Top Broadband Stories of 2021

Every year I write a blog talking about the trends that I think we’re likely to see in the coming year. But 2021 was such an unusual year for all of us that I thought it would also be useful to talk about what we accomplished in the industry over the last year while fending off a pandemic. All in all, it was quite a year.

Broadband Funding. This was the year when the federal government finally reacted to the poor broadband in many parts of the country and pulled the trigger on huge broadband grants. Before the year started, we saw funding through the CAREs funds in 2020. We saw money going to every community that can be used for broadband in the American Rescue Plan Act. This legislation also funded grant programs at the RUS and the NTIA. The big grant announcement was the $42.5 in broadband infrastructure funding from the Infrastructure Investment and Jobs Act. States across the country have chipped in with state broadband grants funded by legislatures. 2021 was the year when the funding spigots were opened wide.

Technology Getting Faster. 2021 was the year when XGS-PON became price competitive with GPON, and we’re starting to routinely talk about new FTTP networks as 10-gigabit capable. Fixed wireless technology has been improving, but the jury is still out on claims made in 2021 for being able to deliver rural gigabit wireless. Several cable companies did field trials of early DOCSIS 4.0 technology last year – the technology that will bring gigabit upload speeds to coaxial networks. Starlink showed us last year that satellite broadband doesn’t have to suck.

Supply Chain Becomes an Issue. I don’t recall ever hearing the term supply chain in the broadband industry before 2021 – and now it’s on everybody’s lips. Supply chain issues became real in 2021. ISPS ran into sudden long waits for basic electronics like switches and servers. During the year, the delivery times for fiber grew longer. And like always happens in times of shortages, by the end of the year, it became obvious that the biggest ISPs are still getting what they need while new ISPs at the bottom of the supply chain are told to wait a year to buy fiber.

BIG ISPs Interested in Rural America. I find it dismaying and somewhat ironic to see the big telcos and even a few of the big cable companies taking a sudden serious interest in serving rural America. The telcos started to ignore rural copper networks as far back as the 1980s, and their collective neglect led directly to the current dreadful state of rural broadband that we are now attempting to fix. The new interest in rural America is clearly due to the gigantic grant programs. Since the big grants are going to be funded through states, I guess we’ll find out if anybody wants to trust these companies yet another time.

Expansion of WiFi. When we look back twenty years from now, the expansion of WiFi spectrum might have been the most important development in 2021. The FCC originally voted to add 6 GHz spectrum to WiFi in April 2020, but the order was appealed by cellular carriers that wanted the spectrum for 5G. At the very end of 2021, the courts sided with the FCC and are allowing the use of 6 GHz WiFi to finally move ahead. WiFi is the wireless solution the world needs. You buy a box and can transmit wireless broadband around the home or office – the alternative is to buy subscriptions from cellular carriers. WiFi 6 and 6 GHz spectrum is going to take the technology to a new level.

Private Equity Finds Broadband. 2021 saw private equity money pouring into the broadband market. The big flashy announcement was when Apollo Global Management bought the copper assets of CenturyLink in twenty states. But more quietly, there is private equity money being used to buy smaller ISPs and to launch new fiber networks. It’s an interesting phenomenon when you consider that none of the fundamental aspects of the market has changed. Broadband networks are never likely to earn more than infrastructure returns, and the sudden interest in investing in low, slow return businesses is baffling.

Regulation Went Nowhere. There was big anticipation at the end of 2020 that a change of administration meant a new regulatory direction for the broadband industry. But inexplicably, almost all of 2021 went by without the White House naming a fifth FCC Commissioner or a new head of NTIA. 2021 was a year of regulatory status quo where the FCC concentrated on issues that have bipartisan support like awarding new spectrum and trying to fix robocalling.

When Will We See Real 5G?

The non-stop wireless industry claims that we’ve moved from 4G to 5G finally slowed to the point that I stopped paying attention to it during the last year. There is an interesting article in PC Magazine that explains why 5G has dropped off the front burner.

The article cites interviews with Art Pouttu of Finland’s University of Oulu about the current state and the future of 5G. That university has been at the forefront of the development of 5G technology and is already looking at 6G technology.

