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Regulation - What is it Good For?

Is it Time to Kill Retransmission Rules?

Rep. Anna Eshoo (D-Calif.) and Rep. Steve Scalise (R-La.) recently introduced a bill to Congress labeled as the Introducing the Modern Television Act of 2021 that wants to largely do away with the retransmission consent rules for cable companies. They’ve introduced similar bills in recent years.

Retransmission rules require that cable operators must carry local TV stations that are within over-the-air transmission range of a given area. That rule sounds benign enough but has been used by local stations to extract huge fees from cable companies for carrying local content. The fees paid to local stations are one of the primary reasons that cable TV rates have escalated so quickly over the last decade.

Fifteen years ago, it was rare for local stations to charge anything for carrying their signal. They were happy to be able to claim cable viewers of their content when calculating advertising rates based upon ‘eyeballs’ for ads placed on their stations. But a handful of consultants convinced a few stations that the retransmission requirements were a valuable commodity and stations started insisting on payments from cable companies to carry the content. Since that time, the payments have climbed from zero to rates in the range of $4 or more per cable customer, per local station per month. For a cable company carrying even the basic four networks of ABC, CBS, FOX, and NBC means shelling out $16 or more per month to local stations for each cable subscriber.

It was these fees that have led the big cable companies to create the local programming fees that are not part of basic rates. Cable companies may advertise a basic rate for a cable package at $50 but then sock on large hidden fees of $20 or more to cover local station fees along with some sports network fees.

The bill sponsors also blame high retransmission fees for the increasing blackouts of content that we’ve seen in recent years. When cable companies balk at paying increasing rates each year for local content, the local stations have adopted the tactic of shutting off access to their content until the cable company finally agrees to pay the ever-increasing rates.

Following are a few of the key provisions of the bill:

  • Eliminates the retransmission consent, mandatory copyright fees, and other provisions of current FCC rules (which were dictated by Congress). This should allow for real negotiations of rates – today the stations demand rates and there is little room for negotiation.
  • Adds a 60-day period where blackouts of content aren’t allowed when the local station and a cable operator are negotiating rates.
  • Gives the FCC the right to push a programming dispute into binding arbitration. Blackouts would be prohibited during the arbitration period.
  • Preempts federal, state, and local governments from regulating cable rates. This is an odd requirement since there is little or no rate regulation that I know of, but it must exist somewhere in the country.
  • Keeps the rule that cable networks and satellite providers must continue to carry local content.

As would be expected, local TV stations and the major networks are against these changes. Most of the money charged for retransmission consent ends up in the pockets of the major networks. Cable companies are obviously in favor of the proposed changes since it would give them an opportunity for real negotiations for content.

Congress created this original mess by mandating that cable companies must carry local content without allowing for things like the arbitration in negotiations this bill brings to the process. But the runaway rates in the cable industry can be pinned on the greed of programmers who have raised programming charges far more than inflation for two decades. The industry has driven cable rates so high that millions of households are cutting the cord annually and abandoning paying for content that includes local stations. If you were asked to imagine a scenario where an industry would self-destruct over time, it would be hard to think of a better example than the retransmission fees in the TV industry.

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Regulation - What is it Good For?

Focus on Sustainability

There are a few glaring holes in all federal broadband grants that have to do with how a grant recipient uses the network that was constructed with grant dollars. I wrote a recent blog that talks about the fact that most grants surprisingly don’t have any mandate that the grant recipient serve any customers in the grant area. For example, Starlink could take a grant for western North Carolina but never sign a customer in the grant areas.

Even more amazingly, there is not any proof required that the grant money was all spent for the intended purposes in the grant areas. Consider the CAF II grants where the telcos self-report that they have completed the upgrades in each grant area – the telcos were not required to show any proof of the capital spending. A lot of people, including me, think that the big telcos didn’t make many of the required CAF II upgrades. The FCC has no idea if grant upgrades were really done. It would have been easy for the FCC to demand proof of capital expenditures showing the labor and specific equipment that was used in each of the grant areas. Such a requirement would have forced the telcos to do the needed work because it would be extremely easy for an FCC auditor to show up and ask to see some of the specific equipment that was claimed as installed.

