focus puts them into opposition with incumbent ISPs on some issues. Experience shows us that cities are often more aligned with new overbuilders, at least to the extent that those ISPs don’t want to only cherry-pick the most lucrative customers in the city. Because of various state restrictions, cities vary widely in how much influence they have over broadband. But cities everywhere are the ones that determine some of the key processes in broadband deployment such as permitting and local construction practices. And that means that their goals must be recognized by anybody wanting to deploy new broadband in cities.

A New Cellular Technology

Steve Perlman and his company Artemis are experimenting with a new form of cellular transmission they are calling pCell. Perlman is an inventor who sold his company WebTV to Microsoft for half a billion dollars. Perlman also helped to create Apple QuickTime that brought video to the Macintosh.

His new invention completely changes the way that cell sites function. Today the cellular network is comprised of large cell sites that purposefully don’t overlap too much. These big cell sites then divvy up the available bandwidth to the users inside each cell. As everyone has experienced, data capacity can get overwhelmed in a busy cell site resulting in slow data speeds or an inability to even make a connection.

Perlman’s pCell technology takes a radically different approach. His technology would deploy numerous tiny transmitters using home and business IP connections. The pCell technology then combines connections from multiple tiny transmitters to create a ‘personal cell’ around each cellular phone or device. The personal cell is small, in the range of a centimeter and follows a phone’s location. On the Artemis web site is both a short video showing how this works along with an incredibly detailed whitepaper for those who want to really dig into the technology.

Perlman proposes to increase the bandwidth available to his pCells by connecting the tiny transmitters to existing landline data connections. This would offload pCell traffic from the cellular network, which would eliminate the bandwidth constraints from today’s big cell sites. Perlman has proposed that Google connect pCells to all customers that have Google Fiber in Kansas City as a way to create a network of tiny transmitters. Each Google Fiber customer would be encouraged to place a small transmitter on their roof. At the cellphone end, each pCell customer would have to swap to a new SIM card that recognizes the pCell connections.

In practice, if enough small transmitters are spread around a local area, then every pCell customer could make a connection that would use the maximum bandwidth allowed by the particular spectrum being deployed. Perlman describes this as each person getting all of the bandwidth of one cell site.

And that’s where I think Perlman gets into both market and regulatory trouble. He basically wants to introduce an alternative cellular technology, and cellular companies are unlikely to scrap the big cell networks in favor of this new technology. Unfortunately for Perlman the large cellular carriers license the spectrum they use today for 4G LTE and that gives them exclusive rights to that spectrum. I can’t imagine the cellular companies are going to allow Perlman to swap SIM cards and run an alternate network using their licensed spectrum.

Perlman likens this concept to the idea of using a cellular repeater to get a stronger data signal. There are a lot of such repeaters in place, mostly either to strengthen cellular signals in large buildings or to boost the signals in rural areas for those located near the outer edge of a cell site. But those repeaters are sanctioned by the cellular companies, and therein lies the difference from a regulatory perspective.

Perlman’s pCell technology could be a giant leap forward in cellphone technology. In fact, it looks like a great alternative to 5G. Perlman’s tiny transmitters are smaller and far less less expensive than the small cell sites that the cellular companies are now installing. The pCell technology would disperse hundreds of tiny transmitters in a neighborhood instead of the handful of expensive small cells that are envisioned by the cellular providers.

But if no cellular company is willing to try the technology then this is going to be a hard sale in the US. Customers don’t have any automatic right to intercept and reroute cellular traffic that uses licensed spectrum. And there probably isn’t enough usable public spectrum in urban areas to make this work with unlicensed spectrum. Perlman envisions this as the ‘Uberization’ of cellular and envisions that everybody with a transmitter would receive some small compensation from the cellular traffic carried by their landline connection. This truly sounds wonderful in that it would mean much faster connections and high-quality connections in crowded urban environments. But I’m highly skeptical that such a network would ever be allowed in practice unless sufficient public spectrum is available to make this work.

Cable Company Gigabit

We are starting to get a look at what a gigabit product from the cable companies might look like. Late last year Comcast rolled out a gigabit product in parts of Atlanta, Detroit, Nashville and Chattanooga. They are now rolling implementation across the country and the company says that gigabit speeds will be available in all markets by 2018.

Comcast has elected to make the upgrades by implementing DOCSIS 3.1 technology on their networks. This technology allows the network to bond together numerous empty channels on the cable system to be used for broadband.

