The Infrastructure Guessing Game

As Congress inches closer to an infrastructure bill, the industry is feverously speculating how a broadband infrastructure plan might work. There is still a lot of compromise and wheeling and dealing to be done, so nobody knows how a final broadband program might work, or even definitively if there will be one. But since this is the billion-dollar question for the industry, it’s worth a review of the possibilities.

At this point, I think we know where the White House would come down if they were the decider in the issue. We can see the White House’s influence in shaping the policies concerning ARPA grant monies. The White House has pushed to ignore the FCC’s outdated 25/3 Mbps definition of broadband and has quietly pushed for rules that would let broadband money solve the urban broadband gap and not just the rural gap. The White House’s original proposal was for $100 billion to built state-of-the-art broadband infrastructure. Other than that, the original White House plan avoided talking about the mechanics of how to use broadband funding – and that is the real billion-dollar question.

But the White House does not get to decide the details of how infrastructure spending will be done – that responsibility lies fully with Congress. There have been two radically different broadband plans suggested in Congress.

Last year, an $80 billion infrastructure plan was proposed with the Accessible, Affordable Internet for All Act sponsored by Rep. James E. Clyburn of South Carolina and Sen. Amy Klobuchar of Minnesota. This bill included a lot of unique ideas. Most of the funding was to be awarded in one gigantic reverse auction of at least $60 billion. We saw the perils of using the reverse auction last year when much of the FCC’s reverse funding awards went awry. We saw companies with no balance sheets winning huge dollars. We saw grant awardees claiming technologies like gigabit rural wireless that doesn’t exist. We saw money going to an unproven low orbit satellite business. We also quietly saw many of the big incumbents claim huge funding.

The Accessible, Affordable Internet for All Act also had a big emphasis on affordability. This was the act that suggested a $50 monthly discount for low-income broadband that materialized this year in the EFF program. The Act also promotes the idea of open access – an idea that is anathema to many ISPs. Altogether, the mechanics of this Act are troublesome.

Just this month, three Senators – Michael Bennet, D-Colorado, Angus King, I-Maine, and Rob Portman, R-Ohio – reintroduced the Broadband Reform and Investment to Drive Growth in the Economy Act (BRIDGE Act).  This would allocate $40 billion for broadband infrastructure. The bill promotes gigabit broadband and would require that funding only be allowed for technology that can deliver symmetrical 100 Mbps speeds. The bill lifts the ban on municipal participation in creating a broadband solution.  The BRIDGE Act takes a drastically different approach in allocating funding and would give money to States to choose funding priorities.

We now hear that a bipartisan group of Senators and the White House have hammered out a compromise infrastructure plan that would allocate $65 billion for broadband infrastructure. The plan at this point doesn’t talk about the mechanics of how the funding would be awarded. Nut it seems likely that a bipartisan compromise bill would be something different than the bills discussed above. For instance, it’s likely that a bipartisan bill would not support municipal broadband. By all news accounts, this compromise is still far from a done deal, and a Democratic-only infrastructure bill is also being considered. But passage of that is far from assured.

I predict that for the rest of the summer we’re going to continue to see different dollar amounts and different ideas on how to spend the infrastructure money – and that’s assuming there even is an infrastructure bill passed. We are now down to the sausage-making, and anybody who thinks they know how this will turn out has a better crystal ball than mine. There is still a lot of time for DC lobbyists to suggest tweaks that benefit their clients. One thing I think we can count on is every Senator telling us how much they care about solving the digital divide. For the broadband industry, this is great theater and there will be continuous headlines – but it’s also serious business since the plans that are already on the table vary significantly in the details that matter.

Figuring Out AT&T

Like has happened many times during my career, AT&T is changing the trajectory of its business. Over just a few months, the company has shed major parts of the business and has taken huge losses in doing so.

At the end of February, the company spun off its cable TV business that includes DirecTV, AT&T TV, and U-Verse. The business went to a newly formed company that will be owned 70% by AT&T and 30% by TPG Capital. AT&T received $7.8 billion in cash which values the new business at $16.25 billion. This represents a huge loss for AT&T which originally paid $67 billion to acquire DirecTV in 2015. That’s over a $50 billion loss after six years.

