Monthly Archives: October 2018

Disasters and Regulation

Both Ajit Pai, the Chairman of the FCC and Governor Rick Scott of Florida have expressed frustration over the speed of recovery of communication in the Florida Panhandle following hurricane Michael. I don’t think anybody expects communications to be restored quickly in the neighborhood by the shore where even the houses are gone, and the frustration is more with lack of communications in areas that were damaged, but not totally devastated.

There are a number of issues to be considered when looking at the slow recovery – regulation, technology and the profitability of the telecom carriers.

The regulatory issues are pretty clear. Back when AT&T or some smaller independent telephone company would have served this area we would have seen the same sort of response from the telephone companies as we see today from the power companies. AT&T and other telcos from around the country would have mobilized swarms of technicians to replace fallen wires. The electronics vendors would have gone to extraordinary lengths to shuffle and direct all of their resources to the disaster areas.

We had plenty of hurricanes during the time when we had telephone monopolies and the telephone linemen were out working as furiously as the power companies to restore service. I remember from the time when I worked at Southwestern Bell that the company had disaster plans in place and routinely reviewed the plans with employees who might be activated during emergencies – the company made disaster a recovery an everyday part of operating the monopoly business.

But the days of monopoly are long past. The phone company is now far from a monopoly and probably only serves a small percentage of the customers in any given area. The big telcos have had huge layoffs over the years and don’t have the staffs that can swarm the area. I wouldn’t be surprised if they don’t even have disaster plans.

Cable companies are the closest thing we have to monopolies and I expect them to put wires back in a reasonable time after a bad storm – but there are many parts of the hurricane-struck area that aren’t served by a cable company. A cable company is still not likely to get the same swarm of technicians like we saw in the regulated telco days.

As we saw with hurricane Sandy, the telcos no longer rushes to fix the damage. After that storm Verizon decided that they weren’t going to fix the copper and used the storm as an opportunity to switch customers to all-wireless cellular broadband. That’s not a change that can be implemented quickly and we saw some of the areas after Sandy without telecom for months. I expect AT&T is going through the same thought process for much of the area from hurricane Michael and is not going to put back copper wires.

There are also technical issues to consider. I’m willing to bet that the primary cause of frustration is the slow recovery of the cellular towers. Unlike the telephone network there is little redundancy built into the cellular networks. When the towers, antennae and equipment huts around a tower are damaged there is no quick fix, and replacements need to be shipped in. Unlike the major coordinated disaster plans of the old Ma Bell, I doubt that the cellular carriers have react-immediately disaster recovery plans. That kind of planning costs money. The companies would need to hold dozens of cell sites in place as spares that were ready to be shipped out on a moment’s notice. That’s not profitable and there is no regulatory agency insisting that the cellular companies have such plans in place.

As the technology at the edge increases, the time needed for recover from a disaster increases. I remember that this was a concern for telcos when they first placed DSL cabinets in neighborhoods – they knew it would take a lot longer to recover from destroyed electronics compared to the days when the outside network was most just copper wires. The cellular networks are the same, and we are about to enter a time when 5G and other new technologies will place electronics deep into neighborhoods. As slow as the recovery might be for hurricane Michael, it’s going to be worse when we are relying on dispersed 5G electronics deep in the field – it takes longer to fix the electronics and the backhaul networks than it is to put wires back on poles.

The issue that nobody wants to talk about is that all of the big companies in the telecom market are now publicly traded companies that exist to maximize quarterly earnings. Having disaster plans in place costs money – and the big companies these days don’t spend anything extra that’s not mandatory. Call it lack of regulation or call it an emphasis on the profit motive, but the big ISPs and cellular companies have no motivation or incentive to make extraordinary efforts after a disaster. I doubt that the existing regulatory powers even give the FCC any authority to impose such rules – particular with broadband, since the FCC says they are no longer regulating it.

Will South Dakota Get 5G?

The Senate Commerce Committee held a recent hearing in Sioux Falls, South Dakota talking about the benefits that 5G will bring to the state. The hearing was chaired by Senator John Thune, who’s one of the primary telecom-related members of Congress.

A local paper quoted Thune as claiming that 5G is going to transform the economy of the country and of the state. He cited the same 5G talking points used by the FCC in their recent order that mandated cheap and fast connections to poles for 5G transmitters. Thune also said we’re in a race with China, Japan and South Korea and that we can’t afford to lose the 5G race.  FCC Commissioner Brad Carr was at the hearing and said that 5G could bring hundreds of millions of dollars of economic benefit to the state. He also estimated that realizing the benefits of 5G would require hundreds of thousands of small cells mounted on poles and light poles in the state.

The numbers cited in this hearing stun me. What would it mean to have hundreds of thousands of 5G transmitters on poles in South Dakota and could such a network create hundreds of millions of benefits for the state? I decided to try to put those numbers into context.

