Broadband Redlining

The National Digital Inclusion Alliance (NDIA) recently asked the FCC to investigate the practice of digital redlining, where big ISPs only bring the best technology to more affluent neighborhoods while ignoring poor ones.

The NDIA has statistics to back up it’s claims. They used the FCC’s data in 2017 to look in detail at how AT&T had deployed DSL in Cleveland. Years ago, AT&T deployed the first generation of DSL almost everywhere in the market. However, the company became far more selective in where they upgraded to faster DSL.

NDIA mapped where AT&T had deployed VDSL and later DSL technologies in Cleveland and found that the company had deployed faster DSL mostly in affluent neighborhoods and in the suburbs while leaving older downtown neighborhoods with the older DSL. VDSL offers speeds of at least 18 Mbps, up to nearly 50 Mbps when deployed using two copper pairs. NDIA found that the 55% of the census blocks in downtown Cleveland still had DSL speeds of 6 Mbps or less while 22% had speeds below 3 Mbps, with some as slow as 768 Kbps. It’s likely that AT&T marketed all versions of DSL the same, advertising ‘up-to’ speeds that described the fastest product in the market.

The AT&T deployment in Cleveland is not an isolated incident and the same is true in communities across the country. It’s not just AT&T that’s done this and Verizon deployed its fiber FiOS product in a similar manner and largely ignored northeast downtowns in favor of serving suburbs. We also tend to think of cable company networks being deployed ubiquitously in cities, but there are pockets in every major city that don’t have cable broadband.

In the industry this practice is generally referred as cherry-picking. It means deploying a new network in the places where the costs are lower or the expected penetration rates are higher – and ignoring the parts of a market that don’t fit a desired financial profile.

Historically the big telcos weren’t allowed to cherry-pick or redline. AT&T was still largely a regulated company when the first DSL was deployed. But the trend over time to deregulate telephone providers has led to laxer regulation, and obviously in Ohio and many other states the telcos were not required to build later generations of DSL everywhere.

One of the reasons we see so much cherry-picking is that many states have adopted statewide cable franchising. Cable franchises were historically negotiated in each community, and cities insisted that a cable provider build to the whole community as a condition for getting a franchise. However, AT&T and other broadband companies lobbied hard for statewide franchising rules, using the storyline that they wanted to deploy fast DSL to bring cable service. The statewide franchises generally give a cable provide the ability to build anywhere in a state. The telcos argued that the cost of negotiating with every community was killing innovation and deployment of faster broadband. What these companies really wanted was the ability to cherry-pick with no obligation to serve whole communities.

The practice of cherry-picking is still common today and most commercial fiber overbuilders engage in it to some degree. Most overbuilders have limited financial resources and they deploy fiber or other broadband technologies in those places where they get the best return for their investment. Many communities have seen fiber built to businesses and to new subdivisions while ignoring the rest of the town.

It’s hard to fault s smaller fiber overbuilder for maximizing the return on their fiber investment. On the flip side, there are few communities that don’t want fiber everywhere. However, most communities are realistic and know that if they always insist on getting fiber everywhere they might not get it anywhere.

Communities that really care about good broadband everywhere are the ones that are building fiber themselves or trying to attract a partner that will build the whole community. However, there are numerous states that hinder or prohibit communities from building broadband networks, and many other cities find the costs to build new networks to be prohibitive. The majority of communities must rely on the good behavior of the incumbents, and unfortunately they don’t always do the right thing.

Tariffs and Broadband Deployment

A number of my clients are receiving letters from telecom supply houses and vendors warning them of price increases due to the tariffs recently imposed on trade with China. It’s no secret in the telecom world that much of the electronics and components used to build fiber or fixed wireless networks come from China.

The following list is from a letter sent from Power & Tel, a big telecom supply house to their customers. Other supply houses and vendors are sending similar notices. This notice lists examples of components that will receive the new tariff additives. As is usual in these situations there will be components that are in gray areas and it will take a while for the vendors to figure out the full tariff impact.

The new tariffs were imposed by the U.S. Trade Representatives (USTR) at the order of the President and are implemented by the U.S. Customs and Border Protection agencies. There have been multiple USTR lists of affected products, and following is Power & Tel’s take on the various tariff actions:

USTR Tariff List 1 – 25% tariff effective on July 6, 2018. Affects optical fiber cables, aluminum, copper, steel & iron.

