Monthly Archives: March 2023

Expect Big Changes from Streaming Video

One of the biggest uses of bandwidth continues to be streaming video from the many online vendors like Netflix, Disney, Hulu, and many others. Final 2022 earnings reports show that this is an industry segment in crisis.

  • Warner Brothers, which owns HBO and Discovery reported losses for online video of as much as $2.3 billion in 2022.
  • Paramount reported losses of $1.8 billion for its online platform.
  • Comcast and its NBC Universal subsidiary that operates Peacock reported losses in 2022 of $2.5 billion.
  • Disney reported a loss of $4.1 billion for its Disney Plus platform, which is hard to fathom with a platform that has 162 million subscribers.

Altogether, the losses for just these four video platforms were almost $11 billion in 2022. There are other big platforms like Apple, Google (YouTube), and Amazon that don’t specifically report on the performance of the video streaming segment. There is one exception to the trend towards losses as Netflix, with 230 million global customers, reported profits of over $6.5 billion in 2022.

The companies with the losses have already reported taking measures to trim the losses. That involves some staff cuts, but mostly it’s going to mean cutting back on the budget for developing new content.

This raises some interesting questions about how the performance of the video streaming industry segment will affect broadband. There has been a significant proliferation of video platforms. Ten years ago, you could count the video platforms on one hand. The earliest platforms like Netflix and Amazon spent almost all of their content budget buying existing TV shows and movies.

But in 2013, Netflix broke the mold with the introduction of House of Cards, followed by a ton of original content. Amazon followed suit in 2015 with the introduction of The Man in the High Castle and Mr. Robot, and now with a wide array of original programming. It now seems that every platform has original content, which seems to be the primary strategy for attracting new subscribers.

It’s hard to think that the industry can sustain these kinds of losses for a long time. Netflix purposefully lost money as it was building its platform, and the company knew it wouldn’t be profitable until it eventually got a lot of subscribers. But with the proliferation of platforms, the idea of any platform suffering losses to get to the top seems like a difficult model to repeat.

One of the ways for the industry to become profitable is to raise rates, but with so much competition, that doesn’t look like an easy solution. Anyone who has tracked subscribers at platforms like Hulu or SlingTV can see how customer counts shrink and grow quarter to quarter. Very few of these platforms have developed a stable, loyal customer base, and the online platforms have made it easy for subscribers to come and go at will – their big differentiator from traditional cable.

The chances are that poor performance, or even the disappearance of a few platforms won’t make much of a difference in the industry overall. If a few of these platforms fail, the subscribers will watch video elsewhere. Probably the only thing that would cause cord-cutting to slow might be if the online platforms raise rates to the point where people decide to keep traditional cable.

Probably the best news for online platforms is that traditional cable companies keep raising rates, largely in response to the ever-climbing cost of traditional TV programming. The programmers seem determined to raise rates significantly every year, even in the face of losing customers. For many traditional programmers, the loss of American subscribers is being offset by a growing audience around the world.

The Most Challenging Fiber Permits

The Virginia House of Delegates recently took up the issue of regulating the fees and the time it takes to get a permit to cross railroad tracks with fiber or other wire infrastructure. This seems to have originated from complaints from some of the winners of the $722 million in state broadband grants that have recently been awarded. I also saw that a similar bill is being debated in Arizona.

There are a lot of complaints made about the regulatory hoops that must be navigated to get onto poles. But we rarely hear about the problems encountered when trying to cross railroad tracks, bridges, interstate highway underpasses, or parklands. Each of these situations can add both time and cost to a fiber construction project.

There are lot more miles of railroads than a lot of people assume. In a rural area, the first challenge is often finding out who owns a given set of tracks. The large railroads own the major rail paths, but there are a ton of different owners of the rights-of-ways for spurs off the mainline. Those spurs were sometimes built by a factory to provide a path to ship products. Some spurs are owned by local governments. A lot of spurs are owned by small railroad companies – a few of which have gobbled up the rights-of ways from defunct railroads.

