AT&T’s New View of Fiber

AT&T’s CFO John Stephens described AT&T’s fiber philosophy on a recent investor call. He described fiber as a “three-for-one opportunity” for AT&T. The first opportunity is for cellular backhaul. AT&T has been busy in recent years building fiber to reach traditional cell sites and is now building fiber to reach small cell sites. The company made a deliberate decision to reduce the amount spent on leasing fiber transport from others.

The second is building to businesses. AT&T often builds fiber to reach a large business which alone justifies the cost of building fiber. But he says the company now also looks at nearby small businesses. All business customers on fiber are high-margin, and generally steady customers. I’m sure AT&T understands what most fiber overbuilders understand – business customers on fiber are not likely to switch back to cable company broadband as long as they believe they are paying a fair price.

Finally, Stephens says the third opportunity is residential. In 2015, AT&T agreed to build fiber to pass 12.5 million homes and businesses. For a few years it didn’t look like the company was working to meet that goal (not untypical for merger conditions that never get fulfilled by big carriers). But in recent years AT&T has been doing exactly what Stephens describes. They have leveraged existing or newly built fiber to add small pockets of residential customers to fiber. All over the country, AT&T has small pockets of 50 or 100 homes that are near to fiber pops that can buy now buy fiber.

This strategy seems to be paying off for the company. In the recently ended third quarter, AT&T added 357,000 customers to fiber to bring total subscribers on fiber to 4.7 million. Stephens says the company now has a 33% penetration in neighborhoods where it has built fiber. A year ago, he said that the company’s goal is to reach 50% penetration after a few years.

AT&T is still bleeding DSL customers and announced on October 1 that it was going to stop connecting new DSL customers. AT&T lost 217,000 DSL customers in the third quarter but still has 10.5 million in service. That number should drop faster now that the company is not connecting new DSL customers. AT&T will converts a few DSL customers to fiber, but the large majority will eventually switch to cable company broadband.

It took AT&T many years to see the light, but the relatively new AT&T philosophy is what I’ve been preaching to clients for years. If you’re going to absorb the big cost of building a fiber route, then you ought to take advantage of every revenue opportunities along that route. I believe every fiber route ought to be looked at as a profit center.

Building a fiber route is a major investment for any company from small CLEC to AT&T. Every new fiber route has at least one justifiable financial reason. A fiber might reach to a school or a cell tower or provide transport to connect two markets. A ISP feels justified in building the fiber for that primary purpose. However, there are few fiber routes that don’t pass additional revenue opportunities.

There are many fiber owners that have not yet figured this out. I know of a bunch of municipal and CLEC networks that are built to reach big anchor tenants that ignore other opportunities along fiber routes.

One of my favorite examples of an ISP that has done this right is Jaguar Communications in Minnesota. In addition to being a local ISP, the company built an extensive backbone fiber network through a number of rural counties. These rural routes were built to reach cell towers, to sell transport to other carriers, or to connect Jaguar markets. Jaguar decided years ago to sell fiber-to-the-home along every transport route. Throughout the state is a Jaguar fiber backbone network that also sells fiber to farms along the fiber routes. I don’t know the number of customers Jaguar reaches this was, but it’s likely to be at least a few thousand. The revenues that can be made from a few thousand fiber customers is no small thing. Jaguar was recently acquired by Metronet, and I don’t know if the new company will continue the practice – but they should because it maximizes profit on every fiber investment.

How Safe is that New Toy?

Every Christmas season the Mozilla Foundation reviews a list of IoT devices that do not protect privacy. It seems like almost anything we buy today that includes electronics also connects to the Internet. We are filling our homes up with devices that provide feedback to the manufacturers or others, often without our knowledge or approval.

The Mozilla Foundation has established a wish list set of security standards that they think all devices sold to the public should meet. The Mozilla standards include:

  • Transmissions between the devices and the Internet should be encrypted.
  • Devices should be able to receive and implement security updates.
  • Devices should allow users to create strong passwords.
  • Devices should include a system to allow users to control or disable vulnerabilities.
  • Manufacturers should provide a clear and accessible privacy policy.
  • Newly added to Mozilla’s list is that manufacturers should disclose when they are deploying AI in the interaction with users or with their data.

