Satellite Cell Service

T-Mobile and Starlink made a joint announcement recently about an arrangement where Starlink will enable voice and texting capabilities to T-Mobile cellphones by the end of 2023. This is a service that would work with existing cell phones and would supposedly kick in when a phone can’t find a signal from a cell tower. Starlink said the technology would be enabled by new satellites that have significantly larger antennae than the current satellites in the constellation. In the press release, Elon Musk touted this as being able to reach people lost in the wilderness, but the much bigger use will be to fill in cellular coverage in rural areas for T-Mobile.

While the two companies made a big splashy announcement about the arrangement, they are late to the game as other industry players already have similar plans underway.

AST SpaceMobile has been working on deploying satellites aimed specifically at the cellular market. The company plans to launch its first five satellites in 2024. The company’s business plan is to launch fairly large satellites weighing over 3,300 pounds to create a constellation dedicated to cellular coverage. The company has already created partnerships with more than 25 mobile operators around the world, including the giant cellular company Vodaphone.

Lynk is taking a different approach and will launch small satellites around the size of a pizza box. The company has one test satellite in orbit with another schedule this December. The company plans to have 50 satellites in orbit by the end of 2023. Lynk already has 14 commercial agreements in place and will support large corporations and governments as well as mobile providers.

Just yesterday, Apple announced that it will offer a texting service for those lost in the wilderness in a partnership with Globalstar. This service is going to be text only and is going to be exceedingly slow, but it will supposedly work for folks who have the latest iPhone and who also are able to point the phone directly at the satellite. There will be an app that will tell a user where the satellite can be found.

All of these plans raise a lot of questions that we won’t get answered until somebody has a working satellite product. For example, could somebody inside a vehicle connect to a satellite? I have no problem connecting to the Sirius XM satellite service, so this might not be a problem. Will these connections somehow roam and connect back to cellular carriers when the user is in reach of a cell tower? That would be really complicated, and my guess is that this won’t work. Mike Sievert, the CEO of T-Mobile said this project is like putting a cell site in the sky, but much harder – and I believe him. I’ve been trying to picture how the satellites will pick out the right calls because filtering through the many billions of cellphone calls to find the right ones sounds like a huge data processing challenge.

The service would certainly be a boon to somebody lost in the  woods, but this is a much-needed service for a lot of people. My consulting firm does surveys, and it’s not unusual to find rural counties today where 30% or more of homes say they have no cellular coverage at their homes. The national coverage maps of the big cellular companies are a joke in many rural places.

T-Mobile and Starlink said that these connections would be only for voice calls and texting at first but that using cellular data might be on the horizon. That would be a significant accomplishment since a receiver many times larger than a cell phone is needed today to communicate with a satellite.

The real potential for this product is not in the U.S. and Europe where a large percentage of folks can connect today to cellular networks. The real market is the many parts of the world where modern cellular towers are a rarity. Most Americans probably don’t understand or appreciate that there is still a lot of the world where folks are not connected, or perhaps only connected through one universal connection that is shared by a whole community.

More WiFi Spectrum

There is more WiFi spectrum on the way due to the US Court of Appeals for the District of Columbia that rejected a legal challenge from the Intelligent Transportation Society of America and the American Association of State Highway and Transportation Officials that had asked to vacate the FCC’s 2020 order to repurpose some of the spectrum that had been reserved for smart cars.

The spectrum is called the 5.9 GHz band and sits between 5.85 GHz and 5.925 GHz. The FCC had decided to allocate the lowest 45 MHz of spectrum to WiFi while allowing the upper 30 MHz to remain with the auto industry.

The process will now begin to make the transition to WiFi. The FCC had originally given the auto industry a year to vacate the lower 45 MHz of spectrum. The FCC is likely going to have to set a new timeline to mandate the transition. The FCC also needs to rule on a waiver from the auto industry to redeploy technology using the Cellular Vehicle-to-Everything (C-V2X) technology from the lower to the higher frequency band. This is the technology that most of the industry is using for testing and deploying self-driving vehicles.

