Technology Shorts April 2024

Scientists continue finding ways to make computers faster and better. Today’s blog talks about three interesting developments in computing technology.

Universal Computer Memory. The holy grail of computing memory has been universal computer memory that can replace the current need for both short-term and long-term memory in the computing process. An article published in Nature Communications describes a new material that looks like it will enable universal computer memory.

Computers currently use RAM for short-term memory. RAM chips are superfast but need a lot of physical space and use a lot of power. A big downside to RAM is that everything is lost if a computer loses power. Long-term memory is achieved using flash memory, which is much slower than RAM but can retain data without power. Universal computer memory would capture the best of both worlds by being fast, energy-efficient, and retaining data without power.

Scientists at Stanford and other universities are using a new material called GST467 that contains germanium, antimony, and terbium. Scientist are configuring GST467 in a stacked-layer structure known as a superlattice. They believe this will create chips that are faster, less expensive to manufacture, and that will use less power. The team tested hundreds of different chip sizes and configurations using the new material. They found that a GST467 memory device achieved fast speeds while consuming very little power. They also believe the material can retain data for more than ten years at temperatures above 248 degrees Fahrenheit. These are all huge performance improvements over current chips.

First Graphene Semiconductor.

Graphene is made from a single layer of carbon atoms bound in a tight hexagonal lattice. It seems like a superior material to use for electronics since it’s a better conductor than silicon. Scientists have always known that graphene also has an unusual property where electrons passing through it can be structured in a wave-like pattern that is perfect for quantum computing.

Researchers have never been able to overcome the issue of creating a band gap, which is the ability to easily move electrons where needed inside a graphene chip. A band gap is what enables components like a transistor to turn on and turn off.

A reported in Nature, scientists at the Georgia Institute of Technology, and from China, have created the first working graphene-based semiconductor. The chip is made from epitaxial graphene, which is a specific crystalline form of graphene bonded to silicon carbide. They’ve found that transistors in this structure can operate at terahertz frequencies, which is ten times faster than today’s silicon-based chips. The best news is that it looks like this new structure could be integrated into the current processes for chip manufacturing.

Protonic Artificial Synapse. Engineers at MIT have developed an artificial synapse that mimics the way the brain works, but that can move data a million times faster than the human brain. The human brain is by far the most powerful data processor due to the unique structure of neutrons and synapses, and scientists and engineers have been trying for years to duplicate the brain using electronic neural networks.

The MIT team has mimicked neural networks by creating a chip that works more like the brain. It uses an analog system that shuttles data using protons instead of electrons. The chip uses a solid electrolyte made from phosphosilicate glass (PSG) that allows the creation of a programmable resistor that will work at room temperatures.

When a strong electric field of up to 10 volts is applied to the device, the protons move very quickly, which is what allows the chip to be up to a million times faster than a brain. They’ve found that the chip seems to have a long-life and doesn’t break down from the increased power. The big challenge is to find a way to mass-produce the chips then arrange them into the most effective array.

The Battle for Network Monitoring

An interesting battle is underway to capture the market for monitoring devices. The latest entry into the market is 5G RedCap. This is a technology that is currently under development in chipsets and ought to hit the market in 2025 and 2026.

RedCap is the latest attempt by cellular carriers to monetize 5G. RedCap was defined in the 5G specification 3GPP Release 17. The technology allows for 5G devices that are less complex, less costly, and more power efficient than conventional 5G devices like smartphones. RedCap will compete for monitoring devices like sensors that send small packets of information continuously and require a long battery life. This will include devices like industrial wireless sensors, health wearables, and surveillance devices. Traditional 5G is not good for such devices because 5G chips add too much cost and use too much power.

5G RedCap devices will use fewer antennas and will support less bandwidth than a typical 5G connection. Fewer antennas, lower bandwidths, and different modes of operation will help to reduce power consumption. RedCap devices can transmit data without having to connect to a network – the RedCap device can transmit its bits and hope a network is receiving it.

Cellular carriers will be working on ways to monetize the new capability – perhaps by selling monthly subscriptions for all of the devices at a given site.