USTR Tariff List 2 – 25% tariff effective on August 23, 2018. Affects fiber adapters, connectors, splice sleeves, grounding hardware.

USTR Tariff List 3 – 10% tariff effective on September 24, 2018. On January 1, 2019 the tariff increases to 25%. Affects electronics, power cables, active optical cable, direct attach cables, cable management and racks, batteries, power supplies, metal hand tools, power tools, hardware.

Included in this list are several major components that are part of every broadband deployment. This includes things like:

  • Core routers and switches for fiber and wireless networks
  • Core electronics and customer ONTs for FTTP
  • Core electronics and customer radios for fixed wireless
  • The core of central offices and huts including racks, batteries, power supplies, grounding hardware, cables, hardware, test equipment and other tools.
  • Cable settop boxes and WiFi routers
  • There are numerous sources of non-Chinese fiber optic cable, but many of the components for an outside plant network like fiber adapters, connectors, pre-connectorized drops, etc. will be affected.

I try not to be political in my blog – and it’s normally easy to do because broadband deployment is a topic that enjoys bipartisan support. I’ve always found in rural America that politicians from both parties support fiber and wireless network deployments because they understand that their local economy needs broadband to thrive and survive. I visited a number of rural counties in the last year where the elected officials say that lack of broadband access has become the number one issue of concern in their county.

However, I have no doubt when looking at the size and scope of these tariffs that the cost of building broadband just got more expensive. I won’t be surprised if this doesn’t kill or delay some pending construction projects, and it’s something that will have to be factored in to any future-looking business plans. I’m sure I share the sentiment of many in the industry and hope that these tariffs are temporary.

Regulating VoIP

The regulation of Voice over IP (VoIP) has been disputed since the late 1990s when Vonage and other VoIP providers burst onto the scenes. In the latest action, the Eighth Circuit Court of Appeals ruled that the Minnesota Public Utilities Commission cannot regulate the VoIP service offered by Charter Communications.

Before looking at that ruling, let me review the history of VoIP regulation. When Vonage and others first offered VoIP a number of states immediately sought to regulate the VoIP companies using what I would call the ‘quack like a duck’ argument that the function of VoIP was to complete telephone calls and that changing the underlying technology didn’t change the nature of the service.

After various regulatory rulings and the subsequent legal challenges it was finally determined that the VoIP offered by Vonage was not the same as regulated voice service because it wasn’t ‘interconnected’ voice. Interconnection is a term defined by the FCC meaning that a telephone call must be originated and terminated using the public switched telephone network (PSTN) established to trade calls between different phone companies. Vonage originated calls using the open Internet and only used the PSTN to terminate calls. This loophole, based upon the FCC definition of a phone call, eventually freed Vonage from most telco regulation, although VoIP providers were required to offer access to 911.

When cable companies started to offer telephone service they adopted the strategy of trying to get their telephone service also classified as VoIP to avoid regulation. They talked about offering VoIP before their voice product even hit the street. However, telephone service on a cable network is not the same as Vonage. Where Vonage customers bypass the PSTN on the originating side of the call, cable companies have always used the PSTN to originate and terminate calls, and from a functional perspective their networks and telco networks look identical.

Cable companies argued that they are VoIP because a customer called is converted to an IP format at the customer location and transmitted digitally across their networks. Their argument relied entirely on the fact that their technology used the ‘IP’ part of VoIP and that preempted them from regulation. Surprisingly, a lot of state regulators agreed with the cable companies and freed them from voice regulation, in what I would classify as regulatory rulings as a result of heavy lobbying. Cable company voice has never, to this day, passed the ‘quack like a duck’ test and they still use the PSTN in the same manner as telephone companies.

We ended up with a patchwork of VoIP regulation as different states took different positions on the issue. Cable companies eventually changed tactics and shot for a different regulatory loophole. They began to argue that VoIP is an information service and not a telecommunications service. They wanted this classification since the FCC had several rulings in other areas, not related to VoIP, that the agency isn’t authorized by Congress to regulate information services. I literally laughed out loud the first time I read this argument and I didn’t expect any regulator to ever accept it, because if making a telephone call isn’t a telecommunications service, then nothing is.