The lower 45 MHz of the new spectrum sits adjacent to the existing WiFi 5.8 GHz spectrum. Combining the new spectrum with the existing band is a boon to WISPs, which now get a larger uninterrupted swath of spectrum for point-to-multipoint broadband deployment. During the early stage of the pandemic, the FCC gave multiple WISPs the ability to use the 5.9 GHz spectrum on a trial basis for 60 days, and many of them have been regularly renewing that temporary licenses since then.

When the FCC announced the resolution of the lawsuit, the agency issued a press release discussing the benefits touted by WISPs for using the new spectrum. Some of them claimed to see between a 40% and 75% increase in throughput bandwidth. This was mostly due to less congestion on this spectrum, which is rarely used. There was little or no interference during the last year. The spectrum also provided a clear path for wireless backhaul between towers. Of course, once this is made available to all WISPs, it’s likely that much of this benefit will disappear as everybody starts vying to use the new spectrum. But it is an increase in bandwidth potential, and that has to mean higher quality wireless signals.

This spectrum will also be available for home WiFi. However, it takes a lot longer for the home WiFi industry to respond to new spectrum. It means upgrading home WiFi routers but also adding the capability to use the spectrum to the many devices in our homes and offices that use WiFi. Everything I’m reading says that we are still years away from seeing widespread use of the 6 GHz WiFi spectrum, and this new bandwidth will likely be rolled out at the same time.

This was an interesting lawsuit for several reasons. First, the entities filing the court suit challenged the FCC’s ability to change the use of spectrum in this manner. The court decision made it clear that the FCC is fully in the driver’s seat in terms of spectrum allocation.

This was also a battle between two large industries. The FCC originally assigned this spectrum to the auto industry twenty years ago. But the industry was slow to adopt any real-world uses of the spectrum, and it largely sat idle, except for experimental test beds. There is finally some movement toward deploying self-driving cars and trucks in ways that uses the spectrum. But even now, there is still a lot of disagreement about the best technology to use for self-driving vehicles. Some favor the smart road that uses spectrum to communicate with vehicles, while the majority opinion seems to favor standalone smart-driving technology in each vehicle.

Between this order and the 6 GHz spectrum, the FCC has come down solidly in favor of having sufficient WiFi spectrum going into the future. It’s clear that the existing bands of WiFi are already heavily overloaded in some settings, and the WiFi industry has been successful in getting WiFi included in huge numbers of new devices. I have an idea that we’ll look back twenty years from now and say that these new WiFi spectrum bands are not enough and that we’ll need even more. But this is a good downpayment to make sure that WiFi remains vigorous.

Streaming Video Continues to Grow

I saw recent headlines that claim that the time people watch streaming content is now greater than all of the time spent watching content from cable companies. A deeper look at the underlying statistics shows that this isn’t entirely true, but it makes for a great headline. But it’s still news that the percentage of viewing done through streaming continues to grow while the number of traditional cable customers continues to plunge.

Let’s start with the July 2022 numbers. These statistics come from Nielsen, which has been tracking viewership of content for decades and publishes monthly reports on the video industry. The best-known statistics coming from Nielsen are the ranking and popularity of various TV shows. Nielsen says that July streaming was up significantly, partially due to a surge in the viewing of the newly released Stranger Things 4.

July 2021 July 2022
Broadcast 23.8% 21.6%
Cable 37.7% 34.4%
Streaming 28.3% 34.8%
Other 10.1% 9.2%

The statistics show that the total time spent watching content through streaming was greater than the time spent watching all content through traditional cable TV connections. The reason that this isn’t completely accurate is that the “Other” category includes some viewing that also comes from cable companies such as streaming through cable settop boxes.

Nielsen counts streaming through a cable settop box as other because the company has no visibility into the identity of such content. An example would be somebody reaching a streaming service like Netflix through the Comcast settop box. Such content is hard to classify because it all comes from a traditional cable company, but much of it is also streaming.

But the nuances of the numbers aren’t what matters as much as the trend. It’s clear over time that the percentage of time watching streaming content is growing while the use of traditional cable TV viewing is waning.