The Foundation reviewed 136 devices this year that it thinks are likely presents this Christmas season. This includes a wide range of devices including smart home, home office, toys and games, entertainment, wearables, health and exercise, and devices for pets. Mozilla applies a “Privacy Not Included’ rating for any device that badly fails the Mozilla privacy standards. Mozilla has been rating devices annually since 2017 and says that a number of manufacturers have beefed up security measures on devices in response to a poor rating by Mozilla.

Some of the reviewed devices got a good rating from Mozilla, but even most of the best devices have some security issues. An example is the Nintendo Switch handheld gaming device. Mozilla says that Nintendo does a good job with privacy, security, and parental controls, but the company had a data breach in 2020 where the personal data from 300,000 accounts were compromised and that revealed name, date of birth, email addresses – enough for anybody to then hack individuals. They also note that while Nintendo doesn’t share user data with third parties, there is no guarantee that the gaming companies using the Nintendo device aren’t selling and sharing user data. This review is a good example of the kinds of security risks that the public is taking with devices we routinely bring into our homes. Every device that was reviewed had at least a few security concerns.

Some devices have almost no security features. An example is the Ubtech Jimu Robot Kits. These are coding robot kits where kids can program robots to navigate around the home using infrared sensors and sonar. The robots come in a variety of shapes like a dragon, a truck, or a combat robot. The robots contain almost none of Mozilla’s wish list of protections. The app associated with the robots can track what is seen and heard in the home and can convey user location – not great traits for a kid’s toy. The company provides no privacy policy for users and doesn’t disclose if and how it collects or uses data from the robots. Like many new electronic devices, the robots can only be used when connected to the cloud – so using the device automatically transmits a wide range of data to the company servers.

This annual list provides a good reminder that many of the devices we buy are unsafe. Most of us turn on new electronic devices without reading any instructions or privacy warnings. We type in our personal data into apps to enable the device (or let it gather that data automatically by signing up through Facebook or some other app). Even when there are privacy settings available, we rarely enable them. Device manufacturers largely count on the public not taking even basic precautions. This enables them to say they are safe while still gathering information from most of the users of the devices.

Tis’ the Season

In a year that has been tough on everybody, the biggest ISPs have decided to give us all a holiday present this year with a new round of rate increases.

Charter usually starts the rate increase season and raised broadband rates again this year on December 1. This year the rate increase is a large one as Charter raised rates on all standalone broadband products by $5 per month. That raises the rate for the basic broadband tier to $74.99, an increase of 7.1%. Charter raised cable rates in August.

Charter has also petitioned the FCC to allow the company to start charging for data caps in May 2021. The company has been prohibited from charging data caps until May 2023 as a condition of the merger with Time Warner Cable – but the company is asking to be released from that condition two years early.

Comcast is raising broadband, cable, and other rates effective January 1, 2021. Broadband rates are increasing by $3 per month for all packages. The company’s primary product, Performance broadband is increasing to $76, an increase of 4.1%.

Comcast is also increasing cable rates. For example, the cost of its basic TV product Choice TV is increasing from $25 to $30. That increase is carrying through larger cable plans. In addition to increasing the rate if basic cable, Comcast is increasing the hidden fees it charges. These are rates that are not advertised for new subscribers but for which all cable customers pay. Depending upon the market, Comcast is raising the Broadcast Fee by $4.50 per month. For many markets, this means an increase from $11.70 per month to $16.70 per month. Comcast is also increasing the Regional Sports Network fee by $2 per month. Altogether, for a customer that is not locked into a promotional special, this is an increase of as much as $11.50. Even customers on promotional plans will see the increases in the hidden fees. As usual, Comcast blames the increase of cable fees on programmers (without mentioning that it owns the NBC family of broadcast channels).

Comcast is not stopping there and is increasing other rates as well. Installation and home-visit fees are increasing from $70 to $100. Comcast is raising the cost of the first settop box from $5.00 to $7.50 but is decreasing the cost of additional boxes from $9.95 to $7.50. Comcast is increasing the cost of its home security and smart home packages by $10 per month.

