Who’s Chasing RDOF Grants?

There is a veritable Who’s Who of big companies that have registered for the upcoming RDOF auction. All of the hundreds of small potential bidders to the auction have to be a bit nervous seeing the list of companies they could end up bidding against.

As a reminder, RDOF stands for Rural Digital Opportunity Fund and is an auction that starts in October that will award up to $16.4 billion in broadband funding. The money will be awarded by reverse auction in a process that favors faster technologies, but also favors those willing to take the lowest amount of grant per customer. The areas that are eligible for the funding are among the most remote places in the country, which is why the list of potential large bidders is puzzling.

There are some big cable companies on the list: Altice, Charter Communications, Cox Communications, Atlantic Broadband, Midco, and Mediacom Communications. These companies serve many of the county seats or other nearby towns to many of the RDOF areas. One has to wonder what these companies have in mind. The only one that has chased any significant federal grants in the past is Midco in Minnesota and North Dakota. Midco has been using grant money to extend fiber backhaul to connect its smallest markets, to build last-mile broadband in some tiny towns, and to build fixed wireless in rural areas surrounding its cable markets.

One has to wonder if the other cable companies have a similar plan. It’s incredibly inefficient to build traditional hybrid coaxial-fiber networks in rural areas, so it’s unlikely that the cable companies will be extending their existing networks. The RDOF auction is being done by Census blocks, which in rural areas can cover a large area. The winner of the auction for a given Census block must offer service to everybody in that block. I also have a hard time envisioning all of these big cable companies getting into the wireless business like Midco is doing, so their presence in the auction is a bit of a mystery.

Then there are the traditional large telcos including Frontier, Windstream, Consolidated Communications, and CenturyLink. These companies already serve many of the areas that are covered by the reverse auction. These are the rural areas where these companies have largely neglected the old copper wiring and either offer no broadband or dreadfully slow DSL. The minimum technology allowed to enter the auction must deliver 25/3 Mbps broadband. It’s almost painful to think that these companies would chase the funding and promise to upgrade DSL to 25/3 Mbps after these companies largely botched an upgrade to 10/1 Mbps DSL in the just-ending CAF II grants. The cynic in me says they are willing to pretend to upgrade DSL all over again if that means substantial grant money. I have to think that some of these companies are considering deploying fixed wireless. To the extent any of these companies is willing to take on new debt or use equity, they could also build fiber. None of these companies has built a substantial amount of fiber to truly rural places, but may these grants are the inducement they were waiting for.

Verizon and U.S. Cellular have registered for the auction. You have to think the cellular carriers will be deploying fixed cellular broadband like the 4G FWA product that Verizon just announced recently. These companies already have equipment on towers in many of the RDOF grant areas and would love to grab a subsidy to roll out a product they might be selling in these areas anyway.

Then there are the satellite companies SpaceX, Hughes Network Systems, and Viasat. Viasat has won federal grant money before for selling broadband from its high-altitude satellites. SpaceX is the wildcard since nobody knows anything about the pricing or real speeds they can provide. We know that Elon Musk has been lobbying the FCC to let him have a shot at the billions up for grabs in this auction.

There is another interesting wildcard with Starry. Their business plan is currently selling fixed wireless to large apartment buildings in center cities and they’ve developed a proprietary technology that’s perfect for that application. They must have something else in mind in chasing grant money in remote areas that are 180 degrees different than their normal business model. Starry founder Chet Kanojia is incredibly creative, so he probably has a new technology in mind if he wins auction funding.

There may be other big players in the auction as well since many of the registered bidders are participating under partnerships or corporations that are disguising their identity for now. I think one thing is clear and some of the rural ISPs and cooperative who think nobody else is interested in their markets will get a surprise early in the auction. These big companies didn’t register for the grant auction to sit on the sidelines.

Western Governors Take a Stance on Broadband

The Western Governor’s Association (WGA) represents all of the states west of the line starting with Texas north to North Dakota, includes Alaska, Hawaii, and the western American territories. The association has been jointly exploring issues of joint interest for the region in many years. In July, the WGA issued a policy position paper that lays forth goals for broadband for 2020 through 2028. This is one of the more concise descriptions I’ve seen of the problems due to poor broadband as well as a concise of a list of needed broadband solutions.

The policy paper begins with the simple statement that broadband is critical infrastructure. I don’t know that I’ve ever seen the term ‘critical’ used at the FCC, which doesn’t share the same sense of urgency as the western governors.

