Author Archives: Doug Dawson, CCG Consulting

If All Programming Went Online

TelevisionRecently, in a comment made on one of my blog posts, somebody postulated that eventually cable lineups will get much smaller and cable companies will be reduced mostly to a platform to broadcast live sports events. That is a possibility because sports are clearly the most valuable programming asset that broadcasters have today.

But even in the sports world we have seen some experimentation with the web. On fall Saturdays, for every football game that is on one of the cable sports networks there are a lot more games that are only on ESPN3, the online channel from ESPN. For most of these games online is the only way to view them. And even ESPN itself has allowed their ESPN, ESPN2, ESPNU, ESPN Deportes and the SEC Channel onto Sling TV and it’s likely they are negotiating the same deal with others.

But let’s assume for a second that the more lucrative sports like pro football stay off the web. What might a world look like where most programming was streaming rather than broadcast?

First, this would create a huge increase in web traffic, particularly in the evenings in each time zone. According to Nielsen, in 2014 the average home watched broadcast TV for almost 143 hours per month while the average home watched streaming video on the Internet for 6 hours and 41 minutes. This means that less than 5% of video programming being watched is on the web. The companies that control the Internet have already been screaming about the impact of Netflix on their networks, and yet the web is still only carrying a small portion of the video content that people routinely watch.

There are certainly problems to solve before we can put most video on the Internet. One must first consider the difference between broadcasting live video versus streaming video like Netflix does. There is not a lot of live video on the web because the web architecture is not really designed to always deliver content exactly on time. I’ve reviewed Sling TV on my blog a few times and their live sports programming is so terrible that it’s basically unwatchable. Anybody who has watched ESPN3 will tell you a little better story, but even that is not great. ESPN3 mostly is made to work by sending out fairly low quality video to hold down the bandwidth demand. And unlike Sling TV, ESPN seems to have invested in carriers with a more robust backbone. The live streaming problem is not just about sports because many of the other popular shows that have been aired live on the web, like the Oscars, have been a debacle.

There is a huge difference between live shows and streamed video. Netflix can send out many copies of a streamed video at the same time because each end user is basically downloading a large file. As long as the download speed can stay ahead of where the show is being viewed then the viewer gets the intended quality. It doesn’t matter if the download process is erratic as long as the viewer stays ahead of the download. But live shows must be delivered immediately and to many homes at the same time. And when there is any glitch anywhere in the network, the live broadcast is going to hiccup or crash. If there is a local problem then only a few viewers have a problem, but if there are network delays then many viewers will suffer.

The results of moving everything to the web would be dramatic at the customer end of the network as well. The first issue would be all of the customers using DSL or slow cable modems that can’t easily receive multiple video streams. The FCC set the new standard of 25 Mbps download based upon homes wanting to watch 3 videos simultaneously as well as doing other normal web things. If you are sitting today on a 6 Mbps DSL line you already know that watching even one Netflix stream can sometimes be a challenge.

But even assuming that everybody gets upgraded speeds (which might be hard since most DSL won’t go much faster), I still have to wonder how the cable companies and telcos would handle a 10 times increase in video download demand. Almost all local networks have some sort of shared nature. In fiber-to-the-home networks a data stream is typically shared with up to 16 homes. But in cable networks that number can be greater than 500 homes.

You don’t have to remember back more than a few years when the speeds on cable networks almost died every night during prime time as most homes got on the computer. Cable companies have responded by increasing the size of the data path to the nodes and by cutting many nodes in half. But a 10 times increase in video volumes would bring every cable network to their knees. They would have to construct a lot more fiber and they would need to reduce the size of their nodes down to something a lot closer to the size of fiber systems. And they would have to do all of this without getting any additional revenue.

And rural folks would just be left out. All of the millions of homes that are being upgraded to 10 Mbps download by the Connect America Fund (and the tens of millions of other ones already with slow DSL) would be shut out in a world where most video was on the web rather than on the cable systems. I wonder if the politicians could ignore a rural TV gap in the same manner that they ignore the rural broadband gap?