AT&T is increasing the cost of its cable products for DirecTV and U-verse TV effective January 17. AT&T is increasing the price of the 160-channel Entertainment package from $97 to $102. The price of the 185-channel Choice package is going from $115 per month to $122. AT&T is raising the rates on the 250-channel Ultimate package from $142 to $151 and is raising the rates on the 330-channel Premier package from $197 to $208. AT&T is increasing U-verse TV by similar amounts, between a $5 and $9 increase. Similar to Comcast, AT&T blames the cost increases in programmers although it owns the suite of programming it acquired with Warner Media.

AT&T is also adding a ‘Federal Cost Recover fee of $0.19 per month that it says covers the expenses that DirecTV pays to the FCC. However, there seems to be no basis for this fee and it’s not being charged elsewhere in the industry.

One thing is clear from this round of rate increases – the big cable companies are feeling their monopoly power and feel free to raise broadband fees by 4% to 7% annually. You don’t have to do a lot of math to foresee basic broadband rates reaching $90 per month within five years. Unfortunately, higher broadband rates are the only way for the big cable companies to keep meeting Wall Street earnings expectations.

It’s worth noting that AT&T and Verizon are not raising rates for fiber broadband. The cable companies don’t face competition from fiber in the majority of their footprint and have largely won the monopoly broadband battle. AT&T recently announced it will no longer sell DSL products and it won’t be surprising to see Verizon follow suit.

Funding Copper Again? Really?

One of the oddest things in an extremely odd RDOF auction is that the FCC allowed bidders to seek funding with promises of upgrading telephone fiber. Both CenturyLink and Windstream won funding in some places for improving rural DSL. This is disturbing on several levels.

First, these companies took money in the past to make these same upgrades, in some instances to the same properties. The FCC awarded over $11 billion in 2015 with the CAF II grants for the big telcos to upgrade rural DSL to speeds of at least 10/1 Mbps. That grant program just finishes this month since the telcos had six years to make the upgrade. Anybody working in the CAF II areas will tell you that the speed increases never happened. We conducted speed tests in rural counties without ever seeing a single DSL reading even approaching the 10/1 goal. We’ve had engineers crawl around the rural DSL deployments in counties and could see no evidence of upgrades.

I can’t say that the big telcos didn’t make any upgrades in CAF II. I’ve seen evidence of DSL getting better in county seats, and by definition, such improvements might stretch a mile or so into the areas surrounding towns. But such upgrades don’t help the rural areas covered by CAF II that are farther outside of towns. There may be entire counties where the big telcos legitimately made the rural upgrades, but I haven’t seen or heard about any of them.

To add insult to injury for the rural people that never saw faster broadband, the FCC is allowing the big telcos to get a seventh year of CAF II funding, to be paid in 2021. The telcos have zero obligations to make any improvements with the nearly $2.4 billion that will be coming their way. That money could have been better used being given to a program to expand rural broadband.

Or could it? The FCC has not learned any lessons from the CAF II debacle and allowed big telcos to again receive funding to improve rural DSL in the RDOF auction. This time the funding will be paid out over ten years and the winners of the RDOF grant have six years to make the upgrades. And this time the speed requirements are a lot higher, depending upon what the telcos promised in the RDOF short forms. The minimum speeds required from RDOF are 25/3 Mbps, although I’m hearing the telcos promised even faster speeds from DSL in some cases.

The real situation on the ground is that the big telcos can’t make these kinds of upgrades in rural America even if they wanted to. The big telcos have ignored maintenance on rural copper for decades and the copper is dead or dying. Month after month, additional pairs of rural copper go permanently dark and can’t be used. The networks are now dying.

Any big telco that says that they can bring rural copper to speeds of 25/3 Mbps or faster is lying – ask any of the big telco copper technicians. That would be a challenge in a rural area even somebody built brand-new copper plant. The smaller telcos made upgrades to DSL on rural copper twenty years ago, and even then, it was a big challenge. The expected life on a copper network is between 40 and 50 years, and most of the rural copper plant was built in the 1960s and 1970, with some even older. We’re entering a new decade where most of our rural copper networks are between 50 and 70 years old.

