Monthly Archives: August 2022

The New Open-Access

It’s fairly easy to understand the concept of open-access. This is where somebody owns a fiber network and allows other ISPs to use the network to compete for customers. The most common owners of open-access networks have been owned by local governments, although SiFi Networks, a commercial entity, has built and is operating several open-access networks.

The open-access dynamics have been similar everywhere. The network owner makes the big investment in the network and sells individual connections to ISPs. This is an interesting operating model for an ISP because it doesn’t have to make any significant capital outlays to be able to provide gigabit bandwidth over a fiber network. In the traditional open-access model, the network owner not only owns the fiber, but also the electronics needed to reach customers. The network owner maintains the network and is responsible for repairs and periodic electronics upgrades. The ISPs sell and provide service to customers.

The traditional open-access model has mostly attracted local and relatively small ISPs. The appeal of the model for ISPs is that they don’t have to make a big capital investment to gain paying customers. If there is any downside to the traditional open-access model, it’s that having multiple ISPs tends to force down consumer prices and pushes down margins. Traditional open-access also requires a different marketing pitch because every ISP is using the identical technology – the value proposition from an ISP has to be based on price and service.

But there are new models related to open-access that don’t fit the traditional open-access model. Consider the West Des Moines conduit model. The city is building empty conduit to reach every home and business in the city. ISPs that want to use the network have to make a significant investment by pulling fiber throughout the city and also providing the electronics. The conduit model is not going to attract undercapitalized ISPs since an ISP has to make a significant investment to reach customers. So far, the City has attracted Google Fiber and Mediacom, and the City is hoping for more ISP tenants.

It’s hard to describe this as open-access. Instead of getting a dozen or more small ISPs on the fiber network, West Des Moines has attracted two large ISPs so far. That’s not meant as a negative, because the West Des Moines model is already bringing more competition using fiber than if the City had decided to become an ISP or if the City had entered into a more traditional public-private partnership with a single ISP. Bringing two or three large ISPs to compete in a city seems like a big upside.

I’m just speculating, but my guess is that a market that draws a handful of large ISPs is probably not going to bring a lot of price competition. I would be surprised if Google Fiber or the other ISPs interested in this model will lower their prices due to the presence of a few other large ISPs in the market. In West Des Moines, the ISPs aren’t sharing a network since each ISP brings its own unique set of electronics and associated features – although everybody will have fast speeds.

Another new model that I see a lot of cities contemplating is best described as dark fiber leasing. In this scenario, a city builds fiber everywhere and leases unlit fiber to ISPs. This model requires an ISP to provide end-to-end electronics. which is a far smaller investment than requiring an ISP to pull fiber through city-owned conduit. There are hundreds of cities doing this already on a small scale, but I can’t think of a larger city that has tried this everywhere yet. But I won’t be surprised if somebody tries this.  I also have a hard time calling this open-access since there would likely not be the capacity to offer this citywide to more than a few ISPs.

But maybe these are open-access, and I’m just getting hung up on the labels. Perhaps the easiest names for these operating models are open-access conduit and open-access dark fiber. It just makes it harder to talk to policymakers and politicians about open-access if it covers such a wide range of business models.

FCC Maps and Professional Engineers

When the FCC first adopted the new broadband data collection and mapping rules, the FCC had a requirement that ISPs must get FCC mapping data certified by a professional engineer or by a corporate officer that meets specific qualifications to make the certification. The genesis of this ruling was fairly clear – the FCC has taken a lot of flak about ISPs that have been submitting clearly inaccurate data about broadband coverage. To some degree, this was the FCC’s fault because the agency never reviewed what ISPs submitted, and there was no feedback or challenge mechanism for outsiders to complain about the maps – even though the FCC heard repeatedly about the poor quality of the maps. The FCC now wants an engineer to bless the coverage area for every ISP that submits broadband mapping data.

In July, the FCC temporarily backed off from that ruling since many ISPs are unable to find a professional engineer to bless its FCC reporting for the upcoming new mapping deadline in September. The FCC will allow ISPs to get coverage data certified by an experienced engineer for the first three FCC data collection cycles meaning that ISPs must comply with the original order by two years from now.