Today’s blog talks about the third missing element of federal; grants – grant recipients don’t have to make any promise to maintain the networks after they are constructed. There is nothing to stop a grant recipient from taking the grant money, building the network, and then milking revenues for years without spending any future capital.

All of the industry experts will tell you that a new fiber network will likely be relatively problem-free after you shake out any initial problems. Unless fiber is cut, or unless customer electronics go bad, there is not a lot of maintenance capital required for the first decade after building a new fiber network. There will still be fiber cuts and storm damage and the inevitable things that happen in the real world, but fiber technology is so tried and true right now that it largely works well out of the box.

I wrote a blog recently that conjectured that a fiber network can be a hundred-year investment. But the key to longevity is maintenance. If a grant recipient treats a fiber network the way that the big telcos have treated copper networks, then new fiber networks will start deteriorating in ten years and will be dead in thirty years. Good maintenance means properly fixing fiber cuts with quality splices. It may mean replacing stretches of fiber that demonstrate ongoing problems that might have come from the factory or from improper handling during installation. But most importantly, maintenance means upgrading and replacing electronics.

Fiber electronics don’t last forever. Manufacturers talk about a 7-year life on electronics, but they are in the business of selling the replacements. There is no physical reason to replace customer electronics (ONT) as long as it keeps working, and we’ve already seen some customer electronics (fiber ONTs) last for as long as fifteen years. But my guess is that, on average, that electronics are going to require upgrades every ten or twelve years.

Luckily, it looks like many of the FTTP upgrades already on the market involve what we call an overlay. This means introducing a new core that can provide new customer electronics while still being able to support the old equipment, as long as it’s working well. This is the sane way to do upgrades because a company can phase customers from old electronics to new over many years rather than going through the chaotic process of trying to change technology for a lot of customers at the same time.

But back to the grants. Federal grants are going to turn out to be a total disaster if the companies receiving the grants don’t build what they are supposed to build and maintain the network to keep it running for a hundred years. This won’t become apparent for fifteen or twenty years, but then we’ll start hearing about big problems in rural areas where customers on poorly maintained fiber networks go out of service and can’t get repairs.

It really bothers me to know that there are bad ISPs in the industry who are likely to take the grant money with the intention of milking the revenues and not reinvesting in the networks. We know that cooperatives, small telco, and municipal network owners will be happily operating grant-funded fiber networks a century from now. But amazingly, sustainability isn’t part of the discussion or criteria in deciding which ISPs deserve grant funding. We continue to pretend that all ISPs are good corporate citizens even after some have proved repeatedly that they are not.

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Regulation - What is it Good For?

Cost Models and Grants

Possibly the least understood aspect of the recent FCC RDOF grants is that the FCC established the base amount of grant for every Census block in the grant using a cost model. These cost models estimate the cost of building a new broadband network in every part of the country – and unfortunately, the FCC accepts the results of the cost models without question.

The FCC contracts with CostQuest Associates to create and maintain the cost estimation models. The cost models have been used in the past in establishing FCC subsidies, such as Universal Service Fund payments made to small telephone companies under the ACAM program. For a peek into how the cost models work, this link is from an FCC docket in 2013 when the small telcos challenged some aspects of the cost models. The docket explains some of the basics about of the cost model functions.

This blog is not meant to criticize CostQuest, because no generic nationwide cost model can capture the local nuances that impact the cost of building fiber in a given community. It’s an impossible task. Consider the kinds of unexpected things that engineers encounter all of the time when designing fiber networks:

  • We worked in one county where the rural utility poles were in relatively good shape, but the local electric company hadn’t trimmed trees in decades. We found the pole lines were now 15 feet inside heavy woods in much of the fiber construction area.
  • We worked in another county where 95% of the county was farmland with deep soil where it was inexpensive to bury fiber. However, a large percentage of homes were along a river in the center of the county that consisted of steep, rocky hills with old crumbling poles.
  • We worked in another county where many of the rural roads were packed dirt roads with wide water drainage ditches on both sides. However, the county wouldn’t allow any construction in the ditches and insisted that fiber be placed in the public right-of-way which was almost entirely in the woods.