One of the issues with railroad crossings are the fees. It’s not hard to be hit with fees of $3,000 to $5,000 for a permit for a single rail crossing. A rural fiber route might cross several sets of tracks, and roads will often cross back over the same rail line multiple times. There are also horror stories of railroads that want much higher fees. It’s routine that the owners of defunct tracks, some that haven’t been used for decades, still expect payments for a permit to cross the tracks. I’ve saw permitting cost of $10,000 for a railroad line where locals can’t remember seeing a train for at least twenty years.

The issue isn’t only the fees. Because the process of getting a permit can drag on for a long time. It’s not unusual to see a permit take six months, and I’ve heard stories of permits taking well over a year. I suspect it was the time required in getting permission to cross the tracks that got the attention of the Virginia legislature. States like Virginia have been striving to get fiber deployed quickly after awarding grants, and a slow railroad permit can stop a project dead in its tracks, so to speak.

The Virginia legislation would cap crossing permit fees at between $750 and $1,500 (Senate versus House versions). More importantly, the legislation would require railroads to respond to a permitting request in thirty days.

While this legislation doesn’t address other rights-of-way problems, there can be similar delays getting permits to cross bridges. The problem with crossing a bridge is that there usually is a delay until and engineer certifies that the bridge will not be harmed by adding a conduit along the side. I have to admit that it’s scary to think that relatively light conduit could endanger a bridge, but in almost all cases this a step that is perfunctory, but necessary to get the permit. However, I have worked with clients who have been denied a bridge crossing. The reasons given for the refusal have usually been aesthetic and not structural. But I know of a few cases where permits were denied for bridges that were scheduled to be upgraded – in one case, with the upgrade was scheduled five years in the future.

As hard as those situations are, the slowest permitting can occur when needing to cross parkland or other public lands. This issue with these permits is not the cost, but the long waits to get approval. And approval often comes with requirements that make it impossible to build. I recall one park permit that said that fiber couldn’t be buried – and this was to cross a park where there are no existing poles.

AT&T Disses FWA Wireless

In recent Telecompetitor article, AT&T Chief Financial Officer Pascal Desroches was quoted as saying that fixed wireless is “not a great product and the customer ultimately is going to reject it.” By fixed wireless, Desroches was referring to the FWA product being offered by competitors Verizon and T-Mobile. The product takes advantage of excess capacity on cell towers to sell home broadband using the same spectrum used to serve cell phones. For now, the market is embracing the FWA product. In 2022, T-Mobile sold around 2 million connections on the product, while Verizon sold almost 1.2 million.

The new product has some clear advantages in two different markets. In rural areas that don’t have any good broadband connection, the FWA product is likely to be faster than what is available from competitors. I’ve talked to rural customers using the product who say speeds are between 50 and 100 Mbps, although I talked to one customer living near a tower who is getting 200 Mbps. In many of the counties I’ve worked in, these speeds are heads and tails above the existing DSL, cellular hot spots, or more traditional fixed wireless.

In more urban and suburban areas, the attraction is price. These markets have much faster broadband available from cable companies and sometimes by fiber providers. But the faster ISPs charge a lot more than the $60 price of FWA. I think this product makes a great replacement for DSL – it costs about the same but is significantly faster. But T-Mobile and Verizon are not providing any details on who is buying the FWA product. How much of the sales are rural versus urban?

There are noted downsides to the FWA product. The primary one I’ve heard from customers is that it’s not consistent and that speeds vary a lot. This is pretty understandable considering the complex nature of cellular networks, and anybody who watches the bars on their cellphones knows that speeds bounce up and down during the day.

FWA coverage is also limited by the location of cell sites since the FWA broadband doesn’t go far. In most rural counties, only a small portion of the geography is within two miles or so of a cell tower. Hopefully, the cellular carriers will be smart enough not to sell service to folks who are at the outer fringe of a coverage area.

I’m sure that Desroches is talking about the long-term legs of the FWA product. I think he is referencing the ever-increasing demand for broadband. OpenVault recently reported that the average U.S. household is now using 587 gigabytes of data each month, up from 270 gigabytes just four years ago. You don’t have to trend that growth very far into the future when it becomes reasonable to ask if cellular networks can meet that kind of demand. Cellular carriers are using excess capacity today to sell FWA. At what point in the future does the FWA demand exceed the cell phone demand at cell sites?