The Battles for the Internet

The InternetIt’s always interesting to think about how the Internet might change in the future and what it might become. It’s likely that the outcome of several current industry battles will determine the Internet we have five and ten years from now. Each of these conflicts is important in its own right; taken together they add a lot of uncertainty about where we are headed.

Ad Blocking vs Advertisers: One fairly recent battle is between ad blocking technology and those who make a living through web advertising. Today much of what we think of as the free internet is paid for through advertising placed on web pages. Very few people like the ads on the Internet, particularly as they get more customized and individualized and are aimed at each of us personally.

But a really large portion of the things that most us like on the web are paid for by ads. That includes things like social media sites and news services. Right now the ad blockers are gaining the upper hand. I saw a recent report that over 200 million users worldwide are now using ad blocking software, and it’s growing fast. And companies like Apple are building ad blocking into their OS, probably in an attempt to poke a stick in the eye of some of their other large rivals.

If advertisers don’t figure out a way to fight back, then the revenues that can be made on the web will be on a fast and downward spiral, and that is going to effect a lot of web businesses. But advertisers are already working on ways to punch through ad blockers and so this is likely to morph into a continuous cat and mouse game as the two sides each get the upper hand at times.

Hackers vs Web Security: For the last several years large companies have sat nervously in the crosshairs of the hackers who are working hard to take them down. But to a large degree a lot of the tactics used by hackers in the past have been defeated by web security companies and it’s no longer easy to breach firewalls by brute force. But hackers are probably more successful than ever today because they have shifted tactics and now concentrate on tricking insiders to let them into a network.

This is a critical battle, and big companies look at what happened to Sony and they now understand how devastating it can be to lose control of their network. The companies that fight hacking are getting better all of the time and they will find ways to beat the current tactics deployed by the hackers. But unless we someday migrate to a web run by a superintelligent AI, it’s likely that this battle is going to go on for a long time.

Surveillance vs Encryption: The NSA revelations opened a lot of eyes about how vulnerable we all are to surveillance. We now know that governments can gather huge amounts of information about us, and many people are worried about how access to our data is going to lead to a government abuse of power. But perhaps even worse is that large corporations are gathering data about us, too, and unlike the government they are more likely to immediately put that knowledge to use.

But there is a counter-movement working to make us safer against surveillance. This involves encryption but also in developing safer ways to communicate such as through bit-chains. Surveillance relies on being able to capture data at central nodes, and so perhaps having an Internet that no longer uses centralization will reduce the amount of knowledge that can be gained from us. Ideally, the outside world would only learn what we choose to give out about ourselves, but for now the surveillance forces are winning this battle.

Open Internet vs State-specific Control. Sparked by those same NSA revelations we now see governments looking at ways to protect their citizens and themselves from outside surveillance. China has already done this in an extreme way and it looks like Russia might be headed down the same path as China. But half of the countries in Europe are looking at ways to keep the data generated in their country safe within their country. If we end up with an Internet that is different in each country, with pockets behind different firewalls, we will have killed much of what is great about the current Internet.

I don’t think anybody can predict where each of these trends are going with any certainty, and it’s hard to say how the various battles affect each other.  There is a big chance that the Internet of ten years from now will be a very different place than today. There will be some ugliness along the way and we are going to keep seeing major hacker success bringing down companies. But none of these issues is insoluble and there is also the chance that over time we will end up with an Internet far safer than today’s.

Small Cable Systems Failing

coax cablesThe American Cable Association (ACA) recently asked the FCC to look at the issue of why small cable systems are shutting down. The ACA represents small cable systems nationwide. Using data from the National Cable Television Cooperative (NCTC), the ACA says that 1,169 cable systems have shut their doors since 2008. In 2014 there were 91 cable systems that closed and in 2013 there were 133 systems.

The ACA says that the primary reason that these small cable systems have closed is programming costs, and I’m sure that has to be a major reason. The other reason is probably due to competition from satellite providers, which is also tangentially related to programming costs.

