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Another Problem with RDOF

I have been critical of the RDOF awards for a number of reasons, but one of the worst problems isn’t being discussed. When the FCC picked the eligible areas for the RDOF awards, there was no thought about whether the grant award areas make any sense as a service area for an ISP. Instead, the FCC picked Census blocks that met a narrow definition of speed eligibility without any thought of the nearby Census blocks. The result is that RDOF serving areas can best be described as a checkerboard, with RDOF serving areas scattered in with non-RDOF areas.

The easiest way to show this is with an example. Consider the community of Bear Paw in western North Carolina. This is a community of 200 homes, 42 cottages, and 23 condominiums that sticks out on a peninsula in Lake Hiwassee. The community was founded to house the workers who originally built the Tennessee Valley Authority’s Nottley dam on the Hiwassee River. Today’s community has grown from the original cottages. As you might expect for a small town deep into Appalachia, the town has poor broadband, with the only option today being slow DSL offered by Frontier. Residents describe the DSL as barely functional. This is exactly the kind of area where the RDOF awards were supposed to improve broadband.

Below are two maps. The first is printed from the FCC’s RDOF maps – it’s a little hard to read because whoever created the map at the FCC chose a bizarre color combination. On the right is a more normal map of the same area. The red areas on the FCC map are the places where RDOF was claimed by an ISP. As you can see, in a community with only 265 households, the FCC awarded RDOF to some parts of the community and not to others.

 

 

 

 

 

 

The checkerboard RDOF award causes several problems. First, any ISP will tell you that the RDOF award areas are ludicrous – it’s impossible for an RDOF winner to build only to the red areas.

And that’s where the second problem kicks in. The RDOF award winner in Bear Paw is Starlink, the satellite company. Starlink is not going to be building any landline broadband. Unfortunately for Bear Paw, giving the award to Starlink makes no sense. All of the lots in Bear Paw are in the heavy woods – that’s one of the attractions for living in the community. Everything I’ve read say that satellite broadband from Starlink and others will be sketchy or even impossible in heavily wooded areas.

The obvious solution if Starlink doesn’t work well is for the community to try to find another ISP to build fiber to the community. But getting another ISP to build in Bear Paw won’t be easy. Other federal and state grant programs will not fund the red RDOF areas on the FCC map. Even should Congress pass the infrastructure bill, there might not be enough grant money made available to an ISP to make a coherent business case to build to Bear Paw. The FCC checkerboard awards significantly curtail any future grant funding available to serve the community.

The shame of all of this is that any other grant program would have brought a real solution for Bear Paw. With most grants, an ISP would have proposed to build fiber to the entire community and would have applied for the grant project to make that work. But the RDOF awards are going to make it hard, or impossible to ever find solutions for the parts of the checkerboard that the RDOF left behind.

By spraying RDOF awards willy-nilly across the landscape, the FCC has created hundreds of places with the same situation as Bear Paw. The FCC has harmed Bear Paw in several ways. It first allowed a company to win the RDOF using a technology that is not suited to the area. Why wasn’t Starlink banned from bidding in wooded parts of the country? (Or an even better question might be why Starlink was allowed into the RDOF process at all?)  Since no other grants can be given to cover the RDOF areas, there will probably not be enough grant money available from other sources for an ISP to bring fiber to the community. Even if the federal infrastructure funding is enacted and the federal government hands out billions in broadband grant money, towns like Bear Paw are likely going to get left behind. How do you explain to the residents of Bear Paw that the FCC gave out money in a way that might kill their once-in-a-generation chance to get good broadband?

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Where are the Gigabit Applications?

I remember that soon after the City of Chattanooga launched its citywide fiber network that the company held a competition seeking web applications that would benefit from gigabit speeds. I don’t recall if anything useful came out of that effort, but I know that there are still today almost no big bandwidth applications on the web online aimed at the average household.

There are always a few people in every community that immediately benefit from gigabit broadband. In many of the cities I’ve worked with, some of the first customers who signed up for residential gigabit service are radiologists and other doctors who appreciate the ability to review medical imagery without having to pop into the hospital in the middle of the night. I know of a few cases where doctors now buy multi-gigabit connections as fast as 10-gigabits because a gigabit isn’t fast enough.

There are always a few others in larger markets that also need the full gigabit capability. This would include scientists and engineers who work with huge data sets. I know people who work from home with movie animation who regularly fill a gigabit connection. But these connections are all work-related and represent people who work with large data at the office and who want the convenience of doing so at home. It’s been eight years since Google Fiber got the whole country talking about gigabit broadband speeds – and yet there still are not any killer gigabit applications.

