Does New Technology Thrill You?

Today’s blog is not about broadband, or perhaps only peripherally. As I write this holiday weekend blog, I find myself thinking a lot about an article written last month by Shannon Vallor in the MIT Technology Review. She asks the question, “We used to get excited about technology. What happened?”.

The world is full of new technologies, yet I’ve had the same feeling as Shannon that these new technologies don’t excite me as they once did. She recalls a few technologies that brought her wonder and awe, such as her first ride on the San Francisco BART, seeing a Concorde for the first time, or her first Commodore PET.

We all have our own list of technologies that thrilled us or that we recognized instantly as game changers. My list includes things like Alan Shepard in the first Mercury flight, my first DSL connection that got me off dial-up, online music libraries like Napster and Spotify, and seeing the first iPhone.

The technological breakthroughs I loved the most were good for me or good for mankind. The childhood me saw the Mercury flight as the first step towards mankind expanding our boundaries past this planet. DSL liberated me to finally search the whole world from my living room. Online music meant I was no longer constrained to the music I could afford to buy and could explore the forty different genres of music I like. The iPhone gave everybody a portable handheld computer. The many other technologies I loved at first sight had similar benefits.

The article discusses how a lot of new breakthroughs feel small and somewhat tawdry because they are aimed at helping the companies that sell the technology more than the people who buy it. She cites how farmers feel captive to John Deere because of the way it controls self-driving tractors. She talked about how Roombas and smart refrigerators spy on us  – our transaction with technology companies doesn’t stop when we bring the technology home.

I remember going to Epcot when it first opened. I’m the first to admit that Disney’s vision of the future was schmaltzy, but the vision shown in the Epcot globe is how the history of technology is inexorably tied to making people’s lives better. The century before I was born saw amazing new technologies like electricity in homes, automobiles and planes, refrigeration, vaccines against some of the worst diseases, and mass communications through telegraphs, telephones, and radio.

The article talks about how technology breakthroughs today seem to be more about making the developers rich. If there is any one technology trend I’d like to see undone, it is how we’ve decided to reward companies with breakthrough technology as unicorns and make the founders into instant billionaires. I’m having a hard time getting as excited as I once with space when we’re using the latest technologies to provide private space rides to billionaires. It’s disheartening to see drones becoming the next weapons of war that can threaten us all. It’s disturbing to see vaccines going to wealthy countries instead of everybody. It’s scary that a lot of the electronics we bring into our homes are watching us and reporting back to parties unknown.

However, while I share the same unease as Vallor, I also read a lot about science breakthroughs in labs around the world. We are surrounded by breakthroughs that would have amazed us a few decades ago that barely rate a mention in the press. We’re discovering amazing materials that will enable the next generation of energy use and communications. The breakthroughs in biology are amazing, and we’re probably not far from finding a cure for the common cold and many cancers. We don’t seem to be far away from the first working generation of fusion reactors.

I guess I’m still hopeful, but at the same time, I’ve been thinking about reducing the number of gadgets in my life instead of adding more. I say all of this knowing that I might get thrilled with a new technology announced tomorrow. But then again, maybe I won’t.

Businesses Are Ready for the Metaverse

The latest technology on the horizon is the metaverse, which, stated simply, is the creation of online environments. While the primary focus of the metaverse is to create alternate realities, an application with a possible immediate big uptake is vertical presence for business meetings.

Ciena, a manufacturer of fiber optic transmission equipment, recently did a survey worldwide of 15,000 business people to understand the interests and expectations of the metaverse. Here are some of the most interesting findings from the survey:

  • 96% of businesspeople surveyed recognize the value of holding virtual meetings.
  • 78% of survey respondents said they would prefer an immersive experience over current tools like video conferencing. Many talked about having Zoom fatigue.
  • 71% thought that virtual meetings and the metaverse could become part of the everyday practices for businesses.
  • 40% thought that their business was likely to move from traditional collaboration tools in favor of virtual-based platforms in the next two years.

Of course, the respondents recognized the hurdles to bringing the metaverse into the workplace. 38% thought that network performance would be a challenge and would hold businesses back from using the metaverse. Many respondents also worried that there would be limited availability of high-quality software to operate efficiently in the metaverse.

Overall, the survey showed that there is interest in the metaverse in the workplace. That’s not the same as demand, and companies will likely only embrace the technology if it is affordable and is reliable. I have to admit I am intrigued that so many survey respondents thought that using the metaverse in the workplace is right around the corner.