AT&T recently announced an even bigger deal and sold off WarnerMedia to Discovery Inc. The sale net’s $43 billion in cash to AT&T to pay down debt. The newly formed company will become the second-largest Media company and will combine HBO, Warner Bros. studios, TNT, TBS, and CNN with Discovery, Oprah Winfrey’s OWN, HGTV, The Food Network, Animal Planet and others. The new company will have a huge sports presence between TNT and TBS and Discovery’s worldwide sports coverage.

The sale represents another big loss for AT&T. The company paid $85 billion for Time Warner and will lose $42 billion in only five years. The two sales will allow AT&T to pay down about $51 billion of its $169 billion in debt. But a lot of the remaining debt is still due to the original two purchases.

I find these transactions to be ironic because AT&T lobbyists have been harping for years against municipal broadband saying that it generates huge losses. The vast majority of municipal broadband ventures are cash self-sufficient, and AT&T’s claim is aimed at convincing legislators to ban municipal competition. But it’s ironic to see that the same company that rails against municipal broadband is absorbing over $90 billion in losses. If AT&T had instead put this money into fiber it would now own the US market and we’d have solved much of the lack of broadband in the country. As we saw from the recent blast at municipal broadband from USTelecom, the irony isn’t stopping AT&T from continuing to make the same false claim against muni broadband.

The company also shifted directions in the broadband market when it decided last October to stop selling DSL to new customers. One has to think that this is the precursor for AT&T pulling down rural copper. In urban areas, this decision will push remaining customers to the cable companies. In rural areas, some of the DSL customers might be able to convert to cellular broadband from AT&T, but for many households, the AT&T decision just means less choice for broadband.

This largely means that AT&T will be focusing on the cellular business and fiber broadband business. The company is still primarily a cellular company and for years the telecom business has been relegated to back pages and footnotes in the company’s annual reports. But AT&T has quietly been investing in fiber. The company has passed over 14 million homes and businesses with fiber in the last few years and is building to pass 3 million more this year. This appears to be a profitable venture for AT&T since the network builds are efficient as AT&T is mostly overlashing fiber onto existing copper wires.

AT&T is still the largest cellular company in the country, but the competition has gotten a lot stiffer over the last five years. The T-Mobile merger with Sprint put them in close second and on AT&T’s tail. We’re now seeing the big cable companies picking off significant numbers of cellular customers. Within a few years, we’ll see the market entrance of Dish Networks which already is saying it’s going to gain market share with low prices.

Back when AT&T moved heavily into media and cable TV, many analysts wondered why the company didn’t stay focused on its core competency. I guess those skeptics were prescient since the new ventures barely made it past half of a decade before AT&T abandoned the new direction.

Altice Slashes Upload Speeds

In a change that makes no sense, Altice announced it is slashing upload broadband speeds for customers served on its cable systems. The speed changes are drastic – on the most popular 100 Mbps download product, upload speeds are getting cut from 35 Mbps to 5 Mbps. On the 200 Mbps service upload is being cut from 35 Mbps to 10 Mbps. The full list of cuts is listed on the company’s website.

The company says it didn’t have any problems delivering the faster speeds throughout the pandemic. Instead, the company says that the changes are being made to bring the company’s speeds in line with what other cable companies are offering.

It’s hard to think of a business reason why the company would poke its customers in the eye for no good reason. Many households with people still working and schooling from home are going to find the slower speeds unusable. I’ve seen this throughout the pandemic as we’ve helped communities with surveys and found consistently that about a third of people trying to work from home said their upload broadband was inadequate.

If the company had no problems offering faster speeds during the pandemic, and if making this change is going to harm customers, then there must be some strong motive for doing something this negative.

