There is an interesting discussion that has been percolating in the industry for many years. Many wireless ISPs have extolled the benefits of building wireless networks as the first step to eventually build fiber networks.
For over a decade, I’ve been a big proponent of this business plan and have worked with many rural ISPs who entered new rural markets with wireless with the hope of eventually building fiber in the same areas. The business plan makes a lot of sense – get paying customers and pocket revenues to eventually fund the upgrade. ISPs with this business plan typically have built as much fiber as they could up front, such as building fiber to each wireless tower to extend fiber deep into the network. Many of the ISPs that have adopted this business plan have already started making the transition to fiber. Many of them have taken advantage of state and federal grants to accelerate the process.
As soon as I heard about the BEAD grants, one of my first thoughts was that this two-step upgrade business plan idea is dead. We are at perhaps the only point in the history of the industry when there is enough money to go straight to fiber by taking advantage of grant funding. Grant funding can provide an ISP with the same kind of cash up-front that they might have accumulated after operating as a WISP in a market for a decade or more.
I sat in more than a dozen presentations in the last year where a WISP asked a County government for ARPA funding to build a wireless broadband network. One of the best selling points in these pitches was that WISPs will have the broadband up and running a lot sooner than a fiber overbuilder. But in every single presentation, the WISPs also that they want to build wireless today but would eventually migrate to fiber.
I didn’t go to the WISPA convention this year, but I talked to one of the vendors that attended and asked him for the main takeaway. He said that everywhere he went, he heard talk of building wireless networks today as the first step to eventually get fiber.
I don’t doubt that most WISPs that promote this two-step business plan are sincere. There are a lot of WISPs that have already built some fiber and understand the long-term durability and reliability of a fiber network. But I suspect that a few of the WISPs who are making this pitch are not sincere and are just telling local government officials what they want to hear.
The issue really gets muddied by the pending introduction of 6 GHz spectrum into wireless networks and the promise of much faster wireless broadband speeds. If WISPs can upgrade to deliver really fast broadband, is there any incentive to ever build fiber? Perhaps there will be no need to upgrade, and perhaps the wireless network is the right long-term solution.
I’m still on the side of building fiber if an ISP can find the funding – and I’m the first to admit that’s my own personal bias. Fiber networks are going to last a long time. Forget the talk that fiber is only good for 20 to 30 years. I think most folks who build fiber today believe it will easily last 60 to 70 years, and where they’ve placed conduit, future upgrades will be a lot less costly than building from scratch. Fiber electronics vendors have also gotten a lot smarter, and you can new generations of electronics over an existing network without a costly rip and replace. This contrasts with wireless technology, which is changing at such a rapid pace that periodic rip and replace upgrades are still the norm.
Local government officials tell me that their two biggest fears of getting a wireless solution are that the network won’t reach everybody and that the WISP won’t make the needed upgrades in the future. To be fair, many of these same local officials are also leery about seeing grant money go to giant ISPs to build fiber, with the fear that these big companies won’t maintain the network.
The bottom line for me is that I am leery about accepting a claim that somebody building a wireless network today is going to eventually upgrade to fiber. But maybe fiber isn’t needed with a high-quality WISP that spends the extra money to reach everybody and who will keep radios up to date in the future. The real concern for rural communities should be how to avoid getting a WISP or a fiber ISP that doesn’t maintain the network – and identifying them is a whole different challenge.
I think there’s a bit of gamesmaship going on. ‘Fiber’ is a blanket term for ‘the best thing that can ever be ever’ and so a lot of presentations are likely loaded with a ‘fiber eventually’ just to get the word into the conversation. That company likely has no firm plans at all for fiber, just that maybe someday if they hit the lottery they’ll get into it but they don’t want to appear to be ‘uncool’.
I don’t think the new push for fiber is any different than any other broadband push. Fiber makes economic sense up to a certain density and past that, wireless is the obvious choice. As the housing density creeps ever outward so does the ‘wired’ connectivity and the wireless migrates out again.
I probably sound like a broken record in my many posts around, but the answer to all of the ideas here is simply to encourage competition. A wisp, or fisp, or cable co, or DSL provider, will let their hardware age out without upgrade to maximize profits until they have to compete. And this is where I feel government funds should go, enabling competition, not picking a single tech and a single winner per census block.
“A wisp, or fisp, or cable co, or DSL provider, will let their hardware age out without upgrade to maximize profits until they have to compete.”
Compete with what? Competition doesn’t tend to emerge in a natural terminating monopoly as with utilities. Particularly so in less densely built areas where ROI and profitability don’t/can’t meet investor expectations.
I think that if you dig in to this you’ll find that competition does form up when the goverment isn’t designing a monopoly.
There are two primary hurdles that holds up competition in the ISP space. Availability (or accessability) of upstream bandwidth and access to facilities.
In most places in the US to access the row and poles in a municipality you have to deliver TV services which allows you to apply for a franchise, that then grants no-permit access to poles and rows. Until fairly recently, a lot of TV content was licensed regionally so this made for a very effective government enforced single vendor market.
Move out of town and the economics of running fiber don’t work out until there is government money available. There may be long-haul fiber but it’s hard to access. That first hurdle of getting bandwidth to an area plays a big role, and when wisps are essentially stuck with 6Ghz or 11Ghz backhauls that also becomes a first come first serve market because there are a very small number of channels to license and once used, that’s it. There is no other suitable licensed long haul spectrum.
This is what I mean about the government’s role. They shouldn’t be picking winners, locking in single vendors to own markets, and funding single vendor buildouts. They should be identifing the hurdles and shortening them.