This contrasts with the other technologies used to monitor devices. For devices inside or near buildings, the monitoring technology of choice is free wireless connectivity using WiFi or Bluetooth. Devices can be monitored with these technologies without paying an additional fee. However, WiFi devices can still require more power than is being envisioned by RedCap. Most WiFi monitoring devices have to periodically be recharged, which is not always practical for a small device like a sensor that alerts the network if somebody walks through a hallway.

WiFi is not a good solution for monitoring outdoor devices that are not located very close to a WiFi network. WiFi also isn’t a good solution for something like a portable health wearable unless the user always carries a cellphone – an impractical requirement.

The other interesting player in the market is Amazon. The company launched its Sidewalk network in 2021. Amazon has created a local network that is established between Amazon devices in the home and neighborhood. The network uses a combination of Bluetooth and 900 MHz LoRa signals. This network can communicate with Amazon from devices inside a home, and the LoRa spectrum can pick up devices outside and in neighboring homes. Amazon says that it already covers over 90% of homes and wants to move that to over 95%.

A fourth technology in use today is using satellites to monitor remote devices. However, the electronics for such devices are neither low-cost nor low-power.

In looking at the various technologies, it’s clear that each technology will find a niche. RedCap seems best aimed at the mobility market. The technology will make it easier to sell wearable technology and anything else that is not stationary. RedCap might always fit into industrial situations where an operator is attracted to large numbers of low-power and low-cost sensors. But RedCap will come with a price, so when you buy a wearable device, be prepared for a monthly 5G fee.

Rural Broadband Is Expensive Today

One of the trends that is a concern for ISPs is plans by State Broadband Offices to force BEAD winners to charge low rates for broadband. I understand some of the rationale behind these attempts.

One argument for lowering rates is that the government is paying a big portion of the cost of building the broadband networks, and it ought to be able to extract concessions from the ISPs for taking the grant funding. That sounds like a reasonable argument until you take a harder look at the places where BEAD funding is going to be used. In most places, BEAD will be used for the most sparsely populated places, which in many instances also have the toughest topography and construction challenges.

The other argument I’ve often heard is that ISPs can provide lower rates because ISPs make a lot of money and can afford it. This might be true for the large national ISPs that can average the revenues from BEAD areas across larger markets with higher margins. But big ISPs don’t want to take on markets that lose money, and they might pass on accepting BEAD in states that insist they charge low rates. Any assumption that smaller ISPs can afford to lose money on a property is badly misplaced – this is like expecting your favorite restaurant to provide low menu prices for a significant percentage of their customers. Such a restaurant won’t be in business for long.

BEAD grants are being offered to ISPs just to get them to consider building networks in places they would otherwise never consider. In many cases, the business case for coming to a BEAD area can barely reach profitability even with a large grant. This is not true of all BEAD places, and there are still some areas covered by BEAD with decent housing density. However, most BEAD areas are high cost to build and high cost to service and maintain after construction. I fully expect a bunch of ISPs who are wading into BEAD to wonder in five years why they ever went through the effort.

What the ISPs are providing as the quid pro quo for the grant funding is building a fast network that can bring a remote rural area into parity with urban broadband. There will be no excess margins in most BEAD business plans that can somehow cover low-cost broadband prices.

The other interesting point that most people are missing is that, for the most part, rural broadband rates are higher today than urban rates. Most areas that get a BEAD network will see lower rates along with a new faster broadband network. How can I say that? Consider the broadband alternatives that exist in rural areas that are BEAD-eligible.

  • Most people using Starlink are now paying $120 per month after shelling out for the receiver.
  • High-orbit satellite broadband is expensive. Consider Viasat. The base plans range from buying 40 gigabytes for $69.99 up to buying 300 gigabytes for $299.99. Extra usage after the data caps can be purchased in small bundles ranging from $9.99 for 5 extra gigabytes to $99.99 for 80 extra gigabytes.
  • Cellular hotspots can be incredibly expensive. The base fee for hotspots sounds reasonable, but the data caps are tiny. Consider AT&T. It sells a hotspot with either a 15-gigabyte data caps for $35 or a 100-gigabyte data cap for $55. The killer is that the overage fee for exceeding those data caps is $10 per gigabyte. Hotspots for T-Mobile, Verizon, and UScellular are similar. I still hear horror stories of families with school children who pay hundreds per month for a hotspot. The only way not to spend money with a hotpot is to greatly curtail broadband usage.
  • While not universally true, many rural fixed wireless providers have high rates. It’s not hard to find rates over $100.
  • The only ‘affordable’ rural broadband alternative is DSL. But it’s getting exceedingly difficult to find or sign up as a new DSL customer in most places, and in many cases the speeds are too slow to be usable. There are exceptions, of course, but most rural folks I’ve talked to tell me that DSL is no longer an option.