FWA is never going to more than an interesting footnote for cellular companies. Even if they sell to ten million FWA customers, that’s barely noticeable compared to the hundreds of millions of cell phone customers. I can’t picture any scenario where a cellular company will endanger its cellular business by trying to meet the demands of FWA. They’ll selectively cancel FWA service at overloaded cell sites before doing that.

Interestingly, AT&T will be offering some FWA service. Desroches characterizes AT&T view of FWA as a temporary product and will treat it accordingly.

I doubt that Desroches set out to be negative about his competitors. I have to imagine that AT&T is constantly being asked why it isn’t emulating the rapid deployment of FWA, and I would guess he was responding to one of these queries. But it is interesting to see his response because it sounds like an honest assessment of the FWA business case. It’s a new broadband product that fills some interesting market niches today. But it’s reasonable to ask if it be relevant a decade from now. I would tend to agree with Desroches that FWA will have a relatively short shelf life compared with faster broadband technologies.

Household Broadband Usage Up Again for 2022

OpenVault published its end of year 2022 Broadband Insights Report that shows that average broadband usage continues to grow.

The average household broadband usage has grown to an astounding 586.7 gigabytes per month. Comparing this to earlier years shows an ever-upward trend of broadband usage.

Usage Growth % Growth
2018 270.2 GB
2019 344.0 GB 74 GB 27%
2020 482.6 GB 139 GB 40%
2021 536.3 GB 54 GB 11%
2022 586.7 GB 50 GB 9%

The average usage numbers are probably the most interesting statistic published by OpenVault. It would have been hard at the end of 2018 to find anybody who would have confidently predicted that in only four years that households would routinely be using 217% more broadband every month. These statistics also show the extraordinary impact of how the pandemic impacted broadband usage. It’s easily understandable how usage skyrocketed in 2020 when everybody was at home. But perhaps more extraordinary is that usage didn’t drop off as life returned to normal – broadband usage has continued to climb.

What OpenVault calls power users continues to climb. 18.7% of homes used more than 1 terabyte per month at the end of 2022, including 3.4% of households that used more than 2 terabytes. That’s a lot of homes that are surpassing the gigabyte data caps imposed by some ISPs.

The trend of homes subscribing to faster speeds is also continuing. Much of this increase comes from ISPs that have upped the speed on existing broadband products – but it’s obvious in looking at the numbers that people are also electing to upgrade to faster broadband packages. An extraordinary 26% of homes are now subscribing to gigabit or faster broadband speeds.

Subscribers 4Q 2020 4Q 2021 4Q 2022
Under 50 Mbps 12.4% 9.4% 6.8%
50 – 99 Mbps 9.1% 7.6% 12.7%
100 – 199 Mbps 50.6% 36.9% 11.3%
200 – 499 Mbps 15.8% 28.5% 32.8%
500 – 999 Mbps 3.7% 5.5% 10.4%
1 Gbps+ 8.5% 12.2% 26.0%

OpenVault also compared upload and download usage. The average home now uploads 35.3 gigabytes per month and downloads 551.4 gigabytes.

OpenVault says the average download speed achieved across the U.S. is 415 Mbps, and the average upload speed is 25 Mbps. While the FCC doesn’t seem to be in any hurry to change the definition of broadband, the reality of the marketplace would suggest that setting the definition of broadband at 100/20 Mbps would be significantly lower than what households are already achieving. Any definition of broadband ought to be at least a little forward looking, so I’m not sure why we aren’t considering that the definition of broadband ought to be something like 500/50 Mbps.

Incredibly, the upcoming $42.5 billion in BEAD grants would allow for the construction of technologies as slow as 100/20 Mbps. Hopefully, State Broadband Offices are noticing these market statistics and will give little consideration to technologies that far below the national average.

