Monthly Archives: December 2017

Verizon Announces Residential 5G Roll-out

Verizon recently announced that it will be rolling out residential 5G wireless in as many as five cities in 2018, with Sacramento being the first market. Matt Ellis, Verizon’s CFO says that the company is planning on targeting 30 million homes with the new technology. The company launched fixed wireless trials in eleven cities this year. The trials delivered broadband wirelessly to antennas mounted in windows. Ellis says that the trials using millimeter wave spectrum went better than expected. He says the technology can achieve gigabit speeds over distances as great as 2,000 feet. He also says the company has had some success in delivering broadband without a true line-of-sight.

The most visible analyst covering this market is Craig Moffett of Moffett-Nathanson. He calls Verizon’s announcement ‘rather squishy’ and notes that there are no discussions about broadband speeds, products to be offered or pricing. Verizon has said that they would not deliver traditional video over these connections, but would use over-the-top video. There have been no additional product descriptions beyond that.

This announcement raises a lot of other questions. First is the technology used. As I look around at the various wireless vendors I don’t see any equipment on the market that comes close to doing what Verizon claims. Most of the vendors are talking about having beta gear in perhaps 2019, and even then, vendors are not promising affordable delivery to single family homes. For Verizon to deliver what it’s announced obviously means that they have developed equipment themselves, or quietly partnered on a proprietary basis with one of the major vendors. But there is no other ISP talking about this kind of deployment next year and so the question is if Verizon really has that big of a lead over the rest of the industry.

The other big question is delivery distance. The quoted 2,000 feet distance is hard to buy with this spectrum and that is likely the distance that has been achieved in a test in perfect conditions. What everybody wants to understand is the realistic distance to be used in deployments in normal residential neighborhoods with the trees and many other impediments.

Perhaps the most perplexing question is how much this is going to cost and how Verizon is going to pay for it. The company recently told investors that it does not see capital expenditures increasing in the next few years and may even see a slight decline. That does not jive with what sounds like a major and costly customer expansion.

Verizon said they chose Sacramento because the City has shown a willingness to make light and utility poles available for the technology. But how many other cities are going to be this willing (assuming that Sacramento really will allow this)? It’s going to require a lot of pole attachments to cover 30 million homes.

But even in Sacramento one has to wonder where Verizon is going to get the fiber needed to support this kind of network? It seems unlikely that the three incumbent providers – Comcast, Frontier and Consolidated Communications – are going to supply fiber to assist Verizon to compete with them. Since Sacramento is not in the Verizon service footprint the company would have to go through the time-consuming process needed to build fiber on their own – a process that the whole industry is claiming is causing major delays in fiber deployment. One only has to look at the issues encountered recently by Google Fiber to see how badly incumbent providers can muck up the pole attachment process.

One possibility comes to mind, and perhaps Verizon is only going to deploy the technology in the neighborhoods where it already has fiber-fed cellular towers. That would be a cherry-picking strategy that is similar to the way that AT&T is deploying fiber-to-the-premise. AT&T seems to only be building where they already have a fiber network nearby that can make a build affordable. While Verizon has a lot of cell sites, it’s hard to envision that a cherry-picking strategy would gain access to 30 million homes. Cherry-picking like this would also make for difficult marketing since the network would be deployed in small non-contiguous pockets.

So perhaps what we will see in 2018 is a modest expansion of this year’s trials rather than a rapid expansion of Verizon’s wireless technology. But I’m only guessing, as is everybody else other than Verizon.

A Further Muddying for Pole Attachments

The issue of putting fiber on poles just got a little more complicated. A U.S. District Court recently overturned a One Touch Make Ready law that had been passed in Nashville, Tennessee to enable easier access to poles by Google Fiber.

The Nashville Metro Council passed the One Touch ordinance last year, and the new law was immediately challenged by AT&T and Comcast, the two large incumbent providers in the area. The law suit is complicated because it looks at two sets of poles – the 20% of the poles in the market owned by AT&T and the 80% of poles owned by Nashville Electric Service (NES), a municipal electric provider.

For the AT&T poles the judge ruled that the law violated federal pole attachment rules. The Telecommunications Act of 1996 gave states the optional authority to regulate poles, but the State of Tennessee never took on that responsibility, so the poles in the state are still subject to FCC pole attachment rules. This differs from an earlier lawsuit in Louisville, Kentucky where that state had preempted FCC pole attachment rules. Here it seems pretty clear that the Metro Council doesn’t have the authority to override FCC rules.