I think the FCC ruling is going to be harmful to small ISPs, and I’ll describe why below. But first, I want to highlight what ISPs must do for the current 477 mapping data due next month. ISPs still need to get somebody who is qualified to certify the broadband coverage area. Note that an engineer is not certifying the broadband speeds – the mapping issue that matters the most. ISPs have three choices of folks who can provide the certification:

  • They can get the coverage area certified by a professional engineer.
  • They can get the data certified by an engineer who meets the following qualifications: 1) a degree in electrical engineering, electronic technology, or similar technical degree along with seven years of experience in broadband network design and/or performance, or 2) somebody with specialized training relevant to broadband network engineering and ten years of experience in the field.
  • A corporate office of the ISP who has a degree in engineering and who also has direct knowledge of the network design. Note that this person must be a corporate officer and not just an employee of the ISP. ISPs cannot satisfy the future requirement by hiring a professional engineer unless that person also becomes a corporate officer. I’ll have to leave it up to lawyers to define what a corporate officer is, but I’m guessing a CTO is not a corporate officer.

The requirement to certify the biannual 477 data filings is going to be a burden for small ISPs for several reasons. First, as the FCC acknowledges in the recent ruling, there is a shortage of professional engineers in the broadband industry. I think this shortage is a lot more acute than the FCC understands. Big ISPs will have no problem meeting this requirement because these ISPs will meet the requirement with either a corporate officer with an engineering degree or by hiring a professional engineer.

The problem comes from the many small ISPs that don’t have a relationship with a professional engineer. Most small ISPs take great pride in that they’ve built the network themselves without paying for expensive external engineering or consulting help. Small ISPs must be frugal if they want to survive I’ve talked to several engineering companies in the industry, and they have zero interest in taking on new clients who only need them to certify FCC 477 filings. Engineering firms in the country are already working at full capacity due to the explosion of broadband grants and the general expansion of fiber networks. They view helping somebody with mapping to be busy paperwork rather than useful engineering. When the temporary FCC waiver is over, I don’t think little ISPs will find professional engineers willing to help them.

I also don’t think the FCC understands what it is requesting from a professional engineer. The FCC is asking the P.E. to certify that the ISP network reaches everywhere claimed in the 477 mapping data. Engineers are not going to be willing to sign a 477 certification without having done the research to fully understand the network. I can picture that easily costing $10,000 to $50,000, depending upon the complexity of the network. It’s clear in the mapping order that the FCC is counting on professional engineers to do that research – but I don’t think they understand how much this will cost a small ISP. Engineers are not going to certify a network without this research since they are putting their license on the line if they certify a network based solely on what an ISP tells them. As an aside, this requirement gets even more onerous if the P.E. must be certified in the same state as the ISP – some states have a major engineer shortage.

Second, I’m not sure that an engineer exists who can certify a WISP network with multiple radio sites. There are propagation models available that estimate the coverage of a given radio, and the FCC has suggested that those are an acceptable tool for understanding the reach of a given radio. But every engineer understands that propagation studies are largely fantasy after a short distance from a transmitter. There are local conditions like trees, buildings, and other impediments that can affect the reach of a radio that are not reflected in the propagation studies. WISPs usually don’t know if they can connect to a new customer until they visit the customer’s house and try to connect. How can an engineer certify the reach of a WISP network when a WISP doesn’t understand it?

I know that the FCC is trying to avoid the blame it has taken over the years for producing dreadful broadband maps. But in this case, the industry told the FCC why its requirements can’t work, and the agency ignored what they were told. Unfortunately, the FCC didn’t hear directly from the small ISPs – because it never does. These little companies don’t know what’s going on at the FCC and don’t make comments in dockets, even those that matter. For now, the FCC has booted this issue two years down the road – but I can promise that the same issues will exist then that exist now, and small ISPs will be unable to comply with this requirement, even if they want to.

Who Should Report to the FCC Mapping?

I think there are a lot of ISPs that are not participating in the FCC data collection effort that the industry refers to as the broadband maps. In almost every county I’ve ever worked in, I run across a few ISPs that are not reporting broadband usage. There are several categories of ISPs in this category.

I often run across small regional WISPs and occasionally across fiber overbuilders that are not listed in the database. I know these ISPs are there because people claim them as their ISP when we do a broadband survey. These ISPs generally have a website that lists broadband rates and coverage areas – but for whatever reason, these ISPs do not participate in the FCC mapping database.