Pouttu reminds us that there is a new ‘G” generation of wireless technology about every ten years but that it takes twenty years for the market to fully embrace all of the benefits of a new generation of wireless technology.

We are just now entering the heyday of 4G. The term 4G has been bantered around by wireless marketing folks for so long that it’s hard to believe that we didn’t see a fully-functional 4G cell site until late in 2018. Since then, the cellular companies have beefed up 4G in two ways. First, the technology is now spread through cell sites everywhere. But more importantly, 4G systems have been bolstered by the addition of new bands of cellular spectrum. The marketing folks have gleefully been labeling this new spectrum as 5G, but the new spectrum is doing nothing more than supporting the 4G network.

I venture to guess that almost nobody thinks their life has been drastically improved because 4G cellphone speeds have climbed in cities over the last few years from 30 Mbps to over 100 Mbps. I can see that faster speed on my cellphone if I take a speed test, but I haven’t really noticed much difference between the performance of my phone today compared to four years ago.

There are two major benefits from the beefed-up 4G. The first benefits everybody but has gone unnoticed. The traditional spectrum bands used for 4G were getting badly overloaded, particularly in metropolitan areas. The new bands of spectrum have relieved the pressure on cell sites and are supporting the continued growth in cellular data use. Without the new spectrum, our 4G experience would be deteriorating.

The new spectrum has also enabled the cellular carriers to all launch rural fixed cellular broadband products. Before the new spectrum, there was not enough bandwidth on rural cell sites to support both cellphones and fixed cellular customers. The many rural homes that can finally buy cellular broadband that is faster than rural DSL are the biggest winners.

But those improvements have nothing to do with 5G. The article points out what has always been the case. The promise of 5G has never been about better cellphone performance. It’s always been about applications like using wireless spectrum in complex settings like factories where feedback from huge numbers of sensors needs to be coordinated in real-time.

The cellular industry marketing machine did a real number on all of us – but perhaps most of all on the politicians. We’ve had the White House, Congress, and State politicians all talking about how the U.S. needed to win the 5G war with China – and there is still some of that talk going around today. This hype was pure rubbish. What the cellular carriers needed was more spectrum from the FCC to stave off the collapse of the cellular networks. But no cellular company wanted to crawl to Congress begging for more spectrum, because doing so would have meant the collapse of cellular company stock prices. Instead, we were fed a steady diet of false rhetoric about how 5G was going to transform the world.

The message from the University of Oulu is that most 5G features are probably still five or six years away. But even when they finally get here, 5G is not going to bring much benefit or change to our daily cellphone usage. It was never intended to do that. We already have 100 Mbps cellular data speeds with no idea how to use the extra speed on our cellphones.

Perhaps all we’ve learned from this experience is that the big cellular companies have a huge amount of political and social clout and were able to pull the wool over everybody’s eyes. They told us that the sky was falling and could only be fixed with 5G. I guess we’ll find out in a few years if we learned any lesson from this because we can’t be far off from hearing the hype about 6G. This time it will be 100% hype because 6G deals with the use of extremely short frequencies that will never be used in outdoor cellular networks. But I have a feeling that we’ll find ourselves in a 6G war with China before we know it.

Is Space Getting Too Busy?

Satellite broadband made the news again recently when the Chinese government said it had to adjust the orbits of the Chinese space station to avoid collisions with Starlink satellites. China claims it had to make adjustments in July and October of last year.

The Chinese are not the only ones making this claim. In 2020, the CEO of Rocket Lab said that it is becoming increasingly difficult to plot a clear trajectory when launching a rocket. The head of the European space agency recently accused Starlink of “making the rules” for everybody else in the way the company is launching satellites. The recent reaction by Elon Musk to these criticisms is that space is huge and can accommodate tens of billions of satellites.

What seems to be in play here is that there are no international regulations in place to define parameters for space launches. The last international treaty on space is over fifty years old and never envisioned the huge number of satellites we’re already starting to see. Starlink alone already has over 1,700 satellites and plans to launch new satellites twice per month throughout 2022. One earlier Starlink business plan called for over 30,000 satellites.

