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Current News The Industry

The State of the Internet

The Mozilla Internet Health Report is packed with interesting statistics about the state of the Internet. Reports like this one remind us that broadband is a worldwide issue that is much larger than the US broadband industry I write about every day.

The report contains a lot of interesting facts:

  • A little more than half of the planet is still not connected to the Internet. As a planet, we still have a long way to go. While the largest percentage of a region still not online is in Africa, by sheer numbers, most of those still not connected are in Asia.
  • Worldwide, men are 21% more likely to be online than women.
  • Much of the world connects to broadband through cellphones, and the cost of broadband is a huge issue in many parts of the world. In Middle Africa, a gigabit of cellular broadband costs almost 12% of the average monthly income. In Western Africa, it’s over 8% and in Eastern Africa, it’s over 7.4%. Closer to home in Central America it’s 4%.
  • Much of the world can’t afford smartphones. For example, in Sierra Leone it takes six months of an average salary to buy a smartphone. In India it takes 63 days of the average salary.
  • Seven of the top ten largest companies in the world, by market capitalization, are Internet companies – Apple, Microsoft, Amazon, Alphabet (Google), Facebook, Tencent, and Alibaba.
  • Five of those companies – Amazon, Microsoft, Alibaba, Google, and Tencent – control 80% of all of the cloud traffic in the world, meaning that most other web applications run through these companies.
  • Four of the top six social media platforms, in terms of users are owned by Facebook – Facebook, WhatsApp, Facebook Messenger, and Instagram.

The report also contains many stories about some of the negative aspects of the web. A few include:

  • The states of Rakhine and Chin in Myanmar have been blacked out from Internet access for over a year. Governments routinely block Internet access as a way to punish or control people. In addition to these two places, there was at least one other place in the world with blocked access every day in 2020.
  • 2020 might go down as the year when Internet disinformation was weaponized with governments all over the world using social media to spread propaganda.
  • The pandemic magnified the extent of the digital divide across the world. In many parts of the world, the education systems have effectively shut down for rural and poor urban students.
  • Government data has been hacked. A good example is a hack in Chile where over 19 gigabytes of citizen data including passwords and personal identifying data was stolen.
  • There are practically no binding guidelines anywhere in the world that set limits or define ethics for the newly developing artificial intelligence technology.

Of course, there are also positive things happening with the Internet:

  • In the US and Europe, there is a major push to tackle antitrust abuses by the largest web companies.
  • Europe is leading the world, but others are catching up in creating rules to enforce consumer privacy.

It’s easy to forget that the web only became a real thing in the mid-1990s. While there are clear problems associated with the web, it’s also amazing that in a little over 25 years we’ve connected half of the people on the planet.

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Regulation - What is it Good For?

Why We Need Broadband Regulation

Anybody that reads this blog knows that I am in favor of broadband regulation. I’m sure ISPs read this and wonder why – because who doesn’t like being unregulated? My feelings on this go back to basic economics – monopolies must either be regulated or split up. By definition, monopolies always end up taking advantage of consumers – unregulated monopolies really can’t help this behavior, because employees and management of monopolies will inevitably take advantage of monopoly market power.

Of course, I’m also fine with breaking up monopolies. It’s actually surprising that stockholders of companies like Comcast aren’t clamoring for this. Comcast stock would be worth a lot more if the entertainment, sports, and cable businesses were separated into separate stocks. We know from seeing the split-up of AT&T that the stocks would be worth even more if the Comcast ISP properties were broken up into regions. Unfortunately, cable companies have gained such a dominant monopoly position in most markets that breaking Comcast into a half dozen smaller ISPs would just result in smaller monopolies.

The only other alternative is to regulate monopolies. Such regulation needs to take the form of protecting the public from monopoly abuse. We know that regulation of broadband companies works. Back when telephone companies were regulated, the public had a favorable opinion of Ma Bell because regulation forced decent customer service and prices. AT&T was far from perfect, but everybody who worked at the company was aware that the company had to answer to regulators – and that’s what stopped the kind of poor treatment that cable companies heap upon the public. There are no repercussions for Comcast or other big ISPs to treat customers poorly today.

