USTelecom Blasts Municipal Broadband

In a typical knee-jerk reaction, USTelecom released an Issues Brief that claims that government-owned broadband networks aren’t built for the long haul. This was clearly prompted by federal grants that are giving money directly to towns, cities, counties, and states that can be used to build infrastructure, including broadband.

The Issues Brief trots out the same old lame arguments that the big ISPs have made for years against municipal broadband – that there have been some municipal broadband efforts that have failed. This is a true, but my math shows that the municipal failures are something less than 5% of municipal ventures. We never hear the comparative figures about how many new commercial ISP startups fail. That’s because there are no newspaper headlines when a small fiber overbuilder over-borrows and quietly folds shop. And somehow the big ISP industry totally overlooks their own big dramatic failures. Frontier just went through bankruptcy and walked away from $10 billion in debt – any industry expert can tell you that Frontier’s problems were all self-made and not due to unforeseeable market forces. AT&T recently walked away from a disastrous foray into cable TV and content and lost over $50 billion in just five years. This is not an industry that should talk too loudly about failures.

The real truth behind this Issues Brief is that the big companies don’t want any competition. The Issues Brief trots out the ridiculous FCC statistic that says that there is “fierce competition among providers—over 92% of American homes have at least two fixed broadband providers competing for their business”. That statistic is due to an FCC that hasn’t wanted to admit that urban areas are largely a monopoly for cable companies. Urban homes can either buy decent broadband from a cable company or slow broadband from ancient and out-of-date DSL from a telco. And that’s where you can still buy DSL – because that FCC statistic hasn’t been updated to reflect that AT&T completely walked away from selling new DSL. There is no fierce broadband competition in most markets. My consulting firms conducts surveys, and we generally see over half the public everywhere claiming they don’t have any choice of broadband providers.

Another great quote from the Issues Brief is that “The private sector has the best track-record of success for broadband deployment”. Really? I work with dozens of communities every year that are only looking for a better broadband solution because the big incumbent ISPs have not invested in their communities. The big telcos walked away from maintaining or upgrading copper networks several decades ago. When cable companies decided to upgrade to DOCSIS 3.1 a few years ago, most of them decided to leave the upload bandwidth at the older DOCSIS 3.0 technology – which hurt millions of homes that struggled with working and schooling at home during the pandemic. The big companies only spend capital when they feel like they don’t have an alternative. This is another topic the big ISPs ought not to be touting too loudly because it’s demonstrably not true.

The Issues Brief finishes by touting public/private partnerships as the answer – the big ISPs want cities to hand them all of the current grant funding to get them to invest in the networks they should have been investing in all along. The truth here is that the vast majority of communities do not want to be an ISP and are looking for partnerships. But in most cases, communities first look for smaller ISP partners that have a track record of providing good customer service before considering the incumbents. There is a clear reason why the big ISPs are always at the bottom of every measure of customer satisfaction – they treat customers like dirt.

I can summarize this Issues Brief a lot more succinctly than did USTelecom: “We know cities are getting a lot of grant money right now. Don’t try to use this money to become a municipal ISP because cities are too stupid to make it work. Give the grant money to us instead and we’ll take care of your future broadband needs, just like we have over the last twenty years. Wink wink.”

AT&T’s Plan for Ditching Copper

Jeff Baumgartner of Light Reading recently reported on a wide-ranging discussion by AT&T CEO John Stankey. One of the most interesting parts of the discussion was about AT&T’s plan to use cellular wireless in rural markets to replace DSL.

I’m not going to repeat everything in the article, but the gist is that AT&T hopes to be able to start walking away from rural copper. Stankey was quoted as saying that there is already a voice alternative in rural markets – meaning cellphones. Unfortunately, that ignores the many rural homes with poor cellular coverage. The FCC was going to plow something like $4 billion into a grant program to expand rural cellular coverage, but the misreporting of existing cellular coverage areas by the big cellular carriers put that plan on hold.

