The Industry

Industry Shorts September 2023

Following is a discussion of a few topics I found to be interesting, but which are not long enough for a separate blog.

Starlink is massively far behind its original business plan. Starlink ended 2022 with around 1 million customers, while its original 2015 plan projected 20 million customers by the end of 2022. The 2022 revenues were $1.4 billion, far under the original projection of over $12 billion. The original projection was for Starlink to make $7 billion in profits in 2022, but the company still had monthly operating losses last year – although the company now claims a small profit at the end of the first quarter of 2023. Starlink company currently has over 4,700 satellites in orbit. The FCC has approved the launch of over 30,000 satellites, and Starlink says that 11,000 are needed to complete the first full constellation.

The company is currently up to around 1.5 million customers worldwide, which is impressive. But Starlink has a new competitor in FWA cellular wireless in many rural parts of the country. T-Mobile and Verizon added almost 3.2 million customers in 2022 and another 1.8 million in the first two quarters of this year. Much of rural America should be getting faster broadband over the next four years from the many federal grants, and I have to wonder if Starlink will ever meet it’s rosy projections for rural America.

Starlink has also been delivering slower broadband speeds than it originally advertised. The company now claims the following speed capabilities on its website, which are slower than what was reported a year ago. For example, in September 2022, residential speeds were claimed to be between 50 – 200 Mbps with upload speeds of 10 – 20 Mbps.

Download                   Upload

Residential      20 – 100 Mbps            5 – 15 Mbps

Business          40 – 220 Mbps            8 – 25 Mbps

RV                  5 – 50 Mbps                2 – 10 Mbps

There is still a lot of pent-up demand for Starlink. In every county I’ve worked in this year, I’ve talk to people on the Starlink waiting list.

AT&T Internet Air. AT&T has not taken the same aggressive approach to selling FWA cellular broadband as Verizon and T-Mobile, which together had over 5.9 million FWA customers at the end of the second quarter of this year.

But AT&T recently announced that it is now installing several thousand FWA connections every day. The product will use the frequencies that AT&T has labeled as 5G for customers living in range of a 5G-enabled tower and will use LTE spectrum elsewhere. AT&T said customers could be provisioned with a combination of 4G and 5G.

Chris Sambar, the President of AT&T Networks, wrote a recent blog that says that the AT&T cellular network has seen a 30% annual increase in the amount of bandwidth used per cellular customer. Any network engineer will tell you that is a huge increase. Landline broadband usage has historically grown at a rate of about 20% annually. At a 30% annual increase, network traffic will double in less than three years.

Sambar also said that AT&T was starting to test what he calls standalone 5G. That means using cellular technology that incorporates the 5G standards. For the last five years, everything offered by cellular companies that has been labeled as 5G was actually 4G LTE delivered using a new set of frequencies. It will be interesting to see what 5G can actually do differently. The blog mentions network slicing, which is perhaps the most important 5G feature – it will allow a cell tower to match the bandwidth being delivered to a customer to match the demand – small bandwidth for simple uses, and bigger bandwidth when needed. If network slicing works as originally intended, the bandwidth at a cell site will be used far more efficiently and a cell site will be able to handle a lot more simultaneous connections.

Regulation - What is it Good For?

The FCC to Tackle Lead Generation

In its ongoing battle to eliminate junk calls and texts, the FCC is considering new rules that would close down the practice of lead generation that tries to bypass Do Not Call restrictions. Current industry practices have found loopholes to avoid violating the letter of the FCC rules.

Lead generation is the source of a lot of spam and robocalls. A consumer will go to a website, such as an insurance company, and in order to get a free quote, the consumer will agree that the insurance company can share information for purposes of marketing with its ‘partners’. The partner companies, which likely paid the insurance company for the sales leads, can then claim that they have permission from the consumer to call or text them, thus avoiding the FCC’s Do Not Call restrictions.

In real-life practice, companies are not only sharing information with closely allied companies, but with any company willing to buy the referral. The sharing of lead generation materials has grown to become big business, and, in one example cited by the FCC, a  company was sharing customer calling information with 5,000 ‘marketing partners.’