I still don’t know what a 5G transmitter on a pole will cost. I’ve heard that a full-blown small cell site currently costs more than $15,000 – but I have to assume that in order to make this even reasonably profitable that most of the devices in a 5G network will have to cost far less (and likely have far less functionality than a full-blown small cell site). Assuming thst that manufacturers will somehow get the installed price down to $2,500 each, then deploying on 200,000 poles (derived from “hundreds of thousands of poles”) equates to a cost in the state for just for the pole electronics of $500 million. This doesn’t include the cost of the fiber and other backhaul costs needed to support the 5G gigabit network.

I look at that $500 million number, knowing that it’s only a portion of the cost of deploying 5G and I wonder who is going to make that kind of investment in South Dakota. It’s not going to be the two primary incumbents, CenturyLink or Midco, the primary cable TV incumbent. It’s unlikely that Verizon owns any significant amounts of fiber in the state and they are not likely to do much there. I look around the industry and I can’t see any major player who would make a $500 million investment in a state with so few people.

Consider the demographics. South Dakota is one of the least populated states and the Census estimates the population to be around 870,000 with almost 400,000 housing units. The biggest city is Sioux Falls with a population of 176,000, Rapid City has 70,000 and cities are much smaller after that. When you get outside the cities it’s one of the least densely populated states.

Even if somebody made that kind of investment in South Dakota, how do they make their money back? Very few large public companies today are willing to earn infrastructure returns on investments, which is one of the primary drivers of our infrastructure crisis. Almost nobody other than governments are willing to invest in projects that have 10 and 20-year paybacks. This is the primary reason why no big ISPs are building residential fiber-to-the-home. It’s hard to envision the paybacks for 5G being much faster than fiber.

If I do the math on a $500 million investment, it would require a new revenue stream of $35 per month for every one of the 400,000 households in North Dakota to repay that investment in 3 years. Even at 6 years that’s still $17.50 per month for every household in the state. When you consider that only a much smaller percentage of people would somehow pay for some sort of theoretical 5G product, the cost per potential customer becomes gigantic – if 25% of the people in the state somehow bought a 5G product that would require a new expenditure of $70 per home per month to pay this investment off in the six years that Wall Street might find acceptable.

Of course, the investment is not just $500 million because there are a lot of other costs to bringing a widespread 5G network. To build the kind of network envisioned at the Congressional hearing has to cost far north of a billion dollars, any possibly several billions if a lot of fiber has to be built. That makes me wonder what the 5G hype is all about. It’s hard to envision anybody making this kind of investment in South Dakota. I’m not busting on South Dakota because this same cost to benefit applies to any place outside of large NFL cities with a high density of households.

I don’t have a crystal ball and I can’t say that somebody won’t invest in 5G in states like South Dakota. But I understand business plans and paybacks and I can’t foresee any of the current big ISPs in the industry making the needed investments where housing density is low. Smaller ISPs can’t raise the huge amount of needed money. It’s certainly possible that some of the neighborhoods a few cities in the state might see some 5G, but that’s probably not going to be on anybody’s radar for a while. I’m skeptical because I just can’t see a way to make the math work.

FCC Proposes New WiFi Spectrum

At their recent open meeting the FCC announced that it is proposing to use up to 1,200 megahertz of the spectrum band between 5.925 GHz and 7.125 GHz (being referred to as the 6 GHz band) as unlicensed spectrum. This is a bold proposal and more than doubles the total amount of bandwidth that would be available for WiFi.

However, their proposal comes with several proposed caveats that will have to be considered before expecting the spectrum to be useful everywhere for rural broadband. First, the FCC proposal is that any place where the spectrum is currently being used for Broadcast Auxiliary Service and Cable TV Relay service that the spectrum only be licensed for indoor use.

In those places where the spectrum is being used heavily for point-to-point microwave service, the outdoor use would have to be coordinated with existing users by use of an automated frequency coordination system, or a database, that would ensure no interference. I assume one of the rules that must be clarified is a definition of what constitutes ‘heavy’ existing point-to-point use of the spectrum.

In places where there are no existing uses of the spectrum it sounds like it would be available for outdoor use as well as indoor use.

This band of spectrum would be a great addition to networks that provide point-to-multipoint fixed wireless service. The spectrum will have a slightly smaller effective delivery area than the 5.8 GHz WiFi ISM band now widely in use. The 5.8 GHz spectrum is already the workhorse in most fixed wireless networks and adding additional spectrum would increase the bandwidth that can be delivered to a given customer in systems that can combine spectrum from various frequencies.

The key is going to be to find out what the two restrictions mean in the real world and how many places are going to have partial or total restrictions of the spectrum. Hopefully the FCC will produce maps or databases that document the areas they think are restricted using their two proposed criteria.