There have already been a few notable collisions between satellites. The most recent was when the Yunhai-1 Chinese satellite was apparently destroyed in March 2021 from pieces of debris from a Russian Satellite. There is a huge amount of space debris. There are over a million pieces of debris between 1 and 10 centimeters (4 inches) in size. The U.S. Space Surveillance Network was actively tracking 15,000 objects larger than 4 centimeters as of November 2021.

Debris matters because orbiting objects are moving fast – at 150 miles above the earth, a satellite needs to be going 17,500 miles per hour to maintain orbit. A collision with even a small object can be devastating.

Scientists have been warning about space debris for a long time. In 1978, NASA scientist Donald Kessler warned that collisions in space could result in a cloud of debris that would create an effective barrier to launching rockets or sending people into space.

This is no longer a theoretical problem since much of what we do on earth is now reliant on satellites. Most of our cable TV signals are launched from space. GPS relies on a series of satellites. Ships and airplanes navigate with support from satellites. Satellites are used to track weather patterns. There are now satellites tracking and monitoring everything from the movement of foreign armies to the water temperature of the oceans.  There will soon be millions of broadband customers using low-orbit satellites.

It’s hard for any layman to understand the real risks. Some of the controversy likely stems from international wrangling between nations. But there are also a lot of notable scientists that are worried that we might make space unusable.

It will be ironic if the world solves rural broadband with satellites only to find one day that there is too much debris to launch more satellites. It seems like a remote possibility, but some scientists say it’s possible. It makes sense for the international community to come together and work out rules that everybody can agree to.

Pushing Back Against Municipal Broadband

As a cautionary tale to any city that provides broadband, the incumbent ISPs are always going to push back on city initiatives. The following is a story from the summer that slipped off my radar. The city of Tucson, Arizona, launched a free wireless network to bring broadband to students in homes without broadband. As would be expected, the incumbent cable company, Cox Communications, fought against the city-provided broadband.

The city recognized the need for the network when it got requests for over 7,000 wireless access points from students during the pandemic. The city decided that the best long-term solution to the large numbers of unserved students was to create a private network using CBRS spectrum. We tend to think of municipal wireless networks as slow, but the city’s network rivals the broadband speeds offered by other cellular carriers in the city.

The city is using 4G LTE technology, which provides for the same indoor coverage as received by cell phones. The city identified 20 square miles of the city with the greatest number of students without home broadband. The initial network consisted of 40 small cell sites, and there are plans to add more. Broadband is received in the home through a typical cellular receiver and a SIM card that identifies the network. Broadband speeds are more than adequate to support a single student with download speeds over 50 Mbps and upload speeds over 3 Mbps. This network avoids the problem of having multiple students in a household sharing the network because it provides a receiver for each student.

The network has some interesting features. It supports basic network slicing which gives the school board the ability to prioritize school broadband traffic over other uses by students. The city is now looking at how to use this network for smart city purposes since the network provides broadband everywhere. The city is considering using the technology for monitoring the water system (critical infrastructure in arid Tucson), for providing ubiquitous broadband in parks, for connecting to all firefighters and other first responders, and for controlling traffic lights.

As might be expected, Cox Communications, the incumbent cable company, pushed back against the city network. When the wireless network was first discussed publicly, Cox made a proposal to provide 10 Mbps broadband to students in some selected parts of the city. When told that the wireless network would be delivering speeds of at least 50 Mbps, Cox countered that it would also be able to match the higher speed. But the first Cox offer is typical of most cable company low-income broadband programs – the speeds offered are far slower than what is delivered to a basic broadband customer.

Cox also sent a letter to the Tucson city council that warned about the problems that would be caused by broadband competition from the city. The letter included the same refrains we have seen elsewhere. The city shouldn’t be competing against the public sector. Cox warned that the city would have a hard time maintaining its new network. Cox also offered to partner with the city to build broadband in parts of the city not reached by Cox (with the city paying for the expansion).

I’m not sure that we should expect incumbents to act differently. As the cable company, Cox has a virtual monopoly on broadband since Cox largely competes only against DSL – and monopolies always fight to maintain monopoly power. Cable companies fight against all competition. They try every trick in the book to delay new commercial ISPs from building networks. But cable companies roll out a full press against city initiatives because they hope there is a political pressure point that will cause the city to reconsider. They know it’s a smart tactic because there are many cities that have canceled broadband plans after heavy lobbying by the incumbents.