I think we’re finally on the verge of seeing this change. The demand for faster broadband products leaped upward during the pandemic. According to OpenVault, at the end of the first quarter of 2021, the percentage of homes subscribing to gigabit data products jumped to 9.8% of all homes. This grew from 1.9% of homes in 2018 and 2.8% at the end of 2019. This is a profound market change because having 10% of all households subscribing to gigabit broadband means there is finally a potential market for gigabit applications. A company that develops a high-bandwidth application now can be assured that there are enough possible customers to make it worthwhile.

Another factor that makes us ripe for gigabit applications is the continued growth of gaming. It’s hard for folks of my generation to put gaming into perspective. The gaming industry now dwarfs other entertainment segments like movies or television. In 2020, the gaming industry had revenues of almost $140 billion. That includes $73.8 billion for mobile gaming, $33.1 billion for PC gaming, $19.7 billion for game console gaming, $6.7 billion for extended reality, and even $9.3 billion for paid subscriptions to watch others play games.

The gaming industry made a big change just before the pandemic when the biggest game companies moved games to the cloud. The old phenomenon of kids lining up to buy the latest game release at midnight is a thing of the past as games are now introduced online and played in data centers. I think the early big bandwidth applications will be related to gaming – and this is not unusual because entertainment has driven the use of bandwidth in the past – a large percentage of home broadband usage is still to watch video.

The third factor that I think will drive faster broadband applications is generation Z coming of age. This is the generation that grew up with a smartphone in their hands and good home broadband. This is a generation that adapted immediately to homeschooling – while they badly missed their friends and live activities, this is a generation that was already living a large percentage of their lives virtually. Generation Z kids are now in college and will soon be out in the world as a major block of consumers. They are likely going to be the first target audience for faster broadband applications and is also likely to be the generation that will create many of the new applications.

It’s likely that the big bandwidth applications will involve extended reality, which is an umbrella term that covers virtual reality, augmented reality, mixed reality, and other similar technologies. With gigabit-capable homes as customers, we’ll start seeing games that bring telepresence and virtual worlds into the home using big bandwidth. The country is ripe for big-bandwidth applications since 10% of homes are buying gigabit broadband products. We have a huge potential market for innovative gaming since over half of the people in the country now play games at least once a month, with tens of millions who play games regularly. All that is needed now is for a few entrepreneurs to see the potential for developing big-bandwidth games. And as happens with all new technologies, this will grow from a  start in gaming to extend to the rest of us.

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A Security Warning

Today I am going to talk about something that happened outside of our industry but that should be a concern of every ISP. There is a lesson to be learned from the Colonial Pipeline hack by the DarkSide ransomware group from Russia.

I am positive that if I call my ISP clients that every one of them will tell me that their broadband networks are secure and that there is no way for malware to shut down their broadband network. I would trust that response since most broadband networks are encrypted from end-to-end between the core and customers.

But the ISPs would still be wrong. The hack of Colonial Pipeline did not attack the software that operates the pipeline. Instead, the hackers found their way into the computers used for the billing system. When that 10-year-old software got locked, Colonial had no way to take orders, pay the gas suppliers, or bill customers for delivering gas. The money side of the business was locked. Colonial made the decision that it couldn’t operate without that software.

I think if I ask the question to ISPs of whether every computer, laptop, and tablet connected to the OSS/BSS software is totally secure I would get a different answer. Hackers only need to get into one computer to shut down an ISP’s OSS/BSS. Without that software, most ISPs would not be able to take new orders, answer billing questions, send out new bills, take trouble tickets, or dispatch repair people. With the OSS/BSS software locked an ISP wouldn’t even be able to look at customer records. Most ISPs would be unable to somehow switch to a manual method of doing things. Most ISPs would have little choice but to pay the ransomware if they found themselves in the same position as Colonial.

This is the same approach that the ransomware hackers take with many large targets. They shut down the billing systems system for hospitals to bring them to a halt. They shut down the supply chain and inventory software of factories to bring them to a screeching halt. Businesses of all types now have sophisticated suites of software that are equivalent to our industry’s OSS/BSS software. Over the last decade, most larger businesses have migrated to a master software that controls most of the day-to-day backoffice functions of the business. That automation has been a huge time and dollar saver – but it is the point of attack for malware hackers.