 

Every fiber construction company can make a long list of similar situations where fiber construction costs came in higher than expected. But there are also cases where fiber construction costs are lower than expected. We’ve worked in farm counties where road shoulders are wide, the soil is soft, and there are long stretches between driveways. We see electric cooperatives that are putting ADSS fiber in the power space for some spectacular savings.

Generic cost models can’t keep up with the fluctuations in the marketplace. For example, I saw a few projects where the costs went higher than expected because Verizon fiber construction had lured away all local work crews for several years running.

Cost models can’t possibly account for cases where fiber construction costs are higher or lower than what might be expected in a nearby county with seemingly similar conditions. No cost model can keep up with the ebb and flow of the availability of construction crews or the impact on costs from backlogs in the supply chain.

Unfortunately, the FCC determines the amount to be awarded for some grants using these cost models, such as the recently completed RDOF grants. The starting bid for each Census block in the RDOF auction was determined using the results of the cost models – and the results make little sense to people that understand the cost of building fiber.

One might expect fiber construction costs to easily be three or four times higher per mile in parts of Appalachia compared to the open farmland plains in the Midwest. However, the opening bids for RDOF were not as proportionately higher for Appalachia than what you might expect. The net results are that grants offered a higher percentage of expected construction cost is the open plains compared to the mountains of Appalachia.

There is an alternative to using the cost models – a method that is used by many state grants. Professional engineers estimate construction costs and many state grants then fund some percentage of the grant cost based upon factors like the technology to be constructed. This kind of grant would offer the same percentage of grant assistance in all different geographies of a state. Generic cost models end up advantaging or disadvantaging grant areas, without those accepting the grants even realizing it. The RDOF grants offered drastically different proportions of the cost of construction – which is unfair and impossible to defend. This is another reason to not use reverse auctions where the government goofs up the fairness of the grants before they are even open for bidding.

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Regulation - What is it Good For? The Industry

The White House Broadband Plan

Reading the White House $100 billion broadband plan was a bit eerie because it felt like I could have written it. The plan espouses the same policies that I’ve been recommending in this blog. This plan is 180 degrees different than the Congress plan that would fund broadband using a giant federal, and a series of state reverse auctions.

The plan starts by citing the 1936 Rural Electrification Act which brought electricity to nearly every home and farm in America. It clearly states that “broadband internet is the new electricity” and is “necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected”.

The plan proposes to fund building “future proof’ broadband infrastructure to reach 100 percent broadband coverage. It’s not hard to interpret future proof to mean fiber networks that will last for the rest of the century versus technologies that might not last for more than a decade. It means technologies that can provide gigabit or faster speeds that will still support broadband needs many decades from now.

The plan wants to remove all barriers so that local governments, non-profits, and cooperatives can provide broadband – entities without the motive to jack-up prices to earn a profit. The reference to electrification implies that much of the funding for modernizing the network might come in the form of low-interest federal loans given to community-based organizations. This same plan for electrification spurred the formation of electric cooperatives and would do something similar now. I favor this as the best use of federal money because the cost of building the infrastructure with federal loans means that the federal coffers eventually get repaid.

The plan also proposes giving tribal nations a say in the broadband build on tribal lands. This is the third recent funding mechanism that talks about tribal broadband. Most Americans would be aghast at the incredibly poor telecom infrastructure that has been provided on tribal lands. We all decry the state of rural networks, but tribal areas have been provided with the worst of the worst in both wired and wireless networks.

The plan promotes price transparency so that ISPs must disclose the real prices they will charge. This means no more hidden fees and deceptive sales and billing practices. This likely means writing legislation that gives the FCC and FTC some real teeth for ending deceptive billing practices of the big ISPs.

The plan also proposes to tackle broadband prices. It notes that millions of households that have access to good broadband networks today can’t use broadband because “the United States has some of the highest broadband prices among OECD countries”. The White House plan proposes temporary subsidies to help low-income homes but wants to find a solution to keep prices affordable without subsidy. Part of that solution might be the creation of urban municipal, non-profit, and cooperative ISPs that aren’t driven by profits or Wall Street earnings. This goal also might imply some sort of federal price controls on urban broadband – an idea that is anathema to the giant ISPs. Practically every big ISP regulatory policy for the last decade has been aimed at keeping the government from thinking about regulating prices.