In this case, the city didn’t back down and has launched the first phase of the wireless network. This became much easier for the city to finance after it received ARPA money from Congress that can be used to pay for broadband infrastructure. I am positive that the city will derive huge benefits from this network far past the day when the pandemic is behind us.

The Fixation with Broadband Speeds

Leichtman Research Group recently conducted a nationwide poll of 2,000 households asking about broadband usage. LRG has been tracking broadband for many years and reports that overall broadband subscriptions are at 87% of all households in 2021, up from 83% in 2016, and 69% in 2006. There are a few results of the survey that I think warrant additional examination.

According to the LRG survey, 63% of broadband subscribers rate the speed of their Internet connection as 8 to10 on a 10-point scale with 10 being excellent. In a similar question, 69% of respondents who subscribe to speeds of at least 100 Mbps are satisfied with their broadband service.

The big news here isn’t that many homes are satisfied with broadband speeds – it’s that one-third of all households don’t think their broadband speeds are great. The news is that over 30% of homes with speeds over 100 Mbps are not satisfied with their broadband.

My consulting firm conducts surveys at the community level, and I often see similar results. LRG only released the high-level summary responses to the survey, so we don’t know all of the questions they asked. But if LRG only asked about broadband speeds, they asked the wrong question. This was borne out by the response to a different survey question where 45% of the respondents in the LRG poll don’t even know their subscribed broadband speed.

What I’ve found through surveys is that people don’t really care about broadband speeds – they care if their broadband connection works. Most people haven’t the slightest idea at any given time how much broadband speed is being delivered to their home. I sometimes hear dismay when people finally take a speed test and find out that they are only receiving a portion of what they are paying for – but even these people might not be unhappy with broadband if it works.

Here are the things I hear from the public when we ask the same kinds of questions that LRG asked:

  • One of the most common complaints I hear about big cable company broadband is outages. The issue in most markets is not big hours-long outages but frequent small outages of a few minutes in duration. These small drive people mad because it invariably disrupts whatever they were doing with the broadband.
  • Right behind unhappiness with outages is unhappiness with slowdowns. The complaint I hear is that broadband works most of the time but then gets maddingly slow at times. It’s almost as disruptive as an outage when broadband slows to a crawl.
  • The other big recurring complaint I hear is when broadband won’t perform an expected function. People become quickly unhappy with their broadband connection when they can’t do something like maintain a Zoom call or if they get kicked off a school or office connection. Somebody might have no trouble streaming Netflix movies but find that they can’t stream the more demanding live sports broadcasts.

This survey reminded me of something that has become clear to me over the last year – policymakers are fixated on broadband speeds but people care about broadband performance. These are not the same thing. I’ve never talked to anybody outside the industry who cares one iota about the definition of broadband – they only care if everybody in the household can use the Internet at the same time.

From a policy perspective, it seems like we’ve decided that there are no urban broadband problems because everybody can buy Internet faster than 100 Mbps download. Even if we set aside the issue that many homes can’t afford broadband, this survey points out that a lot of urban households find their broadband connection to be inadequate.

Our policies are all due to the fixation with broadband speeds. Concentrating on speeds as the only way to measure broadband means that policymakers can yield to cable company lobbying that says we have no urban broadband issues.

I am absolutely thrilled that we are finally going to use some money to bring faster broadband to rural areas that have little or no broadband. But policymakers need to understand that this will not eliminate broadband problems elsewhere. A huge number of people in urban areas are still not happy with their broadband connection – and that’s a problem that’s not going to go away by throwing grant money at rural markets. If anything, building rural fiber is going to remind urban residents that they have something of lesser quality.

U.S. Broadband Prices – High or Low?

Over the years, I’ve seen a number of studies that ask how U.S. broadband prices stack up against the rest of the world. Interestingly, in 2021 I saw reports at both ends of the spectrum. One report says that U.S. broadband prices are among the most expensive in the world. At the other extreme is a report that claims that U.S. broadband prices are low and that prices are falling.