My Fiber Bias

I will readily admit that I have a fiber bias when it comes using infrastructure grant funding. This is a policy issue for me and is not limited only to broadband. The federal government is handing out huge once-in-a-lifetime infrastructure grants. I think federal infrastructure grants should be used to build infrastructure that will last as long as possible to create the longest-term public good. I am perplexed when I see cities using ARPA funding to buy firetrucks and computers if that city has big infrastructure deficits for things like water systems or public housing. I obviously have no bias against firetrucks or computers – but they aren’t infrastructure.

My position raises the obvious question of what qualifies as infrastructure. In my mind, infrastructure is an asset with a long useful life. I think everybody would agree that roads, bridges, and water pipes are infrastructure. These are assets that will be useful to the public for a long time.

It’s a little less clear with broadband infrastructure. Conduit is clearly infrastructure, and there is no reason to think that conduit won’t still be functional in a century.

Fiber is a little less clear-cut. I remember when fiber was being constructed in the 1980s, we thought of it as a 40-year asset. There are some fiber routes built in the 80s that are showing wear, but a lot of fiber built in the 1980s is still going strong.

But fiber manufacturing technology has improved significantly since the 80s. Fiber is now much clearer and less likely to grow opaque with age. Fiber today has much tougher outer sheathing. We’ve also learned a lot about fiber installation techniques, and many of the problems that have arisen from older fiber are due to stress placed on the fiber during construction. While the manufacturers won’t go on the record on the useful life of fiber, I’ve been told privately by fiber manufacturing engineers that fiber ought to last 70 or 80 years if installed properly. That sounds like infrastructure.

The biggest weakness of all broadband technologies in terms of longevity is the electronics. This applies equally to fiber and wireless technologies. The conventional wisdom is that most broadband electronics are good for about 10 or 12 years. Part of this is due to true obsolescence, where circuit cards wear out after being used non-stop for a decade. But part of the obsolescence is due to vendors that stop supporting older technology. It becomes harder each year to support a network if vendors aren’t making replacement cards. Everybody that’s owned a broadband network for twenty years can still point to a few pieces of gear that are still chugging along – but for the most part, electronics have to be replaced over time.

If my philosophy is that infrastructure is an asset that lasts for a long time, how do I reconcile any broadband grant with relatively short-lived electronics (at least short-lived on an infrastructure time scale)? I define infrastructure in the same way as lenders. Federal bond rules say that a borrower can’t have a bond term (the years to pay back the loan) that is longer than the average economic life of the assets being funded. A lot of commercial banks have a similar test as part of evaluating infrastructure loans.

What’s the average useful life of a fiber network? Consider the following real-life example of a recent rural fiber project I worked on.

Average Life % of Project
Conduit 100 25%
Fiber 40 – 60 60%
Drops 30 8%
Buildings/Huts 40 3%
Electronics 12 4%

Folks can disagree about the average life of fiber. I’ve been conservative since I think fiber will last longer than shown in the table. If you assume that fiber is good for 40 years, the weighted average useful life of the above network is 53 years. If you assume the average life of fiber is 60 years, the useful life climbs to 65 years. Aerial fiber networks have a lower economic life without conduit, but the range of expected life is still between 37 years and 53 years.

Other broadband technologies have a much shorter economic life. My guess is that the economic life for Starlink is under ten years since the satellites are designed to fall out of orbit by then. There are probably components in satellite base stations that will last longer – but most of the investment is in the satellites.

It’s hard to do the same math and get a useful economic life for the typical fixed wireless network that is higher than 15 years. It is possible to construct a fixed wireless network with a higher average useful life. Well-built towers can easily last 75 years. Fiber backhaul to towers has the same useful life as last-mile fiber. However, my reading of the BEAD grant rules is that it will be difficult to win funding to build towers or middle-mile fiber. A fixed wireless grant that funded towers and fiber would probably pass my infrastructure sniff test.

I can’t begin to estimate the average useful life of an FWA cellular network, but it’s not very long. These are networks that are built to use the excess capacity of cell phone networks and are not constructed just for broadband. When I consider the rapid evolution of cellular technologies, it seems likely that any system built today will be technically obsolete when real 5G standards are finally implemented.

Hybrid-fiber coaxial systems have an average economic life that is about the same as the lower range of fiber network lives. The coaxial wire won’t last as long as fiber, but forty years is a reasonably assumed life for the coax.