The WGA states that the 25/3 Mbps definition of broadband is obsolete and that western economies and communities need faster broadband to prosper. The FCC recently proposed to stick with the 25/3 Mbps definition of broadband for yet another year and will still fund grants that would build new broadband networks that provide that speed. The governors support a faster definition of broadband that is scalable and that will increase as needed in the future.

The West has a lot of characteristics that make it difficult to find broadband solutions. Communities are often far apart and there are often few opportunities to monetize middle-mile fiber needed to connect communities. The West also has significantly large tracts of federal land that presents a challenge for building broadband infrastructure. Federal agencies like the US Forest Service, Bureau of Land Management, and Bureau of Indian Affairs play a crucial role in allowing (or hindering) the siting of broadband infrastructure. The governors ask for a more coordinated effort from these agencies to remove roadblocks for broadband deployment.

The WGA position paper tackles the inadequacy of the FCC’s 477 data gathering. They note that errors in this mapping are particularly egregious in sparsely populated rural areas where the FCC gathers the maximum advertised speeds instead of actual broadband speeds, which greatly overstates the availability of broadband throughout the West. The WGA supports Congressional funding to produce better data collection.

The WGA complains that there is a maze of broadband grants and financial assistance available from numerous federal agencies but that local communities are rarely able to sort through the opportunities and grants often go unclaimed. The governors support better coordination between federal agencies and states to identify grant opportunities.

The governors strongly support the use of more spectrum for rural broadband.

The governors support an expansion of the eligibility of telephone and electric cooperatives to build new broadband since these are entities that are tackling a lot of western broadband gaps.

The governors ask for better coordination of efforts to help find broadband efforts for tribal lands, which still are far behind the rest of the West in broadband availability and adoption.

The governors ask the federal government to provide more aid in the form of block grants. They say that states know better on how to solve local broadband problems than do federal agencies.

It’s an interesting document in that it is factual and completely non-partisan. As I’ve been contending for many years, broadband is not and should never be a partisan issue. The document reflects the ability of western governors from both parties able to reach an agreement on what’s needed for the region.

America’s First Broadband Blimp?

The Wabash Heartland Innovation Network (WHIN) announced plans to launch an aerostat blimp as part of its mission to monitor IoT sensors for digital agriculture and next-generation manufacturing in a 10-state region of Indiana. The project will be managed by RTO Wireless.

WHIN is headquartered in West Lafayette, Indiana. The group is a consortium of ten counties that is supported by the Lilly Endowment and draws on expertise from Purdue University and Ivy Tech, the local community college. The consortium is a scientific, educational, and charitable 501(c)(3) that is supported by growers, manufacturers, and tech partners such as Wabash National, Nucor, AgriNovus, Demeter, Myers Spring, and Oerlikon.

The concept behind WHIN is to deploy LoRaWAN technology to communicate with Internet of Things sensors for digital agriculture and manufacturing. LoRaWAN technology uses low-power frequency that can cover a large area with a tall enough transmitter. LoRaWAN technology uses a unique spread spectrum technology that is ideal for communicating with IoT sensors, which only transmit data intermittently. A single LoRaWan radio is theoretically able to communicate with huge numbers of sensors. One of the biggest promises of the technology is that it can enable low-power and inexpensive sensors – something that is a challenge if using cellular or other wireless technologies.

The blimp will be tethered to the ground, making it an aerostat. Aerostat blimps are helium-filled and carry the needed electronics to power the LoRaWAN technology and CMRS radios. The press release says the first blimp will hover around 1,000 feet above ground level, which should provide line-of-sight to a large portion of the WHIN territory. The tether includes a power connection to a ground station to operate the electronics as well as a fiber optic cable to carry data traffic to and from the blimp electronics.

This is a creative solution for providing farm sensors. A blimp stationed at 1,000 feet or higher will cover a much larger agricultural footprint than putting the transmitters on much shorter rural cellular towers. Using one tower to communicate with huge numbers of sensors is needed to make the use of farm sensors affordable.

The IoT devices must be designed to communicate at the frequency and using the same technology as the transmitter. Agricultural monitoring is done today with a hodgepodge of technologies. Dairy, hog, and chicken farmers often deploy a local WiFi network since they are usually monitoring a fairly small footprint. There are sensors today that can be read using cellular technology – but one of the big hurdles for cellular companies capturing this market is the ability to cover the huge swaths of farmland. I think one of the drivers behind the FCC’s deferred 5G grant program was to add cellular towers in remote farmlands.