My guess in most cases is that these small ISPs don’t think they are required to report – they either don’t even know about the database, or they don’t fear any repercussions for not reporting. These are generally small single-owner or family businesses, and the owners might think that broadband isn’t regulated. Some of these ISPs have operated for years, and nobody has ever knocked on their doors about regulation, so they remain either blissfully unaware of their obligation to report or they don’t think it is important.

Another category that often doesn’t report is local governments that provide the fiber connectivity to their own buildings and sometimes to a few key businesses in town. These are not always small, and there are municipal networks in larger cities that are not included in the FCC database. Many cities don’t think they are ISPs even if they perform all of the ISP functions. They provide bandwidth to and from the Internet using facilities that they have built to connect to users. In some cases, there is an underlying ISP serving the city, but often there is not. Another similar category is school networks that buy wholesale bandwidth and do all of the ISP functions.

These local governments are doing themselves a disfavor by not reporting because their government buildings are not listed as being served by fiber. That could open up the door for some other ISP to ask for grant funding to serve the anchor institutions in the region that are already served.

Another interesting group of ISPs that often doesn’t report to the FCC is companies that buy wholesale loops from an open-access or leased loop environment. Generally, these loops are pure transport, and the ISP has to handle the functions of routing traffic to and from the Internet. These folks also often don’t think they are ISPs because they don’t own the fiber loop – but the entity that performs the ISP functions for a customer is the ISP and should be reporting to the FCC. These are often small companies that tackle being an ISP as a sideline business and I would guess they don’t think they are regulated.

The group that mystifies me the most are some of the big national ISPs. There are ISPs who have nationwide contracts to serve all branches of national chains like hotels, banks, etc. In a city of 20,000 or larger, there are often a half dozen such ISPs serving one or more businesses. But I regularly find that a few big ISPS are not reporting to the FCC. I’ve always wondered if some other big ISP includes these customers in its reporting, but when I look at the granular data, it often looks like many of the national chains served by fiber are not claimed by any ISP. The new FCC mapping is going to get a lot more granular and maybe we’ll finally be able to see if such connections are reported by somebody.

Adding together all of the ISPs that don’t report is likely only a minuscule sliver of the ISP market. However, these are often some of the most important connections in a city since they are the customers served with fiber. A small-city fiber network might be bringing multi-gigabit broadband to city buildings or a handful of businesses, and nobody knows about it.

I don’t know that the FCC has any hope of uncovering these small ISPs, and it’s not worth the investigative effort to identify them. But at least part of the blame for this lies at the FCC. The agency doesn’t have clear guidelines in plain English defining who is an ISP, with examples. But it might not help even if the FCC did, since it seems that many small ISPs barely know the FCC exists.

FCC Nixes Starlink and LTD Broadband

On August 10, the FCC issued a press release denying the long-form applications of Starlink and LTD Broadband in the RDOF reverse auction. This is big news because these are two of the biggest winners of the reverse auction. LTD Broadband was the largest winner of the auctions at $1.32 billion while Starlink had claimed over $885 million in the auction.

The FCC press release quoted FCC chairman Jessica Rosenworcel asking why the FCC should subsidize Starlink since it’s a “still developing technology” that requires customers to pay for a $600 dish, even with the FCC subsidy. I have to imagine that the FCC was relying, at least in part, on Ookla speed tests that show that Starlink’s performance has been worsening over time as more customers come onto the network. The speed tests also show that Starlink doesn’t meet the 20 Mbps upload speed that Starlink pledged to meet in the auction. We may not know the full reasoning behind the rejection unless the FCC follows this press release with a longer document.

The release says that the FCC rejected LTD Broadband because the agency deemed that the company was not capable of deploying a network of the scope, scale, and size required to satisfy the RDOF buildout requirements. This is not surprising since LTD is a small regional WISP in Minnesota that promised to build a fiber network that would cost many billions of dollars. LTD has already been having problems and had failed to win state approval for Eligible Telecommunications Carrier status in seven of the fifteen states where the company won the RDOF auction. There is also an open proceeding at the Minnesota Public Service Commission asking to revoke the existing ETC status.

These two cancellations of RDOF will have a significant ripple effect through the rest of the carrier world. The areas that were claimed in the RDOF auction have been off-limits for other federal grants like ReConnect. This ruling means that any areas that were claimed by these two companies can now be included in future federal grants.