This spectrum would also be welcome indoors and would add more channels for home WiFi routers, making it easier to cover a home and provide coverage to greater numbers of devices simultaneously. The FCC hopes the spectrum can be used everywhere for indoor use, but they are asking the industry if that causes any problems.

Note that this is not an order, but a proposal. The FCC released a draft of the Notice of Proposed Rulemaking on October 2, and after this vote they should soon publish a schedule for a public comment period from the industry and other interested parties.

WiFi has been a gigantic boon to the economy and it’s a great move by the FCC to provide additional WiFi spectrum, even if this turns out to be largely restricted to indoor use. However, everybody associated with rural broadband is going to hope this is decided soon and that the frequency is added to the toolbox for serving fixed wireless in rural areas.

Interestingly, this spectrum would make it easier for ISPs that claimed they can achieve universal 100 Mbps speeds for fixed wireless in the recent reverse CAF II auctions. Perhaps some of those companies were counting on this spectrum as a way to meet that claim.

It’s always hard to predict the speed of the FCC process. I see that various WiFi-related organizations are hoping this means use of the spectrum as early as sometime next year. However, we’ve often seen the FCC proceed a lot slower than what the industry wants and one of factors the FCC is going to take into consideration is the pushback from cellular companies that will likely want this to be licensed spectrum. Unfortunately, the large cellular companies seem to be getting everything on their wish list from this FCC, so we’ll have to see how that plays out.

I imagine that device manufacturers are already considering this in the design of new hardware, but still need to know more before finalizing software. This is perhaps the best announcement so far from this FCC. The benefit to the country from WiFi is gigantic and this will vastly strengthen the advantages of WiFi.

About the FCC

I have probably averaged a blog a week over the years talking in some manner about the FCC. I thought today I’d discuss a few basic facts about the industry that might help a non-regulatory person understand how they operate.

The FCC’s mission statement is straightforward – the stated mission of the FCC is to ensure that the American people have available—at reasonable cost and without discrimination—rapid, efficient, nation- and worldwide communication services, whether by radio, television, wire, satellite, or cable.

The FCC is an independent agency, meaning it’s not under the direct control of either Congress or the White House. With that said, each new administration gets to select at least a few FCC commissioners, but can’t have more than three of the five commissioners from the same party as the president.

Since 2009 the FCC has been funded through regulatory fees it collects from various industry sources such as annual licenses on cable TV providers, long distance providers, or owners of spectrum. The budget for the year just started on October 1 is $322 million. Starting this year, none of the monies collected from spectrum auctions can count towards the FCC’s budget. The Ray Baum Act that authorized the FCC earlier this year is the first FCC reauthorization bill since 1990. The agency could theoretically operate indefinitely without reauthorization as long as it generates enough fees to cover its budget.

The FCC has a lot of flexibility in determining how it will regulate the various industry. Their authority is only limited by specific rules established by Congress, such as the Communications Act of 1934 that created the FCC or the Telecommunications Act of 1996. Congressional bills that change FCC regulations are somewhat rare, but Congress may pass a number of bills in any year that change some specific aspect of operating the agency. In this past year there were bills that did such things as change the reporting requirements by educational broadcast stations, eliminated some obsolete reports that were prepared for Congress, and established the office of Inspector General at the FCC.

The FCC can establish new rules for regulating the various industries as long as those rules don’t conflict with past Congressional mandate. Many of the challenges that are filed against new FCC decisions question if the FCC’s actions are in conflict with the authority granted to the agency by Congress. The extent and limitations of the FCC’s authority has been defined over the years by a series of court decisions.

The FCC’s rules are encapsulated into seven sections, called ‘Titles’. The FCC rules that govern the telecom industry are included in a few of the Titles:

  • Title II regulates Common Carriers that include telephone companies, CLECs, wireless providers and long-haul fiber networks. Some of the regulation in Title II must be coordinated with a Joint Board, that includes both FCC and state regulators.
  • Title III regulates broadcasting of radio and television.
  • Title VI regulates cable TV communications, including Video programming provided by telephone companies.

The day-to-day functions of the FCC are carried out by 7 bureaus – the Consumer and Governmental Affairs Bureau, the Enforcement Bureau, the International Bureau, the Media Bureau, the Public Safety and Homeland Security Bureau, the Wireless Telecommunications Bureau and the Wireline Competition Bureau.

Most FCC rules are adopted using a process known as ‘notice and comment’ that are defined in Title I. The FCC will issue various forms of proposed rules and anybody in the public can comment.

The public is also free to file complaints to the FCC about actions by regulated companies that have harmed them. The FCC has a defined process for handling such complaints, and most are referred back to the offending regulated party with instructions to explain their actions of make amends if they acted incorrectly.