We need to stop pretending that allowing big telcos to take money to upgrade copper is anything other than a regulatory gift. AT&T finally told the truth about copper networks and is no longer adding any new customers onto DSL. It’s now only a matter of time before the company starts tearing down copper.

Most people don’t realize how remote and rural the areas are that are being funding by the RDOF grants. These are not areas that are close to county seats – but are instead the most remote parts of counties. These networks probably could not be upgraded to 25/3 Mbps speeds on copper with twice the money being awarded by the RDOF grants.

And the real killer of all of this is that any such upgrades would be a giant waste of federal money even if the upgrades could be made. The same FCC that is still allowing telcos to get grant money for DSL also has its head in the sand pretending that 25/3 Mbps is adequate broadband.

The big losers in all of this are people that live in the areas that will see grant awards go to copper. They were told they would get better broadband in 2015 with CAF II and that never happened. They now will be string out until 2027 with no improvement in broadband. When you reduce this debacle to homes where people can’t work from home and where students can’t do homework, this is a tragedy. But obviously not enough of a tragedy for the FCC to stop funding upgrades to telephone copper.

AT&T Aids the Shift to Cable Monopolies

If you live in a city where AT&T is the incumbent telephone company, the chances are high that the cable company is now a broadband monopoly. Unless some other ISP is building fiber, you no longer have a choice of broadband provider – it’s the cable company or nobody. When AT&T announced that it is no longer connecting DSL customers as of October 1, the company has fully ceded its historic telephone properties to its cable company competitors.

Broadband customers are not going to like what having a monopoly provider will mean. The changes won’t happen overnight, but when the cable company becomes a monopoly provider in a market they will eventually act like a monopoly.

  • The cable company will get slower on repairs because there is no threat of losing customers. Technicians will miss more appointments.
  • Customer service will deteriorate. Call waiting times will increase. Customer service reps will become less interested in fixing problems. It will become harder to win billing disputes.
  • Network performance will deteriorate because the cable company will be able to save money by shaving on maintenance budgets. Outages that used to last an hour might last for a day. Outages that used to last for a day might stretch to a week.
  • Financial incentives for new customers will disappear when it becomes clear that the cable company gets every broadband customer without trying.
  • Prices will increase. Data caps will be more strictly enforced in monopoly markets. Customers will no longer be able to negotiate lower rates and will be forced to pay full list prices.

If you don’t think monopoly abuse is real, talk to any rural DSL customer. They can describe in detail how service slowly deteriorated over time once it was clear that the big telcos had a rural broadband monopoly. The abuses that have been heaped upon rural DSL customers are almost unbelievable.

The slide into monopoly behavior won’t happen immediately – but it is inevitable. Most monopoly behavior originates in the local market as regional managers come to understand that they can improve financial performance (and bonuses) by cutting corners. There’s no reason to pay overtime to put a customer back in service – waiting until the next day is fine. There’s no reason to give a complaining customer a discount because they can’t leave. Slowly, bit by bit, the abuses that are to be expected in a monopoly market will become the new normal.

AT&T walking away from DSL will accelerate the shift to monopoly, but it’s a shift that’s already underway everywhere there is no fiber alternative. The telco DSL market has been sinking for a decade as cable broadband became faster. Quarter after quarter, hundreds of thousands of DSL customers are making the shift to cable company broadband. My firm does broadband surveys and we’re surprised when we find a city with a DSL market share over 30%, and in most markets, DSL penetration is now under 15%.

For the most part, urban DSL providers have already given in to the inevitable. The big telcos have continued to cut technicians who understand copper technology. The copper wires continue to age and every year more pairs of copper wire go dark and can’t be used. There are no longer manufacturers supporting some of the older versions of DSL and it’s nearly impossible to get replacement electronics. Long before AT&T formally announced they won’t connect new DSL customers, local telco technicians have been regularly telling that same story to customers.

