A Roadmap to Better Broadband Grants

I’ve been thinking about the effectiveness of federal broadband grant programs. We’ve had three recent major sets of federal grant awards – the stimulus grants of 2007, the first CAF II grants in 2015 and the recently awarded CAF II reverse auctions. We also have an upcoming e-Connectivity grant program for $600 million. I think there are lessons to be learned from studying the difference in the results between these grants. These lessons apply to State grant programs as well as any new federal programs.

Don’t Reward Slow Broadband Speeds. Probably the most bone-headed decision made by the FCC in my memory was handing out billions in CAF II to upgrade rural copper to 10/1 Mbps. This wasn’t considered decent broadband at the time of this decision and yet these upgrades continue to be funded today. The FCC could still take back the remaining CAF II money and redirect these funds to a reverse auction, which we just saw produced much faster speeds in areas with far less density than the CAF II footprint.

Keep Politics Out of It. The CAF II decision to give all of the funding to the big telcos was purely political and resulted in a huge waste of money that could have created many real broadband solutions. The FCC is supposed to be an independent agency, and it’s shameful that lobbyists were able to kill the reverse auction originally planned for CAF II. We are seeing politics back on the table with the e-Connectivity grants where Congress created a feel-good grant program, but then saddled it with a restriction that no more than 10% of homes in a study area can have existing 10/1 Mbps speeds. The reason for this provision was not even hidden, with the big telcos saying they didn’t want federal grant money to be used to compete against them.

Don’t Fund Inadequate Technologies. AT&T is using LTE cellular broadband to satisfy CAF II. This technology will never provide adequate broadband. In the recent reverse auction we saw money going to high-altitude satellite companies. Regardless of speeds that can be delivered with these satellites, the latency is so poor that it limits the ability to use the broadband for important activities like working at home or taking on-line classes.

Don’t Stress Anchor Institutions over People. The stimulus grants required middle mile providers to pop off of highways to build expensive last mile fiber to a handful of anchor institutions – schools, libraries, etc. While these anchor institutions need good broadband, so do the neighborhoods around them. This requirement added a lot of cost to the middle-mile projects as well as made it harder for anybody else to build a last mile network since the biggest bandwidth users in a community already have fiber.

Build to Industry Practices. The stimulus grants required that fiber builders conduct expensive environmental studies and historic preservation studies. That was the first time I ever saw those requirements in my forty years in the industry. Since telecom infrastructure is built almost entirely in existing public right-of-way these restrictions added a lot of cost but zero value to the projects.

Penalize Companies that Cheat. There needs to be repercussions for companies that cheat on grant applications to win the funding. The biggest area of cheating is claiming speeds that the technology can’t deliver. The FCC follows up grants with a decent speed-test program, but the worst repercussion in failing these tests is to not get funding going forward. A carrier that badly fails the speed tests should have to return the original grant funding. I’m also hearing rumors that the many rural households covered by CAF II will not get the promised upgrades – and if so, the big telcos should be forced to return a proportionate amount of that funding for homes that don’t get the promised upgrades.

AT&T Phasing out Lifeline?

A lot of homes still rely on the FCC’s Lifeline program to get a discount on their telecom bills. The program is funded through the Universal Service Fund and administered through USAC. The lifeline program provides a $9.25 discount per household that can be applied to landline telephone, cellular telephone or landline data – assuming customers use a provider that participates in the Lifeline program.

AT&T still touts that they participate in the Lifeline program, but numerous customers around the country received notifications this year notifying them that they were no longer eligible for the Lifeline program. This particular notification was from a customer in Houston, Texas. If you visit the USAC website and look for Lifeline providers in Houston, AT&T is the only company that is listed for landline service. There are numerous cellular providers listed in Houston, but AT&T is not among them.

People might wonder why landline Lifeline is still important. Landline penetration rates are reported each year by the Center for Disease Control. (CDC). They track landline and cellular penetration rates through a huge annual survey that studies the topic to understand how the medical community can communicate best with the public during a medical emergency. They reported last year that the nationwide landline penetration rate was at 45% of households – a number far greater than many people would guess.