I’m not sure that a lot of the respondents grasped the network challenges required for using the metaverse in the workplace. A big question that still needs to be answered is how much bandwidth is going to be required to use the metaverse.

There are two visions for the metaverse. One would replace face-to-face Zoom images with avatars. It’s possible that this metaverse would use even less bandwidth than video calls. But this begs the question of whether people want to have meetings with avatars rather than with the actual person. I might be the exception, but I like Zoom calls that let me see the person I’m talking to. I know a lot of people are shy or hate Zoom calls for other reasons, such as having to put on a public face for a function that just a few years ago would have been a phone call. Going from cameras to avatars might be comforting to Zoom haters.

But the other vision of the metaverse in the workplace uses a lot more broadband. This is the concept of telepresence, where a person can feel like they are meeting live with the person at the other end. This might mean beaming the meeting into an actual office or holding meetings in virtual offices and conference rooms. Telepresence is going to require a lot of bandwidth in order to project a real-time hologram of a meeting participant. I also have to assume that a telepresence connection is going to require low latency and jitter.

The big challenge for most of the world is upload bandwidth. Companies aren’t going to make telepresence calls over today’s cable technology. The cable companies could solve this by implementing faster upload speeds, and many are tackling that. But most are not looking at upload speeds that equal the symmetrical speeds on most fiber connections.

The other big challenge for the metaverse is that a lot of employees now work virtually, meaning that companies will have to deal with a wide variety of inferior home broadband connections.

Matching Big ISP Tactics

There are three billing practices that are routine for the large ISPs that smart competitors avoid. First is offering special low prices to attract new customers. The second is bundling, which means giving a discount to customers buying multiple products. Third is what has become known as hidden fees, where there are routine monthly fees that are not included in the online advertised price offers to customers.

A lot of smaller ISPs wonder if they should match these same tactics. The argument for copying the tactic is that it allows advertising rates that can be compared to what the big companies advertise. The main argument against matching these tactics is that the practices are deceptive, and customers have made it clear that they don’t like these tactics. Fiber overbuilders tell me that the first customers they win in a new market are those who feel deceived and mistreated by the bigger ISPs.

Big ISP online advertising has felt sleazy for many years. I wrote a recent blog where Charter in Los Angeles offers customers drastically different introductory rates depending upon neighborhood – with the highest rates being offered to the neighborhoods with the highest level of poverty. It’s common to see broadband specials advertised for less than half of the list price. A customer has to click through multiple levels of footnotes to find out the rate at the end of the special – if it is online at all. It’s not hard to think that somebody could be attracted to low rates without understanding that big increases will be coming in a year or two.

Bundling is an interesting pricing strategy. Customers are given a discount for buying multiple products but are never told which products get the discount. If a customer tries to drop one of the bundled products, they inevitably find that the dropped product had all of the discount and the customer usually ends up paying full price for the products they don’t drop. This tactic is intended to bully folks into not breaking the bundle.

Hidden fees are just plain sleazy. A customer buying an online cable product will get socked with a range of hidden fees on the first bill. While they thought they were buying a $40 cable package, the first bill could easily be $60 or $70. The most common hidden fee for broadband is usually a high rate for the cable modem, which can be over $15 per month. Even more expensive are data caps, which can significantly add to the monthly bill.

The majority of the small ISPs I work with don’t use these tactics. They understand that these tactics are what drive consumers to seek them out. Most of the small ISPs I know have the philosophy of charging the same fair rate all of the time.

But I’ve seen ISPs that start with the simple, fair rate philosophy and get sucked into offering discounts to try to win new customers. Their marketing folks become convinced that matching the big company techniques is the only way to get new customers. I’ll grant that mimicking the big guys is probably the easiest sales technique, but acting like the big ISPs is a poor long-term tactic for many reasons.

