Monthly Archives: February 2023

Where are the Small Cell Sites?

Five years ago, one of the most talked about trends in the broadband industry was the upcoming explosion in the deployment of small cellular cell sites. The industry expectation in 2017 was that there would be half a million new small cell sites added within a few years. That expectation was bolstered by an FCC order in 2018 that basically let cellular companies place small cell sites anywhere, with an accelerated timeline and with a small cap on permitting fees.

After the FCC order, municipalities braced themselves to process large numbers of small cell site permits. The public got up in arms because there were some examples of horrendously ugly small cell deployments that were widely covered on social media. The public also got riled by the idea of placing small cell sites directly adjacent to their homes – with the most widely discussed deployment I recall in Philadelphia that placed a small cell site ten feet from a baby’s bedroom window. Anybody building a last-mile fiber network was hoping to sell transport to small cell sites scattered throughout neighborhoods.

My blog today is prompted by several cities and a university recently that asked me why they have never received any small cell site permit requests. I don’t have a specific answer for their specific location, but overall, the number of small cell sites deployed has been a lot smaller than was anticipated in 2017. The hard question to answer is how much smaller – how many cell sites are there in the U.S.?

That turns out to be a difficult number to count, mostly due to what is counted as a cell site. In 2022 the CTIA, the industry group for cellular carriers, claimed recently that there are around 419,000 total operational cell sites, including tall tower sites. I saw another estimate in 2022 that put the number closer to 350,000.

One of the differences in the numbers is the definition of small cell site. For example, there are a lot of cellular devices deployed to enhance cellular coverage inside tall or large buildings. Some people count these as cellular repeaters, while others claim them as small cell sites. Similarly, there are cellular boosters deployed at places like stadiums and convention centers that are functionally something less than a full standalone small cell site.

But back to the original question. Why aren’t there as many small cell sites as touted in 2017? The answer to that question means looking back at cellular networks in 2017. While it wasn’t discussed much publicly at the time, the cellular carriers had big problems in 2017. The proliferation of folks using cell phone broadband swamped the cellular networks, particularly in busy places like shopping districts and busy commuter routes.

In 2017, the cellular carriers envisioned a multi-prong approach to relieve overcrowding on overstressed cellular networks. One was to deploy more cell sites, the second was to introduce new frequency bands, and the third was to improve cellular speeds.

The FCC reacted to the need for spectrum and made several major new swaths of mid-range spectrum available to cellular carriers. Carriers rolled out the new spectrum and labeled it as 5G, even though they are still using 4G technology. But labeling as 5G gave the handset makers a good reason to market a whole new line of phones, and handsets that used the new frequencies decreased the demand on existing frequencies – to the point where the traditional 4G frequency bands are now sometimes faster than the 5G bands, due to the number of people using each.

The carriers improved cellular speed dramatically by modernizing cell sites with the latest technologies, and cellular speeds on both the existing 4G and the newly labeled 5G network got faster. As I wrote in a blog the other day, the median cellular download speed nationwide measured by Ookla in 2017 was 22.6 Mbps, and at the end of 2022 climbed to 193.7 Mbps. Faster speed means that the time that a customer needs to use the network is reduced, freeing the network for other customers.

There was a fourth benefit to cellular networks that was not in the cellular carrier plans. During the last five year WiFi has become ubiquitous. A huge amount of cellular data traffic has been transferred to the landline networks through WiFi.

There have been plenty of small cell deployments to lighten the traffic load on tall tower cell sites. The early deployments of small cells have been in areas where the customer demand was greatest. But the carriers didn’t deploy half a million small cells because it wasn’t needed. The overcrowding on cellular networks has been mitigated through the new spectrum, faster cellular networks, and WiFi.

Cellular companies will eventually need to widely deploy the expected small cell sites. As the demand for cellular broadband continues to grow at a torrid pace, the networks will get busier again. There are still additional frequency bands that can be introduced to spread the traffic, but small cell sites are still a part of the long-term solution needed to keep cellular networks healthy in the coming decades.