I advise every ISP to take a look at the security of computers used by staff. That’s where the vulnerabilities are – and that’s where the ransomware folks exploit. Very few ISPs pay the same kind of attention to PCs, laptops, and cellphones as they do to the broadband network. We often don’t keep up with software updates for every device. We let employees take devices home or travel with them and use hotel WiFi.

I would bet that we’ve already had ISPs hacked – because most of the businesses that are hit with ransomware don’t talk about it. They pay the ransom and hope they get up and running again. A company like Colonial had to disclose it because the gas supply chain works on a 24/7 cycle and gas stations started running out of gas soon after the attack.

I am not a security expert, and I don’t have any answers. But I know a lot of clients do not have ironclad security for the backoffice side of the business. As soon as I heard about this hack I realized how this could happen easily in our industry as well.

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Video and Broadband Demand

One of the obvious drivers of broadband usage is online video, and a study earlier this year by the Leichtman Research Group provides insight into the continuing role of video growth in broadband usage. The company conducted a nationwide poll looking at how people watch video, and the results show that Americans have embraced online for-pay video services.

The survey concentrated on what it calls SVOD service (subscription video-on-demand). In the industry, this category includes pay services like Netflix and Disney +, but does not include the online services that mimic the networks covered by traditional cable TV like Sling TV. This is the eighteenth annual nationwide survey by LRG that looks at video usage.

One of the most interesting results of the survey is how many households still buy some form of pay-TV service. 74% of homes pay for a full cable TV service. About 2/3 of all households still buy traditional cable TV from cable companies or satellite providers. This means that 8% of homes now buy video an online service that mimics traditional TV channels such as Sling TV, Hulu + Live TV, YouTube TV, or fuboTV. That’s no longer a surprising statistic when we saw in September that Hulu + Live TV is now the fifth-largest provider of video, in front of Verizon.

Even considering that many homes are buying full video packages online, the statistics show a continuing decline in traditional TV viewers. Where 74% of homes buy some form of cable service today, that’s way down from the 85% of homes in 2015 and the peak of the TV pay-market at 88% in 2010. This shows that 14% of all homes have stopped buying pay-TV in the last decade.

The survey summarized cable households in another interesting way:

  • 60% of homes pay for a full TV service and also buy at least one SVOD service like Netflix.
  • 14% of homes buy a full pay-TV service but do not subscribe to an additional SVOD service like Amazon.
  • 20% of homes buy an SVOD service like Netflix but don’t pay for a full TV line-up.
  • Only 6% of homes don’t pay for any TV service.

The survey also summarizes the use of SVOD service like Netflix in a way I hadn’t seen before:

  • The survey showed that 79% of households using traditional cable TV (from a cable company or satellite TV service) also purchase an online video service.
  • 76% of households that don’t subscribe to traditional cable TV pay for an online video service.
  • However, 96% of customers who subscribe to an online video service that mimics traditional cable TV also buy at least one additional for-pay TV service.

The survey also shows that age is still a factor for paying for a full for-pay TV service. 81% of adults over 55 have a for-pay TV service, 76% of those between 35 and 54 have a pay-TV service, and only 63% of those between 18 and 34 have pay-TV service. This is the trend that is making TV less valuable for advertisers that want to reach younger audiences.

A few other interesting factoids coming out of the survey:

  • 38% of consumers who have moved in the last year do not buy a full for-pay TV service. This verifies something we’ve seen in many surveys where respondents say they are thinking of cutting the cord, but then don’t do it. Perhaps when life presents an easy option to cut the cord, such as when moving, consumers finally decide not to resubscribe to pay-TV. That would imply there is still a large potential pool of cord-cutters in the market.
  • 13% of all TV households use a TV antenna rather than subscribe to a pay-TV service for local channels.

Buried somewhere in these statistics are the millions of rural homes that don’t have the option to stream video.

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Broadband Interference

Jon Brodkin of ArsTechnica published an amusing story about how the DSL went out of service in a 400-resident village in Wales each morning at 7:00 am. It turns out that one of the residents turned on an ancient television that interfered with the DSL signal to the extent that the network collapsed. The ISP finally figured this out by looking around the village in the morning with a spectrum analyzer until they found the source of the interference.

It’s easy to think that the story points out another weakness of old DSL technology, but interference can be a problem for a lot of other technologies.