I am guessing that many of the systems that are closing are small bandwidth systems that don’t carry the 200 – 300 channels that people associate with urban cable systems. There are numerous rural systems that carry smaller channel line-ups from 30 to 100 channels. They tend to carry the most popular stations and so their customers are generally happy with them.

There is one programming issue that I think particularly discriminates against smaller systems. While I can’t cite specific numbers due to various NDAs, there are programmers that price programming in a way that kills the small operators. For instance, the programmers often make the large systems take all of the channels they offer in an all-or-nothing deal. But they price this in such a way that all of the ‘cost’ to the cable system is allocated to one or two primary channels in the suite with the rest being added for free or for a very low cost. This means that a small system that takes only a few channels from a programmer might pay as much for the programming as a large cable operator that carries everything from that same programmer.

While it is probably impossible for the FCC to regulate the programmers, I think it is probably within their purview to say that the practice of forcing systems to take every channel is discriminatory. If they could do that they could probably also insist that the programmers fairly allocate the fees among the many channels in their package. That would allow the small systems to save a lot of money on programming and to stay competitive against satellite providers.

The satellite providers are definitely hurting the small systems. The satellite companies are large enough that they can buy programming for a little cheaper than a small system. But this is only a minor edge because even the big companies don’t get much of a discount on programming. The real advantage the satellite companies have is that they don’t have to maintain a fleet of technicians in trucks. That is a true competitive advantage and the small systems can’t compete with that while paying more for programming than they ought to.

The other issue that small cable systems face is not related to programming. A lot of these smaller systems are low bandwidth, meaning that they have only enough bandwidth to carry the smaller cable lineup they offer. This means they cannot offer cable modem service, which is the one huge advantages that larger cable companies have. Even if the small systems were able to increase their bandwidth somehow, these older systems often would require a major rebuild of the coaxial plant in order to handle larger bandwidth. It would mean replacing and moving power taps and amplifiers, and in some cases even replacing the coaxial cable.

To some extent a number of these systems were doomed to fail when the rest of the industry shifted to make all of their profits from cable modems and voice. Without that extra margin these small companies are competing with only a cable product against satellite providers who can offer more channels for a lower price. And these small systems have the same issues with cord cutting and a general loss of cable customers that everybody is seeing. That is a recipe for failure and I’m not sure that the FCC ought to prop up systems that are doomed to fail almost by definition.

But there are many other cable providers that would benefit and thrive if the programming issues can be made fairer. If the FCC really wants to help out cable providers of all sizes and of all technologies they will give cable providers the chance to offer smaller packages of programming to match what the OTT guys are doing. This will benefit fiber systems as much as coaxial systems and can put some balance back into the relationship between programmers and providers.

What is Anti-Competitive Behavior?

federal-trade-commission-ftc-logo_jpgThe Federal Trade Commission (FTC) recently clarified a long-standing policy specifically defining, for the first time in history, how it is going to judge anti-competitive behavior.

As a little background, the FTC has always been tasked with enforcing the Sherman Antitrust Act and the Clayton Act. But those laws are aimed at stopping anti-competitive behavior at the national level when a company is stifling a whole market. It has been exceedingly hard to apply those laws to a smaller market or to the actions of a large company stifling only a single tiny competitor.

In the telecom industry there are numerous cases where the large cable companies went after a small competitor, but these small companies have never had any legal recourse. I don’t think there are any examples of a small company using the law to stop anti-competitive behavior by the big cable companies. In every case I have ever worked with, the smaller company has gotten legal advice that it’s almost impossible to win an anti-competition claim against a big cable company.

And that has been a shame since there are cases where the behavior of the incumbents has been egregious. I’ve seen large cable companies cut rates significantly in a market to try to harm a new competitor while jacking up the rates in surrounding communities to make up for the losses in the one market. Those are the kinds of things that monopolies aren’t supposed to be able to do, but there has never been a mechanism for stopping this anti-competitive behavior.