The blimp launch will also test the idea of providing wireless connections for rural broadband. Fixed wireless electronics are typically installed on towers – and the taller the tower, the better for establishing line-of-sight communications with customers. Putting radios at 1,000 feet is five to seven times higher than the normal fixed wireless radio deployment.

There will technology issues with establishing a fixed broadband link since a blimp will move around with the winds. One of the features that enable maximum bandwidth from a normal fixed wireless deployment is that the electronics are fixed in place at both ends, enabling a focused beam between the tower and a customer. It will be interesting to hear how WHIN handles the non-stationary transmitter on the blimp.

If this is deployment is successful we might see similar blimps appearing all over farming communities. We now know that the use of agricultural sensors can improve farm yields while better protecting the environment by reducing the amount of chemicals and insecticides used in farming. What’s been lacking is a platform and system for affordably monitoring sensors.

A New Push to Tax Broadband?

In August, four cities in Indiana – Indianapolis, Evansville, Valparaiso, and Fishers – sued Netflix, Hulu, DirectTV, and Dish Networks claiming that the online video services offered by these companies should have to pay the same franchise fees that cable companies pay for using local rights-of-ways.

I’ve been covering in this blog how cord-cutting has been accelerating, especially this year, and cities are seeing a huge drop in cable franchise fees. These fees are generally levied against the fees charged for traditional cable TV service and are ostensibly to compensate the cities for using the public rights-of-way to deliver TV service.

These fees are a significant source of tax revenues for many communities, and that’s not hard to understand when you realize that the fees range from 3% to 6% that’s added to the cost of every traditional cable TV bill. Most big cable companies say that average cable bills are trending towards $100 per month.

Cities have gotten spoiled by these fees because for the last decade the amount of franchise fees collected has skyrocketed. For over a decade cable companies raised cable rates by 9% or more per year, and those rate increases automatically meant franchise tax revenue increases for cities. While franchise fees might have been relatively small when first imposed, the tax revenues have gotten gigantic as the average cable TV bill approaches $100 per month just for cable.

In a recent blog, I talked about how homes are doing more than just cord-cutting. A survey by Roku showed 25% of TV subscribers are now cord-shavers who have trimmed the size of their cable bill by downgrading packages or dropping extras like movie channels. Cord-shaving also trims franchise tax collection and franchise revenues at cities have to be in a free fall.

Taxes that are imposed unevenly usually eventually are challenged. The cable industry has complained about franchise fees for years, but never seriously tried to eliminate the fees. However, big cable companies are recently yelling foul about competing with online video services that don’t have to collect the franchise fees.

The franchise fees have always been hard to justify from a fairness perspective. If a telephone company or a fiber provider uses the same rights-of-way but doesn’t carry cable TV, then their customers are not charged this same expensive tax. Cities could have more fairly charged a franchise fee on some other basis, such as per mile of cable installed in their cities.  But cities latched onto a cable tax at a time when cable TV was a growing industry.

These Indiana cities are treading into dangerous legal waters because if the courts decide that Netflix doesn’t have to charge the franchise fee, that might provide a legal basis for the cable companies to claim that they also shouldn’t pay.

It would be a disturbing ruling if the online video companies end up having to pay a franchise fee. If Netflix has to pay to use the rights-of-way to reach homes, then why wouldn’t this apply to every other online subscription like newspapers, sports boards, etc. There is nothing particularly different about Netflix’s video signals compared to the numerous other sources of video on the web. Bits from online video data areidentical to every other bit of data delivered across ISP networks.  From a functional perspective, if the cities win this lawsuit, they will be imposing a tax on some, but not all bits passed between an ISP and a customer. That’s a line that I hope we don’t cross.

It’s not hard to understand why cities are unhappy about a drop in cable franchise tax revenues. But any tax that is specific to a given technology is going to change over time. Traditional cable TV as we’ve known it is fading away and could even completely disappear over the next decade. A tax on cable might seem as strange in a decade as a tax in the pass on the proverbial buggy whips.

Is Telemedicine Here to Stay?

It’s going to be interesting to see if telemedicine stays after the end of the pandemic. In the past months, telemedicine visits have skyrocketed. During March and April, the billings for telemedicine were almost $4 billion, compared to only $60 million for the same months a year earlier.