The NTIA tried to express the same sentiment as me without defining why. The NTIA said early on, after it was given responsibility for the BEAD grants, that the agency favors fiber. It would have been a lot clearer if the NTIA said instead that it doesn’t support infrastructure grants for projects that don’t have infrastructure useful lives – I think that is what they meant. If the agency had set a definition of infrastructure as projects with a useful life of at least thirty or forty years, we wouldn’t be having the discussion of funding networks with short useful lives.

2022 Was a Year of Change for the Big ISPs

There was a sea change among the big ISPs in 2022. The big news is that most of the growth in the industry came from the T-Mobile and Verizon cellular FWA broadband product. Cable company growth crawled to a halt after a robust 2021, and the sector only grew by 55,000 net broadband customers in the fourth quarter. The big telcos still had small losses for the year, but the big news is that they added 2.4 million customers to fiber during the year.

The following list of ISPs represents about 95% of the U.S. broadband market. The large ISPs, in aggregate, added just over 3.5 million net customers in 2022. The two cellular FWA companies added 3,171,000 of those additions. Cable companies added 517,103 customers for the year, with most of the growth coming at the beginning of the year. The big telcos had a net loss of 181,276 customers but continued to furiously replace DSL with fiber.

The following statistics were compiled by the Leichtman Research Group, which tracks the broadband performance of the largest ISPs in the country. Following are the customers counts for the fourth quarter and the end of year 2022:

% 4Q Annual
4Q 2022 4Q Change Change Change
Comcast 32,151,000 (26,000) -0.1% 250,000
Charter 30,433,000 105,000 0.3% 344,000
AT&T 15,386,000 (66,000) -0.4% (118,000)
Verizon 7,484,000 37,000 0.5% 119,000
Cox 5,560,000 0 0.0% 30,000
Altice 4,282,900 (7,700) -0.2% (103,300)
Lumen 3,037,000 (63,250) -2.0% (253,000)
Frontier 2,839,000 8,000 0.3% 40,000
T-Mobile FWA 2,646,000 524,000 24.7% 2,000,000
Mediacom 1,468,000 0 0.0% 5,000
Verizon FWA 1,452,000 389,000 36.6% 1,171,000
Windstream 1,175,000 0 0.0% 10,300
Cable ONE 1,060,400 (1,600) -0.2% 14,400
Breezeline 693,781 (14,173) -2.0% (22,997)
TDS 510,000 3,500 0.7% 19,700
Consolidated 367,458 (14,454) -3.8% 724
Total 110,545,539 873,323 0.8% 3,506,827
Cable 75,649,081 55,527 0.1% 517,103
Telco 30,798,458 (95,204) -0.3% (181,276)
FWA 4,098,000 913,000 28.7% 3,171,000

There are a lot of interesting trends withing these numbers:

  • T-Mobile is now the 9th largest ISP, and the Verizon FWA product comes in at eleventh. T-Mobile is poised to pass Frontier and Lumen soon at the current growth rate.
  • While all of the landline ISPs on the list are feeling pressure from the cellular FWA product, the bigger and more permanent challenge for the cable companies is the 2.4 million telco customers added to fiber to the year. That statistic shows why cable companies are scrambling to improve upload speeds.
  • The biggest loser on the list continues to be Lumen, which lost 7.7% of its broadband customers for the year. It’s worth noting that the above numbers represent the smaller Lumen after the spinoff of Brightspeed in 2022. Breezeline (Formerly Atlantic Broadband) was the biggest percentage loser among cable companies, having lost 3.3% of broadband customers during the year.
  • TDS continues to be the fastest-growing landline ISP at 4.0% growth for the year. Next is Verizon FiOS, having grown by 1.6% for the year.

Will Cellular Companies Pursue BEAD Grants?

Several people have asked me recently if cellular companies will be pursuing BEAD grants. It’s an interesting question that I don’t think anybody other than the cellular carriers know the answer. But it’s an intriguing question since it’s a possibility.

Until recently, cellular companies didn’t have a product that would have qualified for broadband grants. BEAD and other grants are awarded to ISPs that serve homes an businesses, not cell phones. But the introduction of the FWA product line has created a broadband product that might qualify for grants.