There is also a more formal process for regulated companies to make complaints against each other, or which seek resolution of industry disputes and the FCC has Administrative Judges that hear such complaints and make rulings or assess fines. Many of the ‘orders’ we see from the FCC, such as a whole series of rulings over the last few years about access charges, are actually rulings from Administrative Judges and not from the FCC Commissioners.

The FCC also has an Engineering and Technology bureau that advises the FCC on technical issues such as spectrum allocations. This group also authorizes the use of equipment, and most telecom equipment must be approved by the FCC before it can be introduced into the public networks. This group also can grant the use of experimental licenses to test new ideas in the field.

Deploying 5G – It’s no Panacea

This was published last week as an article on WRAL Techwire, a Raleigh TV station. 

If you read many articles about 5G, you’d think that we’re on the cusp having wireless broadband brought to most homes in America, providing homes with another option for broadband. This idea was recently bolstered by news that Verizon plans to offer 5G wireless broadband to as many as 11 million homes over the next few years.

However, Verizon has one huge advantage over the rest of the market in that they already own an extensive fiber network that reaches to cellular towers, large businesses, schools, large apartment complexes and high-rise buildings. Verizon plans on leveraging this existing network to bring wireless broadband to neighborhoods lucky enough to be near to their fiber. It’s unlikely that anybody else will copy the Verizon business plan – the other big telcos with large fiber networks, AT&T and CenturyLink, have made it clear that they are not pursuing 5G broadband to homes.

Verizon has a second benefit that few others share. As a huge cellular carrier, Verizon will benefit by relieving the pressure on their cellular networks in neighborhoods where they offer 5G. The bandwidth being demanded on cellular networks is the fastest growing sector of the industry with total bandwidth requirements doubling every 18 months. Verizon will save a lot of money by not having to bolster their cellular backbones in 5G neighborhoods.

So, what would it take for anybody else to provide the same 5G wireless technology as Verizon? The 5G technology relies on the placement of small transmitters on utility poles or street lights and the FCC just passed rules making it easier for a provider to get the needed connections. Each transmitter will be able to wirelessly transmit broadband to homes or businesses in the immediate area. Verizon press releases say the effective distance for delivering a signal is up to 2,000 feet, but most of the industry thinks the realistic distance is closer to 1,000 feet. That means that any given pole-transmitter will be able to ‘see’ anywhere from a handful up to a few dozen homes, depending upon what’s called line-of-sight. The 5G spectrum requires a relatively clear path between the transmitter and a dish placed on the home – and that means that 5G is best deployed on straight streets without curves, hills, dense tree cover or anything that decreases the number of homes within range of a transmitter.

The first-generation Verizon technology claims broadband speeds of around 300 Mbps, with the goal to eventually reach gigabit speeds. That level of bandwidth can only be delivered to the pole-mounted unit in two ways – with fiber or with a high-bandwidth wireless link. If wireless backhaul is used to bring broadband to the poles there can be no obstructions between the pole units and the wireless basestation – unlike many kinds of wireless transmission, high-bandwidth wireless backhaul can’t tolerate any obstructions in the transmission path. That requirement for pure line-of-sight will make wireless backhaul impractical in many neighborhoods.

Where wireless backhaul won’t work a 5G network will require fiber to each pole transmitter. The cost of building fiber to neighborhoods is the biggest barrier to widespread 5G deployment. It’s expensive to string fiber in residential neighborhoods. The cost of putting fiber on poles can be expensive if there are already a lot of other wires on the poles (from the electric, cable and telephone companies). In neighborhoods where other utilities are underground the cost of constructing fiber can be exorbitantly high.

To summarize, a 5G network need transmitters on poles that are close to homes and also needs fiber at or nearby to each pole transmitter to backhaul these signals. The technology is only going to make financial sense in a few circumstances. In the case of Verizon, the technology is reasonably affordable since the company will rely on already-existing fiber. An ISP without existing fiber is only going to deploy 5G where the cost of building fiber or wireless backhaul is reasonably affordable. This means neighborhoods without a lot of impediments like hills, curvy roads, heavy foliage or other impediments that would restrict the performance of the wireless network. This means not building in neighborhoods where the poles are short or don’t have enough room to add a new fiber. It means avoiding neighborhoods where the utilities are already buried. An ideal 5G neighborhood is also going to need significant housing density, with houses relatively close together without a lot of empty lots.

This technology is also not suited to downtown areas with high-rises; there are better wireless technologies for delivering a large data connection to a single building, such as the high bandwidth millimeter wave radios used by Webpass. 5G technology also is not going to make a lot of sense where the housing density is too low, such as suburbs with large lots. 5G broadband is definitely not a solution for rural areas where homes and farms are too far apart.