I guarantee you that if the government sponsered dark fiber and an accessability system to every school (urban and rural) in the US fed back to the nearest open internet exchange there’d be an explosion of competition in the same and broadband prices would drop and speeds increase. fisp, coax, and wireless. This is the biggest hurdle. row/poles a distance second.
Government policy doesn’t create the monopoly. Microeconomics does so naturally. Landline advanced telecom infrastructure has high cost barriers to entry and first mover advantage that deter competitors. Market forces don’t work to benefit buyers as there are few sellers but many buyers.
“Government policy doesn’t create the monopoly. Microeconomics does so naturally.”
I could not disagree with you more. As a long time wireless and wired/fiber operator being denied access to row and poles has hindered me in a dozen markets in multiple (US) states and amplified my costs to enter those markets. The government roadblocks kill competition that wants to exist. And those monopolies now have guaranteed customers so they’re not driven to expand, instead they work to increase prices on existing customers. Where expansion could make sense but has lower margins, they don’t expand. If they had a constant threat of competition, they would move into lower margin (due to cost to build out) markets because this is what ALL markets do when there is competition. Then the government comes in, gives them money to expand (those are big profits) so they do and then they rest until the next round of government funds.
These are fundamentally government designed monopolies that are intentially setup to stop competition.
What you are describing isn’t market competition. It’s regulation.
“What you are describing isn’t market competition. It’s regulation.”
regulation is not picking a single vendor. Allowing just one company access to facilities isn’t regulation. Giving just one company funds to build into an area that you then give sole access to facilities isn’t regulation. In every way this is describing government endorsed if not government designed monopoly and is not in any way describing regulation beyond the FCC licensing.
I repeat, it is NOT regulation when the government picks a single company to have exclusive rights in an area which limits consumers to a single choice in vendors. If you replace the word regulation and remove the NOT is perfect describes monopoly.
Good point re government endorsed monopoly. That describes AT&T in much of the 20th century with voice local and long distance telephone service. But unlike advanced telecom, it was regulated as a common carrier under Title II of the Communications Act to ensure access and affordability with universal service and state rate regulation.
We are essentially feeling the pain of the first few waves of government built so called ‘natural’ monopolies. We have power grids failing and it’s generally disallowed for anyone to compete against them. We have a near complete failure of the DSL infrastructure that was laid atop another government endorsed ‘natural’ monopoly. We have cable plans that are 2-3 generations out of date also built on government endorsed monopolies (via those franchise video agreements). We’re no where near energy independance that doesn’t require the grid so now government has to step in to make the grid work, something’s gotta give there. DSL tech has numerous upgrade options that would keep that tech good for likely another decade if there were only competition to get those upgrades in place, right now there shouldn’t be a single user that isn’t on a VDSL2 or g.hn connection good for 100mbps. The cable plants are capable of being just as fast as the XGSPON fiber plans being built if only the now half a decade old DOCSIS4.0 option was deployed at all, or even DOCSIS3.1 which is 10G download capable like XGSPON and has been available for a decade. Most of these things should still be functional for quite a while, the need to build fiber to the home is false because there are existing services to many of these homes that just need minor upgrades.
This isn’t a technology problem or even a ‘moderate’ amount of money problem. It’s pure lack of competition in every single government designed or endorsed monopoly market in the US. Once upon a time these things were fabulous, and having the first decade of that government endorse monopoly was fantastic for those that needed those products early on, but it creates a system where only the government can come and replace that monopoly with a new one and getting the political will to do that means having people suffer enough that it makes it’s way up the ladder. Seems like a really terrible way to get internet to a home.
I’m simply pushing the idea that the government should be tearing down hurdles instead of lifting up individual companies in cases where it’s just upgrades to networks that would solve the need. One of multiple methods to this is the dark fiber to schools model. Government doesn’t pick a winner and doesn’t create a cycle of degrading services because new competition can spring up easily to solve those issues and ‘strongly encourage’ the existing companies to keep up to date.
Notably, the 1996 Telecom Act states public policy in line with your view:
SEC. 706. ADVANCED TELECOMMUNICATIONS INCENTIVES.
(a) IN GENERAL- The Commission and each State commission with
regulatory jurisdiction over telecommunications services shall
encourage the deployment on a reasonable and timely basis of
advanced telecommunications capability to all Americans (including,
in particular, elementary and secondary schools and classrooms) by
utilizing, in a manner consistent with the public interest,
convenience, and necessity, price cap regulation, regulatory
forbearance, measures that promote competition in the local
telecommunications market, or other regulating methods that remove
barriers to infrastructure investment.
—-
The problem with this policy is it’s based on a fallacy that market competition can exist in a natural terminating monopoly that is telecom delivery infrastructure. It cannot due to the aforementioned barriers to competitor entry due to high costs and first mover advantage. Competitive markets require many sellers and many buyers having relatively equal access to information on costs and value. That cannot occur in advanced telecom or any other utility that tends toward monopoly or duopoly at best.
“We have a near complete failure of the DSL infrastructure that was laid atop another government endorsed ‘natural’ monopoly. We have cable plans that are 2-3 generations out of date..”
This is not a result of government policy. Rather, it reflects the aversion of investors in shareholder owned large telcos and cablecos to capex that can potentially reduce earnings and dividends as well as overleveraged balance sheets. An example is Verizon adopting infrastructure modernization strategy in the 2000s to replace the legacy POTS copper with FTTP that shareholders forced it to abandon.