I’m not a lawyer and I don’t know if the new FTC language fixes this problem, but my layman’s interpretation is that it offers hope. Here is how the FTC now defines how it will look at anti-competitive behavior:

  • The commission will be guided by public policy behind antitrust law, namely, consumer welfare.
  • An act or practice challenged by the FTC must cause or be likely to cause harm to competition or the competitive process, while taking into account related efficiencies and business justifications.
  • The commission is less likely to challenge acts or practices on the sole basis that they constitute unfair competition if the Sherman or Clayton Acts would be enough to address them.

It’s the second bullet point that I think holds out hope. It’s clear that the actions of large companies can cause harm to competition and the competitive process, and this makes it clear that the FTC feels they have the right to oversee such practices. As that second bullet also notes, sometimes small competitors get crushed inadvertently when a large company implements a nationwide practice for efficiency or business reasons. The FTC is not likely to tackle those cases, but should be open to investigating cases where a large company specifically goes after a small company in one market.

The timing of this is interesting for our industry. For many years the place to take a complaint against a large cable company would have been the FTC since the FCC didn’t regulate the cable companies as carriers. The FCC has regulated cable practices and requirements for being a cable company, but not issues like anti-competitive behavior.

But recently, with the changes coming from the net neutrality rule, the FCC has turned the cable companies into carriers under its jurisdiction. The FCC has always heard complaints from small telephone carriers against the larger telcos, so perhaps now the FCC might also be willing to entertain complaints from small cable providers against the larger cable companies.

It would be ironic that now the FTC is willing to perhaps hear such anti-competition claims that they might no longer hold the jurisdiction over the cable market. Those two agencies are certainly engaged currently in an arm-wrestling match over this issue and it might take a while to figure out which agency would be the one to take an anti-competition claim.

Finally, Speed Competition

cheetah-993774We are at the beginning of a big change in urban Internet speeds. Recently, there have been all sorts of announcements about companies upgrading speeds or wanting to build fiber in major markets.

For instance, Comcast says that they are going to upgrade all of their systems to DOCSIS 3.1 within about two years. This new CableLabs standard is going to allow them to offer far faster speeds to their customers. DOCSIS 3.1 allows a cable system to bond together empty channels to make one large data pipe and theoretically, if the networks were empty of television channels, they could offer download speeds up to 10 Gbps. But since there are still lots of cable channels on these network the more realistic maximum speeds for now will be a gigabit or maybe less depending upon the spare channels available in any given system.

Comcast has already started the process of upgrading customer speeds. For example, in much of the northeast they have upgraded customers from 25 Mbps to 75 Mbps and from 105 Mbps to 150 Mbps. They’ve announced that these same upgrades will be done in all of their systems. They’ve said in future years there will be more upgrades to go even faster.

Other cable companies are likely to follow suit. MediaCom has already made gigabit announcements. Time Warner in Austin also greatly increased speeds. Cox has announced aggressive plans for speeds. It’s likely almost all urban cable systems will be upgraded to DOCSIS 3.1 within a few years.

Meanwhile, CenturyLink has been starting the process of building fiber in most of their larger markets. It looks like they are building fiber in cities like Seattle, Portland, Minneapolis, Phoenix, Denver, Salt Lake City, and a number of other markets. They will offer speeds that vary from 40 Mbps for $30 to gigabit speeds for $80 as part of bundled packages. CenturyLink is also experimenting right now in Salt Lake City with G.Fast, testing a 100 Mbps product over copper. Between the two products the company thinks they will be able to offer faster speeds to a lot of urban and suburban customers.

And of course, Google has been rolling out fiber and can be credited with popularizing the concept of gigabit fiber. They have built or are launching in Kansas City, Austin, Atlanta, Provo, Salt Lake City, Nashville, Raleigh-Durham and now San Antonio. They have released a long list of other cities where they may go next.