AT&T is the first big telco to announce the end of DSL support, but they won’t be the last. I find it hard to think that Verizon won’t soon follow now that AT&T has taken a public stance. CenturyLink management has made it clear that they would love to get out of the copper business. Frontier will continue to try to make copper work because the company has no other revenue stream to fall back upon. But within the next decade, the copper wires are finally going to stop working for all of the telcos.

It will be interesting to see how long it takes the FCC to acknowledge this new reality. When AT&T announced the end of DSL, it took away the second broadband option from millions of households. But AT&T will continue to report its dwindling number of DSL customers, and my bet is that the FCC won’t recognize or admit that millions of homes now have only one broadband choice.

Microsoft Looking at Broadband and Agriculture

This past summer Microsoft announced a strategic alliance with the giant farm cooperative Land O’Lakes. The company is one of the country’s largest farmer-owned cooperatives and is a huge dairy producer and controls over 150 million acres of cropland.

The partnership intends to explore ways that Microsoft can leverage technology to improve farm production. Land O’Lakes has created a portfolio of software tools for members and Microsoft will work to unify the software in its Azure cloud platform. The hope is that a large and standardized agricultural software platform will be the best way to bring technology improvements to individual farmers in the cooperative.

One example of this initiative is a tool for dealing with early mitigation of plant stress. Crops are most susceptible to problems at the beginning of the growing cycle, and the software platform will help farmers to survey their fields with sensors and to take actions to optimize growth conditions. The software will suggest optimum fertilizer applications that will lower the amount of fertilizer used by applying the right kind of fertilizer only where needed. Over time the goal is to identify the right seed varieties for each farm to maximize output.

The biggest challenge in the Microsoft initiative is something that readers of this blog are well aware of – many farms have inadequate broadband. Rather than be stopped by lack of broadband, the partnership will be exploring solutions that work for well-connected farms as well as for those with poor broadband.

An example of a solution for areas with poor broadband is the Digital Dairy solution. This will use edge computing located at the farm that will be powerful enough to process data without having to send the data to the cloud. This initiative starts with tracking herd health with innovative practices that will tailor the feed to each cow to maximize health and milk production. Microsoft also will be concentrating on the supply chain to find strategies to make sure that milk doesn’t go bad during storage and transit. The ultimate goal is to provide traceability so that stores in the supply chain, and ultimately consumers will be able to know the source, quality, and freshness of dairy products.

One of the most exciting parts of the partnership is to use software tools to help with sustainability. This means studying the local soil to develop strategies to improve soil conditions since healthier soil ultimately means better crops and healthier food. One important component of sustainability is developing strategies for carbon sequestration, which is the process of permanently storing excess carbon in the soil. That’s good for the planet but also good for the soil.

Microsoft will also be working to bring better broadband to some of the Land O’Lakes farms. For several years, the company has been engaged with rural ISPs in its Airband program to use white space spectrum to bring better broadband to rural areas. That program got a huge shot in the arm a few months ago when the FCC finally agreed to free up more rural white space spectrum – something for which Microsoft has been lobbying for almost a decade.

This initiative is emblematic of the new approach that Microsoft is taking in the market. Rather than only developing generic software products, the company wants to work with individual industries to develop new and improved software tools specific for each industry. There is probably no better place for Microsoft to start than our farms.

Are There any Cable Companies Left?

Are there any companies left that we can still call cable companies? Everything in the business press still refers to Comcast and Charter as cable companies and AT&T and Verizon as telephone companies. It’s getting harder to justify using these traditional labels and maybe the time is finally here to just start calling them all ISPs.

After all, these four companies collectively have 80 million broadband customers, meaning these four ISPs now have around 73% of all broadband customers in the country. They also have about 73% of all traditional cable customers, at 58 million, but that number has been tumbling and is down from 64 million just a year ago. It was only a few years ago where the broadband and cable TV markets crossed and broadband became the predominant product for these companies – but since then, the gap is growing quickly between the two product lines.

FierceVideo published an article in September that interviewed the CEOs of Comcast, Charter, and AT&T that asked each their views on the future of cable TV. Their responses are not surprising in an industry where traditional cable subscribers are shrinking quickly.