5G technology is not going to be a panacea that will bring broadband to most of America. Most neighborhoods are going to fail one of the needed parameters – by having poles without room for fiber, by having curvy roads where a transmitter can only reach a few homes, etc. It’s going to be as much of a challenge for an ISP to justify building 5G as it is to build fiber to each customer. Verizon claims their costs are a fraction of building fiber to homes, but that’s only because they are building from existing fiber. There are few other ISPs with large, underutilized fiber networks that will be able to copy the Verizon roadmap. With the current technology the cost of deploying 5G looks to be nearly identical to the cost of deploying fiber-to-the-home.

Flexible Numerology

This is the last in a series that looks at the underlying technologies that will create improvements for 5G – I looked previously at MIMO antennas and network slicing. Today I look at flexible numerology. Flexible numerology, in a nutshell involves new techniques that allow for changing the width of data channels in a frequency band.

The easiest way to understand the issues involved is to think back at how we used wireless devices in the past. Anybody that ever fiddled with an older 802.11n WiFi router using 2.4 GHz remembers directing different devices in the home to channels 1,6 or 11. While the 2.4 GHz band has 11 separate available channels, most wireless router manufacturers limited the use to those three channels in order to avoid cross-channel interference. They knew that if a home only used these three channels they’d likely not see such interference and would get the maximum performance on each channel. However, the decision to use only those three channels limited the amount of bandwidth that can be utilized. In peak usage situations only 3 of the 11 channels of 2.4 GHz are carrying bandwidth – avoiding interference meant not using much of the available frequency.

It’s easy to think of the channels within a wireless frequency as separate channels, because that’s how they are defined at the FCC. Cable companies are able to create distinct channels of frequency within the controlled confines of a coaxial cable in way to limit interference between channels. But when transmitted in the wild through the air all sorts of interference arises. Anybody old enough to remember watching TV in the 50s can remember times when you could see ghosts of a nearby channel when you were watching one of the low channel numbers.

Our cellular networks have been designed in a similar fashion to the WiFi channels. Within each of the frequencies used for cellular service are channels predefined by the FCC, with buffers between each channel. However, even with the buffers there is cross-channel interference between neighboring channels, and so the cellular carriers have selectively chosen to spread the actual use of frequency in ways similar to how we used channels 1,6 and 11 for WiFi.

Flexible numerology is new goal for 5G that was published with the 3GPP Release 15 standard. Flexible numerology is part of a system for allocating frequency in a new way that is intended to get the most and best use of the spectrum.

5G will use the same underlying method for modulating signals as 4G LTE – orthogonal frequency division multiplexing (OFDM). The OFDM scheme is the current way to try to get the best use of frequency and with OFDM a data stream is split across several separate narrowband channels to reduce interference, much in the same way that we used the three channels of WiFi.

Flexible numerology is going to give the cell site the option to create much smaller narrowband channels within the channels described in the OFDM standard. That’s the magic sauce that will enable 5G to communicate with huge number of devices without creating massive interference.

Consider a situation of two users at a 5G site. One is an IoT sensor that wants to trickle small amounts of data to the network and the other is a gamer that needs bursts of huge amounts of bandwidth. In the LTE network both devices would be given a narrowband channel – the IoT device for perhaps a tiny amount of time and the gamer for longer bursts. That’s an inefficient use of frequency since the IoT device is transmitting only a tiny amount of data. For even the short time that the cell site communicates with that device, in an LTE network the device commands as much bandwidth as any other user.

Flexible numerology will allow assigning a tiny slice of frequency to the IoT device. For example, the cell site might elect to assign 1/64th of a channel to the IoT device, meaning the remaining 63/64ths of the frequency can be assigned to some other purpose to be used at the same time that the IoT device is demanding bandwidth. In a 5G network the IoT device might grab a tiny slice of frequency for a short period of time and barely create a ripple in the overall use of frequency at the cell site.

The cellular network might treat the gamer the same as today but has numerous new options with flexible numerology to improve the gaming performance. It might separate sent and received data and size each path according to needs. It might create a connection for a longer time period than normal to efficiently transmit the needed packages. Essentially, flexible numerology lets the cell site treat every customer differently depending upon their specific needs.

This implementation of flexible numerology for 5G is complicated and will require new algorithms that ultimately get built into the chips for 5G devices. It’s always interesting to watch how new standards are implemented in the industry. I’ve seen numerous papers on the web over the last few months from labs and universities looking at the challenges of flexible numerology. These investigations will eventually get translated into lab trials of devices, and, if those trials are successful make it into the production for both cell sites and cellular devices. This is why a new standard like 5G can’t be implemented immediately. Standards define the problem, and then scientists, engineers and manufacturers take a shot at making the new ideas work (or sometimes find out that they don’t work). It’s likely to be years until the flexible numerology is made to work good enough to be in everyday use in cell sites – but when it does the utilization of frequency will be significantly improved, which is a key goal for 5G.

Small ISPs and the Internet Bill of Rights

Recently Ro Khanna, a California Congressman, worked with some of the biggest thinkers in Silicon Valley to develop what he’s calling an Internet bill of Rights – the document included at the end of this blog. This Bill of Rights lays forth the ideal basic right of privacy that users most want out of the Internet.