However, in the Minnesota case the cable companies finally talked a court into accepting the argument. The Minnesota case arose when Charter moved their VoIP product to a different subsidiary in an attempt to avoid the assessment of regulatory taxes and fees. The Minnesota PUC sought to impose the same taxes and fees on the new subsidiary, which prompted the lawsuit.

Charter still made the same technology argument that cable companies have used for years. They argued that their product isn’t a telecom service because telephone traffic on their network undergoes a ‘protocol conversion’ as the signal is transformed from analog to digital (for telephone folks, from TDM to IP). This is the decade-old argument that it’s VoIP if some portion of the call uses IP technology.

However, in this case Charter bolstered this argument by claiming that they offer features that prove that their VoIP is an information service. Charter cites as proof the use of features like offering a web portal to listen to voice mails, converting voice mails to text, and providing caller ID on a connected TV.

Technically, these are all ancillary services that have nothing to do with the direct delivery of a telephone call. Most telcos and cellular companies today offer these same features – and they all happen outside of the direct voice path. Recording a call to play back later doesn’t change the fact that a telephone call was made.

Surprisingly the courts agreed with Charter and declared that their VoIP product is an informational service. That exempts Charter from state regulation and the case is going to be used elsewhere by cable companies hoping to avoid regulation. You might want to read the ruling, but I’ll warn you that the circular logic will hurt your head. Apparently, if something now quacks like a duck it might really be a turkey.

Upgrading FCC Broadband Statistics

The NCTA – The Internet & Television Association that represents the large cable companies and telcos has filed a complaint with the FCC asserting that the agency is not updating broadband maps in a timely manner, and this is understating the amount of broadband deployed in the country.

They have a good point, in that the FCC recently released broadband data from 2016 while they already have received June 2017 data. The recently released data is now more than two years behind the actual broadband deployments in the country.

There may have been years in the past where this kind of time delay didn’t make that much difference, but we are now at a time when there are massive amounts of broadband upgrades happening across the country. The big telcos are well into the CAF II upgrades that are upgrading huge swaths of rural America to speeds of at least 10/1 Mbps. There is a lot of upgrades at smaller telcos that are implementing upgrades from the A-CAM program that requires upgrades to at least 25/3 Mbps – although many of them are upgrading to fiber with gigabit speeds. We now see cable companies starting to implement DOCSIS 3.01 upgrades that can increase their download speeds to a gigabit. And there are numerous overbuilders upgrading broadband all over the place by building fiber or fixed wireless technology. We will soon see the CAF II reverse auctions building yet more rural broadband, with a significant percentage of those upgrades being at 100 Mbps or faster.

This means that the FCC’s broadband maps and the underlying databases are far out of synch and provide the wrong narrative about broadband coverage. The members of NCTA want to get credit for the upgrades they are making, which means that numerous households are no longer considered as unserved, with many of them getting a broadband option for the first time.

There are practical and policy ramifications due to the delay in upgrading the maps. For example, some of the federal loan and grant programs score applicant projects according to whether they are upgrading rural areas that are unserved or underserved – and the FCC data overstates the households that are classified as unserved.

There are also real-life implications for communities. Consider Otter Tail County, Minnesota. Looking at the current FCC maps shows the County with a paltry 2% of households able to get download speeds of 100 Mbps. That is a truthful depiction just looking back a year or two. The cable companies serving the towns in the County have had maximum speeds of no more than 60 Mbps and the rural areas all have broadband using DSL, fixed wireless or satellite.

However, that map doesn’t reflect what’s happening in the County today and what will be happening there in the next few years. Charter has promised to upgrade to faster speeds nationwide and their customers in the County ought to be at speeds far above the 100 Mbps threshold. A lot of the rural areas are served by small telcos that are using A-CAM funding to build fiber. In this past summer alone there were dozens of construction crews building fiber around the County. There are also a few pockets of the County that have gotten upgrades to fiber that were assisted with broadband grants from the State of Minnesota. My quick assessment show that the County will soon have 100 Mbps broadband for 70% to 80% of households when the known upgrades are finished over the next few years. And even most of the areas not getting 100 Mbps broadband will still be seeing speed improvements. That facts on the ground in Otter Tail County paint a drastically different picture than what is shown by the current FCC maps. I have no doubt that this same thing is true in numerous other rural counties.