The FCC’s proposed rules are aimed at strengthening the rules established by the Telephone Consumer Protection Act (TCPA). The law was originally enacted by Congress in 1991 as the first step towards taming the growing number of unwanted calls to consumers. The Act limited the use of pre-recorded voice messages, auto-dialers, and automated texts. The Act said that anybody calling a consumer must have explicit customer consent. The Act also created the national Do Not Call Registry for people to declare they don’t want unsolicited calls.

The FCC plans to solicit comments on its proposal to tighten the rules. The FCC is considering only allowing lead generating referrals with partners that are logically and topically associated with the website. The FCC also wants any company that will make referrals to prominently display the identity of all marketing partners on the web page where consent is being requested.

The new FCC rules would create a huge shift for companies that use such referrals to bypass the Do Not Call rules. Many businesses that primarily sell by telephone or text calls say that enforcing the new rules would put them out of business. The practice of obtaining referrals through other companies is also widely used in the non-profit world.

It’s taken the FCC far too long to do this, and marketing referrals have been widely used for years to ignore the Do Not Call rules. I’ve been on the Do Not Call list for over twenty years, and I still receive a lot of junk calls and junk texts.

Twenty-eight State Attorney Generals have asked the FCC to tighten these rules. This issue is also being considered by the Federal Trade Commission related to its Dot Com Disclosure rules. There are also several lawsuits in federal courts taking on companies that violate the TCPA rules.

The Industry

In Search of the Killer 5G App

AT&T and Comcast recently joined forces and joined the 5G Open Innovation Lab. This is a venture that has been funding start-ups and others working in 5G research. Along with looking to improve 5G edge technology, a primary goal of the OAI Lab is to search for killer apps for 5G. The two big companies join the other founding members of the effort, that includes Dell, Intel, Microsoft, Deloitte, and Nokia. The group hopes that adding the large carriers will help to continue to support the 118 start-ups that have already been funded by the organization. The 5G Open Innovation Lab has raised over $1 billion in start-up venture funding and another $602 million in second or later round funding.

It’s clear that the public doesn’t understand 5G. A survey earlier this year from Deloitte showed that 62% of Americans now have a 5G-enabled phone. Most people who don’t have 5G want it from their next upgrade. Almost 75% of survey respondents couldn’t name any specific benefits of 5G other than faster cellular speeds. 30% of survey respondents are disappointed that having 5G doesn’t seem to add any perceived applications or services.

Both companies hope to find 5G innovations through working with the companies that have been nurtured by OAI Lab. AT&T and Comcast both operate an internal product development labs but want to share in the work being done on many fronts by the Innovation labs partners.

5G has seen rapid acceptance worldwide, and the consulting firm Front & Sullivan estimates there will be over 3 billion users of 5G by 2026.

It seems like the only money-making 5G application is the recent use of the 5G network to provide home broadband. That’s something that’s possible due to the faster speeds on cellular networks. I’ve been following 5G since the technology was first announced, and using it for home broadband was never one of the original planned uses of 5G by the cellular companies.

There are more subtle benefits of 5G. The technology launched directly into the path of the pandemic at a time when people suddenly stayed at home and were less interested in mobile applications. But one of the trends that grew out of the pandemic was for people to engage with friends, family, and coworkers using video conferencing. Now that the world is mobile again, the 5G networks are supporting easy video calling that would have been challenging in the 4G LTE environment.

Making money from 5G is an interesting challenge for cellular carriers. I’ve been asking people how they feel about 5G for years. People are always amazed at the speeds they now get on their cell phones, but they are puzzled at the same time. Most people don’t do data-intensive tasks on a cell phone that demand faster speeds. I’ve lately been hearing from folks who are annoyed with their landline ISP when they see faster speeds on their cell phone. Interestingly, I’ve also been hearing from folks who have forced their phones back to 4G LTE which seems to have steadier speeds, particularly at busy times of the day. That’s a sign that 5G networks, at least in some urban setting, might be getting over-busy.