Recently we got a glimpse of why regulation works. Charter had asked the the Ajit Pai FCC to implement data caps two years early. The company was prohibited from using data caps until 2023 as part of its agreement to buy Time Warner Cable. When the administration flipped and Chairman Ajit Pai left the FCC, Charter quietly withdrew the request because they knew that the new FCC would reject the request. Just the mere hint of a regulator saying no was enough to stop Charter from asking to implement data caps two years early – which means a savings of millions for customers over the next two years. It’s not hard to imagine big ISP being better citizens if FCC regulation had any teeth.

There are stories in the press every week showing why we need regulation. The latest example I read is that Frontier raised its Internet Infrastructure Charge from $3.99 to $6.99 for every broadband customer. This fee is a great example of an ISP hidden fee. There is no basis for this fee – Frontier instead uses this fee to bill more for broadband so that the company can continue to advertise that it has inexpensive broadband. Hidden fees are dishonest because ISPs can advertise low base fees and then hit customers with the hidden fees on the first bill.

I’m hoping the new FCC implements truth in billing rules and does away with hidden fees. Frontier has every right to increase its broadband prices – but it should do honestly and tell customers the real cost of broadband. The big ISPs have hidden fees on all of the triple play services and get away with this because no regulator tells them to knock off the nonsense.

I opened up this blog saying that small ISPs probably wonder why I’m always asking for more regulation. There are two reasons. My primary reason is that the vast majority of the public has no choice but to buy broadband from one of the big ISPs.

But another important reason is that the vast majority of small ISPs have nothing to fear from basic regulation. They already treat their customers well and don’t engage in the shady practices of the big ISPs. Small ISPs will be better off if their big competitors must be truthful. How much easier would it be to compete against Comcast if the company had to honestly tell customers that standalone broadband costs nearly $90?

This is not to say that there are not bad actors among small ISPs. There are, and we’d all be better off if these companies are also brought to task. The basic premise of regulation is simple – regulators are supposed to protect the public against abuses by regulated companies. This is not to say that regulators can’t go too far in being too pro-public – because regulators’ second role is to foster the industry they are regulating. If regulators go too far, you’ll see me writing blogs about the regulators. But as long as regulators tackle the role of watching out for the public, paint me as pro-regulation.

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Current News The Industry

The Need for Training Telecom Technicians

Eleven different industry trade associations have written a joint letter to Congress and the new administration asking that any new infrastructure funding include training for telecom technicians. I can’t recall a time when so many associations aligned like this on any issue.

The letter included support from the Competitive Carriers Association (CCA), the Fiber Broadband Association (FBA), INCOMPAS, NATE: The Communications Infrastructure Contractors Association, NTCA – The Rural Broadband Association, Power & Communication Contractors Association (PCCA), the Telecommunications Industry Association, USTelecom – The Broadband Association, the Wireless Infrastructure Association (WIA), the Wireless Internet Service Providers Association (WISPA), and the CTIA.

The letter says that the industry expects to create 850,000 new technician jobs by 2025 to support wireline and wireless deployments. To put that number into perspective, the industry currently employees 672,000 technicians with an average salary of $77,500. The industries also collectively expect to add another 2.1 million jobs to support the new industries like 5G and new fiber ISPs.

The associations are asking for the federal government to expand existing apprenticeship programs and create new ones that combine class learning along with field experience. There are some such programs in the country, but nearly enough to handle the upcoming needs of the telecom industry. To letter asks that in order to promote diversity that training programs be established at Historically Black Colleges and Universities and Tribal Colleges and Universities along with community colleges, public universities, and other institutions.

The industries suggest that training institutions form public/private partnerships with the industry to help develop the programs in a timely manner and to make sure that training is covering state-of-the-art technologies and techniques.

We are not currently prepared to double the number of fiber technicians – but we’re going to have to find a way to do it. There are some formal training programs for fiber technicians, mostly being done by trade schools or technical colleges that sponsor apprenticeship like the CFOT or CPCT certification process sponsored by the Fiber Optic Association. But the majority of fiber technicians today are trained on the job with new employees starting as hands-on journeymen.