One explanation for this is the decreasing number of traditional cable customers. According to Leichtman Research Group, the number of cable customers of the largest cable companies dropped from 70.7 million in June 2021 to 65.0 million in June 2022. That’s an 8% drop in total cable customers, which aligns well with a drop in the share of cable viewing in the Nielsen numbers above that show a 9% drop in cable viewing.

All of this means there is still a lot of video content that will eventually be migrating to the Internet. Traditional cable still carried 37.7% of all viewing in July. Another 23.8% of viewing was through broadcast (rabbit ears). Those still represent over 60% of all video views.

The Nielsen numbers and trends suggest that broadband networks will continue to see increased demand from video that will continue to shift to the web. While video viewing is still the largest single use of the web, many other uses of broadband are still growing rapidly. In recent years we’ve moved a lot of the software we use daily to the cloud. Web-connected security cameras are becoming ubiquitous. Practically every device we buy for the home now talks to the Internet. I rarely had video calls before the pandemic, and it’s now a routine part of my workday.

Another RDOF Auction?

There was a recent interview in FierceTelecom with FCC Commissioner Brandon Carr that covered a number of topics, including the possibility of a second round of RDOF. Commissioner Carr suggested that improvements would need to be made to RDOF before making any future awards, such as more vetting of participants upfront or looking at weighting technologies differently.

The FCC is building up a large potential pool of broadband funding. The original RDOF was set at $20 billion, with $4.4 billion set aside for a second reverse auction, along with whatever was left over from the first auction. The participants in the first RDOF auction claimed only $9.2 billion of $16 billion, leaving $6.8 billion. When the FCC recently decided not to fund LTD Broadband and Starlink, the leftover funding grew by another $2 billion. Altogether that means over $11 billion left in funds that were intended for RDOF.

We also can’t forget that around the same time as the RDOF that the FCC had planned to fund a 5G fund to enhance rural cellular coverage. Due to poor mapping and poor data from the cellular carriers, that auction never occurred. That puts the pool of unused funding at the FCC at $20 billion, plus whatever new FCC money might have accrued during the pandemic. That’s a huge pool of money equal to half of the giant BEAD grants.

The biggest question that must be asked before considering another RDOF reverse auction is how the country will be covered by the BEAD grants. It would be massively disruptive for the FCC to try to inject more broadband funding until that grant process plays out.

Commissioner Carr said that some of the FCC’s funding could go to enhance rural cellular coverage. Interestingly, once BEAD grant projects are built, that’s going to cost a lot less than was originally estimated. A lot of the money in the proposed 5G fund would have been used to build fiber backhaul to reach rural cell sites. I think the BEAD last-mile networks will probably reach most of those places without additional funding. However, there is probably still a good case to be made to fund more rural cell towers.

But there are larger questions involved in having another reverse auction. The big problem with the RDOF reverse auction was not just that the FCC didn’t screen applicants first, as Carr and others have been suggesting. The fact is that a reverse auction is a dreadful mechanism for awarding broadband grant money. A reverse auction is always going to favor lower-cost technologies like fixed wireless over fiber – it’s almost impossible to weight different technologies for an auction in a neutral way. It doesn’t seem like a smart policy to give federal subsidies to technologies with a 10-year life versus funding infrastructure that might last a century.

Reverse auctions also take state and local governments out of the picture. The upcoming BEAD funding has stirred hundred of communities to get involved in the process of seeking faster broadband. I think it’s clear that communities care about which ISP will become the new monopoly broadband provider in rural areas. If the FCC has a strict screening process up front, then future RDOF funding will only go to ISPs blessed by the FCC – and that probably means the big ISPs. I would guess that the only folks possibly lobbying for a new round of RDOF are companies like Charter and the big telcos.

The mechanism of awarding grants by Census block created a disaster in numerous counties where RDOF was awarded in what is best described as swiss cheese serving areas. The helter-skelter nature of the RDOF coverage areas makes it harder for anybody else to put together a coherent business plan to serve the rest of the surrounding rural areas. In contrast, states have been doing broadband grants the right way by awarding money to coherent and contiguous serving areas that make sense for ISPs instead of the absolute mess created by the FCC.