Stankey believes that cellular broadband will be the alternative to rural DSL. Verizon has the same strategy but doesn’t serve as many rural markets after having unloaded most of them to Frontier over recent years.

What might a rural cellular data network look like? In most rural counties there are generally only a few existing cell towers – it’s not unusual for this to be a half dozen or less. The traditional older cell towers often don’t reach a lot of rural homes since the towers were built for the old cellular model of making sure that cars could get cell signal along numbered highways. But over time, many counties have added a few more towers for public safety purposes that reach a lot more homes for voice service.

Most people don’t realize that cellular broadband has a lot of the same characteristics as other rural wireless broadband. The signal from the cell towers quickly dies with distance. Depending upon the spectrum being used, cellular broadband can hit speeds of 50-100 Mbps for the first mile from a rural cell site, but the speeds drop off pretty rapidly from that point. Cellular broadband does not travel nearly as far as cellular voice, and rural people are used to the idea of being to make a call but not being able to grab the web. Cellular data also gets slowed and stopped by hills and other impediments. Any county without a flat topology will have lots of cellular dead spots.

What this means is that cellular broadband is not a pure replacement for landline service. For the typical rural county with a limited number of cellular towers, there are going to be plenty of homes that can’t get a cell signal. There will be a lot more homes that can’t get enough broadband speed to be meaningful.

What Stankey failed to mention in the interview is that AT&T has already walked away from the DSL market. As of last October, the company won’t sign new DSL customers anywhere in the country – in towns or rural areas. That means everybody buying or building a rural home in an AT&T area doesn’t have DSL as a broadband option. I’m sure AT&T will continue to milk existing DSL revenues for the next few years. But is the company going to care a whit if some rural households can’t get the cellular data?

The various rural grant programs are filling in some of the rural broadband gaps – but not close to all. As large as the RDOF grants were, the FCC says those grants will reach 5 million rural homes if the grants are all awarded. There are still 10 to 15 million more homes in rural America that don’t have adequate broadband – maybe more. Unfortunately, some recent federal grants went to providers like Viasat or to ISPs that might not be able or willing to fulfill the RDOF requirements.

Don’t get me wrong. I’m happy for the rural home that can finally get a decent cellular data plan. I just don’t want regulators or politicians to think that companies like AT&T are taking care of rural America with this new strategy. I would characterize AT&T’s strategy as providing cover for the company to pull down rural copper. The copper is old and at end of life and has to come down – but it’s disingenuous to not tell the public that cellular broadband means the end of copper.

What’s the Right Definition of Upload Speed?

I read a blog on the WISPA website written by Mark Radabaugh that suggests that the best policy for broadband speeds would be met by asymmetrical architecture (meaning that upload speeds don’t need to be as fast as download speeds). I can buy that argument to some extent because there is no doubt that most homes download far more data than we upload.

But then the blog loses me when Mr. Radabaugh suggests that an adequate definition of speed might be 50/5 Mbps or 100/10 Mbps. I have seen enough evidence during the pandemic to know that 5 Mbps or 10 Mbps are not adequate upload speeds today. My consulting firm conducts speed tests and surveys for communities and during the pandemic, we’ve learned a lot about upload demand.

We’ve seen consistently in surveys that between 30% and 40% of the families that worked or schooled from home during the pandemic said that the upload connections were not adequate. Many of the respondents making this claim have lived in cities using cable company broadband with upload speeds between 10 Mbps and 20 Mbps. While those speeds may be adequate for one person working from home, they were clearly not adequate for multiple people trying to use the upload connection at the same time.

But it’s not quite that simple and we need to stop fixating on speed as the way to measure if a broadband connection is adequate. Many of the people who find home upload speeds to be inadequate complain about inconsistent speeds. They’ll connect easily enough to a work or school server, or a Zoom call but eventually get dumped out of the connection. Speeds on most technologies are not constant and bounce up and down as demand changes in the neighborhood. A 10 Mbps upload connection is not adequate if there are times when the speed drops below that speed and connections are dropped. Inconsistent broadband connections can also be related to poor latency and heavy jitter.