This document is possibly the start of the process of discussing regulation for the big Internet companies – something that doesn’t exist today. Currently the Federal Trade Commission theoretically can pursue web companies that rip off the public and the Justice Department can tackle monopoly abuses – but otherwise the web companies are not regulated.

It’s becoming increasingly clear in the last few years that web companies have grown to the size where they value profits first, and any principles that were loosely followed in the early days of the Internet are long gone. There are constant headlines now declaring abuses by web companies. Recent Congressional hearings made it clear that the big companies are misusing customer data – and those hearings probably barely uncovered the tip of the iceberg.

The European Union has begun the process of trying to reel in some of the biggest abuses of the web companies. For example, web companies in Europe now have to disclose to users how they intend to use their data. In this country we’re starting to see sentiment from both Democrats and Republicans that some level of regulation is needed.

It won’t be easy to regulate the big web companies, which are now gigantic corporations. I read recently that there are now more lobbyists in DC working for web companies like Facebook and Google than work for the big telcos and ISPs. There will a major pushback against any form of regulation and it would obviously require a significant bipartisan effort over many years to create any worthwhile regulations.

My guess is that the public wants some sort of protection. Nobody wants their data released to the world through data breaches. Most people want things like their medical and financial records kept private and not peddled between big companies on the web. Almost everybody I know is uneasy with how the big web companies use our personal data.

I think this creates an opportunity for small ISPs. There are aspects of this Bill or Rights that the big ISPs will oppose. They are clearly against net neutrality. All of the big ISPs have purchased companies to help them better mine customer data – they obviously want to grab a slice of the money being made by Google and Facebook off user data. The big ISPs are likely to fight hard against regulation.

It’s virtually impossible for small ISPs to violate any of these principles. That creates an opportunity for small companies to differentiate themselves from the big ISPs. I think small ISPs need to tout that they are for net neutrality, that they value customer privacy and that they will never misuse customer data. I have a few clients that do this, but very few make this one of the key ways to differentiate themselves from the big ISPs they compete against.

I strongly recommend giving this some thought. Supporting consumer data rights can be made a key part of small ISP advertising. Some statements akin to the Internet Bill of Rights can be made prominent on web sites. These concepts should be prominent in your terms of service. These are concepts your customers will like and it shouldn’t be hard for any small ISP to embrace them.

Internet Bill of Rights

The internet age and digital revolution have changed Americans’ way of life. As our lives and the U.S. economy are more tied to the internet, it is essential to provide Americans with basic protections online.

You should have the right:

(1) to have access to and knowledge of all collection and uses of personal data by companies;

(2) to opt-in consent to the collection of personal data by any party and to the sharing of personal data with a third party;

(3) where context appropriate and with a fair process, to obtain, correct or delete personal data controlled by any company and to have those requests honored by third parties;

(4) to have personal data secured and to be notified in a timely manner when a security breach or unauthorized access of personal data is discovered;

(5) to move all personal data from one network to the next;

(6) to access and use the internet without internet service providers blocking, throttling, engaging in paid prioritization or otherwise unfairly favoring content, applications, services or devices;

(7) to internet service without the collection of data that is unnecessary for providing the requested service absent opt-in consent;

(8) to have access to multiple viable, affordable internet platforms, services and providers with clear and transparent pricing;

(9) not to be unfairly discriminated against or exploited based on your personal data; and

(10) to have an entity that collects your personal data have reasonable business practices and accountability to protect your privacy.

I’m Not a Fan of the 5G Hype

I read a lot of articles talking about what a huge deal 5G will be for the economy. The source of the excitement is the huge numbers being thrown around. For example, Qualcomm and IHS Technology issued a report in 2017 that estimated that 5G could enable $12 trillion in economic output around the world by 2035. That same report made the incredibly hyped claim that 5G could be as important to the world as the introduction of electricity. It’s no wonder that financial people are excited about the potential for 5G and why so many companies want to somehow grab a piece of this new market.

But I look around my own part of the world and I have a hard time seeing this kind of impact. I live in a town of 90,000 people. If we are like the average US market then roughly 85% of homes here already have landline broadband. Practically everybody here also has a cellphone, with the majority using smartphones.

People may read my blog and think I am not a fan of 5G – but that’s not true, I’m just not a fan of the hype. I would love for Verizon to offer me another choice of home broadband – I would consider changing to Verizon at the right price, as would many other households. My biggest question is how much value Verizon would create by introducing 5G in my town. Let’s say Verizon was to capture 30% of the broadband market here – that certainly creates an advantage to Verizon and gives them a significant new revenue stream. However, for every customer Verizon gains, Charter or AT&T would lose a customer, and overall that’s a zero-sum game. Further, if you assume that 5G competition would drive down prices a bit (it might not since oligopolies tend to not compete on price), then the overall spending on broadband in the town might actually decrease a bit.