Finally, there are numerous smaller companies and municipalities that are already building fiber or who have plans to build fiber.

Comcast’s new philosophy is a 180 degree turnabout from a few years ago when they said that customers didn’t need bandwidth and that they would give customers only what Comcast thought they needed. It seems now that Comcast is adopting the philosophy of unilaterally increasing speeds, even in markets where they might not have an immediate competitor on the horizon. They already have the customers and they already have the networks and they can take the wind out of the sales of a potential fiber competitor if customers in any given markets already have fast speeds at an affordable price.

I think Comcast and the other companies are smart to do this. The higher-priced data products are probably the highest margin products we have ever had in this industry. It doesn’t cost a whole lot more than a few dollars to buy the raw bandwidth needed to serve a data customer and it’s widely believed that for large companies the margins are in the 80% to 90% range. It’s a wise decision to protect these customers, and by being proactive with speeds the cable companies will make it a lot harder for other companies to take their customers. And I think they have finally begun to learn the little secret that many have already figured out – faster speeds don’t really hurt profitability and a customers with a 100 Mbps connection doesn’t use much more data than one with a 20 Mbps connection, they just download things faster.

So what we are seeing now is competition through speed rather than competition through pricing. All of the comparisons I have ever seen show that US broadband prices are significantly higher than in any other developed countries. When Google or CenturyLink enters a market with $70 to $80 gigabit they are not lowering prices, and are actually luring customers to pay more than today. It’s an interesting market when even in the most competitive markets the prices don’t really come down.

Who is Dropping Cable?

RCA_CT100-hdFierce Cable reports that the average revenues per customer are rising at many cable companies as they lose customers. This seems to indicate that a lot of people that are dropping cable were buying the lower-priced packages.

Here are some of the numbers they reported from the second quarter of 2015:

  • DirecTV lost 133,000 customers but saw the average revenue per customer rise 6.4% to $109.93.
  • Dish lost 81,000 customers but average revenue per customer rose 4.4% to $87.91.
  • Charter dropped 33,000 customers and saw average revenue jump 4.5% to $92.88.
  • Overall the largest cable providers combined saw average revenue per customer in the quarter rise by 6.7%.

Now to be fair about those numbers, a lot of these companies raise rates in the first quarter each year, making the second quarter the first period that sees the full impact of rate increases.

But the numbers do hint at the underlying cause of cord-cutting. I will admit that I’ve always figured cord cutters were coming from the tech savvy and from those who have decided that that they can live with the many alternatives for entertainment available on the web. My perspective has probably been influenced by the cord cutters I know, and it’s always a dangerous thing to take personal experience and extrapolate it to a national trend.

But if it’s true that cord-cutting is more driven by economics then we have a different phenomenon. People are being driven off cable because they are getting priced out of the market. I’ve been predicting for years that this day would come because cable rates have been rising far faster than inflation for a long time. And that eventually has to have an effect.

Just look at the above numbers. I am a bit astounded by the DirecTV numbers. If $109.93 is the average revenue per customer then there are a lot of people spending a lot more than that to offset the low special prices the company offers to new customers.

It’s easy to forget how fast rates can get out of control. But an $80 cable package will cost $105 in five years with a 5.5% annual rate increase or $112 with 7% rate increases. Looking at all of the big companies, one has to wonder how they are going to sell the value of their product 5 and 10 years from now.

I can see how cable rates are becoming unaffordable for lower-income families, but it’s not going to be that long until this starts being out of the range of a whole lot more families. Even without the pressure from OTT programming, the industry is headed down a path of real trouble.

And you have to feel sorry for cable companies. The cost of programming has been skyrocketing. I have a few clients who have seen 15% rate increases over the past two years. They grimace every time they have to raise rates and they are all seeing customers falling off their systems.

Big companies like Comcast are probably going to find a competitive option for the big cable packages. They are already looking at their own version of OTT programming. But unless the FCC can break the monopoly of the programmers the smaller cable companies are going to have very few options other than to watch their customers disappear. Almost all of my clients are losing cable customers at a faster rate than the large ones and I have a number of them already seeing 5% to 7% annual customer dropoff.

