The Cost of Using Poles

The Georgia Public Service Commission (GPSC) passed a rule recently that reduces the cost of pole attachments to $1 per year per pole for anybody that builds broadband in areas of the state that the state considers to be unserved. They titled this the One Buck Deal. The state has created its own broadband map that undoes many of the errors in the FCC’s broadband maps and shows that over 500,000 rural homes don’t have broadband.

I really don’t mean to detract from any effort to make it easier to build rural fiber – but pole attachment fees are not what is stopping companies from building rural fiber. It easy to understand how regulators got this idea because the big ISPs have been screaming about pole attachment fees for years. And at the national level, the biggest fiber builders have claimed that pole attachment fees are an impediment.

From an operating perspective, annual pole attachment fees are a relatively minor cost for most network owners. The biggest expenses for operating a new fiber project are labor and interest on debt. Other big expenses include the cost of the Internet backbone, billing, and marketing. Pole attachments fall far down the list, and for most projects I’ve worked with, the cost of pole attachments is rarely more than a percent or two of total operating expenses. While the GPSC gesture of reducing these fees would be welcome to a fiber overbuilder, avoiding 1% of operating costs isn’t going to move the needle on any business plan.

The biggest cost of deploying fiber is the construction cost of building the fiber network along each road in a service area. Poles play a major role in the cost equation, but it’s not the fees to rent the poles that are the problem. The biggest cost culprit in putting fiber on poles in something the industry calls make-ready. This is the cost of getting poles ready before fiber can be hung. There are national electrical standards that define the spacing between wires of different utilities – rules that are designed to provide safety to technicians that must work on poles, particularly when trying to fix storm damage.

Make-ready costs fall into three general categories. Some make-ready involves fixing existing problems with wires. The original utilities on the poles may not have followed the safety rules and there are often many cases where wires are already out of compliance with the safety rules. Cables may be installed too close to neighboring wires. Wires might have too much sag, making it hard for an additional attacher.  Unfortunately, the make-ready rules say that the new fiber attacher must pay the full cost fixing existing problems.

The second category of make-ready involves situations where there is not enough room for a new attacher. In these cases, the pole must be replaced with a taller pole and each existing attacher must move wires to the new pole. Unfortunately, the new attacher must also pay for all of these costs.  The final category of cost in areas with a lot of trees is tree trimming. Electric utilities are supposed to keep trees trimmed out of the way of the wires on a pole – but if they are lax in this effort, then the new fiber attacher must also pick up these fees.

It’s not untypical for make-ready costs to range from $10,000 to $20,000 per mile, with some cases we know of as high as $50,000 per mile. The areas with the highest costs are with pole owners (generally electric companies) that have neglected pole maintenance for many years. A new fiber builder is often saddled with replacing poles that are rotted or leaning – something that the utilities should have been routinely fixing over the years. I know of cases where practically every pole needs to be replaced – and this can generally be pinned on the absence of maintenance by the pole owner.

If the GPSC really want to make it easier to build rural fiber, they would have tackled the make-ready issue aggressively. It’s crazy that a new pole attacher must pay to fix existing safety violations of the current utilities using the pole. It’s massively unfair that a new fiber attacher should pay the full cost to replace poles that are old, rotted, and already unsafe.

But fixing the make-ready issue means taking on the powerful lobbies of existing utilities. The telcos, cable companies, and electric utilities collectively have a huge presence in most state legislatures. They are perfectly happy with the status quo where the new guy pays to fix all past sins.

I hope the Georgia idea doesn’t catch on. Regulators and state politicians look for easy ways to say that they are doing something to fix the rural broadband problem. They will point to things like the One Buck Deal to prove they are taking action – when in fact, actions like this one don’t make it any easier to build rural fiber. If regulators want to fix rural pole issues, then they should be fixing the 99% cost problem of pole make-ready instead of the 1% cost issue of pole attachment fees.

Let’s Try Another Approach – Part II

Yesterday’s blog talked about the many problems with the recently concluded RDOF grant process. The FCC has an opportunity to clear up some of these problems through the long-form approval process. But if the FCC awards the grants as auctioned, then the FCC will have completely botched the only two giant-dollar broadband grant programs it has administered – the original $11 billion CAF II and now the $16 billion RDOF. Even if the FCC cleans up some of the worst problems, the agency has shown us that it should have no role in deciding who gets to build broadband networks.