I understand that the FCC wants to use actual data to create their maps. But I’m mystified why they don’t want to brag about the programs they have sponsored that will improve broadband. It should be easy for them to overlay a map of the expected upgrades that will come from the CAF II and A-Cam programs. These future-looking maps are a better picture of the rural broadband situation.

There are obviously numerous upgrades happening that the FCC can’t know about – they have no way of knowing about upgrades being done with non-FCC funding. But there isn’t much excuse for the FCC to be issuing data and maps that are more than two years out of synch at the date of publication. It’s not a difficult  technical challenge to quickly map ISP broadband data as it’s submitted – numerous states already readily create their own versions of these maps. And it shouldn’t be hard for the FCC to create overlays showing the upcoming successes due to the upgrades they have fostered.

Taking Advantage of Rural Fiber

As I keep reading about Verizon’s residential 5G roll-out I can’t help but thinking about how 5G might benefit rural America. It’s clear that the 5G technology requires fiber that is close to customers – it uses wireless to deliver the broadband for the last thousand feet or so, but must be fed from fiber. This means that the biggest cost and biggest impediment to rural 5G deployment will be the cost of deploying fiber.

But what about all of the fiber that already exists in rural America? I visit rural counties all of the time and there is usually a surprising amount of existing fiber. It’s used for purposes like connecting to electric substations, for connecting to schools, for connecting telco central offices and many other similar uses. How much benefit might rural America get if these fibers could be tapped for 5G?

One fiber provider that is often forgotten is the railroads. There are 233,000 miles of railroads in the US, and a decent percentage the tracks already has fiber. Union Pacific is the largest railroad with 32,000 miles of tracks, much of it with fiber. While many miles of track go through desolate places with no people, Union Pacific and the other railroads also pass numerous small rural towns and other pockets of rural households as well as portions of numerous larger towns and cities.

It’s not hard to picture a business case for somebody like Union Pacific to get into the 5G business. The company has toyed with the broadband idea for nearly twenty years and has done some trials as an ISP using the existing wireless technologies. If 5G works as promised they could have a robust wireless product that could deliver hundreds of Mbps to those living close enough to the railroad tracks. It’s a tricky business plan in that it probably requires door-do-door marketing to those within range of a 5G transmitter, but one has to think that Union Pacific alone might pass close to millions of homes. Just one railroad of their size could become a significant ISP if they are willing to leverage the fiber they have buried along their tracks.

The same goes with other fiber owners. Electric companies collectively own even more miles of rural fiber than the railroads. A number of electric companies have already become ISPs and are building fiber-to-the-premise. Tapping the 5G potential would be an interesting ISP model that provides broadband along narrow corridors – but that still could bring better broadband to millions of homes.

There are obviously numerous challenges to make this work. The technology is not here yet today to do this. Verizon developed their own 5G electronics and there is no commercially equivalent yet available to the average ISP. Fiber owners like a small electric cooperative or a school district might not own enough fiber to make a viable business plan. And even those with enough fiber need to fund and implement a new ISP business – which many fiber owners would consider as a distraction from their normal line of business.

But there is a lot of potential in existing rural fiber. Once the technology is reliable and cheap enough I can foresee ISPs willing to partner with or lease capacity from existing fiber owners. A 5G ISP could gain economy of scale if they can master the business plan of selling only to those who live within a thousand feet of an existing fiber. There will clearly be operational hurdles to overcome – because wireless is always trickier to operate than end-to-end fiber.

5G is not going to come close to solving the rural broadband problem because most rural homes are not close enough to existing fiber. Many owners of the existing rural fiber are not going to use it for this purpose or allow others to use it. There is still likely to be no business case for building new fiber to support rural 5G, and in fact, anybody doing that might still decide to go the whole way to the home with fiber.

But I can’t help envision how creative ISPs might be able to take advantage of the fiber that already exists along railroad lines or is used to reach schools. This might bring good broadband to a few million more rural homes, and that’s how we are going to solve the rural broadband dilemma – one home at a time.

The Zero-rating Strategy

The cable companies are increasingly likely to be take a page from the cellular carriers by offering zero-rating for video. That’s the practice of providing video content that doesn’t count against monthly data caps.