Fiber Networks as Community Development

Today’s blog wonders why local governments don’t view an ISP that is going to build a fiber network in the same way that they view other economic development opportunities. What do I mean by that? Local governments roll out the red carpet for a business that is considering building a factory that will bring jobs. Communities routinely offer incentives to attract a new business, such as offering free land in an industrial park. It’s routine to offer relief on property taxes and other fees for a company that is bringing new jobs to the community. Local governments sometimes offer a cash incentive to coax a new employer to build in the community.

These kinds of incentives come from the traditional economic development playbook. Local governments understand the math involved for a business that will bring a hundred jobs to the community. They can quantify how those jobs will result in property taxes from employees, and how the new salaries will be spent to support the other businesses in the community. The economic development playbook has always been pretty simple – new jobs bring prosperity.

To be fair, local governments sometime make concessions to an ISP that is going to build fiber – but not with the same zeal and fervor associated with bringing a new factory. A city might give a break to a new fiber builder by relaxing right-of-way rules or by providing expedited permitting. They will sometimes donate spare land or a building. But generally, the concessions to bring a fiber network are not of the same magnitude as the concessions given to other potential new businesses. It’s not unusual to see the opposite of concessions where a local government instead asks for concessions from an ISP, such as providing free fiber connections for government buildings.

This mystifies me. A new fiber network brings huge benefits to a community with inadequate broadband or that is suffering from a lack of competition due to a cable company controlling the market. The investment a fiber overbuilder makes in building a fiber network can easily equal or surpass the dollar investment that another company might make in bringing a new factory or a call center.

  • An ISP always brings at least a few jobs in the form of fiber technicians. More local jobs are created if the ISP is going to open a local business office. But the real jobs benefit of building a fiber network comes from making it easier for folks to work from home. A fast broadband network allows existing residents to find better paying jobs online than are available locally. If the community is a desirable place to live, a fiber network can attract people who want to work from home and get away from big cities or bad weather.
  • A new fiber network helps everybody in a community by bringing competition. The industry rule of thumb has always been that competition will lower the cost of broadband across the board by at least 15%. That’s a huge saving and affects every household that buys broadband – including those who stay with the incumbent providers. These are the kinds of savings that economists love because when residents save money on a monthly commodity, they spend that money elsewhere to the benefit of grocery stores, restaurants, and every other local merchant.
  • Competition might bring the biggest benefit to the local business community. When there is only one incumbent ISP selling to businesses, the rates are often extraordinarily high – sometimes many times the rates charged to a resident buying the same broadband. Lowering costs across the whole business community is a tangible and measurable benefit.

Part of the reason that bringing fiber isn’t considered as economic development is that ISPs are not telling a good story about the economic benefits of bringing fiber. In their defense, ISPs concentrate of building and operating networks and are not used to talking, jobs, local revenue multipliers, and the other economic development arguments that the folks who bring new factories are adept at talking about.

But I think ISPs are missing the boat. Bringing a fiber competitor to a community is at the top of the list for bringing economic development for most communities.

How Big Is the Internet?

I haven’t looked for a while at worldwide Internet statistics. It’s always interesting to see how the Internet is growing and changing outside of the U.S. The last time I looked in August 2018, there were a little over 4.2 billion people connected to the Internet, a worldwide penetration rate of about 55%. Internet usage has continued to grow, and at the end of 2022, there were 5.54 billion Internet users, meaning that 69% of people in the world have access to the Internet. There are still roughly 2.7 billion people with no broadband access. New users on the Internet are growing at a rate of 8.2% annually.

The penetration of Internet usage still varies tremendously by continent. In North America, 93.4% of people use the Internet, followed by Europe at 89.2%. The lowest penetration is Africa at 43.2% and Asia at 67%. Asia has the most Internet users at over 2.9 billion compared to 747 million in Europe and 348 million in North America. China has over 1 billion Internet users.

The overall use of bandwidth continues to grow, and broadband usage for the world grew by 1,355% from the beginning of 2000 to the end of 2022. The fastest-growing use of the Internet is in the Middle East, which saw usage grow by 6,141% since the beginning of 2020.

90% of people in the world use a mobile device to go online. Mobile devices account for 55% of all web traffic. Samsung is the largest mobile vendor with a 28.8 % market share. Second is Apple at 27.8%.

The most popular languages on the Internet are English (25.9%), Chinese (19.4%), and Spanish (8%).

32% of all Internet users are between the ages of 25 and 34.