That’s not surprising after hearing a recent AT&T announcement that it has experienced over a 30% growth in cellular usage per customer in each of the last three years. That’s a huge amount of strain to put onto any broadband network.

I always find the talk of a killer app to be interesting since that was never the real goal of 5G. Carriers implemented 5G because 4G networks were headed toward a collapse. The carriers needed to spread cell traffic over new spectrum to keep networks functioning. The big carriers are finally starting to implement some aspects of the 5G specification that are aimed at further improving the network. For example, network slicing will right-size the bandwidth used by every customer transaction – a change that will allow many more people to use a cell tower at the same time.

But who knows – maybe the start-up companies and the carriers will find the 5G killer app. They’ve been looking for over five years, but maybe it’s out there hiding in plain sight.

Regulation - What is it Good For?

The Fifth FCC Commissioner

Nearly three years after the 2020 election, the FCC finally approved a fifth Commissioner for the FCC. The Senate voted 55-43 to confirm Anna Gomez as the newest FCC Commissioner. This will be the first time since Ajit Pai resigned in January 2021 that the Commission will be at full strength.

For those that might wonder why this matters, the five seats on the FCC are generally split 3-2 in favor of whatever party holds the White House. Without the third Commissioner for the party in current power, the FCC is easily gridlocked on numerous issues.

The industry is already speculating about what a fifth Democratic Commissioner might mean. President Biden made his feelings clear early in his administration that he hoped the FCC would tackle the monopoly powers of the big ISPs. However, the FCC is an independent agency that is not under the direct control of the White House, and past FCCs have not always been in lock-step with the White House.

Following are some of the issues the FCC might tackle:

Restoring Title II Regulation. We just found out yesterday that Chairwoman Jessica Rosenworcel isn’t going to waste any time after seating the fifth Commissioner, and she intends to quickly tackle the restoration of Title II regulation. The FCC under Ajit Pai eliminated Title II regulation, which was the mechanism chosen to regulate broadband since there is no specific mandate to do so from Congress. Congress could mandate that broadband be regulated by passing a law, but there have never been enough votes to do so. Until the day when Congress acts, the FCC can only regulate broadband by trying to make broadband fit into existing regulations. Title II does just that by declaring broadband to be a telecommunications service, meaning it can be regulated using the same authority used to regulate telephone and cellular services.

The press is already labeling this as an effort to reinstate net neutrality, but net neutrality is a minor portion of what it means to regulate broadband. Using the power of Title II regulation to regulate broadband means that the FCC can tackle things like mediating disputes between broadband companies, establishing some limits on broadband rates, and even doing simple things like intervening when ISPs abuse customers. Unfortunately, if the FCC pulls off the reinstatement of Title II regulation, it will begin another cycle of what I call the regulatory yoyo, where rules come and go with the change of administrations.

Tackling Broadband Discrimination. ISPs have long been accused of redlining – of only building broadband infrastructure to selected neighborhoods. If anything, it looks like many fiber builders are discriminating even more than in the past and building infrastructure only in neighborhoods with the highest returns on investment. Earlier this year, the FCC opened a docket to investigate digital discrimination, and it seems likely that this topic will take on more importance with a fifth Commissioner.

Regulating Web Companies. In the last few years, the biggest web companies have seemingly gone off the deep end and instituted policies that invite regulation. Big web platforms like Facebook and X (Twitter) are suddenly blocking news and content and allowing the proliferation of mass misinformation. It’s probably within the FCC’s power to impose some regulations on the big platforms – or to at least try.

Media Cross-ownership.  The FCC under Ajit Pai largely eliminated rules against the cross-ownership of print media and broadcast outlets – bringing in an unprecedented consolidation of the way that Americans get local news. The Ajit Pai FCC also made it easier to allow foreign investment in media companies and to relax the reporting of foreign investors. Current Chairwoman Jessica Rosenworcel has shown a desire to clamp down on the worst of these practices.