There is a better and easier approach to successfully administering broadband grants sitting openly in front of us. Congress gave block grants to the states for CARES funding that included money for broadband. This money came with some odd strings and rules that kept changing, but from what I can see, the states did a decent job of administering the funds. The biggest hurdle with the CAREs money was that states had to spend the money too quickly and were faced with having to repay any money that was later deemed to not meet the intentions of the CARES Act. But even with the CARES restrictions, each state carefully deliberated and debated the best way to use the money.

The most effective way to award large amounts of grants like the RDOF is through block grants that would allow each state to determine how to use the money. To be effective, block grants shouldn’t be saddled with any stupid rules or restrictions – but I think it’s clear that states know local broadband needs far better than the FCC. For example, one of the big problems with RDOF is the FCC determining the Census blocks where the grants were to be awarded based upon its admittedly crappy broadband mapping. With block grants, states should be free to pick where funds are allocated.

Block grants would have avoided most of the mistakes made by the FCC with RDOF. Consider the state of Minnesota as an example. The state already has a successful grant program that could have been expanded to deal with a large block grant. Minnesota uses its own broadband map and would have ignored the FCC mapping. Minnesota already has a minimum speed requirement for grant recipients of 100 Mbps download and would not have considered slower technologies. Minnesota would likely not have considered satellite broadband as an acceptable solution. In the RDOF, a large portion of the money in Minnesota was awarded to WISP that says it will build fiber. The Minnesota grant program would have likely rejected this company for lack of technical experience and financial wherewithal – but that would be a local decision for the state to make.

Not every state has its act together as well as Minnesota and perhaps the FCC rules would have to create a few guidelines. For example, the current state grants in Washington are only awarded as a combination of a grant and a loan. The federal money should be awarded as pure grants that shouldn’t be complicated or encumbered with state loans.

States certainly wouldn’t be perfect with block grants and some states would make boneheaded decisions. As an example, a few years ago a large state grant program was created in California, and before the money was awarded, AT&T and Frontier lobbyists used political influence to make sure most of the money went to them. However, there is currently huge public pressure to solve broadband gaps, and any politician who bungles state grants would be under a microscope and held accountable. I like that accountability. There is zero accountability when the FCC botches a grant. We never saw any heads roll for the disaster of the CAF II awards when an $11 billion screw-up should have been front-page news. Giving the money to the states bring accountability and transparency that we don’t have at the federal level.

The FCC is a regulatory body and should never have tackled figuring out how to award $16 billion in grants. It was obvious from the start that the FCC had bitten off more than they could chew – but considering the time that the FCC had to get ready for this, I was surprised at the utter failure of the reverse auction process. The FCC could have instead announced state block grants and gotten positive acclaim from coast to coast – that would have been a legacy that Ajit Pai could have been proud of – instead, he’ll be known as the guy who botched the RDOF grants.

Let’s Try Another Approach – Part 1

Anybody reading this blog already knows that I am not a fan of the recent RDOF grant program. If the FCC doesn’t figure out a way in the next few months to cancel the worse of the grant awards, when we look back six years from now we’ll find that half or more of the funding was wasted. The FCC has wasted money before, like with the $11 billion from the CAF II for big telcos that was nearly all wasted – but solving the rural digital divide has become too important to keep throwing away grant money.

The RDOF grant process was doomed before it ever got started. The amount of grant award in each Census block is based upon a massively flawed FCC cost model that pretends to understand the difference in broadband construction costs around the country. This unfortunately means that the FCC offered far too much grant funding in some places, and not enough in others. This is a nuance of the grant that everybody seemed to have missed – that the FCC pre-determined the amount of grant available for each Census block. I know areas where the FCC was offering 20% more than the cost of building a fiber network, and others where it wasn’t offering half of what is needed. The FCC’s faulty cost model does not accurately reflect the cost of getting onto bad poles or of encountering rock when burying fiber. We saw folks offering to build fiber in places where the FCC awards were overly generous, but no landline ISPs offering to build broadband where the awards were too low. People living in the Census blocks where the FCC awards were too small were doomed from the start to not see a decent broadband solution.

The FCC really blew it when it came to vetting the financial wherewithal of applicants. They allowed small companies with limited experience and weak balance sheets to claim huge amounts of funding, with the largest winning more than $1 billion in grant funding. This was not hard to foresee, and companies should have been given bidding limits according to their financial capability. Tackling this after the auction is over is a real mess.

The FCC also didn’t put any common sense stops in place on the bidding. There are a huge number of Census blocks where the grant was finally awarded at less than 5% of what the FCC offered – many as low as 1%. Some of these recipients say they are going to build fiber in areas where the construction cost per passing to build fiber is more than $15,000. Does anybody really believe that a grant recipient will build fiber if they accepted only a few hundred dollars of grant per passing in these high cost places?