The most popular web browser in the world is Chrome (65.5%), followed by Safari (18.8%), Microsoft Edge (4.3%), and Firefox (3.2%).

Google controls worldwide search with 92.7% of all searches, with Bing a distant second at 2.8%. Almost 30% of all global web traffic is initiated via an online search. There are currently 106,000 Google searches per second.

There are 1.5 billion websites, but less than 200 million are active. There are 371 million registered domain names in the world. More than 43% of all websites use WordPress as the content management system.

There are 4.9 billion users of social media. In January of this year, Facebook had 2.91 billion users. YouTube is second at 2.56 billion, followed by Whatsapp at 2 billion, Instagram at 1.47 billion, WeChat at 1.26 billion, and Tik Tok at 1 billion.

4.26 billion people used email in 2022. There were over 333 billion emails sent per day in 2022.

Many of these statistics are estimates, and there are varying estimates to be found for many of the statistics. As usual, when I look at these kinds of statistics, I get overwhelmed trying to put the numbers into context. Probably the biggest takeaway is that demand to use the Internet continues to soar, with over 8% more users worldwide every year. With 2.7 billion people still not using the web, we have a lot of growth to go.

Fixed Wireless in Cities

I am often asked by cities about the option of building a municipal fixed wireless broadband network. As a reminder, fixed wireless in this case is not a cellular system but is the point-to-multipoint technology used by WISPs. My response has been that it’s possible but that the resulting network is probably not going to satisfy the performance goals most cities have in mind.

There are several limitations of fixed wireless technology in an urban that must be considered. The first is the spectrum to be used. Cities tend to be saturated with unlicensed WiFi signals, and the amount of interference will make it a massive challenge to use unlicensed WiFi for broadband purposes. Most folks don’t realize that cellular carriers can snag a lot of the free WiFi spectrum in cities to supplement their cellular data networks – meaning that the free public spectrum is even more saturated than what might be expected.

Licensed spectrum can provide better broadband results. But in cities of any size, most of the licensed spectrum is already spoken for and belongs to cellular companies or somebody else that plans to use it. It never hurts to see if there is spectrum that can be leased, but often there will not be any.

Even if licensed spectrum is available, there are other factors that affect performance of fixed wireless in highly populated areas. The first is that most fixed wireless radios can only serve a relatively small number of customers. Cities are probably not going to be willing to make an investment that can only serve a limited number of people.

Another issue to consider is line-of-sight. In practical terms, this means that neighbor A’s home might block the signal to reach neighbor B. In the typical city, there are going to be a lot of homes that cannot be connected to a fixed wireless network unless there are a lot of towers – and most cities are averse to building more towers.

Even when there is decent line-of-sight, an urban wireless signal can be disturbed by the many routine activities in the city, such as seasonal foliage, bad weather, and even traffic.  One of the more interesting phenomenons of spectrum in an urban setting is how the signal will reflect in scatter in unexpected ways as it bounces off buildings. These factors tend to cause a lot more problems in a dense neighborhood than in a rural setting.

A point-to-multipoint fixed wireless system is also not a great solution for multi-tenant buildings. These networks are designed to provide bandwidth connections to individual users, and there is not enough bandwidth to deliver broadband from one connection to serve multiple tenants. There are also challenges in where to place antennas for individual apartments.

The combination of these issues means that fixed wireless can only serve a relatively small number of customers in an urban area. The speeds are going to bounce around due to urban interference. Speeds are not likely going to be good enough to compete with cable technology.

There is a good analogy to understand the limitations on wireless technologies in cities. Cell carriers have one advantage over many WISPs by owning licensed spectrum. But even with licensed spectrum there are usually numerous small dead spots in cities where the signals can’t reach due to line-of-sight. Cellular radios can serve a lot more customers than fixed wireless radios, but there are still limitations on the number of customers who can buy cellular FWA broadband in a given neighborhood. Any issues faced by cellular networks are worse for a point-to-multipoint network.

The bottom line is that there are a lot of limitations on urban fixed wireless networks that make it a risky investment. Tower space is usually at a premium in cities, and it’s hard to build a network that will reach many customers. There is a lot more interference and line-of-sight issues in a city that makes it hard to maintain a quality connection.