I hadn’t looked at residential phone rates in a while and just looked at AT&T’s residential rates. In case you haven’t looked at landline rates, they are not cheap. AT&T has three packages: Complete Choice comes with Caller ID and 9 other features (not including Voice Mail) for $40 per month. Complete Choice Basic is a basic line plus Caller ID and Call Waiting for $36. A basic phone line with no features is $28 per month. None of these prices include taxes and fees that add at least another $10 per month. None of these packages includes long distance. AT&T offers lower rates for those that bundle telephone with Internet or cable TV (although they are actively knocking people off their TV product).

In Texas, AT&T mitigated the Lifeline discontinuation notices somewhat by offering discounts of between $8 and $12 per month for qualifying customers who will sign a term contract, and who know to ask for the discount. But since this wasn’t widely advertised there is a good chance that few people asked for the discount. Discount plans like this also come and go and there is no guarantee of this discount surviving into the future.

I can’t see that there are any penalties for AT&T no longer offering Lifeline. There was a time when the big telcos had to participate in the program, but as state Commissions have deregulated telephone service any such requirement probably no longer applies.

What’s shameful about this is that I am sure that any AT&T executive will say that the company supports the Lifeline program. It certainly says so on their website. Both the AT&T and the USAC website imply that customers in Texas can still enroll in Lifeline, but numerous reports on complaint sites show this not to be the case. Perhaps a really persistent customer can still fight through the customer service gauntlet to get the Lifeline discount, but many customers report they’ve lost the discount.

What’s also disturbing about this is that AT&T doesn’t even have to go through the process of qualifying customers for Lifeline eligibility. In Texas customers must certify eligibility by going through the Public Utility Commission. The big telcos complained in the past that certifying customers was expensive and exposed them to liability if they granted eligibility to unqualified households. But Texas and a number of other states took over the certification process, meaning the telcos have little cost or liability for participating in the program, since USAC reimburses them for discount granted to customers. Why would a big telco stop giving the discounts when it costs them so little?

Our National Telecom Priorities

I recently wrote a blog that talked about the FCC’s formal goals for the next few years. I noted in that blog that some of the FCC’s actions currently seem to conflict with their stated goals. Today I present my take on what I see as the actual current priorities in our industry.

5G, 5G, 5G. The FCC and other policy makers have swallowed the 5G hype hook, line and sinker. I have no doubt that 5G will be an important part of our future telecom landscape, but the hype seems way out of proportion to the reality we are likely to see. Nothing highlights this better than a Qualcomm-sponsored article that claims that 5G technology will be as important as the introduction of electricity.

The FCC is sweeping away regulations that might interfere with 5G and already killed local say over the location of small cell electronics and towers. The FCC is well on the way towards allocating massive amounts of spectrum for 5G and ignoring other spectrum needs. The White House even held a 5G summit where politicians were repeating the talking points of the 5G carriers.

This all seems premature since engineers all say that the major benefits of mature 5G will come years from now. There will be some early 5G technology introduced into the market over the next few years, but this will not include the characteristics that make 5G an important technology. From a policy perspective, 5G seems to have won the war without having had to fight any of the battles. I’ve never seen this industry (and the politicians) go so gaga over a new technology that we aren’t even going to see for a while. The marketers at the cellular companies have clearly hit a hype home run.

The Rural Digital Divide Gets Lip Service. Talking about solving the rural digital divide is a high priority. The FCC rarely makes a presentation without mentioning how important this is to them. However, the FCC and others in Washington DC are doing almost nothing to solve the problem. The FCC even went so far as to list the rural digital divide as the first priority on their own list of goals but has done little to address the problem.

There is universal acknowledgement that the private sector is not going to invest in rural broadband without some funding help from government. Yet all of the state and federal grant programs added together are throwing millions of dollars at a problem that needs many billions of dollars to solve.

Meanwhile, the rural digital divide is widening as urban areas are seeing significantly faster broadband speeds while rural America is stuck with little or no broadband.

The Big ISPs Want to be Google. Every one of the big ISPs has made investments to try to catch-up with Google. The big ISPs want to monetize their vast troves of customer data. Big ISPs are envious of the advertising money made by Google and Facebook and want to grab a piece of those dollars. The FCC has aided the big companies by weakening consumer privacy protections.

But for whatever reason, the big ISPs haven’t yet figured this out. They have the most intimate and detailed access to customer data but have scarcely found any ways to understand it, yet alone monetize it.

