Another Spectrum Battle

Back in July the FCC issued a Notice of Proposed Rulemaking seeking comments for opening up spectrum from 3.7 GHz to 4.2 GHz, known as the C-Band. As is happening with every block of usable spectrum, there is a growing tug-of-war between using this spectrum for 5G or using it for rural broadband.

This C-Band spectrum has traditionally been used to transit signals from satellites back to earth stations. Today it’s in use by every cable company that receives cable TV signals at a ‘big-dish’ satellite farm. The spectrum had much wider use in the past when it was used to deliver signal directly to customers using the giant 7 – 10 foot dishes you used to see in rural backyards.

This spectrum is valuable for either cellular data or for point-to-multipoint rural radio broadband systems. The spectrum sits in the middle between the 2.4 GHz and the 5.8 GHz used today for delivering most rural broadband. The spectrum is particularly attractive because of the size of the block, at 500 megahertz.

When the FCC released the NPRM, the four big satellite companies – Intelsat, SES, Eutelsat and Telesat – created the C-Band Alliance. They’ve suggested that some of their current use of this spectrum could be moved elsewhere. But where it’s not easy to move the spectrum, the group volunteered to be the clearing house to coordinate the use of C-Band for other purposes so that it won’t interfere with satellite use. The Alliance suggests that this might require curtailing full use of the spectrum near some satellite farms, but largely they think the spectrum can be freed for full use in most places. Their offer is seen as a way to convince the FCC to not force satellite companies completely out of the spectrum block.

I note that we are nearing a day when the need for the big satellite earth stations to receive TV might become obsolete. For example, we see AT&T delivering TV signal nationwide on fiber using only two headends and satellite farms. If all TV stations and all satellite farm locations were connected by fiber these signals could be delivered terrestrially. I also note this is not the spectrum used by DirecTV and Dish networks to connect to subscribers – they use the K-band at 12-18 GHz.

A group calling itself the Broadband Access Coalition (BAC) is asking the FCC to set aside the upper 300 megahertz from the band for use for rural broadband. This group is comprised of advocates for rural wireless broadband, including Baicells Technologies, Cambium Networks, Rise Broadband, Public Knowledge, the Open Technology Institute at New America, and others. The BAC proposal asks for frequency sharing that would allow for the spectrum to be used for both 5G and also for rural broadband using smart radios and databases to coordinate use.

Both the satellite providers and the 5G companies oppose the BAC idea. The satellite providers argue that it’s too complicated to share bandwidth and they fear interference with satellite farms. The 5G companies want the whole band of spectrum and tout the advantages this will bring to 5G. They’d also like to see the spectrum go to auction and dangle the prospect for the FCC to collect $20 billion or more from an auction.

The FCC has it within their power to accommodate rural broadband as they deal with this block of spectrum. However, recent history with other spectrum bands shows the FCC to have a major bias towards the promise of 5G and towards raising money through auctions – which allocates frequency to a handful of the biggest names in the industry.

The BAC proposal is to set aside part of the spectrum for rural broadband while leaving the whole spectrum available to 5G on a shared and coordinated basis. We know that in real life the big majority of all ‘5G spectrum’ is not going to be deployed in rural America. The 5G providers legitimately need a huge amount of spectrum in urban areas if they are to accomplish everything they’ve touted for 5G. But in rural areas most bands of spectrum will sit idle because the spectrum owners won’t have an economic use for deploying in areas of low density.

The BAC proposal is an interesting mechanism that would free up C-Band in areas where there is no other use of the spectrum while still fully accommodating 5G where it’s deployed. That’s the kind of creating thinking we need to see implemented.

The FCC keeps publicly saying that one of its primary goals is to improve rural broadband – as I wrote in a blog last week, that’s part of their primary stated goals for the next five years. This spectrum could be of huge value for point-to-multipoint rural radio systems and would be another way to boost rural broadband speeds. The FCC has it within their power to use the C-Band spectrum for both 5G and for rural broadband – both uses can be accommodated. My bet, sadly, is that this will be another giveaway to the big cellular companies.

When Will Small ISPs Offer Wireless Loops?

I wrote last week about what it’s going to take for the big wireless companies to offer 5G fixed wireless in neighborhoods. Their biggest hurdle is going to be the availability of fiber deep inside neighborhoods. Today I look at what it would take for fiber overbuilders to integrate 5G wireless loops into their fiber networks. By definition, fiber overbuilders already build fiber deep into neighborhoods. What factors will enable fiber overbuilders to consider using wireless loops in those networks?