A reverse auction also relies on having completely accurate broadband maps – and until the FCC makes ISPs report real speeds instead of marketing speeds, the maps are going to continue to be fantasy in a lot of places.

Finally, the reverse auction is a lazy technique that allows the FCC to hand out money without having to put in the hard effort to make sure that each award makes sense. Doing grants the right way requires people and processes that the FCC doesn’t have. But we now have a broadband office and staff in every state thanks to the BEAD funding. If the FCC is going to give out more rural broadband funding, it ought to run the money through the same state broadband offices that are handling the BEAD grants. These folks know local conditions and know the local ISPs. The FCC could set overall rules about how the funds can be used, but it should let the states pick grant winners based upon demonstrated need and a viable business plan.

Of course, the simplest solution of all would be for the FCC to cut the USF rate and stop collecting Universal Service Fund revenues from the public. The FCC does not have the staff or skills needed to do broadband grants the right way. Unfortunately, that might not stop the FCC from tackling something like another RDOF auction so it can claim credit for having solved the rural digital divide. If the FCC plans on another RDOF auction I hope Congress stops them from being foolhardy again.

Traditional Cable in Less than Half of Households

Leichtman Research Group recently released the cable customer counts for the largest providers of traditional cable service at the end of the second quarter of 2022. LRG compiles most of these numbers from the statistics provided to stockholders, except for Cox, which is privately held and estimated. Leichtman says this group of companies represents 96% of all traditional U.S. cable customers.

The traditional cable providers continue to lose customers at a torrid pace, losing over 1.65 million customers in the second quarter, up from 1.4 million customers the previous quarter. Overall, the traditional cable providers lost almost 18,200 customers every day during the quarter.

The big news for the quarter is that traditional cable providers are now in less than half of homes and have collectively dropped to a 49% market penetration. The industry has lost almost seventeen million customers since the end of 2017, when traditional cable was in over 73% of homes.

2Q 2022 Change Change
Comcast 17,144,000 (520,000) -2.9%
Charter 15,495,000 (226,000) -1.4%
DirecTV 13,900,000 (400,000) -2.8%
Dish Network 7,791,000 (202,000) -2.5%
Verizon 3,479,000 (87,000) -2.4%
Cox 3,230,000 (80,000) -2.4%
Altice 2,574,200 (84,500) -3.2%
Mediacom 540,000 (15,000) -2.7%
Frontier 343,000 (20,000) -5.5%
Breezeline 332,312 (6,709) -2.0%
Cable ONE 221,000 (17,000) -7.1%
   Total 65,049,512 (1,658,209) -2.5%
Hulu Live 4,000,000 (100,000) -2.4%
Sling TV 2,197,000 (55,000) -2.4%
FuboTV 946,735 (109,510) -10.4%
Total Cable 39,536,512 (949,209) -2.3%
Total Telco / Satellite 25,513,000 (709,000) -2.7%
Total vMvPD 7,143,735 (264,510) -3.6%

It doesn’t look like people are replacing traditional cable with an online alternative like Hulu and Sling TV – which collectively lost 264,000 customers in the quarter. A few major online alternatives like YouTube TV aren’t on the list, but the loss in traditional cable far surpasses any possible net gain for the online cable alternatives.

Charter is still losing customers at a slower rate than everybody else in the industry and has for the past several years – although Charter’s losses are starting to climb. Charter CEO Tom Rutledge says that Charter actively points out to customers that the online alternatives cost more. The rest of the industry seems resigned to letting cable customers go.

The biggest percentage losers continue to be Frontier and Cable ONE.

Broadband Training for Communities

The Institute for Local Self-Reliance (ILSR) has announced an affordable program to help communities strategize about how to get better broadband. The new online course lasts for eight weeks and is called the Let’s Get Going Broadband Program. It’s modeled a bit after a program offered for many years in Minnesota by the Blandin Foundation and more recently offered by several states.