I’ve written about this issue before. We’re facing a shortage of technicians for several reasons. First, the large telcos have been downsizing technician workforces for the last two decades, meaning they did not train a lot of new technicians. These big ISPs have historically been the primary drivers for training new technicians. Unfortunately, this also means that a lot of the technician workforce are baby boomers who are now retiring, causing additional shortages.

We must find a way to make this happen or the wireless and broadband industries will be forced to cut back on expansion plans. We’ve been building fiber and new small cell sites at a furious pace for the last few years and are likely to continue to do so as long as we have the technicians needed to construct the new networks and to maintain them after they are built. Fiber and wireless technicians are the kinds of solid middle-class jobs our economy needs and hopefully, we can kick training programs into high gear in a hurry.

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Regulation - What is it Good For? The Industry

Another Idea for Federal Broadband Funding

It’s obvious that we need better broadband in the country, and much of that broadband is in rural places that are going to require financial assistance to build. The new White House and Congress are finally talking about the need for an infrastructure package that will create jobs and that will build rural broadband along with fixing roads and bridges. However, deficit hawks worry that too much spending will increase the deficit to an unsupportable level.

There is an idea from our past that can build better broadband while not increasing the permanent deficit. As a nation, we solved a similar problem when we figured out a way to bring electricity to everybody in the country. The challenge of bringing broadband to everybody is amazingly similar to what happened with electrification.

Franklin D. Roosevelt campaigned on the issue during his 1932 presidential campaign, and after he won, he worked with Congress to create the Rural Electrification Administration (REA). Rather than the government directly funding electric infrastructure, the REA offered 30-year loans to electric cooperatives to electrify rural America. Citizens from all over the country came together and formed cooperatives, borrowed the federal money, and electric grids sprang to life all over rural America.

There is no reason this same idea can’t work for rural broadband. The challenge is nearly identical. The best long-term infrastructure solution for broadband is fiber. Fiber provides enough broadband capacity to meet the needs of homes today and will meet broadband needs decades from now. No other technology can scale to the needed bandwidth demands over the next century.

The basic funding method used for electrification still makes sense, as does the idea of doing this through cooperatives. Cooperatives owned by the customers are willing to take on the long-term debt needed to make this work. Cooperatives are largely non-profits since any profits generated by the business must be rolled back into the business. It makes far less sense for the government to subsidize the giant for-profits ISPs like AT&T, CenturyLink, or Frontier – those big companies care about the bottom line and are not willing to operate a business with slim margins. We’ve seen these companies in the past improve rural profitability by cutting back on staff and maintenance.  That’s not the kind of stewards we want operating rural broadband networks for the next hundred years.

There are a few differences between now and the 1930s that we have to recognize. There has been a lot of years of inflation since 1932 and it doesn’t look feasible in many cases to build broadband networks and repay the money with 30-year loans, even at low interest rates. A new program would need to consider longer loans like 40 years, and maybe even 50 years. There is no reason a coop wouldn’t accept longer loans if it means getting fiber broadband. It’s also likely that in the highest-cost places that there would have to be some grant funding to accompany the loans.

These loans could go almost immediately to existing telephone and electric cooperatives. In areas where there are no cooperatives, or where the existing cooperatives don’t want to tackle broadband, the government could help with the formation of new cooperatives, just like they did in the 1930s. I’ve been working in rural areas all over the country and I can’t think of a community that would not be excited about this idea.

One of the best features of this plan is that most of the money spent by the government is in the form of loans that will get repaid. That means that the expansion of broadband doesn’t have to be a big burden on the taxpayer.

There are some obstacles to overcome to make this work – but mostly it just requires the will of the White House and Congress to solve the rural digital divide. There will be lobbyists from all of the big ISPs moaning about how this unfairly competes with the private sector. That argument falls apart quickly when you visit a rural county and can’t find even one rural home that has broadband speeds of 10/1 Mbps. The big companies have completely failed rural America and their lobbyists must be ignored.

There will also be a lot of silly discussions about which rural places should be eligible for this money – and those discussions will be couched in terms of talking about the number of homes that have access to broadband speeds of 25/3 Mbps. These speed discussions are a red herring because urban residents have access to far faster broadband. In the 2020 broadband report to Congress, the FCC said that 82% of homes already have access to broadband speeds of 250/25 Mbps. Hopefully, policymakers will agree that rural broadband ought to be as good as urban broadband and that we can stop using speed thresholds – everybody in America deserve good broadband.