Brian Roberts of Comcast said he is “indifferent” for having customers on traditional cable TV or in Comcast’s Flex product that is free and ad-supported. And that doesn’t even count in the 14 million people who are now watching Comcast’s online Peacock service. Comcast sees all video products as important in making Comcast’s broadband customers stickier. AT&T’s John Stankey said something similar. He says he values the traditional cable TV product, but that the company is betting on the online offerings like AT&T TV and HBO Max.  Charter is the only large company still on the traditional track, and the company added cable customers in the second quarter of this year. But Charter CEO Tom Rutledge foresees growth coming to an end since the company feels obligated to pass video content rate increases on to cable customers.

Both Comcast and Charter have made up some of the loss in cable customers by launching a successful cellular product. At the end of the third quarter this year, Comcast had 2.6 million cellular customers and Charter had grown to 2 million. Both companies will be working to increase the profit margins of the cellular product by shifting traffic from resold cellular to company-owned small cell sites. Both companies have a built-in advantage in that they already own fiber deep into neighborhoods, so both should be able to deploy cellular small cells without having to lease transport. I find it interesting that these two traditional cable companies seem to be doing a better job of bunding in cellular service than was ever done by AT&T and Verizon – those two companies never seemed to find a way to do that.

In my writing about the industry, I have lately been referring to these big companies as ISPs or incumbents because the terms cable company and telephone company seems to have lost relevance. It’s becoming hard to distinguish between Comcast and AT&T in markets where AT&T is competing against Comcast using gigabit fiber.

I’m at a loss to explain why the industry continues to call Comcast a cable company. The percentage of revenue that comes from cable TV is dropping quickly, and the share of margin from cable is dropping even faster. The amount of money that AT&T makes from traditional telephone service is so small that it’s a challenge to even find the word telephone in the company’s financial report. But I guess old habits are hard to break. We instantly know who is being referred to when somebody says “large cable companies” or “large telcos”. But I’m still looking forward to a time when these monikers are so rare that we’ll have to explain what they mean to children.

Broadband Growth Continues During the Pandemic

Leichtman Research Group recently released the broadband customer statistics for the end of the third quarter of 2020 for the largest cable and telephone companies. Leichtman compiles most of these numbers from the statistics provided to stockholders other than for Cox, which is estimated. Leichtman says this group of companies represents 96% of all US landline broadband customers.

The second quarter shows big growth in broadband customers with over one and a half million new broadband subscribers customers added by the big ISPs. The following are the statistics for the first and second quarters of 2020.

9/30/20 3Q Change % Change 2Q 20 Adds
Comcast 30,062,000 633,000 2.2% 323,000
Charter 28,633,000 537,000 1.9% 850.000
AT&T 15,375,000 174,000 1.1% (114,000)
Verizon 7,069,000 110,000 1.6% (23,000)
Cox 5,330,000 50,000 0.9% 50,000
CenturyLink 4,563,000 (75,000) -1.6% (29,000)
Altice 4,363,500 26,000 0.6% 70,400
Frontier 3,119,000 (23,000) -0.7% (41,000)
Mediacom 1,425,000 29,000 2.1% 47,000
Windstream 1,102,300 12,900 1.2% 22,100
Cable ONE 865,000 27,000 3.2% 45,000
WOW! 808,900 3,300 0.4% 8,000
Consolidated 792,211 1,008 0.1% 5,078
TDS 487,700 8,200 1.7% 19,500
Atlantic Broadband 492,212 13,523 2.8% 6,000
Cincinnati Bell 434,500 2,500 0.6% 4,500
104,922,323 1,529,431 1.5% 1,243,578
Total Cable 71,979,612 1,318,823 1.9% 1,399,400
Total Telco 32,942,711 210,608 0.6% (115,822)

Going purely by the numbers, the cable companies collectively added 1.3 million customers in the third quarter  – 80,000 less than the second quarter. The telcos made a huge turnaround and adding 210,000 customers in the quarter after having lost 116,000 customers just a quarter earlier.