The timing of this change is suspicious, and I have to wonder if this is being done to create a unified face for the cable industry. The whole industry is under fire as the Treasury Department is suggesting in the rules for ARPA money that the right definition of minimum broadband ought to be symmetrical 100 Mbps. My guess is that the cable industry is going take a strong position that 5 – 20 Mbps is adequate upload broadband and that homes don’t need more.

Further, Altice is not changing the speeds for existing customers – only new customers or those that change packages. That makes this sound even more like a regulatory stunt than any real change.

It’s too bad that we don’t have an FCC with any power. A broadband regulatory agency would likely be dragging Altice in this week to explain the change and might even ask to see any correspondence between Altice and the other big cable companies. But the FCC under Ajit Pai pulled the FCC’s regulatory teeth, and the agency is largely powerless to challenge ISPs on broadband issues.

What is most interesting about this change is that Altice is lowering its speeds in solidarity with other cable companies rather than the other cable companies trying to increase speeds to emulate Altice. The cable companies profited greatly from the upload crisis – it’s been reported that millions of customers upgraded to faster download speed in an attempt to get faster upload speeds. During the last year we saw cable companies crowing about how they weathered the pandemic, when in reality millions of their customers were unable to use the upload bandwidth to function well at home.

The biggest problem faces by the cable companies is that they are on the wrong side of this issue. The big cable companies have been increasing broadband rates annually but are unwilling to make the investments needed to offer the upload speeds that people need and want. Altice has shown that cable networks can be configured to reach 35 Mbps upload speeds, but most of the companies other than Altice have failed to do so. This might require cable companies to upgrade the upload portion of the network to DOCSIS 3.1 – something that should have been done when the download performance was upgraded.

The funny thing is that we’ve seen this before. If you go back a decade when most cable companies offered download speeds of 30 Mbps, the CEOs of the cable companies were all saying that was all of the speed households needed. The cable companies were dead wrong about that and finally decided to provide the broadband that people want – and that change has won them most of the broadband customers in the industry. It’s curious to watch the industry again telling the public what it needs and doesn’t need. In the long run, this isn’t going to go well for the cable companies.

A Busy Year for State Broadband Legislation

One of the more interesting ways to see the degree to which broadband has grown in importance around the country is to look at the volume of legislation that has been proposed around the country this year. This website from the National Conference of State Legislators shows the status of the many broadband bills that have been introduced in state legislatures.

Of course, much of the legislation didn’t pass, but that’s true of all types of legislation. In the typical state legislative session, there are usually hundreds of bills proposed but only a small fraction that are approved.

There is an interesting chart at the beginning of the report that categorizes the various pieces of broadband legislation. As might be expected, the biggest category of proposed laws is aimed at solving the rural broadband divide. The next big category is funding, and a lot of state legislatures this year allocated money to help solve the digital divide.

The best thing about this website to me is that it’s linked to all of the various bills. Anybody who is interested in improving broadband in their state can likely find proposed bills on this list that provide a jump start for proposing new legislation.

I’ve always found proposed legislation to be fascinating. Many bills are proposed every year that have no chance of being passed, but for which the bill’s author wants to make a political point. There are other bills that get introduced year-after-year, with the author hoping that the time to consider an idea will eventually come.

Not all bills are pro-broadband. There are plenty of bills found in this list that were likely penned by industry lobbyists who are hoping to tamp down competition for the big ISPs.

A policy person could skim through the proposed legislation all day. Here are a few of the more interesting and typical bills I found on the list:

  • Arkansas SB 74 makes it easier for municipalities to partner with existing ISPs. There were laws proposed in other states that make it harder for municipalities to participate in getting better broadband.
  • California AB 34 would create a $10 billion state broadband fund for solving the rural broadband gap, upon approval of the voters.
  • Connecticut HB 6167 would create residential broadband as a public utility and all rate increases would have to be approved by the Public Utilities Regulatory Authority. I’m surprised that some state hasn’t tried this.
  • Florida SB 1944. This was one of several Florida laws that are aimed at modifying regulations for pole attachments. This is a common theme with most bills aimed at making it easier for fiber providers of 5G companies to get access to poles.
  • Illinois HB 3275 established a State Low Income Assistance Program that would provide a $9.95 monthly subsidy for qualifying homes to help pay for broadband.
  • Indiana HB 1522 creates a state broadband map to contrast with the FCC’s faulty maps. There are similar initiatives in other states.
  • Maine LD 80 permanently assigns 33% of sales and use tax revenues to be used to deploy broadband infrastructure.
  • Michigan HB 4210 was vetoed by the Governor and would have given tax breaks to ISPs. There are similar attempts every year by ISPs across the country.
  • Missouri HB 321 allows electric companies to own and operate broadband infrastructure.
  • Virginia SB 1434 requires that any school board that requires virtual learning must provide the needed technology to students.
  • Washington SB 5439 institutes a dig once policy for state highways. Similar bills are contemplated or passed in other states.

USTelecom Blasts Municipal Broadband

In a typical knee-jerk reaction, USTelecom released an Issues Brief that claims that government-owned broadband networks aren’t built for the long haul. This was clearly prompted by federal grants that are giving money directly to towns, cities, counties, and states that can be used to build infrastructure, including broadband.

The Issues Brief trots out the same old lame arguments that the big ISPs have made for years against municipal broadband – that there have been some municipal broadband efforts that have failed. This is a true, but my math shows that the municipal failures are something less than 5% of municipal ventures. We never hear the comparative figures about how many new commercial ISP startups fail. That’s because there are no newspaper headlines when a small fiber overbuilder over-borrows and quietly folds shop. And somehow the big ISP industry totally overlooks their own big dramatic failures. Frontier just went through bankruptcy and walked away from $10 billion in debt – any industry expert can tell you that Frontier’s problems were all self-made and not due to unforeseeable market forces. AT&T recently walked away from a disastrous foray into cable TV and content and lost over $50 billion in just five years. This is not an industry that should talk too loudly about failures.

The real truth behind this Issues Brief is that the big companies don’t want any competition. The Issues Brief trots out the ridiculous FCC statistic that says that there is “fierce competition among providers—over 92% of American homes have at least two fixed broadband providers competing for their business”. That statistic is due to an FCC that hasn’t wanted to admit that urban areas are largely a monopoly for cable companies. Urban homes can either buy decent broadband from a cable company or slow broadband from ancient and out-of-date DSL from a telco. And that’s where you can still buy DSL – because that FCC statistic hasn’t been updated to reflect that AT&T completely walked away from selling new DSL. There is no fierce broadband competition in most markets. My consulting firms conducts surveys, and we generally see over half the public everywhere claiming they don’t have any choice of broadband providers.

Another great quote from the Issues Brief is that “The private sector has the best track-record of success for broadband deployment”. Really? I work with dozens of communities every year that are only looking for a better broadband solution because the big incumbent ISPs have not invested in their communities. The big telcos walked away from maintaining or upgrading copper networks several decades ago. When cable companies decided to upgrade to DOCSIS 3.1 a few years ago, most of them decided to leave the upload bandwidth at the older DOCSIS 3.0 technology – which hurt millions of homes that struggled with working and schooling at home during the pandemic. The big companies only spend capital when they feel like they don’t have an alternative. This is another topic the big ISPs ought not to be touting too loudly because it’s demonstrably not true.

The Issues Brief finishes by touting public/private partnerships as the answer – the big ISPs want cities to hand them all of the current grant funding to get them to invest in the networks they should have been investing in all along. The truth here is that the vast majority of communities do not want to be an ISP and are looking for partnerships. But in most cases, communities first look for smaller ISP partners that have a track record of providing good customer service before considering the incumbents. There is a clear reason why the big ISPs are always at the bottom of every measure of customer satisfaction – they treat customers like dirt.

I can summarize this Issues Brief a lot more succinctly than did USTelecom: “We know cities are getting a lot of grant money right now. Don’t try to use this money to become a municipal ISP because cities are too stupid to make it work. Give the grant money to us instead and we’ll take care of your future broadband needs, just like we have over the last twenty years. Wink wink.”