The other issue caused by RDOF is that the awards were by Census block, and this resulted in award areas that have been described as swiss cheese. This meant that the RDOF awards were not contiguous but were often a scattering of Census blocks mixed in with areas that seemed to be identical but were mysteriously not included in RDOF – fully as a result of faulty FCC maps. This made it nearly impossible in some cases for other ISPs to seek grants for the areas not covered by RDOF since the areas are scattered.

I’m only speculating, but I suspect that the pending BEAD grants have a lot to do with the FCC decision. If the FCC had awarded the RDOF, then folks living in the Starlink areas would have been precluded from getting fiber or other broadband that is faster than Starlink. This was a particularly troublesome situation in my part of the world, where Starlink won the RDOF reverse auction in some of the western mountainous wooded counties in North Carolina. We now have a lot of evidence that Starlink struggles in heavily wooded areas.

The risk of awarding the RDOF to LTD Broadband is that the company would fail to execute on the fiber buildout. It wouldn’t be evident for a number of years if the buildout wasn’t going to succeed, and by that time, all of the current state and federal broadband grants would be long gone. I think this rejection shows that the federal government is really hoping that the BEAD grants will bring broadband to all rural areas.

There are still a few other large RDOF winners that have not been awarded. These are companies that are proposing gigabit wireless capability. The FCC is obviously not yet ready to make the awards to these companies, but it’s also apparently not ready to reject them. The clock is ticking for these areas. ISPs and local governments need to know if these areas won’t get RDOF since it takes time to plan for the BEAD grants, so it’s important for the FCC to make or reject the remaining RDOF applications soon.

The Work Force is Changing

McKinsey & Company recently published an article that explores the changes in the U.S. workforce. The bottom line of the article is that the pandemic gave people time to contemplate their personal and work lives, and a large percentage of Americans have decided to not go back to the kinds of jobs they held before the pandemic. McKinsey is calling this the Great Attrition, where millions of people have decided to retire early, take sabbaticals, start their own businesses, or start a new career.

This is reflected in a lot of statistics. There were a record 11.3 million jobs open at the end of May. After a huge number of people quitting their jobs in 2021, the percentage of people still quitting jobs is up 25% over historical trends.

McKinsey says that the current labor shortage is mostly for jobs that can be classified as traditional. People who are willing to take traditional jobs do so for the benefits, job titles, and the chance of long-term career advancement. The article postulates that the number of people willing to take traditional jobs that put the company first is dwindling. McKinsey doesn’t see that many big companies are changing the way they are recruiting – and this means there is a disconnect between what companies and potential employees are looking for.

Companies are mostly filling traditional jobs by luring people away from other companies, which is resulting in wage inflation but is not addressing the overall underlying number of people willing to take jobs they think will be unfulfilling.

McKinsey suggests that the long-term solution for companies to fill open jobs is to find a way to attract the 40% of workers that McKinsey classifies as non-traditionalists. That’s going to mean a big shift in the way that many businesses operate. Consider the following chart from the article that explains the difference between traditional and non-traditional workers.

The first column represents people who quit jobs between April 2021 and April 2022 but then took another traditional job. These folks look like traditional workers in that career development and advancement, adequate compensation, and meaningful work top the reasons why they took the new job. For the most part, these folks moved on to a company that offered them a better chance for career advancement. The one difference between this list and a list from five years ago is that even traditional workers now highly value workplace flexibility.

The second column represents the factors that non-traditionalists say might lure them to accept a traditional job. Topping the list as the most important reason is workplace flexibility, followed by good pay and meaningful work. The chance for career development and advancement is listed seventh for the reason to consider a job, below having a safe work environment.

The conclusion that can be drawn from this chart and the rest of the article is that building a long-term career at one company is no longer important to many people. People who are looking for long-term advancement will tolerate a work environment with an annoying boss or long hours if they think it puts them on the path toward advancement. But the growing number of people who view jobs untraditionally will likely bail on a company that doesn’t have a great work environment.

This is an important issue in our industry since telcos, cable companies, and other ISPs tend to offer traditional jobs with set work hours, decent wages, and okay benefits. At least historically, ISPs have not been known as places with a flexible work environment. Technicians and customer service reps work set hours. The business office is open at set times. Career advancement is possible, but it’s often a slow path that rewards staying with a company for many years until the bosses above retire.

The article suggests a number of different strategies that companies are starting to consider for filling open positions. One is to reach out to people who retired from a company to see if they can be lured back to work. Companies are looking for ways to become more flexible by allowing people to work from home or periodically take extended vacations.