The lawsuit also claimed that the ordinance was in violation of local rules. AT&T claimed that the city charter did not explicitly give the Metro Council the authority to set rules for the NEC poles. The court said that NES had the exclusive right by charter to regulate public rights-of-ways. The court said it agreed with the AT&T allegations but did not make a firm ruling since NES was not a named party in the lawsuit.

The Metro Council originally passed the One Touch ordinance because AT&T and other pole attachers like Comcast were slow-rolling Google Fiber requests to get onto poles. Even today, a few years later, there are thousands of outstanding requests by Google Fiber to get onto poles. The One Touch ordinance would have given Google Fiber the ability to attach to poles and to then handle the paperwork retroactively.

This suit got resolved at a time when the FCC is considering One Touch rules concerning wireless connections. The FCC is thinking about granting the same rights to wireless carriers that this ordinance would have given to Google Fiber and other fiber overbuilders. The FCC recognizes that pole attachments are perhaps the major impediment for the promised coming implementation of 5G networks.

Incumbent pole owners have been able to thwart fiber overbuilders for the last few decades. They can deploy numerous delaying tactics that still fit within the FCC pole attachment guidelines. It’s not clear if the contemplated FCC rules will also make it easier for fiber overbuilders – but my guess is that they won’t. This FCC is clearly favoring the big ISPs and wireless carriers – and so they are likely to grant the rules that the big companies want.

This potential dichotomy between the treatment of wireless attachers and fiber attachers is ironic, because 5G networks are going to require a lot of new fiber. The wireless companies are not going to be building all of the needed new fiber and are hoping for others to build for them. But if those fiber builders encounter the same resistance seen by Google Fiber, then One Touch rules for wireless transmitters will not alone solve the 5G deployment issues.

One of the most interesting aspect of the pole attachment issue is that Verizon and AT&T are two of the largest builders of fiber. These companies scream bloody murder when they encounter the kinds of delays in building fiber that AT&T is causing for Google Fiber in numerous markets around the country. But AT&T clearly wears two hats and they argue for easy pole attachments where they are building fiber and for maintaining barriers to other fiber overbuilders when they own the poles.

None of this is going to be easily solved without Congressional action. There are still going to be states that can preempt federal pole attachment rules if they so choose. And the FCC is going to find themselves unable to overcome the state/federal jurisdictional issue when they try to make a nationwide One Touch rule for 5G. Expect a lot more lawsuits before this gets resolved.

Operating on a Leased Network

One of the comments posted on a recent blog mentioned that CenturyLink recently had agreed to operate on somebody else’s fiber network to serve residential customers – the first time that one of the big telcos or cable companies had agreed to do so. One of the major reasons cited for lack of competition in the US is the unwillingness of the major ISPs to operate outside their own networks. This certainly sounded newsworthy and I looked into the example cited.

CenturyLink has agreed to use the fiber network provided by Lumiere Fiber, an affiliate company of Sterling Ranch, a new planned community outside of Denver. CenturyLink won the ability to serve the community through an RFP competition with Comcast, the cable company serving the area. As the winner, CenturyLink will be the exclusive ISP on the network – which only has a few homes now but has plans to grow to 12,000 residences.

So is this really newsworthy? I think the answer is both yes and no – but mostly no. It is true that CenturyLink will be using somebody else’s fiber network, and a large one at that, when the community is ultimately built. But there are a number of reasons why this is not as groundbreaking as it sounds.

First, this is not really unique. While this is a large new subdivision, in many ways this is similar to the thousands of arrangements that ISPs routinely have made to serve large apartment complexes. In the vast majority of apartments the wiring is owned by the landlord and not the ISPs. There are some large apartment units around the country numbering in the thousands of units and this opportunity is unique only from this perspective of being larger than most MDUS.

CenturyLink is already building a lot of fiber to residential neighborhoods, with nearly 1 million new units passed this year – so this isn’t going to present any technological challenges. I am sure that the company will use the identical electronics and provisioning software it uses everywhere else.

This also is not going to stretch the operational systems of CenturyLink. The only real difference between this and other CenturyLink fiber is that the company doesn’t own the fiber. But they are going to take orders and connect new customers using their normal processes. They will dispatch technicians for trouble calls in the usual manner. And if Lumiere hires CenturyLink to do the fiber maintenance then they would even make fiber repairs in almost the same manner (this detail was not specified in the press releases).