Of course, a fully staffed FCC might not tackle all of these issues or might tackle them in unexpected ways. In the past, the Chairperson of many FCCs has tried to put a personal stamp on FCC actions to make a name in history. Now that there is finally a fifth Commissioner we’re going to see what Chairwoman Jessica Rosenworcel has in mind.

Regulation - What is it Good For?

Universal Service Fund Under Fire

There have been several lawsuits over the last few years that challenge the legitimacy of the FCC’s Universal Service Fund (USF). A suit from a non-profit group called Consumers’ Research argues that USF fees are actually taxes and that the original creation of the USF was unconstitutional since it gave the FCC the power to levy taxes.

Several lawsuits have already been decided in favor of the FCC in the 5th and 6th U.S. Circuit Courts of Appeals. But in June, the 5th Circuit, based in New Orleans, agreed to rehear the case before the full court. That hearing was held last week and press reports say that the questions at the hearing seemed to be in favor of the petitioners who want to shut down the USF.

There is also an appeal of the other rulings that are pending before the U.S. Supreme Court. There is also a case from Consumers’ Research that is pending at the 11th Circuit and the D.C. Circuit Courts.

The Universal Service Fund has been popular with the public and many politicians because the FCC has been using the USF to tackle issues that are broadly referred to these days as the digital divide. The E-Rate program provides subsidized broadband to make sure there is connectivity in the poorest schools in the country. The Rural Health Care program subsidizes broadband connections for rural healthcare clinics.

A few of the USF programs have been more controversial. The Lifeline Program was originally used to provide a discount for telephone bills for low-income homes but has been repurposed to provide broadband discounts. Critics have charged for years that the program was rife with fraud, but the FCC finally instituted a portal that does a better job of verifying eligibility. The High Cost program has provided subsidies and grants to extend rural broadband. Among the programs have been a few that are controversial such as the CAF II program that gave subsidies to the biggest rural telcos to increase DSL speeds to 10/1 Mbps, and the more recent RDOF program that allocated subsidies to unserved parts of the country through a reverse auction. The FCC is considering using this fund to expand rural cellular towers.

The biggest issue facing the USF is that the funding mechanism is inadequate. The fees that fund the USF are assessed on Interstate telephone services and traditional Interstate regulated data circuits – revenue streams that continue to shrink. The USF fee on these items has continued to creep upward to make up for the shrinking and has grown to become a 30% fee on the services.

One of the obvious fixes to the funding would be to spread the USF fee over the huge number of broadband subscriptions in the country. This makes a lot of sense since the Universal Fund is used almost entirely these days to tackle broadband gaps. But the big ISPs have lobbied heavily against the idea and have instead been pushing for the fee to be assessed to big tech companies like Amazon, Google, Meta, and Apple. The big ISPs say it would be unfair for them to subsidize the web giants, It’s an argument I’ve never fully understood since the ISPs wouldn’t be paying the fees and would pass the fees on to consumers. The big web companies have an equally powerful lobby these days and have fought against this idea. This is an argument that has been going on for several decades but has been heating up over the last year as it’s becoming obvious that the Universal Service Fund cannot remain viable with the existing funding mechanism.

The USF seems to be popular with federal legislators, but there has been no noticeable movement in Congress to fix the USF funding mechanism. The original funding mechanism was established by the FCC from authority granted by the Telecommunications Act of 1996, which is badly out of date with the modern broadband industry. Congress could fix the funding mechanism at any time, but it doesn’t seem like legislators want to choose between the big ISPs and tech companies.

All of this could be made mute if a Court rules that the way that the FCC funds the USF is unconstitutional. The USF could theoretically be shut down quickly if the funding mechanism is turned off. That would mean the end of Lifeline discounts, of broadband payments to schools, libraries, and health care clinics, and a cessation of funding for RDOF and ACAM. Congress could fix the issue by creating an actual tax instead of a fee set by the FCC – and perhaps it will take a drastic court action to get Congress to act.

Current News

Childcare and Working From Home

The childcare industry in the county is on the verge of a major collapse, and this could mean millions of families will be looking for jobs that allow them to work from home. That will mean a lot of additional demand for decent broadband.