But this doesn’t mean there are no applications that make sense. For example, a fixed wireless network might be ideal for creating a private network for connecting to city locations that don’t need a lot of broadband, like sensor monitoring. That makes a lot more sense than trying to use the technology as an alternative ISP connection for residences and businesses.

Is Fiber Growth Slowing?

In a recent article in LightReading, Mike Dano cites data from industry analyst Cowan that shows that some of the largest fiber builders in the country have already trimmed back their construction plans for 2023.

AT&T has the largest retrenchment and is trimming 2023 plans from 3.5 to 4 million passings back to 2 to 2.5 million. The company says that it is not changing its long-term goal to reach 30 million passings with fiber, but a cutback of this size means it won’t likely reach that target in 2025.

Lumen’s new CEO Kate Johnson said the company is taking a pause while it rethinks its path forward. In doing so, the company trimmed 2023 fiber expansion plans from 1.75 million passings to something under 1 million.

Cowen says other big ISPs will also trim plans a bit. Frontier is probably trimming 2023 plans from 1.6 million to 1.4 million passings. Altice is cutting expectations back from 1.6 million to 1.5 million. Consolidated is reducing 400,000 planned new passings to 350,000.

There are other fiber builders that don’t seem to be cutting plans. Brightspeed, Metronet, and others still seem to be on track for their 2023 plans.

But cutbacks of the size of the AT&T and Lumen plans raise some questions about the trajectory of fiber overbuilding. If construction plans announced two years ago had held steady, there was a massive push to build fiber networks to compete with cable companies. Do these cuts mean that fiber competition won’t materialize as planned?

There have been big external changes affecting the entire industry. Fiber material costs are up, as evidenced by the recent price hike announced by Corning. Prices of fiber components are up across the board for everything from conduit, handholes, drop wires, etc. A bigger cost impact is the cost of labor, with technicians labor rates rising across the industry.

Fiber construction is also not immune from interest rate increases. I already have some clients thinking of shelving fiber expansion projects until interest rates come back to earth.

All of this adds up to a lower return for fiber builders. I was always a bit mystified by the frenetic planned pace of fiber expansion craze in cities since the returns have never been spectacular. I’ve always assumed the push to build fiber has been more of a land grab as big ISPs see other fiber builders encroach on areas they want as markets. I think much of the fiber construction craze has been about either building now or getting locked out of markets in the future.

Any level of cutbacks is good news for cable companies, since the above cutbacks mean several million fewer fiber passings to compete with by the end of 2023. Any relaxing of the competitive pressure gives cable companies more time to upgrade upload speeds over the next three years. I have to wonder if the cable company’s plans to increase upload speeds play into any of the decisions to cut back on fiber expansion. It would be really interesting to sit inside the Board rooms as the big ISPs debate these strategies. The broadband environment is getting more complex by the day.

Broadband Prices and Digital Discrimination

I recently wrote a blog that talked about digital discrimination. The article identified two primary types of discrimination. The first is infrastructure discrimination, where lower-income neighborhoods tend not to have the same quality of technology as more affluent neighborhoods. The second was price discrimination, where cable companies have started to price broadband differently by neighborhood based on demographics.

But there is a more basic element of price discrimination that also needs to be recognized. The big cable companies have raised the price of broadband at a much faster rate than inflation, which is putting the cost of a broadband subscription out of reach of a lot of households.

It’s not easy on the web to find the pricing history of broadband because the primary source of pricing has always been on ISP web pages which are constantly updated. If you do a web search on older broadband prices, the first couple pages of Google search are full of fraudulent articles from USTelecom and big ISP lapdogs like BroadbandNow that tell you that the cost of broadband has dropped over time. The many articles making this claim fail to mention that the statistic that has dropped over time is the price per megabit of broadband speed. That just means that cable companies have increased broadband speeds at a faster pace than prices. But the out-of-pocket cost of broadband has increased at a significantly faster pace than general inflation as measured by the Consumer Price Index. These articles must be confusing to the average consumer who knows they are paying more for broadband every year.