There seems to be two reasons why the big ISPs don’t generally use networks owned by others. In the case of the big cable companies there seems be a gentleman’s agreement to never cross those lines. I can’t find one example of a big cable company crossing the line to compete for residential customers.

But the hardest barrier for the big ISPs to use other networks is the fact that their systems are largely incapable of making operational exceptions. They have created operation systems and processes that work for them, on their own networks, with their own employees. These processes are often highly decentralized and it takes employees scattered across the country to accomplish normal daily tasks like adding a new customer or answering a trouble call. It’s extremely difficult for a decentralized company to make exceptions for customers that are treated different than everybody else – that always results in chaos.

An example of this is Verizon FiOS. When the company decided to build fiber they realized that they could not reshape their existing copper work processes and people to accommodate the new technology. They solved this by creating a totally new company and FiOS was new from top to bottom – from technology, to people, to processes.

The real headline I want to see is where one of the big ISPs gets on somebody else’s network in a competitive environment. For example, there are a number of open access fiber networks in Washington state that are significantly larger than the Sterling Ranch opportunity. There are numerous smaller open access networks around the country, and no big ISP has ever served residents on these networks. If the big companies would jump on competitive networks then a lot more of these networks would get built.

San Francisco is talking about building an open access fiber network and if it’s built will really challenge the big ISPs. If that network comes to fruition, will one of the other big cable companies decide to take on Comcast? That would be the big news we’ve always wanted to hear.

Portugal and Net Neutrality

Last week I talked about FCC Chairman Ajit Pai’s list of myths concerning net neutrality. One of the ‘myths’ he listed is: Internet service will be provided in bundles like cable television as has happened in Portugal.

This observation has been widely repeated on social media and has been used as a warning of what would happen to us Internet access without net neutrality. The social media postings have included a screen shot of the many options of ‘bundles’ available from the mobile carrier Meo in Portugal. Taken out of context this looks exactly like mobile data bundles.

Meo offers various packages of well-known web applications that customers can buy to opt the applications from monthly data caps. For example, there is a video bundle that includes Netflix, YouTube, Hulu, ESPN, Joost and TV.Com. There are a number of similar bundles like the social bundle that includes Facebook and Twitter, or the shopping bundle that contains Amazon and eBay.

But the reality is that these bundles are similar to the zero-rating done by cellular carriers in the US. The base product from Meo doesn’t block any use of cellular data. These ‘bundles’ are voluntary add-ons and allow a customer to exclude the various packaged content from monthly data caps. If a customer uses a lot of social media, for example, they can exclude this usage from monthly data caps by paying a monthly fee of approximately $5.

The last FCC headed by Tom Wheeler took a look at zero-rating practices here in the US. They ruled that the zero-ratings by AT&T and Verizon violated net neutrality because each carrier has bundled in their own content. But the FCC found that T-Mobile did not violate net neutrality when they included content from others in their zero-rating package. The current FCC has not followed through on those rulings and has taken no action against AT&T or Verizon.

The Meo bundles are similar to the T-Mobile zero-rating packages, with the difference being that the Meo bundles are voluntary while T-Mobile’s are built into the base product. The FCC is correct in pointing out that Portugal did not create mobile ‘bundles’ that are similar to packages of cable TV channels. If anything, I see these bundles as insurance – in effect, customers spend a small amount up front to avoid larger data overages later.

It is also worth noting that Portugal is a member of the European Union which has a strong set of net neutrality rules. But the EU is obviously struggling with zero-rating in the same way we are in the US. The real question this raises is if zero-rating is really a violation of net neutrality. It’s certainly something that customers like. As long as we have stingy monthly data caps then customers are going to like the idea of excusing their most popular apps from measurement against those caps. If cellular carriers offered an actual unlimited data then there would be no need for zero-rating.

I disagreed with the Wheeler FCC’s ruling on T-Mobile’s zero-rating. That ruling basically said that zero-rating is okay as long as the content is not owned by the cellular carrier. This ignores that fact that zero-rating of any kind has a long-term negative impact on competition. T-Mobile is like Meo in that they exclude the most popular web applications from data ca measurement. One of the major principles of net neutrality is to not favor any Internet traffic, and by definition, zero-rating favors the most popular apps over newer or less popular apps.