As soon as Medicare and other insurance plans agreed to cover telemedicine, a lot of doctors insisted on remote visits during the first few months of the pandemic. In those early months, we didn’t know a lot about the virus and doctor offices were exercising extreme caution about seeing patients. But now, only four months later a lot of doctor’s offices are back to somewhat normal patient volumes, all done using screening patients at the door for temperature and symptoms.

I had two telemedicine visits during April and the experience felt familiar since I was was spending a lot of my day on Zoom meetings that month. These were zoom-like connections using specialized software to protect patient confidentiality, but with a clearly higher resolution camera (and more bandwidth used) at the doctor’s end. I was put on hold waiting for the doctor just as I would have been in the doctor’s office. One of my two sessions dropped in the middle when the doctor’s office experienced a ‘glitch’ in bandwidth. That particular doctor office buys broadband from the local cable incumbent, and I wasn’t surprised to hear that they were having trouble maintaining multiple simultaneous telemedicine connections. It’s the same problem lots of homes were having during the pandemic when multiple family members have been trying to connect to school and work servers at the same time.

One of my two telemedicine sessions was a little less than fully satisfactory. I got an infected finger from digging in the dirt, something many gardeners get occasionally. The visit would have been easier with a live doctor who could have physically looked at my finger. It was not easy trying to define the degree of the problem to the doctor over a computer connection. The second visit was to talk with a doctor about test results, and during the telemedicine visit I was wondering why all such doctor meetings aren’t done remotely. It seems unnecessary to march patients through waiting rooms with sick patents to just have a chat with a doctor.

There was a recent article about the topic in Forbes that postulates that the future of telemedicine will be determined by a combination of the acceptance by doctors and insurance companies. Many doctors have now had a taste of the technology. The doctors that saw me said that the technology was so new to them at the time that they hadn’t yet formed an opinion of the experience. It also seems likely that the telemedicine platforms in place now will get a lot of feedback from doctors and will improve in the next round of software upgrades.

The recent experience is also going to lead a lot of doctor’s offices to look harder at their broadband provider. Like most of us, a doctor’s office historically relied a lot more on download speed than upload speed. I think many doctor’s offices are going to find themselves unhappy with cable modem service or DSL broadband that has been satisfactory in the past. Doctor’s will join the chorus of those advocating for faster broadband speeds – particularly upload speeds.

Telemedicine also means a change for patients. In the two sessions, the doctor wanted to know my basic metrics – blood pressure, temperature, and oxygen levels. It so happens that we already had the devices t home needed to answer those questions, but I have to think that most households do not.

I don’t think anybody is in a position to predict how insurance companies will deal with telemedicine. Most of them now allow it and some have already expanded the use of telemedicine visits through the end of the year. The Forbes articles suggest that insurance companies might want to compensate doctors at a lower rate for telemedicine visits, and if so, that’s probably not a good sign for doctor’s continuing the practice.

My prediction is that telemedicine visits will not stay at the current high level, but that they will be here to stay. I think when somebody books a visit to a doctor that they’ll be given a telemedicine option when the reason for the visit doesn’t require an examination. The big issue that will continue to arise is the number of homes without adequate bandwidth to hold a telemedicine session. We know there are millions of people in rural America who can’t make and maintain a secure connection for this purpose. There are likely equal millions in cities that either don’t have a home computer or a home broadband connection. And there will be many homes with so-so broadband that will have trouble maintaining a telemedicine connection. Telemedicine is going to lay bare all of our broadband shortcomings.

Is Online Programming Too Expensive?

I’ve read several articles recently that conjecture that online programming services that mimic cable company TV are in trouble because they are too expensive. This matters when trying to understand the cord-cutting trend because homes are less likely to bolt traditional cable if they have to spend as much elsewhere to get the networks they still want to watch. I haven’t looked a while, so I thought I’d make a new comparison. My local cable company is Charter Spectrum, so I compared the price of Charter cable TV to the online alternatives.

Charter’s base TV plan is called TV Select, and a new Charter subscriber gets a 12-month special price as follows:

$49.99 – 12-month advertised promotional price

$16.45 – Broadcast TV charge

$  6.99 – Settop box

$73.43 – 12-month promotion total price

After 12 months the base price for Select TV goes from $49.99 to $73.99, a $24 increase – and the full monthly fee jumps to $97.43 after the end of the one-year promotion. I’m a sports fan, and to get all of the channels I want I’d have to subscribe to Charter’s TV Silver plan. That package is $20 more expensive than the select plan, or $93.43 for 12 months, and then $117.43 after the end of the promotion period.