The purpose of this course if to provide training for a handful of local people – be that city staff or community volunteers – who want to help advance the process of getting better broadband for a community. The course goes beyond just getting broadband and also forces participants to consider how their community will leverage better broadband after they find it.

As anybody who reads this blog knows, finding the right broadband solution can feel complicated and overwhelming. This course will break the topic down into digestible pieces. Rather than throw everything at participants at once, over an eight-week period, the course will look at a range of topics that will help communities find a broadband solution. The list of weekly topics is a great outline of a step-by-step approach to finding a broadband solution with topics like:

  • Broadband 101. What are the basics behind how a broadband network functions? What are the pros and cons of various broadband technologies that cities will likely be offered?
  • Identifying Broadband Problems. I often refer to this as a broadband gap analysis – what unique issues is a given community having because of a lack of broadband? Are speeds too slow? Are there too many people not connected to broadband? Is lack of broadband hurting the business community?
  • Infrastructure Challenges. What kinds of issues are faced by anybody building a fiber network – important to understand since the local issues in a given community will define the willingness of ISPs to build there.
  • Building a Broadband Coalition. The communities that are benefitting the most from getting better broadband are those that have brought all local stakeholders to the table – citizens, local government, non-profits, healthcare, public safety, the business community, and key anchor institutions like schools and libraries.
  • Infrastructure Solutions. What are the disruptions that come when building a network? Like with any major infrastructure initiative, expanding broadband is not painless.
  • Digital Equity Solutions. How can a community make sure that everybody has the opportunity to be connected to broadband, including making sure there are computers in homes and training on how to use them? How can a community help to make broadband affordable?
  • Funding Programs. How are communities funding broadband networks? What kinds of grants are available to communities, and how does a community go about pursuing grants? Where does a community find the rest of the funding?

One of the best features of this learning is that it is done by a group of cities together so that participants can learn from the ideas and approaches being considered by others. ILSR calls each group of participants a cohort, and the group will work together online and share ideas during the course.

The goal of the course is for each community to find its best solution to better broadband – and it’s likely that every city in a cohort will seek a unique and separate path. The purpose of the training is to help participants gain the common vocabulary of broadband to enable the community to make informed choices about broadband.

Beware the Grant Challenges

One of the hurdles faced by communities pursuing broadband grants is that many grant programs allow incumbent broadband providers to challenge the validity of a grant. The most common challenge is for an incumbent provider to claim that a grant incorrectly includes homes and businesses that already have fast broadband. Today’s blog includes a few examples of recent grant challenges and warns that communities need to be ready for challenges as part of seeking better broadband. It appears that the purpose of many challenges is to delay the process, with the ultimate hope to derail or cancel grant requests.

The first challenge story comes from northeastern Louisiana in East Carroll Parish for the state grants that have been dubbed GUMBO grants. In this case, the grant was to go to Conexon to bring fiber to the rural parts of the Parish. A challenge was filed by Sparklight, the incumbent cable company (which has rebranded from Cable One). Sparklight claimed that it serves 2,856 homes in the East Carroll Parish with 960/50 Mbps broadband – a dubious claim since the entire Parish only has 2,792 households. I talked to several residents of the county who say that Sparklight does not serve rural residents and that most of the parish has little or no broadband options.

This challenge is unusual in that it came after the grant was awarded. The grant process had included several months to file protests, and Sparklight had said nothing during that period. I’m not sure I have the facts entirely straight, but it seems like the Legislature allowed for a second 7-day challenge period that was not part of the original rules. In this case, the challenge came on the same day that the Parish had planned to kick off the process of asking residents to join a sign-up list to get service, and after the Governor had come to the Parish to announce the grant award. There were a lot of other challenges around the state as part of the Gumbo grant process.

Another well-publicized grant challenge came from an NTIA grant being sought to bring broadband to Grafton County, New Hampshire. In this case, the incumbents challenged 3,000 of the 4,000 Census Blocks covered by the grant. It’s difficult for any grant applicant to defend a challenge of this magnitude, even if the grant areas legitimately qualify for the grant funding. It turns out that most of the challenges were erroneous.