Grant Funding is Not Free

It’s easy to think of grants as free money, but nothing is ever really free. I know ISPs that have won grants and then decided to return the grant funding once they fully understood all of the costs and requirements that come along with the grant funds. The following are a few of the issues that ISPs might not like about grants.

  • Filing for grants can be expensive, particularly if the grant requires undertaking engineering studies or market studies that the ISP might have otherwise not taken on. There is, of course, no guarantee of winning a grant after going through the cost of grant preparation.
  • Environmental studies can add a lot of cost to a grant. Environmental studies seem unnecessary for networks that will be built entirely in existing utility rights-of-ways that already contain other utilities – particularly when putting fiber on poles. Environmental studies can be expensive in some circumstances. I helped a client that wanted to replace abandoned cell sites on national parkland where the environmental study for a $2 million project cost over $250,000.
  • Archaeological studies can also be expensive and can again seem unneeded when a project will be using existing rights-of-ways and previously disturbed soil.
  • Some grants require historic preservation studies which seem unneeded when the entire network is being built outside and not in or near to historic buildings.
  • Prevailing wages can add a lot of cost to fiber construction – particularly if engineering estimates didn’t anticipate paying higher wages.
  • I’ve seen all of these extra costs add as much as 20% to the cost of a project. It’s easy to think that’s okay as long as the grants cover the extra costs – but these extra costs also add to the needed matching funds which might change the attractiveness of the grant.
  • Grants can require significant paperwork to show compliance with all of the grant rules. Sometimes paperwork is needed annually for many years after the end of grant construction.
  • Grants can require the grantee to provide free broadband to anchor institutions or others for long periods.
  • There have been grants that put restrictions on the grantee selling the grant property far into the future.

ISPs have sometimes found lenders unwilling to lend to a grant-funded project because of the restrictions. For example, a prohibition against selling a grant-funded asset for a decade might make an asset worthless as collateral for a bank loan. You can’t assume that a commercial bank will accept all of the requirements of a grant.

There are obviously many ISPs willing to accept these various provisions when grants provide enough dollars to make it worthwhile. But these various restrictions can be a lot more problematic when taking grant money to fund only a small portion of a larger project – because the restrictions come whether the grant is funding 90% or only 10% of a project.

It can be even more problematic when accepting multiple grants for a single project since each grant likely comes with different rules. It’s sometimes a Gordian knot to reconcile multiple grants with external financing.

The bottom line is that anybody accepting a grant needs to read the fine print and be aware of the restrictions that might come with the grant. Many rural projects are not viable without substantial grants – but as the above list shows, grants are not free.

NTIA’s New Broadband Map

The National Telecommunications and Information Administration surprised the broadband industry by issuing a new broadband map for the whole U.S. The map differs in dramatic ways from the FCC’s broadband map, which is derived from broadband speeds that are reported by the ISPs in the country. It’s commonly understood that the FCC broadband map overstates broadband coverage significantly. The NTIA map draws upon varied sources in an attempt to create a more accurate picture of the availability of broadband.

The NTIA map was created by overlaying layers from various data sources over Google Maps. This includes speed test data from both Ookla and M-Lab. The map shows the results from Microsoft measurements of speeds experienced during software updates. There are two layers of data from the American Community Survey showing homes that report having no Internet access at home and also homes that have no computer, smartphone, or tablet. The NTIA also includes the FCC Form 477 data that is the only basis for the FCC broadband map. The NTIA map then offers an additional layer that shows high poverty areas have 20% or more households below the national poverty level. The data in the map can be viewed at both the Census tract and Census block level.

The data on the map is eye-opening. I live in Asheville, North Carolina. The map shows that broadband adoption varies widely across the city. In my Census tract, there are 6% of homes without broadband access. The neighboring tracts have broadband access in between 6% and 10% of households. But there is also a part of the city where 43% of homes don’t have broadband. This is clearly an issue of poverty and not availability because, in the rural areas surrounding the city where there is little option except slow DSL, the percentage of homes without broadband access is around 20%.