One thing is for sure; this genie is not going back into the bottle any time soon. In an economy with more job openings than people to fill them, workers are currently in the driver’s seat. And unfortunately for many companies, that means they are not taking traditional jobs.

Who is the Fastest ISP?

I regularly run across articles that ask which major ISP is the fastest. Most of these articles get their speed data from Ookla, which publishes comparative median broadband speeds for mobile and landline ISPs each quarter, like in this report for the second quarter of 2022.

Americans love a horse race – we like to rank things, and articles that rank ISPs grab readers. But we have to take articles based upon the Ookla rankings with a grain of salt. Ookla doesn’t make any claims about its numbers – it just presents the data.

There are a few things to note about the Ookla numbers. First, the results come from the many speed tests reported to Ookla. We know that a significant number of speed tests aren’t perfect due to issues at the customer end, such as an old WiFi router or taking the speed test at the far end of the house away from the WiFi router. Most importantly, Ookla reports median speeds – meaning half of all speed tests for a given ISP are faster, and half are slower than the value shown. Median speeds don’t seem to be a great metric for comparing ISPs.

Here are the median speeds for the second quarter from Ookla for the largest landline ISPs.

Download Upload
Cox 196.73 10.60
Xfinity 184.08 18.88
Spectrum 183.84 11.70
Verizon 171.01 112.36
AT&T Internet 146.64 112.27
Frontier 136.99 113.21
CenturyLink 41.29 12.02

What do these numbers tell us (and not tell us)?

  • The results are only from customers who took speed tests. I have to think that customers who have blazingly fast Internet don’t take a speed test as often as customers who are seeing sluggish performance. Summarizing the speeds for only those who take a speed test is very different than measuring the average speed being delivered to all customers by an ISP.
  • One of the factors that likely has a big impact on the median speed is the mix of broadband speed products offered by each ISP. An ISP that sells a lot of 50 Mbps or 100 Mbps download products is likely to have a lower median speed than an ISP that has a minimum speed of 200 Mbps. The numbers above include ISPs with widely different speed products and prices.
  • This list only includes the largest ISPs. Smaller ISPs that offer fast products, like Ting, Sonic, US Internet, and many others, would blow away these median speeds.
  • I saw two articles that declared that Cox is now the fastest ISP in the country. Is it really? Just two quarters ago, at the end of 2021, Verizon had a median download speed of 201 while Cox was at 172. This variability from quarter to quarter is a good indication that you can’t make any serious judgment about an ISP based on median speeds. I can’t imagine that Verizon got slower – there was just a different mix of Verizon customers who took the Ookla speed test in the fourth quarter and the second quarter.
  • It’s interesting that none of the median upload speeds for cable companies is at the proposed 20 Mbps definition of broadband being considered by the FCC. This suggests more than half of all customers of the cable companies have upload speeds of less than 20 Mbps – and it’s likely that far more than half don’t achieve the 20 Mbps upload threshold. Is Cox really the fastest ISP when it doesn’t seem to meet the FCC’s proposed definition of broadband?
  • It’s clear that the measurements for CenturyLink include DSL. I’ve seen individual speed test results from CenturyLink Fiber customers that show symmetrical speeds – and far faster speeds than these numbers. By comparison, it looks like the Frontier, AT&T, and Verizon speeds are for fiber customers and don’t include DSL.

I like ranking as much as anybody, but I am unable to draw too many conclusions from the Ookla numbers. Perhaps the most you can say is that both fiber and cable companies are delivering decent download speeds – at least to the top 50% of customers. But these numbers are another example of the paltry upload speeds being delivered by the cable companies. I can’t pick the fastest ISP from this table – if I was forced to choose, I’d say Verizon. But that’s a pretty weak pick using median speeds. All of these ISPs offer a gigabit download product, and from that perspective, they are all the fastest – except for the ISPs not on this list that now offer a residential 10 Gbps broadband product.

When There is No Broadband

Jon Brodkin wrote a recent article in Ars Technica that highlights a Seattle couple who bought a house in Seattle and found it doesn’t have broadband. The house was built in 1964, but the new homebuyers found that the Comcast network was never extended to the house, although all six neighbors are connected to Comcast.