An interesting grant story comes from Washington State. I ran across an article talking about the challenge to a grant filed by the Grays Harbor Public Utility District, which is an electric and water utility serving the county. The PUD operates an open access network where it builds fiber and lets multiple ISPs compete to serve residents and businesses, and the grants asked to expand the open-access networks.

Grays Harbor PUD had asked for a grant to serve 922 homes in an area where both broadband and cellular coverage are almost nonexistent. The PUD would have used the grant money to bring fiber to this pocket of rural homes. In Washington State, grants and challenges are handled by the Public Works Board, a group of 14 volunteers appointed by the Governor. Comcast objected to the grant and said that 249 of the homes near one of the towns could already buy broadband from Comcast.

There was no investigation of the challenge claim, and the Public Works Board rejected the grant outright, along with eight other grants that had received similar objections. The PUD believes that almost all of the homes being challenged cannot buy broadband from Comcast, but the PUD was given no opportunity to dispute the objection. A better solution would have been to investigate the challenge and trim out homes that can already buy broadband. The Public Works Board thought it was obligated to toss out a grant that violates the grant rules, but has since examined its processes since it appears that State law would have allowed the Board to make a partial grant based on the homes that don’t have broadband.

These are just a few of the many hundreds of stories of challenges that have been filed against grants over the last year. These stories are important because they presage what might happen with the upcoming $42.5 billion BEAD grants that include a challenge process. The fact that challenges are allowed puts the burden on communities to do the homework to make sure that grant areas fit the grant rules. This means gathering speed tests and also getting testimonials from residents explaining the lack of broadband choices. Grant offices can get overwhelmed if huge numbers of challenges are filed – communities that can prove their story are going to fare the best.

The Birth of the Digital Divide

A lot of the money being spent on broadband infrastructure today is trying to solve the digital divide, which I define as a technology gap where good broadband is available in some places, but not everywhere. The technology divide can be as large as an entire county that doesn’t have broadband or as small as a pocket of homes or apartment buildings in cities that got bypassed.

I can clearly remember when the digital divide came about, and at that time I remember discussing how the obvious differences between technologies were going to someday become a major problem. Today I’m going to revisit the birth of the digital divide.

Until late in the 1990s, the only way for almost most people to get onto the Internet was by the use of dial-up access through phone lines. ISPs like AOL, CompuServe, and MSN flourished and drew millions of people online. At first, dial-up technology was only available to people who lived in places where an ISP had established local dial-up telephone numbers. But the online phenomenon was so popular, that ISPs eventually offered 800 numbers that could be reached from anywhere. There was no residential digital divide, except perhaps in places where telephone quality wasn’t good enough to accommodate dial-up. Some businesses used a faster technology to connect to the Internet using a T1, which had a blazingly fast speed of 1.6 Mbps, almost 30 times faster than dial-up. To people connecting at 56 kbps, a T1 sounded like nirvana.

The digital divide came into being when the faster technologies of DSL and cable modem were offered to homes. My first DSL line had a download speed of almost 1 Mbps, an amazing 18 times increase in speed over the dial-up modem. At almost the same time, some cable companies began offering cable broadband that also had a speed of around 1 Mbps. Homes in urban areas had a choice of two nearly-identical broadband products, and the early competition between telephone and cable companies was loud and fierce.

The advent of DSL created the first digital divide – the gulf between urban areas and rural areas. While telcos theoretically offered DSL in much of rural America, the 2-mile limitation of the DSL signal meant the speed didn’t carry far outside of the towns that housed the DSL transmitters, called DSLAMs. Many telcos were willing to sell rural DSL, even if speeds were often barely faster than dial-up. Soon after the first DSL was offered to customers, the vendors came up with ISDN-DSL that could deliver a speed up to 128 kbps deeper into rural copper networks – twice the speed of dial-up. But decent DSL never made it very far into most of rural America – and still doesn’t today for much of rural America.