Affordable Technology. Number one on the list is cheaper technology. There is a long history in the wireless industry where new technologies only become affordable after at least one big company buys a lot of units. Fifteen years ago the FCC auctioned LMDS and MMDS spectrum with a lot of hoopla and promise. However, these spectrum bands were barely used because no big companies elected to use them. The reality of the manufacturing world is that prices only come down with big volumes of sales. Manufacturers need to have enough revenue to see them through several rounds of technical upgrades and tweaks, which are always needed when fine-tuning how wireless gear works in the wild.

Verizon is the only company talking about deploying a significant volume of 5G fixed wireless equipment. However, their current first-generation equipment is not 5G compliant and they won’t be deploying actual 5G gear for a few years. Time will tell if they buy enough gear to get equipment prices to an affordable level for the rest of the industry. We also must consider that Verizon might use proprietary technology that won’t be available to others. The use of proprietary hardware is creeping throughout the industry and can be seen with gear like data center switches and Comcast’s settop boxes. The rest of the industry won’t benefit if Verizon takes the proprietary approach – yet another new worry for the industry.

Life Cycle Costs. Anybody considering 5G also needs to consider the full life cycle costs of 5G versus fiber. An ISP will need to compare the life cycle cost of fiber drops and fiber electronics versus the cost of the 5G electronics. There are a couple of costs to consider:

  • We don’t know what Verizon is paying for gear, but at the early stage of the industry my guess is that 5G electronics are still expensive compared to fiber drops.
  • Fiber drops last for a long time. I would expect that most of the fiber drops built twenty years ago for Verizon FiOS are still going strong. It’s likely that 5G electronics on poles will have to replaced or upgraded every 7 – 10 years.
  • Anybody that builds fiber drops to homes knows that over time that some of those drops are abandoned as homes stop buying service. Over time there can be a sizable inventory of unused drops that aren’t driving any revenue – I’ve seen this grow to as many as 5% of total drops over time.
  • Another cost consideration is maintenance costs. We know from long experience that wireless networks require a lot more tinkering and maintenance effort than fiber networks. Fiber technology has gotten so stable that most companies know they can build fiber and not have to worry much about maintenance for the first five to ten years. Fiber technology is getting even more stable as many ISPs are moving the ONTs inside the premise. That’s going to be a hard to match with 5G wireless networks with differing temperatures and precipitation conditions.

We won’t be able to make this cost comparison until 5G electronics are widely available and after a few brave ISPs suffer through the first generation of the technology.

Spectrum. Spectrum is a huge issue. Verizon and other big ISPs are going to have access to licensed spectrum for 5G that’s not going to be available to anybody else. It’s likely that companies like Verizon will get fast speeds by bonding together multiple bands of millimeter wave spectrum while smaller providers will be limited to only unlicensed spectrum bands. The FCC is in the early stages of allocating the various bands of millimeter wave spectrum, so we don’t yet have a clear picture of the unlicensed options that will be available to smaller ISPs.

Faster speeds. There are some fiber overbuilders that already provide a gigabit product to all customers, and it’s likely over time that they will go even faster. Verizon is reporting speeds in the first 5G deployments between 300 Mbps and a gigabit, and many fiber overbuilders are not going to want a network where speeds vary by local conditions, and from customer to customer. Wireless speeds in the field using millimeter wave spectrum are never going to be as consistently reliable and predictable as a fiber-based technology.

Summary. It’s far too early to understand the potential for 5G wireless loops. If the various issues can be clarified, I’m sure that numerous small ISPs will consider 5G. The big unknowns for now are the cost of the electronics and the amount of spectrum that will be available to small ISPs. But even after those two things are known it’s going to be a complex decision for a network owner. I don’t foresee any mad rush by smaller fiber overbuilders to embrace 5G.

The New e-Connectivity Pilot Grants

In March Congress passed a new $600 million grant/loan program to build rural broadband. The project has been labeled as the e-Connectivity Pilot and it’s expected that the specific rules for seeking the funding will be released early on 2019. The USDA sought public comments on the program in September and is now working out the details of how the awards will be made.

Anybody interested in these grants should get serious about it now, since it’s likely that the grant application window might not be any longer than 60 to 90 days. Getting ready means having a detailed and solid business plan as well as already having a source of funding for any parts of a project not covered by these grants. The grants are also likely to include provisions like getting a professional engineer to approve the network design – so designs need to be specific and not generic. It’s likely that the USDA will stick with their existing grant application process – and those forms have always been a bear to complete.

There is one huge hurdle to overcome for this program since an application can’t cover an area that has more than 10% of households with access to broadband speeds of at least 10/1 Mbps. Considering that the CAF II awards and more recent CAF II reverse auctions awards already will supposedly provide this kind of speed to huge swaths of the country, there are not a lot of areas left that will meet this requirement.