But the FCC can fix the problem if they choose. One of the biggest problems today is that the major programmers make cable providers take all of their huge suite of channels if they only want one of them. We all know there are a ton of channels on cable systems that hardly anybody watches but that everybody is being forced to pay for. If cable systems could choose the channels they want, like is possible with products in almost every other industry, then they could control their cost and could get the rate increases back under control.

Big Telcos Take CAF II Funding

USF-logoThe biggest telcos have claimed most of the available CAF II funding to extend broadband to rural areas that the FCC defines as unserved or underserved.

The money that has been accepted is as follows:

‘                                            Customers                  CAF II Funds

AT&T                                      1.1 M                           $427M

Cincinnati Bell                      7,084                            $2.2M

CenturyLink                           1.2M                           $506M

Consolidated Tel                 24,698                            $14M

Fairpoint                                105k                             $37M

Frontier                                  660k                           $283M

Hawaiian Tel                        11,081                           $4.4M

Micronesian Tel                  11,143                            $2.6M

Verizon                                   115k                             $49M

Windstream                           405k                           $175M

Total                                        3.6M                            $1.5B

This money will be paid out evenly over 6 years from the Connect America Fund which is part of the larger Universal Service Fund. This is the second round of such funding with smaller amounts given out a year ago.

While Verizon took $49 million they didn’t claim an additional $550 million of CAF funds that could have been used to upgrade 270,000 rural customers. This just further confirms that Verizon is not interested in extending the life of their rural copper by extending DSL. That has been clear for a decade as they have been selling off rural properties, mostly to Frontier.

The CAF II upgrades require the large telcos to upgrade broadband to a minimum of 10 Mbps download and 1 mbps upload. That is far below the current definition of broadband which is 25 Mbps download and 3 Mbps upload. This was obviously a huge political compromise because this allows the telcos to upgrade DSL in these areas rather than provide faster options.

For any areas that were not claimed by the large carriers, the FCC will hold a reverse auction sometime next spring. A reverse auction means that whoever asks for the least amount of money for a given service area will get the funding.

It’s a real shame that the FCC let the big telcos grab the money without challenge. There are many communities that were hoping to get this money to help pay to build fiber to these same customers. But instead, by giving the money for slow DSL, the FCC has probably precluded at least some of these communities from getting the funding to build fiber. This should have been an open auction from the beginning with anybody who wants the money able to bid on it. It’s obvious that the large telcos have very good lobbyists.

I am sure that households that have no broadband today are going to be happy to get this DSL. But it’s not necessarily coming quickly. The telcos have 2 years to spend 40% of the funding, 4 years to spend 60% of the funding and 6 years to spend it all. That means at least some of the covered areas aren’t going to see the upgrade for 6 years.

And in my opinion this is nothing more than a gigantic temporary band-aid. Where 10 Mbps is great compared to dial-up or cellular data in the rural areas, this is far slower than what urban areas can get, particularly when we look forward 6 years. These upgrades will be obsolete before they are even installed and households that get this speed bump still will not be able to use broadband in the same way as urban households.

It would be really ironic if at the end of the 6 years the FCC then allocated more Universal Service Funds to finally bring fiber to these same places. Sadly, at least some of these folks could have gotten fiber now if this had been done fairly.

Update on Sling TV

Fatty_watching_himself_on_TVI first tried Sling TV in March during the NCAA tournament. The experience was so bad in watching just one basketball game, I finally gave up. I couldn’t keep a signal long enough to make it work.

So it’s been nearly six months and we are at the beginning of the college football season and I thought I would try again. If anything the experience was worse. I tried to watch Maryland play Richmond, which was on ESPNU. So I paid my $20, found out that ESPNU was an additive and paid $5 more and sat down to watch the game.