The latest grant requirements from the NTIA for using ARPA funding describe the issue succinctly. The NTIA says that the ARPA grants can be used in places where an ISP is not “reliably” delivering speeds of 25/3 Mbps. Reliability is a concept that is long overdue in our discussion of broadband because, unfortunately, many of our broadband technologies deliver different speeds from minute to minute and hour to hour. We cannot keep pretending that a WISP, DSL, or cable modem service that delivers 15 Mbps upload sometimes but a 5 Mbps connection at other times is reliable. Such a connection ought to more properly be labeled as a 5 Mbps connection that sometimes bursts to faster speeds.

The WISPA blog also fails to mention the context of discussing a speed requirement. There is a big difference in setting a definition of speed for today’s broadband market versus setting an expected speed for a project that’s being funded by a federal grant. We should never use federal grant funding to build broadband that just barely meets today’s definition of broadband. It’s an undisputed fact that households, on average, use a lot more broadband every year. We know that the amount of bandwidth used by households is likely to double every three years. If we build to meet today’s broadband demand, a network will be obsolete within a decade. Grant funding should be used to build networks that meet expected future needs.

I often tell stories about network engineers who undersize new transport electronics. While they know that broadband demand and traffic have been doubling on their networks every three years, they just can’t bring themselves to recommend new electronics that have ten times today’s capacity. Even experienced engineers have a mental block against truly believing the impact of growth. But anybody designing a network needs to be looking to make sure the new network is still going to be robust a decade from now.

It’s just as essential for policymakers to understand the incessant growth in broadband demand. When talking about awarding grants we shouldn’t be discussing the current definition of broadband, but instead the likely definition of broadband in a decade. That’s the big point that the WISPA blog misses. I think it’s easy to demonstrate that 5 Mbps or 10 Mbps is inadequate broadband speeds today – we have too much evidence that upload speeds need to probably be at least 25 Mbps. But we can’t accept today’s upload needs when funding new networks. Grant-funded networks should be forward-looking – and I think the NTIA’s suggestion of 100 Mbps upload for future networks is reasonable.

Cord Cutting Accelerates in 1Q 2021

The largest traditional cable providers collectively lost over 1.6 million customers in the first quarter of 2021 – an overall loss of 2.2% of customers. To put the quarter’s loss into perspective, the big cable providers lost almost 18 thousand cable customers per day throughout the quarter.

The numbers below come from Leichtman Research Group which compiles these numbers from reports made to investors, except for Cox which is estimated. The numbers reported are for the largest cable providers, and Leichtman estimates that these companies represent 95% of all cable customers in the country.

Following is a comparison of the first quarter subscriber numbers compared to the end of the 2020:

1Q 2021 4Q 2020 Change % Change
Comcast 19,355,000 19,846,000 (491,000) -2.5%
Charter 16,062,000 16,200,000 (138,000) -0.9%
AT&T 15,885,000 16,505,000 (620,000) -3.8%
Dish TV 8,686,000 8,816,000 (130,000) -1.5%
Verizon 3,845,000 3,927,000 (82,000) -2.1%
Cox 3,590,000 3,650,000 (60,000) -1.6%
Altice 2,906,600 2,961,000 (54,400) -1.8%
Mediacom 626,000 643,000 (17,000) -2.6%
Frontier 453,000 485,000 (32,000) -6.6%
Atlantic Broadband 313,591 318,387 (4,796) -1.5%
Cable One 252,000 261,000 (9,000) -3.4%
     
Total 71,974,191 73,612,387 (1,638,196) -2.2%
Total Cable 43,105,191 43,879,387 (774,196) -1.8%
Total Other 28,869,000 29,733,000 (864,000) -2.9%

 

Some observations about the numbers:

  • The big loser continued to be AT&T, which lost a net of 620,000 traditional video customers between DirecTV and AT&T TV. In the second quarter of this year AT&T spun these customers all off to a corporation.
  • The big percentage loser continues to be Frontier which lost 6.6% of its cable customers in the quarter.
  • Big customer losses finally hit to Comcast, which lost 491,000 traditional cable customers in a quarter where it added 460,000 broadband customers.
  • Charter continues to lose cable customers at a slower pace than the rest of the industry. I have to wonder if this means bundles that hard to break or some similar issue.
  • This is the ninth consecutive quarter that the industry lost over one million cable subscribers.

