Category Archives: The Industry

Should You Have a Data Cap?

data recovery

data recovery (Photo credit: Sean MacEntee)

Over the last few years most of the cable companies and some telcos have implemented data caps on high-speed Internet access. They always claimed that caps were necessary to help protect their networks from congestion. They claimed that heavy users would clog the networks and make data speeds slow for everybody else. But as someone who sees hundreds of networks, this claim holds no technical validity, except in some isolated instances and in some parts of some networks.

Michael Powell, the head of the National Cable and Telecommunications Association admitted publicly last week that caps are not about congestion, but rather are about ‘pricing fairness”. In the telecom world there is a general rule of thumb that the most active 15% of your users will use 85% of any resource, be that minutes, data, etc. And it’s a pretty good rule of thumb. If cable companies had come along and lowered prices for the 85% who are not heavy users and then made up the difference on higher rates for the 15%, then his argument would resonate with the public. But nobody saw any rate reductions and it’s hard to see data caps as anything more than a way to make even more money from data service.

One has to just note that the US has some of the highest-priced Internet services in the world to poke holes in NCTA’s announcement. If you compare US rates to the Far East or Europe it is easy to see that our rates are way out of line on a cost per megabit of service available to customers.

To make it worse, cable companies are starting to raise data rates. And this follows a ten-year period where the underlying cost of raw data has gotten cheaper every year. When a cable company set a monthly rate of $40 or $50 a decade ago, during that decade the cost of buying wholesale access to the Internet has probably dropped by 90%. It’s my opinion that cable companies know that in another decade that they are going to mostly become ISPs since cable and telephone are both dying products. They are starting to creep the rates up now to hedge against the day when that is their only product.

But even assuming that our rates are too high and that profits are really high, should any ISP consider any sort of cap or limitation on how customers use their data. I think the answer is yes, and it is not for any of the reasons that the cable companies have given.

Using my metric, 15% of the users on a network create most of the data usage. But absent any rules on how the network can be used, a small number of them could be using most of the usage for that group. For example, customers who operate servers and operate ecommerce site or other very busy sites like a pornography server can use huge amounts of data on the network. Much of that data is sent in the upload direction and doesn’t cost as much for a carrier as downloaded data, but a few such sites actually can clog a part of the network if they are busy continuously. The way around this problem is a prohibition against using servers on a basic residential data product. But if you are going to have this kind of policy you also need to have some way to measure how much data each customer is using.

On the download side of the equation, there are always a few customers who abuse any system. There are internet hoarders just as there are hoarders of anything else, and so you might want to set a cap that discourages continuous downloading. Comcast has implemented data caps of around 300 Gb in a lot of markets lately. If a customer downloads movies at a very high quality rate, they can use around 2 Gb per hour. If they watch non-HD movies it’s about half of that. And so a 300 Gb data cap would limit people to watching 150 hours of HD programming or 300 hours of normal programming per month. That works out to a limit of 5 hours per day or HD programming or 10 hours per day of normal programming. That may seem like a lot, but if each person in the family is watching their own programming, that is a really small limit.

I have advised my clients to institute a fairer cap, but to still have one. For instance, a cap set at 1 Tb (1,000 Gb) allows for over three times the usage than the Comcast cap. Anybody going over a 1 Tb cap is likely a data hoarder because that requires somebody to be downloading video more or less continuously every day of the week. Every network has a different configuration and so this is not a hard and fast limit. But I suggest some limit on data, at a very high rate that will only affect a truly small handful of people. The Comcast rate is set to make any family who actually uses their bandwidth to pay more. My suggestion is to set a cap that stops bad abuse, while giving people what they have paid for.

The Future Viability of WiFi

Español: Logo WiFi Vectorizado

Español: Logo WiFi Vectorizado (Photo credit: Wikipedia)

Just last week I wrote a blog that talked about how busy the WiFi spectrum is getting. It seems like every telecom business is using or has plans to use the spectrum in a big way. Since I wrote that blog I noticed the following article which outlines how wireless companies intend to deploy WiFi transmitters as part of their urban cell sites (and any other cell site that experiences congestion).