Then there were problems due to the FCC not taking the time to do its homework. I’ve seen maps showing grant awards to places like large airports, giant parking lots, malls, and other assorted empty Census blocks. The FCC couldn’t afford to have somebody in the last year spend some time looking at the grant areas on Google Earth? Such areas should never have been in the grant to start with and demonstrate incompetence at the FCC. Hopefully, these grant awards will be canceled.

The RDOF grant also allowed grants to be awarded for technologies that should never have been allowed in the grants. In another giveaway to big telcos there were awards made to enhance DSL – does this FCC really think there is any life left in rural copper? Technology as slow as 25 Mbps was allowed in the auction – all due to the FCC not having the backbone to define broadband at a more reasonable and higher speed. Perhaps the biggest dollar problem was letting bidders claim faster technology speeds than are conceivably possible – such as bidders that claimed the ability to build gigabit fixed wireless. All the WISPs I know are irate about this since they were outbid in the auction by bidders that lied about technical capabilities. Such grant applications must be nixed in the long-form process or the FCC will have allowed fraud into the grant process. The headscratcher that has generated a hundred articles is why the FCC is allowing grants for satellite broadband – a technology that is going to reach all of these places anyway, without the grant money.

Maybe the biggest problem with the RDOF process is that the penalties for cheating are too small. This was the rule that doomed CAF II. The big telcos did the math on CAF II and figured they could do absolutely nothing and still keep a significant percentage of the grant dollars. The penalty for taking RDOF money and doing nothing ought to require repayment of more than 100% of the grant – with a repayment that cannot be hidden behind a bankruptcy.

It’s hard to know which of these problems was the worst, and they all contributed to the disaster we see at the end of the grant. This FCC has loudly complained about fraud and waste in the universal service fund. But it turns out the biggest waster of the funds is the FCC itself. It tossed away $11 billion in the CAF II awards and is on the path to toss away more with the RDOF awards.

The second part of this blog, to be published tomorrow will suggest a better way to handle large FCC grants. We need to find a better way to do this because I can’t see the FCC fixing all of the problems I listed above.

Is it Time to Kill ETC Requirements?

One of the requirements for receiving grants out of the FCC’s Universal Service Fund is that recipients offer telephone service and also obtain Eligible Telecommunications Carrier (ETC) status. That is a regulatory status that is most often awarded by state regulatory commissions. I’m wondering if this still makes sense.

It’s worth looking at the history of the ETC requirements to help answer that question. Eligible Telecommunications Carrier is defined in FCC code § 54.201. Here a few key provisions of this part of the FCC code:

  • Only providers with ETC are eligible for ‘support’ funding from the Universal Service Fund. FCC grants come out of the same pile of money that in the past provided funding to rural telcos – so it is still being considered as support.
  • Companies with ETC status must participate in the FCC’s Lifeline program.
  • State regulatory commissions are to designate carriers as ETCs, although in recent years the FCC has granted a handful of ETC designations directly. State commissions are directed to make certain that carriers are technically and financially capable of providing carrier-of-last resort obligations.
  • When a new carrier is granted ETC status in a given area this takes away the carrier-of-last resort obligations from the original telco and transfers this obligation to the new ETC.

There are two provisions of this rule that don’t make a lot of sense in today’s world. The first is carrier-of-last-resort obligations that say that a carrier must serve a new customer in a given footprint if it’s feasible. The big telcos stopped honoring this obligation years ago and AT&T finally put a dagger in this obligation when they announced that as of October 1 that the company won’t take any new orders for DSL. But the big carriers have been denying requests for service from new customers for years, mostly by telling customers there are no facilities available (even when this was not true).

It’s hard to justify requiring somebody that takes a federal grant to meet carrier-of-last-resort obligations when the FCC and states have not enforced this requirement for big telcos for more than a decade. If you take the FCC rules as gospel, then somebody that builds a rural fiber network would have to extend fiber to somebody that only wants to buy local telephone service. I suspect very few of the companies accepting the FCC grants understand that this is what the law says.

The other outdated requirement is that a carrier building rural broadband must offer telephone service. How low do telephone penetration rates have to drop until the FCC kills voice regulation and silly requirements like this one? Many broadband providers offer telephone service because even at small volumes it can have a positive margin – but the day of mandating this needs to go away. Our firm does broadband surveys and we have recently worked in markets where voice penetration rates have dropped below 10%.

What’s so odd about the voice requirement is that anybody with a good broadband connection has dozens of options to buy web-based telephone services like Vonage, Google Voice, and many others. Most such services now come with unlimited long-distance which eliminates any concern that people buying the service can’t afford to call outside of their immediate area.

