How Many IoT Devices Do You Have?

Before reading any further, make a quick guess of the number of Internet of Thing (IoT) devices you have in your house. That’s any device that can make a wireless connection through cellular, WiFi, or bluetooth. Go ahead, I’ll wait.

Ting Internet recently conducted a survey of 1,500 people and asked them how many Internet-enabled devices they have in their home. The average respondent quickly estimated that they had eight IoT devices in their home.

Now, make a count of all of the devices. Following is a list of the kinds of devices you might have that can connect with wireless:

  • Computer, laptops, tablets, and cellphones
  • eReaders like the Amazon Kindle
  • Smart TVs
  • Smart watches
  • Gaming consoles
  • Smart speakers
  • Smart headphones
  • Smart assistants like the Amazon Echo
  • Smart thermostats (ones that you can control from a cellphone or computer)
  • Security and front porch cameras
  • Smart door locks
  • Alarms that you can control remotely for burglar, smoke, CO2, radon, and flood alarms
  • Smart appliances you can control from an app such as washers, dryers, refrigerators, coffee makers
  • Smart exercise monitors and smart gym equipment
  • Smart medical devices like blood pressure monitors, sleep monitors, and thermometers
  • Smart lights
  • Smart blinds
  • Smart irrigation and watering systems
  • Smart toys, robots, and gadgets
  • Your car – if you can start it from your phone

Respondents generally undercounted. Instead of the eight devices they thought they had, after going through the list the average count grew to thirteen.

I tried this and my quick guess was sixteen and my wife guessed twenty-six. After sitting with my wife and counting we came up with thirty-three devices. There were devices on the final list that surprised me. I learned we can control our basement dehumidifier with WiFi. We have two inexpensive thermometers that allow us to record our temperatures in an app every time we use them. We had both forgotten about the ability to start the car remotely. The number of wired devices would have been higher, but we recently undertook a spring cleaning and ditched and donated a few smart devices. And after we did the count, our daughter came home for the summer and brought eleven more devices.

Ting found a few more interesting things in the survey. Adults between 35 and 54 had the highest number of connected devices. They also were the group that undercounted the number of devices by the biggest percentage.

Ting’s survey found the most commonly owned devices are smartphones (96%), computer/laptop (86%), tablet (70%), smart TV (69%), gaming console (62%), streaming device (49%), smart speaker (42%) and smartwatch (31%).

Ting’s survey results were lower than I’ve seen from other surveys that I’ve covered in a blog. Deloitte found in a survey in 2022 that the average home has 22 smart devices. But the bottom line is that wireless capability is being included in a huge array of everyday devices. Our homes are becoming increasingly connected.

Impact of Prevailing Wages

ISPs have been complaining that the BEAD grant rules are adding a lot of cost to building broadband networks. There are requirements like needing letters of credit and environmental studies that will add cost compared to projects funded with other grant projects.

One of the issues that is adding the most cost to BEAD-funded networks is the requirement that all construction must be done using prevailing wages. That means wages that are paid at Davis-Bacon wage levels – to include benefits. The Davis-Bacon Act was passed in 1931 and requires that workers used for federal public work projects must be paid a prevailing wage rate. Some states also require Davis-Bacon labor rates for projects constructed using State grant funding.

Davis-Bacon wages are calculated by the U.S. Department of Labor. The DOL surveys existing wages regionally for a long list of job titles and publishes the results. Since the calculations are done regionally, and since most federal projects are done in or near cities, the prevailing wages tend to reflect the wages and benefits paid in urban areas.

Davis-Bacon prevailing wages are almost always higher than the labor rates paid by the contractors that construct rural fiber networks. The contractors that build fiber in rural areas typically specialize in rural work. Since the cost of living is lower in most rural areas, the wages tend to be lower than the Davis-Bacon prevailing wages.

This is somewhat of a regional issue. I’ve worked with projects in a few parts of the country where contractors are already paying prevailing wages or higher. But I’ve also seen cases where fiber construction contractors were paying at rates as much as 30% below the prevailing wage.

Following is an example of an actual fiber construction project priced at market rates (what contractors are paying today) and Davis-Bacon wages. The two network components most affected by the prevailing wage issue are fiber and fiber drops.

Market Prevailing
Labor Rates Labor Rates Difference
Fiber

$19,900,000

$22,000,000

$  2,100,000
Drops

$  1,500,000

 $  1,700,000

$     200,000
Total

$21,400,000

 $23,700,000

$  2,300,000
At 75% Grant
  BEAD Grant $16,050,000 $17,775,000 $  1,725,000
  Matching $  5,350,000 $  5,925,000 $     575,000
Total $21,400,000 $23,700,000 $  2,300.000

If this project was funded by a BEAD grant, the cost of the network would be 11% higher than funding with a grant that doesn’t require prevailing wages. This not only increases the amount of BEAD grant that will be requested, but it also adds to the matching funding that must be provided by the ISP. In this case, if this project was funded by a BEAD grant, the prevailing wage would add $1,725,000 to the size of the requested grant – if the request was for 75% grant funding. This also adds $575,000 to the matching funds that must be provided by the ISP.

One of the problems with driving up the cost of the project is that it might make the project unfeasible. There is not much margin in rural grant projects even if paying market wage rates, and the extra matching funds might be enough to make an ISP decide not to pursue the grant or the project.