Just about every telecom business has some use for WiFi. Telcos and cable companies are using WiFi in their data routers to spread their data around homes and businesses. The wireless carriers are all planning on using WiFi to offload their tremendously busy licensed spectrum. Businesses use it to set up public hotspots. Settop manufacturers are going to use it to serve multiple TVs in your home. Devices that connect to your TV like Roku and Playstation use it. And it is becoming the default spectrum to use for the Internet of things and billions of devices are going to be made WiFi capable.

So this raises the issue of whether there is some point when there is just too many different people trying to use the same spectrum in the same area at the same time. People use the WiFi spectrum because it’s free. But like any radio spectrum, it has physical limitations. At some point we can simply overwhelm a given spectrum band in a given area and it will not work well for any of the applications trying to use it. It sure seems to me like we are headed towards that possibility with WiFi. I am sure that everybody remembers in the 90’s when cordless phones came out. The spectrum got so busy in some neighborhoods that the phones just wouldn’t work.

Without getting too technical, let me discuss some of the issues associated with radio interference. There are a whole lot of different ways that interference can affect a spectrum in a given location. Consider some of the following:

Adjacent Channel Interference (ACI). The WiFi spectrum is not one big swath of data but is divided up into discrete channels. Earlier versions of WiFi used one channel per transmission, but the latest standards allow for bonding channels together. Many of the problems that are experienced in the real world with WiFi is that many of the devices using it are not built to the same high standards that you find in licensed spectrum gear. And so there are numerous devices that bleed usage into adjacent channels. When such a device is transmitting, it then not only uses the assigned channel but pollutes the two channels on both sides.

Electromagnetic Interference (EMI). This is the interference that we all remember when listening to AM radio. This is interference that comes from some outside source that can range from microwave ovens, computer terminals, solar flares, doorbell transformers, and hundreds of other sources. WiFi is not immune from external interference and so part of the spectrum is eaten through native interference.

Co-channel Interference (CCI). This is the interference that comes when more than one user us trying to use the same channel at the same time. In the voice world this is known as crosstalk, which we have all experienced on cell phones from time to time. But in a data transmission this manifests as slower data speeds since each concurrent user loses part of their signal.

Common Mode Interference (CMI). This is interference that comes from using spectrum to conduct two-way transmissions. This is basically interference between transmitting and receiving WiFi signals at the same time.

As we put more and discrete WiFi paths in the same neighborhood the effects of each one of these types of interference get magnified. In any given area there is at least a little bit of all of these types of interference. That is inherent in the way that radio waves interact with each other on a physics basis. There are engineering techniques that can be used to minimize interference. For example, it’s typical to put the transmit and receive signals as far apart as you can get them. But if you out enough different signals into the same environment there comes a point where no techniques can overcome the sheer facts of physical interference. The spectrum can get overwhelmed and essentially becomes worthless until the demand on it reduces.

I know there are a lot of scientists and engineers who look at all of the planned used for WiFi and just shudder. Because in urban environments it is likely that the spectrum is going to get overwhelmed and none of the uses will work as they should.

Will Software Eat the Telecom Industry?

no-cable-tv

no-cable-tv (Photo credit: hjl)

A few years ago Marc Andreessen, founder of Netscape coined the phrase that software is eating the world. And by that he meant that software based systems were killing off traditional industries one by one.

It’s a great observation because we have seen entire industries crumble from web competition. And just about every industry that doesn’t involve a direct physical service, such as transportation, or involve the manufacturing of goods has felt the pinch. We still need to go see a doctor when we are sick (although a lot of us will go to Web MD and misdiagnose ourselves first).

Everybody is familiar with the industries that have been decimated by competition with software. How many of you still use a travel agent when you want to book an airline ticket? When was the last time you drove to rent a movie to watch for the evening? How many music CDs have you purchased this last year? Those industries are largely gone. And many other industries have been injured by software, if not outright killed. For example, a large percentage of stock trading is now done online without the need of a  stockbroker. There is barely an industry that hasn’t felt some pinch due to software.

Looking out a decade or two it’s easy to foresee a whole lot more industries and jobs that are going to be killed by software. Driverless vehicles are likely to eventually get rid of cab drivers and truckers. 3D printing is going to wipe out a ton of manufacturing companies. When you need a small widget you’ll just print your own, and you’ll even be able to go to a friend to print a new 3D printer.