If enough customers participate in zero-rating the popular apps will maintain prominence over start-ups apps due to the fact that customers can view them for free. This is not the same thing as paid prioritization. That would occur if Netflix was to pay T-Mobile to exclude their app from data caps. That would clearly give Netflix an advantage over other video content. But voluntary zero-ratings by the cellular carriers has the exact same market impact as paid prioritization

None of this is going to matter, though, if the FCC kills Title II regulations. At that point not only will zero-rating be allowed in all forms, but ISPs will be able ask content payers for payment to prioritize their content. ISPs will be able to create Internet bundles that are exactly like cable bundles and that only allow access to certain content. And cellular carriers like AT&T or Comcast are going to be free to bundle in their own video content. It’s ironic that Chairman Pai used this as an example of an Internet myth, because killing net neutrality will make this ‘myth’ come true.

Disintegration of the World Wide Web

The BRICS nations (Brazil, Russia, India, China and South Africa), which represent the emerging major economies of the world are planning to create their own DNS routing. DNS (Domain Name System) is the large database that associates IP addresses with specific web site or with physical hardware like routers or computers. There is currently one worldwide DNS system that is used to route all Internet traffic.

Russia approved this change in October and set a deadline of August 1, 2018 to have the alternate DNS system online. The reason Russia gives for the change is that the West has the power to disrupt their Internet by changing the current DNS system. While that’s true, the US no longer controls DNS routing and handed over the operation of DNS last year to ICANN, an international coalition of many countries, including the BRICS members.

But there is a lot more to this than just fear of having DNS cut off to a given country and that excuse is mostly just a political cover story. A BRICS DNS system would give the member companies total control over the Internet routing within their country. Many countries already curtail and block some Internet usage today, with the most prominent example being the Great Firewall of China. The Chinese control web usage by monitoring and intercepting traffic at Internet hubs.

But control of DNS is a more foolproof way for a country to curtail web usage. If they block a website from the DNS system then it no longer exists within the country and there is no backdoor way to get to such web sites. Controlling the DNS gives a country complete control of what’s allowed on the web. DNS control would make it easy to block a company like Google, a topic such as politics or pornography, or even traffic from an entire other country from participating in the web within a country.

Controlling the DNS also would allow a country to maintain web sites within the country that could not be reached from outside the country. That would be a safer way for a country to keep information away from cyberhackers, or to just hide websites from foreigners.

Another benefit to controlling DNS is that it can be used to control the dark web. DNS could be used to make the dark web disappear within a country. Or it could alternatively be used to allow it, but make it open to inspection. A country controlling the DNS could also establish a new dark web specific to their country to be used by the government or anybody else they favor.

The BRICS countries say that they would only initially use an alternate DNS to use in case of some DNS emergency, like an external cyberattack. But the it’s going to be hard for regimes like China or Russia to pass up the temptation to take more control over the web and over their citizens. For example, controlling the DNS would allow for an easy way to squelch on-line dissent.

This change would be the first real splintering of the web. Until now come countries like China have blocked web sites and restricted access to some parts of the web. But taking control of DNS lets a country go further to micromanage the web within their country. And that ability is going to tempting to any repressive regime.

Once this happens there is really nothing to stop other countries or regions to also create their own DNS. And that means we no longer would have a worldwide web, but rather a series of separate webs that share selectively with each other. That would disadvantage the whole world in countless ways.

The FTC and Net Neutrality

One of the lynchpins of the FCC’s plans to reverse net neutrality is their assertion that the Federal Trade Commission (FTC) is ready to step in and protect consumers from any abuse by the big ISPs. FCC Chairman Ajit Pai argues that the FTC should always have been the go-to agency for privacy issues and issues like broadband rates. However, it’s possible, and perhaps even likely that the FTC will be legally unable to take on that role.

There is an open lawsuit that challenges whether the FTC has any authority over big ISPs like AT&T. The FTC sued AT&T and levied a $100 million fine on the company for abuses of their unlimited cellular data plans. AT&T stopped selling unlimited data plans in 2011. But the company had sold millions of limited plans that had promised that customers could keep the plans for life. This is about the time that customers could actually begin using large amounts of cellular data due to the burgeoning OTT video market, and AT&T started to pressure customers to drop the grandfathered unlimited plans. AT&T eventually took steps to throttle unlimited data users and even went so far as to block customers from using Facetime, the Apple product that lets customers video chat.