This is a plan that will sanely solve the rural broadband gap. It means giving communities time to form cooperatives or non-profits to build broadband networks rather than shoving the money out the door in a hurry in a big reverse auction. This essentially means allowing the public to build and operate its own rural broadband – the only solution I can think of that is sustainable over the long-term in rural markets. Big commercial ISPs invariably are going to overcharge while cutting services to improve margins.

Giving the money to local governments and cooperatives also implies providing the time to allow these entities to be able to do this right. We can’t forget that the electrification of America didn’t happen overnight and it took some communities as more than a decade to finally build rural electric networks. The whole White House infrastructure plan stretches over 8 – 10 years – it’s an infrastructure plan, not an immediate stimulus plan.

It’s probably obvious that I love this plan. Unfortunately, this plan has a long way to go to be realized. There is already proposed Congressional legislation that takes nearly the opposite approach, and which would shove broadband funding out of the door within 18 months in a gigantic reverse auction. We already got a glimpse of how poorly reverse auctions can go in the recently completed RDOF auction. I hope Congress thinks about the White House plan that would put the power back into the hands of local governments and cooperatives to solve the broadband gaps. This plan is what the public needs because it creates broadband networks and ISPs that will still be serving the public well a century from now.

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Regulation - What is it Good For?

The Accessible, Affordable Internet Act for All – Part 2

This is the second look at the Accessible, Affordable Internet Act for All sponsored by Rep. James E. Clyburn from South Carolina and Sen. Amy Klobuchar from Minnesota. The first blog looked at the problems I perceive from awarding most of the funding in a giant reverse auction.

In a nutshell, the bill provides $94 billion for broadband expansion. A huge chunk of the money would be spent in 2022, with 20% of the biggest funds deferred for four years. There are other aspects of the legislation worth highlighting.

One of the interesting things about the bill is the requirements that are missing. I was surprised to see no ‘buy American’ requirement. While this is a broadband bill, it’s also an infrastructure bill and we should make sure that infrastructure funding is spent as much as possible on American components and American work crews.

While the bill has feel-good language about hoping that ISPs offer good prices, there is no prohibition that I can find against practices like data caps imposed in grant-funded areas that can significantly increase monthly costs for a growing percentage of households.

The most dismaying aspect of the bill that is missing is the idea of imposing accountability on anybody accepting the various federal grant funds. Many state grant programs come with significant accountability. ISPs must often submit proof of construction costs to get paid. State grant agencies routinely visit grant projects to verify that ISPs are building the technology they promised. There is no such accountability in the grants awarded by this bill, just as there was no accountability in the recent RDOF grants or the recently completed CAF II grants. In the original CAF II, the carriers self-certify that the upgrades have been made and provide no back-up that the work was done other than the certification. There is a widespread belief that much of the CAF II upgrades were never done, but we’ll likely never know since the telcos that accepted the grants don’t have any reporting requirements to show that the grant money was spent as intended.

There is also no requirement to report the market success of broadband grants. Any ISPs building last-mile infrastructure should have to report the number of households and businesses that use the network for at least five years after construction is complete. Do we really want to spend over $90 billion for grants without asking the basic question of whether the grants actually helped residents and businesses?

This legislation continues a trend I find bothersome. It will require all networks built with grant funding to offer a low-income broadband product – which is great. But it then sets the speed of the low-income service at 50/50 Mbps while ISPs will be required to provide 100/100 Mbps or faster to everybody else. While it’s hard to fault a 50/50 Mbps product today, that’s not always going to be the case as homes continue to need more broadband. I hate the concept that low-income homes get slower broadband than everybody else just because they are poor. We can provide a lower price without cutting speeds. ISPs will all tell legislators that there is no difference in cost in a fiber network between a 50/50 Mbps and a 100/100 Mbps service. This requirement is nothing more than a backhanded way to remind folks that they are poor – there is no other reason for it that I can imagine.

One of the interesting requirements of this legislation is that the FCC gathers consumer prices for broadband. I’m really curious how this will work. I studied a market last year where I gathered hundreds of customer bills and I found almost no two homes being charged the same rate for the same broadband product. Because of special promotional rates, negotiated rates, bundled discounts, and hidden fees, I wonder how ISPs will honestly answer this question and how the FCC will interpret the results.

