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Regulation - What is it Good For?

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.

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Regulation - What is it Good For?

State versus Federal Regulation

One of the oldest tugs-of-war in the regulatory world is a battle between state and federal authority to impose regulations. This has been a constant battle in telecom regulation, but also extends across the regulation of many other industries.

The latest telecom clash between state and federal regulators comes from the attempt of states to implement net neutrality rules. The first state to pass a net neutrality law was California, but this was quickly followed by net neutrality rules in Vermont, Washington, Rhode Island, New York, Montana, and Hawaii.

The California net neutrality rules closely match those that were killed by the FCC in 2017. The California laws were quickly challenged by the US Department of Justice along with some large ISPs. The federal courts upheld the FCC’s authority to kill federal net neutrality but ruled that the FCC didn’t have the jurisdiction to override state net neutrality rules.

This year several industry lobbying groups have banded together and have sued in the U.S District Court in the Eastern District of California to stop the implementation of the California law. This includes the American Cable Association, CTIA — The Wireless Association, NCTA — The Internet & Television Association, and USTelecom — The Broadband Association. Other states have put implementation of state net neutrality rules on hold waiting for the outcome of this latest case.

The line between state and federal regulatory authority has always been a fuzzy one. The plaintiffs in this case argue that the California rules are unlawful because the state is trying to regulate interstate commerce – meaning communication between California residents and Internet servers sitting in data centers in other states. They argue that only the FCC can regulate this kind of traffic.

But the line between state and interstate traffic got blurred a long time ago as telcos and ISPs have implemented centralized technologies. For example, regulators always assumed that states have the authority to regulate telephone features like Caller ID or voice mail since these are sold to accompany landlines, which has always been considered to be under state jurisdiction. However, a close look at the technology used by telcos would show that some functions supporting telephone features are handled in other states. A company like AT&T or Verizon might house the master servers for identifying the identity of calling numbers in a single data center that serves a huge swath of the country. If a computer dips into a data center in Chicago to get the name of a calling party, does that make caller ID an interstate function?

Unfortunately, technology has badly blurred the lines between telecom products that are interstate in nature versus products that are delivered locally or within a state. My guess is that there are very few telecom products left that are purely local.

This kind of jurisdictional argument also raises the specter of carriers manipulating telecom service delivery to avoid regulation. To use my caller ID example, there is nothing to stop a telco from changing the way that caller ID works if doing so can avoid regulation – put the server in another state, and voila – caller ID is an interstate service.

This raises a larger issue to consider. The blurring of state versus interstate products raises the issue of whether states even have a role in regulating telecom services. For example, there are likely almost no web products or connections that completely begin and end within a single state. If the state / interstate issue is defined in the way the plaintiffs are asking in this case, then states likely have no role left in regulating broadband products.

That may be where the courts end up on the question – but that somehow doesn’t feel right. One of the regulatory roles of states is to protect their citizens against abuses by monopolies and bad actors. In cases where the federal government fails to act, states are the last line in protecting consumer rights. I have no idea how the courts will rule in this case. But I have a hard time thinking that states can’t act to make sure that there is no discrimination in the routing of Internet traffic affecting their citizens.

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Regulation - What is it Good For?

What Does an Administration Change Mean for the FCC?

Just as the last change in administration changed the course of the FCC, so will the swing back to a Democratic administration. If you’ve been reading me for a few years you know I am a big believer in the regulatory pendulum. Inevitably, when a regulatory agency like the FCC swings too far in any direction, it’s inevitable that it will eventually swing back the other way.

If I had to characterize the current FCC, the biggest theme of the last four years has been their stances that were exceedingly in favor of the big carriers. In ruling after ruling they helped to fulfill the wish list of the big telcos and cable companies – with nothing bigger than the nearly complete deregulation of broadband. The term deregulation isn’t even the right word because the current FCC took themselves out of the game as regulators. Chairman Ajit Pai has characterized their treatment of broadband as light-touch regulation, but it went way beyond that and the FCC eliminated its own ability to regulate broadband.