Can the same thing happen to telecom? Certainly the executives at cable companies seem to be denying that the web is changing their business model. They have an excuse and a story for every decline they see in subscribers. I think it is clear to anybody who understands the industry that for a communications company to be relevant a decade from now that they will need to change their corporate identity to become an ISP. If you can deliver a fast pipe you can survive, and possibly even thrive. But at some future point there is no longer going to be a company that is primarily a cable company.

Anybody who thinks that voice and cable TV, two legs of the triple play, are not in danger of going the way of the CD store or video rental store is kidding themselves. The history of products that have been killed by software is that, at some point, the general public sees more merit in the new software version of the product than in the traditional one. Such changes can be rapid and viral and it only took a few years for people to stop buying music CDs and renting movies at a local store. It was much easier and more affordable to do it the software way.

What the cable companies seem to be ignoring is how much the public is talking about and thinking about dropping their product. I know I am in the industry and so I am attuned to any discussion about telecom topics. But I have noticed that almost everybody I know has either dropped cable or has seriously thought about dropping or downsizing their cable subscription. If that idea goes viral and becomes conventional wisdom, then a huge percentage of cable subscribers could disappear in a very short time.

I am positive that the executives in all of these other industries saw the end coming. But in the US corporate world, with an overriding emphasis on quarterly earnings, no executive from the companies that are now dead ever came out and publicly said, “Our industry as we know it is doomed and our company needs to change massively if we want to survive”. Instead we saw the music and other industries go down in flames rather than admit publicly that they couldn’t make it. Our financial system punishes those who tell an ugly truth, and so company after company died without ever publicly admitting they could not compete with the new paradigm.

So, will software kill the telecom industry? I think it’s inevitable that it will kill voice and cable TV as products. The product that will survive in some form is fast data, because without that none of the software killer products will work. Fast internet, along with electricity and water will be the basic utilities of the future. Will software eat the telecom industry? Probably not, but it sure as hell is going to take a big bite out of it.

Safer Passwords but not More Privacy

Image representing Yubico as depicted in Crunc...

Image by None via CrunchBase

Google has developed a new device that might save us all from having to remember passwords. I know that passwords are one of my own personal bugaboos and it’s embarrassing to admit how many times I have returned to a website or service and been unable to use it since I could not remember my user name and password.

In 2014 Google is going to release a new privacy platform that would be the first big step to do away with passwords. The product will be called the YubiKey Neo and will be a USB dongle built by Yubico for Google. The technology involved is called U2F, or Universal Second Factor. This technology builds upon earlier work done in the development of smart cards.

The way the YubiKey will work is that when you are using Google Chrome or Gmail, you will log in once to the YubiKey with a user name and a PIN. Then, whenever the need for a password arises in those two applications, the YubiKey will verify who you are and you will no longer need to know passwords. It then is impossible for somebody else to pose as you on the Internet unless they have your username, PIN and physical possession of your YubiKey.

This would be a somewhat limited security platform if it only uses Google Chrome and Gmail. But Google wants this to be a universal security device and has joined a new coalition called FIDO (Fast Identy Online Alliance). This coalition includes other heavy hitters like Mastercard and Paypal. Google’s has published the U2F specification and says it is committed to an open source security solution. Google hopes this becomes the standard way to protect your identity.

This kind of technology could make online shopping even safer. And it certainly is a great way to make life easier for people like me who don’t really want to remember the passwords for a hundred different sites and services. But in the end, it really doesn’t help our privacy, just our security.

Let’s face it. We have all bought into the world where we give up our personal data for the ease or enjoyment of using free services like Facebook, LinkedIn or Gmail. It’s a well-known axiom in the industry that the product of all of these free sites are us, their users. These companies make money by using information they gather about you and everybody else on their site.

They mostly use the data today to feed advertisers, who are using that data to get more and more focused in bringing you ads for things you want to buy. But your data is starting to be used in many other new ways. Things you post on Facebook are now searchable on Bing and Google. There are social web connections being made where companies no longer just try to figure out what you lie, but they also want to know who you know. These large companies are constantly playing around with our data to see if they can find new ways to make money from your data or to make their product more valuable so they can gather even more data.