  • Promotional rates tell customers that rates are negotiable, and once an ISP goes down that path, customers will ask for breaks forever. Many consumers are used to negotiating with the big ISPs and will do so with the small ISP as well.
  • These tactics tell customers that your rates are too high and that the real rate is the discounted rate. Customers who are too timid to negotiate for lower rates feel cheated.
  • Unplanned discounts can be devasting to cash flows and meeting financial objectives. If your business plan and budgets are based upon a specific set of rates, then giving discounts lowers the average revenue per customer. Do the math and consider what happens if the average revenue for all of your customers drops by $5 or $10.
  • Matching the big ISP tactics also attracts customers who will drop an ISP for a small discount elsewhere. Every few years, they will compare you against the competition and will take the best offer. ISPs with fair rates tell me that they rarely lose a customer to special rates – and that might be because they don’t attract customers who get a thrill out of bartering.
  • Finally, special discounts complicate your dealing with customers. The ISP now has to track when special promotions are finished and notify customers that rates will increase. This likely means having to talk with most of your customers, and calls to the call center will skyrocket. It’s important to remember that most customers view the perfect ISP as one they never need to talk with.

I’m a huge fan of keeping things simple because I have seen so many ISPs that thrive with the philosophy. The danger of mimicking the big ISP tactics is that the public will see you as just another untrustworthy ISP.

 

Latest Broadband Statistics 3Q 2022

The latest Broadband Insights Report from Ookla shows broadband statistics for the end of the third quarter of 2022.

The average household used 495.5 gigabits of broadband per month in the quarter. That is the combination of 474.2 gigabytes of download and 32.3 gigabytes of upload.

What Ookla calls power users continues to climb. 13.7% of homes used more than 1 terabyte per month. 2.1% of all households use more than 2.1 terabytes.

The speeds of household broadband subscriptions continue to migrate to faster speeds. A lot of this is ISPs arbitrarily giving consumers faster speeds. But there are also a lot of folks opting to buy faster speeds. Only 13.1% of homes are now subscribed to speeds under 100 Mbps. 15.4 Percent of homes are subscribing to gigabit or faster broadband speeds.

Subscribers 3Q 2020 3Q 2021 3Q 2022
Under 50 Mbps 18.8% 9.8% 4.7%
50 – 99 Mbps 19.9% 8.0% 8.4%
100 – 199 Mbps 36.4% 38.4% 9.9%
200 – 499 Mbps 14.1% 27.4% 54.8%
500 – 999 Mbps 5.2% 5.1% 6.7%
1 Gbps+ 5.6% 11.4% 15.4%

I always wonder when I see one of these monthly reports where the current quarter fits into broadband trends. The following chart shows the average household usage by quarter reported by Ookla since the beginning of 2019.

This chart shows a clear pattern. It shows that broadband usage is strongest in the fourth quarter of each year. The usage dips a bit for the next several quarters each year. This trend was confounded by the pandemic when the first quarter usage spiked over the end of 2019. But from that point forward, the expected trend continued.

But the overall trend is clear, and usage is growing over time. Home broadband usage spiked during the pandemic when 2020 usage was more than 40% higher than in 2019. Usage then grew by 11% from 2020 to 2021 and grew by 14% from 2021 until 2022. Household broadband usage has grown 80% from the third quarter of 2019 until 3Q of this year.

 

 

 

 

 

 

 

 

A Slowdown in Cellular Expansion?

Mike Dano had a series of articles recently in LightReading talking about how the big cellular carriers plan to significantly cut back on 5G spending in 2023. Dano cited one analyst, Tom Nolle of CIMI that said that the cellular carriers are having a hard time making the business case for expanding 5G. The cellular companies are not seeing an uptick in new incremental revenues as a result of 5G investments. He says the cellular companies are clueless and don’t see a path to increase revenues next year.

This feeling of falling 5G expectations was bolstered by a somber outlook from Crown Castle. The biggest owner of cell sites said that it doesn’t see the big cellular carriers spending heavily in 2023 for cell towers or small cell sites.

As might be expected in complicated economic times, not all analysts agree. Dano cites analysts from Raymond James that say that 2023 will mark the year when the cellular companies start spending at a slow steady pace over multiple years to put in the promised 5G expansions.

As with most topics, I ask what this might mean for rural broadband. T-Mobile and Verizon have made a big recent splash in the industry with the rollout of the FWA fixed cellular broadband product. In the second quarter of 2022, Verizon and T-Mobile added 816,000 FWA customers. For the quarter, the largest seven cable companies collectively lost 60,000 customers. The six largest telephone companies lost 88,000 customers. Before the first quarter of 2022, we heard almost nothing about FWA.

I have to wonder what the news of a cell site expansion means for rural broadband. For customers lucky enough to be able to buy it, the FWA product has been a huge improvement over other kinds of rural broadband. I talked to one farmer who lived adjacent to a cell site and was seeing speeds of 200 Mbps. For this farmer, the faster FWA speeds meant being able to finally utilize his smart farming applications. But his neighbors, only two miles away, weren’t seeing speeds over 50 Mbps.