Cellular companies pass the first sniff for BEAD grants since the wireless technology uses licensed spectrum. The NTIA says it does not consider wireless broadband using public spectrum to be reliable.

The next hurdle to winning grant funding would be for cellular companies to convince state grant offices that they can deliver broadband speeds greater than 100/20 Mbps. That’s an interesting challenge for a cellular carrier. From what I’ve seen, customers living close to a cell site can easily exceed those speeds. I’ve talked to a few people getting over 200 Mbps download on FWA – but each happened to live close to a cell site.

But speeds on FWA decrease rapidly with distance. I’ve talked to customers who are less than two miles from a cell site and aren’t seeing download speeds of 100 Mbps. But that doesn’t disqualify a cellular carrier from pursuing grants. BEAD allows for grants that cover small areas, theoretically as small as a single home.

More interestingly, there is no reason that a cellular company couldn’t propose a grant to build new towers to expand the faster coverage and also the fiber lines to feed the towers. It’s not hard to picture a network in rural areas where this might be the lowest cost solution. One has to wonder if a cellular company would ever want such a network – that’s a lot of cell sites to maintain that likely each only serve a small number of customers.

Another issue to consider is that cellular carriers are currently providing priority to cell phones over FWA customers. If the network gets busy, cell phones customers get the requested broadband, and FWA customers get throttled. Broadband offices might deem this to be disqualifying in areas with any significant population – but this seems like far less of a concern in a rural setting where cell sites probably rarely get overstressed.

Yet another issue is the ability of a grant winner to serve everybody in the footprint. Unless a grant area has extremely low density, it’s likely that the cell site doesn’t have the capacity to give everybody unlimited home broadband.

Another interesting issue to consider is how mapping plays into this. I’ve heard a lot of comments from folks who are claiming that T-Mobile and Verizon are already claiming fast speeds in a lot of places. Folks are saying the coverage areas claimed in the FCC maps seem a lot larger than the reality. It’s not hard to understand the motivations for cellular companies to claim fast speeds since it helps with marketing. This is particularly important for T-Mobile, which reached an agreement with the government as a condition of the Sprint merger to cover a large percentage of the country with faster speeds.

But claiming high speeds and claiming coverage areas that are larger than reality are counterproductive to seeking grants. An ISP can’t ask for grant funding for a place it says already has fast broadband.

The more important question for the industry is how the FWA claims of current speeds and coverage might hurt other grants. Will broadband offices not award grants in places the cellular companies claim to already have fast broadband? The emergence of the FWA technology is so new that I suspect most state broadband offices haven’t come to grips with that question. Many states have been creating their own broadband maps in recent years, and FWA technology has not been factored into those maps. This is just one more complication for broadband offices – as if they needed another issue.

New York City’s Broadband Reversal

New York City has done a 180-degree turnaround on the concept of the City providing broadband to low-income households. In 2020, then-May Bill de Blasio announced a plan to bring affordable broadband to low-income households. That Master Plan said that the City would make a $157 million infrastructure investment to provide broadband to around 600,000 homes that includes 200,000 residents of public housing.

The current mayor, Eric Adams, quietly killed the broadband Master plan after putting it on hold after coming into office a year ago. The Mayor recently announced a new plan called Big Apple Connect, where the City will pay either Charter or Altice to provide broadband, depending on the neighborhood. Qualifying low-income customers who take basic broadband will get the service for free, with customers paying if they want more than the basic broadband product or other products in the cable bundle.

It’s hard to imagine a bigger philosophical turnaround. The original Master Plan provided for reasonable access for ISPs to city-owned infrastructure like rooftops and poles to help build the needed infrastructure. Five ISPs began offering broadband service under a pilot project that covered 30,000 residents, including Silicon Harlem, Starry, Sky Packets, Flume, and NYC Mesh. The $157 million plan would have constructed a fiber backbone to make it easier to get broadband into the poorest parts of the city. It was rumored that de Blasio was in conversation with People’s Choice Communications to oversee the construction of the new infrastructure. This is a cooperative formed by former employees of Charter that were locked out for years over a labor dispute.

