Monthly Archives: April 2021

A Surprise

I think my biggest industry surprise of the last year happened recently when I opened the front door and found that a new yellow page directory had been placed on my porch. I haven’t received a yellow pages directory for the last seven years living in the US or the decade before that living in the Virgin Islands. I hadn’t given it much thought, but I thought the yellow pages were dead.

The yellow pages used to be a big deal. Salespeople would canvass every business in a community and sell ads for the annually produced book. I remember when living in Maryland that the Yellow Pages was at least three inches thick just for the Maryland suburbs of DC and that there were similar volumes for different parts of the DC metropolitan area.

Wikipedia tells me that the yellow pages were started by accident in Cheyenne, Wyoming in 1883 when a printer ran out of white paper and used yellow in printing a directory. The idea caught on quickly and Reuben H. Donnelley printed the first official Yellow Pages directory in 1886.

Yellow Page directories became important to telephone companies as a significant source of revenue. The biggest phone companies produced their directories internally through a subsidiary. For smaller telcos, the yellow page ads were sold, and directories were printed by outside vendors like Donnelley that shared ad revenues with the phone company. The revenue stream became so lucrative in the 1970s and 1980s that many medium-sized telephone companies took the directory function in-house – only to and found out how hard it was to sell ads to every business in a market. The market for yellow pages got so crazy that competing books were created for major metropolitan markets.

Yellow pages were a booming business until the rise of the Internet. The Internet was supposed to replace the yellow pages. The original yellow pages vendors moved the entire yellow page directories online, but this was never a big hit with the public. It was so much easier to leaf through a directory, circle numbers of interest, and take notes in a paper copy of the directory than it was to scroll through pages of listings online.

Merchants always swore that yellow page ads were effective. A merchant that was creative in getting listed in the right categories would get calls from all over a metropolitan area if they sold something unique.

Of course, there was also a downside to yellow pages. The yellow paper and the glue used to bind the thick books meant that the paper wasn’t recyclable. This meant a huge pile of books ended up in landfills every year when the new books were delivered. After the directories lost some of their importance, many cities required that directories were only delivered to homes that asked for them to reduce the huge pile of paper in the landfills.

Yellow pages are just another aspect of telephony that has largely faded away. There was a time that you saw yellow pages sitting somewhere near the main telephone in every home you visited. It’s something that we all had in common – and it’s something that the consumer found to be invaluable. A new business knew they had made it when they saw their business first listed in the yellow pages.

The Accessible, Affordable Internet Act for All – Part 2

This is the second look at the Accessible, Affordable Internet Act for All sponsored by Rep. James E. Clyburn from South Carolina and Sen. Amy Klobuchar from Minnesota. The first blog looked at the problems I perceive from awarding most of the funding in a giant reverse auction.

In a nutshell, the bill provides $94 billion for broadband expansion. A huge chunk of the money would be spent in 2022, with 20% of the biggest funds deferred for four years. There are other aspects of the legislation worth highlighting.

One of the interesting things about the bill is the requirements that are missing. I was surprised to see no ‘buy American’ requirement. While this is a broadband bill, it’s also an infrastructure bill and we should make sure that infrastructure funding is spent as much as possible on American components and American work crews.

While the bill has feel-good language about hoping that ISPs offer good prices, there is no prohibition that I can find against practices like data caps imposed in grant-funded areas that can significantly increase monthly costs for a growing percentage of households.

The most dismaying aspect of the bill that is missing is the idea of imposing accountability on anybody accepting the various federal grant funds. Many state grant programs come with significant accountability. ISPs must often submit proof of construction costs to get paid. State grant agencies routinely visit grant projects to verify that ISPs are building the technology they promised. There is no such accountability in the grants awarded by this bill, just as there was no accountability in the recent RDOF grants or the recently completed CAF II grants. In the original CAF II, the carriers self-certify that the upgrades have been made and provide no back-up that the work was done other than the certification. There is a widespread belief that much of the CAF II upgrades were never done, but we’ll likely never know since the telcos that accepted the grants don’t have any reporting requirements to show that the grant money was spent as intended.

There is also no requirement to report the market success of broadband grants. Any ISPs building last-mile infrastructure should have to report the number of households and businesses that use the network for at least five years after construction is complete. Do we really want to spend over $90 billion for grants without asking the basic question of whether the grants actually helped residents and businesses?

This legislation continues a trend I find bothersome. It will require all networks built with grant funding to offer a low-income broadband product – which is great. But it then sets the speed of the low-income service at 50/50 Mbps while ISPs will be required to provide 100/100 Mbps or faster to everybody else. While it’s hard to fault a 50/50 Mbps product today, that’s not always going to be the case as homes continue to need more broadband. I hate the concept that low-income homes get slower broadband than everybody else just because they are poor. We can provide a lower price without cutting speeds. ISPs will all tell legislators that there is no difference in cost in a fiber network between a 50/50 Mbps and a 100/100 Mbps service. This requirement is nothing more than a backhanded way to remind folks that they are poor – there is no other reason for it that I can imagine.

One of the interesting requirements of this legislation is that the FCC gathers consumer prices for broadband. I’m really curious how this will work. I studied a market last year where I gathered hundreds of customer bills and I found almost no two homes being charged the same rate for the same broadband product. Because of special promotional rates, negotiated rates, bundled discounts, and hidden fees, I wonder how ISPs will honestly answer this question and how the FCC will interpret the results.

The bill allocates a lot of money for ongoing studies and reports. For example, there is a new biennial report that quantifies the number of households where cost is a barrier to buying broadband. I’m curious how that will be done in any meaningful way that will differ from the mountains of demographic data that show that broadband adoption has almost a straight-line relationship to household income. I’m not a big fan of creating permanent report requirements for the government that will never go away.