Funding cooperatives should not be the only government solution because the solution won’t work everywhere for everybody that needs better broadband. But I can’t think of any reason why the this shouldn’t be part of the solution.

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Current News

Trying to Understand the RDOF Grant Awards

I live in North Carolina, and in the last few days, I heard a few things about the RDOF grant awards that I found to be disturbing. First, a state politician is claiming that the RDOF awards are going to take care of the rural broadband problems in the state, so there is no longer any reason for the state to be looking at broadband solutions. I also heard from a few county broadband groups who are wondering if they still have a role to play in seeking better broadband.

I had not previously analyzed the North Carolina RDOF winners, so this set me off to gather the facts. The following is what I found about the tentative RDOF awards in North Carolina. I say tentative because the FCC still has to approve each recipient and award and the FCC just recently received the long forms that start the review process.

  • North Carolina has tentatively been awarded $166.6 million in grants, to be paid to grant winners over 10 years or $16.66 million per year.
  • The grants cover 155,137 households in North Carolina or roughly 350,000 people. In a state with 10.5 million people, the grants propose to bring improved broadband to 3.4% of the people in the state.
  • The RDOF grant works out to $1,074 per household.

Here are the RDOF winners in North Carolina:

  • Charter – $142.1 million
  • Starlink – $17.4 million
  • Windstream – $4.2 million
  • Wilkes Membership Cooperative – $1.3 million
  • Co-op Connections Consortium – $721,000
  • CenturyLink – $530,000
  • Mediacom – $304,000
  • Connecting Rural America – $33,600
  • Carolina West Wireless – $460.

Charter is the big winner, taking over 85% of the RDOF award in the state. Starlink got over 10% of the award in the state, and everybody else combined got a little less than 5%.

Recall that RDOF was only awarded in places where the FCC broadband maps say that broadband speeds are less than 25/3 Mbps. In the latest FCC broadband report to Congress, just released in January of this year, the FCC claimed that 456,000 people in rural North Carolina don’t have broadband – and the RDOF only covers one-third of those folks. But we also know that the FCC mapping data is full of problems. The State of Georgia undertook an analysis of the FCC mapping and determined that the number of homes in Georgia without broadband is twice what is claimed by the FCC. It’s hard to know the actual number of people in North Carolina without 25/3 Mbps broadband, but it has to be a lot more than 456,000.

The most troublesome aspect of the RDOF grants in the state is the average award of $1,074 per household. This might be adequate for Starlink if they provide a free receiver for customers (not known if they will do that), but this doesn’t come close to building the technology promised by Charter. Charter has promised to build gigabit infrastructure and that means building either a traditional HFC (hybrid fiber/coaxial) network or fiber. The RDOF grant is bringing broadband to some of the most rural places in the state. As a point of comparison, I’ve analyzed several rural counties in Minnesota recently that have perhaps the lowest rural construction costs imaginable – and the all-in costs in those counties were at least $6,600 per passing. It’s not hard to guess that the costs in rugged Appalachia could easily be as much as $15,000 per passing. Charter has pledged an additional $3.8 billion in equity to match the RDOF funds, meaning $5 billion in total budget. Nationwide, Charter won the grants to cover 1.06 million homes, meaning they have set aside funds of about $4,727 per passing. I have trouble envisioning that Charter has enough money to bring gigabit broadband with that budget.

There are other troubling aspects of the RDOF grants. There have been technical concerns raised recently about the ability of Starlink to meet both the build-out deadlines and the speeds promised for RDOF. In North Carolina, a lot of the Starlink funding is going to Appalachia, and there is a concern about the ability of homes in the mountains and woods to get the needed view of the horizon to see satellites.

Perhaps the biggest downside to the RDOF grants is that grant award winners have six years to build the promised solutions. That’s a long time to wait for households that are hurting without broadband today. And it’s a really long time to wait if some of the RDOF homes never get the promised broadband.