Charter’s Broadcast TV Charge has been widely labeled as a hidden fee in that Charter never mentions the fee in any advertising about the cable product. Charter just raised the fee to $16.45 in August, up from $13.50, making it the highest such fee among the big cable companies. But Comcast is not far behind at $14.95 per month and that fee is likely to increase soon. This fee is where the big cable companies are aggregating the charges for local programming from network affiliates of ABC, CBS, FOX, and NBC.

Comcast, AT&T, and some other big cable companies also charge a Regional Sports Fee, but so far Charter is covering this in their base cable costs. The bottom line is that for a Charter customer, my cheapest alternative that includes a full array of network cable channels will cost $73.43 for a year and then go up by $24.

How does this compare with the online alternatives?

  • The cheapest online alternative might be Sling TV. They have two basic small packages that cost $25 each or both for $45. Sling TV has a balanced number of sports and non-sports channels, but in my case doesn’t carry every sports network I want to see. There are also $5 add-on packages that can drive the cost up to $60 to see the network channels most homes probably want to watch. Sling TV doesn’t carry a full array of local network affiliates.
  • Next up in price is Fubo TV, priced at $54.99 per month. This is a sports-centric network that is especially attractive to soccer fans since the network carries a wide array of international sports. Strangely, Fubo TV doesn’t carry ESPN (meaning they also don’t carry ABC or Disney).
  • At the same price of $54.99 is Hulu + Live TV. They carry all of the sports networks I am looking for and a wide array of other network channels. They also carry the local network affiliate channels for most major markets. For $60.99 you can get this service without commercials, which requires downloading shows to watch the commercial-free versions. Hulu + Live TV also lets families and friends network together to watch shows at the same time.
  • YouTube TV is perhaps the closest online product to compare to Charters cable TV plans. This is priced at $64.99 per month. As a sports fan, the YouTube TV lineup provides all of the channels I want to follow my Maryland Terrapins. YouTube TV carries the same local network affiliates for my market that are available on Charter.

All of the online TV options allow subscribers to drop or add the service easily at any time, although none of them give a refund for time already paid. This means no contracts and no term commitment.

It’s easy to see why homes think that online program is too expensive, particularly since Charter falsely advertises their cable product at $49.99. But it costs almost $20 per month more to buy TV from Charter, even with the 12-month promotional price, and then $42 more poor month at the end of the promotion period. It still mystifies me why homes with decent broadband don’t do the math and leave Charter for Hulu or YouTube TV.

A Resilient Internet

Anybody that lives on the East Coast has likely experienced a major Internet outage in the past due to catastrophic weather like hurricanes, storm surges, flooding, nor’easters, or snow blizzards. There have also been Internet outages due to electrical brownouts and blackouts due to hot weather. Outages also can come from non-weather events, and some of you might remember the fire in the tunnel in Baltimore that incinerated a lot of major fiber cables.

I talked to David Theodore of Climate Resilient Internet. David’s been around since the beginning of the Internet and cut his teeth designing some of the first wireless networks for MCI. The primary premise of resilient Internet is that we should design the critical broadband infrastructure in vulnerable communities to withstand outages. The company has created a simple video to explain the concept.

The cost of a community completely losing the Internet is immense. We’ve seen examples of major Internet outages in the memorable past. Hurricane Sandy knocked out broadband to a large part of New York City in 2012. Hurricane Erma knocked out broadband in parts of Miami for weeks in 2017. I’ve experienced this firsthand when I lived in the Virgin Islands and hurricane Otto knocked out my broadband and phone for six weeks. Some of you may remember what happened when 60 Hudson Street shut down in Manhattan after 911.

There is probably no worse time to lose the Internet than during a disaster since people want to communicate with loved ones and want to start taking steps to get back to normal. Society is increasingly reliant on uninterrupted Internet access. If hurricane Sandy hit today, the economic consequences would be far worse than what we experienced just eight years ago in 2012 since our business and personal lives have migrated extensively to the cloud since then. We are more reliant on broadband access each year as more of our daily routines involve Internet access. An Internet outage completely cuts us off from the outside world and takes away things we’ve come to take for granted.