I’ve always wondered why a cellular company would make the FWA upgrade or even the 5G upgrade at a rural cell site. For a cell site located in a farming area there probably aren’t more than a handful of potential customers within a few miles of a tower. It doesn’t seem like an investment that is ever going to see a return. Voice is a little different because a voice signal can carry many more miles from an upgraded cell site – but most upgrades are leaving voice traffic on 4G.

Both T-Mobile and Verizon said that they were seeing many of the new FWA customers in cities and suburbs and not from rural areas. This makes sense. First, a lot more people are candidates for the product in more densely populated areas. The FWA product is also priced attractively, and I’ve been thinking of it more as a DSL replacement than a direct competitor to cable broadband. The FWA speeds are not as fast as cable broadband, and the signal strength will vary as it does with any wireless product.  Just look at how the cellular bars vary at your house and ask if you want that kind of variance in a home broadband connection. If your only existing choice is lousy rural broadband, you’ll gladly take it as an upgrade. But it seems like a harder sell to folks who have faster alternatives.

I can’t do any more than speculate because even the analysts don’t agree on the trajectory of the cellular industry, although the poor outlook from Crown Castle seems fairly persuasive. We are now sitting at an odd economic time where inflation and interest rates affect everybody, including the big companies. I suspect we’re going to get mixed signals about the near-term future from others, and not just the cellular companies. 2023 is going to be an interesting year to follow the big ISPs.

AT&T in the News

AT&T has not been in the headlines a lot this year, but recently I’ve seen the company’s name everywhere.

In the recently released financial results for the third quarter, AT&T noted that it now has more fiber broadband customers than non-fiber customers. At the end of the quarter, AT&T had 6.93 million fiber customers compared to 6.86 million remaining non-fiber customers. Non-fiber customers are predominantly U-Verse customers served by two pairs of telephone copper. The company still also has 340,000 DSL customers served by a single copper pair. There are also some rural fixed-wireless customers.

In the third quarter, AT&T added 338,000 fiber customers. The company lost 367,000 non-fiber customers in the second quarter – although counting them as lost is probably a misnomer since many were likely upgraded to fiber.

Upgrading to fiber is good for the company’s bottom line. For the quarter, the average revenue per user (ARPU) was $62.62 for fiber customers compared to only $54.60 for non-fiber customers. AT&T has also been saying for years that the cost of maintenance for copper is a lot higher, so the company is likely shedding costs as it sheds customers served on copper.

We also got a peek at market AT&T’s penetration. AT&T says it passes 18.5 million potential customers with fiber, meaning the company has achieved an overall 37% market penetration on fiber. In the third quarter, the company added fiber to pass 500,000 new locations.

I saw another interesting news blurb about AT&T. Bloomberg reported that AT&T is looking for an equity partner to invest in a major expansion of fiber. That would be a big departure from the past since AT&T has always funded its own capital expenditures and networks.

But it’s not hard to see from the third quarter results why AT&T might be seeking additional funding. In the third quarter, the company generated $9.87 billion of cash. It invested $4.71 billion in new infrastructure and paid $3.75 billion in dividends – leaving only $1.41 billion in free cash.

I would conjecture that AT&T wants to invest more heavily in fiber immediately since it’s clear that there is a mad rush nationwide to build fiber in cities. Fiber overbuilders hope that if they are the first to a market with fiber that it might dissuade other fiber overbuilders – so we are currently seeing a fiber land grab. In the long run, sharing fiber profits with an investor will decrease future AT&T earnings. The calculus that the company is betting on is that the market share gained by building first to markets outweighs the cost of sharing profits.

AT&T is currently debt-heavy. AT&T hasn’t had a recent track record of making good investment decisions. It’s been reported that AT&T lost as much as $50 billion from its purchase of DirecTV. In almost the same time frame, the company lost as much as $42 billion from its purchase and sale of WarnerMedia. The company might not be able to easily borrow the money, particularly at current interest rates.

The final news is that AT&T was fined $23 million to resolve a federal investigation that the company had “unlawfully influenced” the former Illinois Speaker of the House, Michael J. Madigan. AT&T admits that it paid Madigan, through an ally, to promote legislation that would eliminate carrier of last resort in the state – meaning that the company is obligated to serve people who ask for a telephone line. That obligation also comes with legacy regulatory requirements that AT&T wanted to ditch.