The childcare industry ran into troubles at the beginning of the pandemic, and over 20,000 childcare centers, or about 10% of the total, closed within a short time after the onset of the pandemic. At the time, this resulted in about 40,000 lost daycare jobs.

As the pandemic started to ebb, Congress provided $24 billion in subsidies to bolster salaries to keep people interested in taking the high-stress jobs of childcare. That funding is going to end this month. Several non-profits that concentrate on the sector say that the end of the subsidies will likely cause another 70,000 childcare centers to close – about one in three of the remaining centers. That will kill another 230,000 childcare jobs, but more importantly, will mean that around 2.3 million families will be confronted with some difficult childcare choices.

Many families will suddenly be without childcare because they won’t be able to find an alternative. It seems likely that without the subsidies, that the remaining childcare centers will raise rates – and, in many cases, making childcare costs too high to justify working.

Some families that lose childcare will find a more expensive alternative, but many will not. The loss of 70,000 childcare centers is going to affect most communities in the country. It might seem logical that some of the childcare workers who lose a job could start taking care of children in their own homes – but that is not practical in most communities. Most places now require all childcare facilities to be licensed, and any home or location used for childcare must meet a lot of requirements that are expensive or impossible to meet for the average home.

Childcare workers who lose their jobs can hopefully find employment somewhere in the overheated job market. But families who decide that a parent must stay at home without access to childcare are likely going to be looking for jobs that can be done at home – and probably online.

This raises all kinds of issues. Many of the families that are suddenly back in the home to take care of their own children will not be proficient with computers. Many will unfortunately live in places where the broadband is not good enough to support working from home.

I wonder if there are enough virtual jobs available to meet this new influx of workers seeking online work? There is a well-known national trend that many Gen X and Millennial workers prefer online work, and new job seekers will be competing with folks who have more computer skills and experience. We’re also starting to see some of the largest employers, including the federal government, starting to insist that workers come back to the office. This is likely going to make it even more competitive to pursue the remaining online jobs.

But there is still a vibrant work-from-home economy. The Bureau of Labor Statistics recently reported that 34% of workers did at least some of their work at home in 2022, down from 42% in 2020 and 38% in 2021. But those same statistics showed that getting work from home is highly correlated with the level of education – 54% of those with a bachelors degree or higher work at home some of the time compared to only 18% for those with a high school diploma or less.

The Industry

Cox to Use Coop Fiber Network

As recently as a few years ago, I was able to say that the large ISPs never used networks owned by somebody else. But that is no longer the case, and we’re starting to see partnerships with big ISPs spring up around the country.

The most recent announcement of a fiber partnership is between Cox and the Indian Electric Cooperative in Oklahoma. The cooperative is building a fiber network to connect its substations and other key electric system components to fiber. The cooperative will lease the remaining fiber capacity to Cox to provide last-mile broadband connections to cooperative members. The partnership will start in the small town of Fairfax, with the intention of going cooperative-wide, if possible.

The cooperative is borrowing the money to pay for the first 80 miles of fiber backbone. The coop has already applied for grants and expects to aggressively pursue more grant funding. Cox will pay for the infrastructure to connect customers as well as all of the electronics. There are also several tribes located in parts of the coop area, and the coop hopes that some of the tribes will pursue grants and follow the same partnership model.

The announced partnership model is that Cox will pay a fee to the cooperative for every customer connected to the network. In rural areas with no other broadband alternative, it’s hard to think that this won’t eventually mean 70%, 80%, or more of households getting broadband through the partnership.

This kind of partnership makes sense for both parties. The cooperative gets a modern smart grid network that is going to be essential in the long run for all electric grid. Smart grids protect against outages, allow for faster repairs when there are problems, and allow for the seamless integration of alternate energy sources – something that is a lot harder than might be imagined.

Cox gets access to customers but saves on building the expensive fiber distribution network that goes up each street. It becomes a lot more feasible for Cox to consider rural markets when it doesn’t have to cover all of the construction costs. Both parties benefit from grant funding, which can reduce the cost of fiber to make a feasible business case.