To put these losses into perspective, these same companies had over 85.4 million cable customers at the end of 2018 and 79.5 million by the end of 2019. That’s a loss of 13 million customers (16% of customers) since the end of 2018.

The big losses in cable subscribers happened at the same time that the biggest ISPs in the country are adding a lot of broadband customers. The biggest ISPs added over 1 million new broadband subscribers in the first quarter of 2021.

In 2020, we saw that a lot of customers dropping traditional video were switching to online versions of the full cable line-up. That didn’t carry into the first quarter of 2021 where the combination of Hulu plus Live TV, Sling TV, AT&T TV, and FuboTV collectively lost over 257,000 customers. I have to suspect that has to do with affordability.

Verizon to Expand Wireless Home Broadband

At its virtual investor day in March, Verizon announced plans to expand its wireless 5G Home broadband product. This is the product that can best be referred to as fiber-to-the-curb because it requires building fiber up and down streets in neighborhoods and then delivering the broadband wirelessly.

Until now, Verizon has been using millimeter-wave spectrum for the Home product. It seems evident that this product has not been everything that Verizon hoped for. The company first introduced the product three years ago and then paused to re-engineer the product. My guess is that Verizon found that millimeter-wave spectrum is more unforgiving in the wild than what they had hoped for.

Verizon plans to modify the Home product by layering on C-Band spectrum, which it recently purchased in an FCC auction. This spectrum sits between the two WiFi bands at 3.7 GHz to 4.2 GHz. It’s an interesting choice to make for fiber-to-the-curb because the C-Band spectrum will carry farther from the curb but will carry a lot less bandwidth than millimeter-wave spectrum.

In the original trial, Verizon reported broadband speeds of 300 Mbps. The company touts that the latest iteration of the product is faster, but I haven’t yet seen any speeds reported yet by new customers. When asked about the speeds that will be available using C-Band, the Verizon company spokesperson said speeds will be “competitive”. This tells us that speeds are still not approaching Verizon’s gigabit speed goal.

It’s an interesting product in several ways. First, Verizon seems to be building this in markets where it was not the incumbent telephone company. Many of the markets announced so far were legacy markets served by AT&T, and Verizon is stepping into the void that AT&T created by ceasing the sale of DSL. It will be interesting to see if Verizon uses the product in its legacy markets where it never built FiOS.

Verizon has been an interesting ISP since the advent of the FiOS fiber product. The company remained disciplined and only built FiOS where the construction costs met the company’s internal cost metrics. This resulted in a disjointed FiOS roll-out where FiOS was only built in the parts of markets that met the company’s metrics. I have to think they will do something similar again.

One of the reasons for the company to expand the Home product is to take advantage of its aggressive fiber builds over the last five years. Verizon has been building fiber all over the country to replace expensive backhaul leases for cell towers. The Home product is a way to take a second advantage of that construction, as well as a way to justify building fiber deeper into neighborhoods to reach small cell sites.

Verizon has said that it hopes to build to pass 25 million homes and businesses by 2025 with the technology. At the investor meeting, Verizon voiced a goal of reaching a 20% market penetration with the new service – meaning a target of 5 million new broadband customers. Part of the strategy for doing so is to bundle the product aggressively with Verizon cellular service.

In the long run, the success of this product is probably going to boil down to broadband speeds that will be achieved with the C-Band spectrum. We’ll have to wait to see how that spectrum behaves when transmitted at pole height in neighborhoods with trees, shrubs, and other impediments. I would think that any product north of 100 Mbps speeds will play well today if it’s priced low enough. The challenge for Verizon is likely to be a decade from now when the cable companies might have increased basic speeds to something like 500 Mbps. The good news for Verizon is that this product could someday be converted to fiber FiOS by building the fiber drops. Verizon might be using the wireless product to gain market share in new markets, with the full realization that eventually homes will want the fiber connection.