Many of the companies building BEAD networks will have rates significantly lower than the current rural rates cited above. BEAD networks will not have data caps, which eliminates the worry spending more than the basic rate. Most rural folks offered BEAD are going to be relieved if asked to pay a decent fixed rate for a connection that is far faster than what they had before. A huge percentage of rural households will see a significant monthly cost decrease just by paying the normal prices of the companies that build BEAD networks.

In saying this, I’m not ignoring the fact that there are households that can’t afford the normal prices charged by ISPs – but those folks also can’t afford the broadband prices available in rural areas today. Rural ISPs can’t shouldered with providing the low rates so that folks can afford broadband. ISPs can’t be forced to somehow fund the end of the ACP – particularly in rural areas. Anybody who has ever operated any business knows that operating with too-low rates is a road to eventual financial disaster.

NTIA Releases Digital Equity Funding

The NTIA recently announced $811 million in funding for digital equity that is available for States and Territories. This round of funding is part of the $1.44 billion Digital Equity Capacity Grant program of money that will go to States to administer digital equity grant programs. $60 million of this fund was allocated to States in 2022 for planning purposes. The NTIA has taken so long to deploy these funds that these disbursements represent the grant funding allocated for the law for years 2022 through 2024. There will be a few more future years of grant funding.

The total funding for digital equity in the IIJA (Infrastructure, Investment, and Jobs Act) was $2.75 billion. It’s expected that the NTIA will launch the $1.25 billion Digital Equity Competitive Grant Program this summer that will make grants directly available to entities like political subdivisions of states, non-profits, schools, libraries, and others.

States have two months to ask for their share of the funding. In this round of funding, $760 million is available to 50 states, Washington, D.C. and Puerto Rico, $45 million for Native entities, and $8.4 million is allocated for territories. The NTIA established a tentative award amount for each government entity. As expected, the largest amounts of funding goes to the states with the largest populations – California ($70 million), Texas ($55 million), Florida ($41 million), and New York ($37 million). Even states with small populations get a significant amount of funding, like North Dakota ($4.5 million), South Dakota ($5.0 million), and Wyoming ($5.3 million).

The States will use this money to make digital equity grants in each state. These grants are not intended for ISPs, but for non-profits, local governments, and related entities. Expect to hear about grant programs in every state as the summer progresses.

These grants are part of the larger effort of the IIJA to tackle all aspects of the digital divide. BEAD grants are intended to address the deployment and availability of broadband. The soon to be defunct ACP plan was intended to address affordability. It’s unfortunate that the NTIA has finally gotten around to spending money for the digital equity effort just as the affordability component is dying.

These grants are intended to tackle digital equity, with the stated purpose for identifying and solving barriers for people to use digital resources. It seems likely that most of the grants under this program will be used to get broadband devices into people’s hands and teach them how to use broadband. I expect to see a wide range of creative proposals made to States under this wide umbrella of uses.

Most States have been telling the public about these upcoming grants for years, and many of the entities that can use the funding have gotten prepared to file digital equity grants. But I have to imagine that States have varied in the effectiveness of this communication and there may still be non-profits, and others that haven’t heard of these grants.

A lot of communities have taken the approach of trying to consolidate all of the various stakeholders in a community into one grant application – with the reasoning that this might be the best way to be sure a community gets its fair share of funding. That might mean pulling in schools, colleges, libraries, and others to develop digital training classes and curriculums. It might mean pulling in the folks who are equipped to refurbish computers or distribute laptops to the public. Any community that has not considered this consolidated approach still has a little time, although it seems likely that we’re only months away from States announcing grant application cycles.

Can States Pick Up the End of ACP?