I’m going to use Comcast for the following discussion, but you could change this discussion to any of the other big cable companies – a few which have raised rates even faster than Comcast. I found a copy of a portion of Comcast’s annual statement for 2005 in the SEC archives. 2005 was an interesting year for broadband because it marked the beginning of the time when broadband speeds on cable companies broke away and greatly surpassed the DSL competition. In the 2005 annual report, Comcast said that its average customer was getting broadband speeds between 6 and 8 Mbps. The company reported that the average broadband charge to customers that year was $42. My recollection of 2005 is that the cable companies (and the telcos) only offered a single broadband product and didn’t have price tiers – a customer paid $42 and got the fastest speed available.

If you trend the Consumer Price Index from December 2005 until December 2022, something that cost $42 in 2005 would be expected to cost $63.34 today to keep up with inflation. Interestingly, the telcos that are still selling DSL in cities today have prices that are at or below the price predicted by inflation.

With the price increase at the end of 2022, the two basic Comcast broadband products were labeled as Fast and Superfast (the product name vary by market). These are the products that Comcast offers to new customers. The fast product at the end of 2022 was $83, with an additional charge of $15 for the modem, which most customers buy. That’s a total price of $98. The Superfast product base price was raised to $93, and with the modem now costs $108. In 2005 there was no separate charge for the modem.

The Consumer Price Index would predict that something that cost $42 in 2005 would now cost $63.34, an increase over 17 years of 51%. The cost of the Comcast Fast product is 133% higher than what Comcast customers paid in 2005. The price of the Superfast product increased by 157% since 2005.

These super-high rate increases are perhaps the ultimate price discrimination – the big cable companies are pricing millions of homes out of the market. The cable companies will tell you that they have low-income products, but only certain homes qualify for them and folks need to know to ask for them. The low-income products also don’t offer the same speeds as the normal consumer broadband products.

Comcast and the other big cable companies have raised rates between 2.5 and 3 times faster than inflation since the end of 2005. Comcast just implemented a $3 increase in December 2022 even as it was seeing customer growth stagnate, while seeing increased pressure from FWA competition. Raising prices at a time that the company’s sales are stagnating might be the ultimate proof that in most neighborhoods that Comcast is a monopoly that can raise prices with impunity.

Final 2022 Statistics from Ookla

As a numbers guy, I’m always intrigued by the Ookla Speedtest Global Index since it provides an interesting look at broadband speeds in the U.S. and around the world. This report shows the median and mean upload speeds, download speeds, and latency for both mobile and fixed broadband by country.

The median download speeds for fixed broadband in the U.S. at the end of 2022 was 193.7 Mbps download, 22.6 Mbps upload, and 14 milliseconds of latency. As a reminder of statistics, the median means that half of all speed tests showed faster results and half slower results than those numbers. Ookla thinks that median speeds are the best way to track the overall market and the difference between carriers.

The fastest median download speeds for landline ISPs at the end of 2022 comes from Comcast at 226.1 Mbps. Charter was at 225.3 Mbps, Cox at 212.3 Mbps, Altice at 190.8 Mbps, AT&T Internet at 187.1 Mbps, and Verizon at 183.2 Mbps. Median upload speeds were obviously faster for ISPs using fiber, with the fourth quarter median upload speeds showing AT&T Internet at 142.8 Mbps, Verizon at 104.9 Mbps, Altice at 29.8 Mbps, Comcast at 20.4 Mbps, Charter at 11.8 Mbps, and Cox at 10.7 Mbps. Missing from these numbers are smaller fiber-only ISPs that have much faster median speeds than all of these large companies.

Those are interesting upload speeds for some of the cable companies during a year of upcoming giant BEAD grants since a large percentage of customers of the cable companies are clearly not achieving the 20 Mbps upload speeds that is being used by the grants to define an underserved customer. We’ve already seen some state broadband grants awarded in cable company service areas – will folks apply for BEAD grants to compete with underperforming cable companies?

The median download speeds for cellular broadband in the U.S. at the end of 2022 was 78.9 Mbps download, 9.3 Mbps upload, and 31 milliseconds of latency. For the fourth quarter of 2022, Ookla says that T-Mobile has the fastest download speeds – on the modern chipsets – of 151.4 Mbps, up significantly higher than the third quarter 2022 median speed of 116.1 Mbps. Ookla not only measures mobile speed tests, but records the type of device being used. Old flip phones still using 3G will have lower speeds based on the capacity of the device. At least for now, the median download speeds for T-Mobile are far faster than Verizon (69.0 Mbps) and AT&T (65.6 Mbps). This likely means to some extent that the Verizon and AT&T are still supporting a greater number of older and slower devices. Median upload speeds were closer with T-Mobile at 12.5 Mbps, Verizon at 9.3 Mbps, and AT&T at 8.0 Mbps.