Broadband Usage Still Strong 1Q 2021

OpenVault just released its Broadband Insights Report for the 1st quarter of 2021. The report shows continued robust average household demand for broadband. The monthly average household usage at the end of the first quarter was 461.7 gigabytes. This is the combined upload and download usage for the average American home. To put that number into perspective, look how it fits into the past trend of broadband usage from OpenVault:

1st quarter 2018           215 Gigabytes

1st quarter 2019           274 Gigabytes

1st quarter 2020           403 Gigabytes

2nd quarter 2020          380 Gigabytes

3rd quarter 2020           384 Gigabytes

4th quarter 2020           483 Gigabytes

1st quarter 2021           462 Gigabytes

OpenVault observes that usage seems to be returning somewhat to seasonal patterns, where historically usage dropped in the first quarter each year compared to the preceding fourth quarter. The first-quarter usage is down 4% from the December 31 usage but is up 15% from the first quarter of the pandemic a year ago. Probably more importantly, usage is up 69% since 2019 and 115% since 2018. Average household bandwidth usage has more than doubled in three years – an extraordinary growth rate. It’s going to be really interesting later this year to see how households react to the end of the pandemic. The general expectation is that most classrooms will be back to normal by the fall, and a significant percentage of the workforce will start returning to the office.

The statistic that probably best defines the pandemic is the growth of average household upload usage each month. At the end of 2019, the average US home uploaded 19 gigabytes of data per month. By the end of 2020 that had grown to 31 gigabytes. In the first quarter that dipped a bit to an average of 30 gigabytes.

The first quarter saw a widening gap between the usage of homes with data caps at 440 gigabytes per month and homes with unlimited usage at 495 gigabytes per month. It appears that data caps cause homes to curtail usage of over 50 gigabytes per month.

Median usage dropped significantly in the quarter from 289 gigabytes at the end of the fourth quarter down to 269 gigabytes at the end of the first quarter. The median is the level at which 50% of homes use less broadband and 50% use more. A dropping median usage would indicate that a significant number of homes have reduced broadband usage – perhaps homes where students or adults went back to school or the office.

The number of households that are heavy users of broadband continues to be strong. At the end of the first quarter, 13% of homes consumed more than 1 terabyte of data per month (1,000 gigabytes), up from 7.3% of homes just a year earlier. OpenVault has started also counting what they call extreme users or homes using more than 2 terabytes per month – 1.6% of all homes were extreme users at the end of the first quarter, up from 1% only a year earlier.

Of all of the statistics gathered by OpenVault, the fastest-growing category is the number of homes subscribing to a gigabit-speed service. At the end of the fourth quarter that has grown to 9.8% of all households, three and half times the 2.8% of homes that were buying gigabit products at the end of 2019. Perhaps the most amazing statistic from OpenVault is that 80% of households now subscribe to a broadband service that provides speeds of 100 Mbps download or faster. This one fact alone provides the justification to update the outdated FCC definition of broadband of 25/3 Mbps. The vast majority of American households obviously believe broadband means 100 Mbps or faster.

10G – Really?

Earlier this year at the CES show in January the big cable companies discussed their vision for the future and introduced the concept that cable networks would be able to deliver 10-gigabit broadband in the future. They labeled the promotion at the show as 10G. I didn’t write about it at the time because I assumed this was a gimmick to give some buzz to this show in the middle of the pandemic. But lately, I’ve seen that they are still talking about the 10G initiative.

For once this is not just the big US cable companies. The US companies were accompanied in this big splash announcement by Rogers, Shaw Communications, Vodafone, Taiwan Broadband Communications, Telecom Argentina, Liberty Global, and smaller cable companies.