A new FCC is almost surely going to try to re-regulate broadband, and they are likely to do so by pushing for the introduction of net neutrality. This is not going to be an easy task. Obviously a new FCC can undo things done by a former FCC, but by completely writing the agency out of the regulatory game, the new FCC will have to start over from scratch. They are going to have to go through the full cycle of steps required to reintroduce any semblance of broadband re-regulation. That means adopting a policy, seeking several rounds of public comments, and then finally voting to reintroduce net neutrality and other broadband regulation. Then will come the inevitable lawsuits that will tack more time onto the process. I’m bettering we’re three years into a new FCC before we see broadband regulation back on the books.

As part of re-regulation process, a new FCC will likely put back the FCC complaint process. Most of America doesn’t realize that the current FCC does nothing with customer complaints about ISPs – complaints are simply forwarded to the Federal Trade Commission.

Hopefully, a new FCC will continue with the process of setting aside unused spectrum for rural broadband. This is one of the few areas where the current FCC stood up to big carriers – but those carriers weren’t really bothered since they don’t use most licensed spectrum in rural markets.

I’m hoping the new FCC takes a hard look at the disaster of broadband reporting and mapping. The current FCC has delayed implementation of new mapping for several years – I’ve always believed that they don’t want to see an honest count of rural homes without broadband because the numbers will be double of what the FCC claims today.

I think a new FCC will update the national definition of broadband. It’s a travesty to continue to define broadband at 25/3 Mbps when eighty percent of America buys broadband from cable or fiber companies. The main outcome of an update of the definition of broadband will hopefully be an honestly count of homes that have inferior broadband. An added bonus will be that slow broadband technologies should stop being eligible for federal grant funding. A new definition of broadband needs to recognize the new crisis of slow upload speeds that have made it so miserable for workers and students send home during the pandemic.

I hope the new FCC gets off the 5G bandwagon. The current FCC blindly followed the administration in pushing the story that America is losing the mythical 5G war. Outside of 5G the current FCC has been in favor of letting the markets solve technology issues. 5G will be whatever it’s going to be, and our national regulators should be not be pushing 5G or hindering it – they just need to stay out of the way of market progress.

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Regulation - What is it Good For?

States Fight Back Against CAF II

Jon Brodkin of ArsTechnica wrote a recent article about the Mississippi Public Service Commission (PSC) notifying the FCC that AT&T had failed to meet its CAF II requirements in the state. AT&T had taken over $49 million per year for six years ending this December and was supposed to use that money to upgrade broadband to almost 144,000 residents in the state to at least 10/1 Mbps broadband.

The PSC notification informs that FCC that they don’t believe the upgrades have been done or that many of those homes were able to get faster broadband. AT&T has certified to the FCC that the CAF II work has been completed on schedule. AT&T has stonewalled the PSC on data requests to find out how many homes have successfully been able to access faster broadband.

The FCC is supposed to begin testing CAF II homes in 2021 and is supposed to fine the big telcos like AT&T if homes in the CAF II area aren’t getting the faster speeds. However, that testing program is badly flawed in that the telcos are going to have some say about which homes get tested, and they’ll certainly funnel the testing into places that meet the speed test.

AT&T elected to use the CAF II funding to upgrade speeds by offering fixed cellular service to customers that formerly had slow DSL service. From what I can see, AT&T has not widely advertised the new wireless product and it’s unlikely that they have added many people to the cellular technology in Mississippi or anywhere else. The company is refusing to tell the state how many homes are on the new product.