AT&T immediately appealed the FTC decision using the argument that Section 5 of the original FTC charter precluded the agency from regulating ‘common carriers’. The original Telecommunications Act of 1934, which established the FCC, had defined common carrier to be a company that provide public telecommunications facilities – which has been taken to mean facility-based telecom providers. Originally the common carrier definition meant the old Ma Bell and other regulated telephone companies, but over the years the FCC has expanded that definition to include other telecom facility-based providers including cellular carriers and long-haul fiber owners.

In February of 2016 the appeals court agreed with AT&T and said that the FTC had no jurisdiction to regulate a common carrier, even for “non-common carrier activities”. This means that the FTC could not regulate AT&T for its telecom business, but also couldn’t regulate other endeavor that the company might undertake, such as AT&T’s actions as the owner of DirecTV or their future actions as a programmer after a merger with Time Warner.

The FTC appealed that decision and the case is still open. The agency pointed out that the ruling created a huge enforcement gap. At the time it of the FTC appeal it was assumed that the FCC would continue to regulate telecom-related issues for common carriers, but the FTC pointed out that the ruling meant that nobody was regulating non-common carrier activities of common carriers like AT&T.

Almost immediately after this court ruling the formerly unthinkable happened and the FCC now wants to walk away from regulating broadband – the most important of the common carrier activities of AT&T and other ISPs. In doing so, the FCC argues that the FTC will be able to take over the regulation of issues like privacy, billing abuses, excessive rates, etc. However, the 2016 court ruling says that the FTC has no jurisdiction over any of the actions of a common carrier like AT&T.

The fact that the FCC is walking away from its responsibilities does not somehow create the right for the FTC to step in and regulate common carriers. This means that after the FCC reverses Title II authority that there might be no agency in the federal government able to regulate any consumer activities of common carriers like AT&T, even in areas that are not telecom related. It would free up AT&T and other common carriers to subject customers to enormous abuses with nobody able to step in to protect customers. AT&T and other common carriers could inflict unimaginable abuses on customers without consequence, up perhaps to the point of outright fraud, at which point the Justice Department could probably intervene.

To make matters worse, the FTC is not sure that they can really regulate companies like AT&T even should they win the appeal of the AT&T lawsuit. FTC Commissioner Terrell McSweeny says in this opinion piece that the FTC is ill-equipped to regulate companies like AT&T. He says the agency is underfunded for such activities and doesn’t have a staff that has the technical expertise to understand complex telecom issues – exactly the kind of expertise that resides at the FCC.

https://qz.com/1144994/the-fcc-plans-to-kill-the-open-internet-dont-count-on-the-ftc-to-save-it/

 

McSweeny further says that even if the FTC is able to take on this role that the agency doesn’t really regulate companies. Instead, the agency punishes companies for consumer abuses, many years after transgressions. That is not the same thing as proactively establishing rules to regulate corporations. He says that the FTC could not really preclude AT&T from abusing customers, and at best could occasionally fine them for the worst of such abuses, many years after they occurred.

Sadly, we have an FCC that is aware of the regulatory gap and which is still willing to walk away from regulating broadband. It’s not hard to imagine what a company like AT&T might do with zero constraints. It’s likely that we’ll see huge price increases, unsavory practices like stringent data caps, constant violations of customer privacy through the mining of customer data, etc. The only constraint against such practices would be competitive pressures, but the other big ISPs in the market would also be unregulated and it’s not hard to imagine that cable companies would match AT&T abuses rather than compete against them.

FCC Whacking the Lifeline Program

A few weeks ago the FCC took steps a few weeks ago that are going to significantly cut back on the Lifeline program. This is a program that has historically provided a subsidy of $9.25 per month off phone service, but which was expanded under the Tom Wheeler FCC to to also be able to cover broadband.

We had a strong hint that this was coming when one of the first acts of new FCC Chairman Ajit Pai was to halt new carriers from becoming eligible to participate in the Lifeline program.

One of the primary stated reasons for the changes are that the Lifeline program is full of fraud and waste. This is something that was identified by the FCC over two years ago and they put in place a remedy to fix the fraud issues. Lifeline goes to households that qualify for various federal welfare programs. The main reasons for fraud was providing the subsidy to those that weren’t eligible or continuing eligibility after people no longer qualified for welfare.