People just don’t realize, or mostly don’t care that everything they do and say on free web services is kept and analyzed and used by the web companies to profile them better and know even more about them. The only way to put the genie back in the bottle is to stop cold turkey using social web sites, and very few people want to do that. So I am certainly glad if the new Google product can do away with passwords, but I don’t take comfort that I am any safer on the web.

The Explosion of WiFi

Wi-Fi Signal logo

Wi-Fi Signal logo (Photo credit: Wikipedia)

WiFi has been around since the mid 90’s as a local wireless data connection. WiFi products grew somewhat slowly with the two primary uses being external WiFi networks used to supply point-to-point data in mostly rural areas, and as the way to connect wirelessly to computers within a home or business. And companies like Cisco, Linksys and others made a decent living selling WiFi transmitters.

But then along came the smartphone and suddenly cellular data offload became a huge business as everybody scrambled to use WiFi data from their landline network rather than pay for more expensive cellular data. All of a sudden WiFi routers became a necessity and most homes that have a landline data connection now also have a WiFi router. In fact, most cable companies, FTTX companies and telcos have built WiFi into their standard data modems.

And as successful as WiFi has been, the spectrum is about to get a lot busier. Consider the following industry trends:

Proliferation of Commercial Hotspots. There has been a proliferation of public WiFi hotspots in recent years. It used to be when you wanted free WiFi you would head to a Starbucks. But since most businesses now have data connections many of them had added WiFi for their customer’s convenience. One good indicator of this is the website WeFi.com. This site tracks known public WiFi hotspots and conveniently maps them. And this site shows many hotspots, but there are many additional hot spots that are not shown on these maps.

In addition to businesses deploying hot spots, some carriers have started deploying hot spots as part of their business plan. For example, it was recently reported that cable companies have deployed over 300,000 public WiFi hot spots, with most of those being deployed by Comcast, Comcast is deploying public hotspots in areas where they have stiff competition with fast landline data, such as areas with Verizon FiOS. So in some of these areas Comcast has deployed hot spots in areas where the public tends to congregate. For instance, they tout that they have completely covered the Jersey shore. When they can they sell hot spots to businesses as a money-making venture, but many of the Comcast hot spots are free for the use of any Comcast customer and have been installed to give them a competitive marketing advantage over their local competition. They report that the public is flocking to their hotspots with cell phones and tablets.

Settop Boxes. Many of the settop makers for cable television are coming out with version of their boxes that use WiFi to connect and transmit TV from one central hub to other televisions or to tablets, PCs or cell phones. There has already been a trend of creating a ‘whole-house’ centralized DVR / settop box that is able to record and playback multiple shows to any other TV in the home. Settop box manufacturers are going to count on the new 801.11ac standard to provide enough bandwidth to transmit cable signal between TVs.

City-wide WiFi networks. There have been a number of municipalities and other entities that have been expanding free WiFi networks. Wikipedia now lists 65 US cities that have deployed WiFi networks in some or all parts of the City. For the most part these networks offer free service although some of them instead offer WiFi by the hour or day similar to what is available in airports. I know of cities who do this which are not on this list, so the actual count of cities with some public WiFi coverage is probably quite a bit higher than 65. And I read almost daily of cities who are thinking about adding more of this. Additionally there are many cities that have added WiFi networks for first responders and City employees without offering these networks for the public.

The Internet of Things. But the real explosion of WiFi is going to come from the Internet of Things. There is only two current reliable ways for the multitude of IoT devices to communicate with a central hub, either WiFi or Bluetooth. It appears that most device makers are leaning towards WiFi as the preferred communications method since Bluetooth is mostly limited by line of sight to the central router. It’s estimated that over the next decade that billions of new IoT devices will be deployed and will start sharing the WiFi bandwidth.

There are a lot of concerns that the number of devices that will be using WiFi is going to cause a lot of local interference, which is an issue I will cover in a later blog.

The Real Cost of Money

Money cash

Money cash (Photo credit: @Doug88888)

I have often heard it said that municipal bonds are cheaper than bank loans. This is an argument rolled out by incumbent telephone and cable companies all of the time when they are trying to stave off competition by a municipal provider. Many times I’ve heard the argument that governments have an unfair advantage over commercial firms in that they can raise cheaper money through bonds.