Claiming that an area meets the 90% unserved threshold will be also be difficult because grant applications can be challenged by carriers that serves the grant area today. I have to assume that CAF II reverse auction winners will also be able to challenge. The big rub is that the original CAF II award winners still have until 2020 to complete their build-out and they will certainly challenge awards for any CAF II area that has not yet been updated. The CAF II reverse auction winners have ten more years to complete their buildout. The USDA will likely be obligated to reject an application that encroaches on any of the CAF II footprint – even if those areas don’t have broadband today.

This gets even more complicated since the CAF II reverse auction awarded funding to fixed wireless and satellite providers. They were funded to serve specific little pockets of unserved homes, but it won’t be hard for them to claim that the CAF II award dollars will allow them to serve much larger areas than the tiny boundaries they bid on.

The process of proving a study area isn’t served will be further complicated by the USDA’s reliance on the FCC’s broadband maps, which we all know to be highly inaccurate in rural America. This all adds up to mean that an applicant needs to prove the area doesn’t have broadband today and will not be getting it over the next decade from one of the CAF winners. They will also need to overcome any errors in the FCC maps. This is going to be hard to prove. I expect the challenge process to be brutal.

From the instant I saw the 90% unserved test, I’ve assumed that the most likely candidates for these grants will be somebody that is already planning on building broadband across a large footprint. If such an applicant is careful to only identify the scattered homes that meet these grant rules, then this funding can help to pay for a project they were going to build anyway. The other natural set of applicants might be those companies that already took CAF II funding – they could use these grants to fill in unserved homes around those build-out areas. The industry is going to be in an uproar if a lot of this funding goes to the big incumbent telcos (who won’t challenge their own applications).

Another issue to consider is that the USDA can award funding as a combination of grants and loans. These awards will surely require matching funding from an applicant. Anybody that is already planning on funding that matching with bank or other financing might find it impossible to accept USDA loans for a portion of a project. USDA loan covenants are draconian – for example, USDA loans usually require first priority for a default, which will conflict with commercial lenders. It’s always been nearly impossible to marry USDA debt with other debt.

rant applicants should also be aware that the USDA is going to be highly leery of awarding money to start-ups or somebody that is not already an ISP. The agency got burned on such grants awarded with the stimulus grants and has indicated that they are looking for grant award winners to have a strong balance sheet and a track record of being an ISP. This will make it nearly impossible for local governments to go after the money on their own. Chances of winning will be greatly enhanced by public/private partnerships with an existing ISP.

I know my take on the grants sound highly pessimistic. Congress saddled these grants with the 90% unserved test at the coaxing of the big telcos who wanted to make sure these funds weren’t used to compete against them. Past USDA grants had the opposite requirement and could consider awards to areas that didn’t have more than 10% of houses with broadband. However, if you are able to identify a service area that can survive the challenge process, and if you have the matching funded lined up, these grants can provide some nice funding. I’m not taking any bets, though, on the USDA’s ability to award all of the money – there might not be enough grant applications that can make it through the gauntlet.

Fighting Spoofing

One of the biggest problems with the telephone network today is spoofing – where robocalls are generated using stolen numbers to mask the identity of the caller. Spoofing and robocalls are the biggest source of complaints to the FCC and NANC (the North American Numbering Council) reports that in 2016 there were 2.4 billion robocalls per month – a number that has surely grown. As recently as a year ago I rarely got robocalls on my cellphone but now get half a dozen per day.

The FCC called upon NANC to find a solution to the problem. NANC used the Call Authentication Trust Anchor Working Group to find a solution to the problem. In May of this year the FCC accepted the recommendations of this group to implement a ‘taken’ system to authenticate that calling numbers are authentic.  Last week Chairman Ajit Pai asked the industry to speed up implementation of the solution, warning that the FCC would issue an order to do so if the industry didn’t solve the problem quickly.

The proposed solution involves a new process used to authenticate the originating telephone number for calls. The concept is to issue ‘tokens’ to carriers that allow them to authenticate, in real-time, that the originating number of a telephone call is really from the party that owns the number. This will mean a whole new overlay on the PSTN to make this validation quickly before a call is terminated.

In addition to developing the specifications for how the process will work, the NANC working group recommended the following industry process for making this work:

  • The industry needs to select a governance authority to take ownership of the process so that it’s implemented uniformly across the industry;
  • The working group also recommended that a policy administrator be chosen that will administer the day-to-day implementation of the new process;
  • The working group also recommended specific roles and responsibilities for the governance authority and policy administrator;
  • Set the goal to have those two entities in place within a year. I think the FCC Chairman’s frustration is due to the fact that this was recommended in May 2018 and I don’t think that the governance authority or policy administrator have been chosen.