The obvious fix for this was for the FCC to maintain a database of those that are eligible and require providers to verify eligibility for each customer each month. That fix was started two years ago and is apparently still two years from being implemented. I find it astounding that it would take four years to put together what is basically a database lookup, especially for an industry that maintains numerous complex databases. This sounds like something a corporate IT team could implement in a few months and failure to make this work in a timely manner speaks mostly about the failure of government to be able to implement technical systems. Since the fix would largely eliminate the fraud I find it disingenuous for the FCC to still be looking for changes to the program due to fraud issues – this is something they should have fixed long ago.

There are a few changes to the program to be implemented immediately along with a list of proposed future changes. The immediate change to the Lifeline program include the following:

  • Limit Lifeline on Indian reservation to only carriers that are facility-based. This eliminates resellers, who are the primary providers of cellular service in rural areas and on tribal lands. Since AT&T and Verizon don’t actively promote Lifeline this likely means that many eligible customers will lose the subsidy. Even where a customer can change to a facility-based option, it’s often more expensive, which effectively would eliminate any savings from lifeline.
  • Eliminated Lifeline plans that rely on WiFi networks instead of cellular networks. In cities there a number of carriers today that sell WiFi only plans, which are affordable and effective where there is widespread WiFi. These phones use VoIP over WiFi instead of cellular and it seems odd to eliminate based upon the technology used.

The big changes are those proposed for the future. As we’ve seen often in the past, specific changes proposed by the FCC tend to get implemented unless there is big pushback by the industry. The proposed changes include:

  • Requiring people to pay a percentage of their phone bill. Today there are cellular carriers willing to only charge $9.95 for a barebones Lifeline plan that has limited minutes, and the FCC wants all Lifeline customers to pay a share of the cost of the service.
  • Extending the requirement that Lifeline is only available for facility-based carriers. In the cellular world that means AT&T, Verizon, T-Mobile and Sprint. It would eliminate the many cellular resellers from participating in the program. Today over 70% of Lifeline recipients are through resellers.
  • Setting some kind of cap on the whole Lifeline program to stop it from growing.

It seems clear to me that this FCC would eliminate Lifeline completely if they could. Since the program was created by Congress it would be impossible to eliminate it without additional Congressional action. But all of the FCC’s proposed changes will significantly cut back on eligibility and make it harder to households to take part in the program.

I will be honest in that I never gave Lifeline a lot of thought in the past. But a few years ago I was introduced to a program that supplied Lifeline phones to the homeless. The carriers provide the phone and the service for $9.25 per month with no cost to the homeless. These are not smart phones, but very basic older-technology phones. And the plans were not lavish, but provides users with some limited minutes during the month plus some basic texting and web connection. The homeless people participating in the program said that it was transformational in that it allowed them to use the phone to connect to social services, to search for work and to communicate with loved ones. The FCC’s proposal would largely eliminate programs like this one, to the benefit of nobody.

The Impact of the End of Net Neutrality

Charter has given us a peek at how the big ISPs are likely to take advantage of the end of net neutrality. Charter is in the middle of a lawsuit filed by New York Attorney General Eric Schneiderman. The suit attacks Charter for promising to deliver Internet speeds as part of the purchase of Time Warner that the company knew it couldn’t deliver. There are other allegations in the suit and I covered it in this earlier blog.

While the FCC won’t formally vote to end Title II regulation for another week it’s largely a foregone conclusion that they will do so. Charter is assuming that it’s a done deal and they have filed paperwork trying to dismiss the New York lawsuit based upon the assumption that the FCC will end net neutrality.

Charter has sent a letter to the courts and is making the following claims:

Federal law preempts state and local laws. Charter is arguing that the planned FCC order will preempt state and local laws concerning broadband. This is an aspect of the proposed FCC order that has not gotten much attention. The proposed FCC order contains a long discussion that talks about the role of federal versus state regulations and comes to the conclusion that federal low should override state and local broadband laws. It’s sort of an ironic position for the FCC to take since they are actually eliminating the FCC’s role in regulating broadband – but they interpret that to mean that states and localities also have no right to regulate broadband.

Charter specifically says that New York can’t criticize the company for delivering slow Internet speeds. They argue that since the FCC will no longer regulate broadband and Internet speeds that New York also does not have the right to do so.

Paid Prioritization. Charter is also arguing that New York has no right to regulate paid prioritization. This is one of the three principles of net neutrality that currently is in effect. Charter is arguing that the FCC’s proposed ‘light-touch’ regulation means that the FCC will be eliminating the net neutrality principles and this means that these principles can no longer be used to judge Charter’s products.