Unfortunately, what AT&T is doing in Mississippi is not unusual. AT&T took $2.57 billion nationwide for CAF II and it’s likely It hasn’t made many upgrades in other states as well. I’ve seen a lot of evidence that Frontier ($1.7 billion) and CenturyLink ($3.03 billion) have also failed to upgrade rural customers. Those two companies elected to mostly upgrade rural DSL to the faster speeds. We’ve recently had engineers in counties where Frontier and CenturyLink were supposed to make CAF II upgrades and we could find no evidence of upgraded DSL anywhere in the rural parts of these counties. We’ve also helped counties to solicit speed test from citizens and we’ve studied a number of counties where no rural DSL service tested even close to the 10/1 Mbps goal of CAF II.

To make matters even worse, the FCC recently decided to award these big telcos a seventh year of subsidy. That means AT&T will get $428 million in 2021, Frontier will get $283 million, and CenturyLink will get $506 million. The companies have no obligation for this addition funding and don’t have to use it to improve rural broadband.

While 10/1 Mbps broadband isn’t great, it’s a lot better than the DSL that was in these rural areas in 2015 when the CAF II payments began. The CAF II areas are remote and most customers who could even get DSL saw speeds under 1 or 2 Mbps download.

The impact of AT&T’s failure to make the upgrades became apparent this year when millions of students were sent home during the pandemic. A student might be able to squeak out a school connection on a 10/1 Mbps broadband connection, but students cannot function on the slower DSL that is still in place due to lack of upgrades. The actions of the FCC and the greed of the big telcos robbed millions of rural homes from getting better broadband.

The failure of CAF II rests entirely on the FCC. The last FCC under Chairman Wheeler awarded the funding to upgrade to 10/1 speeds, even though the definition of broadband at the time was 25/3 Mbps. The current FCC under Chairman Pai has turned a blind eye to the non-performance of the big telcos and absurdly is awarding them with an additional year of CAF II funding. The overall CAF II program handed out over $10 billion in funding for improving rural broadband that might as well have been flushed down the drain. The FCC could have awarded this money instead to broadband grants that could have brought better broadband in the CAF II rural areas.

I hope the Mississippi PSC does more than just write a letter. I’d like to see them ask for AT&T to refund the CAF II money to the state to use for broadband grants. And I’d love to see other states do the same and take back the billions of CAF II broadband funding that was wasted.

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Regulation - What is it Good For?

Can the FCC Regulate Facebook?

At the urging of FCC Chairman Ajit Pai, the FCC General Counsel Tom Johnson announced in a recent blog that he believes that the FCC has the authority to redefine the immunity shield provided by Section 230 of the FCC’s rules that comes from the Communications Decency Act from 1996.

Section 230 of the FCC rules is one of the clearest and simplest rules in the FCC code:  “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider“.

In non-legalese, this means that a web companies is not liable for third-party content posted on its platform. It is this rule that enables public comments on the web. All social media consists of third-party content. Sites like Yelp and Amazon thrive because of public post reviews of restaurants and products. Third-party comments are in a lot more places on the web such as the comment section of your local newspaper, or even here on my blog.

Section 230 is essential if we are going to give the public a voice on the web. Without Section 230 protections, Facebook could be sued by somebody who doesn’t like specific content posted on the platform. That’s dangerous because there is somebody who hates every possible political position.  If Facebook can be sued for content posted by its billions of users, then the platform will have to quickly fold – there is no viable business model that can sustain the defense of huge volumes of lawsuits.

Section 230 was created when web platforms started to allow comments from the general public. The biggest early legal challenge to web content came in 1995 when Wall Street firm Stratton Oakmont sued Prodigy over a posting on the platform by a user that accused the president of Stratton Oakmont of fraud. Stratton Oakmont won the case when the New York Supreme Court ruled that Prodigy was a publisher because the platform exercised some editorial control by moderating content and because Prodigy had a clearly stated set of rules about what was allowable content on the Prodigy platform. As might be imagined, this court case had a chilling impact on the burgeoning web industry, and fledgling web platforms worried about getting sued over content posted by the public. This prompted Representatives Rob Wyden and Chris Cox to sponsor the bill that became the current Section 230 protections.