Of course, this means a new industry protocol and process and comes with a slew of new acronyms. Primary among this is SHAKEN which represents new SIP protocols used specifically for purpose of creating the all authentication tokens. Also used is STIR (secure telephone identity revisited) which is the IETF group that created the specific protocols for telephony. This leads to the cute acronym SHAKEN/STIR which is being used to describe the whole process (and which would definitely not be approved by James Bond).

The working specifications recognize that what is being prepared is just the first step in the process. They understand that as soon as they implement any solution that spammers will instantly begin looking for workarounds. The initial concept is to first begin be implementing this with the largest carriers and that will still leave a lot of holes with numbers assigned to smaller carriers, numbers deep inside PBX trunk groups, numbers used for Internet calling like Skype. However, the goal is to eventually cover the whole industry.

The concept is that this is going to have to be a dynamic process. I envision it much like the software companies that build spam filters. The group making this work will have to constantly create patches to fix vulnerabilities used by spammers. I have my doubts that anything like this will ever fully stop spoofing and that spammers will always be one step ahead of the spoofing police.

This is a concern for small carriers because it sounds like something new that a voice provider is going to have to pay for. It’s likely that there will be vendors that can do this for small carriers, but that sounds like another check to write to be able to provide voice service.

AT&T and Connected Vehicles

AT&T just released a blog talking about their connected vehicle product. This blog paints a picture of where AT&T is at today and where they hope to be headed into the future in this market niche.

For a company like AT&T, the only reason to be excited about a new market niche is the creation of a new revenue stream. AT&T claims to have 24 million connected cars on its network as of the end of 3Q 2018. They also claim 3 million additional connected fleet vehicles. They also have over 1 million customers who are buying mobile WiFi hotspots from AT&T.

What does that look like as a revenue stream? AT&T has relationships with 29 global car manufacturers. Most new cars today come with some kind of connectivity plan that’s free to a car buyer for a short time, usually 3 to 6 months. When the free trial is over consumers must subscribe in order to retain the connectivity service.

As an example of how this works, all new Buicks and Fiats come with AT&T’s UConnect Access for a 6-month free trial period. This service provides unlimited broadband to the vehicle for streaming video or for feeding the on-board mapping system. After the trial customers must subscribe to the service at a monthly rate of $14.99 per month – or they can buy a la carte for connectivity at $9.99 per day or $34.99 per month.

In the blog AT&T touts a relationship with Subaru. The company provides a trial subscription to Starlink that provides on-board navigation on a screen plus safety features like the ability to call for roadside assistance or to locate a stolen vehicle. Subaru offers different plans for different vehicles that range from a Starlink trial of between 4-months and 3-years. Once the trial is over the cost of extending Starlink is $49 for the first year and then $99 per year to extend just the security package or $149 per year to extend the whole service. Starlink is not part of AT&T, so only some portion of this revenue goes to the carrier.

I wonder how many people extend these free trials and become paying customers? I have to think that the majority of the AT&T connected vehicles are under the Starlink relationship which has been around for many years. Families that drive a lot and watch a lot of video in a vehicle might find the UConnect Access to be a much better alternative than using cellular data plans. People who want the feature of locating their car if stolen might like the Starlink. However, most drivers probably don’t see a value in these plans. Most of the features offered in these packages are available as part of everybody’s cellular data plans using the Bluetooth connectivity in these vehicles.

The vehicle fleet business, however, is intriguing. Companies can use this connectivity to keep drivers connected to the home office and core software systems. This can also be done with cellphones, but I can think of several benefits to building this directly into the vehicle.

The second half of their blog discusses the possibility for 5G and automated cars. That’s the future revenue stream the company is banking on, and probably one of their biggest hopes for 5G. They have two hopes for 5G vehicle connectivity:

  • They hope to provide the connectivity between vehicles using 5G and the cloud. They believe that cars will be connected to the 5G network in order to ‘learn’ from other vehicle’s driving experience in the immediate vicinity.
  • They also hope to eventually provide broadband to driverless cars where passengers will be interested in being connected while traveling.

The first application of connecting nearby vehicles is no guarantee. It all depends on the technology path chosen to power driverless vehicles. There is one school of thought that says that the majority of the brains and decision making will be done by on-board computers, and if cars connect to nearby vehicles it will be through the use of on-board wireless communication. AT&T is hoping for the alternate approach where that connectivity is done in the cloud – but that’s going to require a massive investment in small cell sites everywhere. If the cloud solution is not the preferred technology then companies like AT&T will have no incentive to place 5G cell sites along the millions of miles of roads.