The New York lawsuit had attacked Charter for not maintaining a robust enough network that could deliver the speeds customers need. Specifically, New York alleged that people were unable to watch Netflix and that Charter’s network failures amount to throttling of the Netflix data stream.

The new FCC rules aren’t even in effect yet, but this tells a lot about how the big ISPs are viewing the change in rules. Charter wants to use these rules to protect themselves against any fines for not delivering advertised broadband speeds to customers. They also are openly acknowledging that they have no obligations against violations of the current net neutrality rules – and that they have no obligations to ever try to meet them.

Charter’s arguments in the case erase any doubt about how the big ISPs intend to act once they are not regulated. While they will probably generally try to deliver a decent broadband product, they feel under no legal obligation to do so. If you go back and look at the facts in this case you will see customers in New York who have been paying for clearly inferior broadband for years – broadband that is far slower than advertised and that is even too slow to deliver Netflix. Charter promised to fix the network issues that are causing the slow broadband, but it’s clear from the New York lawsuit that no upgrades have been implemented. Lack of broadband regulations might mean that the Charter customers in New York might never get good broadband – the company doesn’t think they have any obligation to provide it.

Charter’s response to this lawsuit largely validates all of the consumer fears that have been expressed as part of the net neutrality debate. The FCC is washing their own hands of anything having to do with broadband regulation, and are also preempting states and localities for doing anything. This leaves the consumer with no place to go to remedy, or even protest bad ISP behavior.

One hopes that the big ISPs want to deliver a decent broadband product – but the facts in this case show a blatant disregard for both customers and regulators. Charter has promised to improve the condition of the Time Warner networks as part of the merger but then failed to do so. The sad fact is that many of the customers with the shoddy Charter service have no real alternative. DSL is dying and the cable companies are becoming virtual monopolies in most of the markets in the country. If Charter prevails with these arguments it will show that there is no regulatory body with the ability to police the ISPs.

FCC’s Net Neutrality Myths

We’ve been having the policy debate over creating net neutrality since at least 2005. During that time there have been a lot of arguments made on both sides of the issue. But overall it’s been a policy debate that is similar to the many other issues discussed in the telecom regulatory world. Both sides make their arguments and eventually a decision is made to regulate or not regulate according to the arguments. Politics has always played a role in these debates and issues tend to slew a bit according to the political leanings of the FCC at any given time.

FCC Chairman Ajit Pai recently released a document that argues strenuously for the end of net neutrality. This document lists various ‘myths’ associated with net neutrality and then describes why each myth is untrue. If you look back at the history of the net neutrality debate you’ll see that his list is a summary of the arguments being made over time by the big ISPs. This is a document that one would expect from AT&T, Comcast, USTA or ALEC – but not from the Chairman of the FCC.

I have a problem with the Chairman’s list because most of the conclusions drawn are factually incorrect. It’s expected for the big ISPs to make arguments in their favor, even if those arguments are not wholly true – but it’s disturbing to see these same arguments coming from the FCC, which is supposed to be the arbiter for telecom policy issues.

I don’t think I have any bias that makes me see these statements as false. Anybody whose been reading my blogs knows that I am as biased as anybody else in the industry. My bias is towards policies that allows smaller ISPs to compete. And I am strongly in favor of policies that try to solve the rural broadband gap and the overall digital divide. But other than that I am largely neutral on other telecom policies and am receptive to hear all arguments on the various issues. Other than as a consumer I have no strong bias in the net neutrality debate because I don’t believe that small ISPs will violate net neutrality even if there aren’t any rules. The net neutrality argument really only concerns the behavior of the largest and most powerful ISPs in the telecom market. I could go through the document and discuss each ‘myth’ – but that doesn’t lend itself to a blog-length discussion. But I think every one of the Chairman’s arguments is stretching the truth.

For example, the document rolls out the old big-ISP argument that broadband investments have dropped due to Title II regulation. This argument goes back to shoddy work done by one researcher on the big ISP payroll and has been debunked numerous times. The numbers tell a different story and investments have not dropped. So do the actions of the big ISPs – AT&T, Verizon, Comcast and most of the other big ISPs are all undertaking aggressive expansion and upgrades. Look at what each of these companies is telling their stockholders and you don’t see an industry in retreat. Title II regulation has had almost zero impact on investment decisions (and regulation rarely has ever done so).