Unfortunately, the facts in a lot of states probably look similar to North Carolina. This has prompted widespread warnings from members of Congress and from various telecom associations that the RDOF awards are troubling. But even if the award winners can somehow reach every pledged home for the grant money as awarded, we know that the RDOF grants will not alone solve the rural broadband problems in North Carolina. Local broadband committees need to keep pressing ahead to find broadband solutions. Politicians can’t use the partial solution brought by RDOF as cover for not supporting broadband solutions.

Categories
Regulation - What is it Good For?

More Delays on CAF II

In the continuing saga of the FCC’s CAF II program, Frontier and CenturyLink recently notified the FCC that the companies did not fully meet upgrade obligations. The CAF II program flowed $11.2 billion to the big telcos over six years between 2015 and 2020. Frontier, CenturyLink, and AT&T were the three biggest recipients of the funding – but some also went to other big telcos like Fairpoint, Consolidated, Verizon, and Windstream. For agreeing to accept the funding, the telcos agreed to increase rural broadband speeds to 10/1 Mbps – which even in 2015 was slower than the FCC’s definition of broadband at 25/3 Mbps.

CenturyLink was the largest recipient of CAF II funding, accepting over $3 billion to improve broadband speeds to more than 1.1 million rural homes. CenturyLink just told the FCC that it met or exceeded its requirements in 10 states but failed to meet obligations in 23 states. Frontier accepted $1.7 billion to upgrade broadband to over 659,000 homes. Frontier just told the FCC that it met its obligations in only 8 states but didn’t meet the obligations in 17 other states. As a reminder, the companies had six years to make the needed upgrades.

I think that the real story on the street is far different than what these companies are telling the FCC. We have been working with rural counties all over the country, and part of that effort includes conducting speed tests. We have never yet found a rural DSL customer of CenturyLink, Frontier, or Windstream that had a speed of 10/1 Mbps or faster. The more typical download speed of rural DSL is just a few Mbps, with some homes seeing speeds under 1 Mbps. This is not to say there these telcos didn’t upgrade any DSL households – but we’ve never seen one. Our findings are bolstered by customers that have taken speed tests collected by M-Lab which show that a rural DSL customer achieving 10/1 Mbps is a rarity.

I can’t just point out Frontier and CenturyLink. We’ve worked in counties where the telco is Windstream and couldn’t find 10/1 Mbps rural DSL. AT&T claims that it has met its rural obligations through the use of rural cellular broadband. Customers have been telling us that it’s exceedingly hard to buy this product, and in many cases, it doesn’t meet the FCC’s speed requirements. That’s not hard to believe since many of the CAF II areas also have poor cellular coverage.

To add insult to injury, the FCC is flowing a seventh year of CAF II funding this year, with no specific obligations for the telcos to use the money to improve anybody’s broadband. That’s an additional $1.5 billion to the telcos in 2021, including $505 million to CenturyLink and $283 million to Frontier. I’m sure that rural residents are thrilled to hear that AT&T is getting an additional $49.8 million this year in Mississippi, CenturyLink is getting an additional $74.9 million in Missouri, and Frontier is getting an additional $38.1 million in West Virginia.

As if this story could get any worse, the FCC’s plans to police this program is largely a joke. The FCC will be conducting speed tests on CAF II areas to see if customers are achieving the desired speeds. Unbelievably, the telcos get a say on who gets tested. – and will choose the handful of customers that might meet the CAF II requirements. I call the tests a joke because a telco is going to pass the CAF II speed requirements if 70% of customers achieve 70% of the required speeds. That test means that the FCC was never serious about the telcos needing to upgrade to 10/1 Mbps. Even if the tests were given to all CAF II homes, a telco would still pass the test if it had made no upgrades to 30% of the CAF II households and then achieved download speeds of 7 Mbps for the rest. I’m positive that the telcos can’t come close to meeting even this watered-down test.

Rather than flowing extra money to the carriers in 2021, the FCC should be asking for a return of much of the original funding. The FCC doesn’t need to go through the fiction of conducting speed tests on a tiny fraction of the CAF II household. I’m positive that rural county administrators would love to tell their broadband story to the FCC. If the agency asked local officials to do speed tests in the CAF II areas, the agency could quickly get the real picture of the CAF II upgrades, instead of the fictions being told by the telcos.