But I have been recently working with some municipal entities and also some public / private partnerships and I think that argument is dead wrong. It looks to me like bond money is some of the most expensive money in the market.

It’s always been easy to make the argument that government money is cheaper due to municipal bonds having lower interest rates. And that is true. Historically municipal bonds have had lower interest rates. There has always been a spread between bond rates and commercial lending rates and bond rates almost always have lower interest rates. But interest rates are not the only cost of money, and so to make a comparison between the two kinds of borrowing based only upon interest rates is not telling the real story.

There are numerous other costs associated with borrowing large amounts of money. It’s easy for the average person to be able to think of loans in terms of interest rates, because when somebody uses a credit card or buys a car there are no additional costs of money other than the interest. But when somebody wants to borrow large amounts of money like what is needed for a major telecom project, then there are extra costs, much in the manner that there are closing costs when you get a mortgage on a house.

The true cost of money is the costs incurred to borrow the money and to administer the payback. Following are examples of some of the extra costs associated with borrowing large amounts of money:

  • Application Fees. For a large borrowing there is typically the requirement for a business plan. But bonds also require an additional document be prepared that is the equivalent of an offering document when a commercial firm sells securities. These documents can come with a significant cost, in the hundreds of thousands.
  • Legal Fees. Both commercial and municipal borrowing include legal fees. But the legal fees associated with bond financing are generally much larger than the costs associated with a commercial loan. Bonds are more complicated, and in some cases can be contested by the public, so there is a lot of additional due diligence done for bonds to make sure they will succeed. And if the bonds are challenged legally there can be a huge legal cost.
  • Referendum Costs. Many kinds of bonds require a vote of the public to be approved and getting a bond question onto a ballot can have a significant cost, particularly if this is not done at the time of a major general election.
  • Capitalized Interest. Bonds generally hand over the entire amount to be borrowed on day one. The bond borrower then has to pay interest on the whole balance from the start of a project. If the revenues associated with a bond don’t start right away (like with telecom projects), then it is typical for the borrower to have to borrow the first two to four years of interest payments. This can significantly increase the cost of the borrowing. For example, on a $50M project, capitalized interest can range from $5M to $10M, which is a 10% to 20% adder to the cost of the project. Commercial loans generally us a construction method where the borrower only draws the loan as it is needed, which greatly reduces the early year interest costs.
  • Debt Service Reserve Fund. Many bonds also require a debt service reserve fund. This is an amount of money set aside to pay bondholders in case the borrower is unable some year to make the full bond payments. It’s not untypical for this to be set at a full year’s interest and principal payment, adding another 3% to 5% to the total cost of the borrowing.
  • Bond Insurance. Some bonds also require bond insurance. This is an amount paid up front at closing to an insurance company that will guarantee some payments to bondholders in case of a default. The insurance rates typically run 1% to 2% of the total project.
  • Escrow Fees. Almost all bonds, and some types of commercial loans require an intermediate escrow company to gather payments monthly in order to make periodic payments to bondholders of lenders. Additionally escrow companies are used to hold money such as the debt service reserve funds or capitalized interest.
  • Reporting and Administration. Most large loans have costs of reporting results to the borrowers in some manner.

When considering all of these costs it is not unusual for a municipal telecom project to have much higher financing costs than an equivalent commercial project. When considering all of these costs it’s not hard to find municipal projects where the total cost of financing is 12% to 18% of the project. It’s rare to find a commercial loan these days where the all-in costs even hit 10%. I’ve recently seen some public / private partnership deals where bringing in commercial money has greatly lowered the cost of borrowing compared to traditional bond financing. So forget interest rates. It’s the whole cost of getting and paying back the money that matters.

Comcast and the Cable Industry

GMMZ Box

GMMZ Box (Photo credit: isriya)

Last week I wrote a blog about my poor experience in signing up with Comcast for cable modem service. Within a day after writing that article I saw several web articles about Comcast and the cable industry that I found very interesting.

First, just a few days after I signed up with Comcast they announced their next set of rate hikes. They raised the cost of leasing their cable modems from $7 to $8 per month. I took their cable modem due to the hectic process of moving into a new home, but I plan soon to replace it. It’s hard justifying spending $96 per year to lease a device that I can buy for a little less than that, and the $8 fee is really out of line with Comcast’s costs. Comcast takes advantage of the fact that most people are not technical enough to feel comfortable installing their own cable modem.