Ookla shows mobile latencies are about the same between the carriers, with T-Mobile at 56 ms, Verizon at 58 ms, and AT&T at 60 ms. Ookla calculates what it calls a multi-server latency, which represents the latency that should be expected by the average user at times when the local network is not under heavy load.

I looked back at an old blog I wrote in 2017, and the differences in mobile broadband speeds between then and now are astonishing. For example, in a 2017 report, Ookla showed median cellular download speeds nationwide at 22.7 Mbps, which was up 19% over 2016. I took a speed test on AT&T when I wrote the 2017 blog and got a download speed test of 13 Mbps. I took a test this morning on my AT&T cell phone and got a download speed of 141 Mbps. That’s more than a tenfold increase in speed in just five years.

Back in that same time frame, I was writing about how the cellular data networks were getting badly clogged and overloaded. It didn’t strike me until I wrote this blog that one of the ways that cellular companies have stretched their network capacity is by increasing speeds. A tenfold increase in speed means that the time required to handle the data requirement for a given customer is reduced by that same magnitude. Upgrading to a faster network means increasing the capacity to serve a lot more customers without a major network upgrade.

Price-for-Life

I recently noticed in the T-Mobile pricing for FWA cellular broadband that the company is claiming that the price is locked-in and will never be raised. In the pricing world, that kind of offer is referred to as a price-for-life, although T-Mobile didn’t use that term.

I’ve had clients ask me about this over the years, and I hopefully talked most of them out of the idea. This is the kind of idea that comes from marketing folks because it’s a gimmick that makes it easier to sell. But there are some long-term consequences of offering a guaranteed price forever.

There are some ugly stories of when price-for-life went sour. Back in 2016, Comcast door-to-door salespeople offered residents some price-for-life packages in Salt Lake City that were rolled out in anticipation of Google Fiber coming to the market. For example, residents were offered a triple play bundle at $120 per month that included broadband, cable TV, and a telephone line. The Comcast doorknockers promised customers a lifetime price, backed up in writing that their price would be good for as long as the customer kept the plan. Customers were assured at each step of the sales process that they were buying a lifeline plan and that rates would never be increased. For example, Comcast customer service reps on the phone repeated the assurance that the prices would be good forever.

It got ugly when the Comcast corporate folks raised rates in 2018. There was a class action lawsuit that alleged that as many as 20% of the 200,000 upgrades sold during the sales campaign were sold as lifetime plans. To nobody’s surprise, Comcast customer service denied any knowledge of selling a lifetime plan it had marketed just two years earlier. Comcast enforced the rate increase, which was substantial for some customers.

Most ISPs who market a lifetime rate would not be dumb enough to raise the rates only two years later. But there is a risk for T-Mobile to repeat the Comcast gaffe. It’s not hard to imagine five years from now that somebody at T-Mobile headquarters will be searching around for extra margin and notice this pile of underpriced customers.

It’s even more likely that T-Mobile can offer this product for life since it already knows the product won’t be around five years from now. As the company introduces future 5G features, at some point it could declare the current product to be technically obsolete and discontinue it.

That tactic would be impossible for a fiber provider, but the average customer doesn’t understand cellular networks well enough to dispute that kind of maneuver. But for my clients who have a fiber network, I can picture some households keeping a product-for-life for twenty or thirty years. I think a lot of people would sign up for a price-for-life for gigabit service.

But there are other reasons why price-for-life is a bad idea. The number one issue is inflation. We just went through a period where we saw steep inflation that would quickly eat away at the margin on a lifetime product. This is particularly true when offering a price-for-life for a product that has already been priced at introductory rates. Even if we return to a long-term inflation rate of 3% annually, the margins on a price-for-life product will drop steadily each year.

The main problem I have with the price-for-life concept is that it provides an easy path for the marketing department to make sales and earn sales bonuses today while pushing lower margins into somebody else’s lap in future years. Sales departments never heard of a sales gimmick they don’t like, and this is clearly a gimmick. A more sensible approach would be to offer a fixed price for some reasonable term, like three to five years. That’s enough to be a sales hook without killing the bottom line in future years.