The FCC is contemplating something along these lines. The agency is finally pursuing revamping the FCC broadband mapping, and one aspect of that revised program is to ask for citizen feedback on actual broadband speeds. If the FCC does that properly, then it will quickly see that much of what the telcos have reported as CAF II upgrades has been a sham. Until then, the FCC really needs to put 2021 CAF II payments on hold. And the agency needs to give serious thought to reclaiming the original funding that padded telco bottom lines rather than being used to upgrade rural broadband.

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Current News

How Good is Low-Income Broadband?

The two biggest cable companies, Comcast and Charter, have taken lots of public bows this year talking about how they are making sure that homes with students have affordable broadband during the pandemic.

Comcast is serving low-income students with its Internet Essentials product. This product is available to homes that are eligible for the National School Lunch Program, Housing Assistance, Medicaid, SNAP, and SSI. The low-income program got its genesis in 2011 as a requirement for the Comcast acquisition of NBC Universal. The company reluctantly offered the product at first, but after growing to 2.6 million households by 2013, the company decided to keep this as a product.

At the start of the pandemic, Internet Essentials offered speeds of 15 Mbps download and 2 Mbps upload. In March 2020 Comcast increased the speeds to 25/3 Mbps. The company worked out deals with some school systems to provide a few months of the product for free. Comcast recently announced that it will increase the speed of the product to 50/5 Mbps on March 1. Comcast recently reported that it has over 8 million households using the product.

Charter has a similar product called Spectrum Internet Assist that delivers 30/3 Mbps for $14.99 with a WiFi router for $5 per month. During the pandemic, Charter has offered qualifying new subscribers two months of free service for any internet product up to 100 Mbps.

A recent article in BuzzFeed documents how students have been pushing back against Comcast, which may have been part of the impetus to increase speeds for Internet Essentials. The article tells of a family with only two students that were unable to both work on the Comcast connection at the same time. The Internet Essentials product is good enough for one student, but not two.

Comcast has been pushing back on criticism of Internet Essentials all year saying that the 25/3 Mbps product is adequate because it meets the FCC’s definition of broadband. But the fact that the company will be increasing the speed to 50/5 Mbps shows that the company recognizes that 25/3 Mbps is not adequate broadband for many households.

This raises the bigger question of how best to provide broadband to low-income homes. While the two programs from the cable companies are inexpensive, they also provide inferior broadband. It feels like the companies are punishing households for not having enough money for a full subscription.

For example, consider the low-income broadband product at EPB in Chattanooga, the municipal broadband provider that delivers over fiber. EPB offers a low-income product of 100/100 Mbps for $26.99, less than half of normal broadband priced at $57.99. This is the identical product delivered to customers paying the full price. The City would like to offer the product for a lower price, but Tennessee law prohibits municipal broadband systems from offering a subsidized product.

The real problem that families are having with the cable company broadband products is the slow upload speeds. Limiting upload speeds to 3, 4, or 5 Mbps is inadequate for students trying to function from home or adults trying to work from home.

During this last year of the pandemic, we have done surveys in a number of cities where households are struggling with the normal cable upload products that have upload speeds between 10 Mbps and 20 Mbps. In the four cities we’ve most recently surveyed, about one-third of households say that their cable broadband product is not adequate for working or schooling from home.

The cable companies face a huge dilemma. They know the upload speeds on their network are inadequate. They also know that fixing the problem is going to incredibly expensive. At a minimum, a cable company would have to undertake what is knows as a mid-split to bring the faster upload speeds to something faster like 50 Mbps. The mid-split option has been available under the DOCSIS 3.1 standard, but few cable companies upgraded the upload portions of networks. The even more expensive upgrade to DOCSIS 4.0 will be available in a few years to bring symmetrical bandwidth.

Since cable networks are already overloaded, it’s clear that the cable companies don’t want to provide full bandwidth to customers that aren’t paying full price, so they are treating low-income subscribers as second-class citizens. Perhaps they should look at the EPB example and charge more. Why not also offer a $30 product that has better upload speeds?

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Current News

Let’s Bring Telecom Manufacturing Back to the US

President Biden recently signed an executive order that will require that the federal government buys more goods produced in the United States. This was done to promote American jobs and to keep profits at home. It’s a great idea, but it suffers from one big flaw – we don’t manufacture a lot of things in the US anymore. Statistics are hard to pin down, but something like 40,000 US factories have shut down over the last decade.