The new Big Apple Connect plan will instead have the City covering the cost of broadband connections from the cable companies. It’s likely that the City has negotiated a bulk purchase rate for the large volume of connections. Interestingly, there is no discussion of requiring residents to enroll in the FCC’s ACP plan that reduces cable rates for low-income and other qualifying households by $30 per month.

There are obvious big pros and cons for the two contrasting plans. The plan to build infrastructure would likely provide the lowest long-term cost to the City by using city-owned infrastructure to connect homes to ISPs. The downside to the infrastructure plan is that it would take time to build the infrastructure, delaying the time when folks get free or cheap broadband.

Paying the cable companies can mean connecting a lot of homes now (assuming that the cable companies are connected to the low-income buildings and are willing to promote the low-income connections). Paying the cable companies also means providing a solution for homes throughout the community and not just for those located in specific neighborhoods. But it also must mean a significant annual subsidy by the City to pay for home broadband connections. I’ve worked with many cities over the years that considered this idea, but the long-term cash obligation to pay for broadband always scared them off.

Like anything in a huge city, part of this is political theater. A mayor can score big points by bringing free broadband to folks now instead of a few years from now. This kind of subsidy always grows legs over time, and it will be difficult for a future mayor to ever end the subsidy if that means turning off broadband to huge numbers of homes. It will also be interesting to see how the City puts a cap on who is eligible for the subsidy.

I talked to a few advocates for broadband for low-income homes and got a mix of reactions. There were a few folks who think that infrastructure is the only way to go and that paying the cable companies is a dreadful idea. But a few folks I talked to said that a solution that bring broadband to the most homes quickly sounds like a reasonable plan.

In many ways, New York City is unlike anywhere else in the U.S., even other large cities. That means that a solution that works or don’t work for NYC might not be that instructive for other communities. But this big turnaround gives digital access advocates a lot to consider. Are other cities willing to pony up the monthly cost of broadband to solve the digital divide?

Can WISPs Compete Against fiber?

I already know that when certain WISP readers see this blog headline that they are going to say, “There goes that damned Dawson again. This is going to be another anti-WISP rant”. I think they might be surprised if they read past the headline.

I know WISP operators who are some of the best ISPs in the country. When I rate them as best, I’m talking about how they deliver products their customers are happy with and how they provide great customer service and timely repairs. They are the kind of ISP that builds customer loyalty. I fully expect high-quality WISPs to be able to compete against fiber networks. While the industry lately seems to be fixated on broadband speeds, there are customers that value other aspects of being an ISP, such as trust and reliability.

I’ve never built a business plan that assumes that any fiber ISP will sweep the market and get every customer, so there will always be room for other ISPs. There is some portion of customers in any market that will switch immediately to fiber. There has been so much hype about fiber that many folks accept it as the gold standard. But the penetration rate of a new fiber network builder is going to depend on who builds and operates the network.

I think WISPs (and every other ISP) will have a hard time competing against a cooperative that builds fiber, particularly one that sets low prices like $50 or $60 for a gigabit. But not all coops will have affordable rates, and not all coops are loved by their members.

WISPs will have a much easier time competing against big telcos that win broadband grants. My firm does a lot of surveys, and a lot of the public has a massive dislike of big telcos like Frontier, CenturyLink, Windstream, AT&T, and some others. The public rightfully blames these big ISPs for walking away from rural America. I don’t think that folks will flock to these big ISPs just because they build fiber – particularly in cases where there is already a high-quality WISP that customers like. I will not be surprised in the future to find some markets where a great WISP will outsell a big ISP with a fiber network. A WISP might survive and thrive in such a market for a long time.

WISPs should also do well against a cable company that builds rural fiber if the cable company charges the same high rates as in cities. There are a lot of homes that can’t or won’t pay $90 – $100 per month for broadband.