My first reaction to the name 10G was a chuckle because the cable companies are linking themselves to the deployment of 5G cellular, which turns out to not be any faster than 4G. But the cellular companies have hammered home the supposed advantages of 5G so relentlessly that I imagine the average person thinks 5G means faster speeds. I don’t think I would have chosen the cellular analogy as a symbol for faster speed.

The question I have to ask is why the companies want to talk about 10-gigabit broadband so early? It’s likely to be near the end of this decade before any of them actually can deliver that much speed to customers. The assertion is made because of the promise of the new DOCSIS 4.0 standard that was released by CableLabs a year ago. Comcast recently conducted the first lab trial of the technology and achieved speeds of about 4 gigabits.

But it’s a long way from the first breadboard lab trial to a working technology that will be deployed in cable networks. DOCSIS 4.0 is a fundamental change to cable networks and is going to be an expensive upgrade. It means changing most of the field electronics including cable modems. In many cases, it’s going to mean replacing old coaxial cable. And it might even mean having to convert to switched digital video to make this much bandwidth fit inside cable networks.

When DOCSIS 4.0 was first announced, the CTOs of most of the cable companies were cold to the technology, having just finished the upgrade to DOCSIS 3.1 (at least for download speeds). There was a lot of speculation in the industry that cable companies would consider converting to fiber rather than go through another big patch on aging copper networks – most cable systems are nearing fifty years in age.

It’s not hard to understand what prompted this. Fiber providers are now starting to routinely deploy XGS-PON which has the capability of 10 gigabit symmetrical broadband. That means 10-gigabit is already here today in some markets, a full decade before cable companies can respond.

The cable companies are also quietly worrying about their lousy upload performance on cable networks. While the companies all crowed about how they survived the pandemic, they all know that many of their customers struggled badly trying to handle work and school from home. They failed the people who needed them the most.

Two decades after Verizon launched FiOS, the big telcos are finally laying fiber like crazy. The cable companies know that once customers change to fiber that they are likely never coming back to a cable company network. While fiber has been built to only a relatively small portion of urban America, it is relentlessly coming. The cable companies have to fear that over the next decade that fiber providers will do to them what they’ve been able to do to DSL competitors. The cable industry’s success over the last decade comes from taking customers from old telephone copper.

I think a peek into the future where there is a lot more fiber is likely what prompted the 10G promotion – that and perhaps a few too-clever marketing folks. But talking about 10G is not the same thing as delivering broadband that homes need today – and the cable companies know this.

Has Your Broadband Gotten Cheaper?

Sometimes the big ISPs do something that leaves me shaking my head in disbelief. The latest is an absurd report from USTelecom that supposedly demonstrates that the price of broadband has been dropping while almost every other commodity that we buy has gotten more expensive. The report doesn’t just suggest that broadband got slightly less expensive, but that “the price of the most popular tier of broadband service declines by 7.5%” last year.

It’s clear why this report was written. It wasn’t written for the general public because every consumer knows that the price of broadband has been increasing. This article was written to provide cover to politicians who will try to protect the big ISPs from re-regulation by the new FCC. It provides a false talking point that the big ISPs are already taking care of us and that regulators shouldn’t meddle with a market that is working so well.

Let’s start with a few demonstrable facts. Comcast and Charter together serve more than 50% of the broadband customers in the country, and their broadband prices have risen significantly in the last few years. Just this past January, Comcast raised the price of its most popular product Performance Plus Internet by $3 to reach $76. Additionally, the Comcast WiFi modem went from $13 to $14. Comcast also raised the broadband product by $3 in early 2019. Charter raised the rate for basic broadband by $5 in each of the last two Decembers.

Think just for a second how preposterous it is to say that rates for the industry dropped 7% in 2020 when half of the broadband market instead saw rate increases. For this article to be true implies that all of the other big ISPs had significant rate cuts to offset the Comcast and Charter rate increases. Raise your hand if Verizon, AT&T, Cox, Altice, or Mediacom slashed your broadband bill during the last two years.