Climate Resilient Internet recommends that vulnerable communities and key infrastructure in vulnerable communities incorporate resilient Internet links as part of the core Internet infrastructure. This means using powerful millimeter-wave radio links that are built to hurricane standards to beam broadband from key buildings to data centers away from flood plains and coastal flooding. It means putting those radio transmitters in secure places like rooftops where they can be bolted down to withstand hurricane winds. It means having onsite microgrid and backup power sources that don’t rely on the commercial power grid. And it means avoiding all wires between the radio transmitter and the data centers.

This doesn’t have to mean a new layer of extra expense. Theodore recommends that large broadband users incorporate radio links into their daily broadband usage so that some of their Internet traffic always travels via the wireless link. Large businesses and critical anchor institutions like hospitals should have diverse routing to reach the Internet. Unfortunately, as many have found out during outages, routes that are promised to be diverse often are not if they eventually converge or share physical address switching points. Having a backup connection using wireless links is one of the only sure ways to guarantee diverse routing.

Oddly, wireless has gotten a bad name over the past twenty years as carriers only wanted to talk about fiber. Some of that bad name is deserved as manufacturers flooded the market with inexpensive radios that don’t meet carrier class standards. But carrier class radios are still some of the most secure and reliable technology we’ve ever deployed. I know of some microwave links that have hummed along for over forty years. Recent technology improvements and the use of higher frequencies mean that radios today can carry multiple gigabits of data.

While cities in hurricane and flood plains have the highest risk of having outages, this concept is worth exploring for critical infrastructure everywhere. Large swaths of the country are vulnerable to tornados. Any city can have a devastating fire. Bad things can happen to even the most secure data center. Some areas of the country stand at risk for earthquakes. Every large city has businesses and key infrastructure that ought to be protected by diverse Internet routing. In too many cases diverse routing using fiber is unavailable, is too expensive, or turns out to not be truly diverse. ISPs everywhere ought to take another look at mixing resilient wireless routing into their networks and as part of their service offerings.

Walking Away from Copper

It’s been clear for many years that the big telcos are looking for ways to walk away from legacy copper networks. Big telco copper is getting old and most was built in the 1950s and 1960s. All of this copper is far past the 40-year expected lives that the telcos claimed when they built the networks. Even old copper can be made to work if it was well-maintained, but the big telcos stopped doing routine maintenance on copper decades ago. For years, the big telco maintenance policy has been to patch problems without improving or fixing network issues.

In some cases, the big telcos have gone through the formal FCC process of formally retiring copper. This requires giving customers a 90-day notice that copper will be deactivated and providing customers an alternative to copper.  For example, Verizon posts notices of copper retirement on this web site. There have been no announced retirements this year, likely due to the COVID-19 pandemic, but Verizon was active last year, like in this September notification for Massachusetts. CenturyLink has made similar notices in parts of Arizona, Colorado, Minnesota, Nebraska, Oregon, Utah, and Washington.

In all of these cases, Verizon and CenturyLink made the announcements in communities where the carriers can provide fiber-to-the-home. It’s a natural technological progression to replace old copper technology with new fiber, and customers who lose copper to move to fiber have little room to complain.

But what about all of the places where the telcos never plan to offer fiber? There are still huge areas, including big parts of major cities where the telcos have no plans of migrating to fiber. What will happen to folks in regions where the copper is rotting past the point of usefulness, like is described in this article from last year in Fauquier County, Virginia? In that county the copper barely works for voice, which is sadly becoming the norm and not the exception.

There is nothing the big telcos can do with copper that has gone past the point of no return. No telco is going to replace bad copper and none of the big telcos are going to extend fiber into rural America or into urban neighborhoods where construction is too expensive. Verizon might be replacing copper with fiber around Boston, as indicated by the above filing, but the telco has no plans for building fiber in western Massachusetts, Cape Cod, or the many other places in the state where it never built FiOS fiber.

We might have gotten a glimpse into Verizon’s strategy when the company recently unveiled a 4G fixed wireless product. This 4G Home product promises to deliver 25 Mbps broadband using the 4G cellular network and Verizon could point to this product as a justification to abandon DSL over copper.

On paper, the 4G Home product will outproduce rural DSL, which typically has speeds well under 10 Mbps. But the Fauquier County article pointed out another ugly truth – much of rural America has poor cellular coverage to go along with outdated copper. The 4G Home product is not going to work for homes that are more than a mile or two from a cell tower. 4G Home is not going to be a reasonable substitute for DSL in communities like the towns on Cape Cod where the density is too high to support a lot of subscribers using 4G data as a landline data substitute – even a small customer penetration would swamp the 4G LTE network in populated areas.