In markets where there is competition with Google Fiber or another fiber provider, the Comcast product is being sold at an introductory price of $70 per month with a 3-year contract. Month-to-month pricing without the contract is $140 per month. In reading group discussion websites where Comcast customers chat it sounds like there are already many markets where the $70 contract price is not available. I have read some customers say they have gotten prices at $110 to $120 per month, so perhaps the company is flexible with those willing to wade through the customer service maze and willing to sign a term contract.  

The current Comcast product delivers up to 1 Gbps download and 35 Mbps upload. You can expect Comcast to make future upgrades that will improve the upload speeds – but that upgrade is not included in this first generation of DOCSIS 3.1 technology. For now the upload speeds will be a barrier to any application that needs fast upload speeds.

The new technology also requires new hardware, meaning a new cable modem and a new WiFi router capable of handling the faster data speeds. So expect the price to be bumped higher to rent the hardware.

It’s hard to imagine that many customers are going to pony up more than $150 per month to get a gigabit connection and modem. When Google Fiber first introduced $70 gigabit to Kansas City (and when that was their only product), there were reports that there were neighborhoods where as many as 30% of the households subscribed to the gigabit product. But Google has a true $70 price tag and didn’t layer on fees for a modem or any other fees, like Comcast is surely going to do. It’s hard to imagine many customers agreeing to a 3-year contract for the gigabit product in competitive markets if they can buy it from somebody else without the contract. But perhaps Comcast will offer bundling incentives to pull the real cost under $70.

But we know when there are more choices that most customers will opt for the lowest-price product that they think is adequate for their needs. For example, when Google Fiber came to Atlanta they also had a 100 Mbps product for $50 per month and it’s likely that most customers chose that product rather than paying extra for the gigabit.

The Comcast pricing might reflect that Comcast doesn’t want to implement too many high-bandwidth customers at the same time. While DOCSIS 3.1 increases the size of the data pipes available to customers, it doesn’t make any significant improvements in the last mile network. To the extent that high-bandwidth customers use a lot more data, too many gigabit customers in a cable company node could degrade service for everybody else. But it’s likely that most gigabit customers don’t use a lot more data than 100 Mbps subscribers – they just get things done more quickly. But I am sure that Comcast still has worries about having too many high-bandwidth customers in the network.

Comcast and other cable companies are seeing more competition. For example, CenturyLink is selling $85 gigabit service in many western cities and passed about 1 million homes with fiber last year. Verizon FiOS just increased their data speeds in their fiber markets – not quite to a gigabit yet, but at ranges up to half a gigabit. But in the vast majority of the country the cable companies are not going to have significant competition with any foreseeable future.

FCC Commissioner Michael O’Reilly said a few weeks ago that ultrafast broadband is a marketing gimmick. While he was even referring to 100 Mbps broadband as a gimmick, it’s hard to not agree with him that a residential gigabit bandwidth product priced above $150 per month is more gimmick than anything else. There can’t be that many households in any market willing to pay that much extra just for the prestige of saying they have a gigabit.

But over time the prices will drop and the demand for bandwidth will grow and a decade from now there will be a significant portion of the market clamoring for an affordable gigabit product. Remember that we’ve seen this same thing happen a number of times in the past. I remember the big deal the cable companies made when they first increased speeds to 15 Mbps. The funny thing is that the market has a way of filling faster data pipes, and the day will come sooner than we expect where many households will legitimately want and need gigabit data pipes.     

Happy Birthday CCG Consulting!

Today marks the twentieth anniversary of CCG Consulting. It’s been an interesting ride and I’m glad to still be here. I started the company on this date in 1997, soon to be joined by my partners Bill Tucker and Mike Fox. Those two have gone on to other ventures – Bill to real estate investing and Mike is now teaching college economics and still doing some consulting.

Our firm hit it’s first big challenge a few years after our start when the large CLEC industry imploded in 1999 and 2000. Most of the large CLECs went under at that time and their demise brought down most of the consulting industry with them. But we always had a different philosophy of mostly working with small companies, and that choice made us one of the handful of consultants that made it through those rough years. Over the years we’ve worked with over 800 clients, most of them relatively small.