If this was a legitimate article, it would be accompanied by tables of data so that people could verify the assertions. Instead, the language that describes how the rates decreases were calculated is so fuzzy so that it’s impossible to know what the author is comparing from year to year. USTelecom will never publish the raw data because I’m sure it would show that the author is playing a sleight of hand of some sort.

I also have to wonder how anybody can get accurate pricing data for the big ISPs. They all offer different prices to different customers. The cable companies still offer exceedingly low promotional prices that are given to new customers that migrate from DSL – but these prices disappear in a year or two and go back to list prices. Many of the big ISPs grandfather some customers on older speeds and prices – these are prices and products that are stuck out of time like an ancient bug stuck in amber. Most confusingly, a large percentage of broadband customers of the big cable companies buy a bundle of services, and customers have no idea what they pay for each component of the bundle. The only way to find out what you are being charged for broadband is to drop cable TV to find out how much you’ll pay for what’s left.

There is one class of customers that have seen a price decrease – those buying the fastest products. When Comcast first introduced the gigabit broadband product it was priced at $121 and was only available in a few markets. Over time as that became a real product, the company lowered the price to entice people to upgrade. But you can’t say that there has been deflation in the price of fast broadband – instead, the early pricing was set to dissuade people from ordering what Comcast couldn’t deliver.

The report shows a decrease in the cost paid per megabit of data, and I am sure that has dropped over time. Over the past decade the cable companies have unilaterally increased speeds on basic broadband from 30 Mbps, to 60 Mbps, to 100 Mbps, and now to as high as 200 Mbps. This was done without big price increases – so the price per megabit would drop as speeds are increased. But we can’t believe the percentage decrease cited in the article if the calculation is based on the same numbers used to show that overall prices are dropping.

Finally, the report goes on to assert that American broadband is less expensive than broadband in Europe, which again is completely absurd. There are numerous reports that show that broadband prices in Europe and the far east are as much as half the cost of US broadband, due to both competitive market pressures and also strong regulation of broadband.

I don’t think there is any consumer in the US who thinks that prices are dropping at big ISPs. There are markets where new competitors appear and prices get lowered a bit, but this unfortunately only happens in a small percentage of the overall market. I understand that the real purpose of this report is to allow the big ISPs to provide talking points for the politicians they fund, but even those politicians know that the monthly checks they write to ISPs for broadband have gotten larger every year – the proof is in their checkbook.

Broadband Growth for 1Q 2021

Leichtman Research Group recently released the broadband customer statistics for the end of the first quarter of 2021 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 1,000,000 net broadband customers added in the quarter beats the 900,000 broadband additions in the fourth quarter of last year. The following are the statistics showing the growth in the first quarter.

 1Q 2021 1Q Change % Change
Comcast 31,034,000 460,000 1.5%
Charter 29,234,000 355,000 1.2%
AT&T 15,435,000 51,000 0.3%
Verizon 7,193,000 64,000 0.9%
Cox 5,435,000 55,000 1.0%
CenturyLink 4,728,000 (39,000) -0.8%
Altice 4,370,800 11,600 0.3%
Frontier 3,052,000 (17,000) -0.6%
Mediacom 1,454,000 16,000 1.1%
Windstream 1,122,300 13,000 1.2%
Cable ONE 880,000 23,000 2.7%
WOW! 823,800 10,000 1.2%
Consolidated 794,224 2,024 0.3%
TDS 501,700 8,400 1.7%
Atlantic Broadband 511,004 6,383 1.3%
Cincinnati Bell 437,600 1,500 0.3%
107,006,428 1,020,907 1.0%
Total Cable 73,742,604 936,983 1.3%
Total Telco 33,263,824 83,924 0.3%

Leading the way is Comcast and Charter, which collectively added 815,000 new broadband customers. That represents 80% of all of the new net customers added by the industry. The cable companies collectively added 936,983 customers in the fourth quarter compared to 83,924 for the telcos. If the 1% growth rate is sustained, the large ISPs will add over 4 million customers this year, a little below the 4.8 million new broadband customers added in 2020.