When the new homeowners couldn’t get service from Comcast, they found out that the only two options for broadband are CenturyLink DSL with a 3 Mbps download or a cellular hotspot. This is a real dilemma for a couple who both work from home.

Comcast largely ignored requests from the homeowners to connect service, and it eventually took pressure from a City Council member to get Comcast’s attention. That’s when the bad news came that Comcast wanted a $27,000 construction fee to bring service. This was to build underground cable to cross 181 feet.

https://arstechnica.com/tech-policy/2022/06/couple-bought-home-in-seattle-then-learned-comcast-internet-would-cost-27000/

This particular home is unusual since it has a lot with no easy street access and would require access through an easement across a neighbor’s lot. At some point, somebody at Comcast told the homeowners that the actual cost to reach the property is $80,000 since construction includes the easement and boring under a street  – a number that is hard to believe.

Comcast bought this cable network from AT&T, but the original cable company was probably TCI. It’s likely in the 1970s that the local construction crew elected to bypass this lot because it was hard to reach. The original cable company probably had a franchise agreement that required it to offer cable TV to every household. But as is often the case, the cable company decided to avoid a high-cost property like this one. There are likely other properties in high-cost situations around the city that aren’t connected to the Comcast network.

This particular house is news because the house is in a neighborhood of single-family homes deep inside a city where all of the other neighbors are connected. Being bypassed is a common story for folks who live on the fringe of the big cities where cable companies often quote similar high costs to get connected to the network. Most stories about urban homes that aren’t connected are in low-income neighborhoods that the original cable network deliberately bypassed.

The industry term for the construction fee that Comcast offered the couple is aid-to-construction. This is where a customer pays the cost of extending an existing fiber, electric, or water service to reach a new location. Anybody who has built a new rural home outside of a subdivision has probably run into this situation.

I regularly hear about cases where a rural farmer is willing to pay a fee of $25,000 to $50,000 to bring fiber to the farm – it’s obviously worth that much to them to get the broadband needed to operate a modern farming business. But the $27,000 fee is one of the highest fees I’ve heard in a city.

Not all ISPs do this. I have plenty of ISP clients that would have bored 181 feet to reach this property for a minimal fee or even no charge. They would have used their own construction crew, and the cost would have been nowhere near Comcast’s quoted fee. Good ISPs would write off this situation as the cost of doing business and to pick up a new and likely permanent customer.

 

Comcast and Charter Losing Broadband Customers

It’s big news that both Comcast and Charter lost broadband customers in the second quarter of this year. Both companies have steadily gained customers every quarter over the last decade. It was not a surprise to me to see this happen, but it happened sooner than I would have guessed.

Comcast lost 10,000 broadband customers for the quarter, a minuscule loss for a company with over 32.1 million broadband customers. To show how surprising this loss is, the company gained 262,000 customers in the first quarter of 2022, more than 1.3 million in 2021, and almost 2 million in 2020.

Charter lost 21,000 customers in the second quarter, again a small fraction of its 30.1 million broadband customers. But the loss is a big turnaround compared to the 185,000 broadband customers the company gained in the first quarter of this year, the 1.2 million customers gained in 2021, and the 2.2 million customers gained in 2020.

Comcast blames the customer loss on two factors. One is the end of the pandemic, which implies that households are now dropping broadband since the pandemic has cooled. This is the first time I’ve heard anybody make that claim. I’d love to hear if any ISPs that read this blog are seeing that same thing. Comcast also blamed the drop on the fact that fewer people than normal moved into new homes and apartments during the second quarter. That’s another claim that we’ll be able to check when the folks who track housing release statistics.

Charter blames the loss of customers on the change in the federal subsidy for low-income homes. Charter said it lost 59,000 customers when the subsidy changed from $50 under the Emergency Broadband Benefit (EBB) program to the $30 discount on the Affordable Connectivity Plan (ACP). That’s interesting, if true, and it provides evidence that many low-income households need a substantial discount in order to afford broadband. I’d also love to hear from any ISPs that are seeing this same customer trend. But I think Charter is being disingenuous to blame the drop on the low-income programs. The math doesn’t add up, and losing 59,000 in a quarter would not drive the company into having a net loss of customers.