Tom Johnson believes the FCC has the authority to interpret Section 230 due to Section 201(b) of the Communications Act of 1934, which confers on the FCC the power to issue rules necessary to carry out the provisions of the Act. He says that when Congress instructed that Section 230 rules be added to FCC code, that implicitly means the FCC has the authority to interpret the rules.

But then Mr. Johnson does an interesting tap dance. He distinguishes between interpreting the Section 230 rules and regulating companies that are protected by these rules. If the FCC ever acts to somehow modify Section 230, the legal arguments will concentrate on this nuance.

The FCC has basically been authorized by Congress to regulate common carriers of telecommunications services as well as a few other responsibilities specifically assigned to the agency.

There is no possible way that the FCC could ever claim that companies like Facebook or Google are common carriers. If they can’t make that argument, then the agency likely has no authority to impose any obligations on these companies, even should it have the authority to ‘interpret’ Section 230. Any such interpretation would be meaningless if the FCC has no authority to impose such interpretations on the companies that rely on Section 230 protections.

What is ironic about this effort by the FCC is that the current FCC spent a great deal of effort to declassify ISPs from being common carriers. The agency has gone as far as possible to wipe its hands of any responsibility for regulating broadband provided by companies like AT&T and Comcast. It will require an amazing set of verbal gymnastics to somehow claim the ability to extend FCC authority to companies like Facebook and Twitter, which clearly have zero characteristics of being a common carrier while at the same time claiming that ISPs are not common carriers.

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Regulation - What is it Good For? The Industry

The Upload Speed Lie

In the 2020 Broadband Deployment Report, the FCC made the following claim. “The vast majority of Americans – surpassing 85% – now have access to fixed terrestrial broadband service at 250/25 Mbps”. The FCC makes this claim based upon the data provided to it by the country’s ISPs on Form 477. We know the data reported by the ISPs is badly flawed in the over-reporting of download speeds, but we’ve paid little attention to the second number the FCC cites – the 25 Mbps upload speeds that are supposedly available to everybody. I think the FCC claim that 85% of homes have access to 25 Mbps upload speeds is massively overstated.

The vast majority of the customers covered by the FCC statement are served by cable companies using hybrid fiber-coaxial technology. I don’t believe that cable companies are widely delivering upload speeds greater than 25 Mbps upload. I think the FCC has the story partly right. I think cable companies tell customers that the broadband products they buy have upload speeds of 25 Mbps, and the cable company’s largely report these marketing speeds on Form 477.

But do cable companies really deliver 25 Mbps upload speeds? One of the services my consulting firm provides is helping communities conduct speed tests. We’ve done speed tests in cities recently where only a tiny fraction of customers measured upload speeds greater than 25 Mbps on a cable HFC network.

It’s fairly easy to understand the upload speed capacity of a cable system. The first thing to understand is the upload capacity based upon the way the technology is deployed. Most cable systems deploy upload broadband using the frequencies on the cable system between 5 MHz and 42 MHz. This is a relatively small amount of bandwidth that sits at the noisiest part of cable TV frequency. I remember back to the days of analog broadcast TV and analog cable systems when somebody running a blender or a microwave would disrupt the signals on channels 2 through 5 – the cable companies are now using these same frequencies for uploading broadband. The DOCSIS 3.0 specification assigned upload broadband to the worst part of the spectrum because before the pandemic almost nobody cared about upload broadband speeds.

The second factor affecting upload speeds is the nature of the upload requests from customers. Before the pandemic, the upload link was mostly used to send out attachments to emails or backup data on a computer into the cloud. These are largely temporary uses of the upload link and are also considered non-critical – it didn’t matter to most folks if a file was uploaded in ten seconds or five minutes. However, during the pandemic, all of the new uses for uploading require a steady and dedicated upload data stream. People now are using the upload link to connect to school servers, to connect to work servers, to take college classes online, and to sit on video call services like Zoom. These are critical applications – if the upload broadband is not steady and sufficient the user loses the connection. The new upload applications can’t tolerate best effort – a connection to a school server either works or it doesn’t.