These kinds of partnerships with giant ISPs are still not common, but they are popping up more and more. CenturyLink (now Brightspeed) is sharing a municipal network built by the City of Springfield, Missouri. Windstream announced a deal similar to this one with an electric cooperative in Georgia. Consolidated Communications has partnered with some cities in New Hampshire. Mediacom is placing fiber in the conduit system built by the city of West Des Moines, Iowa. I’m aware of discussions of several other partnerships with big ISPs that are under consideration.

The biggest hangup for these kinds of partnerships is that the big companies are highly leery of using a fiber network where somebody else operates the electronics, controls the installation process, or maintains the network. It’s a lot harder to attract a big ISP partner if the network owner wants to keep control of the fiber deployment and maintenance.

There are a lot more partnerships being formed between municipalities, cooperatives, and smaller ISPs. I’m aware of dozens of such relationships and wouldn’t be surprised to find that there are hundreds of partnerships operating, with many more underway due to grant funding.

Regulation - What is it Good For?

BEAD and Buy America

The NTIA recently issued a clarification of its intentions for the Buy America rules that are part of BEAD. In a blog released on August 22, the NTIA said that it still plans to take a strict approach to enforcing Buy America. In practical terms, that means that NTIA intends to only seek minor waivers from the Buy America rules.

NTIA first adopted a strict position on Buy America after the State of the Union address this year, when President Biden stressed that one of the key principles behind the Infrastructure Investment and Jobs Act, which funded the upcoming BEAD broadband grants, was to use American materials and labor.

As a reminder, the rules that determine if something is manufactured in America are included in Section 70912 of the Build America, Buy America Act. The Act requires that the iron, steel, manufactured products (including fiber-optic communications facilities), and construction materials used in a federally-funded project are produced in the United States unless a waiver is granted. That Act defines to be produced in the United States if the final product is manufactured in the United States and that at least 55 percent of the total cost of components are mined, produced, or manufactured in the United States.

The NTIA is proposing that 90% of the materials used to construct BEAD projects meet that definition. The NTIA made this recent announcement to provide incentives for fiber vendors to bring manufacturing to the U.S. for key broadband components. The NTIA says it will be leery of asking for waivers for materials that meet the following criteria:

  • Strategically important technologies that ensure the security, integrity, and reliability of network data should be produced in America.
  • If a product’s domestic manufacturing line can be scaled quickly, it should be produced in America.
  • A product, like fiber-optic cable that comprises a significant portion of the overall network cost should be produced in America.

The NTIA recognizes that some of the chips needed for broadband might not be manufactured here in time to support that BEAD grant implementation and may file a limited waiver for chips. However, there is a lot of progress being made to move chip manufacturing to the U.S. But chip factories tend to specialize in specific kinds of chips, and there may not be anybody making enough chips here for fiber electronics in time to meet the BEAD timelines.

The good news is that there is a lot of movement to build fiber electronics in the U.S. to meet the BEAD requirements. For example, both Nokia and Adtran have announced manufacturing plans in the U.S. Calix doesn’t have a U.S. solution yet but recently announced it should have one by the time that BEAD grants are awarded.

There are new fiber cable facilities being constructed by Corning, CommScope, Prysmian, and Superior Essex.

Overall, the Build America requirements don’t appear to be the big bottleneck that was feared a year or two ago. It will remain to be seen if the new U.S. manufacturing will be able to keep up with the demand from BEAD. It looks like most states are going to try to award as much money as possible in 2024, which means that construction for BEAD grants across the country will all start within a fairly narrow time window.

The Industry

Broadband for Low-Income Housing

In April of this year, Kathryn de Wit of the Pew Charitable Trusts released what I consider to be the definitive article defining the broadband gap in low-income housing. I’ve discussed her paper before, but as we finally approach the start of the BEAD grant process, I wanted to highlight the findings from her report. While BEAD grant funding is supposed to be available to bring broadband to unserved and underserved homes everywhere, I have to wonder how much funding will be provided in most states to tackle this issue – which is mostly found in cities.