There was something that both companies conspicuously didn’t claim – that the customer losses are due to competition. They are apparently not ready to make that claim yet because it makes them seem vulnerable. But it has been clear for some time that competition is nipping at the heels of the big cable companies. Telcos and other ISPs are furiously building fiber in urban areas in direct competition with cable companies. It’s hard to know fact from fiction, but fiber-based ISPs have high expectations – for example, AT&T says it plans to get a 50% penetration rate on fiber in a new neighborhood after three years.

Both companies are not acknowledging competition from the cellular carriers, which are selling unlimited 100 Mbps FWA broadband at an affordable price. Both cable companies have recently said they don’t fear competition from the FWA product. It’s too early to know how much of a threat wireless broadband will be – and it will take some time before we can see if the cellular networks can handle a lot of simultaneous broadband users and still maintain speeds. But for now, Verizon and T-Mobile are picking up a lot of new customers  – together, the two companies gained half of all new broadband customers nationwide in the first quarter of this year.

The stock prices of both cable companies have benefitted for years from continuous growth since analysts could count on each company growing both customers and revenues year after year. It’s going to be interesting to see what a loss of customers means to the long-term stock prices.

This new trend might change a lot of dynamics in the industry. I’ve said for years that the cable companies were on a steady march to have $100 broadband – and they still might be. It might be that raising rates is now the only path for them to increase the bottom line. But will these companies be able to raise rates in an increasingly competitive market? It seems unlikely that they will be able to keep increasing the price for the basic products, but the companies might be hoping for a continuation of the trend of customers upgrading to faster products. Both cable companies are aggressively selling cellular services, and each gained over 300,000 new cellular customers in the second quarter. But we don’t know how much margin the cellular business adds to their bottom lines.

Charter might have an easier path than Comcast to curtail losses and possibly grow again. Charter is aggressively seeking grant funding to expand into the rural areas around existing markets. These are areas that have had poor rural broadband, and Charter is building fiber in these markets – much to the annoyance of its urban customers who are not getting upgraded to Charter fiber. But this expansion should add a lot of new customers over the next four or five years. I think Charter realizes that in these markets, they will benefit by being the only provider of fast broadband – the first time the company will be operating in areas where it will largely be a monopoly.

The fact that the two biggest ISPs lost customers is a bellwether event that shows that the broadband market is now up for grabs. Who will be the big winners that fill the void if Comcast and Charter are not grabbing most of the new customers each quarter?

How Safe is Your Fiber Network?

There was a major attack launched against long-haul fiber networks outside of Paris, France on April 27 of this year. It appears that there was a coordinated attack by vandals to simultaneously cut three long-haul fiber routes. Fibers were cut with what seemed like a circular saw, and sections of fiber were removed to make it hard to make repairs. These were backbone fibers that were shared by multiple ISPs. A few ISPs lost service, and broadband access for almost everybody in Paris was slowed for a while.

The cuts were made at night, and in all three cases, the fiber was buried. There have been no arrests made, and no group ever claimed responsibility for the fiber cuts. But it’s obvious that whoever did this knew of the locations and purpose of the fibers.

There has been an uptick in attacks against communications infrastructure in France. In December 2021 the new outlet Reporterre documented more than 140 attacks in France against 5G equipment and related infrastructure during the year. This includes cutting cables, setting fire to cell towers, and even attacking telecom technicians. Attacks have decreased since the peak in 2020

The last major well-known attack on broadband infrastructure in the U.S. came on Christmas 2020 when a man blew up an RV parked outside of an AT&T switching center in Nashville. This seems to have been a case of mental illness, and police have never determined any motive or reason that AT&T was the target. The Department of Homeland Security issued an alert in the U.S. in May 2020 warning against likely attacks against cellular towers, related to 5G. There have been similar attacks in the UK and across Europe.

Regulators in the U.S. don’t widely publicize outages caused by vandalism, probably to not encourage copycats. In Docket FCC 21-99, the proposed rulemaking to improve network resiliency, the FCC noted the frequency of vandalism against U.S. networks. Carriers have always been required to disclose what the FCC defines as major outages, and the FCC noted that the year with the most attacks was 2016, with 1,079 reported acts of outages caused by vandalism. These attacks come in many forms, including gunshots, fires, and cable cuts.

ISPs are at a loss on how to protect infrastructure any better than it’s already protected. Most vital middle-mile fiber routes are buried, with the location of the routes not highly publicized. We put security fences and security cameras at cell tower sites and communication huts and buildings. But much of our vital infrastructure is located in remote locations – often on purpose. Nobody wants cellular towers or communication huts in residential neighborhoods, so carriers find out-of-the-way places to hide the infrastructure.