AT&T has a similar fixed wireless product it introduced during the past year as the solution for meeting the company’s rural CAF II requirements. I’ve been tracking this product on the web and still don’t see local articles or chatter from many folks who have changed to the wireless product. AT&T has implemented this product to satisfy the FCC (and to keep the CAF II grant funding), but for some reason the company doesn’t seem to be pushing the product very hard.

The bottom line is these telcos will have to walk away from copper at some point within the next decade for the simple reason that the networks will stop functioning. From what I can see, both the FCC and many state regulatory commissions refuse to acknowledge that copper is dying and keep pretending that the telcos can somehow make this work. These networks are dying. The telcos might toss a bone to regulators by halfheartedly offering a wireless substitute for DSL. But the telcos are under no obligation to offer a replacement if the copper dies. Sadly, we’re going to look up five years from now and find a lot of rural homes without a telephone line and a cellular connection. There was a time when that was unthinkable, but it’s the coming reality.

Broadband Choice for Apartment Buildings

In the 1996 Telecommunications Act, Congress established a goal that rural residents ought to have an opportunity for broadband speeds equal to urban residents. It is this goal that forces the FCC to measure broadband speeds to determine if the whole country has adequate broadband.

It’s clear that urban and suburban single-family homes have the overall best broadband choices in the country. Most are served by a cable company with basic speeds between 100 Mbps and 200 Mbps. Urban homes also have the option of telco broadband that can range from 15 Mbps DSL to fiber. A few lucky markets also have fiber overbuilders from companies like Google Fiber, municipalities, and a handful of other entrepreneurs like US Internet in Minneapolis.

It’s easy to forget that a lot of urban residents have not shared in the improved broadband seen by single-family homes. A little less than one-third of Americans live in multi-tenant buildings (MDUs) which includes apartment buildings, condominiums, and assisted living housing. There is a hodge-podge of federal regulations that govern MDU broadband that has resulted in a wide range of levels of broadband for apartment residents. There are apartment buildings served by fiber that provide better broadband than the average single-family home but there are other apartments with practically no broadband options.

This situation arose due to a string of regulatory rulings that established that apartment building owners have the right to deny access to ISPs. Landlords also have the right to negotiate with one or more ISPs. Some of the big cable companies took advantage of apartment owners due to the emerging rules and got apartment owners to sign exclusive agreements that took away future options. The FCC stepped in and abolished the most abusive exclusive contracts, but the general principle still stands that apartment owners can grant or not grant access to ISPs.

There is also a wide range of the way that landlords allow tenants to buy broadband. Some allow tenants to contract directly with any ISP that has pre-wired the building, and many apartment dwellers have the choice between a cable company and a telco. But many landlords have inserted themselves as a middleman and force tenants to use whatever broadband choice the landlord has arranged. Landlord broadband can be embedded in the rent or charged a la carte. Nothing is stopping an apartment owner from buying a single broadband connection and providing a weak WiFi connection as the only source of broadband.

You might think that the market might make it hard for landlords that offer poor broadband options. But the reality is that there is often an apartment shortage for low-income tenants. Landlords that serve low-income tenants tend to not negotiate for gigabit broadband on fiber.

Just as the COVID-19 crisis has uncovered the sad state of rural communities without broadband, the pandemic has also uncovered the large number of urban apartments without adequate broadband for students and workers to function from home. I’ve talked to several large cities since the pandemic and some are reporting large numbers of urban students who are unable to participate in remote schoolwork.

Ryland Sherman recently wrote an article for the Benton Foundation that rightfully argues that this is another broadband gap we need to close. He recommends that Congress acts to change the rules that allow landlords to block ISPs from their buildings. He also points out that any meaningful change also will require eliminating the ability of ISPs and landlords to negotiate exclusive contracts that block other ISPs from entering buildings. His final recommendation is that any federal laws on the issue should prohibit states from erecting barriers that would keep ISPs out of apartment buildings.

These are all great ideas and they’ve been on my wish list for years should there ever be another telecommunications act coming out of Congress. Only Congress can make the needed changes since the FCC has its hands tied by the messy history of court rulings on the subject over the last few decades.