I think its universally understood that homes need broadband to take part in modern life. Just in my own life, it seems that month after month and year after year, that more of the functions I do now involve broadband. Just one example, I recently had some doctor visits, and a lot of the process is now online to register prior to the visit and to get my results from lab tests. This was not part of the process for my doctor just a year ago – but seemingly everything we do is migrating online.

Pew interviews with low-income households showed that some of the most important benefits of broadband for low-income homes include reduced isolation and increased social connection, support for aging in place, access to education, health care and wellness, job training, financial services, and the opportunity to apply for and find jobs. Several major studies have documented the positive impact for students who have broadband and computers in the home.

The Pew paper describes the lack of broadband for low-income housing as being the result of several issues. First is that ISPs, in many cases, are not building fiber or other modern infrastructure to subsidized housing. When an ISP builds fiber near a low-income apartment building, it often bypass the building and don’t offer fiber. While ISPs won’t publicly say it, this is due to an expectation of low returns on the investment of building a fiber drop, wiring the units, and providing the electronics.

Another issue is a shift away from community technology centers – places where WiFi broadband and computers are made available to the public. This is a movement that was already underway before the pandemic and which became the norm during COVID shutdowns. This means there must be a bigger emphasis on getting broadband and computers into living units.

But the biggest issue continues to be affordability. Pew research from 2021 showed that 43% of households with incomes under $30,000 did not have a broadband connection – which compares to 8% for homes with incomes over $75,000 per year. 45% of people without home broadband said they can’t afford a monthly broadband subscription, and 37% said they can’t afford a computer. The household income issue is even more acute in public housing, where the average household income in a 2016 study was just over $14,000 per household.

A large survey conducted by the NTIA of homes without broadband showed that the average amount that those living in subsidized households said they could afford was just $10 per month, although over half of homes said they couldn’t afford any amount. A 2021 survey by Everyone On shows that 40% of households with incomes of $50,000 said they can’t afford broadband, while 22% said they could afford to pay as much as $25 per month.

As you might imagine, there are a lot of challenges in getting better broadband to public housing:

  • Broadband subscriptions are not included in the HUD utility allowance. This is a funding mechanism that covers electricity, gas, and water fees in public housing. It’s time to recognize that a broadband subscription is a household need and not a luxury.
  • While BEAD grants theoretically cover bringing broadband to apartment buildings that need it, it’s a challenge to prove the areas are underserved since urban maps often claim ubiquitous broadband coverage from cable companies. The BEAD process is also incredibly unfriendly for filing grants for small areas like a single building due to the complexity of the requirements.
  • ACP funding has allowed many low-income households to get broadband. But unless Congress acts soon, that fund will run dry by next spring. The ACP rules also require individuals to apply for the subsidy. In a low-income housing building, everybody qualifies for ACP by definition, yet there is no mechanism for enrolling a building in ACP. Most other benefits for low-income housing are funded by the building instead of by individual tenants.

I’ve predicted for the last several years that the next big push for broadband connectivity will be in cities. As states start allocating rural grants for BEAD, it will likely become obvious that little has been done to help most cities. I think this is going to be a harder issue to solve than the rural broadband gaps because the big cable companies are going to fight anybody that tries to bring broadband into what they consider as their turf – even where they aren’t serving. But if the goal is to get everybody onto broadband, this is an issue we need to tackle and solve.

Regulation - What is it Good For?

FWA Cellular Speeds

One of the most interesting things about getting access to a lot of speed tests is that it provides a way to test broadband issues you always suspected but couldn’t prove. If you can collect enough speed tests, you might find proof of a lot of different things. For example, speed tests might show that a broadband network is slower in the evening than during the night – something that customers have always complained about. Speed tests might show that an ISP delivers speeds that are far slower than what an ISP claims on the FCC broadband maps.