But not all WISPs will be able to compete. There is a quiet truth that you will never hear WISPA talk about. There are some absolutely dreadful WISPs in the country. Lousy WISPs come in all sizes, but some of the largest WISPs are among the worst. Our broadband surveys often show rural folks who despise some of the WISPs in their neighborhood and either refuse to use them or plan to drop them with the first better broadband alternative. These are the WISPs that are not upgrading technology. These are the WISPs that will sell broadband to customers who are too far away from a tower where a WISP might deliver only 1 Mbps broadband but still charge full price. These are the WISPs that build long chains of wireless backhaul through tower after tower until there is not enough bandwidth for customers. These are the WISPs that have terrible customer service.

Interestingly, the most pointed critcism I hear about these poor WISPs comes from the high-quality WISPs. Good WISPs complain about how some WISPs cheat by exceeding power limits or constantly changing channel assignments just to goof up competing WISPs. There are WISPs who might read that as an anti-WISP statement, but these folks have not been reading my blog. I have been complaining about the big telcos non-stop for the last ten years. Small telcos that do a great job have spent the last few decades explaining how they are different from the big telcos. Great WISPs have to point out that they are different than the lousy WISPs that are poisoning the WISP brand name.

WISPA often responds to my blogs by saying I have a fiber bias and am anti-WISP. I admittedly think fiber should be the first choice for grant funding, but that’s a topic for another blog. But I am not anti-WISP, and I have WISP clients that are terrific. I know many other wonderful WISPs. I fully expect some of these WISPs will be around and thriving a decade from now. WISPs who thrive will do so for the same reasons as any other successful ISP – they will deliver a reliable product, priced reasonably, and will provide great customer service.

Influencing the BEAD Rules

One of the most interesting aspects of the upcoming BEAD grants is that the federal legislation that created the grants require states to solicit feedback from the public. I can’t recall that ever happening with any grants in the past – normally the rules are handed down from on-high, and that’s that.

States have to solicit feedback on two grant programs. First will be each state’s share of the $42.5 billion of BEAD broadband infrastructure grants. Second is the state’s portion of $1.44 billion in digital equity grants. Most states are soliciting feedback on the two grant programs at the same time, although this can be done separately. The listening sessions can be virtual, or the state can send folks out to talk to you live.

The federal rules that created the grants say that the states have to reach out to ‘all corners’ of the state to solicit feedback. I interpret that to mean the state must reach out to local government, non-profits, local broadband committees, and any other stakeholder groups that wants to talk to them. Most states are either in the process of these listening sessions or will be soon.

There will also be some additional chances to provide feedback on the grants and the grant process. The states will be submitting a proposal to the NTIA describing the process of awarding the grants, and there will be a comment period on these rules. The states will weigh in on the broadband mapping issue, and folks can also chime in on that topic.

If your community has something to say about broadband, this is the chance to be heard. A lot of communities are worried that the FCC maps don’t show them as needing broadband, and this is a chance to let the state know the state of broadband needs in your town or county. If you’ve been following my blog, you know there are a lot of policy issues surrounding the BEAD grants. The infrastructure grants seem to be heavily weighted toward large ISPs with deep pockets and not necessarily toward local ISPs that folks hope will serve them. This is a chance to ask state broadband offices to be flexible and consider small local ISPs in making awards. A lot of communities are creating public-private partnerships with ISPs, and these communities want the state to recognize these partnerships. A lot of cities and towns worry that they won’t see any of this grant funding.

Most states have at least some grasp of the broadband infrastructure issues, but I don’t think any of them understand the local issues in each community concerning digital equity issues. Communities differ widely in the degree to which digital equity issues come into play locally. Communities differ in the percentage of folks who can’t afford a broadband solution and want ISPs to offer an affordable option. Communities have differing ideas on how to provide digital literacy training and get computers into the homes that need them. These listening sessions are a chance to tell the story of your community and the solutions that you have in mind.

I strongly recommend that anybody that sponsors a listening session take the time first to organize the issues to be sure to make all of the needed points. It would be too easy to turn one of these sessions into a list of complaints about current broadband instead of a structured plea for broadband solutions. States are required to respond to questions asked in these listening sessions and to forward the questions and responses to the NTIA. But that means that a community or organization needs to ask specific questions if you want a response.

The time to provide feedback will not be open for long, so if your community or group wants to be heard, you should contact your state broadband office soon.