What always dismays me, but never surprises me, is that nobody at a big company like AT&T got in trouble for breaking the law – in this case, bribing a government official. The size of the fine might be appropriate for the magnitude of the crime, but I’ve always thought that the folk at big companies would be more likely to hesitate to be unethical if they saw others going to jail for breaking the law. The only real consequence for AT&T, in this case, is that they got caught, and the fine will just be viewed as the cost of doing business.

Is it Time to Say Farewell to GPON?

GPON is a great technology, GPON stands for gigabit passive optical network, and it is the predominant technology in place that is delivering fiber last mile broadband. The GPON standard was first ratified in 2003, but like most new technologies, it took a few years to hit the market.

GPON quickly became popular because it allowed the provisioning of a gigabit service to customers. A GPON link delivers 2.4 gigabits downstream and 1.2 gigabits upstream to serve up to 64 customers, although most networks I’ve seen don’t deliver to more than 32 customers.

There is still some disagreement among ISPs about the best last-mile fiber technology, and some ISPs still favor active Ethernet networks. The biggest long-term advantage of GPON is that the technology serves more customers than active Ethernet, and most of the R&D for last-mile fiber over the past decade has gone to PON technology.

There are a few interesting benefits of GPON versus active Ethernet. One of the most important is the ability to serve multiple customers on a single feeder fiber. PON has one laser at a hub talking to 32 or more customers. This means a lot less fiber is needed in the network. The other advantage of PON that ISPs like is that there are no active electronics in the network – electronics are only at hubs and at the customer. That’s a lot fewer components to go bad and a less repairs to make in the field.

We’re now seeing most new fiber designs using XGS-PON. This technology increases bandwidth and delivers a symmetrical 10-gigabit path to a neighborhood (for purists, it’s actually 9.953 gigabits). The technology can serve up to 256 customers on a fiber, although most ISPs will serve fewer than that.

The biggest advantage of XGS-PON is that the electronics vendors have all gotten smarter, and XGS-PON is being designed as an overlay onto GPON networks. An ISP can slip an XGS_PON card into an existing GPON chassis and instantly provision customers with faster broadband. The faster speeds just require an upgraded ONT – the electronics at the customer location.

The vendors did this because they took a lot of grief from the industry when they converted from the earlier BPON or APON to GPON. The GPON electronics were incompatible with older PON, and it required a forklift upgrade, meaning a replacement of all electronics from the core to the customer for the upgrade. I helped a few clients through the BPON to GPON upgrade, and it was a nightmare, with staff working late nights since neighborhood networks had to be taken out of service one at a time to make the upgrade.

The other interesting aspect of XGS-PON is that the technology is also forward-looking. The vendors are already field-testing 25-gigabit cards and are working on 40-gigabit cards in the lab. A fiber network provisioned with XGS-PON has an unbelievable capacity, and with new cards added is going to make networks ready for the big bandwidth needs of the future. Any talk of having online virtual reality and telepresence can’t happen until ISPs can provision multi-gigabit connections to multiple homes in a neighborhood – something that would stress even a 10-gigabit XGS-PON connection.

XGS-PON is going to quickly open up a new level of speed competition. I have one new ISP client using XGS-PON that has three broadband products with download speeds of 1, 2, and 5 gigabits, all with an upload speed of 1 gigabit. The cable companies publicly say they are not worried about fiber competition, but they are a long way away from competing with those kinds of speeds.

I’m sure GPON will be around for years to come. But as happens with all technology upgrades, there will probably come a day when the vendors stop supporting old GPON cards and ONTs. The good news for ISPs is that I have a lot of clients that have GPON connections that have worked for over a decade without a hiccup, and there is no rush to replace something that is working great.

Broadband Pricing Disparities in L.A.

Now that digital equity has become a hot topic. I’m starting to see studies from around the country looking at the inequities in the way that large ISPs treat customers.

One of the latest studies comes from the California Community Foundation, which looked at rates being offered to new customers in different parts of Los Angeles. Los Angeles is an odd broadband market in that Charter is a monopoly in much of the market. Charter claims to provide service in almost 96% of Census blocks, while AT&T and Frontier each only serve about a fifth of the market. Fourth is Cox, with a tiny market share. This means that a majority of customers in Los Angeles can only buy broadband from Charter, with no other landline option.