The same thing would happen with cellular 5G. The big four cellular companies will have to spend a lot to upgrade all of the cell sites here to 5G. We’re a hilly and heavily wooded City and it will take a lot of small cell sites just to fill in the existing cellular holes. But unless they can find a way to charge more for 5G cellular broadband, then cellphone broadband is also a zero-sum game. Everybody in town already has a cellphone and a data plan, and the long-term trend is for cellular data prices to drop. I don’t see the new revenue stream from 5G cellular that will pay for the needed upgrades. Perhaps faster cellular data speeds will attract more people to drop landlines, but that’s also a zero-sum for the market as a whole.

There is one new aspect of 5G that the cellular carriers are counting on to create a new revenue stream. Once the 5G technology has been developed, the 5G standard calls for the ability of a cell site to communicate with as many as 100,000 devices – a huge increase over today’s capabilities. The cell carriers are clearly banking on IoT as the new revenue opportunity.

However, that kind of transition isn’t going to happen overnight. There are a whole lot of steps required before there is a huge cellular IoT revenue stream. First, the technology has to be developed that will handle that huge number of IoT devices. The 5G core standards were just developed last year and it will take years for vendors and labs to achieve the various goals for 5G. As those improvements are realized it will take a lot longer to introduce them into the cellular networks. We are just now finally seeing the deployment of 4G LTE – AT&T is just now deploying what they call 5G Evolution into any major markets, which is actually fully-compliant 4G LTE. The same slow roll-out will occur with 5G – we’ll advance through 4.1G, 4.2G, etc. until we see fully-compliant 5G network in a decade.

We’ll also have to wait for the rollout of IoT sensors that rely on a 5G network. It will be a bit of a chicken and egg situation because nobody will want to deploy devices that need 5G until 5G is active in a sufficient number of neighborhoods. But eventually this will come to pass – to a degree we can’t predict.

The question is if IoT usage is the trillion-dollar application. I certainly look forward to a time when I might have an embedded chip for 24/7 health monitoring using a 5G network – that’s a service that many people will be willing to pay for. But there is no guarantee that the revenue streams will materialize for IoT monitoring to the extent envisioned by AT&T and Verizon. I’ve done the math and the only way that the carriers can see a trillion-dollar benefits from IoT is if future homes have an IoT monitoring bill of the same magnitude as our current cellular or broadband bills – and that may never come to pass. I would love to see a concrete business plan that predicts where these huge new benefits come from, but I’ve seen nothing specific other than the big claims.

There is one aspect of the hype that I do buy. While I can’t see any way to equate the value of 5G to be as important as electricity, it is likely to share the same kind of introduction cycle that we saw with the electric grid. It took 25 years for electricity to spread to the majority of US cities and another 25 years until it was in most of rural America. New technologies today deploy faster than the deployment of electric grids – but this still can’t happen overnight and is at likely to be many years until rural America sees 5G cellular and a lot longer for 5G fixed broadband.

If you believe the hype in the press, we’ll start seeing big benefits from 5G in 2019 and 2020. I can promise you a blog at the end of next year that looks to see if any of this hype materialized – but I already suspect the answer will be no.

The Millimeter Wave Auctions

The FCC will soon hold the auction for two bands of millimeter wave spectrum. The auction for the 28 GHz spectrum, referred to as Auction 101, will begin on November 14 and will offer 3,072 licenses in the 27.5 to 28.35 GHz band. The auction for 24 GHz, referred to as Auction 102, will follow at the end of Auction 101 and will offer 2,909 licenses in the 24.25 to 24.45 GHz and the 24.75 to 25.25 GHz bands.

This is the spectrum that will support 5G high-bandwidth products. The most unusual aspect of this auction is that the FCC is offering much wider channels than ever before, making the spectrum particularly useful for broadband deployment and also for the frequency slicing needed to serve multiple customers. The Auction 101 includes two blocks of 425 MHz and is being auctioned by County. Auction 102 will include seven blocks of 100 MHz and will be auctioned by Partial Economic Areas (PEA). PEAs divide the country into 416 zones, grouped by economic interest. They vary from the gigantic PEA that encompasses all of the New York City and the surrounding areas in Connecticut and New Jersey to PEAs that are almost entirely rural.

That means that every part of the country could see as many as seven different license holders, assuming that somebody pursues all of the spectrum. It’s likely, though, that there will be rural areas where nobody buys the spectrum. It will be interesting to look at the maps when the auctions are done.

This is the spectrum that can be used to support the fixed wireless broadband like Verizon is now deploying from poles. The spectrum has the capability of delivering big bandwidth, but for relatively short distances of 1,000 feet or more. The spectrum can also be used as a focused beam to deliver several gigabits of bandwidth for a mile to a single point, such as what Webpass is currently doing to serve downtown high-rise apartment buildings.