I’ve been trying to understand the speed characteristics of FWA cellular wireless. I’ve been interviewing folks for a few years who have FWA wireless, and they all told me that speeds are fast for those living close to a tower but slower as the distance to the tower increases. For example, the first customer I talked to who was using the FWA broadband from T-Mobile is a farmer who had a T-Mobile tower on his property and got almost 300 Mbps download speeds. He was thrilled with the product compared to the much slower WISP he had been using. But when he recommended the FWA wireless to his neighbors, they received a far different bandwidth product. A neighboring farm a little over a mile away was getting speeds closer to 100 Mbps, which they also thought was good. But some farms further away said that the FWA broadband was too slow.

I heard similar stories from elsewhere, but it’s hard to make any universal statements about the FWA product based on a handful of anecdotes from different parts of the country. I recently got access to enough speed tests to understand the performance of the FWA cellular wireless product.

The map below shows a lot of speed tests from Verizon tower in a suburban county. The yellow dots on the map are the locations of actual speed tests. The colored circles on the map show the distance from a cell tower – with purple showing locations within a mile of the tower, red showing locations between 1 and 2 miles, blue/greed showing speed tests within 2 and 3 miles, and the surrounding white areas at more than 3 miles. I didn’t cherry-pick this particular tower as the best example – there are more than a dozen other Verizon towers in the same county that show similar speed test results. I must note that speed tests are not a prefect indicator of broadband performance, and there might be explanations behind some of the slower readings. But I have to think that seeing this same speed pattern around multiple tower sites is a good indication that this is how the technology works.

This map demonstrates what the farmer told me to a tee. There are some locations close to the tower getting 300 Mbps. Customers just over a mile from the tower are getting slower speeds, with the highlighted ones around 75 Mbps. By the third mile band, speeds have dropped a lot closer to 25 Mbps download, and outside the three-mile circle, speeds drop significantly. There is no easy way to tell if the customers with slower speeds are buying FWA wireless, which uses the spectrum that Verizon labels as 5G, or the older Verizon hotspots that use traditional LTE spectrum.

On the FCC map in this county, Verizon reports two speeds – 300 Mbps or 50 Mbps. It’s not easy to understand how Verizon makes the distinction, but it seems like locations for a fairly good distance around towers are claimed at 300 Mbps.

Somebody who doesn’t understand the FCC mapping rules might think that Verizon is breaking the rules by reporting 300 Mbps speeds in places where actual speeds are a lot lower. But the FCC allows ISPs to report marketing speeds for the FCC maps as long as Verizon is advertising the claimed speeds. But that doesn’t mean that the Verizon FCC reporting is ethical. Customers who might refer to the FCC map when looking for an ISP, or customers that see Verizon advertising are hoping to get something close to the 300 Mbps speed – and many will not.

I have some major concerns about cellular FWA technology related to the upcoming BEAD grants. First, any state broadband grant offices that accept the claimed Verizon speeds in the FCC mapping might not award any grants where a fast FWA speed is claimed. That would be a travesty if folks who can’t get speeds of at least 100/20 Mbps with FWA are denied another broadband option.

It’s also possible that the cellular companies will challenge grants that come close to their towers. I knew this was likely going to become an issue the day that the NTIA said that it considers wireless broadband using licensed spectrum to be broadband for purposes of the BEAD program.

It’s also possible that Verizon, T-Mobile, AT&T, and others will try to win BEAD grant funding using this technology. At least in this county, there are very few customers outside of one or two miles from a tower who can get the 100/20 Mbps required for BEAD grants.

I hope that state broadband offices take a hard look at this. Many of them have purchased detailed speed test data, and they can search around towers in the same manner done above. I don’t think it will take much investigation for them to be convinced that FWA cellular broadband can meet the speeds required for BEAD – but only for short distances from cell towers. Broadband offices should also take note that both Verizon and T-Mobile warn customers that speeds can be throttled any time there is increased demand for bandwidth from cellphones.

I am not busting on the cellular FWA technology. If I was in a rural area without a good broadband alternative, I’d buy this product in a second. But I’d be unhappy if I was hoping for 300 Mbps and got 25 Mbps. What is being deployed today is the first generation of the technology, and I assume that it will improve over time. My only concern is the timing of the rollout of this new technology and how it might negatively affect an already complicated BEAD grant process.

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