The study concentrated on Charter since they are the ubiquitous ISP, but there are findings about the other two ISPs as well. The study was done by looking at broadband products and rates that are advertised to homes scattered across the 88 separate communities in the LA area. ISPs today make offers online to customers looking to connect to broadband, and the study looked at specific offers made in different communities.

The study instantly found that the products and prices offered to residents vary widely by neighborhood. You might think that the products available online from a big ISP like Charter would be the same for the whole market or even the whole country, but there is a dramatic difference in some cases with the products and prices that are offered online.

For example, the base broadband product offered by Charter online seems to be Internet Ultra, which provides a download speed of 500 Mbps. This is the only product that was offered at every address in the study. About three-quarters of addresses were offered the 300 Mbps download product. Only about one-fourth of homes were offered the 100 Mbps broadband product.

The biggest finding from the study is that Charter offers better pricing along with better terms and conditions to wealthier neighborhoods. That is counterintuitive, and basic economics 101 says that businesses should be expected to get the highest prices out of customers who can afford it.

The examples listed in the report are devastating. In one case, Charter offered an address in Willowbrook (where the poverty rate is 8%) a 2-year special rate of $30 per month for a new subscriber to the Internet Ultra product. A home just two miles away in Watts, where the poverty rate is 31%, was offered the same product for a 1-year deal at $70 per month. In both cases, the product reverts to the $95 list price at the end of the term. This is a gigantic difference. The home in Willowbrook was offered 500 Mbps for a two-year cost of $720, while the home in Watts was offered a package that would cost $1,980 over two years.

Charter called the report misleading and said that promotional rates change all of the time. But the study was done across the city at the same time, meaning there was no big timing difference where promos had changed. Charter’s defense is that everybody eventually pays the full price.

There is no easy way for Charter to defend this. It’s obvious that somebody at the company is uploading different specials into the online portal by address or neighborhood. This can’t be random, and that means that somebody in the Charter marketing department (or, more likely, some piece of software) is making these determinations based on what others are willing to pay in each neighborhood. This feels like broadband pricing set by a sophisticated pricing algorithm like what is used for airline seats.

Charter has broken no laws, but this is still a black eye for the big ISP. The big cable companies might wonder why a fiber overbuilder does so well in new neighborhoods – but they need to look no further than the findings from this study to know why customers don’t like or trust them.

Being Stingy with Broadband Speeds

As I work in various parts of the country, I help new ISPs choose the speeds and the prices to offer on fiber networks. Part of that research begins with looking at what other ISPs charge in the region. I should probably stop being surprised, but I’m still taken aback when I see fiber-based ISPs offering what can best be described as stingy speeds. Just the other day, I ran across an ISP that is offering a range of speeds between 25/3 Mbps and 100/20 Mbps on fiber. Earlier this year, I ran across an ISP that has fiber products as tiny as symmetrical 10 Mbps.

This frankly mystifies me, and I always wonder why somebody with fiber would offer broadband products that are similar to their competitors. I figure that part of the reason is what I would call old thinking. Somebody offering that kind of speed is likely a small telco that used to offer DSL or a small rural cable company that didn’t have fast speeds. DSL products were set at a range of speeds up to 25/3 Mbps because that’s what the technology would allow.

I can’t imagine the thought process that says the slow speeds are adequate. According to OpenVault, 75% of U.S. Households are currently subscribing to download speeds of 200 Mbps or faster. That includes over 14% of homes nationwide that are subscribing to a gigabit product. It’s clear that people want faster broadband.

I think another part of the reason that an ISP would set low speeds is a fundamental belief that customers that buy faster speeds will somehow cost the ISP a lot more money. But after having seen the impact of hundreds of ISPs that have upgraded to faster speeds – I know this is not true. There is a one-time increase in broadband usage when you unblock a community that has had restricted broadband. The people in such communities start using broadband like everybody else, and that looks like a one-time big increase in usage – but people are just catching up to the ways that most of the rest of country uses broadband. After that short burst to catch up, usage then grows like everybody else.

Another reason behind offering slow speeds probably goes back to the day when buying Internet backbone connections was extremely expensive, and operators feared that a burst in usage would cost a lot. That’s also not true anymore in most places. Wholesale broadband prices have tumbled over the last decade. I know ISPs that are buying eight or ten times more bandwidth than a decade ago, at basically the same cost. I know that there are still some small ISPs located deep in rural areas that are paying far too much for broadband from the local telco.