My main objection to price-for-life is that it conveys a message to consumers that runs against the philosophy of most small ISPs. Most small ISPs pride themselves on offering fair rates all of the time, which makes it easy to favorably contrast themselves with the big ISPs that constantly run special pricing promotions. Once a small ISP runs a price-for-life promotion it loses that message and marketing advantage because it has created a pile of customers that year-over-year have lower rates than their neighbors – and those neighbors will notice.

As odd as it sounds, a price-for-life also creates an administrative burden on an ISP. Having a pile of customers that are different than everybody else is something that will have to be explained to every new customer service rep for decades to come. Getting everybody at an ISP to remember the nuances of the products and prices sold in the past is one more complication that makes it harder on future staff. This was one of the major issues when Charter purchased Time Warner Cable. Time Warner had hundreds of different old grandfathered price plans that confused Charter employees. Charter resolved this by killing off the old rate plans – effectively voiding old price-for-life promises.

There is one counterargument to be made in favor of price-for-life. There is value in a customer that never churns. Even if a customer delivers less margin every year by hanging on to a price-for-life product, that customer is delivering a huge accumulated return by paying for a product for a decade or two. But this argument just sounds like a justification, because an ISP likely would have made more profits over time by not locking in rates, even after considering future churn. In my opinion, the long-term downsides and complications of price-for-life outweigh this economic argument.

Lets Stop Talking About Technology Neutral

A few weeks ago, I wrote a blog about the misuse of the term overbuilding. Big ISPs use the term to give politicians a phrase to use to shield the big companies from competition. The argument is always phrased about how federal funds shouldn’t be used to overbuild where an ISP is already providing fast broadband. What the big ISPs really mean is that they don’t want to have competition anywhere, even where they still offer outdated technologies or where they have neglected networks.

Today I want to take on the phrase ‘technology neutral’. This phrase is being used to justify building technologies that are clearly not as good as fiber. The argument has been used a lot in recent years to say that grants should be technology neutral so as not to favor only fiber. The phrase was used a lot to justify allowing Starlink into the RDOF reverse auction. The phrase has been used a lot to justify allowing fixed wireless technology to win grants, and lately, it’s being used more specifically to allow fixed wireless using unlicensed spectrum into the BEAD grants.

The argument justifies allowing technologies like satellite or fixed wireless using unlicensed spectrum to get grants since the technologies are ‘good enough’ when compared to the requirement of grant rules.

I have two arguments to counter that justification. The only reason the technology neutral argument can be raised is that politicians set the speed requirements for grants at ridiculously low levels. Consider all of the current grants that set the speed requirement for technology at 100/20 Mbps. The 100 Mbps speed requirement is an example of what I’ve recently called underbuilding – it allows for building a technology that is already too slow today. At least 80% of folks in the country today can buy broadband from a cable company or fiber company. Almost all of the cable companies offer download speeds as fast as a gigabit. Even in older cable systems, the maximum speeds are faster than 100 Mbps. Setting a grant speed requirement of only 100 Mbps download is saying to rural folks that they don’t deserve broadband as good as what is available to the large majority of people in the country.

The upload speed requirement of 20 Mbps was a total political sellout. This was set to appease the cable companies, many which struggle to beat that speed. Interestingly, the big cable companies all recognize that their biggest market weakness is slow upload speeds, and most of them are working on plans to implement a mid-split upgrade or else some early version of DOCSIS 4.0 to significantly improve upload speed. Within just a few years, the 20 Mbps upload speed limit is going to feel like ancient history.

The BEAD requirement of only needing to provide 20 Mbps upload is ironic for two reasons. First, in cities, the cable companies will have much faster upload speeds implemented by the time that anybody builds a BEAD network. Second, the cable companies that are pursuing grants are almost universally using fiber to satisfy those grants. Cable companies are rarely building coaxial copper plant for new construction. This means the 20 Mbps speed was set to protect cable companies against overbuilding – not set as a technology neutral speed that is forward looking.