The DSL and cable modem technologies improved within a few years after introduction, and the technology improvements created the second digital divide. I recall versions of DSL that had a maximum speed of 3, 6, 12, 15, 24, and eventually 48 Mbps. The big telcos upgraded to later DSL technology in some neighborhoods, but not others. Sadly, even today we continue to find places where the earliest versions of DSL are still offered, meaning there are places where DSL speeds never climbed above 3, 6, or 12 Mbps. This was particularly painful in towns that didn’t have a cable competitor because they were stuck with whatever flavor of DSL the telephone company offered to them. This was noticeable in big cities where some neighborhoods never saw any DSL upgrades. There was a well-known study done a number of years ago documenting the DSL technologies available in Dallas, Texas. The study showed that poor neighborhoods still had the slowest versions of DSL while more affluent neighborhoods had DSL speeds up to 50 Mbps.

Cable modem technology improved more quickly than DSL. By 2005, the cable modem won the speed game. And that’s when the cable companies started charging more for cable broadband – something they could do because the broadband was faster. This price difference largely meant that low-income households were stuck with DSL, while folks who care about speeds migrated over the years to the cable companies.

The digital divide in rural areas deepened as older DSL was not upgraded while the DSL that had originally been deployed started to reach end-of-life. Copper networks have lasted far past the expected economic useful life and get a little worse every year. In cities, any parts of the city stuck with only DSL fell far behind the neighborhoods where speeds increased significantly from both DSL and cable modems.

Unfortunately, we are not at the end of this story. There is a huge amount of fiber being constructed today in urban areas. But there is no reason to think that most of the ISPs building fiber are going to serve every neighborhood. The big telcos that build fiber like Verizon, AT&T, Frontier, CenturyLink, and others have always cherry-picked what they think are the best neighborhoods – best in terms of either demographics or the lowest in cost of deployment.

Unless we reach a time when fiber is everywhere, the digital divide will stick around. Right now, we’re tackling the rural digital divide – I expect in 5 or 10 years we’ll have to do this all over again to tackle the urban digital divide.

Cable Companies Tout Speed Increases

Earlier this month, NCTA – The Internet and Television Association – posted an article on its website touting the big increases in broadband speeds since the start of the pandemic. NCTA is the industry trade and lobbying association for medium-sized and large cable companies.

The article touts that the average U.S. download speed has grown from 138 Mbps in March 2020, the first month of the pandemic, to 226 Mbps in June 2022. These speeds come from the Ookla Speedtest Global Index. The cited numbers are the mean, or the average speeds measured by Ookla in the respective months across the whole U.S. Obviously, the cable companies are taking credit for much of the speed increase, and to some extent, that’s true. But there are a number of different reasons why average download speeds are increasing.

One of the primary reasons is directly related to the cable companies. Over the last year, cable companies have almost universally increased the download speed of the base broadband product to 200 Mbps to 300 Mbps. This not only applies to new customers, but many existing customers woke up one day in the last year with a download speed increase. This is something that the cable companies had done periodically since the days when speeds were 6 Mbps download. Since Comcast and Charter alone serve over half of all broadband customers in the country, anything the big cable companies do to increase speeds affects a lot of people and drives up the national average speed.

Another factor that is driving up average speeds is more homes getting access to fiber. This is starting to rachet up and many homes are now seeing a second fast choice other than the cable company. When looking at the amount of fiber being built and the sales goals of the fiber companies, this is going to be picking up in the coming years. To some extent, the big cable companies are also building fiber. Charter, in particular, is building fiber on the fringe of its traditional cable markets to new subdivisions or areas where the company has gotten grants. I’ve been hearing from Charter cable customers lately who are frustrated that the company is building fiber nearby and not in their neighborhood.

One of the major reasons for the average speed increases reflects poorly on the cable companies. Over the last two years, there has been a huge migration of homes buying faster broadband packages. These are homes that struggled with broadband performance and upgraded to get better speeds. Most people didn’t realize (and still may not realize) that their issues during the pandemic were mostly due to poor upload bandwidth from the cable companies. Folks upgraded to faster download packages hoping to get better upload performance, and even after the upgrade, many did not. You’ll notice on the NCTA website that there is no mention of upload bandwidth – a topic the cable companies absolutely do not want to discuss.