The final big factor that affects the bandwidth on a cable network is demand. Before the pandemic, a user had a better chance than today of hitting 25 Mbps upload because they might have been one of a few people trying to upload at any given time. But today a lot of homes are trying to make upload connections at the same time. This matters because a cable system shares bandwidth both in the home, but also in the neighborhood.

The upload link from a home can get overloaded if more than one person tries to connect to the upload link at the same time. Homes with a poor upload connection will find that a second or a third user cannot establish a connection. The same thing happens at the neighborhood level – if too many homes in a given neighborhood are trying to connect to upload links, then the bandwidth for the whole neighborhood becomes overloaded and starts to fail. Remember a decade ago that it was common for downloaded videos streams to freeze or pixelate in the evening when a lot of homes were using broadband? The cable companies have largely solved the download problem, but now we’re seeing neighborhoods overloading on upload speeds. This results in people unable to establish a connection to a work server or being booted off a Zoom call.

The net result of the overloaded upload links is that the cable companies cannot deliver 25 Mbps to most homes during the times when people are busy on the upload links. The cable companies have ways to fix this – but most fixes mean expensive upgrades. I bet that the cable companies are hoping this problem will magically go away at the end of the pandemic. But I’m guessing that people are going to continue to use upload speeds at levels far higher than before the pandemic. Meanwhile, if the cable companies were being honest, they would not be reporting 25 Mbps upload speeds to the FCC. (Just typing that made me chuckle because it’s not going to happen.)

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Current News Regulation - What is it Good For?

The Race to Bury Net Neutrality

The Internet is currently full of news articles describing how the FCC will soon be putting to bed the last vestiges of its order a few years ago to eliminate net neutrality rules. The order that is widely being called the net neutrality ruling was a far-reaching change at the FCC that essentially wrote the FCC out of any role in regulating broadband.

Eliminating net neutrality rules was only a small part of that order. Net neutrality is a set of principles that describe how ISPs and network owners are to not discriminate between bits carried over the Internet. Most of the largest ISPs said that they could live with the net neutrality principles, and eliminating net neutrality was not a high priority for companies like AT&T and Comcast. The real priority for the big ISPs was to take advantage of a friendly FCC that was open and willing to deregulated broadband – particularly willing to eliminate any threat of broadband rate regulation.

So when you read the flood or articles this month talking about net neutrality, you need to substitute the term ‘net neutrality’ with ‘regulating broadband’ as you read articles on the topic. The FCC chose to disguise their attempt to kill regulation under the moniker of net neutrality and was successful since the average American probably has no idea that the FCC no longer regulates ISPs and broadband.

The FCC is holding a vote on October 27, just before the presidential election to cement the last open pieces from the FCC’s order to eliminate broadband regulation. The FCC’s order to write the agency out of broadband regulation was challenged in federal court. The court basically said that the FCC had the regulatory authority to either change the rules (or not change the rules) to walk away from broadband regulation.

However, the court said that the FCC needs to demonstrate that eliminating regulatory authority over broadband didn’t impact three areas negatively. The FCC was asked to clarify:

  • How eliminating broadband regulation impacts public safety;
  • How the FCC can still regulate pole attachments if it doesn’t regulate broadband;
  • If walking away from regulation negatively impacts the FCC’s ability to offer the FCC Lifeline programs that benefit low-income Americans.

On October 27 the FCC is going to take a vote to say that it’s earlier order doesn’t negatively impact any of these issues. It’s clear that that the FCC wants to finish the elimination of broadband regulation before the election on the chance that a new Democratic president will mean a new head of the FCC. The FCC has openly said that it changed the rules on broadband regulation in such a way that will make it hard for a future FCC to overturn its order.