FCC Chairwoman Jessica Rosenworcel made it clear recently that the FCC is not willing to tackle funding for the ACP plan that is expiring in May. She estimated that the FCC would have to add something like $9 to every broadband bill in the country to fund the ACP plan.

But there is another alternative. States could pick up the ACP funding just for their state. States will have the authority to do this after the FCC approves the reinstitution of Title II authority this month. That authority would give the FCC the authority to create the fee needed to fund the ACP through the FCC Universal Service Fund.

We’ve always had a regulatory structure that allows States to tackle any telecom issue that the FCC decides not to pursue. Once Title II regulation is in place, and assuming that the FCC formally passes on funding ACP, then each state would be free to do so.

It’s obvious that the big ISPs are worried about this. A joint letter from Comcast, Charter, and Cox was recently sent to the FCC asking it to preempt States from establishing a State version of ACP.

If I was a betting man, I bet that the FCC will not preempt the States on this issue. While the FCC is not ready to take on the flak that would come with creating a nationwide ‘tax’ on every broadband household and business, I’m guessing that they will allow States to do so.

Many States already have a mechanism that easily could handle this. A lot of States have a State universal service fund that mimics the structure of the FCC’s USF. The States have used these funds in the past to support rural telcos or to fund other telecom-related issues. Many States already assess a fee on telephone customers to fund the State USF. It’s not much of a stretch for a State to extend this to cover a broadband discount.

States that decide to create a low-income subsidy plan that like the ACP will face the same kind of issues highlighted by Chairwoman Rosenworcel. A State fee could easily be anything from a few dollars per month to over $10 per month. People are annoyed at any taxes and fees added to products they must buy, and a large fee is going to draw a lot of public attention and ire.

There are ways that the States could reduce the size of an ACP replacement. An easy change would be to not cover cellphones, just home broadband connections. States are also likely to fiddle with the qualifications. The ACP program had a wide range of ways to qualify, with the most important one being that ACP is eligible to homes making as much as twice the level of poverty for a given area. States might lower that threshold to lower the size of the fund and the size of any monthly fee.

It’s always interesting to watch big ISPs fight hard to keep fees from being assessed on broadband. In this particular case, a State USF assessment wouldn’t likely cost an ISP anything since they would pass the fee on to customers. But big ISPs are fighting hard to maintain the current environment where broadband can’t be taxed. While payments to a state or federal USF fund are technically fees and not taxes, they feel like taxes to the folks who pay them. The big ISPs have been successful at keeping broadband from being taxed for the last 25 years, and they don’t want to open up the floodgate where State and local governments feel they can tax broadband revenues for ACP since that would raise the issue of assessing fees for a wide variety of other purposes.

Of course, this discussion could end in a hurry if Congress steps up and funds some version of ACP. That’s not something I’m willing to bet on.

Cord Cutting Continues in 2023

Leichtman Research Group recently released the cable customer counts for the largest providers of traditional cable service at the end of 2023. LRG compiles most of these numbers from the statistics provided to stockholders, except for Cox and Mediacom – they now combine an estimate for both companies. Leichtman says this group of companies represents 96% of all traditional U.S. cable customers.

I suspect there are regular blog readers who wonder why I post these statistics every quarter. There are several reasons.

  • I find it fascinating to watch the slow train wreck of the implosion of the cable TV industry. Recall that the big cable companies like Comcast and Charter got so large through selling only cable TV and no other products. Technology let them compete and then beat telcos for broadband customers, but they already had a huge number of customers in 2000 when broadband competition kicked off in earnest.
  • I’m fascinated to see that there are still over 55 million household buying cable TV from the largest companies. A lot of folks have completely written off cable TV as irrelevant, and a thing of the past, but 42% of households are still buying a traditional cable TV package. Roughly 30 million homes have cut the cord since 2018, but there are still 55 million more homes that might someday migrate all of their video to broadband networks.

The traditional cable providers continue to lose customers at a torrid pace, losing 1.7 million customers in the third quarter. Overall, traditional cable providers lost over 18,700 customers every day during the quarter. The overall penetration of traditional cable TV is now down to 42% of all households, down from 73% at the end of 2017.In the fourth quarter, Comcast dropped from being the large cable provider and fell below Charter. Losses were big across the board, and only Charter, Verizon, and Breezeline lost less than 10% of the cable customer base for the year. The traditional cable providers lost over 6.9 million cable customers for the year – with only a fourth of those customers choosing an online cable substitute.