Take My Residential Customers, Please. The big telcos have made it clear that they are not particularly interested in the residential market. CenturyLink made it clear this year that they will no longer invest in residential networks. Verizon has already sold vast tracts of rural networks. AT&T is constantly petitioning the FCC to let them tear down rural copper. Verizon is talking about expanding wireless local loops using 5G, but we’ll have to wait to see how serious they are about it.

Big ISPs Continue to Try to Squash Competition. The big ISPs miss no opportunity to squash competition, no matter how small. They all still rail against municipal competition, although all such competition added together is barely a blip on the national radar. They still pay for hit pieces – articles and papers that blast municipal fiber networks – even ones like Chattanooga EPB that is a paragon of competitiveness. They have been working hard to kick CLECs off of their dying copper networks, even thought the CLECs have been investing in newer DSL that can deliver decent broadband over the copper.

Broadband Statistics – 3Q 2018

As a nation we are approaching an 85% overall penetration of residential broadband. The following statistics come from the latest report from the Leichtman Group and compares broadband customers at the end of the recent 3Q of 2018 to the end of 2017.

 3Q 2018 4Q 2017 Change
Comcast 26,872,000 25,869,000 1,003,000 3.9%
Charter 24,930,000 23,903,000 1,027,000 4.3%
AT&T 15,746,000 15,719,000 27,000 0.2%
Verizon 6,958,000 6,959,000 (1,000) 0.0%
CenturyLink 5,435,000 5,662,000 (227,000) -4.0%
Cox 5,040,000 4,880,000 160,000 3.3%
Altice 4,096,300 4,046,200 50,100 1.2%
Frontier 3,802,000 3,938,000 (136,000) -3.5%
Mediacom 1,260,000 1,209,000 51,000 4.2%
Windstream 1,015,000 1,006,600 8,400 0.8%
Consolidated 781,912 783,682 (1,770) -0.2%
WOW! 755,100 730,000 25,100 3.4%
Cable ONE 660,799 524,935 135,864 25.9%
Cincinnati Bell 310,700 308,700 2,000 0.6%
97,662,811 95,056,435 2,123,694 2.2%

The large ISPs in the table control over 95% of the broadband market in the country. Not included in these numbers are the broadband customers served by the smaller ISPs – the telcos, WISPs, fiber overbuilders and municipalities. Cable companies continue to dominate the broadband market and now have 63.6 million customers compared to 34.0 million customers for the big telcos.

The 2.2% overall growth during the year is impressive since many have assumed that we are nearing the top of the market for broadband penetration. It’s worth noting that the US has had a housing construction boom and has added 1.6 million new housing units so far in 2018. If you assume those new homes share the same overall 85% market penetration as the rest of the country, the new homes would account for 1.36 million of the broadband gain. That means the rest of the market saw nearly a 1% overall increase in broadband penetration – a definite slowdown over prior years.

Much of the growth at the big cable companies continues to come at the expense of telco DSL. Overall, the big telcos lost a net of 328,370 customers for the year. This is mostly due to CenturyLink and Frontier, who are clearly bleeding DSL customers. The customer losses for these two companies is a bit surprising since by now each company should have activated big numbers of faster rural DSL customers, funded by the CAF II program. Companies are not required to report their performance for CAF II separately, and I have to wonder if many rural households are actually buying the improved rural broadband.

One thing that is clear about these numbers if that every company on the list ought to be considered now as an ISP, rather than as a telco or cable company. For this same 9-month period these same companies lost nearly 2.7 million cable customers while adding 2.1 million broadband customers. It’s clear that broadband is now the biggest and most important product for each of these companies.

The Reality of Rural Broadband

I recently saw the results of several rural surveys that probably tell the best story about the state of rural broadband. The two areas being studied are far apart geographically, but they are similar in many ways. The areas are both rural and are not near to a metropolitan area. The areas have some modest manufacturing and some modest amount of tourism, but neither in a big way. Both areas included some small towns, and a few of these towns have cable TV. And in both places, the customers in the rural area have poor broadband choices. These are not small isolated pockets of people, and the two surveys cover nearly 20,000 homes.

If you listen to FCC rhetoric it’s easy to think that rural broadband is improving – but in areas like these you can’t see it. These areas have both were supposed to get some upgrades from CAF II – but from what the locals tell me there have been zero improvements so far. The CAF program still has a few years to go, so perhaps there will be some modest improvement in rural DSL.