Let’s start with the high price claim. The most recent look comes from CompareTheMarket that claims that the average U.S. residential price for broadband is $66.13 and is the ninth most expensive in the world. The study compares a broadband product in each country that offers unlimited bandwidth and that delivers speeds of at least 60 Mbps download. According to this report, the only places with higher prices than the U.S. are Ethiopia, UAE, Qatar, Zimbabwe, Oman, Honduras, Saudi Arabia, and Iceland.

The calculated $66.13 price seems realistic to me and is similar to numbers I’ve been gathering all year through surveys. The CompareTheMarket price is only for broadband and doesn’t include a WiFi modem. I’ve been seeing average prices that include the WiFi modem generally range between $70 and $75 per month. It’s worth noting that the big ISPs have been quietly burying the cost of broadband in the modem fee, with one of the highest fees being the $14 monthly fee from Comcast.

There is another report that claims that U.S. Broadband prices are not only affordable but are falling from year to year. This comes from the 2021 Broadband Pricing Index Report published by USTelecom, the lobbying arm of the biggest ISPs in the country. That report makes some outrageous claims. For example, it claims that the price of the most popular tier of broadband declined by 7.5% between 2020 and 2021 – something that’s impossible to believe when Comcast and Charter, which together are half of the broadband industry, each had a significant rate increase during that period.

It’s impossible to understand what USTelecom is comparing since there are zero statistics cited to back up its numbers. It seems to be relying on the fact that the price per megabit has been decreasing – which I don’t think anybody disputes.  It’s clear that consumer broadband speeds have risen at a faster pace than prices. But that’s not what the report is implying – a casual reader would have to assume the report means that out-of-pocket prices to customers are dropping.

USTelecom puts out this report every year, and I always find it rankling. There is no consumer in the U.S. who thinks their ISP is cutting broadband prices. Some ISPs still negotiate with customers that ask for lower rates, but overall, broadband prices from the big cable companies that control most of the market keep rising year after year.

Comcast just announced an overall 3% price increase across the board for January 2022, but I haven’t yet seen this expressed in specific product prices. This comes on top of the basic broadband at Comcast that I calculate to cost $90. That’s $76 for the basic standalone broadband package (100 Mbps or 200 Mbps in most markets), plus $14 for the WiFi modem. The rate increase would put the new price at around $93.

I have to think that the USTelecom report is aimed at providing cover for politicians that support the big ISPs. There are no consumers who feel like broadband prices are dropping – unless perhaps they are in a market where a new competitor showed up during the last year. But USTelecom and the big ISPs want politicians to think the ISPs are looking out for the public during the pandemic.

I know I shouldn’t get worked up over these kinds of shenanigans from the big ISPs. But it’s aggravating to see them peddle such blather since the purpose behind these untruths is to lobby policymakers. This is a story the ISPs want legislators to hear to tell at a time when the big ISPs know that the FCC is likely to reintroduce broadband regulation. The message from the big ISPs is clear, “Why regulate us? Look how well we’re taking care of the public without regulation”. Tell that to the families paying $90 per month for Comcast broadband – assuming they don’t exceed Comcast’s data cap and pay even more.

Idle Fiber

Just in the last few months, I have talked to several rural residents and businesses who are furious that they can’t get fiber broadband even though there is fiber close to their home or business. They can’t understand why the uncaring company that owns the fiber can’t make the tiny investment needed to connect them to fiber that’s already tantalizingly close to them. I’m pretty sure that none of these folks are satisfied with my explanations of why they aren’t likely to get connected. It’s likely that these folks won’t get fiber for the reasons discussed below.

The most common reason is that the fiber that runs close to the home and business is likely middle-mile fiber. This is fiber that runs between two distant points. At the extreme, the middle-mile fiber might be part of a long-haul fiber route connecting two distant states. It’s economically infeasible to break into the middle-mile fiber. I recently had a conversation with a long-haul fiber provider that quoted a price of $2 million for a long-term contract to snag a single fiber on a fiber route that runs between the East Coast and the Midwest. Obviously, these middle-mile routes are too valuable to serve last-mile customers.