In the fourth quarter, online cable substitutes like YouTube and Hulu Live picked up 1,476,000 customers, almost all by YouTube. For the year, these providers added almost 1.9 million customers.

Can the FCC Fund the ACP?

A lot of folks have been pleading with the FCC to pick up the tab to continue the the Affordable Connectivity Program (ACP). Folks are assuming that the FCC has the ability to take on the ACP program inside the Universal Service Fund. To make that work, the FCC would have to apply a monthly assessment against all broadband users – something the FCC should have the authority to do if it votes to reinstate Title II authority over broadband at its April meeting.

What might it look like for the FCC to absorb the dying ACP program? FCC Chairwoman Jessica Rosenworcel told Congress that rolling the ACP into the USF could add $9.00 to monthly broadband and telephone bills. She also cited an internal FCC report that found that broadband bills could increase between $5.28 and $17.96 per month. I decided to kick the tires on the FCC’s estimates.

Taking over the Existing ACP. The existing ACP has 23.3 million recipients. That includes 13 million cellular customers, and the rest using landline or wireless broadband. It’s not easy to pin down the number of U.S. broadband customers that a fee might be assessed to. For example, there are numerous wholesale arrangements that would have to be defined – like assessing the fee on a landlord who includes broadband in the rent. Using a variety of sources, I assumed there about 121 million total broadband customers that could be assessed a fee to support ACP.

Funding the current ACP with a monthly fee on all broadband users equates to a monthly fee of $5.78. However, the monthly ACP fund disbursements grew 28% over the last year, so an initial fee would have to be set higher to prepare for growth over the next year. That means the starting USF fee might have to be something like $7.50 per month, and there would have to be additional future increases to the fee until the ACP fund reached equilibrium. It’s not hard to envision the broadband fee growing significantly beyond $10 per month in a few years.

This also raises the uncomfortable question about giving low-income households a $30 monthly discount and then charging the same folks to fund the program. If low-income households are excused from the USF fee, then the fee to everybody else would be increased by another 20%.

Exclude Cellular from ACP. There is a lot of controversy about giving the ACP discount to cellular customers. Almost all of the cellular companies involved in the program are cellular resellers, and most of the suspected ACP fraud involves cellular ACP claims.

If ACP is limited to landline (and fixed wireless) customers, the broadband fee would be a lot smaller. With the current number of ACP enrollees, the FCC broadband fee would be roughly $2.54 per month. However, it seems likely that a lot of ACP recipients receiving the discount on cellphones would convert that to a home broadband connection, which would quickly boost the fee.

The most common qualification for ACP is participation in the SNAP program that provides food subsidies for low-income households. There are currently 21.6 million households that get SNAP benefits, and if all of them applied for the ACP discount, the monthly fee to fund the USF would equate to  $5.36. The current economy has historically low unemployment rates, and a future dip in the economy could quickly add to households eligible for SNAP and ACP.

Assessing a Fee on Broadband Isn’t Easy. It’s more challenging than you might think to assess a fee on every broadband customers. A fee on single family homes and standalone businesses is fairly straightforward. But there are a lot of complicated broadband billing arrangements. Landlords for both residents and businesses often build broadband into the rent. Landlords might drop broadband rather than pay a fee for every tenant. There are many arrangements providing free broadband to public housing. There are many varieties of wholesale broadband relationships that would have to be figured out.

Impact of Raising Rates. It’s not hard to imagining the furor that would ensue if people drop their broadband connection as unaffordable because of the extra fee. One of Chairman Rosenworcel’s fears is that funding broadband this way would push a lot of broadband rates to an unaffordable level.

Conclusion. I think Chairwoman Rosenworcel is in the right range with her estimate if you trend the current ACP recipients to grow for a few more years. However, the FCC has alternatives. If ACP recovery was limited to home broadband and not cellphones, it looks like the fee might might top out at $6 or $7 – lower than her $9 projection. If cell phones remain eligible for ACP, it’s not hard to envision the USF fee growing far past her cited $9 fee – that might be how the FCC predicted a $17 fee.