For now, the broadband situation in these areas is miserable. There are homes with DSL with speeds of a few Mbps at best, with some of the worst speeds hovering at dial-up speeds. One respondent to a survey reported that it took 8 hours to download a copy of Microsoft Office online.

The other broadband choices are also meager. Some people use satellite broadband but complain about the latency and about the small data caps. These areas both have a smattering of fixed wireless broadband – but this is not the modern fixed wireless you see today in the open plains states that delivers 25 Mbps or faster broadband. Both of the areas in the surveys are heavily wooded with hilly terrain, and fixed wireless customers report seeing speeds of 1-2 Mbps. There are a number of homes using their cell phones in lieu of home broadband – an expensive alternative if there are school kids or if any video is watched. There were customers who reported using public hotspots in nearby small towns. And there were a number of households, included many with school kids who have given up and who have no broadband – because nothing they’ve tried has worked.

As would be expected in rural areas, slow speeds are not the only problem. Even homes that report data speeds that should support streaming video complain that streaming doesn’t work. This indicates networks with problems and it’s likely the networks have high latency, are full of jitter, or are over-subscribed and have a lot of packet loss. People don’t really judge the quality of their broadband connection by the speed they get on a speed test, but instead by the ability to do normally expected activities on the Internet.

Many of these homes can’t do things that the rest of us take for granted. Many report the inability to stream video – even a single stream. This is perhaps the biggest fallacy in the way the FCC measures broadband, because they expect that a house getting a speed like 5 Mbps ought to be able to do most needed tasks. In real life the quality of many rural connections are so poor that they won’t stream video. Many people in these areas also complained that their Internet often froze and they had to constantly reboot – something that can kill large downloads or kill online sessions for school or work.

One of the biggest complaints in these areas was that their network only supported one device at a time, meaning that members of the family have to take turns using the Internet. I picture a family with a few school kids and can see how miserable that must be.

The surveys produced a long list of other ways that poor broadband was hurting households. Number one was the inability of people to work at home. Many people said they could work at home more often if they had broadband. A few respondents want to start home businesses but are unable to because of the poor broadband. Another common complaint was the inability for kids to do schoolwork, or for adults to pursue college degrees on line.

The problems many people reported were even more fundamental than these issues. For instance, there were households saying that they could not maintain a good enough connection to bank online or pay their bills online. There were respondents who say they can’t shop online. Many households complained that they couldn’t offload cellular data at home to WiFi, driving up their cellular bills. A number of homes would like to cut the cord to save money but can’t stream Netflix as an alternative to cable.

When you look the raw data behind these kinds of surveys you quickly see the real issues with lack of broadband. In today’s society, not having home broadband literally takes a home out of the mainstream of society. It’s one thing to look at the national statistics and be told that the number of homes without broadband is shrinking. But it’s an entirely different story when you see what that means for the millions of homes that still don’t have adequate broadband. My guess is that some of the areas covered by these surveys show as underserved on the FCC maps – when in fact, their broadband is so poor that they are clearly unserved, ignored and forgotten.

Why I Am Thankful – 2018

It’s Thanksgiving again and I take a pause every year to look at the positive events and trends for the small ISP industry. This year was challenging in some ways because we have a current FCC that clearly favors the giant ISPs over the rest of the industry. But there are still a lot of things to be grateful for here at the end of 2018.

Local Governments Opening the Purse Strings. Local governments are listening to their constituents who are demanding broadband, and a surprising number of local communities are finding ways to help pay for broadband networks. In Minnesota alone there are a dozen counties that have agreed to make million dollar plus contributions to help fund local broadband efforts. These are de facto public-private partnerships with small telcos and rural cooperatives using that public funding to help bring broadband to rural areas.

Electric Cooperatives Have Awoken. All over the country we see electric cooperatives planning to bring broadband to their members. These cooperatives own electric grids in many of the same rural places that don’t have broadband. With existing pole lines and rights-of-way these cooperatives have a natural advantage for stringing fiber, particularly if they put the cabling into the electric space on poles and avoid costly make-ready. The coops also enjoy the natural advantage of being customer-owned and customer friendly, meaning that they are likely to see far higher penetration rates than an outside commercial operator building a broadband network.