This is one of those chicken and egg situations. I liken it to smart city technology. A decade ago many predicted that cities would need mountains of fiber to support smart cities – but today most such applications are being done wirelessly. Any company banking on a fiber-based solution got left behind. At this point, nobody can predict the technology that will ultimately be used by smart cars. However, since the 5G technology needs the deployment of a massive ubiquitous cellular network, the simpler solution is to do it some other way.

Can You Trust Your Small ISP?

FCC Commissioner Michael O’Rielly recently made a speech at the Media Institute “Free Speech America” Gala in which he made some serious allegations against municipal broadband. From that speech:

In addition to creating competitive distortions and misdirecting scarce resources that should go to bringing broadband to the truly unserved areas, municipal broadband networks have engaged in significant First Amendment mischief. As Professor Enrique Armijo of the Elon University School of Law has shown in his research, municipalities such as Chattanooga, Tennessee, and Wilson, North Carolina, have been notorious for their use of speech codes in the terms of service of state-owned networks, prohibiting users from transmitting content that falls into amorphous categories like “hateful” or “threatening.” These content-based restrictions, implicating protected categories of speech, would never pass muster under strict scrutiny. In addition to conditioning network use upon waiver of the user’s First Amendment rights, these terms are practically impossible to interpret objectively, and are inherently up to the whim of a bureaucrat’s discretion. How frightening.

Let me address the three allegations he’s made against municipal broadband:

Municipalities create competitive distortion. The fact is that most US markets have almost no real competition – they instead have weak competition between a cable company and telco. O’Rielly is repeating a familiar talking point of the big ISPs who don’t want any competition. Customers love real competition whether it comes from a municipal provider or from a fiber overbuilder.  Consumer Reports recently listed the Chattanooga municipal ISP cited by O’Rielly as the ISP with the highest customer satisfaction in the country. I think what O’Rielly and the big ISPs call market distortion, consumers would call real competition.

Municipalities misdirect needed investments from unserved areas.. This is a particularly ironic statement. Wilson, Greenlight used those ‘scarce resources’ to build fiber to the nearby tiny unserved town of Pinetops, NC. Anti-municipal legislation in in North Carolina first required that Wilson not bill outside of their city boundaries. That same legislation then forced Wilson to sell or abandon the network when Suddenlink decided by build in the town.

Anybody who knows the industry knows that the big ISPs are not investing a single nickel of their own money in rural broadband. The big ISPs have been willing to spend the FCC’s tax money to implement 10/1 Mbps broadband from the CAF II program, but otherwise they don’t care a whit about the unserved areas of the country. I’m really not sure who Commissioner O’Rielly thinks will invest in rural America if the FCC precludes rural towns, counties and townships from solving their local lack of broadband.

Municipalities restrict First Amendment rights of customers. This allegation is almost too ridiculous to respond to. Take the example of Wilson, North Carolina, who the Commissioner singled out. The wording of the Wilson terms of service are nearly identical to the terms of service from Charter, the largest ISP in the region. I’ve not done the same comparison for Chattanooga, but I’ve done so for around twenty other municipal ISPs and they all typically mimic the terms of service of their commercial competitors.

A have a lot of clients that are municipal fiber providers, fiber overbuilders and small telcos. I can’t think of one example over the last decade when one of my clients unilaterally shut down a customer for things they’ve said on the web. They mimic the terms of service from the big ISPs, because all ISPs are occasionally asked by law enforcement to shut down a user who is harassing somebody or otherwise engaging in nefarious, illegal or other bad practices on the web. The terms of service give the ISPs the cover to disconnect customers under such circumstances.

Commissioner O’Rielly has it backwards and it’s the big ISPs that daily violate the trust of their customers. Small ISPs don’t use deep packet inspection to read emails or messaging. Small ISPs don’t record and then sell or use customer web search history. Small ISPs don’t track what their customers do on the web. Smalll ISPs don’t monetize their customer’s data.

Commissioner O’Rielly ought to talk with some customers of the two ISPs he’s singled out. Those customers will tell them that they trust their local municipal ISP far more than they trust Comcast or Charter or AT&T. The Commissioner’s talking points come straight from the big ISP lobbyists and he further supports his position by citing a discredited whitepaper paid for by the big ISPs. If the Commissioner spent more time outside the Beltway he’d find out that people love and trust their small ISPs – be that a municipality, a fiber overbuilder or a small telco.

The FCC’s Strategic Plan

In one of those quiet things that the FCC does behind the scenes, the FCC has created a strategic plan for the four years from October 2018 to October 2022. This strategic plan represents their official goals that they report to Congress. This plan also supposedly is how they judge their performance internally. The Strategic Plan has four primary goals:

Strategic Goal 1: Closing the Digital Divide. Develop a regulatory environment to encourage the private sector to build, maintain, and upgrade next- generation networks so that the benefits of advanced communications services are available to all Americans. Where the business case for infrastructure investment doesn’t exist, employ effective and efficient means to facilitate deployment and access to affordable broadband in all areas of the country.