Comcast also raised the price of basic cable between $1 and $2. Basic cable is the small package that includes the traditional network channels plus some freebies like shopping networks. Comcast is also raising the price of other tiers by $2, meaning an average customer is going to see an increase of $3 – $4.

But what was not included in the announcement is that Comcast is introducing a new fee of $1.50 called a ‘broadcast fee’. This supposedly is to offset some of the increased in costs they are seeing in basic channels due to the cost of retransmission deals with traditional broadcasters. Networks like Fox, NBC, ABC and CBS have been raising rates significantly faster than inflation in recent years and this charge supposedly offsets some of those fees. However, the real reason that Comcast is including this as a separate rate is to be able to advertise lower rates for all of their cable packages than what customers actually pay. I would hope the FCC will slap them for this practice, because this new rate applies to every cable customers and to not include this as part of basic rates is a huge deception and false advertising.

I also saw a long article from Business Insider that says that “TV is Dying, and Here are the Stats to Prove It.”  It’s an interesting article and worth the read. I won’t repeat all of their statistics, which show in aggregate the cable industry has tipped over the edge and is now shrinking as an industry. Cable companies like Comcast and Time Warner are losing customers a lot faster than the industry as a whole

Telcos like Verizon FiOS and AT&T UVerse are gaining customers at the expense of the cable companies, but the industry as a whole is losing customers. This article makes a strong case that the problems experienced by the cable industry are mostly economic and that the price of cable is starting to force customers from the market. Some other sources that I have cited in the blog in the past put a lot of the blame on customers have alternative sources of content on the Internet. Certainly it is some of both, but cable is getting so expensive and continues to have big annual rate increases that are convincing customers that they need to seek an alternative. Throw into this the negative feelings that a lot of customers have about the cable company’s customer service and there are more and more people poised to drop the big cable packages.

I remember a time about four or five years ago when you couldn’t turn on a consumer show or open a magazine that didn’t have an article that was telling people to drop their home phones. And people listened to the advice and more than 40% of homes have now dropped landlines. I am now seeing the same sort of discussion about dropping cable TV. Most people are creatures of habit and most households are going to need repeated convincing to get them to drop their cable. But as the media keeps urging them to do so, and as their neighbors tell them it is okay to do so, and as the cable companies keep raising the rates, more and more households will drop cable. Right now the rate of drop-off is relatively slow, but it might well turn into a flood in the same manner that happened with landlines. Many households will never drop cable, but enough of them could do so to transform the industry in a very short period of time.

The current cable model is broken and it’s just a matter of how long it takes for the wheels to come off. The industry is driven by the content providers who are driven by the demand that their corporate earnings increase year over year. In an environment where the number of subscribers is shrinking the industry is now at the beginning of a death spiral – rate increase drive away customers, which forces content providers to increase rates, etc. And death spirals always end with, well, death.

What I am Thankful For (In the Telecom Industry)

It’s the time of the year where people make lists of the things they are thankful for. Following is my list of things that I am grateful for in the telephone industry this year.

English: Original to File:Australian Brush-Tur...

English: Original to File:Australian Brush-Turkey Telephone.JPG. (Photo credit: Wikipedia)

The Large Incumbents. As a telecom consultant I am grateful for the large incumbent providers like Verizon, AT&T, Comcast and Time Warner. It is the behavior of these large companies that gets me a lot of my work. These companies continue to do things that annoy their residential customers, overcharge their larger customers and antagonize smaller carriers. So I get a lot of work helping people work around the big carriers.

The large telephone companies saw millions of subscribers leave their voice and DSL service and yet never fixed their customer service enough to keep customers happy. And now the large cable companies are seeing the same drop-off of customers and, if anything, they are annoying their customers even more than the telcos did.

The Regulators. Every year there seems to be more things that are deregulated and yet there seems to be a bigger regulatory burden each year. There are at least a half dozen major new regulatory burdens placed on the industry just in the past five years. Just like the large incumbents, the regulators make work for me. While I grateful for this, I also wish that this was not so.