A new FCC can obviously undo anything that was done by a previous FCC. However, the net neutrality order was done in such a way that a new FCC would have to go through the full cycle of the FCC’s processes that including various cycles of notices of proposed rulemaking, a final rulemaking, and then the inevitable court challenges to any attempt to reregulate broadband – all done with vigorous opposition from the big ISPs. The process of reversing the deregulation of broadband would likely stretch over many years.

However, there is a much shorter and quicker path for reversing the FCC’s order. Congress is free to reset the FCC rules in any way it seems fit, and Congress could finally pass a new telecom act. There hasn’t been any major telecom legislation out of Congress since 1996 – during the heyday of dial-up Internet. In today’s political environment it would take a Democratic sweep of the White House and both houses of Congress to get new telecom legislation passed.

Even should that happen with the election, the new Democratic majority would have to agree on what is contained in a new telecom act. I can’t foresee that being an easy or quick process. There is an accumulation of topics in addition to broadband regulation that would benefit from Congressional clarification including privacy, regulation of web companies, solving the digital divide, elimination of outdated cable TV and telephone regulations, a national policy on spectrum, regulation of low orbit satellites, and a host of smaller issues.

If the Democrats don’t make a clean sweep of Congress and the White House, then the current FCC will largely have succeeded and it might be many years until a determined FCC could reestablish any regulatory authority over broadband. What is clear to somebody who closely watches industry regulation – it’s going to be interesting few years ahead of us in this industry regardless of what happens at the polls in November.

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Current News Regulation - What is it Good For?

FCC Kills CableCards

The FCC Commissioners recently unanimously voted to eliminate the rules that require cable companies to support devices that use CableCard technology for connecting to video services. The largest user of the technology is TiVo, but consumers have also been able to buy settop boxes using the technology rather than paying monthly to lease a box from the cable company.

The requirement for CableCards came from the Telecommunications Act of 1996. The congressional authors of that act thought that consumers ought to have an alternative to leasing a mandatory settop box from a cable company. After some industry wrangling, the FCC ordered that cable companies be ready to allow devices with CableCards by July 2000.

The big cable companies hated the CableCard rule and refused to share network security keys with CableCard manufacturers, making it a major challenge for a customer to install a CableCard device. In 2005 the FCC clarified the original order and told cable companies that software had to be separate than settop box devices so that CableCards could connect to cable company networks.

Over time, the software on cable networks has grown increasingly complex, and CableCard technology never became plug and play. Anybody who has ever installed a TiVo box knows the challenge of getting the CableCard software to talk to a specific local cable system. Because of this, and because of ongoing resistance to cable companies to make it easy for CableCards to work, no major market for consumer-owned settop boxes ever emerged. However, even in recent years, there have been sales of roughly half a million CableCard devices per quarter.

The biggest user of CableCard technology is TiVo which has a CableCard in every DVR recorder it sells. The FCC order doesn’t force cable companies to continue to support CableCard technology, but they likely will. Any cable company settop box built before 2015 uses CableCard technology – that was the easiest way for the cable companies to make CableCards work.

However, the FCC eliminated the last vestige of regulation on CableCards, so there is nothing to stop a cable company from cutting off CableCard devices, other than perhaps a desire to not push more households to cut the cord. Cable companies are also free to charge extra to consumers for connecting with a CableCard device.

It’s more likely that CableCard devices will just become technically obsolete over time. Without the FCC’s rules in place, the cable companies might not worry about the impact on CableCards as they update settop box software. This likely spells the end of the traditional TiVo box that could record many hours of video to watch later. Most cable companies offer an alternate to TiVo and allow customers to record and store programming in the cloud rather than on a device in the home. However, TiVo and other companies already started that transition, and TiVo introduced a cloud DVR service in 2018 for a cord-cutter that allows recording of video content that comes from any source such as over-the-air, or from an online service.