The NTIA map sticks it in the eye of the FCC for being so slow to change its broadband maps. The exaggerated coverage in the FCC maps first became obvious to me in 2009 when clients were seeking ARRA stimulus grants that defined homes as either served, unserved, or underserved for the first time. It was clear then that some of the ISP reporting to the FCC was pure fantasy. There has been a loud call since then to fix the FCC maps that has largely gone unheeded until a recent effort to begin the process of modifying the maps. That effort is expected to take a year or two.

The NTIA is making a point that there are many other sources of broadband data than just the FCC data. For example, we all know that speed test data isn’t perfect – but taken in mass, speed tests create a pretty accurate picture of broadband speeds. One of the most interesting data points is from Microsoft – one can argue that the speeds encountered when downloading a big data file like a software update is the best measurement of actual speed. The Microsoft data shows that actual download speeds are far below what ISPs claim in most of the country.

There are even more data points that could be layered onto the NTIA maps. For example, I wish the NTIA has also layered on maps created by State broadband offices because the States have taken a stab at undoing the worse fictions in the FCC mapping.

As might be expected, the industry reacted almost immediately to the new maps. The NCTA – The Internet and Television Association quickly blasted the NTIA maps. The big trade associations probably have a good reason to hate the maps after the Department of Treasury said just last week that cities and counties could rely on mapping data from any federal agency when deciding where ARPA grant funding can be spent. Localities are going to find these maps to be interesting and useful as they consider spending money on broadband infrastructure.

Hopefully, the NTIA will continue to update these maps as new data becomes available. You probably know by reading this blog that I am not a fan of using speed definitions when allocating broadband grants. I think it would far easier, as an example, to say that grants can always be used to overbuild rural DSL. But if the government continues to base grants upon something like the 25/3 Mbps definition of broadband, then maps like this new one are extremely helpful by showing more realistic speed numbers while also reminding is that there are a lot of other factors like poverty and broadband adoption rates to considere when deciding which parts of the country need grant assistance.

Treasury Makes it Easier to Fund Broadband

On June 17, the US Treasury Department clarified the rules for using federal ARPA broadband money that is being given to states, counties, cities, and smaller political subdivisions. The new FAQs make it a lot clearer that local government can use the funds to serve businesses and households that are considered as served – meaning they receive broadband speeds over 25/3 Mbps. My first reading of the rules came to the same conclusion, but these clarifications hopefully make this clear for everybody. There was language in the original Treasury Interim rules that might have scared off city and county attorneys from using the funding for broadband. Following is some of the clarifying language from the revised FAQs:

FAQ 6.8 adds the clarifying language that unserved or underserved households or businesses do not need to be the only ones in the service area funded by the project. This is a massively helpful clarification that discloses Treasury’s intent for the funds. The response to this FAQ could have previously been interpreted to mean that the money could only be used to bring broadband to places that have less than 25/3 Mbps. FAQ 6.9 further makes this same point, that while the goal of a broadband project must be to provide service to unserved or underserved areas, a sensible solution might require serving a larger area to be economical – and again, unserved and underserved locations need not be the only places funded by the ARPA funding.

FAQ 6.11 looks at the original use of the term ‘reliably’ when defining the broadband provided to homes and businesses. The Treasury response makes it clear that advertised speeds don’t define broadband speeds, but rather the actual broadband performance experienced by customers.

The use of “reliably” in the IFR provides recipients with significant discretion to assess whether the households and business in the area to be served have access to wireline broadband service that can actually and consistently meet the specified threshold of at least 25/3 Mbps – i.e., to consider the actual experience of current broadband customers that subscribe to served at or above the 25/3 Mbps threshold. Whether there is a provider serving the area that advertises or otherwise claims to offer speeds that meet the 25 Mbps download and 3 Mbps upload speed threshold is not dispositive.  