We’ve tried to implement this rule with telecom before. The American Recovery and Reinvestment Act of 2009 funded billions in fiber projects. One requirement of those grants was that newly built networks had to buy American whenever possible. I worked with clients who tried to find American electronics to no avail – they largely did not exist. Even the electronics made by US manufacturers were all built overseas.

It’s time we have a serious discussion about bringing telecom manufacturing back to the US. We learned during the pandemic that the US is totally dependent on other countries for basic goods – countries that in many cases are not our allies.

And a lot has changed since we’ve shipped electronics manufacturing overseas. Consider if we wanted to start manufacturing fiber ONTs in the US. This is the device that terminates fiber to a home or business. US ISPs are likely to buy a hundred million such devices over the next decade, not counting the demand in nearby Canada and Mexico. That is more than enough demand to justify building a US factory to make these devices. Even more basic than ONTs is fiber lasers – is there any reason we can’t build fiber lasers in the US?

The most important change that can reinvigorate US manufacturing is robotized factories. A modern factory can compete in cost and efficiency with the lower labor costs in places like Wuhan Province, China, where a lot of the ONTs are manufactured today. Where an older factory making ONTs in the past might have had thousands of jobs, a robotized factory might have only have 500 jobs – but good-paying technical jobs.

We know this idea can work because we see it in action. Germany decided a long time ago that it needed to keep manufacturing jobs at home, while also paying good wages. Germany passed legislation that encouraged manufacturing at home. This meant tax breaks for factories. It also meant big penalties for companies that used foreign goods when domestic ones were available.

It may turn out that we can’t make an ONT for $100. But our economy is is far better off if we can make one for $110 or $120 and if we buy all of the ONTs from a supply chain wholly inside the US. However, I’m betting that our smart engineers can design an efficient factory that can meet and beat the cost of overseas ONTs.

What is needed to make this happen is the will to do so. We need changes in laws that heavily favor using US manufacturing and that reward owners for building modern robotized factories. There are tens of thousands of empty factories around the country and communities that will welcome new manufacturers with open arms.

It’s one thing to issue a call to buy American. I can remember a similar government rule several times during my career. What’s needed instead is a government call to move US manufacturing back to our shores. We have the smart technical people who can make this happen and we have a lot of workers eager to return to good-paying factory jobs. I hope that ‘Buy American’ finally becomes more than a feel-good slogan.

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The Industry

States Get Serious About Broadband Funding

One of the consequences of the pandemic is that states are getting a lot more serious about funding broadband solutions, as evidenced by recently announced proposals to increase state funding for broadband in 2021. I’ve seen proposals from states of more than $2 billion in new funding. These are newly proposed funding amounts that don’t include money already allocated for existing state broadband grant programs.

Few of these proposals are a done deal – most have been suggested by governors or legislators and still must go through the legislative process. But even at the proposal level, this is a far greater amount of state broadband funding than anything we’ve seen in the past and reflects the serious nature of the rural broadband divide. Politicians at all levels are being assailed by people who have struggled through the pandemic due to a lack of broadband. Every governor recognizes the huge economic downside from a failed education system or from businesses crippled when employees can’t work from home. I see these state proposals as a cry for help to solve broadband gaps.

Here is the list I’ve assembled. I’m sure there are other states I’ve missed or states that have not yet announced plans for new 2021 broadband funding. If anybody knows of other proposals, please leave in the comments to this blog.

  • Iowa – $450 million over 3 years
  • Ohio – $250 million
  • Tennessee – $200 million
  • Wisconsin – $200 million
  • West Virginia – $150 million
  • Oregon – $118 million
  • Indiana – $100 million
  • South Dakota – $100 million over 5 years
  • Kentucky – $50 million
  • Minnesota – $50 million
  • Utah – $50 million
  • Washington – $45 million
  • Arizona – $43.1 million
  • Nebraska – $40 million
  • Idaho – $35 million
  • Arkansas – $30 million
  • North Carolina – $30 million
  • South Carolina – $30 million
  • Georgia – $20 million
  • Vermont – $20 million
  • Virginia – 15 million
  • New Mexico – $10 million
  • Missouri – $5 million
  • Maine – $1.8 million

One of the best things about this list is that money is being allocated to broadband in both red and blue states. Broadband should not be a partisan issue, although there are only a few state legislatures where it is. In most states, practically every rural politician is desperate to solve the rural digital divide, and broadband funding bills get bipartisan support.