I had all of the same problems I had 6 months ago. During the course of the game I got 3 blue screens of death. The only other time that’s happened on this computer was the last time I watched Sling TV. The signal also kept freezing and I had to reboot to get it going again. Since last spring they have added an apology message when this happens, but it happens a lot and after a while you start cursing the error message. When you try to log back in to a game, Sling TV often doesn’t recognize your credentials and you have to close and reopen the program multiple times.

Maryland’s punt returner, Will Likely, had a Big 10 record day returning kicks and every time he touched the ball was electric. Or so I hear since I missed several of them.

To give a little credit to Sling TV, I went to several sports forums where others were talking about watching the Maryland game on TV and they reported that the signal was poor.

So then I did some channel surfing among the other broadcast (non-sports) channels. I never got booted out of any of these. There were major issues with audio. The volume difference between stations was huge and I could barely hear the Rocky marathon even with my computer sound system on full, a setting that would normally break out my windows. And like last spring, several times the audio feed lagged the video feed and I had to reboot the feed.

Bottom line is that after six months of doing this, Sling TV has exactly the same problems that they had during their first month online. They are still not ready for prime time. If any OTT provider wants to get the sports audience they are going to have to do much better than this. It is still better to listen to streaming radio than to watch a sporting event on Sling TV.

The Future of Universities

Berkeley-UniversityWe’ve already seen technology and the Internet completely transform a number of industries. The most common example talked about is what digital photography and then cellphone cameras have done to companies like Kodak. And other industries, like music and newspapers, have been transformed and are very different companies than they were just a few years ago.

As I look into the near future I have to wonder if universities are not next on the list. Almost all of the pieces are in place today to start to replace them. Universities are ripe for a change. A degree in the US has grown to become incredibly expensive and the cost of education has grown far faster than inflation. I recall tuition at the University of Maryland to be $700 per year in the early 70s. Some states were even cheaper and at that time the tuition at the University of Texas was $50 per semester. Money was not a road block to anybody who really wanted to go to college and one could earn most of your tuition through summer and part time jobs.

But today a college education is far more expensive. Using those same two schools, the tuition at the University of Maryland is now $5,400 per semester for a resident and $16,000 for a non-resident. The University of Texas is similar with tuition varying by major, but averaging about $5,000 per semester for a resident and $18,000 per semester for a non-resident. By the time you add in books and tons of fees and living expenses, college is far more expensive than it was in the past. And of course, private colleges are even more expensive.

A large percentage of students have to get student loans today, and the US News and World Report said that the average student loan today at the end of school is a little over $30,000. I can’t remember anybody getting a student loan in the early 70s and I don’t even know if such loans existed then. The bottom line is that going to college has become an economic burden and a significant portion of students have to finance their degrees.

Meanwhile, there has been a lot of progress in creating on-line college courses. Organizations like edX, Coursera, Udacity, Saylor, and OLI have developed significant number of online courses. Most of the courses offered are not yet accredited to provide college credits, but the trend is towards getting accreditation and one would expect within a few years that there will be mountains of for-credit content available online. There are also numerous universities developing this content and it’s not unusual these days to be able to take nearly all parts of some graduate degrees online.

Over time these many online courses will be sequenced into degree programs and will become the equivalent of a college degree. Interestingly, much of the content will be self-paced and the ambitious student will be able to complete many courses quickly if the material is easy for them.

One of the important parts of taking college is having lectures from qualified professors, and in the online world there will probably be an improvement in the caliber of the teachers over what many people experience in college today. The better lecturers will draw more students and students will be able to pick lecturers who appeal to them. There will become superstar professors that attract mountains of students.

There are some things that can’t be taught online like Chemistry labs or biology dissection, and so there will have to be places for students to get access to hands-on teaching when needed. But there are many degrees that really don’t require much live work and one can envision programmers, history majors, and others taking their entire degrees online. And there are courses that require a lot of interaction, but that can happen online also with smaller class sizes for selective classes and individual interaction, at a price.