But the real issue isn’t the size of the monthly fee – but whether the FCC is willing to take on the responsibility. If the FCC was to assess a $5 – 7 fee on every broadband user, the agency would be in the crosshairs by both sides of the political spectrum. Realistically, it also seems likely that an attempt by the FCC to implement such a fee would be challenged and end up in court for years – which wouldn’t help anybody.

The FCC is obviously being cautious, but they might be right in doing so. Tackling such a controversial solution with such high visibility would likely put the FCC under a lot of scrutiny, which might even bring the entire Universal Service Fund under attack. I know it’s not the answer that people want to hear, but the best solution is for Congress to fix ACP – unfortunately, nobody is feeling highly hopeful about that.

FCC to Reimpose Broadband Regulation

The FCC will vote on reimposing Title II authority over broadband at its April 25 meeting this month. It seems likely that the proposal will pass since three Commissioners have already expressed support for the idea. The proposed order is 434 pages long and includes 2,921 footnotes. Hopefully this summary will suffice for anybody but full regulatory nerds like me.

The press is largely going to label this as the FCC putting net neutrality back in place. However, net neutrality is only a small portion of the regulatory changes that accompany reimposing Title II authority over broadband. The national conversation would be more useful if the question was asked if people think broadband should be regulated – and it’s likely that a large percentage of folks don’t like a world where giant ISPs set the rules and prices.

Anybody who follows telecom regulation knows that regulating broadband at the federal level has been on a roller-coaster ride that follows the party that wins the White House. Chairman Tom Wheeler, who led the FCC under President Obama, implemented net neutrality rules tied to the existing Title II regulation. Chairman Ajit Pai led the FCC under President Trump and canceled both Title II authority and net neutrality rules to try to make it harder for future FCCs to reinstate broadband regulation. The Pai FCC went so far as to wipe the FCC’s hands of remaining broadband regulation and defaulted to the Federal Trade Commission as the final say on some broadband issues. The current move to reimpose Title II regulation was only enabled after a Democratic president nominated and Congress finally approved a fifth Commissioner to replace Chairman Pai. It almost seems inevitable that if the White House changes parties again that the roller coaster ride will repeat.

As a backdrop, while Chairman PAI was killing Title II authority, a federal court ruled on a previous challenge to Chairman Wheeler’s net neutrality order and concluded that the FCC has the regulatory authority to implement net neutrality as long as Title II regulations are in place. This should mean that any challenges to the actions of the current FCC would need to use a different tactic to challenge new Title II authority.

The current proposal from the FCC differs in some areas from the Tom Wheeler set of rules. In addition to reimposing net neutrality, the new rules will enable the FCC to monitor broadband outages, give the FCC more authority over network security issues, and increase the protection of consumer data. The new rules will also mandate national net neutrality rules that would preempt state rules like the ones created in California – although the FCC said it will tread lightly in these areas as an experiment in state rule.

It’s a natural question to ask why we need Title II regulation because the press rarely talks about broadband regulation in terms that consumers can understand. Here are just a few of the things that can happen after the FCC reintroduces Title II regulation:

  • The FCC used to have a broadband complaint process where the agency would intervene in cases of bad behavior by ISPs. Consumers could plead for relief from particularly egregious ISP behavior, and the FCC often required ISPs to set things right. The FCC also had the authority to dictate policies related to broadband customer service.
  • While they never exercised it, the FCC has the ability to regulate rates under Title II. This is the big bogeyman that worries ISPs. The FCC in the past used this power to coax ISPs to cut back on practices like rate caps.
  • The FCC used to have the authority to make ISPs refund money to customers when ISPs overbilled or otherwise cheated customers.
  • The FCC used to intervene and mediate disputes between ISPs over network practices. That ability died when Title II authority was killed.
  • The FCC had the authority to fine ISPs that engaged in bad behavior with customers – that largely died when Title II authority was killed.
  • The FCC had more authority to act against hacking and other behavior by bad actors.