This same problem is common on cable company hybrid-fiber coaxial networks. The easiest way to understand this is to think back to the old days when we all watched analog TV. Anybody who watched programming on channels 2 through 5 remembers times when the channels got fuzzy or even became unwatchable. It turns out that there are a lot of different devices that interfere with the frequencies used for these channels including things like microwave ovens, certain motors like power tools and lawnmowers, and other devices like blenders. It was a common household occurrence for one of these channels to go fuzzy when somebody in the house, or even in a neighboring home used one of these devices.

This same interference carries forward into cable TV networks. Cable companies originally used the same frequencies for TV channels inside the coaxial wires that were used over the air and the low TV channels sat between the 5 MHz and 42 MHz frequency. It turns out that long stretches of coaxial wires on poles act as a great antenna, so cable systems pick up the same kinds of interference that happens in homes. It was pretty routine for channels 2 and 3, in particular, to be fuzzy in an analog cable network.

You’d think that this interference might have gone away when cable companies converted TV signals to digital. The TV transmissions for channels 2 through 5 got crystal clear because cable companies relocated the digital version of these channels to better frequency. When broadband was added to cable systems the cable companies continue to use the low frequencies. CableLabs elected to use these frequencies for the upload portion of broadband. There is still plenty of interference in cable networks today – probably even more than years ago as coaxial networks have aged and have more points for interference to seep into the wires. Until the pandemic, we didn’t care much about upload bandwidth, but it turns out that one of the major reasons that cable companies struggle to deliver reliable upload speeds is that they are using the noisiest spectrum for the upload function.

The DSL in the village suffered from the same issue since the telephone copper wires also act as a big outdoor antenna. In this village, the frequency emanating from the old TV exactly matched the frequencies used for DSL.

Another common kind of interference is seen in fixed wireless networks in a situation where there are multiple ISPs using the same frequencies in a given rural footprint. I know of counties where there are as many as five or six different wireless ISPs, and most use the same frequencies since most WISPs rely on a handful of channels in the traditional WiFi bandwidth at 2.4 MHz and 5 MHz. I’ve heard of situations where WiFi is so crowded that the performance of all WISPs suffer.

WiFi also suffers from local interference in the home. The WiFi standard says that all devices have an equal chance of using the frequencies. This means that a home WiFi router will cycle through all the signals from all devices trying to make a WiFi connection. When a WiFi router connects with an authorized device inside the home it allows for a burst of data, but then the router disconnects that signal and tries the next signal – cycling through all of the possible sources of WiFi.

This is the same issue that is seen by people using WiFi in a high-rise apartment building or a hotel where many users are trying to connect to WiFi at the same time. Luckily this problem ought to improve. The FCC has authorized the use of 6 GHz spectrum for home broadband which opens up numerous new channels. Interference will only occur between devices trying to share a channel, but that will be far fewer cases of interference than today.

The technology that has no such interference is fiber. Nothing interferes with the light signal between a fiber hub and a customer. However, once customers connect the broadband signal to their home WiFi network, the same interference issues arise. I looked recently and can see over twenty other home WiFi networks from my office – a setup ripe for interference. Before making too much fun of the folks in the Welsh village, there is a good chance that you are subject to significant interference in your home broadband today.

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K12 Education During the Pandemic

Pew Stateline published a recent article talking about the widely disparate state of educating K12 students during the pandemic. Every school system has students without home broadband or home computers and school districts and states are dealing with these issues in widely different ways.

There are major challenges in educating students outside of the classroom. The Stateline article points out that there are issues beyond providing broadband and computers, and that kids still need adults to help direct their learning. But students without computers or broadband have virtually no chance of keeping up in an environment that relies fully or partially on learning from home.

The article cites a recent study by the Annenberg Institute of Brown University that looks at the impact of the pandemic in the spring semester of this year. The study estimates that students returning to school this fall will have only made between 63% and 68% of the expected gains in reading that would normally have been expected from the last school year. Students will only have made between 37% and 50% of the expected gains in math. It’s hard to imagine what happens to current students if virtual or interrupted education carries through much of the current school year. I’ve seen articles where various educators are already calling 2020 a ‘lost year’.

As part of my ongoing work with community broadband, I’ve talked to communities with a wide range of circumstances and proposed solutions. For example, I talked to the school administrator of a small rural school district that has roughly 600 students. The area resides in a broadband desert and most homes have no good home broadband option – even traditional satellite service barely works in the community where homes are nestled into canyons and valleys.