Consumers who have used CableCard devices face having to eventually pay the monthly fee for a settop box if they want to keep traditional cable TV service. Ironically, there might be a bigger need for a settop box alternative today than there was in 2000. Largely freed from regulation, the cable companies have raised fees on settop boxes, and I’ve seen monthly rental rates as high as $15 per month.

In the end, the CableCard regulation was largely a bust. It provided an alternative to renting settop boxes, but the cable companies never stopped fighting the idea and never made it easy for consumers to connect and use a CableCard device.

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Regulation - What is it Good For?

A Huge FCC Giveaway

Is there is a way to take the worst broadband subsidy program ever and make it worse? The FCC just answered that question by extending the CAF II program for a seventh year.

The CAF II program paid the large price-cap telcos to supposedly upgrade rural broadband to speeds of at least 10/1 Mbps. Over $11 billion was paid out over six years starting in 2015 and completing this year. This money went to the big telcos like AT&T, CenturyLink, Frontier, Windstream, Consolidated, and a few others. Buried in the original awards was a provision that the carriers could elect to extend payments for a seventh year – and of course, they are doing so.

Why do I call this subsidy plan a failure? Even in 2015, it was ludicrous to spend money to build 10/1 Mbps broadband. 2015 is the same year that the FCC increased the definition of broadband to 25/3 Mbps and so the FCC was investing in new Internet infrastructure in 2015 that didn’t qualify as broadband at the time of the award of funding. Worse, the FCC gave the big telcos six years to complete the construction of the upgraded 10/1 Mbps architecture – which is this year. The FCC is still paying money in 2020 to upgrade rural customers to speeds of 10/1 Mbps.

But that’s not the worst of it because it doesn’t look like a lot of the upgrades were ever done. Our company helps rural counties assess the condition of broadband, and it’s rare in many rural places that were covered by CAF II to find even a single customer getting broadband speeds of at least 10/1 Mbps. We’ve done speed tests in counties this year where the average download speeds are 4 to 5 Mbps, with a significant number of customers getting speeds under 1 Mbps. The big telcos have been cheerily reporting progress to the FCC on implementing CAF II, but in the real world, it’s hard to find any evidence that many upgrades have been made.

I have seen the DSL in rural county seats get faster, and I suppose this was done with CAF II money – even though the funding was supposed to be used for rural customers. When DSL is upgraded in a county seat, the only rural customers that see any benefit have to be within a mile or so from the town.

To improve rural DSL to 10/1 Mbps requires building a significant amount of rural fiber so that customers are within four or five miles of a fiber node equipped with DSL gear. We’ve driven whole counties looking for evidence of such upgrades and have rarely found the needed new fiber construction or electronics huts. There is no need to take my word for this – states like Georgia and Minnesota have created broadband maps that are showing no evidence for most of the CAF II upgrades.

And now the FCC is going to pay a seventh year of funding to these same telcos – only this time the companies don’t have to spend the seventh year funds to improve broadband. Instead this money is seen as ‘support’ to the telcos. This is a straight giveaway that means $503 million for CenturyLink, $427 million for AT&T, and $313 million for Frontier – straight to the bottom line. This is the most blatant handout of federal broadband funds I’ve ever seen – because these funds won’t improve broadband for any rural customer. This will just help AT&T make its dividend payments and help ease Frontier coming out of bankruptcy. 

The original plan in 20i5 included the provision for the seventh year of payout – but the FCC could have changed that rule at any time in the last six years. This is over a billion dollars being wasted  that could instead be added to the RDOF fund to build rural fiber or put into some other worthwhile broadband grant fund. The FCC would benefit rural communities more if they just walked around handing out this cash to rural folks during the pandemic.

This FCC has been pro-big carrier from the start – but adding a seventh year of CAF II is hard to see as anything other than federal waste being done openly. The companies getting this money didn’t meet the obligations of the original CAF II funding and are now perversely getting rewarded for their failure. This kind of waste makes me ill when I do the math and realize that this money could instead be used to build fiber for everybody living in the poorest 40 counties in the country. I guess it’s more important to ‘support’ AT&T instead of rural households with no broadband. 

