The current FCC recognizes the disaster that was created when the original CAF II grant program subsidized the construction of broadband that supports speeds of only 10/1 Mbps. Several FCC commissioners have said that they don’t want to repeat that disaster. Had the CAF II grant monies been allowed for companies other than the big telcos, much of the money would have gone to fiber ISPs and we’d see a lot more areas covered with good broadband today (meaning fewer headaches for the FCC).
Today I ask the question: what speeds should the new $20.4 billion RDOF grant fund support? In the NPRM for the RDOF grant program, the FCC suggests that the minimum speed they will fund is 25/3 Mbps. It looks like the funding for these grants will start in 2021, and like the CAF II program, anybody taking the money will have six years to complete the broadband construction. I think the right way to think about the speeds for these grants is to look at likely broadband speeds at the end of the construction period in 2027, not at where the world is at two years before the RDOF is even started. If the FCC bases the program on broadband speeds today, they will be making the same error as on the original CAF II – they will use federal money to build broadband that is obsolete before it’s even constructed.
I start by referring to a recent blog where I challenge the idea that 25/3 should be the definition of broadband today. To quickly summarize that blog, we know that broadband demand has been growing constantly since the days of dial-up – and the growth in broadband demand applies to speeds as well as volume of monthly downloading. Both Cisco and Ookla have shown that broadband demand has been growing at a rate if about 21% annually for many years.
At a bare minimum, the definition of broadband today ought to be 50 Mbps download – and that definition is a minimum speed, not a goal that should be used for building tomorrow’s broadband. As I said earlier, in a world where demand continues to grow, today’s definition of broadband shouldn’t matter – what matters is the likely demand for broadband in 2027 when the RDOF networks are operational.
Trending the demand curve chart for download speeds forward presents a story that the FCC doesn’t want to hear. The need for speed is going to continue to increase. If the growth trend holds (and these trends have been steady since the days of dial-up), then the definition of broadband by 2027 ought to be 250 Mbps – meaning by then nobody should build a network that can’t meet that speed.
The big cable companies already recognize what the FCC won’t acknowledge. The minimum speed offered to new customers on urban cable networks today is at least 100 Mbps, and most users can order a gigabit. The cable companies know that if they provide fast speeds they get a lot fewer complaints from customers. In my city of Asheville, NC, Charter unilaterally increased the speed of broadband in 2018 from 60/6 Mbps to 135/20 Mbps. Anybody who has watched the history of cable company broadband knows that they will increase speeds at least once before 2027 to stay ahead of the demand curve. It wouldn’t be surprising by 2027 if cable company minimum speeds are 300 – 500 Mbps. Do we really want to be funding 25/3 rural broadband when speeds in cities will be fifteen times faster?
Will the world behave exactly like this chart – not likely. But will homes in 2027 be happy with 25/3 Mbps broadband – most definitely not. Given a choice, homes don’t even want 25/3 Mbps broadband today. We are already seeing hordes of urban customers abandoning urban DSL that delivers speeds between 25 Mbps and 50 Mbps.
If the FCC funds 25/3 Mbps broadband in the RDOF grant they will be duplicating one of the dumbest FCC decisions ever made – when CAF II funded 10/1 Mbps broadband. The FCC will be funding networks that are massively obsolete before they are even built, and they will be spending scarce federal dollars to again not solve the rural digital divide. There will continue to be cries from rural America to bring real broadband that works and by 2027 we’ll probably be talking about CAF IV grants to try this all over again.