The Growing Clamor for Broadband. More and more I see whole communities demanding that they get better broadband. Sometimes they are able to talk some provider into bringing better service, but more and more they are deciding to get it done themselves. I am a big believer that broadband is basic infrastructure, so it is nice to see this validated across the country in places large and small.

Over-the-Top Programming. I never liked the big cable packages. I finally feel empowered to not have cable in my house and to just seek out and watch the content I want to watch. I am thankful for the companies who have gathered the large libraries of OTT content and for the myriad devices that we can use to watch it.

The Push for Gigabit Bandwidth. I love the nationwide push for gigabit bandwidth. This is being led by Google but is now coming from many other places. I know today that supplying a gigabit is overkill, but we are quickly approaching a time when there will be billions of new networked devices and many new bandwidth-hungry apps that will use the bandwidth. I think the gigabit initiative is going to push us into areas that will benefit mankind as a whole.

The New Toys. I have been looking at making my new home into a smart home and I love all of the new toys that are available to that end. I am pretty sure that I don’t want a fridge that counts the eggs, but I love the fire alarm that talks to me. I know that at this point that a lot the Internet of Things are toys, but some of it, like being able to control my temperature, irrigation and other systems as well as enhanced security monitoring are not toys. And I know these are the precursor towards having a truly smart house, medical monitoring and yet undreamed of services that will make our lives better.

My Smart Phone. I thought I would never say that, but I now love and need my smart phone. I am able to keep up with emails and appointments at ease. I read a lot more news than I ever did with a computer. And I can keep up with friends through games and Facebook and other apps.

My Comcast Story

XfinityAs I mentioned last week, I just moved to Florida. My options for broadband here are CenturyLink DSL or Comcast cable modem. I am in a smaller town and the only CenturyLink DSL product sold here is a speed of ‘up to 10 Mbps’. The CenturyLink product is priced attractively low with packages starting as cheap as $20. I had a faster product than that in the Virgin Islands, and so I looked at Comcast.

I talked to the neighbors around here and was surprised that almost nobody uses Comcast. They use satellite for cable and most of them use CenturyLink for DSL. They all told me that they thought Comcast was too hard to work with. But I’ve had Comcast before and their broadband product is clearly superior, so I gave them a call.

Comcast in this market has broadband products that range between 12 Mbps download and 105 Mbps download. My family is two adults and a teenager. We have multiple computers, a few Kindles, an iPad and smart phones. Right now we don’t have a TV although I’ll probably get around to buying one. I decided on the 50 Mbps product. This seemed like enough bandwidth for us to watch multiple video streams, surf the web and play games at the same time. Even though I would love more bandwidth, the 105 mbps product seems too expensive at well over $100 per month. But I am glad to live in a place where I have that faster option and I won’t be surprised to find myself needing to upgrade to it one day.

We first signed up with Comcast on line, But after a few days nothing happened and we tried it again. It finally took calling the local Comcast office because the online customer service people, who seemed to be overseas, were not getting our order into the queue right.

The first thing I found out is that Comcast in this market would not sell me naked cable modem, except for the 105 Mbps product. Every other cable modem product is only available when bundled with a cable TV product. So in order, to get the 50 Mbps product I wanted I was forced to buy the smallest basic cable package which is a dozen or so channels. I got a first-time customer special and am being charged $59 for six months and then it goes to $79 per month. At that point I’ll see if they let me drop the cable, which I do not want.

Once I order the bundle, the first thing I am told is that there is a $259 charge to ‘make sure that my property can be served by Comcast’. I tell them that there is a Comcast pedestal in my front yard and that this didn’t seem necessary. But I go ahead and authorize this and then find out that it’s going to take up to ten days to make the verification. We call every day and after five days finally convince somebody that we have the pedestal and that they don’t have to come out to verify. But I still get nailed with the charge.

After two weeks into the process it’s finally time to schedule the install. I am told there is a big backlog in the area and that it’s going to be a while. I get an appointment for five days later for late afternoon. Nobody shows up at the scheduled time and we finally get a call at 9:30 PM that day asking if they still want us to come over. Since I need a new drop I tell them we don’t want them doing that in the dark, and I get a new appointment for four days later. When the installer finally shows up he seems like a good guy and pretty competent. I’ve had Comcast installers in the past that didn’t seem well trained, but this guy seems to know his stuff. He is in a Comcast truck, not a contractor, which probably explains that.