Zero-rating has been around for a while. T-Mobile first started using zero-rating in 2014 when it provided its ‘Music Freedom’ plan that provided free streaming music that didn’t count against cellular data caps. This highlights how fast broadband needs have grown in a short time – but when data caps were at 1 GB per month, music streaming mattered.

T-Mobile then expanded the zero-rating in November 2015 to include access to several popular video services like Netflix and Hulu. AT&T quickly followed with the first ‘for-pay’ zero-rating product, called FreeBee Data that let customers (or content providers) pay to zero-rate video traffic. The AT&T plan was prominent in the net neutrality discussions since it’s a textbook example of Internet fast lanes using sponsored data where some video traffic was given preferential treatment over other data.

A few of the largest cable companies have also introduced a form of zero-rating. Comcast started offering what it called Stream TV in late 2015. This service allowed customers to view video content that doesn’t count against the monthly data cap. This was a pretty big deal at the time because Comcast was in the process at the time of implementing a 300 GB monthly data cap and video can easily push households over that small cap limit. There was huge consumer pushback against the paltry data caps and Comcast quickly reset the data cap to 1 terabyte. But the Stream TV plan is still in effect today.

What’s interesting about the Comcast plan is that the company had agreed to not use zero-rating as part of the terms of its merger with NBC Universal in 2011. The company claims that the Stream TV plan is not zero-rating since it uses cable TV bandwidth instead of data bandwidth – but anybody who understands a cable hybrid-fiber coaxial network knows that this argument is slight-of-hand, since all data uses some portion of the Comcast data connection to customers. The prior FCC started to look into the issue, but it was dropped by the current FCC as they decided to eliminate net neutrality.

The big cable companies have to be concerned about the pending competition with last-mile 5G. Verizon will begin a slow roll-out of its new 5G technology in October in four markets, and T-Mobile has announced plans to begin offering it next year. Verizon has already announced that they will not have any data caps and T-Mobile is also unlikely to have them.

The pressure will be on the cable companies to not charge for exceeding data caps in competitive markets. Cable companies could do this by eliminating data caps or else by pushing more video through zero-rating plans. In the case of Comcast, they won’t want to eliminate the data caps for markets that are not competitive. They view data caps as a potential source of revenue. The company OpenVault says that 2.5% of home currently exceed 1 TB in monthly data usage, up from 1.5% in 2017 – and within a few years this could be a lucrative source of extra revenue.

Comcast and the other big cable companies are under tremendous pressure to maintain earnings and they are not likely to give up on data caps as a revenue source. They are also likely to pursue sponsored video plans where the video services pay them to provide video outside of data caps.

Zero-rating is the one net neutrality practice that many customers like. Even should net neutrality be imposed again – through something like the California legislation or by a future FCC – it will be interesting to see how firmly regulators are willing to clamp down on a practice that the public likes.

More FCC Mapping Woes

The FCC has another new billion dollar grant program, this one aimed to improve rural cellular coverage. Labeled as the Mobility Fund II the program will conduct a reverse auction sometime next year to give $4.53 billion to cellular carriers to extend wireless coverage to the most remote parts of the country. For taking the funding a cellular carrier must bring 4G LTE coverage to the funded areas and achieve cellular download speeds of at least 10 Mbps. Funding will be distributed over 10 years with build out requirements sooner than that.

Just like with the CAF II program, the areas eligible for funding are based upon the FCC’s broadband maps using data collected by the existing cellular carriers. As you might expect, the maps show that the parts of the country with the worst coverage – those eligible for funding – are mostly in the mountains and deserts of the west and in Appalachia.

The release of the Mobility Fund II maps instantly set off an uproar as citizens everywhere complained about lack of cellular coverage and politicians from all over the country asked the FCC why there wasn’t more funding coming to their states. The FCC received letters from senators in Mississippi, Missouri, Maine and a number of other states complaining that their states have areas with poor or non-existent cellular coverage that were not covered be the new fund.

If you’ve traveled anywhere in rural America you know that there are big cellular dead spots everywhere. I’ve been to dozens of rural counties all across America in the last few years and every one of them has parts of their counties without good cellular coverage. Everybody living in rural America can point to areas where cellphones don’t work.