The final issue with ETC status is that it draws any carrier getting the status into state regulation. Most states have reduced the amount of paperwork that comes with being regulated – but not all. This FCC has said it favors light-touch regulation, and yet they are still forcing companies to be regulated to receive federal grant funds.

It’s time for the FCC to take a hard look at the ETC rules and neuter them. The whole point of FCC broadband grants is that the winners are supposed to be bringing good broadband. If that is true then it’s time to decouple ETC status from getting grants to build broadband.

AT&T’s Regulatory Wish List

CEO of AT&T Communications Jeff McElfresh recently outlined four major regulatory priorities for the company going into next year. This list couldn’t be more different than the list I made recently from the perspective of small ISPs – and I wouldn’t expect it to be. One thing you have to admire about AT&T – the company has never been bashful about asking for regulatory policies that benefit it over others in the industry. Following are the four items on AT&T’s wish list. This is the shortest such list I think they’ve ever had, since the current FCC largely gave the company everything it wanted over the last four years.

Retain a Light Regulatory Touch. It’s no surprise that this is at the top of the list since a change of administration means an FCC that is likely going to try to re-regulate the broadband industry. This topic is always tied to the reintroduction of net neutrality, but AT&T and the other large ISPs don’t care much about net neutrality. You have to search hard to find examples where the big ISPs are violating the net neutrality principles.

What AT&T really wants is to keep the no touch regulatory regime where broadband has largely been fully deregulated. This AT&T goal is always accompanied by a subtle threat that the company will stop investing in broadband if the FCC tries to regulate them. That’s complete bosh, and AT&T hasn’t considered regulation in any investment strategies in years – anybody at AT&T who suggested this internally would be laughed out of the boardroom.

Congress Should Fund the Universal Service Fund.  McElfresh acknowledges that the funding mechanism is broken for the Universal Service Fund. It currently layers a fee that’s about to hit 30% on top of interstate calling services. AT&T suggest the way to fix this is to let Congress decide the funding for the USF each year in budgetary process.

This is a dreadful idea, because it would them give AT&T and the big ISPs a place to lobby to kill any funding that would be used to compete with them. This would remove USF funding from the open deliberative process at the FCC and move it behind closed doors where lobbyists can influence Congressional votes.

McElfresh acknowledges that the USF these days is mostly used to solve broadband problems, and the more obvious solution would be to keep the USF at the FCC and fund it with a fee on broadband customers instead of voice customers. The whole purpose of the USF is universal service, and the concept behind this funding years ago was that a small fee levied on urban telecom users could be leveraged to bring telephone service to everybody, since we all benefit if the whole US is connected. That goal has been updated from telephone service to broadband and it’s as true today as ever.

The Government Should Be Technology Neutral. This is perhaps the funniest thing I’ve ever seen on AT&T’s wish list because it’s classic doublespeak and AT&T wants the opposite of technology neutrality. The company is benefiting tremendously by a federal government that thinks that 5G should be a priority over every other technology.

The company also means that federal broadband grants shouldn’t consider broadband speeds as a criteria for picking winners for funding. AT&T would love to be handed billions of federal subsidies to roll out a fixed wireless product from rural cell towers – and doesn’t want to see the FCC hand out money to fiber builders that would interfere in areas that AT&T would love to keep as monopolies. The funny thing is that AT&T is already on most cell towers in the country and nothing is stopping them from marketing fixed wireless to millions of rural customers that would gladly buy faster broadband. But the company would rather be handed billion-dollar subsidies than do the hard work of selling.

Fix the Broadband Maps. The only crossover between AT&T’s list and mine is to fix the damned broadband maps. The FCC has been talking about this for years and has been hiding behind the fiction that they need a bunch of funding to make this work. The FCC could require ISPs to begin reporting more honestly starting tomorrow if it was serious about this.

AT&T points out the stupid rule where an entire Census block is deemed to have good broadband if one customer in the Census block has broadband. While that is indeed stupid, that’s probably only 10% of the problem with the current FCC maps. The real issue is that ISPs, including AT&T report marketing speeds instead of real broadband speeds. A new mapping program is barely going to put a dent in the problem unless the FCC decides to start fining ISPs that lie about broadband speeds.

The Advertised Speed Problem

There has been a lot of hype over the last two years about fixing the FCC broadband maps. The FCC has proposed a method for defining broadband coverage by asking ISPs to draw polygons on maps around areas where the ISPs have customers or could connect a new customer soon after an order is placed. The FCC touts this as a way to make ISPs report more honestly. The current FCC has dragged their feet for several years to force implementation of new reporting, but the impetus is probably finally here to get this done.