The bill allocates a lot of money for ongoing studies and reports. For example, there is a new biennial report that quantifies the number of households where cost is a barrier to buying broadband. I’m curious how that will be done in any meaningful way that will differ from the mountains of demographic data that show that broadband adoption has almost a straight-line relationship to household income. I’m not a big fan of creating permanent report requirements for the government that will never go away.

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Regulation - What is it Good For?

Taking the Short View

We need to talk about the insidious carryover impact of having a national definition of broadband speed of 25/3 Mbps. You might think that the FCC’s definition of broadband doesn’t matter – but it’s going to have a huge impact in 2021 on how we spend the sudden flood of broadband funding that’s coming to bear from the federal government.

First, a quick reminder about the history of the 25/3 definition of broadband. The FCC under Tom Wheeler increased the definition of broadband in 2015 from the paltry former definition of 4/1 Mbps – a sorely overdue upgrade. At the time that the new definition was set it seemed like a fair definition. The vast majority of US homes could comfortably function with a 25/3 Mbps broadband connection.

But we live in a world where household usage has been madly compounding at a rate of over 20% per year. More importantly, since 2015 we’ve changed the way we use broadband. Homes routinely use simultaneous broadband streams and a large and growing percentage of homes now find 25 Mbps download to be a major constraint on how they want to use broadband. The cable companies understood this, and to keep customers happy have upgraded their minimum download speeds from 100 Mbps to 200 Mbps.

Then came the pandemic and made the whole country focus on upload speeds. Suddenly, every student and every adult who tried to work at home learned that the upload stream for most  broadband connection will just barely support one person working at home and is completely inadequate for homes where multiple people are trying to function at home at the same time.

Meanwhile, the FCC under Chairman Ajit Pai ignored the reality of the big changes in the way that Americas use broadband. The FCC had multiple opportunities to increase the definition of broadband – including after the evident impact of the pandemic – but he stubbornly stuck with the outdated 25/3 definition. Chairman Pai did not want a legacy of suddenly declaring that many millions of homes didn’t have adequate broadband.

We now have an FCC that is likely to increase the definition of broadband, but the FCC is still waiting for a fifth Commissioner to hold a vote on the issue. Meanwhile, we are poised to start handing out billions of dollars of broadband subsidies that come from the $1.9 trillion American Rescue Plan Act. This includes $10 billion that is directly approved as state block grants for broadband plus some portion of the larger $350 billion that is approved for use for more general infrastructure that can include broadband. I can promise you that this money is going to come encumbered in some form or fashion by the old definition of broadband. I can’t predict exactly how this will come into play, but there is no way that the Treasure Department, which is administering these funds can’t ignore the official definition of broadband.

As much as federal officials might want to do the right thing, 25/3 Mbps is the current law of the land. The new federal monies are likely to emphasize serving areas that don’t have speeds that meet that 25/3 Mbps definition. Let me rephrase that to be more precise – federal broadband money will be prioritized to give funding to areas where ISPs have told the FCC that households can’t buy a 25/3 broadband product. Unfortunately, there are huge parts of the US where homes don’t get speeds anywhere close to 25/3 Mbps, but where ISPs are safe in reporting marketing speeds to the FCC rather than actual speeds. States like Georgia and North Carolina have estimated that the number of households that can’t buy a 25/3 Mbps broadband product is twice what is reported to the FCC.

What this all means is that we are going to decide where to spend billions in funding from the American Rescue Plan Act based upon the 25/3 Mbps definition of broadband – a definition that will not long survive a fully staffed FCC. The intransigence of Chairman Pai and the big ISPs that strongly supported him will carry over and have a huge impact even after he is gone. The broadband that will be built with the current funding will last for many decades – but unfortunately, some of this funding will be misdirected due to the government taking the short view that we must keep pretending that 25/3 Mbps is a meaningful measurement of broadband.

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Regulation - What is it Good For?