There are still a few factors that probably make 2020 subscriber numbers a little soft. For example, most of the big ISPs are still not disconnecting customers for non-payment. At some future date that back billing is going to come due, and one might expect that due to widespread unemployment that there will be a significant downside adjustment. Some of the ISPs have also been providing free or low-cost broadband to students working from home – something that will also eventually end. One piece of evidence that subscriber numbers are soft is that the third quarter also saw 1,500,000 homes disconnect traditional cable TV, largely to save money.

Probably the most important thing demonstrated by the growth numbers is the huge and growing demand for broadband during the pandemic – even if the numbers are masking homes that might not be able to afford broadband post-pandemic. We continue to find evidence that broadband has become a necessity for homes.

There is another industry trend that is not reflected in these numbers. OpenVault reported recently that at the end of the third quarter that 5.6% of homes were now subscribed to a gigabit broadband product. That means that just in the third quarter that 875,000 homes upgraded to gigabit. Similar upgrading can be seen for subscribers to bandwidth tiers between 200 Mbps and gigabit speeds. People are clearly finding existing broadband products to be inadequate and are upgrading to faster products.

Continued Bans Against Municipal Competition

There are still states around that don’t let municipalities participate in finding broadband solutions. In a world where it’s now clear that broadband is vital to homes, it’s hard to understand how such bans make any sense. I’m going to write today about my state of North Carolina as an example of how continued bans are harming the citizens of the state.

This is a state where the telecom lobby has been historically generous with state lawmakers and has been able to pass desired legislation for decades. The municipal ban in North Carolina was passed a decade ago when lawmakers reacted to a citywide fiber network constructed by the City of Wilson. The big ISPs at the time – Time Warner Cable (now part of Charter), AT&T, and CenturyLink argued that municipal competition was unfair and that the private sector should be allowed to take care of the broadband needs of communities.

The pandemic has highlighted the fallacy of the big ISP argument. In the ten years since the law passed, the state has seen some improvements in broadband. When Google Fiber popped up in the Research Triangle, both AT&T and Time Warner reacted quickly and a few lucky households can buy gigabit broadband today from three providers. There are a few telephone cooperatives in the state that have built fiber in rural areas, including one that is extending into some neighboring counties. A few WISPs have built wireless broadband to pockets of rural customers. Charter upgraded a few years ago to DOCSIS 3.1 and cable broadband in the cities is decent – although upload speeds now look to be inadequate to handle the pandemic.

But the households that had no broadband, or poor broadband a decade ago when the municipal ban was passed still had no broadband when the pandemic sent students and adults home to work. AT&T has gone so far as to announce on October 1 that it will no longer install new DSL customers – so it’s ceding the towns and cities in the states to become monopoly markets controlled by cable companies. CenturyLink got billions of federal dollars to improve rural broadband to at least 10/1 Mbps, but nobody in North Carolina can find where these upgrades have been made.

The big ISPs are lobbying against a bogeyman that doesn’t exist. Municipal competition has been allowed in a lot of the country for twenty years and there are still only around 200 communities that have built fiber – most of them small and most of them already having a municipal electric utility.

Communities only look for broadband solutions when prompted to do so by their citizens. A big percentage of rural communities are now exploring better broadband because their citizens are screaming loudly about the inability to participate in normal daily life without good broadband. At the local level, broadband is a non-partisan issue and you won’t find many local politicians in rural areas who are not strong proponents of solving the broadband gaps.

But unfortunately, at the state level, politics as usual still controls the municipal ban on broadband. Almost annually in North Carolina, proponents for better broadband take a shot at overturning the municipal broadband ban. But year after year the lobbyists kill such efforts. In the last legislative session the story I heard is that AT&T lobbyists were able to change the wording of the proposed new law to the point of neutering it. This is the same AT&T that publicly announced a year ago that it was finished building residential fiber and that this year decided to bow out of the business of providing broadband using DSL on copper wires. This is a big ISP that is not spending any money to help North Carolina households but that still is still spending on lobbyists to kill any law that even hints at broadband competition.