The second argument against the technology neutral argument is that some technologies are clearly not good enough to justify receiving grant dollars. Consider Starlink satellite broadband. It’s a godsend to folks who have no alternatives, and many people rave about how it has solved their broadband problems. But the overall speeds are far slower than what was promised before the technology was launched. I’ve seen a huge number of speed tests for Starlink that don’t come close to the 100/20 Mbps speed required by the BEAD grants.

The same can be said for FWA wireless using cellular spectrum. It’s pretty decent broadband for folks who live within a mile or two of a tower, and I’ve talked to customers who are seeing speeds significantly in excess of 100/20 Mbps. But customers just a mile further away from a tower tell a different story, where download speeds are far under 100 Mbps download. A technology that has such a small coverage area does not meet the technology neutral test unless a cellular company promises to pepper an area with new cell towers.

Finally, and a comment that always gets pushback from WISPs, is that fixed wireless technology using unlicensed spectrum has plainly not been adequate in most places. Interference from the many users of unlicensed spectrum means the broadband speeds vary depending on whatever is happening with the spectrum at a given moment. Interference on the technology also means higher latency and much higher packet losses than landline technologies.

I’ve argued until I am blue in the face that grant speed requirements should be set for the speeds we expect a decade from now and not for the bare minimum that makes sense today. It’s ludicrous to allow award grant funding to a technology that barely meets the 100/20 Mbps grant requirement when that network probably won’t be built until 2025. The real test for the right technology for grant funding is what the average urban customer will be able to buy in 2032. It’s hard to think that speed won’t be something like 2 Gbps/200 Mbps. If that’s what will be available to a large majority of households in a decade it ought to be the technology neutral definition of speed to qualify for grants.

BEAD Grants for Small Pockets of Customers

One of the most interesting aspects of the BEAD grants is that the funding is intended to make sure that everybody gets broadband. There is one section of the grant rules that talk about how the funding can be used to serve areas as small as a single home. Following are two quotes from the BEAD rules:

Project—The term “project” means an undertaking by a subgrantee to construct and deploy infrastructure for the provision of broadband service. A “project” may constitute a single unserved or underserved broadband-serviceable location, or a grouping of broadband-serviceable locations in which not less than 80 percent of broadband-serviceable locations served by the project are unserved locations or underserved locations.

Unserved Service Project—The term “Unserved Service Project” means a project in which not less than 80 percent of broadband-serviceable locations served by the project are unserved locations. An “Unserved Service Project” may be as small as a single unserved broadband-serviceable location.

This is something that is badly needed because in every county I’ve worked in, there are small pockets of folks that have been left out of other broadband expansion projects. To give an example, I was working with a county where there is a small pocket of about fifteen homes that are between the areas funded by two state grants. The homes are along a State highway, which means higher construction costs. The earlier state grant applicants ignored the area because of the high costs.

I’m curious about how small areas like this one can fit into the complicated BEAD grant rules. I’m sure the two different ISPs that decided not to build these area would do so if they got enough funding – which should be available from BEAD. But I can’t picture any ISP going through the massive hassle of plowing through the BEAD application and the myriad of rules to get the money to serve fifteen homes. I already know a lot of small ISPs that are thinking about skipping the BEAD grants entirely because of the complexity.

I’ll be interested to see how the State Broadband offices tackle this issue when they publish their draft grant rules. I would not expect any ISP to ask to serve small pockets of customers if they have to jump through the full gamut of the BEAD hoops. Will State Broadband offices come up with a simpler mechanism for these stray pockets of homes?

We’ve seen simpler mechanisms used for small pockets of homes in some state grants. For example, several states have used the concept of loop extension grants to fund homes that are close to an existing broadband network. These grants fund drops and customer electronics only and not the infrastructure wiring along the streets. The loop extension grants can be requested for a single home or groups of homes in a neighborhood.

Will a State be allowed to deviate from the NTIA grant rules to reach the many tiny clusters that will otherwise not get broadband? A lot of the complicated rules for BEAD were dictated by Congressional legislation, and it might not be possible to hand out money to anybody that doesn’t meet all of those federal requirements. If an ISP needs a letter of credit, an environmental study, and to jump through many other onerous hoops, I can’t picture any ISP that will be willing to tackle small pockets of customers. Unfortunately, the language above classifies building to a single home as a project probably means that all of the rules associated with the BEAD grants will apply.