 Strategic Goal 2: Promoting Innovation. Foster a competitive, dynamic, and innovative market for communications services through policies that promote the introduction of new technologies and services. Ensure that the FCC’s actions and regulations reflect the realities of the current marketplace, promote entrepreneurship, expand economic opportunity, and remove barriers to entry and investment.

 Strategic Goal 3: Protecting Consumers & Public Safety. Develop policies that promote the public interest by providing consumers with freedom from unwanted and intrusive communications, improving the quality of communications services available to those with disabilities, and protecting public safety.

 Strategic Goal 4: Reforming the FCC’s Processes. Modernize and streamline the FCC’s operations and programs to increase transparency, improve decision-making, build consensus, reduce regulatory burdens, and simplify the public’s interactions with the agency.

Within each goal there are more specific targeted objectives. For example, the goal for Closing the Digital Divide includes more specific goals like: adopt pro-competitive rules that will expand facility-based competition; ensure that broadband is built everywhere; use reverse auctions to efficiently award USF grants; remove regulatory barriers to next generation technology; develop industry best practices; foster participation in the market by non-traditional participants; free up spectrum to help eliminate the digital divide; continue to free up spectrum in the 600 MHz band; and, conduct timely spectrum licensing.

The period covered by these goals is already barely underway, and yet it’s already interesting to see how the FCC is performing against some of these goals. For example, the first Digital Divide goal is to provide a regulatory environment to promote broadband. This FCC has already tried to walk completely away from regulating broadband, and I have to suppose that they believe the best way to meet this goal is to have no regulations. However, it’s sophistry to claim that lack of regulation is the same thing as a ‘regulatory environment’.

I can think of a number of regulations that would help to foster competition. For example, regulations that curtail monopoly abuses by big ISPs help smaller carriers. Allowing small ISPs to continue to use unbundled copper loops fosters competition (something the FCC wants to end). Making Lifeline funds available to all ISPs fosters competition. Allowing rural carriers to use idle spectrum would foster competition. Many of the actions taken or being considered by this FCC seem to favor large ISPs rather than foster competition. I’m guessing that the giveaways to the big ISPs are covered in the ‘promoting innovation’ goal.

You can make similar observations about many of their goals. For instance, this FCC seems to be antagonistic towards municipal broadband, which makes it hard to meet their goal of fostering participation by non-traditional participants.

I have no doubt that the FCC will claim that they are meeting every goal in the Strategic Plan. The goals are high-level and they are likely to be able to self-grade themselves as successfully meeting each goal. I coach clients on setting goals and I tell them they can’t have soft goals like “bring broadband to more customers in the coming year’. For a goal to have any meaning it has to be far more specific, such as “add 2,000 new broadband customers in the next calendar year”. The FCC’s goals are so nebulous that they can almost do the opposite of the goals and still claim to meet many of them.

Where Will 5G Find Fiber?

I was talking to one of my clients about 5G. This particular client is a fiber-overbuilder and they verified something I’ve suspected – they don’t plan to ever make any of their fiber available for a 5G provider wanting to deploy 5G small cell sites. They reason that 5G point-to-point radios, like Verizon is now launching, would compete directly with their retail broadband products and they can’t think of a scenario where they would assist a competitor to poach their own retail customers.

This is a break with the past because this client today provides fiber to a number of the big cellular towers and hopes to continue those sales. These are good revenue and help to offset the cost of building fiber to the towers. This leads me to ask the title question of this blog – where are the 5G providers going to find the needed fiber? A lot of the rosy predictions I’ve read for widespread 5G deployment assume that 5G providers will be able to take advantage of the fiber that’s already been deployed by others, and I’m not so sure that’s true.

I have no doubt that big backhaul fiber providers like Level 3 or Zayo will sell 5G connectivity where they have the capacity. However, much of their fiber network is not strategically located for 5G. First, 5G networks are going to need to get to numerous poles, and that requires fiber with existing access point. Much of the fiber built by companies like Level 3 was built to get to specific buildings or big cellular towers that anticipate the need for other access points. These fiber companies are also leery about tapping into fibers feed their largest customers, who often pay extra for guaranteed service. A lot of their fiber is underground and not easy to get to the needed pole connections.

Of more relevance is that these carriers are not going to own a lot of fiber that goes deep into neighborhoods where the 5G providers want to deploy. Most of the fiber built deep into residential neighborhoods has been built by fiber-to-the-premise overbuilders or cable companies. These companies use their fiber to sell retail broadband to residents and businesses. Fiber overbuilders, from Google Fiber down to the smallest municipal fiber network are not likely to sell fiber to the pole in neighborhoods where they are already a retail ISP.