Anybody who has been reading my blog knows that I am a huge fan of some basic level of broadband regulation. It seems irresponsible for the government not to have any authority over the actions of what can be argued to be the most important industry in the country. It’s an industry that is largely dominated by a handful of duopoly players who serve the large majority of customers in the country. Broadband is vital to both the economy and to people’s everyday lives, and it’s almost unfathomable that the FCC hasn’t been looking out for the public for the last six years after Title II authority was killed.

Reimposing Title II authority is far from ideal since it won’t stop the roller-coast ride if there is a future change of parties. A much better solution has always been to have Congress give the FCC specific authority to regulate broadband. That would also cut back on lawsuits that challenge the FCC’s authority to create regulations. But Congress hasn’t done anything major along these lines since the Telecom Act of 1996, during the early days of dial-up access. It doesn’t seem to be a big ask to give the FCC permanent authority over broadband, and the failure of Congress to do so is evidence of the stranglehold that ISP lobbyists have on Capital Hill. I’ve been hoping for Congressional action for over twenty years – and maybe they will surprise me one of these years and do the responsible thing.

BEAD Grant Contracts

One of the steps in the BEAD grant program that isn’t being talked about is the contract that an ISP must sign with a broadband office before officially being awarded a grant. While the whole industry has been focused on creating a good grant application, the grant contract is the most important document in the grant process because it specifically defines what a grant winner must do to fulfill the grant and how they will be reimbursed.

The grant contract is going to define a lot of important things:

  • This is the document that will define the line of credit that must be provided. If an ISP has elected a line of credit that can be decreased over time, make sure that contract defines the specific events that will allow for a reduction in the size of the line of credit.
  • The contract is going to define the specific environmental studies that are required, along with the timing of the environmental work. A lot of BEAD grant recipients are going to be disappointed if they are required to complete time-consuming environmental studies before starting any other work. Note that just like the rest of the industry, the folks who do environmental studies are likely to get quickly backlogged with BEAD work and may take a lot longer than normal.
  • The contract is going to define how the Broadband Office envisions implementing the many issues that were in the grant application. Regardless of what an ISP might have proposed in the grant application, the Broadband Office is going to try to use the contract to impose their will for items like setting rates. It’s important to note that an ISP doesn’t get what they proposed in the BEAD grant application – the real negotiation for how the grant is going to work happens in agreeing to a contract.
  • Perhaps the most important part of the contract is that it is going to define how the ISP will get reimbursed for completed work. There are many States that are talking about reimbursing ISPs based on meeting specific milestones. Be very careful to understand specifically what this means, because it might mean waiting for many quarters, or even a year before seeing a check out of the grant office. The natural inclination of ISPs is to order all of the materials to build a network when the grant is awarded – but that is not a good idea if the payments for that material isn’t coming for a long time. Note that payments tied to milestones likely means an ISP must front all of the money for engineering and labor long before reimbursements are made. This is a use of cash that ISPs might not be expecting. The ideal reimbursement plan is one that pays for invoices on a monthly or quarterly basis as grant work is completed.
  • The grant application is going to define the terms of grant compliance. For example, the BEAD grants require a lot of details concerning the grant labor force that haven’t been included in previous grants. The contract is going to define how the ISP proves to the Broadband Office that it is complying with the many BEAD requirements. In the case of labor, and many other requirements, documented full compliance is likely going to be required before a Broadband Office ever writes the first reimbursement check.
  • The contract is likely to have an expected contract completion date. The contract might require an ISP to finish the construction in the time that the ISP proposed in the grant application – while also imposing delays with things like environmental studies, compliance, and reimbursement rules that might make it hard for the ISP to meet that schedule.

It’s important to note that ISPs are not required to sign the contract first offered to them. A grant contract is like any contract, and the terms can be negotiated – with the caveat that a Broadband Office can’t negotiate away requirements that were included in the law that created the BEAD grants. Expect to be shocked by some of the requested contract terms included in the first draft of the contract.

Finally, note that signing a contract with terms you don’t like is still binding. There have been ISPs that have walked from other grant programs when the offered contract was too harsh. Don’t be in such a hurry to get started that you sign a contract you can’t live with.