This past week also marked my 1,000th blog here on PotsandPansbyCCG. It’s hard to believe that I’ve written that much. I continue to add subscribers weekly and will continue to write as long as there is something interesting to say – and it’s hard to picture an industry facing as many concurrent changes as telecommunications right now.

I’d also like to note that I will be speaking twice next Tuesday at the NTCA convention in St. Louis. I will speaking solo on the topic of how new wireless technologies will likely affect rural markets. I’ll also be chairing a panel on the Internet of Things.

So Many OTT Choices

I get asked by clients all of the time about how long they should stay in the video business. Most small providers are losing money on video and most of them are becoming less wedded to sticking with the product. By now just about everybody is familiar with Netflix, Hulu and Amazon Prime as alternatives to traditional cable TV. Additionally, there are now numerous skinny bundles like Playstation Vue, Sling TV, DirecTV Now, and soon those will be joined by YouTube TV and a new unnamed service from Hulu. It’s becoming a lot easier for people with good household bandwidth to cut the cord. But there are a lot more alternatives that don’t get as much press as the above options, and today I’m going to take a look some of the other choices. A cord cutter can put together an amazing array of content with a little work. Many of these networks offer free trials.

FuboTV. This was launched in early 2015 and carried mainly soccer. But the service has expanded to a 70 channel line-up that includes popular networks and is heavy on sports. They offer a wide range of sports programming to include the Fox Sports channels, the Big 10 Network plus a lot of off-beat networks that carry things like rugby, the European golf tour, motorcycle racing and boxing. The service comes with free on-line DVR storage.

Layer3 TV. This company is taking a different approach to everybody else. They are offering large packages at cable company prices for those that like the big packages but don’t like cable company customer service. They are not available everywhere yet. They offer 200 channels of HD programming and a lot of 4K programming, a great settop box, a high-capacity DVR, and integration with most social media and the promise of great customer service.

Sundance Now. This is a service that offers indie films, award winning foreign films and independent documentaries.

Curiosity Stream. They offer a number of non-fiction documentaries, heavy on science, technology, history and nature.

BritBox. This service from BBC Worldwide carries over 2,000 hours of British TV.

Feeln. This is a service that specializes in ‘feel-good’ movies.

Jazz & Blues TV. This features music documentaries and concerts.

Rooster Teeth. This is service that is popular with millennials and that grew out of a popular series Red vs. Blue from YouTube.

FilmStruck. They carry the kind of films that were shown on Turner Classic Movies.

Shudder. The service carries a big library of horror films. Don’t expect the blockbuster classics, but they seem to have everything else.

Fandor. This has been described as the service for film majors. It includes indie films, classics, silent movies, foreign films, documentaries and shorts.

SeeSo. Contains uncensored standup comedy.

Other Pay Streaming Services. There are new ones being added all of the time, but not included above are Acorn TV, ConTV, DramaFever, RabbitTV, Vid Angel, VUDU, Warner Archive and TV Land.

Individual Channels. You can also buy individual channels like CBS ALL-Access, HBO Go, Showtime, Starz, and the CW Network.

Free Programming. There is a mountain of free content available. This includes sites like AOL ON, Break, CollegeHumor, Crackle, CW Seed, Funny or Die, Itenu, Internet Archive, Mohu One, My Damn Channel, PBS, PlutoTV, PopcornFlix, Red Bull TV, ShareDots, ShareTV, Shout!, Simpsons World, SnagFilms, South Park Studios, teamcoco.com, TestTube, The Onion, Tubi TV, TV.com, VEVO, Viewster, Vimeo and Yamgo.

Free News. This includes 60 Minutes All Access, Bloomberg, C-SPAN, CBS News, and NBC News.

I think the bottom line is that your customers can put together some amazing package of programming as an alternative to traditional cable TV. A customer could use rabbit ears for local stations and for $50 – $70 per month could do Netflix and a number of the above OTT products and have a great tailored programming package. And it’s likely that the online choices will be increasing. I have several clients who have dropped cable TV and who are glad about it. I think the above puts the writing on the wall and every small cable company ought to at least add this as a topic of company conversation.

The Challenges of 5G Deployment

The industry is full of hype right now about the impending roll-out of 5G cellular. This is largely driven by the equipment vendors who want to stir up excitement among their stockholders. But not everybody in the industry thinks that there will be a big rush to implement 5G. For example, a group called RAN Research issued a report last year that predicted a slow 5G implementation. They think that 4G will be the dominant wireless technology until at least 2030 and maybe longer.