A final factor that is contributing to a faster national average download speed is the rapid expansion of fiber in rural areas. While this doesn’t represent a big slice of people, the national average speeds are boosted when households migrate from download speeds of 1 or 2 Mbps to fast download speeds on fiber. There is currently a lot of construction going on funded by the FCC’s ACAM program, federal grants and subsidies like ReConnect and RDOF, and numerous state broadband grants.

So yes, the cable companies deserve credit for increasing download speeds – and they are a big part of the reason behind the faster national average speeds. But it’s not all due to the cable companies.

Big Telcos and the BEAD Grants

We’re finally starting to gain a picture of the plans of the big telcos for the upcoming BEAD grants. The bottom line is that some of the big telcos seem to be prepared to pursue the upcoming grants in a major way. Consider the following:

  • At a recent industry conference, Frontier’s CFO said that Frontier has ambitious plans to pursue grants for all of the three to four million rural homes that it serves today with DSL.
  • When the BEAD grants were first announced, AT&T added five million new passings to its goal for 2025, all due to pursuing rural grants. AT&T hasn’t said much about grants since that early announcement.
  • Brightspeed, which purchased twenty states of copper networks from CenturyLink, has made it clear that it will be seeking state and federal grants to build as much fiber as possible. CenturyLink has been aggressively pursuing grants in the states sold to Brightspeed, for the obvious benefit of the new company.
  • Windstream was a big winner in the RDOF reverse auction and has been aggressively pursuing ARPA funding. It seems obvious that the company will also pursue BEAD grants.

The two big telcos that have not said much about grants are CenturyLink and Verizon. There are rumors that CenturyLink is seeking somebody to buy the rest of its copper lines, but it also would not be surprising to see the company come out swinging for grant funding if a sale isn’t forthcoming. Verizon abandoned a rural strategy years ago, and it would be surprising but not impossible to see the company tackle grant funding if the math is good.

The other big ISP that has aggressively been pursuing grant funding is Charter. It would make sense for the company to pursue BEAD grants to fill in around where it has already won the RDOF auctions.

This is an interesting dilemma for rural communities. The telcos all say they will be building rural fiber with grant funding – which is what rural America most desires. But a lot of rural folks blame the big telcos for the current miserable state of rural broadband. It’s the big telcos that stopped maintaining copper, reduced staffing drastically, and basically walked away from rural America. I know a lot of folks who hope that anybody other than the big telcos wins the grant funding in their area.

There are several big fears that I hear voiced about the big telcos winning the grant funding. One is that the big telcos will not follow through after winning the grant funding. Many communities remember how some of these telcos walked away with huge amounts of CAF II funding without doing the promised DSL upgrades. I think the fear is that the big telcos might cut corners and not build to the most remote households in a grant award area. I’ve also heard the fear that the big telcos will accept grants and then decide not to build some areas in a state.

Perhaps the biggest fear about big telcos building rural fiber networks is that we’ll see a repeat of the past. They will build the new network as funded. But if the telcos don’t hire enough technicians or cut corners on maintenance, the fiber networks will deteriorate over time.

This is a real concern because there is a big difference between copper networks and fiber networks. It’s been possible to keep a copper network limping along for decades with minimum maintenance. This is due to the relative simplicity of the DSL technology. There are twenty-year-old DSL cards still limping along, long past the expected economic life. But fiber networks are not likely to be so tolerant. Fiber technology is complicated and precise, and when a card starts going bad, it most commonly means the fiber will go dark. I think the big fear in rural America is that the big telcos will build fiber but let it go dark in 10 or 15 years if they can’t get additional subsidies. This is an impossible scenario to imagine the big telcos demanding future subsidies to keep networks working.

One of the most important aspects of the BEAD grants will be community approval and partnerships with the grant applicants. It will be curious to see if the big telcos seriously court local support for grant applications or do little more than ask for a letter of support when it’s time to file grants. If a community really wants to keep out the big telcos, the best strategy is to partner with somebody you trust more.