The cable companies are not going to make their fiber available for 5G – they’ve made it clear that their future path lies in the DOCSIS 3.1 upgrades, including upgrading beyond gigabit speeds as needed. All of the major cable companies have said that have the ultimate end-game of fiber-to-the-premise. They’ve all cited 5G as one of the reasons they are increasing speeds and are not likely to sell access to a major competitor.

AT&T is the only other carriers with an extensive fiber network that goes deep into many neighborhoods. However, AT&T has been building FTTP connections in neighborhoods where they have fiber. For now, they don’t intend to mimic Verizon and are going to stick with FTTP rather than 5G. It would be tactically smart for AT&T to refuse to sell 5G connections to others. But AT&T is the hardest company in the industry to predict because they wear so many hats, and their retail fiber ISP business is in a different business silo than their wholesale fiber connection business – so who knows what they will do.

I don’t see a glut of existing fiber sitting waiting to sell to 5G providers. That seems to be the major hurdle for the rapid 5G deployment that the FCC, the White House and the cellular carriers have all been loudly touting. How many 5G companies are going to want to make the gigantic needed investment in fiber to get deep into neighborhoods?

I think the folks in Washington DC have gotten a false sense of the potential for 5G by seeing what Verizon is doing. But Verizon is taking advantage of the many billions of dollars of fiber they have already built over the years, and their 5G network is going to follow that fiber footprint. There are not many other companies with a glut of fiber that can be leveraged it in the same manner as Verizon.

Verizon has already announced that they will be passing roughly 11 million homes with fiber. They can be that specific because they know what’s close to their existing fiber. I doubt that they are going to expand anywhere else, just like they didn’t expand FiOS where the construction costs weren’t low. If Verizon can’t afford to deploy 5G where they don’t already have fiber, then how can anybody else justify it? Deploying 5G is like deploying any new network – it is only going to make financial sense where deployment costs are reasonable – and for now that means where there is already easy access to fiber. I think the opportunities for rapid 5G deployment are a lot less than what policy-makers think.

‘Tis the Season for Rate Increases

Charter just announced their annual rate increases for cable TV and broadband. They are usually the first of the big companies to announce since they increase rates in November, while most other big companies do so after the new year.

The announced increases include the following:

  • The Broadcast TV surcharge will increase from $8.85 to $9.95 per month.
  • Settop box fees will increase from $6.99 to $7.50 per month.
  • Broadband prices for customers who are bundled with cable TV will increase from $54.99 to $59.99 per month.
  • Broadband prices for standalone broadband (no cable TV) will increase from $64.99 to $65.99 per month.

The cable TV increases follow the pattern we’ve seen among the big cable companies in that they are raising ancillary fees instead of the basic prices for cable packages. The Broadcast TV surcharge, which is paid by every TV subscriber, covers the costs of retransmission fees that Charter pays to over-the-air networks like ABC, CBS, FOX and NBC. Most customers probably think this is included in the cost of basic cable service, but by shifting this to a separate fee the cable companies can continue to advertise a low price for basic cable. I know what a lot of my clients pay for retransmission fees, and none of them are yet paying $9.95 per month, so it looks like Charter is padding this number with some profits.

I’m surprised that the Federal Trade Commission hasn’t slapped one of the cable companies for this billing practice. They have created ancillary fees like the Charter’s Broadcast TV surcharge along with other fees such as a ‘sports fee’ in order to be able to advertise prices that are lower than what customers pay. When a new customer subscribes to cable they often end up paying $15 – $20 more than the advertised price.

The settop box fee is another place where cable companies make a lot of money. Charter probably pays no more than $100 for a settop box, so their new increased fee of $7.50 per month pays back the cost of the box in only 13 months. The box fee is the most profitable part of the cable business since customers tend to keep settop boxes for an average of 5 years or more. At least Charter’s settop box rate is lower than the $9.95 currently charged by Comcast.

The real headline is the increase in broadband rates. I was just talking to a client yesterday who mentioned that they hadn’t changed broadband prices in over fifteen years. We have now entered an era where cable companies are likely to raise broadband prices every year. They are losing cable customers and telephone customers every year. While broadband customers are still increasing, the growth is now due to continued poaching of DSL customers since the overall pool of broadband customers is no longer growing rapidly. This means that the only way Charter and other cable companies will be able to meet Wall Street earnings expectations in the long-run is by raising broadband rates.