FAQ 6.11 goes on to clarify that governments can consider a wide range of information to use as proof that broadband is not reliably meeting the 25/3 threshold including federal or state broadband data (meaning State broadband maps or the newly released NTIA broadband map), speed tests, interviews with residents, or any other relevant information. Local governments can consider issues such as whether speeds are adequate at all times of the day – do speeds bog down at the busiest times? Issues like latency and jitter can be considered.

Maybe most significantly, the FAQ gives an automatic pass to overbuild DSL or cable companies still using DOCSIS 2.0. While there are very few homes still served by DOCSIS 2.0, Treasury is allowing localities to basically declare DSL to be obsolete, regardless of any speed claims made by the telcos. This negates the tens of thousands of Census blocks where telcos claim rural DSL speeds of 25/3 Mbps – an area served only by DSL is justification to use the funding.

In a clarification that some states and counties will find reassuring, FAQ 6.10 says that the ARPA funding can be used to fund middle-mile fiber as long as it is done with a goal of supporting last-mile fiber.

These were critically important clarifications since there has been a lot of debate at the local level about whether ARPA money could be used in various circumstances. The clarifications make it clear that ARPA money can always be used to overbuild rural DSL. It’s also clear that the ARPA money can be used in urban settings as long as the funded area included at least one location that doesn’t have a broadband option of at least 25/3 Mbps. There are numerous little pockets in all cities where the cable companies didn’t build and where DSL is the only option. Cities can clearly use this funding to provide support for low-income neighborhoods and places the big ISPs have bypassed or ignored.

Why Do We Give Grants to Huge ISPs?

The blog title is a rhetorical question because we all know why we give federal money to big ISPs – they are powerful companies that have a lot of lobbyists and that make a lot of contributions to politicians. But for some reason, the rest of us don’t talk enough about why giving money to the big ISPs is bad policy.

I could write a week’s worth of blogs detailing reasons why big ISPs don’t deserve grant funding. The public dislikes big ISPs and has rated them for two decades as having the worst customer service among all corporations and entities, disliked even more than insurance companies and the IRS. The public hates talking to big ISPs, because every call turns into a sales pitch to spend more money.

The big ISPs routinely deceive their customers. They routinely advertise special prices and then proceed to bill consumers more than what was promised. They have hidden fees and try to disguise their rates as taxes and fees. The big telcos unashamedly bill rural customers big fees for decrepit DSL that barely works. The telcos have known for over a decade that they can’t deliver what they are peddling.

Cable companies come across as better than the telcos only because their broadband technology is faster. But in every city, there are some neighborhoods where speeds are far slower than advertised speeds – neighborhoods where longstanding network problems never get fixed. I hear stories all of the time about repeated slowdowns and outages. About 30% of the folks we’ve surveyed during the pandemic have said that they couldn’t work from home due to problems with cable company upload speeds.

And then there are the big reasons. The big telcos created the rural broadband crisis. They made a decision decades ago to walk away from rural copper. They quietly cut back on all upgrades and maintenance and eliminated tens of thousands of rural technicians, meaning that customers routinely wait a week or longer to even see a technician.

What’s worse, the big telcos didn’t walk away from rural America honestly. They kept talking about how they could provide good service, to the point that the FCC awarded them $11 billion in the CAF II program to improve rural DSL – we paid them for what they should have routinely done by reinvesting the billions they have collected from rural customers. But rather than use the CAF II money to improve rural DSL, most of the money got pocketed to the benefit of stockholders.

While I think the decision to walk away from rural broadband was made in the boardroom – the worst consequences of the decision were implemented locally. That’s how giant companies work and is the primary reason we shouldn’t give money to big ISPs. Upper management puts pressure on regional vice presidents to improve the bottom line, and it’s the regional managers who quietly cut back on technicians and equipment. Rural broadband didn’t die from one big sweeping decision – it was murdered by thousands of small cutbacks by regional bureaucrats trying to earn better bonuses. I’ve talked to many rural technicians who tell me that their companies have taken away every tool they have for helping customers.