But carriers are also usually reluctant to break into shorter transport fiber routes, like fiber between two neighboring communities. What will drive people nuts is that a fiber owner could use these types of middle-mile fiber routes to serve customers if there are spare fibers. But there are two reasons to not use middle-mile routes for last-mile service. The first is technical. Every fiber splice point added to an existing fiber will slightly degrade a fiber’s performance. If a middle-mile route wasn’t designed to have multiple splice points, the owner is not going to put the middle-mile investment at risk.

But the main reason carriers don’t break into existing middle-mile fiber routes is economic. There is often no reasonable business case for serving just a few customers off an existing fiber. It’s expensive to add a few customers onto an existing transport fiber route. An ISP would have to build an FTTP hub in the area. That might mean land, a hut, core electronics, and an ongoing utility bill to keep electricity at the new hut. The ISP also must consider the cost of the fiber drops – which get expensive after a few hundred feet. The ISP also now haw to make sure there is a technician within easy range of the new customers. Unless there is an opportunity for adding a lot of customers from a new splice point, it probably makes no financial sense. You can’t just drop off a fiber to serve just a few people – the math for doing so is likely not pretty.

There is one situation that I think rightfully infuriates folks. State legislators have typically made sure that fiber built with state funding can’t be used for commercial purposes. This is obviously done at the prodding of big ISP lobbyists. This means that fibers built to connect to city halls or to connect schools together can’t be used for anything else if these fibers include a whiff of state funding.

State-funded fibers don’t just come close to rural households – the fibers often run through towns and cities, often deep into residential neighborhoods to reach schools, firehouses, and other government buildings. In these kinds of cases, it would be economically feasible to use such fiber as the launch point for last-mile fiber.

People can’t blame the school systems or the counties that build such fiber – the fault comes from restriction at the state level. I was flabbergasted a few decades ago the first time I encountered this, but I’ve come to learn that this is a common practice. Even many states that allow municipal competition usually draw a line for using state-funded fiber for any commercial purposes. Such fiber might sit idle and unused forever because of the way they were originally funded.

The final category of fiber that drives people crazy comes from commercial entities that elect to use the fiber only for themselves. A perfect example of this is Duke Power, the electric utility in my part of the world. The company used to have a thriving wholesale fiber business that leased fibers to ISPs. But a few years ago, the company decided to completely get out of the fiber leasing business, and the company now doesn’t let any other entities share its fiber. The utility probably owns the most extensive fiber network in my part of the world, including fiber that reaches deep into neighborhoods. The utility cited security as the reason to stop sharing fiber, but there are easy ways to share fiber with responsible carriers that add zero security risks.

Big Telcos and Federal Grants

Several large telcos have announced big plans to expand fiber coverage, and I assume that also means heavily participating in the upcoming $42.5 billion BEAD grants that are aimed primarily at bringing better broadband to rural areas.

When Frontier came out of bankruptcy, the company announced plans to pass 6 million homes with fiber by 2025. As part of its Build Gigabit America plan, the company raised that goal to 10 million homes. Frontier already has undertaken the first step in that plan. It set a goal of 495,000 new fiber passings for 2021 but recently announced that it expects to hit 600,000 passings for the year.

AT&T also has big plans. The company has been steadily building a fiber customer base and announced at the end of the third quarter that it now has 5.7 million fiber customers, representing a 37% market share of its 15.4 million fiber passings. A year ago, AT&T announced a goal to pass 25 million homes and businesses by 2025 – another 10 million passings. CEO John Stankey announced recently that the federal infrastructure bill will entice AT&T to increase that goal to 30 million passings, adding 5 million rural passings.

Windstream didn’t express expansion plans in terms of passings but announced this past summer that it is embarking on a $2 billion fiber expansion plan. It seems likely that the federal grants will entice the company to tackle even more growth.

Consolidated Communications is passing 300,000 new potential customers with fiber this year and has plans to continue fast growth into the future. I couldn’t find any specific plan related to federal grants, but I speculate that the company is likely going to chase grants close to existing properties.

The big mystery is CenturyLink. The company is passing 400,000 locations with fiber this year. But the company also announced the sale of its copper networks in twenty states.