First Look at Broadband Labels

The FCC’s Broadband Labels were implemented by ISPs with more than 100,000 customers on or before April 10. Not surprisingly, many ISPs waited until the last day. I think the FCC hoped that the labels would create “clear, easy-to-understand, and accurate information about the cost and performance of high-speed internet services.” I looked at a lot of the labels this past week. As you might expect, the actual labels often fall far short of the FCC’s goal. I’m not going to use this single blog to try to rate and rank the various labels but will highlight a few of the things I found.

The first observation is that the labels are generally hard to find – they are not prominently displayed on ISP websites. This is because the FCC rules say that ISPs only have to display the labels at ‘points of sale’. ISPs have interpreted this to mean that a customer must first submit a valid address to the ISP website, and then typically navigate through several more links to find the labels. Even after entering an address, the links to broadband labels are often not clearly identified, and it was a challenge to find the labels for some ISPs. I thought one of the purposes of the labels was to make it easier for the public to comparison-shop between ISPs – but finding the labels usually takes a lot of work, especially for somebody who isn’t familiar with navigating ISP websites.

The one big benefit of the labels for most ISPs is that they make it easier to find broadband prices. Over the last few years, it’s grown increasingly difficult to find the list price for broadband on big ISP websites – the price that customers pay at the end of a special promotion rate. ISPs are now disclosing the full list price on the labels.

One exception to showing list prices is Comcast. The company is showing the promotional rates in bold for many broadband products and only shows the list price in fine print. Comcast is also deceptive about the cost of its broadband modem. All they say is that it’s optional, without mentioning that their price for a modem rental is $15. They also don’t mention that to get some features a Comcast modem is mandatory. I rate the Comcast labels as still being as deceptive as their website was before the labels. But Comcast isn’t the only one not being open and clear about the modem rental. I’m guessing that big ISPs are rationalizing that WiFi and the modem are not a broadband product as a way to keep them off the label. Any ISP not disclosing modem prices and policies is creating a hidden fee.

One of the features of the labels is that an ISP is supposed to provide a plain English description if its technology and network practices. Most ISPs failed at this, and a customer trying to understand two competing ISPs is not going to understand the technology difference using the broadband labels.

Consider Verizon. It has a network management section of the label that mixes in descriptions of its wide range of different technologies rather than describing each separately. There are a few things that a shopper for FWA service ought to be told: 1) that the FWA product is delivered over the same network delivering bandwidth to cellphones, 2) that the key factor that determines the speed for a customer at a given tower is the distance between the customer and the tower, and 3) that broadband can be throttled if the cell site gets busy. They disclose the third item, but overall, they fail at describing how FWA works.

The labels are not going to tell the public much about speeds. A few ISPs, like Verizon FWA and T-Mobile FWA, are honest and report a range of speeds. Cox is relatively honest and says that speeds are ‘up-to’ the cited marketing speed for a given product. But most big ISPs are claiming they deliver speeds in excess of advertised rates. Charter says speeds are at the advertised speed or faster. Comcast, CenturyLink, Mediacom, and Sparklight all cite ‘typical speeds’ which are all faster than the advertised speed – some significantly faster. This is the first time I’ve seen the term ‘typical speed’, and I have no idea what ISPs mean by it.

Windstream took an interesting approach to broadband labels and only created labels for fiber customers and not for older DSL. I don’t know if that meets the FCC requirements, but Windstream is reporting 100 Mbps capability for DSL in some markets on the FCC map, and this feels like something that should have a label.

All of the labels must disclose latency, and many of the latency numbers cited seem significantly low. I think that the ISPs are citing the latency between their headend and the customer, not the latency that a customer can expect in getting to the Internet. If so, this also feels deceptive to me.

Overall, the Broadband Labels do not fulfill the FCC’s goals of making it easier for customers to understand broadband products. It is a relief to see most ISPs disclose prices – but if Comcast gets away with highlighting marketing promotional rates, the labels for other ISPs might change soon to match. Disclosures on speeds are mostly a joke – and most customers are going to be surprised to find that their ISP is bringing them faster speeds than what they are paying for (sarcasm alert). For the most part, the descriptions of network practices are not written in plain English to help a potential customer understand the technology being used. The carefully crafted lawyer language in these sections makes it hard for even experienced industry folks to understand network management policies.