Grant Accountability

I was listening in on a webinar the other day and heard the comment that the RDOF grants don’t include any requirement to serve customers. Winners of the grants are required to build networks according to a specific timeline, but there is no requirement that they market and sell to anybody. I went back and read the grant requirements, and this is absolutely true. It turns out that this was also the case for many other federal grants in the last decade. The BTOP grants and a few others had requirements to serve anchor institutions, but most federal grants don’t have any specific requirements for serving the public.

You might ask why this matters – after all, doesn’t a grant recipient want to use the money to attract new customers and gain new revenues? Unfortunately, I can think of examples where this was not the case. Consider AT&T and the CAF II grants. AT&T claimed to meet most of the CAF II requirements by claiming that rural DSL customers could change to a wireless broadband product supplied from AT&T cellular towers. But for much of rural America, this wireless product was a fiction. I wrote a blog a few years ago about a guy in Georgia that called AT&T continuously for nearly a year until he finally found somebody who even heard of the product. Even then, the installer that showed up to install the product was from hundreds of miles away. AT&T met its CAF II requirements with a product that it didn’t even bother to tell its customer service reps about.

I now look back and wonder why the FCC didn’t include a requirement to advertise and notify customers in the CAF II grants. This would have made it a lot harder for telcos like Frontier and CenturyLink to fake the CAF II upgrades. The FCC could have required that grant recipients notify each existing DSL customer when faster DSL speeds were available and to also advertise in local newspapers, with maps, as the CAF II upgrades were completed. Can you imagine the public uproar had these telcos been forced to make public claims that the grant upgrades were complete, if they weren’t? A requirement to advertise the completion of the CAF II upgrades would have provided real-time feedback to the FCC from the public about whether DSL speeds were actually improved.

I can foresee this same situation with the RDOF grants. As an example, Starlink has no obligation to serve anybody in the areas where the company will receive nearly a billion dollars of grant money. They aren’t required to spend some of the grant money to advertise in these areas and they aren’t required to give customers in the grant areas any better priority for satellite broadband than customers that live outside the grant areas. I bet that years from now we’ll find out that satellite penetrations are no higher where Starlink got the grants than elsewhere in the country – and maybe even lower since some of the grant areas in the Appalachians don’t look friendly for satellite reception.

Without a requirement to market and sell and to notify the public, there is no reason that other RDOF grant recipients can’t take shortcuts. A few grant recipients might make little or no upgrades like the telcos did in CAF II. It wouldn’t be hard for a grant recipient to build only a portion of a grant award area as a way to shave costs – and hope that nobody notices.

As bad as it is for grant a recipient to not have to notify the public when grant construction is completed, there is no requirement for a grant recipient to give the FCC any feedback on many households actually purchase the improved broadband. The FCC grabs a lot of glory when it announces a grant – but then doesn’t have any requirements for feedback that the public benefited from the grant.

These are all reporting shortcomings that the FCC can still rectify with the RDOF grants so that we don’t have a repeat of the CAF II fiasco. One of the unique features of the RDOF grants is that the grants are geographically specific. The grant areas are mapped down to the street level. Grant recipients should easily be able to notify households when grant work is completed and then count customers that benefit after grant completion.

Interestingly, most state grants have accountability. It’s not unusual for state grant offices to want to see construction receipts and to also send somebody out to verify that the construction was done. The FCC has completely ignored grant accountability which is the primary reason that the CAF II grant work went largely undone. It’s time that the FCC build in some basic accountability in federal grants so that we stop handing out checks to carriers and then hope they’ll do the right thing.

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Regulation - What is it Good For?

Changing the Definition of Broadband

A group of US Senators recently sent a letter to the FCC asking to raise the definition of broadband to 100/100 Mbps. This speed has been discussed for several years as the logical step forward from the current 25/3 Mbps speed set by the FCC in 2015. It’s clear to everyone in the industry that homes are using a lot more broadband than they did in 2015 – with the biggest change being simultaneous uses of multiple broadband streams in the typical home.