This funding augments any federal grants. That includes the $9.2 billion that was recently announced at the end of the RDOF grants, $1 billion recently allocated for Tribal areas, and $300 million provided by the NTIA for grants.

While $2 billion might sound like a huge amount of money, it is just a start to permanently solve the rural broadband gap. This article from the Alabama Daily News describes a statewide study done by CTC Technology and Energy that estimates that it will cost between $4 billion and $6 billion to build fiber to all underserved areas of Alabama. I’ve also seen estimates nationwide that vary between $60 billion and $100 billion.

States are clearly saying that they are not going to sit around and wait for federal funding to help solve broadband gaps. Hopefully, most of these proposals make it through the legislative process – and perhaps when states see where they fall on the list above, some of them will step up the amount of funding even more.

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Regulation - What is it Good For?

FCC Expands Siting Rules for Wireless Broadband

On January 8, the FCC expanded the over-the-air reception device rules (OTARD) to allow for the placement of wireless hubs and relays for the delivery of broadband or voice service. This ruling will make it easier for fixed wireless companies and 5G providers to distribute signals within a neighborhood.

This ruling amends and extends the original OTARD rules. Those rules allow apartment tenants to install antennas in any space they control like a patio or balcony. They allow somebody renting a house to install an antenna anywhere on the home or property they rent, without having to notify the property owner. These rules were first passed many years ago to define tenant rights that are separate from landlord rights. Tenants can use areas that are included in the rental space to receive a wireless signal. Landlords still have jurisdiction over common spaces like rooftops and common real estate. Landlords can allow the use of common spaces but are not required to do so.

The rules also stop others like homeowner associations or local governments from placing unreasonable restrictions on the placement of antennas. For example, a homeowner association might suggest that antennas must be placed on the backside of a home away from the street. But if there is no place in the rear that can receive the wireless signal, the OTARD rules allow placement in the front of the building.

In the past, these rules applied to tenants and renters being allowed to place antennas or small dishes so that they can receive service. The most recent ruling gives new rights to WISPs and wireless companies. Providers can now site a relay point along with a customer antenna. For example, a WISP may have a customer in one apartment and can use that receiver to further beam the signal to a second customer.

This kind of use vastly increases the reach of a WISP. Today, there is no broadband option for a premise that doesn’t have line-of-sight to the WISP transmitting antenna. The new ruling gives the wireless provider the ability to use an existing customer location as a relay point to reach other customers.

This has some interesting applications due to newer technologies. For example, there are now receivers that can be placed inside windows that could be reached from a nearby transmitter. Such devices can’t receive the signal directly from the distant tower but can connect to a nearby neighbor.

This is also a useful ruling for fiber-to-the-curb providers like Verizon which can use a receiver on a customer’s home to retransmit broadband to a second customer that is not within line-of-sight from the pole-mounted transmitter.

It’s likely that the new ruling will quickly get tested in court. For example, a tenant might have broadband service directly from a WISP with a legally located antenna. But when that tenant leaves, the landlord or the next tenant might want to remove the antenna. In the past, that’s been allowed if there is no longer service being provided to the original customer.

But this gets complicated if the unit in question is also a relay unit being used to serve additional renters. The new rules imply that the receiver could not be removed because that would disconnect working customers, even though they are not located at the property with the antenna. This seems to grant property rights to wireless companies in that they’ll be able to force property owners to keep a relay antenna that is not providing any direct benefit to the unit with the antenna. It’s not hard to anticipate property owners not liking these rules. It’s also not hard to envision property owners taking down an antenna without knowing it is being used to serve other customers.

Smart WISPs will talk to property owners when they establish these kinds of connections because nobody wants to get embroiled in this kind of dispute. But ultimately, the OTARD rules provide the ability of renters to get wireless broadband – and now seemingly gives that right to secondary locations that are reached by a locally relayed signal.