This small school district is trying the full range of solutions we hear from across the country. The district has scrambled to find computers for students that don’t have them at home. The school district has obtained cellular hotspots for many rural students, although there a lot of places in the county with little or no cellular coverage. The local government has tried to fill in the gap in cellular coverage by deploying a number of public hotspots to provide places where students and home workers can find broadband. But probably the most important thing they are doing is that the superintendent of schools called every student in the district and is trying to find individual solutions for students that are having problems learning.

Even with all this effort, the school district acknowledges that this is not a solution that will work with all students and that some students are going to fall far behind. This school district is only able to tackle the above solutions due to the small number of students in the district. It’s hard to imagine how school districts with thousands of students can even attempt to provide individual solutions.

The pandemic has also shown us that ‘normal’ broadband is not adequate for homes with multiple students and adults trying to work from home at the same time. Even expensive cable broadband subscriptions can be inadequate when more than two people try to share the small upload bandwidth. Emergency home and public hotpots share the same problems and can easily get overwhelmed.

I don’t have any proposed solutions for the problem and as a country, we’re going to somehow deal with a whole generation of students that have fallen behind the expected education progression. I do not doubt that when school gets back to normal that many school districts will figure this out.

For now, local communities have to try to take all of the steps needed to at least try to help students. I talked to somebody who does broadband mapping and was surprised to hear that many school districts are just now trying to figure out which students don’t have computers or home broadband. It’s been six months since the start of the pandemic and it’s hard to believe that school districts didn’t gather these basic facts before now.

States and localities everywhere have scrambled to create WiFi hotspots, but nobody should rest on their laurels and think that solves the problem. Many states and localities have used CAREs money to buy computers, and as important as that is, it is only a piece of the solution. I’ve read that school districts scrambled all summer to adapt curriculum to an online format, but that also doesn’t fix the problem. The bare minimum answer is that school districts need to find ways to do all of the above, and more – and even with that students are going to fall behind this school year. But what other choice do we have? As the Stateline article points out, some lucky families will hire tutors to keep students up to speed – but that’s not going to help the vast majority of students in the coming school year.

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Gaming and Broadband Demand

Broadband usage has spiked across the US this year as students and employees suddenly found themselves working from home and needing broadband to connect to school and work servers. But there is another quickly growing demand for broadband coming from gaming.

We’ve had online gaming of some sort over the last decade, but gaming has not been data-intensive activity for ISPs. Until recently, the brains for gaming has been provided by special gaming computers or game boxes run locally by each gamer. These devices and the game software supplied the intensive video and sound experience and the Internet was only used to exchange game commands between gamers. Command files are not large and contain the same information that is exchanged between a game controller and a gaming computer. In the past, gamers would exchange the command files across the Internet, and local software would interpret and activate the commends being exchanged.

But the nature of online gaming is changing rapidly. Already, before the pandemic, game platforms had been migrating online. Game companies are now running the core software for games in a data center and not on local PCs or game consoles. The bandwidth path required between the data center core and a gamer is much larger than the command files that used to be exchanged since the data path now carries the full video and music signals as well as 2-way communications between gamers.

There is a big benefit of online gaming for gamers, assuming they have enough bandwidth to participate. Putting the gaming brains in a data center reduces the latency, meaning that game commands can be activated more quickly. Latency is signal delay, and the majority of the delay in any internet transmission happens inside the wires and electronics of the local ISP network. With online gaming, a signal between a gamer only has to cross the gamer’s local ISP network. Before online gaming, that signal had to pass through the local ISP network of both gamers.

There are advantages for gaming companies to move online. They can release a new title instantly to the whole country. Game companies don’t have to manufacture and distribute copies of games. Games can now be sold to gamers who can’t afford the expensive game boxes or computers. Gamers benefit because gaming can now be played on any device and a gamer isn’t forced into buying an expensive gaming computer and then only playing in that one location. Game companies can now sell a gaming experience that can be played from anywhere, not just sitting at a gamer’s computer.

A gaming stream is far more demanding on the network than a video stream from Netflix. Netflix feeds out the video signal in advance of what a viewer is watching, and the local TV or PC stores video content for the next few minutes of viewing. This was a brilliant move by video streamers because streaming ahead of where what viewers are watching largely eliminated the delays and pixelation of video streams that were common when Netflix was new. By streaming in advance of what a viewer is watching, Netflix has time to resend any missed packets so that the video viewing experience has ideal quality by the time a viewer catches up to the stream.