There was a time when most of the industry tried to throttle customer usage. I remember quotes from the CEOs of the big cable companies and telcos saying that people didn’t need faster speeds. However, folks like Verizon FiOS and a handful of early fiber overbuilders exploded that concept and the cable companies did a 180 and now routinely increase customer speeds as a way to keep folks satisfied.

This same thinking also manifests in pricing. An ISP that offers 25 Mbps on fiber might also offer a gigabit product – but at a price that nobody can afford. I still run across gigabit broadband on small fiber ISPs priced at $175 per month or higher. These prices are set to make sure that only a few people buy the faster broadband. This thinking comes from the underlying belief that faster speeds are a luxury. But that’s really odd thinking for somebody that operates a network that can easily provide symmetrical gigabit broadband at an affordable price.

And that’s what gets me the most – these ISPs are losing revenues by being stingy. If they offer a slow broadband product at $50, they would likely have a lot of customers willing to pay $70  or $80 per month for gigabit broadband. I can tell by looking at the offerings that most ISPs with slow speeds are making less than their peers.

I understood these speeds and prices somewhat a decade ago when fiber networks were new and buying backbone Internet was expensive. But I can’t understand ISPs that have these stingy pricing plans when their peers a town away have normal broadband pricing.

ISPs and Customer Data

The FCC recently made a data request to cellular carriers asking how long the companies retain geolocation data on customers. For those not sure what that means, it means that the carriers record your location from your smartphone as you move around during the day. Your cellular company keeps data that can retrace everywhere you’ve been during the day. This rightfully makes most people nervous that somebody is watching and recording every place they visit.

Geolocation data is only one small piece of the data that cellular carriers collect on people. Cellular companies obviously know everybody you’ve called and texted, including the content of every text. They know every app you’ve used, websites you’ve visited, and the topic of every Google search you’ve made from your phone. Cellular companies also know the content of every email you send, assuming the email is not encrypted.

The FCC sent the data request in response to pressure from the public and politicians to put some commonsense caps on the collection and use of customer data. Here is a link to the responses from the fifteen largest cellular carriers.

Here are a few of the most common responses to the data request:

  • Cellular carriers said they retained records of customer activity to be able to respond to requests from law enforcement. This is a big turnaround from twenty years ago when telephone companies only tracked customer telephone usage after getting a valid subpoena to do so. It now seems that the carriers claim to record everything done by all customers to be able to respond to subpoenas involving only a minuscule percentage of people. The carriers cite law enforcement and FCC rules that force them to track customers.
  • Ten of the carriers said that customers have no options for opting out of having their locations tracked.
  • The amount of time that carriers retain data varies from two months to five years.

This is an issue that has been investigated at the FCC before. Several years ago, the FCC considered large fines against some of the largest cellular carriers for improperly misusing customer location data, such as selling data to bail bondsmen.

This FCC investigation centered only on geolocation data, but people are concerned about how ISPs and wireless carriers use all collected customer data. Company privacy practices vary widely, as does the way that carriers explain data collection practices. Consider what various carriers tell customers in the terms of service.

T-Mobile explicitly tells customers that it uses their data to consider marketing to them. Further, its privacy policy not only says that customer data is collected directly but that the company might buy or get personal data from third parties like social media platforms, analytic providers, and consumer data resellers.

AT&T says that it might share customer data with third parties, such as device information, advertisements you view, and demographic information like your age, gender, and ZIP code.

Verizon says it may collect demographic and interest data and look at how customers use the Verizon website and apps. That may not sound like a lot, but it includes “information about browsing, searching and buying activities; IP address, mobile phone number, device numbers and identifiers, web addresses of the sites you come from and go to next, screen recordings, browser and operating system information, platform type, connection speed, and other attributes.” Verizon also sells data to third parties.

At the other extreme are carriers like Comcast, which says that it doesn’t track or record the apps people use, or the websites visited.

But interestingly, most of the carriers that say they don’t use customer data have resisted any FCC or FTC attempts to restrict the data that might be collected.

The FCC inquiry only dips a toe into the fringe of data collection practices. It’s always been assumed that the carriers make a lot of money selling and using customer data, but none of them ever identify or quantify the financial benefits. I know I am probably like a lot of the public and would like to see more restrictions and disclosure requirements for carriers and ISPs. I know this view is shared by most small ISPs that don’t record or share data – I think they need to remind folks about this more often.