It’s likely that all of these telcos want to benefit from the huge upcoming federal grants. The easiest ways for telcos to take advantage of the federal grant is to plan to overlash fiber onto existing telco copper where the companies are already the incumbent. But if the grants are lucrative enough, they might seek grants in other areas as well.

It would be interesting to be a fly on the walls of the corporate board rooms of these big telcos to see how they feel having the huge federal funding flowing through the states. The big companies have always done well with subsidies coming directly from the federal government, such as the $11 billion CAF II subsidies.

But will the telcos do as well with funding being decided at the state level? State regulators and state governments across the country have been unhappy with the way that the big telcos abandoned rural telephone networks. Most states have been able to make an easy comparison between smaller telcos and cooperatives that have invested in rural fiber and the big telcos that have done as little as possible to keep rural networks operating.

I’m curious about the degree to which the big telcos might have burned their bridges with past behavior. I know a lot of state regulators and state broadband offices who will not want to see money going to the companies that were largely responsible for creating the rural broadband gap. Are states going to be willing to give another chance to these big telcos?

I am sure that the state politics involving these grants is going to get intense. Most of the broadband offices that will be awarding these grants will be understaffed and under a lot of pressure to spend the grant money on schedule. Legislators are bound to get involved in some states to try to steer the grant process, although the federal money must meet federal grant rules set by the NTIA. Governors will also weigh in on the issue, and in some states, the grant offices are part of the executive branch. State regulators who have tussled with the big telcos will weigh in. And the public is likely to make itself heard as communities are coalescing around grant applications.

It’s going to be nearly impossible to follow grant policies and trends everywhere when all fifty states will be embarking on a giant grant program at the same time. One thing is for sure – the next few years are going to be interesting.

Build It, and They Will Fill It.

I assume that most people know the famous line from Field of Dreams where the disembodied voice promises, “Build it, and he will come.” For twenty years, I’ve been advising broadband clients against taking that advice. It doesn’t make any sense to invest a lot of money into building a broadband network without first having done enough market research to know that people will buy your services.

Today I want to talk about a similar-sounding idea – build it, and they will fill it. This is a shorthand way to describe the unbelievable growth in broadband demand. I’m now warning clients to build new networks that are robust enough to handle the future demand that will inevitably be coming from customers.

We have a lot of evidence of the fast growth of broadband usage. Center stage is statistics from OpenVault that has reported on the average nationwide broadband usage by homes as follows:

1st Quarter 2018          215 Gigabytes

1st Quarter 2019          274 Gigabytes

1st Quarter 2020          403 Gigabytes

1st Quarter 2021          462 Gigabytes

It’s easy to think that the usage spike created by the pandemic is an anomaly, but recent broadband growth has been only slightly higher than the long-term growth trend. The amount of bandwidth used by the average home has been doubling about every three years for several decades.

Another statistic from OpenVault tells a similar story. OpenVault has labeled households that use more than a terabyte of data per month as power users. The percentage of power users has grown from 4% of all homes at the end of 2018 to almost 11% by the middle of 2021.

There are two reasons that average household broadband usage has been growing. Over time, homes are finding new ways to use broadband while also using more broadband for the things we’ve always done.

I think most of us see how familiar tasks are using more broadband. A few years ago, I used Microsoft Word and Excel locally on my computer and the only time I used bandwidth was when I sent a document to somebody else. Today, my files are automatically stored in the cloud as I type, and I also keep another backup copy of everything in a different cloud. I also participate in collaboration software that stores some of the same documents again. For somebody that creates as many spreadsheets and word documents as me, this is a major increase in home broadband usage.

But it’s the new uses of broadband that really add up. New uses of broadband are coming along every day. Just a few years ago, I talked almost exclusively on my cellphone. Today I probably average three hours per day on video calls. As a sports fan, it’s not unusual for me to be streaming two or three 4K games at the same time. I’m not a gamer, but the major game platforms were all in the process of migrating to the cloud just as the pandemic hit. Our Subaru dumps a big file into the cloud every time we pull into our driveway. YouTube has started accepting 8K video that requires a 50 Mbps download stream. There are already early experimental HD virtual reality streams online.