Gaming doesn’t have this same luxury because gaming is played in real time. The gamers at both ends of a game need to experience the game at the same time. This greatly changes the demand on the broadband network. Online gaming means a simultaneous stream being sent from a data center to both gamers, and it’s vital that both gamers receive the signal at the same time. Gaming requires a higher quality of download path than Netflix because there isn’t time to resend missed data packets. A gamer needs a quality downstream path to receive a quality video transmission in real-time.

Gaming adds a second big demand in that latency becomes critical. A player that receives signal just a little faster than an opponent has an advantage. A friend of mine has symmetrical gigabit Verizon FiOS fiber broadband at his home which is capable of delivering the best possible gaming data stream. Yet his son is driving his mother crazy by running category 6 cables between the gaming display and the FiOS modem. He sears that bypassing the home WiFi lowers the latency and gives him an edge over other gamers. From a gamer perspective, network latency is becoming possibly more important than download speed. A gamer on fiber has an automatic advantage over a gamer on a cable company network.

At the same time as the gaming experience has gotten more demanding for network operators the volume of gaming has exploded during the pandemic as people stuck at home have turned to gaming. All of the major game companies are reporting record earnings. The NPD Group that tracks the gaming industry reports that spending on gaming was up 30% in the second quarter of this year compared to 2019.

ISPs are already well aware of gamers who are the harshest critics of broadband network performance. Gamers understand that little network glitches, hiccups, and burps that other uses may not even notice can cost them a game, and so gamers closely monitor network performance. Most ISPs know their gamers who are the first to complain loudly about network problems.

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AT&T Argues for Broadband Reform

Ed Gillespie, the Senior Executive Vice President of External & Legislative Affairs at AT&T posted a policy position on the AT&T website that argues for major policy reform to better bring broadband to low-income homes and rural areas.

It’s hard for any broadband advocate to not agree with the suggestions Mr. Gillespie is making:

  • He wants Congress to finish funding the new FCC mapping program to identify homes without access to broadband.
  • He supports additional broadband grant funding for programs like the $20 billion RDOF grants.
  • He supports Lifeline reform and says that it should be as easy for low-income homes to apply a Lifeline discount as it is to use a card to buy food from the SNAP program.
  • He thinks funding should be increased for the Lifeline program and should be funded by Congress rather than funded through a 26% tax on interstate telephony.

I hope AT&T is serious about these proposals because having them lobby for these ideas would help to move the needle on digital inclusion. It’s just odd to see these positions from AT&T since they have spent a lot of effort and dollars arguing against some of these policies.

Mr. Gillespie complains that a lot of the current $9.25 Lifeline discount program is used by MVNOs and other carriers that have not built networks. That’s an ironic argument for AT&T to make since the company has done it’s best to walk away from the Lifeline program. AT&T no longer offers Lifeline in 14 states – AL, AR, FL, IN, KS, KY, LA, MS, NC, NV, SC, TN, and WI. AT&T still participates in Lifeline in 6 states, but only because those states refuse to allow the company to exit the Lifeline program.

Of course, this would not be an AT&T policy paper if the company didn’t pat itself on the back a bit. Mr. Gillespie brags that the ISP networks in the country weathered the big increase in web traffic due to the pandemic even though predictions were made that networks would collapse. He claims that AT&T made it through the pandemic due to light touch regulation. The fact is, once it was understood that the new traffic on the web was coming during the daytime when the network wasn’t busy, I don’t know any network engineer who thought that the web would collapse. I also wonder why AT&T would claim to have weathered the pandemic well – I would challenge AT&T to bring forth happy customers using AT&T DSL and ask for their testimonials on how the AT&T network enabled multiple people to work from home at the same time.

Mr. Gillespie is also calling for an expansion of the concepts used in the RDOF grants. Those grants provide funding for new broadband networks in rural areas that have the worse broadband. Before supporting an expansion of that grant program, I think many of us are holding judgment on the RDOF reverse auction process. While I think it’s likely that there will be beneficial grants given to those willing to build rural fiber networks, I also fear that a huge amount of these grants are going to be wasted on satellite broadband or other technologies that don’t bring rural broadband in line with urban broadband. I’m not ready to bless that grant program until we see how the reverse auction allocates money. I also can’t help being suspicious that AT&T’s position in favor of more grants reflects a hope to win billions of new grant dollars.