The issue boils down to the FCC mapping used to define cellular and broadband coverage. The maps for this program were compiled from a one-time data request to the cellular carriers asking for existing 4G coverage. It’s obvious by the protests that the carriers claim cellular coverage where it doesn’t exist.

In August, the Rural Wireless Association (RWA) filed a complaint with the FCC claiming that Verizon lied about its cellular coverage by claiming coverage in many areas that don’t have it. This is the association of smaller wireless companies (they still exist!). They say that the Verizon’s exaggerated coverage claims will block the funding to many areas that should be eligible.

The Mobility Fund II program allows carriers to challenge the FCC’s maps by conducting tests to identify areas that don’t have good cellular coverage. The smaller carriers in the RWA have been filing these challenges and the FCC just added 90 additional days for the challenge process. Those challenges will surely add new eligible coverage areas for this program.

But the challenge program isn’t going to uncover many of these areas because there are large parts of the country that are not close to an RWA carrier, and which won’t be challenged. People with no cellular coverage that are not part of the this grant program might never get good cellular coverage – something that’s scary as the big telcos plan to tear down copper in rural America.

The extent of the challenges against the Verizon data are good evidence that Verizon overstated 4G LTE coverage. The RWA members I know think Verizon did this purposefully to either block others from expanding cellular networks into areas already served by Verizon or to perhaps direct more of this new fund to areas where Verizon might more easily claim some of the $4.5 billion.

To give Verizon a tiny amount of credit, knowing cellular coverage areas is hard. If you’ve ever seen a coverage map from a single cell tower you’ll instantly notice that it looks like a many-armed starfish. There are parts of the coverage area where good signal extends outward for many miles, but there are other areas where the signal is blocked by a hill or other impediments. You can’t draw circles on a map around a cell tower to show coverage because it only works that way on the Bonneville Salt Flats. There can be dead spots even near to the cell tower.

The FCC fund is laudable in that it’s trying to bring cellular coverage to those areas that clearly don’t have it. But there are countless other holes in cellular coverage that cannot be solved with this kind of fund, and people living in the many smaller cellular holes won’t get any relief from this kind of funding mechanism. Oddly, this fund will bring cellular coverage to areas where almost nobody lives while not addressing cellular holes in more populated areas.

Verizon’s Residential 5G Broadband

We finally got a look at the detail of Verizon’s 5G residential wireless product. They’ve announced that it will be available to some customers in Houston, Indianapolis, Los Angeles and Sacramento starting on October 1.

Verizon promises average download data speeds of around 300 Mbps. Verizon has been touting a gigabit wireless product for the last year, but the realities of wireless in the wild seems to have made that unrealistic. However, 300 Mbps is a competitive broadband product and in many markets Verizon will become the fastest alternative competitor to the cable companies. As we’ve seen everywhere across the country, a decent competitor to the big cable companies is almost assured of a 20% or higher market penetration just for showing up.

The product will be $50 per month for customers who use Verizon wireless and $70 for those that don’t. These prices will supposedly include all taxes, fees and equipment – although it’s possible that there are add-ons like using a Verizon WiFi router. That pricing is going to be attractive to anybody that already has Verizon cellular – and I’m sure the company is hoping to use this to attract more cellular customers. This is the kind of bundle that can make cellular stickier and is exactly what the Comcast and Charter have in mind as they are also offering cellular. Verizon is offering marketing inducements for the roll-out and are offering 3 months free of YouTube TV or else a free Apple TV 4K or a Google Chromecast Ultra.

Theoretically this should set off a bit of a price war in cities where Comcast and Charter are the incumbent cable providers. It wouldn’t be hard for those companies to meet or beat the Verizon offer since they are already selling cellular at a discount. We’re going to get a fresh look at oligopoly competition – will the cable companies really battle it out? The cable companies have to be worried about losing significant market share in major urban markets.

We’re also going to have to wait a while to see the extent of the Verizon coverage areas. I’ve been speculating about this for a while and I suspect that Verizon is going to continue with their history of being conservative and disciplined. They will deploy 5G where there is fiber that can affordably support it – but they are unlikely to undertake any expensive fiber builds just for this product. Their recently announced ‘One Fiber’ policy says just that – the company wants to capitalize on the huge amount of network that they have already constructed for other purposes. This means it’s likely in any given market that coverage will depend upon a customer’s closeness to Verizon fiber.