What does this all boil down to? If we give money to the big ISPs to build rural networks, they are going to pocket some of the money like they did with CAF II. But even if they use grant money to build decent rural networks, it’s hard to imagine them being good stewards of those networks. The networks will not get the needed future upgrades. There will never be enough technicians. And every year the problems will get a little worse until we look up in twenty years and see rural fiber networks owned by the big ISPs that are barely limping along. Meanwhile, we’ll see networks operated by cooperatives, small telcos, and municipalities that work perfectly, that offer good customer service, and that have responsive repair and maintenance.

I have a hard time thinking that there is a single policy person or politician in the country who honestly thinks that big ISPs will take care of rural America over time. They’ll take federal money and build the least they can get away with. Then, within only a few years they’ll start to nickel and dime the rural properties as they have always done.

I have to laugh when I hear somebody comparing current rural broadband grant programs to our effort a century ago for rural electrification. That electrification money went mostly to cooperatives and not to the big commercial corporations. We’ve lost track of that important fact when we use the electrification analogy. The government made the right decision by lending money to citzens to solve the electricity gap and didn’t give money to the big commercial electric companies that had already shunned rural America.

The main reason we shouldn’t give grants to big ISPs is that solving the rural broadband gap is too important to entrust to companies that we know will do a lousy job. There is nobody who thinks that the big telcos or cable companies will do the right thing in rural America over the long run if we’re dumb enough to fund them.

A Security Warning

Today I am going to talk about something that happened outside of our industry but that should be a concern of every ISP. There is a lesson to be learned from the Colonial Pipeline hack by the DarkSide ransomware group from Russia.

I am positive that if I call my ISP clients that every one of them will tell me that their broadband networks are secure and that there is no way for malware to shut down their broadband network. I would trust that response since most broadband networks are encrypted from end-to-end between the core and customers.

But the ISPs would still be wrong. The hack of Colonial Pipeline did not attack the software that operates the pipeline. Instead, the hackers found their way into the computers used for the billing system. When that 10-year-old software got locked, Colonial had no way to take orders, pay the gas suppliers, or bill customers for delivering gas. The money side of the business was locked. Colonial made the decision that it couldn’t operate without that software.

I think if I ask the question to ISPs of whether every computer, laptop, and tablet connected to the OSS/BSS software is totally secure I would get a different answer. Hackers only need to get into one computer to shut down an ISP’s OSS/BSS. Without that software, most ISPs would not be able to take new orders, answer billing questions, send out new bills, take trouble tickets, or dispatch repair people. With the OSS/BSS software locked an ISP wouldn’t even be able to look at customer records. Most ISPs would be unable to somehow switch to a manual method of doing things. Most ISPs would have little choice but to pay the ransomware if they found themselves in the same position as Colonial.

This is the same approach that the ransomware hackers take with many large targets. They shut down the billing systems system for hospitals to bring them to a halt. They shut down the supply chain and inventory software of factories to bring them to a screeching halt. Businesses of all types now have sophisticated suites of software that are equivalent to our industry’s OSS/BSS software. Over the last decade, most larger businesses have migrated to a master software that controls most of the day-to-day backoffice functions of the business. That automation has been a huge time and dollar saver – but it is the point of attack for malware hackers.

I advise every ISP to take a look at the security of computers used by staff. That’s where the vulnerabilities are – and that’s where the ransomware folks exploit. Very few ISPs pay the same kind of attention to PCs, laptops, and cellphones as they do to the broadband network. We often don’t keep up with software updates for every device. We let employees take devices home or travel with them and use hotel WiFi.

I would bet that we’ve already had ISPs hacked – because most of the businesses that are hit with ransomware don’t talk about it. They pay the ransom and hope they get up and running again. A company like Colonial had to disclose it because the gas supply chain works on a 24/7 cycle and gas stations started running out of gas soon after the attack.

I am not a security expert, and I don’t have any answers. But I know a lot of clients do not have ironclad security for the backoffice side of the business. As soon as I heard about this hack I realized how this could happen easily in our industry as well.