But will polygons really fix the FCC maps? Some of the worst abusers of the FCC mapping process, at least in terms of reporting imaginary coverage areas are wireless ISPs. They often claim potential coverage to places that are both distant and with no line of sight from existing towers. But how is somebody sitting at the FCC going to judge the coverage claimed by a WISP? Short of forcing WISPs to file a wireless propagation study from each transmitter, how can anybody who is not local judge claims made by any ISP? I fully expect at least some WISPs to continue to overclaim coverage areas even with reporting by polygons.

But let’s assume for argument’s sake that the polygon process forces ISPs to be more honest about coverage areas. That alone ought to reclassify a whole lot of rural Census blocks as being unserved – where today claiming even one potential customer in a Census block means the FCC counts the whole block as having broadband capability.

Unfortunately, the polygons only fix what I think is the second most important problem with the current FCC data gathering. The problem that has caused the most harm to rural households is overstated broadband speed capabilities by ISPs. ISPs of all sorts routinely lie and exaggerate the speeds they are delivering. This happens everywhere, from cities to the most rural places in the country.

I speculate that the following are some of the major reasons that speeds are overstated:

  • There are ISPs who report the same speeds to the FCC that they report to customers. If an ISP tells the world on its web site and says on customer bills that it delivers speeds up to 25 Mbps, it’s not likely going to come clean on a public database like the FCC 477 and tell the truth that it’s only delivering speeds of a few Mbps.
  • I think there are ISPs that see the FCC reporting system as a form of advertising. The average citizen doesn’t know how to decipher the FCC broadband reporting, but there are half a dozen web sites that make money by telling people the broadband available in their zip code. These sites largely spit out to the public whatever is reported to the FCC (it’s hard to think how they would do anything else). I think that exaggerating speeds to the FCC likely translates into increased inquiries from potential customers.
  • It’s hard not to think that some of the big telcos exaggerate broadband speeds to keep out competition. Companies like Frontier and CenturyLink know that the FCC uses the 477 databases to establish broadband grants – so fudging the speeds can be an effective way to keep out grant money. There are huge geographic areas where these ISPs claim DSL speeds in the range of 25 Mbps where the actual speeds at customers are perhaps a few Mbps. We saw Frontier try to reclassify over 16,000 Census blocks as having speeds of 25 Mbps or faster just before the recent RDOF grants.

I’ve seen nothing in the proposed fixes to FCC mapping that is going to fix this problem. It’s impossible to think that ISPs that exaggerate broadband speeds are going to change the practice unless there are big consequences for not telling the truth. Unfortunately, the only tool the FCC has to correct speed reporting is imposing fines against ISPs. I honestly can’t see the FCC fining ISPs heavily enough to convince them to report honestly. But without enforcement, it’s highly unlikely that new FCC maps will be any better than the current ones – and the big telcos all know this.

I’m Still Confused by the RDOF Grants

On the day after the RDOF awards were announced I wrote a blog lamenting that it looked like the FCC had allowed wireless carriers to walk away with huge amounts of the grant funding while promising gigabit speeds. As I started digging in the details of the awards, it’s a whole lot more complicated than that.

For example, it turns out that some of the WISPs that won big awards actually bid to build fiber. That sounds wonderful if they actually build fiber, but when you look at the details of the bidding that looks unlikely.

Let me provide one example. I helped a client estimate the cost of building fiber in one of the RDOF areas that extended over two counties. We had determined in this specific set of Census blocks that it didn’t make sense to take anything less than 50% of the RDOF reserve price. The math showed there were not enough customers to support the debt that would be incurred by accepting less than that. This particular area was finally awarded to a bidder claiming to bid on fiber at 10% of the reserve price – only 20% of the grant that made sense for my client. I can envision operators who might have been satisfied at a 40% grant, but it’s inconceivable to me that somebody could seriously be proposing to build fiber with the small amount of grant they accepted for this one area. Only a bidder with a huge amount of equity could make this work, because no bank will loan money for a fiber project that doesn’t generate enough cash to cover the debt payments.

If this was an isolated example I wouldn’t be bothered by it, but there are similar examples all around the country. This explains why the total RDOF grant closed at only $9 billion instead of the anticipated $16 billion – some grant bidders are promising to build fiber for absurdly low amount of grant awards. And frankly, this is not financially possible.