I thought I’d discuss just what it would mean to change the definition of broadband. I think the change in broadband definition would trigger the following:

  • This would make it clear that DSL is an obsolete technology. We’d no longer have to worry about the big telcos that stretch the truth by claiming 25/3 Mbps speeds on DSL to stave off federal grants to overbuild them. No DSL will meet the 100/100 Mbps test and DSL will automatically be considered as an obsolete technology not capable of delivering modern broadband. Any area served by rural DSL should automatically be eligible for federal grants.
  • A higher definition of speed also declares other technologies to be inadequate. This eliminates high-orbit satellites from consideration for grant funding – something that should never have been allowed as was done in the CAF II reverse auction. This new definition would declare that older versions of fixed wireless technology are obsolete and would require WISPs to upgrade to new technology if they want to be considered for grant funding. This also kills the idea that WISP networks that have multiple wireless backhaul hops are adequate – only fiber-fed radios can meet the needed speeds.
  • This would put cable companies on the hot seat because many cable systems are not capable of 100 Mbps upload speeds. Most big cable companies did not bother to upgrade the upload portion of the network when they upgraded to DOCSIS 3.1. Cable companies that stick to the older DOCSIS 3.0 technology will fail this new FCC speed for uploading. Expect cable companies to fight fiercely against increasing the definition of broadband. If this new speed is adopted, expect to see cable companies quietly completing the mid-split upgrades to improve upload speeds – something they all should have automatically done when it was clear that poor upload speeds were the primary culprit in homes struggling during the pandemic. A change in the definition of broadband could goal cable companies into doing what they should have done as good corporate citizens.
  • This might also be a problem for the low orbit satellite companies. There are already some early beta tests results from Starlink that could pass the speed test – but many early speed tests do not. But the technology is still in beta testing and if Elon Musk is being truthful that the download speeds will soon be 300 Mbps, then 100/100 Mbps might be a passable hurdle. However, critics of Starlink say that speeds are going to bog down tremendously when more customers are added to the satellite networks. We will probably find out more about Starlink’s likely speeds if Starlink pushes back against a faster definition of broadband.
  • This definition would mean that most of rural America would rightfully be declared to not have broadband. Homes served by fiber pass the test. Homes served with WISPs with the latest technology, from towers fed by fiber, and within 2-3 miles of good line-of-sight with the transmitter can pass the test. Everything else used to provide broadband in rural America would no longer be considered as broadband.
  • This drastically changes the picture for federal grants. Today, huge swaths of rural America were denied RDOF grants because telcos lied about the speed capability of rural DSL. A higher definition of broadband speeds will paint a whole new picture where the vast majority of rural America should be eligible to get broadband grant assistance.
  • This also drastically changes the reporting to Congress on the state of US broadband. Recall that this reporting was the original reason that the FCC established a definition of broadband. Overnight we’d go from 10s of millions of homes without good broadband to potentially hundreds of millions – if the cable companies truthfully report on upload speed capability. That would paint the picture that every broadband consultant, engineer, and policy person already knows – that much of America is unhappy with their current broadband. The 100/100 Mbps definition of broadband would align the FCC with the public perception of what is acceptable broadband.
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Regulation - What is it Good For?

No Longer News – Big Telcos Ignore Copper

In news that falls under the category of ‘why did they even bother’, the California Public Utilities System released a report that details how the big telcos in the state have allowed the copper networks to deteriorate. The report was originally written in 2019, but as tends to happen in California, the telcos were able to quash the report for a few years by claiming it contains proprietary data.

The report is a great, but sad read for anybody that wants to hear the story of the slow death of copper networks. My first reaction on reading the report was to ask why the CPUC is even pretending that it has any regulatory authority over copper networks because AT&T and Frontier largely ignore the Commission on anything related to copper.

This is a report that could have been written in almost any state because copper is dying regardless of whether the telco is AT&T, Frontier, CenturyLink, Windstream, Consolidated, or others. The report is a good reminder that the neglect that is now blamed on Frontier in California was mostly due to Verizon, which owned the copper networks until 2016.

The CPUC documents situations that are familiar to customers on copper networks everywhere. AT&T and Frontier failed to meet the CPUC’s goal of fixing 90% of reported troubles within 24-hours. Amazingly, AT&T reports hitting that goal in 2 out of the 96 months covered by the CPUC report. But even that hides the fairly common practice of telling customers that troubles can’t be fixed and cutting them off the network.

The companies have raised rates on telephone service. AT&T raised rates for landline telephone between 2006 and 2018 from $10.69 to $27, allowing the company to maintain revenue on copper even as demand dropped. Measured rate service, which is supposed to be a lot cheaper for homes that don’t make many calls increased from $5.70 in 2006 to $24.25 in 2018.