I point out that I don’t have a TV and don’t want the settop box. But he says he has to connect it and activate it for my bundle. He also leaves the drop on the ground and tells me that in three weeks somebody will show up to bury it.

In summary it took over three weeks to get a cable modem. It took a dozen phone calls. It took three tries just to get in the queue. I had to buy a cable product I don’t want. I then had to wait to verify that I could get service even though I have one of their pedestals in the yard. The installer doesn’t show up when scheduled and doesn’t call until much later in the day and we have to reschedule. I now have a settop box sitting on my living room floor although I don’t have a TV. And I have a drop wire laying across my lawn and making me wonder how I am going to mow around it.

I see now that my neighbors were right and I can see why people less determined than me give up on Comcast. It was not a good experience and costly as well. But the cable modem is fast and as long as it stays connected I guess I will be happy with it. I’m not going to be thrilled when the price goes up and I start paying for a cable product I don’t want. And I am just hoping the drop will get buried without more phone calls.

This experience makes me wonder if the big cable companies are ever going to understand that customer service needs to be their first priority. Because they still are not doing it right. They provided me with several chances in this process to change my mind and give up on them. I saw last week that Comcast is thinking about growing by buying all or parts of other giant cable companies. Perhaps rather than do that they ought to spend some time figuring out how to do things right. After all, connecting a new customer who needs a 30 foot drop is not that complicated.

Lifeline Accountability

USAC LogoUSAC, the group that administers the Universal Service Funds, has started testing a program that is designed to stop people from requesting multiple subsidies from the Lifeline program.

The lifeline program provides a discount of $9.95 from telephone bills for low-income consumers. A consumer is eligible for Lifeline if they a earn less than 135% of the federal poverty level or if somebody in the household participates in any of a number of assistance programs such as Medicaid, Food Stamps, Section 8 housing, low income home-energy assistance, Head Start and various tribal and state programs.

The way this works is that the telephone company providing the service gives the discount to the consumer and then collects the funds from USAC out of the Universal Service Fund.

A consumer can elect to get the discount from either a home telephone or a cellular phone account, but cannot collect from both. Apparently there is a lot of concern in Washington that people are collecting the discounts for both a landline and a cell phone, because the FCC has instructed USAC to put together a program to make certain that people don’t collect multiple benefits.

And so USAC is currently implementing the National Lifeline Accountability Database (NLAD). Carriers who participate in the lifeline program are required to input data about each lifeline customer including the last four digits of their social security number or their tribal ID and their date of birth. The carrier also has to provide the full address for each customer and this address will then be verified by USAC using the USPS database of valid addresses. Expect big problems in this area because rural addresses are often very erratic in the USPS databases.

As you might imagine, many carriers don’t ask for things like the date of birth when somebody gets telephone service, so they are now scrambling to get the needed information from their customers.

States are being added to the NLAD in groups. The first group of states now entering data includes Arkansas, Maryland, Louisiana, Oklahoma and Washington. Already some states have opted out of the NLAD database including Puerto Rico, Oregon, Texas, California and Vermont. Those states are going to have to come up with some version of this database of their own or else carriers in those states will lose Lifeline funding.

There is no fee to use the database, but use of it is mandatory if a carrier wants to collect from the Lifeline fund. The real cost is in the effort of each carrier to implement and keep this database current – another unfunded mandate.

I suppose that this process will turn up some cheaters and they will be asked to pare back to just one Lifeline subsidy. But one has to wonder how many customers might have been given the discount by multiple carriers without even knowing that this is not allowed? And one might suspect that there are somewhat shady carriers who are collecting the payments from the Lifeline fund without giving the discount to a customer, or possibly even having a customer. I would not be surprised to find some carriers collecting Lifeline for customers who died years ago.

I hope the FCC publishes the result of what they find through this database. As much as I hate waste and fraud, one has to wonder of the cost of implementing this kind of red-tape process is worth it compared to any savings that will be achieved through eliminating duplicate payments. These kind of processes end up becoming permanent new requirements for carriers and make it just that much harder to do business.