I can only think of one possible explanation for this. I can only suppose that such bidders think the FCC will let them swap out to a lower-cost technology such as fixed wireless during the long-form process. These bidders have to be betting that the FCC will work with them rather than be embarrassed by reversing huge amounts of grant awards. We all have to hope that the FCC doesn’t let that happen. Any such agreements would screw ISPs that were willing to build fiber in these same areas. The FCC would be punishing WISPs that bid fixed wireless honestly at the 100 Mbps tier. It’s hard not to use the word fraud to describe somebody that accepted grant awards to build fiber if there was no intention of actually building fiber.

The other thing that confuses me is how many of the grant winners will get financed. The RDOF awards are paid over ten years, but the networks must be built in six years or less. Even should somebody win an RDOF award that covers 100% of the cost of construction, they have to finance roughly 50% of the project to get it built. Since most RDOF grants cover less than 100% of the cost of construction (particularly where bidders bid down the size of the awards), the average winner will have to raise a lot of money to build the required networks. When I see that some of the big grant winners are small companies, I have serious doubt about the ability to borrow the needed funding. There are winners of the grants that will likely need to borrow hundreds of millions or even more than a billion dollars to make these grants work. You can count the participants in this auction that are capable of borrowing hundreds of millions on one hand.

I am really disheartened by the FCC’s imposed quiet period for the grant winners. I understand why there is a quiet period before the grant bidding so that parties don’t collude on the bids. I’d really like to see the press asking the same questions I have to some of the grant winners. Right now a grant winner can hide behind the quiet period.

I’m really hoping the long forms are made public long before the FCC accepts or rejects a grant winner. I think the people who live in the areas covered by these grants ought to have an opportunity to see what the grant applicant intends in terms of technology and time frame. I think all of the ISPs that didn’t win the grants deserve to see that applicants aren’t being allowed to negotiate to use a different technology than the one they bid to win the grant. I also hope the FCC requires iron-clad proof of the needed financing to make the grants work. I also hope the FCC levies the maximum penalties possible against bidders that made bids that can’t be fulfilled.

I still think this grant is likely to be a disaster before it’s over. If the FCC does their job on the long forms, I foresee billions of dollars being handed back to the FCC – something that will be a major embarrassment for the agency. It will be even worse if the FCC does a poor job on the long forms since unqualified ISPs will eventually fail to deliver the promised networks. I also fear that the big telcos will pull another CAF II and take the awards and not build the promised broadband. I still haven’t stopped scratching my head wondering why a satellite company should get a grant to cover places it that will already cover automatically. I bet that the FCC staff is looking at the details of the grant awards and already wondering how they can come close to making this work. The more I dig into the details, the more messes I find, and that is disheartening.

The FCC Drops the Ball on RDOF

My Twitter feed is full of self-congratulations from FCC and other federal officials about the success of the recently completed RDOF grant. But I look at the results and I just see another big FCC failure. I see a grant where billions of federal dollars were misallocated due to another giant gaffe by the FCC.

How did the FCC fail? They allowed fixed wireless technology to bid as a gigabit technology. This means the FCC believes that fixed wireless technology is the functional equivalent of fiber. This is such an easily disprovable concept that it would be laughable if the FCC hadn’t just awarded billions of dollars to an imaginary gigabit wireless technology.

I don’t dislike fixed wireless technology, and in fact, I spent most of a decade as a customer of a WISP that did a great job bringing broadband to a place that otherwise would have had no broadband. Fixed wireless is a decent technology. When serving large areas there are many places today where it’s routinely being used today to deliver 50 Mbps to 75 Mbps broadband. In unique cases where a customer is near to a tower, I’ve seen speeds approaching 150 Mbps and I wouldn’t be surprised if WISPs can point out customers getting 200 Mbps. But as nice as that is, that’s not gigabit speeds and fixed wireless is not a gigabit technology, nor is it a functional equivalent to fiber.

This technology can be deployed in two ways – in a point-to-point configuration or as point-to-multipoint. Point-to-point wireless shoots bandwidth from a transmitter on a tower to reach a single endpoint. This is the technology used to beam backhaul between towers or is used in urban areas to reach between high-rise buildings. This is the technology that we’ve always referred to in the industry as microwave backhaul. This technology can deliver gigabit speeds, but is not a practical technology to use for residential broadband because there is only room for a small number of transmitters on any given tower or rooftop.

The technology used to provide WISP broadband is point-to-multipoint technology. A single antenna on a tower can connect to multiple customers. This technology is aim at delivering modest broadband to lots of customers. It can’t be used to deliver giant bandwidth to more than a few customers – and it’s not really designed to deliver gigabit download, and certainly not a symmetrical gigabit.