The AT&T tactic used to kill a pro-broadband law earlier this year demonstrates the newest big ISP tactic. Lobbyists get language inserted into proposed bills that kills them – but the language is always subtle, and to a layperson never sounds bad. This gives cover to state politicians that can tell their rural constituents that they are pro-broadband while still voting against pro-broadband laws.

What’s ironic about the municipal broadband ban is that there are only a few communities that are willing to become an ISP. The vast majority of communities that spend money looking for a broadband solution are trying to lure a new ISP to serve their community. But of course, the big ISPs don’t want that any more than they want municipal competition.

The pandemic may have changed the calculus of the legislative process enough to overturn the bans against municipal broadband. Rural residents are now up-in-arms about lack of broadband and are letting politicians know their unhappiness. But since the legislative process is done behind closed doors, it’s sadly likely that the lobbyists of the big ISPs will continue to hold enough sway to keep killing competition.


Why I am Thankful for 2020

Every year I write a blog at Thanksgiving talking about the things in our industry for which I am thankful. Most years it’s not hard to do this because there are always a lot of great things happening in the broadband industry. But 2020 has been hard on the broadband industry just like it’s been hard on all of us. I had to reach a little deeper this year to make a list. Please feel free to comment on this blog with things you are thankful for this year.

Response to the Pandemic. To me, the big story of the year is the way that local officials and local ISPs quickly responded to the pandemic. It was a shock sending kids home to do schoolwork who didn’t have computers or home broadband connections. I’ve talked to dozens of school districts that scrambled and found hot spots and computers so that within a short time kids had some options.

Unfortunately, this wasn’t always easy. For instance, there are a lot of rural places with poor cellular coverage where sending home a wireless hotspot wasn’t a viable solution. Communities and ISPs found ways to install public hot spots at schools, parked school buses, restaurants, fire stations – any place where people could park cars and where ISPs could get a broadband signal. I’m thankful for the thousands of people who mobilized quickly to make this happen.

Rural Broadband Problems Got Noticed. Politicians at every level heard from angry constituents who will no longer tolerate the sad state of rural broadband. All of a sudden, almost every politician is talking about solving the rural broadband problem. We’ll have to see how this translates into action when the pandemic is over, but there is no mistake that rural residents were finally heard loud and clear.

Rural Spectrum. Probably the brightest broadband news this year is that the FCC released a ton of new spectrum that can be used for rural broadband. Broadband purists want everybody in America to have fiber, but until we figure out how to pay for that, today’s wireless technology can deliver 50 Mbps to 100 Mbps broadband in rural areas and is a badly-needed solution. The new spectrum gives WISPs a chance to step up their game.

Better WiFi on the Way. The industry released the WiFi 6 standard and the FCC approved 6 GHz spectrum for WiFi use. These two innovations are going to revolutionize WiFi. A lot of the problems that homes cite with broadband performance can be blamed on our currently overloaded WiFi spectrum bands. Within a few years, most of these problems should melt away with new WiFi gear.

A New FCC Coming. While this FCC did some positive things, they have gone too far in the direction of catering to the big ISPs at the expense of the public good. The ideal FCC balances the needs of the industry and the needs of the public. I expect a new FCC is going to swing the regulatory pendulum away from a carrier emphasis back closer to where the FCC ought to be.

Cybersecurity Getting Better. Early news reports say there was no apparent tampering of voting machines in the recent elections. That’s great news and is a reminder that cybersecurity has quietly gotten a lot better at protecting computer networks. There hasn’t been a big hack of corporate or government networks announced for a while. The biggest threats to computer networks continue to come from disgruntled employees or employees that inadvertently let bad actors into networks.

Growth of Video Conferencing. I don’t know how others feel, but I like video conferencing. I find it refreshing to see who I’m talking to. As a lifetime road warrior, I really like not getting on an airplane to make a presentation. We’ve learned this year that people can communicate well from a distance. I don’t know about the rest of the world, but I won’t be flying across the country without a very good reason when the pandemic is finally over – and for that I’m thankful.

It’s Almost 2021. Perhaps the best thing about 2020 is that it’s almost over and we’ll soon get a new year, and hopefully a reset. May 2021 be better for you all.