There is one twist to this deployment that means Verizon might not be in a hurry to deploy this too quickly. The company has been working with Ericsson, Qualcomm, Intel and Samsung to create proprietary equipment based upon the 5GTF standard. But the rest of the industry has adopted the 3GPP standard for 5G and Verizon admits it will have to replace any equipment installed with their current standard.

Verizon also said over the last year that they wanted this to be self-installed by customers. At least for now the installations are going to require a truck roll, which will add to the cost and the rate of deployment of the new technology.

Interestingly, these first markets are outside of Verizon’s telco footprint. This means that Verizon will not only be taking on cable companies, but that they might be putting the final nail in the coffin of DSL offered by AT&T and other telcos in the new markets. Verizon is unlikely to roll this out to compete with their own FiOS product unless deployments are incredibly inexpensive. But this might finally bring a Verizon broadband product to neighborhoods in the northeast that never got FiOS.

It’s going to be a while under we understand the costs of this deployment. Verizon has been mum about the specific network elements and reliance on fiber needed to support the product. And they have been even quieter about the all-in cost of deployment.

Cities all over the country are going to get excited about this deployment in the hope of getting a second competitor to their cable company which are often a near-monopoly. It appears that the product is going to work best where there is already a fiber-rich environment. Most urban areas, while having little last mile-fiber, are crisscrossed with fiber used to get to large businesses, governments, schools, etc.

The same is not necessarily the same in suburbs and definitely not true of smaller communities and rural America. The technology depends upon local last-mile fiber backhaul. Verizon says that they believe their potential market will be to eventually pass 30 million households, or a little less than 25% of the US market. I’d have to think that the map for others, except perhaps for AT&T largely coincide with the Verizon map. It seems that Verizon wants to be the first to market to potentially dissuade other entrants. We’ll have to wait and see if a market can reasonably support more than one last-mile 5G provider – because companies like T-Mobile also have plans for wide deployment.

Massive MIMO

One of the technologies that will bolster 5G cellular is the use of massive MIMO (multiple-input, multiple-output) antenna arrays. Massive MIMO is an extension of smaller MIMO antennas that have been use for several years. For example, home WiFi routers now routinely use multiple antennas to allow for easier connections to multiple devices. Basic forms of the MIMO technology have been deployed in LTE cell sites for several years.

Massive MIMO differs from current technology by the use of big arrays of antennas. For example, Sprint, along with Nokia demonstrated a massive MIMO transmitter in 2017 that used 128 antennas, with 64 for receive and 64 for transmit. Sprint is in the process of deploying a much smaller array in cell sites using the 2.5 GHz spectrum.

Massive MIMO can be used in two different ways. First, multiple transmitter antennas can be focused together to reach a single customer (who also needs to have multiple receivers) to increase throughput. In the Sprint trial mentioned above Sprint and Nokia were able to achieve a 300 Mbps connection to a beefed-up cellphone. That’s a lot more bandwidth than can be achieved from one transmitter, which at the most could deliver whatever bandwidth is possible on the channel of spectrum being used.

The extra bandwidth is achieved in two ways. First, using multiple transmitters means that multiple channels of the same frequency can be sent simultaneously to the same receiving device. Both the transmitter and receiver must have the sophisticated and powerful computing power to coordinate and combine the multiple signals.

The bandwidth is also boosted by what’s called precoding or beamforming. This technology coordinates the signals from multiple transmitters to maximize the received signal gain and to reduce what is called the multipath fading effect. In simple terms the beamforming technology sets the power level and gain for each separate antenna to maximize the data throughput. Every frequency and its channel operates a little differently and beamforming favors the channels and frequency with the best operating capabilities in a given environment. Beamforming also allows for the cellular signal to be concentrated in a portion of the receiving area – to create a ‘beam’. This is not the same kind of highly concentrated beam that is used in microwave transmitters, but the concentration of the radio signals into the general area of the customer means a more efficient delivery of data packets.

The cellular companies, though, are focused on the second use of MIMO – the ability to connect to more devices simultaneously. One of the key parameters of the 5G cellular specifications is the ability of a cell site to make up to 100,000 simultaneous connections. The carriers envision 5G is the platform for the Internet of Things and want to use cellular bandwidth to connect to the many sensors envisioned in our near-future world. This first generation of massive MIMO won’t bump cell sites to 100,000 connections, but it’s a first step at increasing the number of connections.