We Finally Have the Next Big Product. I know numerous small ISPs who have seen instant success selling managed WiFi. I have clients that have achieved penetration rates north of 50% in just one year for the new product (and a few considerably higher than that). Bigger bandwidth requires an efficient and effective WiFi network and customers seem to be glad to have their ISP make this work for them.

Politicians Outside of Washington DC Get It. State legislatures all over the country are listening to constituents and are creating state broadband grant programs. Many of them are doing it the smart way and are mimicking successful grant programs like the one in Minnesota. The grant programs are coming from both red and blue states, demonstrating that broadband is not a partisan issue – almost all of rural America needs better broadband and state legislators are listening to their voters. Federal politics continue to be mired in partisan infighting and we probably won’t see anything out of them for the next few years.

FCC Holds out Possibility of New Spectrum. For the most part the FCC has been giving spectrum to the 5G industry and has not been creative in finding ways to also use spectrum to help solve the rural broadband gap. However, the FCC is looking at spectrum that would significantly benefit rural broadband. Of massive importance is the 6 GHz band being considered as the next swath of WiFi. This would double the amount of mid-range spectrum available for WiFi. The FCC is also considering other frequencies such as C-Band spectrum between 3.7GHz to 4.2 GHz. There are proposals in front of the agency to allow for 5G use in urban areas while allowing use for broadband in rural areas. The FCC may yet give this all to 5G carriers, but there are reasonable ways to share most bands of frequency to benefit both urban 5G and rural broadband.

Urban Broadband Speeds Improving. The big cable companies have unilaterally improved broadband speeds in urban areas, increasing the speed for their base products to between 100 Mbps and 200 Mbps. You might ask how this benefits rural ISPs. The increases in speed are in response to demands from customers, and the cable companies are redefining acceptable broadband – something the FCC is never going to be realistic about. These new urban speeds were easily predictable by anybody that understand that customer demand for broadband speed and total downloads has continued to double ever three years. Fast urban broadband resets the expectation for acceptable rural broadband.

The Big Telcos are Walking Away from Rural America. This has actually been quietly happening for decades as the big telcos have refused to invest in their rural networks. CenturyLink made it clear in 2018 that they are no longer interested in ‘infrastructure returns’ like what is earned on last-mile networks. They now join Verizon, which has been furiously selling rural properties and AT&T that keeps pestering the FCC to tear down rural copper. The door is open even wider for those ISPs that want to fill the broadband gaps.

Cable Subscribers – 3Q 2018

We are now in the second year of real cord cutting. The statistics show the traditional cable industry losing about 1 million customers per quarter. The numbers for the recently ended 3Q of 2018 come from the Leichtman Research Group and I compare to year-end 2017.

3Q 2018 4Q 2017 Change
Comcast 22,015,000 22,357,000 (342,000) -1.5%
DirecTV 19,625,000 20,458,000 (883,000) -4.1%
Charter 16,628,000 16,997,000 (369,000) -2.2%
Dish 10,286,000 11,030,000 (744,000) -6.7%
Verizon 4,497,000 4,619,000 (122,000) -2.6%
Cox 4,035,000 4,200,000 (165,000) -3.9%
AT&T 3,693,000 3,657,000 36,000  1.0%
Altice 3,322,800 3,405,500 (82,700) -2.4%
Frontier 873,000    961,000 (88,000) -9.2%
Mediacom 793,000    821,000 (28,000) -3.4%
Cable ONE 328,921    283,001 45,920 16.2%
  Total 86,096,721 88,788,501 (2,691,780) -3.0%

These companies represent roughly 95% of the entire cable market. Not included in these numbers is WOW with over 400,000 cable customers.

This group of large companies dropped almost 2.7 million customers so far this year, with losses in the third quarter over 1 million – making the third quarter the biggest losing quarter in history. Cord cutting is accelerating and 2018 is certainly going to exceed the 3.1 million cable customers that dropped in 2017.

The big losers are the satellite companies which lost 1,577,000 customers so far in 2018. These losses are offset by the fact that these two companies own the largest online video service, with Dish’s Sling TV now having 2,370,000 customers and DirecTV Now having 1,858,000 customers.