They cite a number of reasons for this belief. First, 4G isn’t even fully developed yet and the standards and implementation coalition 3GPP plans to continue to develop 4G until at least 2020. There are almost no 4G deployments in the US that fully meet the 4G standards, and RAN Research expects the wireless carriers to continue to make incremental upgrades, as they have always done, to improve cellular along the 4G path.

They also point out that 5G is not intended as a forklift upgrade to 4G, but is instead intended to coexist alongside. This is going to allow a comfortable path for the carriers to implement 5G first in those places that most need it, but not rush to upgrade places that don’t. This doesn’t mean that the cellular carriers won’t be claiming 5G deployments sometime in the next few years, much in the way that they started using the name 4G LTE for minor improvements in 3G wireless. It took almost five years after the first marketing rollout of 4G to get to what is now considered 3.5G. We are just now finally seeing 4G that comes close to meeting the full standard.

But the main hurdle that RAN Research sees with a rapid 5G implementation is the cost. Any wireless technology requires a widespread and rapid deployment in order to achieve economy of scale savings. They predict that the cost of producing 5G-capable handsets is going to be a huge impediment to implementation. Very few people are going to be willing to pay a lot more for a 5G handset unless they can see an immediate benefit. And they think that is going to be the big industry hurdle to overcome.

Implementing 5G is going to require a significant expenditure in small dense cell-sites in order to realize the promised quality improvements. It turns out that implementing small cell sites is a lot costlier and lot more expensive than the cellular companies had hoped. It also turns out that the technology will only bring major advantages to those areas where there is the densest concentration of customers. That means big city business districts, stadiums, convention centers and hotel districts – but not many other places.

That’s the other side of the economy of scale implementation issue. If 5G is only initially implemented in these dense customer sites, then the vast majority of people will see zero benefit from 5G since they don’t go to these densely packed areas very often. And so there are going to be two economy of scale issues to overcome – making enough 5G equipment to keep the vendors solvent while also selling enough more-expensive phones to use the new 5G cell sites. And all of this will happen as 5G is rolled out in drabs and dribbles as happened with 4G.

The vendors are touting that software defined networking will lower the cost to implement 5G upgrades. That is likely to become true with the electronics after they are first implemented. It will be much easier to make the tiny incremental 5G improvements to cell sites after they have first been upgraded to 5G capability. But RAN Research thinks it’s that initial deployment that is going to be the hurdle. The wireless carriers are unlikely to rush to implement 5G in suburban and rural America until they see overwhelming demand for it – enough demand that justifies upgrading cell sites and deploying small cell sites.

There are a few trends that are going to affect the 5G deployment. The first is the IoT. The cellular industry is banking on cellular becoming the default way to communicate with IoT devices. Certainly that will be the way to communicate with things like smart cars that are mobile, but there will be a huge industry struggle to instead use WiFi, including the much-faster indoor millimeter wave radios for IoT. My first guess is that most IoT users are going to prefer to dump IoT traffic into their landline data pipe rather than buy separate cellular data plans. For now, residential IoT is skewing towards the WiFi and towards smart devices like the Amazon Echo which provide a voice interface for using the IoT.

Another trend that could help 5G would be some kind of government intervention to make it cheaper and easier to implement small cell sites. There are rule changes being considered at the FCC and in several state legislatures to find ways to speed up implementation of small wireless transmitters. But we know from experience that there is a long way to go after a regulatory rule change until we see change in the real world. It’s been twenty years now since the Telecommunications Act of 1996 required that pole owners make their poles available to fiber overbuilders – and yet the resistance of pole owners is still one of the biggest hurdles to fiber deployment. Changing the rules always sounds like a great idea, but it’s a lot harder to change the mindset and behavior of the electric companies that own most of the poles – the same poles that are going to be needed for 5G deployment.

I think RAN Research’s argument about achieving 5G economy of scale is convincing. Vendor excitement and hype aside, they estimated that it would cost $1,800 today to build a 5G capable handset, and the only way to get that price down would be to make hundreds of millions of 5G capable handsets. And getting enough 5G cell sites built to drive that demand is going to be a significant hurdle in the US.

Can ‘Dig Once’ Work?

There is a lot of discussion on Capitol Hill of implementing a national ‘dig once’ policy that would require that empty conduit be placed whenever anybody builds new roads or sidewalks or upgrades existing ones.