Buried inside of these numbers is the fact that the telcos collectively added 400,000 customers to fiber in the quarter bringing total telco fiber customers to 14.6 million. Over time this growth ought to let the telcos claw back some of the growth experienced by the cable companies over the last few years.

It will be interesting to see what happens to broadband customers as the pandemic finally slows down and students return to live school and many people move back to the office. The pandemic has also attracted a lot of new customers to buy low-income broadband offerings, and we’ll have to wait to see if those are long-term sustainable.

The Fiber Expansion Craze

I’ve written several times recently in blogs that there is a growing backlog in buying fiber cable. Some of the backlog is due to the general supply chain malaise that seems to be affecting almost everything we buy. I found out during the recent gas shortages in North Carolina that there is a shortage of truck drivers. Apparently, many truck drivers found something else to do during the pandemic and now there is a shortage of drivers to deliver the many goods that are shipped by truck.

The primary issue affecting the fiber backlog is the exceptionally high demand for fiber. Consider all of the following announcements about building fiber in 2022:

  • RDOF fiber construction probably starts next year.
  • It’s anticipated that much of the $10 billion earmarked for broadband in the ARPA plan will end up as fiber construction over the next two years. It’s also expected that some cities and counties will use some of the $350 billion in ARPA funds to build fiber.
  • The new NTIA grants expect fiber networks to be built in one year.
  • There are also beefed-up grant programs at USDA and EDA that will start next year.
  • Verizon is in the midst of a many-year fiber buildout to pass 25 million homes by 2025 with fiber to support its Verizon Home fiber-to-the-curb service.
  • AT&T announced it’s going to pass 3 million new homes and businesses this year and 2 million homes next year with fiber, to add to the 14.5 million already passed.
  • Altice has announced plans to upgrade 500,000 passings from HFC to fiber this year.
  • Fronter announced as it was coming out of bankruptcy that it plans to pass 495,000 homes with fiber this year.
  • CenturyLink is planning on passing at least 400,000 premises with fiber this year plus the company is still expanding its middle-mile fiber network.
  • Consolidated Communications plans on passing 300,000 homes with fiber this year.
  • Windstream plans to add several hundred thousand fiber passing this year.
  • Numerous smaller telcos like Ziply, TDS, and Cincinnati Bell have aggressive fiber expansion plans.
  • Numerous fiber projects from the CAF II reverse auction are now under construction.
  • Smaller telcos are continuing to build fiber under the ACAM program.
  • Dozens of electric cooperatives are building FTTP.
  • Numerous ReConnect grant projects from the past several years are now under construction.
  • State grants have funded significant fiber projects.
  • Independent fiber builders across the country like Google Fiber, MetroNet, US Internet, and numerous municipalities quietly continue to build fiber projects.
  • Cellular companies all continue to build fiber to replace cellular transport leases.
  • Long-haul fiber networks continue to expand.
  • Electric companies are aggressively expanding smart grid networks.
  • Cable companies use significant fiber every year to split nodes.
  • I’m sure this list misses some large fiber initiatives.

This all adds up to an unprecedented amount of fiber construction. There has never been a time in my memory when the industry has been this busy. It’s no wonder that we’re seeing a backlog in fiber delivery times. It’s probably a good year to be a fiber salesperson.

Everything associated with fiber construction is also going to be in big demand and likely have supply chain issues. Fiber electronics are already suffering from the chip shortage that’s affecting all electronics industries. But there will be a huge demand for lasers and electronics to light all of the fiber that’s being constructed. I’m hearing of spotty backlogs in this area that are likely going to grow longer.

Perhaps the one shortage that means the most is the shortage of fiber technicians. In February, the eleven largest telecom trade associations wrote a letter to the White House and Congress and said that the industry will need 850,000 more fiber man-years by 2025 to keep up with the demands of the industry. The technician shortage is already here and everybody I know building fiber is worried about finding and keeping the needed technicians.