The $5 rate increase for bundled broadband is the largest broadband rate increase I’ve ever seen. Charter doesn’t disclose the number of customers that buy bundles. My firm, CCG conducts surveys for customers and we typically see around 70% of households buying a bundle of services. If 70% of Charter’s 24 million broadband customers are in bundles this equates to $1 billion in new annual revenues and bottom line for the company. Charter won’t realize the whole $1 billion since some customers are going to be under term contracts, but this is still by far the largest increase in broadband prices I’ve ever seen.

Interestingly, Charter just made it easier for customers to cut the cord. Before the rate increase there was a $10 per month differential between the price of bundled and unbundled broadband – meaning that somebody that dropped Charter cable would have seen a $10 rate increase. That penalty is now lowered to $5 per month. However, Charter just made up for that with the big rate increase.

Charter has recently increased broadband speeds across-the-board. They advertise that the minimum speed for their basic product has been increased from 100 Mbps to 200 Mbps (although in my markets speeds have increased from 60 Mbps to 135 Mbps). I’m guessing that Charter is hoping the speed increases will help to justify the $5 broadband rate increase that a lot of their customers are going to see.

Are Millimeter Wave Radios Safe?

Deep inside the filing of the recent docket at the FCC that resulted in eased access to poles for 5G providers were comments that warned about the unknown health impacts of millimeter wave radiation. A group of 225 scientists from 41 countries filed comments in Dockets No. 15-79 asking that the FCC be cautious in implementing millimeter wave radiation without further scientific research into the impacts of prolonged exposure of the radiation to humans. These scientists have all published peer-reviewed papers on the topic.

As scientists are wont to do, their wording sounds cautious, but in scientific language is a stern warning: “There is scientific evidence to cause concern among independent scientists, that this new infrastructure, on top of existing electrical and wireless infrastructures, will cause more harm to mankind and nature . . . The FCC needs to critically consider the potential impact of the 5th generation wireless infrastructure on the health and safety of the U.S. population before proceeding to deploy this infrastructure.”

I looked around the web to find some of the research that’s been done in this area in the past. A quick web search showed:

·         The biggest impact of millimeter wave radiation is on the skin and 90% of the transmitted power is absorbed by the dermis and epidermis layers of the skin – meaning concerns about skin cancer.

·          A 1994 study showed that low levels of millimeter radiation created lens opacity in rats, which is linked to cataracts.

·         A 1992 Russian study found that frequencies between 53-78 GHz caused overall stress in rats that manifested by an increase in arrhythmia and other changes to heart rates.

·         A 2002 Russian study found that exposure to low level 42 GHz radiation had a profound impact on the overall immune systems in rats.

·         A 2016 Armenian study observed that millimeter wave radiation created changes in the cells of bacteria. They postulated that the radiation could do the same to humans. This study concluded that changes to bacteria could change result in increasing drug resistant.

·         Another Armenian study showed that the impact to plants might be even greater than to animals.

·         Dr. Joel Moskowitz of UC Berkeley says that the impacts of all of these other studies might be understated since 5G uses pulsed frequencies. The studies were all done using constant frequency and Dr. Moskowitz has shown that pulsed frequencies magnify the impact of radiation on organisms.

One of the handful of current uses of millimeter wave radiation is in airport scanners, which use frequencies between 24 – 30 GHz. Numerous studies have shown that the likely exposure from these scanners is safe, but made the conclusion based upon the relative short burst of exposure. The issue that has scientists concerned about 5G is continuous transmission from poles in front of homes, and perhaps eventually building some of this frequency into cellphones.

Obviously, no study has yet shown a direct health impact from pole-mounted 5G transmitters since they are just now starting to see their first deployments. The scientific evidence of the dangers of the prolonged low-level radiation has a lot of people concerned. I’ve been contacted by several groups that are starting to alert their local officials of this danger (the inbox of a blogger can be really interesting). Nationwide several local politicians have jumped on the issue.

The question these local groups are asking is if there is any way to use the health concerns to try to block 5G deployment in their neighborhoods. It looks to me like the recent FCC order for allowing small cell sites on poles doesn’t contain much ambiguity – pole owners have a federal mandate to connect the 5G devices. However, that order is being challenged in court by numerous states and cities and I imagine that the health concerns are going to be one of the issues raised in those appeals – with the primary legal tactic challenging if the FCC has the jurisdiction to override cities on pole issues.

Interestingly, Verizon has announced a timeline that seems to be going full bore on installation of 5G transmitters. The industry is usually cautious about relying on any FCC order until it’s been vetted by the courts, but perhaps Verizon is only concentrating on 5G deployment in cities that have invited them to deploy, like Sacramento. It won’t be surprising to see cities ask for an injunction against deployment until the courts decide on the issues.