By allowing WISPS to claim gigabit capabilities, the FCC cheated huge numbers of people out of getting fiber. There were numerous electric cooperatives, small telcos, CLECs, fiber overbuilders, and public/private partnerships in the auction hoping to bring fiber to entire rural counties. In looking at the footprints won due to this fiction, I’m guessing the FCC’s decision to allow fixed wireless to falsely bid as gigabit technology killed fiber construction to at least a few hundred rural counties.

Six of the top ten winners of the auction will be deploying wireless technology and together account for over $3.2 billion – more than a third of the entire auction award. That list includes four wireless companies along with Windstream and Frontier.

Interestingly, WISPs that didn’t exaggerate the capability of the technology got clobbered in this grant. For example, Midcontinent won grant money in the CAF II reverse auction bidding fixed wireless as capable of 100 Mbps. They did the same in this auction and got steamrolled by the WISPs that won by bidding with the identical technology but falsely claiming gigabit capability.

I’m sure the people that get the networks built from this auction will be glad to get better broadband. But a few million of them could have instead gotten fiber that would have future-proofed them for the rest of the century. And sadly, some of the people in these grant areas won’t get broadband because they’re located in a hollow or behind a hill, out of reach of the wireless towers.

I don’t understand why the FCC couldn’t get this right. The FCC could have talked to any one of a hundred telecom engineers I know who would have laughed at the idea that fixed wireless can deliver gigabit speeds across big tracts of extremely rural America. A huge portion of this auction was based upon this lie, and that never bodes well for the long run.

There is an easy fix for this going forward. If the FCC is going to let WISPs exaggerate the technical ability to deliver gigabit speeds, then fiber providers should be allowed to bid in a 10-gigabit tier. That’s something that any fiber winner could easily guarantee, and which wouldn’t be a false claim. I also hope for severe penalties, up to having to return all of the grant money, for any grant winners in this auction that claimed gigabit speeds but then deliver 50 Mbps networks.

My Wish List for a New FCC

A change of administration will bring a change at the FCC as the majority swings from Republican to Democratic. I’ve always maintained a regulatory wish list, and the following are my hopes for what we’ll see out of the new FCC. Note that these aren’t predictions – just my own hopes.

Keep the Politics Out. This was added to the blog as it went to press. There is talk of a new Congress refusing to seat a new Chairman and a fifth commissioner in an attempt to thwart any attempt to re-regulate broadband. That would be a disaster for the industry (as it would be for any other regulatory agency). A partisan FCC with no voting majority is going to accomplish very little and will deadlock on most issues.

Kill the Seventh Year of CAF II. The CAF II program that handed over $10 billion to the big telcos to upgrade rural America to 10/1 Mbps broadband was a total bust. To rub salt into the wounds for the failed program, the current FCC just awarded the big telcos an additional $2.5 billion in a seventh year of subsidy – a payment for which the ISPs have no expected performance obligations. It’s just free money. I hope a new FCC kills that funding and uses that money to support new rural broadband.

Adopt a Realistic Definition of Broadband. It’s unbelievable that the current FCC is sticking to 25/3 Mbps as the definition of broadband. The FCC proudly claims in the 2020 report to Congress that 85% of homes in the country can buy broadband of at least 250/25 Mbps (a claim I think is overstated). If the FCC thinks that claim is true, then how can they think that the remaining 15% of homes deserve only one-tenth of the broadband speeds available to everybody else?

Fix the Damned Maps. The FCC has dallied for a few years to pull the trigger for new mapping, always with some excuse. They need to make this happen and make it happen right. The current FCC plans still don’t penalize ISPs for reporting marketing speeds instead of actual speeds. Unless that problem is fixed, any new mapping will be just as dreadful as existing mapping. And please, don’t hand out any more giant grants based upon badly flawed maps.

Stop Funding Slow Broadband Technologies. It’s mind-boggling that the current RDOF grants allow technologies as slow as 25/3 Mbps to claim grant funds – for a program that allows six years to implement the funded solution. That means that not only does the FCC pretend that 25/3 Mbps is adequate broadband today, but they are willing to saddle parts of rural America with those speeds for the next decade.

Bring Back Broadband Regulation. This FCC gutted broadband regulation. It probably raises eyebrows to see me ask for the return of regulation, but the FCC can’t currently even scold big ISPs for abusing customers. It’s highly unlikely that any FCC would go so far as to implement rate regulation, but one of the most important industries in the country needs a cop at the top to protect citizens against monopoly abuses.

Drop the 5G Rhetoric. The FCC has no business pushing 5G as the solution to everything broadband. The FCC is an independent agency. While the administration and Congress have every right to climb aboard the 5G bus, the FCC is supposed to be a neutral regulator and has no business supporting 5G over other technologies. The cellular companies behind 5G are extremely well-funded and we should let 5G play out as the market sees fit.