Chairman Pai also argues that the Internet was free and open before we had Title II regulation. That’s not the way I remember it. The net neutrality debate has been going on since 2005 and the ISPs have been held in check by the threat of net neutrality regulation. Even without Title II regulations in place the FCC was able in the past to pressure the ISPs on practices like data caps and zero-rating by the threat of future regulation – and for the last decade this has largely worked. Title II regulation didn’t just appear out of thin air with the FCC order in 2014 – the net neutrality principles were the backbone of FCC regulation and actions for a decade before then.

This FCC document also argues that the Federal Trade Commission is well equipped to police unfair, deceptive and anticompetitive behavior from ISPs. That gives the FCC cover to duck out of regulating broadband. What this doesn’t mention is that the big ISPs are now attacking the FTC’s right to regulate broadband (a blog will be coming on this soon). I find it extraordinary that the FCC would declare that it should have no role in regulating broadband – the most important telecommunications product. Regulating broadband seems to be their role in the industry almost by definition.

I guess more than anything else this document disappoints me. While there have always been some politics involved in the decisions made in our industry, past FCCs have largely decided issues on their merits. My own business was founded largely due to the Telecommunications Act of 1996 which unleashed much-needed competition into the industry. But I look at this current FCC and see that the pendulum has swung to one far extreme and the merit of issues aren’t even part of policy discussions. That saddens me.

How Do You Plan?

Today’s blog is not specifically about a telecom topic, but is something that affects every one of my clients. Today I ask the question: how do you plan for the future of your business? I ask this question because it’s something I see many of my clients struggle with.

What do I mean by planning? To me it means having a process for identifying and setting goals and then having a process for implementing the goals. Goals can be anything, but most of the goals that my clients identify are either to fix existing problems or else to implement something new in their broadband business.

I know this is a problem for many broadband companies because I see them facing the same problems year after year or I see them taking a really long time to implement a new product or build into a new market. I have many clients that are frustrated by this.

It’s usually fairly easy to diagnosis the reasons why plans don’t get implemented. One of the major reasons that plans go awry is that companies get wrapped up in the day-to-day operation of the business and taking the time to make planned changes slips to the bottom of the priority list. I also often see that companies try to tackle too many changes at the same time. I have clients who hold an annual strategy session and then try to implement a dozen changes in the company. This rarely works and half of the changes fall to the floor and end up on the to-do list the following year. And for some companies, plans don’t get implemented because the company doesn’t have any real planning process and good ideas just hang in the air.

I will be the first to tell you that planning is hard. I am sometimes as guilty of not taking the time to plan as my clients and it’s easy to fall into the trap of reacting to fires every day rather than taking the time to plan for the future. But I have a few clients who are really good at the planning process, and interestingly. In observing companies who are good at planning, I notice the following similarities:

  • The planning process is formal. There are scheduled planning sessions that are a top priority for the company. There are planning or implementation meetings held regularly to help set goals and then to make sure that the goals are being met.
  • The planning process is mandatory. I’ve seen companies set planning meetings only to have half of the planned attendees beg off to take care of daily fires. If planning is not mandatory then the planning process tends to fizzle out over time.
  • It includes the whole company. This is not just something that the top few guys in a company should do. Since it generally takes all parts of the company to implement new ideas or to fix problems, then every group ought to have some input to the process. The top people night have the biggest role in choosing the direction of the business, but if the whole company doesn’t feel vested in the process then plans tend to slip in importance to the daily work routine.
  • Goals are published. Everybody in the company ought to know what the short and long-term goals are, and they should understand their role in implementing solutions.
  • The process needs to be organized. Companies that are good at planning keep a running list of tasks they want to accomplish. This is essentially a company to-do list. They list will include both major and minor goals. A major goal might be something like entering a new market or implementing a new product. Minor goals might include things like developing a needed new management report or finding a way to streamline a specific process.
  • Plan for successes. The best way to keep a formal planning process going is by getting wins. Just like it feels good to cross something off your personal to-do list, a company benefits organization-wide if there are constant small wins by crossing things off the company to-do list. This means setting quarterly goals for minor tasks along with longer time frames for major tasks.

As a matter of disclosure, this blog is not intended to drum up work. While I often help companies set goals and priorities, our firm does not offer a formal product for establishing a planning process. There are plenty of firms I know who offer this service and I’d be glad to make a recommendation. I’ve seen that bringing in an outsider to help create a formal process can be money well spent. If your company struggles with setting and implementing goals then seeking help might be one of the best investments you can make – it’s really investing in yourself.