This is a warning for anybody building a new network to pay attention to physical security. In driving around, I see a lot of communication huts and cabinets sitting alongside the highway in plain sight. There are a few basics of physical security that every carrier should bake into the plans for a new network.

First, protect the perimeter around facilities. Put buildings and devices behind fences. Plant shrubs to keep infrastructure out of sight. Make it hard to park too near your facilities. And monitor your sites. Modern high definition or 4K cameras can capture the details needed to identify intruders. Cameras are now inexpensive and easy to connect where there is fiber. Connecting cameras to motion detectors can trigger recordings or security alerts when somebody is close to a facility. Consider a camera that includes license plate recognition software.

Always Online Customers

Computer Weekly recently compared the behavior of cellular customers in the UK from before the pandemic and after the pandemic. The analysis compared cellular customer usage from November 2019 to November 2021. Ookla took the findings and also looked at Switzerland and the U.S. to see if there were similar trends. The analysis revealed some interesting trends in mobile broadband usage that I think have implications for ISPs.

The percentage of consumers who describe themselves as always online grew from 30% to 69% during the pandemic. The analysis looked deeper at the reasons customers considered themselves as always online. Users who were always online for economic reasons (employment, traffic, remote working, social media, and information sharing) dropped from 16% of all users to 7%. However, the percentage of users who were always online for lifestyle reasons (parenting, caregiving, health and fitness, and gaming) grew from 3% to 32%. There has been an obvious shift in the reasons people are using the Internet.

By 2021, users who identified as always online were twice as likely to have reported an issue to customer service. About one-third of cellular customers are unhappy with customer service. The study looked at a wide range of the expectation that customers have for a customer service interaction, including the clarity of communications, the feeling that the carrier valued users as customers, the availability of multiple options for communicating with customer service, and how quickly issues were resolved.

Always online consumers have a higher expectation for the customer service interaction. They were more bothered by things like long wait times or customer service staff that doesn’t have the expertise to resolve a problem immediately.

One of the most interesting findings is that almost half (47%) of customers who had a customer service issue in the past 18 months either have switched or want to switch to another cellular carrier. I don’t recall a major survey that had a similar finding from before the pandemic and I wonder if people’s expectations have changed during the last few years. It’s certainly possible that the isolation of the pandemic made folks more dependent on broadband, which translates into a lower tolerance for poor service.

This finding is probably not news to cellular carriers – but it’s clear that carriers that want to keep the most active users need to step up the customer service game. I’ve heard several presentations in recent years that claimed that cellular companies spend as much as $350 on average to get a new customer. That’s a large number, especially considering that all it takes to lose many customers is a single negative customer service interaction.

How might all of this apply to broadband? First, it’s becoming clear that people are using broadband more, and I’m sure that the percentage of people who would say they use broadband for most of the day has also increased during the pandemic.

It’s probably not a big stretch to say that the customers who use broadband the most have the highest expectations for the performance of an ISP network and for the ability of customer service to resolve issues. Unfortunately, the large cable companies and telcos have the lowest-rated customer service in the country. To be ranked at the bottom can only be due to an accumulation of poor customer service experiences with customers.

It’s not as easy for most customers to change ISPs as it is to change a cellular carrier since in many markets there is only one ISP with a network fast enough to satisfy the heavy broadband users. But that doesn’t mean that customers don’t want to leave – and they will leave if they get another broadband choice. My consulting firm does surveys, and I invariably find that at least 30% of the public in every market are ready to change to a theoretical new fiber ISP, meaning that they are unhappy with the incumbent cable company. In some markets, this is much higher, and during the last year, I’ve worked in a few cities where more than 60% of existing broadband users said they were ready to change to a new ISP.

Many markets are going to see new competitors in the next few years. There will be almost ubiquitous FWA cellular broadband in most cable markets. It will be interesting to see how many people will bail on the existing cable company to change to 100 Mbps cellular broadband. If we believe all of the press releases of the big telcos and others, there is also a huge amount of fiber overbuilding underway across the country. It’s going to be interesting to see how many people will bail from a cable company to a fiber ISP. It can’t be good news for the cable companies if the trend for landline broadband is similar to cellular broadband, where half of its customers are ready to bail after a bad customer service experience.