Not reflected in these numbers is the fact that 2018 so far has been a boom year for building new homes, with 1.6 million new housing units added nationally during the year so far. If you assume that new homes buy cable TV at the same rate as older homes, then the estimate of cord cutting would be 1.1 million higher for the first three quarters than is shown in these net numbers shown in the table.

In 2017 Comcast and Charter didn’t fare as poorly as the rest of the industry, but their rate of loss has roughly doubled over a year ago.

Cable ONE looks to a bit of an anomaly, but they had lost over 11% of customers in 2017 due to disputes with programmers, and they seem to have recaptured many of those customers.

The most obvious thing that jumps out from these numbers is that cord cutting is real and is here to stay. Within two short years after the start of the cord cutting phenomenon the big cable providers are on track to lose over 4% of total traditional cable subscribers in a year. That’s a lot of lost revenue for these companies and a lot of lost revenues for the programmers.

2.5 GHz – Spectrum for Homework

As part of the effort to free up mid-band spectrum, the FCC is taking a fresh look at the 2.5 GHz spectrum band. This band of spectrum is divided into 33 channels; the lower 16 channels are designated as EBS (Educational Broadband Service) with the remainder as BRS (Broadcast Radio Service).

The EBS band was first granted to educational institutions in 1963 under the designation ITFS (Instructional Television Fixed Service) and was used to transmit educational videos within school systems. It became clear that many schools were not using the spectrum and the FCC gave schools the authority to lease excess capacity on the spectrum for commercial use. In urban markets the spectrum was leased to networks like HBO, Showtime and the Movie Channel which used the spectrum to delivery content after the end of the school day. In the late 1990s the spectrum was combined with MMDS in an attempt to create a wireless cable TV product, but this use of the spectrum never gained commercial traction.

In 1998 the FCC allowed cellular companies to use the leased spectrum for the new 3G cellular. In 1998 the FCC also stopped issuing new licenses for the spectrum band. Companies like Craig McCaw’s Clearwire leased the spectrum to deliver competitive cellular service in many urban areas. In 2005 the FCC cemented this use to allow the spectrum to be used for two-way mobile and fixed data.

Today the technology has improved to the point where the spectrum could help to solve the homework gap in much of rural America. The spectrum can be used in small rural towns to create hot spots that are tied directly to school servers. The spectrum can also be beamed for about 6 miles from tall towers to reach remote students. The spectrum has nearly the same operating characteristics as the nearby 2.4 GHz WiFi band, meaning that long-distance connections require line-of-sight, so the spectrum is more useful is areas with wide-open vistas than in places like Appalachia.

A group of educational organizations including the Catholic Technology Network, the National EBS Association, the Wireless Communications Association International and the Hispanic Information and Telecommunications Network petitioned the FCC to expand the EBS network and to grant new EBS licenses to fully cover the country. The FCC has been considering a plan that would strengthen the educational use of the spectrum and which would also auction the rest of the spectrum for use as wireless broadband.

The use of the spectrum for rural educational uses could be transformational. Rural students could get a small dish at their homes, like is done with the fixed wireless deployed by WISPs. Students would them have a direct connection to the school systems servers for doing homework. Interestingly, this would not provide a home with regular Internet access, other than what might be granted by schools for links needed for doing homework.

The disposition of the spectrum band is complicated by the fact that Sprint holds much of the spectrum under long-term lease. Sprint holds licenses to use more than 150 MHz of the spectrum in the top 100 markets in the country, which currently provides them with enough spectrum to simultaneously support both 4G LTE and 5G. The speculation is that the FCC is working on a plan to free up some of this spectrum as a condition to the merger of Sprint and T-Mobile.

This is the only current spectrum band where the FCC is envisioning different urban and rural uses, with rural parts of the country able to use the spectrum to connect to students while in urban areas the spectrum is used to support 5G. This divided use was only made possible by the historic educational component of the spectrum. If the FCC tries to give all of this spectrum to the cellular carriers they’d have to reclaim the 2,200 licenses already given to school systems – something they are politically unwilling to tackle.

However, this solution points to a wider solution for rural residential broadband. The FCC could order the same type of rural/urban bifurcation for many other bands of spectrum that are used primarily in urban settings. We need to find creative ways to use idle spectrum, and this spectrum bank provides a roadmap that ought to be applied to other swaths of spectrum.