Online universities are also going to open up learning to the whole world. One of the biggest draws of the US today is from students around the world who want to partake in our superior college degree experience. But when that same content is available online there will be billions of potential students who can tackle and master what we teach. This is certainly going to raise the level of education worldwide.

I suspect there will continue to be live campuses for a long time for those who want to pay extra for the college ‘experience’, but over time that will become more and more expensive and something that only the rich will indulge in.

Taking education will dramatically change the education industry. One can picture college sports fading away. One can envision that everybody will be allowed to try college courses and we will no longer screen for those who didn’t have the motivation when younger to apply themselves. Online learning will not have age limits and students from the very young to the very old will be wading into credit courses. Education can become a lifetime experience and available to all at any time. It will be an interesting transition to watch, but it is surely coming. And at some future point what we think of as college will large be a quaint memory of the past.

Broadband and Farmers

johndeereoutsideThe National Agricultural Statistics Service (NASS) just released their latest Computer Usage and Ownership report on Internet usage by American farmers. They have been doing this tracking for many years and looking through the statistics in this report is a good way to get an overall picture of rural broadband since the broadband that is available to farmers is the same that is available to many other rural people who don’t live in towns.

Since most farms are rural, the picture this report paints is not pretty and is much like what you would expect. Farmers are being forced to rely on the slowest forms of broadband due to where they live.

The report says that 70% of farms now have access to the Internet, up from 62% in 2011. It’s interesting to see how farms access the Internet now vs then:

‘                                   2011                2015

Dialup                           7%                   2%

DSL                              24%                 21%

Cable                             7%                   8%

Satellite                         9%                 15%

Wireless                       12%                 20%

Unknown type               2%                   5%

Total                             62%                 70%

What is obvious in this numbers is that dial-up has been abandoned in favor satellite and wireless access. The wireless category ought to be clarified in future surveys because this can consist of point-to-multipoint wireless provided by a WISP or cellular data from one of the big cellphone companies. There is a huge difference between those two kinds of access and in rural areas especially, cellular data is not broadband.

I would also love to see future reports of this type look at download speeds. The picture painted is not a good one in terms of probable speed. Rural DSL is often very slow since the bandwidth delivered by DSL drops with distance. Just getting back to a lot of farm lanes would be enough to eat much of the speed out of a DSL connection and it’s very unlikely that many of these farms are sitting next to a DSLAM cabinet. Rural DSL is very regularly reported to have speeds of 1 Mbps, and often considerably less – sometimes not much faster than dial-up.

I have talked about satellite data many times. Some of the newer satellites offer faster speeds and I’ve seen reports of speeds up to 12 Mbps from satellite broadband. But there are two big problems with satellite data. A functional problem is the latency, meaning that the signal takes a long time to get to the end user due to having been bounced to and from a satellite. This latency means that real-time functions are hard or impossible to do. So this kills applications like Skype, but more importantly it kills myriad applications that require you to maintain a connection. That could be all sorts of things like gaming, logging onto an email server, or trying to buy something from a web site. It can be aggravating when a satellite connection forces you to log into applications over and over again.

The other problem with satellite data is the tiny data caps. An end user can download some small amount of data per month and there are monthly caps of anywhere from 5 gigabits to 50 gigabits, with most caps on the low end of that scale. This makes a satellite connection unusable for many of the things the rest of us take for granted like watching video or distance learning.

And then there is cellular data where the monthly caps are even smaller and it’s hard to find a plan with more than 10 gigabits of monthly download. Not only that, but cellular data is incredibly expensive at around $10 per downloaded gigabit.

What this reports shows is that, overall, the condition of broadband on farms is miserable. Not surprisingly, a large percentage of farmers have the slowest forms of connectivity. And many of these farms are multi-million dollar enterprises that could greatly benefit from better broadband. I’ve been reading about a lot of research for implementing IoT solutions at farms to micro-monitor fields to improve crop yield, and such applications are going to require bandwidth. But I guess farmers are only going to get better broadband when we figure out a way to give all rural people better broadband.