Interestingly, even though he never says it, the reforms that Mr. Gillespie is asking for require new broadband regulation. I’m sure that Mr. Gillespie must realize that bills needed from Congress for these reforms are not likely to stop with just AT&T’s wish list. We are long overdue for a new telecommunications act that brings broadband regulation in line with today’s reality. The last such law was passed at a time when people were flocking to AOL for dial-up access. It’s highly likely that new telecom legislation is going to go beyond what AT&T is calling for. It’s likely that new legislation will give some broadband regulating authority back to the FCC and will likely include some version of net neutrality. It’s ironic to see arguments for a stronger FCC when the FCC walked away from regulating broadband at the urging of AT&T and the other giant ISPs. Perhaps even AT&T knows it went too far with deregulation.

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Will Congress Fund Rural Broadband?

Members of Congress seem to be competing to sponsor bills that will fund rural broadband. There are so many competing bills that it’s getting hard to keep track of them all. Hopefully, some effort will be made to consolidate the bills together into one coherent broadband funding bill.

The latest bill is the Accessible, Affordable Internet for All Act, introduced in the House of Representatives. This is part of a plan to provide $1.5 trillion of infrastructure funding that would include $100 billion for rural broadband. $80 billion of the funding would be used to directly construct rural broadband. It’s worth looking at the details of this bill since it’s similar to some of the other ideas floating around Congress.

The bill focuses on affordability. In addition to building broadband it would:

  • Require ISPs to offer an affordable service plan to every consumer
  • Provide a $50 monthly discount on internet plans for low-income households and $75 for those on tribal lands.
  • Gives a preference to networks that will offer open access to give more choice to consumers.
  • Direct the FCC to collect data on broadband prices and to make that data widely available to other Federal agencies, researchers, and public interest groups
  • Direct the Office of Internet Connectivity and Growth to conduct a biennial study to measure the extent to which cost remains a barrier to broadband adoption.
  • Provide over $1 billion to establish two new grant programs: the State Digital Equity Capacity Program, an annual grant program for states to create and implement comprehensive digital equity plans to help close gaps in broadband adoption and digital skills, and the Digital Equity Competitive Grant Program which will promote digital inclusion projects undertaken by individual organizations and local communities
  • Provide $5 billion for the rapid deployment of home internet service or mobile hotspots for students with a home Internet connection.

This bill also guarantees the right of local governments, public-private partnerships, and cooperatives to deliver broadband service – which would seemingly override the barriers in place today in 21 states that block municipal broadband and the remaining states that don’t allow electric cooperatives to be ISPs.

This and the other bills have some downsides. The biggest downside is the use of a reverse auction.  There are two big problems with reverse auctions that the FCC doesn’t seem to want to acknowledge. First, a reverse auction requires the FCC to predetermine the areas that are eligible for grants – and that means relying on their lousy data. Just this month I was working with three different rural counties where the FCC records show the entire county has good broadband because of over-reporting of speeds by a wireless ISP. In one county, a WISP claimed countywide availability of 300 Mbps broadband. In another county a WISP claimed countywide coverage of 100 Mbps symmetrical broadband coverage, when their closest transmitter was a county and several mountain ranges away. Until these kinds of mapping issues are fixed, any FCC auctions are going to leave out a lot of areas that should be eligible for grants. The people living in these areas should not suffer due to poor FCC data collection.

Second, there are not enough shovel ready projects ready to chase $80 billion in grant funding. If there is no decent ISP ready to build in a predetermined area, the funding is likely to revert to a satellite provider, like happened when Viasat was one of the largest winners in the CAF II reverse auction. The FCC also recently opened the door to allowing rural DSL into the upcoming RDOF grant – a likely giveaway to the big incumbent telcos.

This particular bill has a lot of focus on affordability, and I am a huge fan of getting broadband to everybody. But policymakers have to know that this comes at a cost. If a grant recipient is going to offer affordable prices and even lower prices for low-income households then the amount of grant funding for a given project has to be higher than what we saw with RDOF. There also has to be some kind of permanent funding in place if ISPs are to provide discounts of $50 to $75 for low-income households – that’s not sustainable out of an ISP revenue stream.

The idea of creating huge numbers of rural open-access networks is also an interesting one. The big problem with this concept is that there are many places in the country where there a few, or even no local ISPs. Is it an open-access network if only one, or even no ISPs show up to compete on a rural network?

Another problem with awarding this much money all at once is that there are not enough good construction companies to build this many broadband rural networks in a hurry. In today’s environment that kind of construction spending would superheat the market and would drive up the cost of construction labor by 30-50%. It would be just as hard to find good engineers and good construction managers in an overheated market – $80 billion is a lot of construction projects.