Massive MIMO is also going to facilitate the coordination of signals from multiple cell sites. Today’s cellular networks are based upon a roaming architecture. That means that a cellphone or any other device that wants a cellular connection will grab the strongest available cellular signal. That’s normally the closest cell site but could be a more distant one if the nearest site is busy. With roaming a cellular connection is handed from one cell site to the next for a customer that is moving through cellular coverage areas.

One of the key aspects of 5G is that it will allow multiple cell sites to connect to a single customer when necessary. That might mean combining the signal from a MIMO antenna in two neighboring cell sites. In most places today this is not particularly useful since cell sites today tend to be fairly far apart. But as we migrate to smaller cells the chances of a customer being in range of multiple cell sites increases. The combining of cell sites could be useful when a customer wants a big burst of data, and coordinating the MIMO signals between neighboring cell sites can temporarily give a customer the extra needed bandwidth. That kind of coordination will require sophisticated operating systems at cell sites and is certainly an area that the cellular manufacturers are now working on in their labs.

More Crowding in the OTT Market

It seems like I’ve been seeing news almost weekly about new online video providers. This will put even more pressure on cable companies as more people find an online programming option to suit them. This also means that a likely shakeout of the OTT industry with such a crowded field of competitors all vying for the same pool of cord-cutters.

NewTV. This is an interesting new OTT venture that was founded by Jeffrey Katzenberg, former chairman of Walt Disney and headed by Meg Whitman, former CEO of Hewlett Packard Enterprise and also from Disney. The company has raised $1 billion in and has support from every major Hollywood studio including 21st Century Fox, Disney, NBCUniversal, Sony Pictures Entertainment, and Viacom.

Rather than take on Netflix and other OTT content directly the company plans to develop short 10-minute shows aimed exclusively at cellphone users. They plan both free content supported by advertising and a subscription plan that would use the ‘advertising-light’ option used by Hulu.

AT&T already owns a successful OTT product with HBO Now that has over 5 million customers. John Stankey, the head of WarnerMedia says the plan is to create additional bundles of content centered around HBO that bring in other WarnerMedia content and selected external content. He admits that HBO alone does not represent enough content to be a full-scale OTT alternative for customers.

AT&T’s goal is to take advantage of HBO’s current reputation and to position their content in the market as premium and high quality as a way to differentiate themselves from other OTT providers.

Apple has been talking about getting into the content business for a decade, and they have finally pulled the trigger. The company invested $1 billion this year and now has 24 original series in production as the beginning of a new content platform. Among the new shows is a series about a morning TV show starring Reese Witherspoon and Jennifer Aniston.

The company hired Jamie Erlicht and Zack Van Amburg from Sony Pictures Television to operate the new business and has since hired other experienced television executives. They also are working on other new content and just signed a multiyear deal with Oprah Winfrey. The company has not announced any specific plans for airing and using the new content, but that will be coming soon since the first new series will probably be ready by March of 2019.

T-Mobile. As part of the proposed merger with Sprint, T-Mobile says they plan to launch a new ‘wireless first’ TV platform that will deliver 4K video using its cellular platform. On January T-Mobile purchased Layer3 which has been offering a 275 channel HD line-up in a few major markets.

The T-Mobile offering will be different than other OTT in that the company is shooting for what they call the quad play that bundles video, in-home broadband (delivered using cellular frequency), mobile broadband and voice. The company says that the content will only be made available to T-Mobile customers and they view it as a way to reduce churn and gain cellular market share.

The Layer 3 subsidiary will also continue to pursue partnerships to gain access to customers through fiber networks, such as the arrangement they currently have with the municipal fiber network in Longmont, Colorado.

Disney. Earlier this year the company announced the creation of a direct-to-consumer video service based upon the company’s huge library of popular content. Disney gained the needed technology by purchasing BAMTech, the company that supports Major League Baseball online. Disney also is bolstering its content portfolio through the purchase of Twenty-First Century Fox.

Disney plans to launch an ESPN-based sports bundle in early 2019. They have not announced specific plans on how and when to launch the rest of their content, but they canceled an agreement with Netflix for carrying Disney content.