The industry consensus is that this spectrum will find limited use in rural areas for now since it’s hard, with existing technology, to deploy a 5G transmitter site that might only reach a few potential customers.

The FCC has released the names of the companies that will be bidding in the auction. As expected the big cellular companies are there and AT&T, Verizon and T-Mobile are bidding. Absent is Sprint, but the speculation is that they are relying on the merger with T-Mobile and have elected to sit out the auction.

The big telcos are also in the auctions with AT&T, Verizon, Frontier and Windstream all participating. Absent is CenturyLink, which further strengthens the belief that they are no longer pursuing residential broadband.

The only cable company of any size in the auction is Cox Communications. The other big companies like Comcast, Charter, Altice and many others are sitting out the auction. It doesn’t make sense for a cable company to deploy the spectrum where they are already the incumbent broadband provider. Wireless technology for end users would complete directly with their own networks. Since Cox is privately held it’s hard to know their plans, but one use of the spectrum would be to expand in the areas surrounding their current footprint or to move into new markets. It’s costly to expand their hybrid-fiber networks and 5G wireless might be a cheaper way to move into new markets.

There are some rural companies that are bidding for spectrum. It’s hard to know if the rural telcos and cooperatives on the list want to use the spectrum to enhance broadband in their own footprint or if they want to use the spectrum to expand into larger nearby markets. One of the most interesting companies taking part in both auctions is US Cellular. They are the fifth largest cellular company after the big four and serve mostly rural markets. They’ve already made public announcements about upgrading to the most current version of 4G LTE and it will be interesting to see how they use this spectrum.

PropTech

One of the things that I’ve always loved with our industry is that there are dozens of new acronyms to learn every year – and that’s the result of the industry always moving in new directions. The latest new acronym for me is PropTech, meaning telecom technology designed to benefit large buildings. There are now numerous companies, including well-funded start-ups, that are specializing in bringing broadband and upgrading other technology in buildings.

It’s been interesting to watch the growth of the industry over time. For many years the telecom focus for large buildings was bringing a competitive cable TV product into buildings, usually delivered by satellite.

When broadband was first introduced in the late 90s and speeds were still slow, tenants were able to get sufficient broadband from the cable or telephone incumbent. The first place we saw a demand for bigger bandwidth was in high rises housing big corporate clients. This was an area of focus for the telcos and the big CLECs that arose in the late 1990s. CLECs were measured by how many buildings they had lit with fiber – and the numbers were low, with only a handful of large buildings connected in each major city.

There were cost barriers for constructing downtown fiber – construction costs were high, gaining access to entrance facilities was a challenge and there was no easy technology for stringing fiber inside older buildings – so the number of fiber-wired buildings remained relatively small. Around 2000 we started to see newly constructed residential and business high rises come wired with fiber. But getting fiber into older buildings remained a challenge. I have numerous clients that built fiber to whole cities before 2010 but bypassed the high rises and large apartment complexes.

This started changing a decade ago as we saw new technologies aimed at more easily rewiring older buildings. Probably the most important breakthrough was flexible fiber that could easily bend around corners, allowing fiber-wiring schemes that could unobtrusively hide fiber in the corners of ceilings. Since then we’ve seen other improvements that make it easier and affordable to service larger buildings such as the use of G.Fast to distribute broadband using existing copper wiring.

PropTech is now taking real estate technology to the next level. Broadband is still the primary focus today, and building owners want fast broadband for tenants. But PropTech goes far beyond just broadband. Landlords now want to provide networked WiFi in common areas. Landlords want cellular boosters to provide better cellphone coverage for tenants. Buildings owners want to tout security and want security cameras in parking and other common areas that can be accessed by tenants. We’re seeing landlords now adding smart-home technology into upscale units. We’re also seeing buildings with business tenants constructing sophisticated data center rooms rather than the old wiring closets that used to house electronics.

Some of the new technology is designed to help landlords control their own operating expenses. This includes things like sensors and smart meters aimed at minimizing power costs. New buildings are going green, often generating much or all of their own energy needs – all supported by a robust telecom infrastructure.

Convincing landlords to spend the capital to adopt PropTech isn’t always easy. PropTech business plans stress new revenue streams from providing broadband, new revenues from increased rents and cost-savings as a way to pay for upgrades. The ultimate value to a landlord is the increased value of the property from modernizing. Some PropTech companies are even bringing the funding required to pay for the upgrades, making it easy for a landlord to say yes.

PropTech is creating some interesting changes in urban broadband. For many years the best broadband in cities was found in single family homes. But today some of the best networks and fastest data speeds are found in the high rises – where just a few years ago renters suffered from slow broadband and poor cell phone coverage.