This is an idea that has been around for a while. President Obama tried to require this as part of an executive order in 2012 for all federal road projects. But this never was implemented when the road projects didn’t have specific funds allocated for the conduit and labor. Rep Anna Eschoo (D-CA) has been proposing legislation for this annually since 2009. And a number of cities around the country have adopted dig once rules of various types.

It seems like this is an idea that has wide bipartisan interest now on Capitol Hill and so there has been a lot of talk about a dig once bill being implemented. Rep Marsha Blackburn (R-TN) put the latest bill from Representative Eschoo onto the agenda for the House Communications and Technology Subcommittee. A number of legislators from both sides of the aisle have announced support for the bill.

But today I want to examine if a dig once policy will be effective in helping to build more broadband. Certainly in the long run it seems like a good idea – if every street in the country already had empty conduit today we’d be a lot further along in getting broadband everywhere. This would be particularly true in rural areas where the cost of burying conduit (or of getting onto poles) is the major hurdle for building new fiber networks. But like anything that involves infrastructure, there are right and wrongs ways of implementing such a policy that could limit the usefulness of conduit it is done poorly.

Speed of Deployment. The number one issue that I foresee is the slow speed of deployment of conduit under this policy. Most streets and roads are engineered to be replaced on a 30 to 50 year cycle depending upon the use of the road and local weather conditions. There are also huge miles of unpaved rural roads that may not be excavated for even longer, if ever. What this means from a practical perspective is that it’s going to be a long time until there is enough conduit in place to make a difference. Since America needs broadband now, I have concerns about a policy that won’t provide any significant amount of conduit for decades to come. I fear that the time to implement this was twenty years ago and that it might be too late for this to have any practical impact on building fiber that is needed now.

Access to Local Connections. A bigger concern is the issue of access to fiber. Consider a conduit that is laid with the dig once rules along a few miles of a busy business district. If that conduit was not constructed with the needed access – handholes and manholes – then the fiber will be largely unusable for delivery of fiber to the businesses along that street. It can be nearly as expensive to come back and add access to a conduit than it is to build new fiber.

Having empty conduit make a lot of sense along stretches of highway that will be used for for middle mile fiber to connect towns. By definition, middle mile fiber is built without many access points since the primary purpose of the fiber is to connect to adjoining communities. I think it was the access issue that stopped the federal highway department from implementing President Obama’s executive order. It’s one thing to put a conduit into an empty ditch, but it’s something very different to spend the engineering dollars needed to decide where access points are needed during road construction and to then pay for the access points.

To some extent this requires highway builders to have a crystal ball – where will the potential customers be along a conduit route fifteen or twenty years in the future? Failure to provide access to the conduit where it will eventually be needed will result in numerous future holes being dug in the street when somebody tries to use the conduit for local access.

There is even a simpler issue that be a problem with empty conduit. Consider a fiber that is built down one side of a busy highway. It can be an expensive effort to later tunnel under the highway to serve people on the opposite side of the highway. This means that using the empty conduit might cost more than alternate construction methods like building on overhead pole lines for distribution. Having empty conduit available does not always mean saving money. Do we mandate putting empty conduit on both sids of a new road?

I’ve already seen the practical consequences of having a patchwork of empty conduit in place. I’ve had clients try to build fiber in towns that had some empty conduit, and in some cases the hassle of trying to integrate existing conduit into an engineering plan was more work and cost than it was worth to these clients.

Uniform Rules of Use. It’s likely that dig once rules will apply to anybody that digs up streets. This might mean that over time there will be numerous different entities placing empty conduit in a City like the street department, the gas company, the water company and anybody else that digs up streets. Who is responsible for keeping track of the specific location of the empty conduit? How do you coordinate somehow connecting conduit that is built at different times, at different depths and on various different sides and parts of streets? Who is responsible for maintaining the conduit – for example, what happens when somebody cuts an empty conduit? I could easily make a list of dozens or practical issues that must be considered to make this work.

Without specific local rules I envision a hodgepodge of conduit built that doesn’t connect into a coherent network. I also have worked with numerous communities that do a poor job of record keeping and I picture losing track of conduit placement and creating an engineering and paper nightmare for a future fiber builder.