I’m regularly asked why fiber is superior to technologies like wireless or satellite networks – and the answer is easy. Anybody who builds a new broadband network must be prepared for that network to carry ten times more broadband traffic in a decade and one hundred times more traffic in twenty years. Fixed wireless networks are not going to be able to do that. Satellite networks won’t even come close. Until the cable companies make major upgrades, they are already fallen badly behind the demand curve for upload bandwidth.

If you build a fiber network, your customers will fill it. When it gets too busy you can upgrade electronics and start the growth cycle all over again.

My 2022 Predictions

It’s that time of the year for me to get out the crystal ball and peer into 2022.

The FCC Will Tackle Broadband Regulation and Net Neutrality. I have no idea why it took a year for the administration to tee up a new Chairman and recommend a fifth FCC Commissioner. But once a new Commissioner is seated, the new FCC will tackle reinstating some version of Title II regulation, accompanied by net neutrality regulations. For yet another year, this won’t come from Congress, which is the only permanent solution.

The Rural Wireless vs. Fiber Debate Will Heat Up Again. Vendors are starting to make a lot of noise that layering on 6 GHz spectrum will revolutionize rural fixed wireless broadband. Everything I’m hearing says that the spectrum can bring fast broadband for a few miles from towers, but the outdoor operating characteristics of 6 GHz are sketchy. It won’t stop the wireless industry from declaring yet again that gigabit rural wireless is here.

Many States Will be Overwhelmed by BEAD Grant Process. The $42.5 billion BEAD grants are going to be awarded through the states on the tail of large amounts of State ARPA funding. About half of the states already have a broadband grant program, but most have awarded only a few tens of millions of grant funding. States without an existing grant program are facing the daunting task of being ready to process this funding. States collectively must hire hundreds of qualified grant reviewers in a hurry – which won’t be easy when those same people can make a lot more writing grant requests.

Supply Chain will Get Uglier. The wait time for fiber is not going to get any better during the year as demand for fiber is growing at a hockey-stick rate. Much of the rest of the supply chain will ease during the year as the roadblocks from factors like the lack of raw materials and backed-up ports will begin clearing.

The FCC Maps Aren’t Going to Improve Much. Congress finally awarded a contract for $45 million to CostQuest Associates to start the process of fixing the broadband maps. The contract award was immediately challenged by LightBox, which put the contract on hold. In a prediction that breaks my heart, I predict the revised maps are still going to have major problems. The new maps will better pin down broadband coverage areas, but ISPs will still be able to report marketing speeds instead of actual speeds.

The FCC Will Not Kill all of the Bad RDOF Winners. I hope this is my worst prediction and never happens, but I think the FCC will award RDOF funding to a few companies that shouldn’t be funded. If the FCC doesn’t clear out the RDOF long-form backlog in the next three or four months, the still pending RDOF awards will really gum up those wanting to file BEAD grants.

Starlink is Going to be Unspectacular. 2022 is supposed to be the year when Starlink goes live and starts serving millions of rural customers. My prediction is that the company will stay in beta mode for most or even all of 2022 and not make the promised big splash. However, customers who get Starlink working (around the trees and mountains) are going to rave about having broadband that is light years ahead of DSL.

Cities and Counties Will Quietly use ARPA Money for Broadband. Many local governments are still hesitant to use this funding for broadband. But as localities see other bolder local governments move ahead, I predict many will quietly follow suit. Most ARPA projects won’t get much press outside the local community.

Technician Shortage Becomes Noticeable. The technician/engineer shortage is already becoming evident and will get worse as 2022 progresses. Small construction firms and small ISPs are already seeing staff lured away by larger firms. Salaries will have to increase everywhere, and the cost of building fiber will increase accordingly.

Broadband Inflation Will be Higher than General Inflation. A lot of the issues causing general inflation will ease, and inflation will slow. However, material and labor shortages will mean more inflation for the broadband industry than for the rest of the economy.

Buy American. Applying strict buy American rules for the use of federal grant funding is going to stir and disrupt an already messy broadband supply chain.

I Will Bring Home a Boxful of Kittens. I’m just seeing if my wife is still reading my blog!