Don’t Sponsor a New National Broadband Plan. That’s what the government does when it wants to kick an issue down the road. We don’t need another panel of experts telling us what is wrong with rural broadband.

Say No to a Big ISP Once in a While. The current FCC seems to have decided every issue in favor of the biggest ISPs. I understand that AT&T, Comcast, Charter, and Verizon serve 73% of the broadband and cable customers and most of the cellular customers in the country. The current FCC approved everything on the big ISP’s regulatory wish lists. The role of a regulator is to strike a balance between the companies it regulates and the public – we need to get back to a balance between those two interests.

Updating FCC Device Rules

The general public probably doesn’t realize that all telecom devices must be approved by the FCC before the devices can be announced, marketed, or sold to the public. These requirements were put in place many years ago at the FCC to make certain that devices were safe, that radio devices don’t exceed legal power limits, and that radio devices use only the radio frequencies that are authorized.

Once a manufacturer has devices that are of a finished quality ready to sell to customers, the devices are sent to the FCC testing labs for approval. It’s rare for devices to fail the FCC approval process, but it does happen – and one has to suppose a manufacturer of a failed devices was hoping for a miracle by sending devices for testing.

This testing is still a vitally needed step, particularly in the wireless world. Devices that go inside central offices, huts, and cellular sites must also pass inspection by Underwriters Laboratories to makes sure the devices are safe. But wireless devices have two big concerns that must be addressed. The first is that devices stay within the spectrum bands they are supposed to use. Now that devices have software-defined antennas it would not be hard for cheap devices to stray out of the authorized band, which would cause havoc in the real world as devices interfered with licensed uses of spectrum – including uses by the military, satellites, and other key users of spectrum. Without testing it’s not hard to imagine cheap foreign cellphones that would blast out signals out of the authorized band.

The other big issue with wireless devices is the power level. We care about the power level for a bunch of reasons. First is user safety, and one of the reasons that cellphones have been declared safe over time is that they transmit at relatively low power levels. Power also defines how far a signal can propagate. If wireless devices were allowed to transmit at high power levels the signal might carry to the horizon and interfere with other uses of the frequency. Limiting the power of devices is one of the key ways that allows the FCC to define license areas for selling or awarding spectrum. The ability to limit power is probably the main reason that the FCC has been allowing rural WISPs to use some of the frequency in rural areas that sits idle. If WISPs used too much power they could be interfering with urban use of the spectrum.

The FCC rules are rigid in the process that a device manufacturer must follow. One key aspect of the FCC rules is that manufacturers are prohibited from doing pre-sales or conditional sales of wireless devices – except at the wholesale level. Apple can pre-sale a new iPhone to Verizon, but neither Apple nor Verizon can take preorders from the public. That means that the marketing effort for a new device can’t start until the device passes the FCC tests, and the devices can’t be sent for FCC testing until the devices are retail-ready.

Manufacturers are also prohibited from sending display versions of their devices to retail outlets. People want to see and touch a new cellphone before they order it, but the devices can’t be displayed in a Verizon store until they are approved for retail sales.

Manufacturers have been asking for the FCC to relax these rules so that they can market in the way that we market most things today. The testing delays may have made sense decades ago, but today it adds significant time in bringing new cellphones and other devices to market.

Cellphones are huge business today and it’s a major marketing event when Samsung or Apple announces the next generation cellphones. I have a hard time thinking why Verizon and other wireless carriers couldn’t take pre-orders for the latest phone months before the phones are ready. We now do that with a lot of big-ticket items like the Tesla Cybertruck – people are willing to get on waiting lists long before they can ever buy a new truck. We also now live in the world of Kickstarter where cool new ideas of all kinds are pre-marketed to see if there is enough marketing demand to go to manufacturing.

The big manufacturers like Samsung and Apple are never going to send a phone for FCC testing that doesn’t pass the tests – and they aren’t going to deliver phones to customers until they pass the FCC tests. It’s hard to think of any reason why the cellular carriers can’t take preorders for the latest phone. It’s hard to see what harm would come through taking orders early when customers are fully aware that they have to wait until the new phone is released.

It no longer makes sense to treat FCC-approved devices differently than other electronics. Manufacturers have asked the FCC to allow for waivers from the rules. It’s probably not a good idea to let cheap foreign cellphones be marketed until they have passed FCC muster. But it’s hard to think of any reason why the FCC should delay commerce by not allowing presales of iPhones. It’s time for the FCC rules to catch up to the realities of the marketplace.