Freeing the spectrum for full use by rural education offers big potential, but also creates challenges for rural school systems which will have to find the money to build and deploy wireless networks for homework. But solving the rural homework gap is compelling and I’m sure many school districts will tackle the issue with gusto.

Worldwide Broadband Prices

Cable.co.uk has updated their comparison of worldwide broadband prices. Their report consists of a spreadsheet that compares broadband prices in 195 countries. If you didn’t know there were that many countries, many of the ones on the list are small island countries. The study considered the products offered by the major ISPs in each country. I assume they are using published prices and not some estimate of speeds that customers actually receive.

It’s not easy to compare broadband products because broadband speeds vary significantly around the world. The spreadsheet ranks countries by monthly price, expressed in US dollars, but you can use the spreadsheet to compare other factors. For example, looking at the cost per megabit provides a different perspective.

The US didn’t fare well in a comparison of overall pricing and came in at 119, with a monthly price for broadband at $67.69. This is down three places from last year. The US price was calculated using 25 ISP packages that had an average speed of 54 Mbps and a price per megabit of $1.26.

The cheapest broadband in the world is in Ukraine where the month price is US $5.00 with average download speed of 112 Mbps. To show how hard these comparisons are to make, the second cheapest broadband is in Sri Lanka with a monthly price of $US $5.56, but an average speed of only 11 Mbps, followed by Iran with a monthly price of US $8.20 per month, but a download speed of only 3 Mbps. The largest country at the top of the rankings is Russia, at number 4, where the average cost of broadband is US $9.77 per month with average speeds of 31 Mbps.

At the bottom of the list were two sub-Saharan countries: Mauritania with an average price of US $768.16 for 6 Mbps and Namibia with an average price of US $383.83 for 22 Mbps. Also at the bottom was Papua New Guinea with an average price of US $571.67 for 7 Mbps.

The US fares a little better when ranking by cost per megabit. With a price of $1.26 per megabit we’re at number 56. Number 1 on this comparison is Singapore with a price of US $0.03 per megabit, due to delivering an average speed of 1.6 Gbps for a price of US $50.43 per month. At the bottom of the list were two other sub-Saharan countries, Somalia and Niger that have average broadband speeds of less than 1 Mbps.

Finally, I compared countries by average Internet download speeds. The US came in at number 39 with an average speed of 54 Mbps. At the top of the list is Singapore with the 1.6 Gbps speed. Second is Jersey, in the Channel Islands off Normandy with a speed of 468 Mbps and Panama with an average speed of 273 Mbps.

Like all statistics there is a story go with all of the various countries. For example, China has an average broadband speed of 98 Mbps with an average price of US $41.29 per month. However, China is similar to the US and their data speed blends cities with gigabit speeds with smaller markets with much slower speeds. Among the countries with fast download speeds are places like Hong Kong, Bulgaria and Ireland where the government has set a priority and dedicated public money to building broadband infrastructure.

Since these comparisons are made using advertised prices and speeds, they don’t represent the total actual cost to consumers. For example, in this country some ISPs jack up the price of broadband by requiring an expensive monthly modem rental. In some markets in the US the ISPs deliver significantly slower speeds than advertised, making the products a lot more expensive on a per megabit basis. Many ISPs here also offer bundled discounts, making the prices lower than advertised. I’ve studied broadband prices in specific US markets and I know how hard it is to understand the real cost of broadband – and I’m sure these sorts of things are true in other countries as well. However, the average price of $67.69 for the US doesn’t seem out of line.

US broadband trends will change our rankings over the next few years. For example, prices by the big ISPs are on the increase, as witnessed by the recent $5 monthly increase by Charter for bundled broadband. Wall Street analysts all expect broadband prices in the US to now increase every year after a decade of stable prices. However, the cost per megabit ought to be tumbling here since the big cable companies recently increased customer speeds unilaterally – meaning millions of US customers now have broadband that is significantly faster than just a year ago.

Even with all of the issues of comparing broadband in countries with widely disparate conditions, this kind of comparison is useful. The main takeaway for me from this table is that most of the economic rivals of the US in Asia and Europe have faster broadband speeds than here, and lower monthly prices. Our trend is to increase broadband speeds, at least in urban areas, but prices are going to climb at the same time. If you look at broadband as a basic utility that’s necessary to be competitive, we aren’t stacking up very well.

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.