Competition. This may sound like an odd concern, but I can also picture dig once rules being a disincentive to build new fiber. Consider a situation where somebody is contemplating building fiber today along a route to get to a cell site of a subdivision. Companies that build fiber understand that the payback takes many years, and that factors into financing the new construction. If  fiber builder knows that a given stretch of road is going to be excavated five years from now they might not want to spend the money today to build fiber there. For example, would it make sense to spend the money to build fiber to a rural cellular site if five years from now the cell site owner will be able to bypass you using ‘dig once’ conduit? It would be ironic if this rule leads to less fiber being built – but I can picture cases where that might be the result of the rule.

Other issues. I can think of other kinds of issues that should be addressed with a dig once policy. For example, what will be the cost to use conduit built in this manner and who decides what fair compensation is? Can a new fiber overbuilder by forced to use empty conduit even if it’s more expensive than some alternative form of construction? How do you deal with the numerous jurisdictional issues since there are widely different ways that state, local and private roads are built and paid for around the country.

Dig once is one of those ideas that instantly sounds like a good idea to anybody that hears it. But like most things that sound simple but which are really complex – if its done right it could do a lot of good, and if done poorly it could waste a lot of money and result in conduit that is never used. I’d hate to see this turn into another federal mandate that ends up building ‘bridges to nowhere’.

The Latest on Federal Broadband Infrastructure

There is a lot of talk in DC of working towards a federal infrastructure funding plan this year. So today I’m going discuss some of the latest news about infrastructure, particularly as it affects broadband funding.

Shovel Ready Projects. A few weeks ago the White House said that they only favored funding ‘shovel-ready’ projects. meaning those projects that have already had enough engineering and financial work done to understand the costs and benefits. The President said that he didn’t want to fund projects that would then take ten years to get started, something that is not that unusual for highway projects.

Size of the Funding. US Transportation Secretary Elaine Chao last week said that the administration’s infrastructure plan would be for $1 trillion spread over ten years. That’s the first time we’ve heard any specific numbers and time frame. There is no telling at this point whether the funding would be spread evenly over the years. Secretary Chao said the details of the plan would be released later this year.

Including Broadband? Secretary Chao said that that “the proposal will cover more than transportation infrastructure, it will include energy, water and potentially broadband and veterans hospitals as well.” This certainly tells us that broadband funding is not a sure thing at this point.

Probably Not Outright Grants. Secretary Chao also reiterated what the administration had said earlier that any funding was going to favor public-private partnerships and was not likely to directly fund projects. This has always been expected, but this doesn’t tell us anything about the nature of the support. There was talk during the transition of the infrastructure plan to heavily favor using tax credits, meaning that it would favor and induce large companies to invest in infrastructure.

I suspect the idea of public private partnerships for roads tells us to expect a lot of new tolls roads. Advisers to Trump have said they would rely on federal tax credits and public-private partnerships rather than federal spending to pay for a new infrastructure program. The concept of public-private partnership is a bit puzzling when it comes to broadband in that there are many states where local governments can’t participate in broadband or are severely restricted from doing so.

FCC’s Position. FCC Chairman Ajit Pai said recently that any broadband funding ought to be handled through the Universal Service Fund mechanisms since it already has the processes in place to handle such funding. The Chairman came out heavily in favor of significant broadband funding for rural areas as well as funding what he calls Gigabit Opportunity Zones that would provide tax incentives for serving low income areas.

Bipartisan Support for Broadband. In early February 48 US Senators from both parties sent a letter to the President supporting the idea that any infrastructure plans should include funding for broadband. My guess is that this is due to the complaints that all politicians are hearing these days from those without adequate broadband.

Democratic Alternative. And of course, since this is Washington DC, there is also an alternate infrastructure plan. Senate Democrats unveiled an alternative $1 trillion plan that would more directly fund infrastructure with mostly outright grants. Their plan includes not only roads and bridges, but also broadband networks, hospitals run by the Department of Veterans Affairs, and schools. In general there is a lot of Democratic support for broadband funding and the plan allocated $20 billion for broadband. I guess the trillion dollar question will be if this is a topic that might find some bilateral agreement.

What are the Odds? When it comes to Washington and politics I don’t have any better crystal ball than anybody else. But it does look like there is bipartisan support for doing something with infrastructure and even more bipartisan support to make sure that broadband is included in any funding package. It’s probably a good time for small service providers to make sure that your DC representatives hear from you. And it’s a good time for those without broadband to yell even louder.