Unfortunately, Mr. Sherman’s recommended changes alone won’t fix all of the problems. These changes will allow ISPs to enter buildings that they’ve been precluded from. But no law can force ISPs to enter apartment buildings. The reality is that it’s expensive for a new ISP to rewire many apartment buildings. Many ISPs have only agreed to spend the money to wire buildings based upon having an exclusive contract. ISPs won’t enter buildings in a competitive environment when the math doesn’t work. It’s hard to imagine that fixing barriers is going to entice ISPs to serve apartments with low-income tenants.

The recommendations made by Mr. Sherman are needed. Allowing ISPs to enter buildings more freely will spur competition in both speeds and prices. We need to come up with new ideas to get ISPs to serve buildings that are expensive to wire or that serve low-income tenants. This will likely need to be a local solution since every market is different. We can’t rely on the private sector to provide good broadband in all MDUs – the incumbents have already been accused in many cities of redlining to avoid low-income neighborhoods. We absolutely should remove all barriers that keep ISPs out of MDUs. But we need to go a lot further to find ways to get ISPs to serve all MDUs.

A Fresh Look at Cord-Cutting

Roku undertook a survey that took a deep dive into cord-cutting and interviewed over 7,000 homes in March. The overall conclusion of the survey is that cord-cutting is accelerating in 2020. The survey was done at the beginning of the pandemic, and overall industry statistics for the second quarter make it sound like cord-cutting exploded in the second quarter of this year.

The Roku survey segregates the television market as follows: 43% of homes still have traditional cable TV. Another 25% are cord-shavers and still have traditional cable TV but have downsized to a lower-cost video package. 25% of the market are now cord-cutters, and 7% of the market never had traditional cable TV.

Probably the most interesting statistic is that one-fourth of the market consists of cord-shavers who have reduced their traditional programming packages. It’s been clear that cord-shaving has been happening, but I’ve never seen it quantified before. The big cable companies never mention cord-shaving when reporting cable TV subscribers. The magnitude of the number of households that have trimmed back to lower-cost programming packages explains why the paid subscriptions to cable networks is dropping far faster than the drop in cable customers.

80% of cord-cutters say that they are satisfied with their decision to end their subscription to traditional TV. Two-thirds of cord-cutters say they wish they had cut the cord sooner.

Lack of sports is driving some cord-cutting during the pandemic, and 28% of cord-cutters say that lack of sports is their number one reason for cutting the cord. 17% of cord-cutters (or 4% of the whole video market) say they will consider returning to traditional TV when sports return to the air full time. 31% of cord-cutters say they will pursue a sports streaming service when sports returns.

The number one reason cited for cutting the cord is cost savings, and many of those surveyed say they were driven to this decision due to a change in household income due to the pandemic. The average Roku user said that they are saving $75 per month with cord-cutting. As a household that has cut the cord, I find that number a little hard to believe – but it’s what they reported in the survey. My consulting firm does surveys and we’ve learned to always be leery when households cite numbers of any kind; in this case, it would be natural for many homes to exaggerate their savings as a way to justify cutting the cord. I’m sure some homes have saved $75, but that seems like a high average and it doesn’t take more than a few subscriptions to online video services to eat into that savings.

Cord-cutters are watching more free ad-supported content as a way to control costs. 42% of cord-cutting households said that free content or extended free subscriptions to streaming services helped to convince them to cut the cord.

45% of the households in the cord-shaver category say they are likely to cancel traditional TV in the next six months. Every survey about cable TV I’ve seen for the last five years has included substantial numbers of homes that say they are about to drop cable TV – but then don’t. But this statistic is a lot higher than I’ve ever seen and indicates a lot of households are thinking about cutting the cord. It’s often a complicated decision for a home with multiple family members to finally cut the cord.

The pandemic makes it harder to discern long-term trends. This survey supports the industry belief that a lot of homes continue to drop traditional TV packages. But the pandemic provides several good reasons to drop a cable subscription that won’t be permanent. Sports will eventually come back to TV and sports fans are going to subscribe. As the economy rebounds, people will get back to work – it’s an easier decision to cut a $100 per month cable subscription when one or more people in a home are unemployed. The pandemic has also killed the creation of new programming content, and many cable subscribers only pay in order to watch the latest versions of their favorite shows. I’ve read that it might take more than a year after the pandemic ends to see a fresh supply of new content.

It will take time to see if an improved economy reverses any of the cord-cutting trends. For now, any company offering cable TV is in for a rough ride. It’s hard to see any positive news from the results of this survey for programmers or cable companies.