The CPUC report also hints that AT&T is likely redlining poorer neighborhoods in areas where it has upgraded to fiber. Areas with fiber have 2010 median household incomes of $72,024 while areas still on copper have household incomes of $60,795. These comparisons are a bit hard to make because AT&T is not converting whole neighborhoods to fiber – just selected small pockets.

Since the report was written the AT&T situation has gotten worse when the company decided in October of 2020 to step selling DSL to new customers. Customers with DSL are allowed to keep service for now, but this means that AT&T is 100% ceding the markets where there is a cable company and is leaving rural households with few broadband options beyond satellite. This has to be a move by AT&T to start the process of walking completely away from copper. Frontier has promised to expand its fiber footprint as a condition for coming out of bankruptcy, but this is likely going to happen in cities, towns, and suburbs and not in rural areas.

It’s time for state regulators to stop the gnashing of teeth over copper networks. The service sucks and is going to get worse and worse until the networks die. If states had any real regulatory authority over copper networks, they’d confiscate them from the telcos and sell them to somebody else for a dollar. Any buyer would do a better job of keeping on the lights than the big telcos – and a buyer would likely use the remaining copper revenues to fund a conversion to fiber.

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Regulation - What is it Good For?

California Net Neutrality Rules Go Into Effect

A federal judge in the Eastern District of California has allowed the California net neutrality law to go into effect. The law was passed in 2017, soon after the FCC killed federal net neutrality along with broadband regulation. Here is a copy of the California statute from 2018.

The California net neutrality law was met immediately by a suit by the US Justice Department that said that California didn’t have the authority to pass a law that impacts interstate commerce. The California law was also challenged in court by America’s Communications Association, CTIA, the NCTA, and US Telecom on behalf of the biggest ISPs in the country. That lawsuit claimed that the California law was a “classic example of unconstitutional state regulation”.

The court placed a stay on the implementation of net neutrality until the lawsuit was resolved. The appeal of the case has bogged down in court and not much progress was made in resolving the issue. Recently, the US Department of Justice withdrew its objections to the California law, leaving only the big ISP suit. Judge John A. Mendez of the federal courts decided to lift the injunction on the law after the Department of Justice withdrew its objection to the law.

Theoretically, the law will go into effect immediately. However, the four telecom associations that brought the original suit may still try to get another injunction against the law going into effect.

Judge Mendez scolded Congress for not dealing with the issue, “When you have to deal with legislation drafted in 1934 in 2021, I don’t think anyone is well served …That is Congress’ job. They have to keep up with what is going on in the real world.” This is a sentiment that almost anybody following broadband regulation will mirror. The judge also said that lifting the injunction was done strictly on legal grounds and that nothing political should be read into his decision.

It’s going to be interesting to see how the big ISPs deal with this ruling. They can’t ignore it since California would be the fifth-largest economy in the world if it was a standalone country. It’s going to be challenging for ISPs to act one way in California and a different way everywhere else. Even if they somehow try to do that, there are several other states that have also passed new net neutrality rules that have been put on hold waiting for the resolution of the California case. It’s not hard to envision dozens of slightly different sets of net neutrality rules.

The California law largely mimicked the original FCC net neutrality rules. It included things like an injunction against paid prioritization. It would mean the end of zero-rating where a company can impose data caps while excluding it’s own content from the practice. One of my favorite aspects of the law is that it forces ISPs to tell customers the actual data speeds they are likely to receive – which is probably the part of the net neutrality order that carriers dislike the most.

This is a nightmare scenario for the big ISPs. The thought of having different net neutrality rules in each state would be a regulatory nightmare, and likely unworkable if the various states adopt different versions of the rules. But ultimately, the fault for this can be laid at the feet of the big ISPs who put tremendous effort into killing the federal rules. Ironically, the CEOs of all of the big ISPs have been on record saying that they could live with net neutrality. But federal net neutrality was killed as part of the effort to kill FCC regulation of broadband. It would be ironic if the big ISPs at some point have to lobby for federal net neutrality rules rather than face multiple state rules.