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Regulation - What is it Good For?

FCC – Please Focus on Upload Speeds

I wrote a recent blog that talked about how the FCC is recommending to stick with the 25/3 Mbps definition of broadband for another year. In that blog, I mostly talked about how 25 Mbps download is out of touch when the FCC claims that 85% of homes today can buy 250/25 Mbps broadband.

Today I want to look at the second half of the definition – the upload speed. The FCC is proposing, in 2020 – the year when millions were sent home for work and school – that 3 Mbps upload is a sufficiently high definition of broadband. Sticking with the 3 Mbps definition of broadband makes no sense. I contend that 3 Mbps is massively out of touch with the needs of the average home. To make matters worse, the FCC will allow an ISP that offers 25/3 broadband to bid in and win grant funding in October’s RDOF grant – a network which the ISP then has six years to build. The FCC doesn’t just think that 25/3 is adequate broadband today, they think that is okay broadband size years from now.

The pandemic has made it clear to a lot of households that upload speeds matter. Before the pandemic, customers that cared about the upload speeds tended to be folks that sent huge files such as doctors, architects, engineers, photographers, etc. When they worked from home these folks have known for years that the upload speeds on the average home network are inadequate.

All of a sudden this year, millions of homes found out that they don’t have enough upload broadband speeds. Consider the amount of bandwidth that is needed to work from home. There are two uses of upload broadband that are new to most people – connecting to a school or work server and participating in Zoom or other online meetings.

Many home and work servers require the creation of a virtual private network (VPN). A VPN is a dedicated connection – the home connects and stays connected to a school or work server. It generally requires dedicating at least 1 Mbps of bandwidth, but usually more, to create and maintain a VPN connection. This means that somebody working at home on a VPN is going to tie up 1 – 3 Mbps of bandwidth that can’t be used for anybody else in the home.

Zoom calls also require upload bandwidth. The Zoom website says that a home should have a 2 Mbps connection, both upload and download to sustain a Zoom session between just two people. The amount of download bandwidth increases with each person connected to the call, meaning Zoom recommends the 2 Mbps upload, but a 6 Mbps download for a meeting with three other people.

There are other uses for upload bandwidth in the home as well. For example, a telemedicine call can use even slightly more bandwidth than connecting to work or school servers. Upload bandwidth is needed for gaming in the cloud. Upload bandwidth is also used to back-up data files, pictures, etc. into the cloud.

It doesn’t take complicated math to see why a 3 Mbps connection is inadequate for any household that wants to make more than one upload-heavy connection to the Internet at the same time. 3 Mbps is not enough bandwidth for multiple people in a home trying to connect to work and school servers or to make Zoom-like calls. I’ve heard from numerous people this year telling me they can’t have more than one person at a time using their home broadband connection. Many of these complaints came from households using broadband provided by the big cable companies, and many of these homes thought they had plenty of bandwidth until the pandemic hit.

For the FCC to stick with 3 Mbps upload as the definition of broadband is a slap in the face to every family where more than one person wants to connect to the web at the same time. With that definition, the FCC is blessing any ISP that delivers 3 Mbps upload speeds.

Even if the FCC doesn’t want to upgrade the download component of the definition of broadband, they can’t turn a blind idea to the millions of homes trying to make it through the pandemic. If social scientists are right, there will likely be millions of people who continue to work remotely even after the end of the pandemic. This is not a temporary problem that is somehow going to go away.

It’s hard to think that the minimum acceptable definition of upload speeds should be anything slower than 25 Mbps. Assuming a robust WiFi network, that’s enough bandwidth for 3 – 4 adults and/or students to work from home at the time. So FCC, please reconsider the definition of upload speeds. If you stick with 3 Mbps upload as the definition of broadband it means you don’t support broadband networks that can deliver the speeds that the average households need.