Don’t take my negative comments to mean I am against massive funding for rural broadband. But if we do it poorly a lot of the money might as well just be poured into a ditch. This much money used wisely could solve a giant portion of the rural broadband problem. But done poorly and many rural communities with poor broadband probably won’t get a solution. Congress has the right idea, but I hope that they don’t dictate how to disperse the money without talking first to rural industry experts, or this will be another federal program with huge amounts of wasted and poorly spent money.

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The Industry Uncategorized

An End to Data Caps?

All of the major ISPs that were enforcing data caps have lifted those caps in response to the COVID-19 crisis. This includes AT&T, Comcast, Cox, Mediacom, and CenturyLink. All of these companies justified data caps as a network management tool that was in place to discourage overuse of the network. That argument no longer holds water if these ISPs eliminate the during a crisis that is overtaxing networks more than we are likely to ever see again.

These companies eliminated the caps as a result of political pressure and from a mass public outcry. The caps were eliminated to make broadband more affordable in a time when millions of people are becoming unemployed. By eliminating the caps during this crisis, these ISPs have publicly admitted that the caps were about making money and not for any issues related to network traffic.

The lame justification these ISPs gave for data caps was always weak when other large ISPs like Charter, Verizon, Altice, Frontier, and Windstream never implemented data caps. A few ISPs on that list like Frontier and Windstream have some of the weakest networks in the country yet never sought to implement data caps as a traffic control measure.

AT&T has been the king of data caps. They have data caps that kick in as low as 150 gigabytes of monthly broadband usage on DSL lines. AT&T’s fixed wireless product for rural markets has a data cap that kicks in at 250 GB. Interestingly, customers buying the 300 Mbps on fiber have a 1 terabyte data cap while customers buying gigabit broadband on fiber are allowed unlimited usage. This also proves that the data caps aren’t about traffic control – the caps are removed from the largest data users. The AT&T caps are to encourage somebody buying 300 Mbps to upgrade to the faster service. AT&T is also the king of overage charges. For DSL and fixed wireless, the overage charges are $10 for each 50 GB, with a maximum monthly overage of a whopping $200. The monthly dollar cap on 300 Mbps service is $100.

Mediacom had the next lowest data caps at 400 Mbps. Comcast and Cox have had data caps at 1 TB. It’s been reported by customers that the companies aggressively enforce the caps. CenturyLink has mostly not billed the data caps, but the fact that they eliminated the caps during this crisis likely means they were billing it to some customers.

To put these data caps in context, OpenVault says that at the end of 2019 that the average households used 344 gigabytes of data, up from 275 gigabytes a year earlier. More germane to data caps, OpenVault says that nearly 1% of homes now use 2 terabytes per of data month and 7.7% use over 1 terabyte per month. The percentage of homes using over 1 terabyte climbed from 4% a year earlier. AT&T has likely been cleaning up with data caps charges while Comcast was just starting to see some real revenue from the caps.

What remains to be seen is if these ISPs reintroduce data caps sometime later this year. They can no longer make a straight-faced claim that data caps are in place to dissuade overuse of the network. If data caps had that kind of impact on networks, then during the crisis the ISPs should have tightened the data cap threshold to protect the many new households that are working from home or doing schoolwork remotely. The data caps have always been about money, nothing else.

Unfortunately, we have no recourse other than a loud public outcry if these ISPs renew the data caps. The FCC has completely washed its hands of broadband regulation and killed its authority to do anything about data caps. Most tellingly, when FCC Chairman Ajit Pai released a plea to ISPs to “Keep Americans Connected”, that plea didn’t even mention data caps. Chairman Pai asked ISPs not to disconnect customers for not paying and asked ISPs to provide more public hotspots.

I bet that when this crisis is over that the big ISPs will quietly introduce data caps again. Even before this crisis, almost 9% of homes routinely used more than a terabyte of data, and the data caps are a huge moneymaker for the big ISPs that they are not willingly going to give up. During this crisis, a lot of routine functions are going go virtual and I expect a lot of them will stay virtual when the crisis is over. It wouldn’t be surprising a year from now to see 20% of homes routinely exceeding a terabyte of usage each month.

I think these ISPs will be making a huge mistake if they introduce data caps a few months, or even a year from now. Millions of people found themselves unable to work or school from home due to poor broadband. In the current environment a big public outcry against bad ISP behavior has a high chance of bringing Congressional action. Almost nobody, except the most partisan politicians would vote against a bill that bans data caps. The ISPs should be afraid of other restrictions that might come along with such a bill.