ISPs are clearly unhappy about this requirement because they feel like they are paying more for a project than what they could contract for without this rule. They have willing contractors willing to build the project at market labor rates. Having to come up with an additional $575,000 out of pocket feels like a penalty.

Another issue that might compound problems is that some rural contractors aren’t interested in projects at the prevailing wages. They are uncomfortable having some crews being prevailing wages and others making market wages. That is an uncomfortable position for an employer.

To make matters more confusing, a lot of ISPs build the fiber drops using existing staff. They are leery about paying more for the staff building grant-funded drops than for other drops. This is both an accounting nightmare and an HR problem with staff.

It’s easy to understand why the Davis-Bacon wage rules are in place. The IIJA project that funded the BEAD program is basically a jobs bill, and the whole point of the program is to get more money into the pocket of workers. But the real-life consequence of the policy is higher costs and the possibility that grant projects will be too expensive to pursue.

The FCC and USF

The FCC quietly won two court cases over the last month that most folks have not heard about. A group of complainants brought a suit against the FCC, saying that the agency didn’t have explicit direction from Congress for the creation of the Universal Service Fund (USF) or the authority to delegate the operation of the USF to a third party. Years ago, the FCC prompted the creation of the non-profit firm Universal Service Administrative Company (USAC) to administer the day-to-day operations of the $10 billion fund.

The plaintiffs pleaded that the FCC didn’t have the constitutional authority to create the Universal Service Fund since that was not specifically spelled out by Congress. Specifically, plaintiffs argued that the FCC was violating the nondelegation doctrine, a legal principle that says that Congress cannot delegate its legislative powers to other entities.

The first ruling was issued by the Fifth Circuit Court of Appeals and the ruling came down squarely on the side of the FCC. The Court said that Section § 254 of the Telecommunications Act of 1996 had given the FCC explicit authority to advance and preserve universal telecommunications service and that the agency’s decision to create the USF falls under that authority given to the FCC by Congress. A similar decision was recently reached by the Sixth Circuit Court of Appeals.

The Universal Service Fund has always been controversial, and this is not the first challenge to its authority. There are a lot of people who don’t think the FCC should effectively have the power to levy a tax on telecommunications services, the primary tool for funding the USF. The FCC is careful to call this a fee, but to folks who pay it, the distinction between a fee and a tax is hard to see.

The Courts also upheld the FCC’s right to delegate the administration of the Universal Service Fund to USAC. The courts noted that USAC is purely administrative and doesn’t have any authority to create rules. The rulings found that USAC makes proposals to the FCC on ideas for using the fund – ideas the FCC is free to ignore.

If the FCC had lost these cases, it would have been devastating to some highly popular programs. The most popular is probably the Schools and Libraries (E-Rate) program, where the FCC subsidizes fast Internet connection for schools that have a high percentage of low-income students. The USF also administers subsidies to get broadband to rural healthcare facilities and the Lifeline program that provides a discount on broadband bills.

Probably the most controversial use of the USF is the Connect America Fund which provides subsidies to support rural broadband. The fund was used for the CAF II program that was supposed to improve rural DSL for the largest telcos – at a time when DSL was already obsolete and copper wire maintenance was nonexistent. This money was used to create the often-criticized RDOF program that held a reverse auction for funds to support rural broadband. The FCC has been studying the use of the fund to build more rural cell towers.

The FCC is not entirely out of the woods, and there is one more similar challenge to its authority pending in the 11th Circuit Court. Historically, strong rulings like the first two would limit the chance of a different ruling in another court. However, it seems lately that courts are more independently making decisions that are not based on prior rulings.

It would be an interesting scenario if the FCC’s authority to operate the USF is ended. All current broadband subsidies would likely come to a screeching halt. It’s likely that at least a few states would leap in and fill such a void, but that would mean a plethora of subsidy programs by states – which also could be challenged. But it would also likely mean that many states would do nothing.

Easing of the Supply Chain

One of the biggest broadband issues in 2021 and 2022 was that ISPs suddenly found themselves unable to buy the materials and electronics needed to construct networks. Within six months after the onset of the pandemic, wait times for many fiber and electronics components had stretched to a year or longer. Before the pandemic, ISPs knew they could order materials a few months ahead of construction and have the material on-site when needed.

The Fiber Broadband Association recently announced a dramatic improvement in the supply chain for fiber networks. The FBA cited the following decreases in the waiting times for the delivery of fiber materials by comparing the average wait times for material deliveries in the summer of 2022 to March 2023.

  • The lead time for fiber cable dropped from 52-60 weeks to 4-10 weeks.
  • The delivery time for handholes decreased from 22-26 weeks to 8-14 weeks.
  • The wait times for fiber cabinets and splitters decreased from 10-20 weeks to 4-8 weeks.
  • Delivery times for fiber multiport terminals dropped from 20-35 weeks to 4-8 weeks.
  • Conduit backlogs decreased from 15-20 weeks to 3-7 weeks.
  • The wait time for home electronics and wiring decreased from 12-24 weeks to 4-10 weeks.

This is all good news for the many ISPs building fiber networks. Lead times have almost returned to pre-pandemic levels, and somebody building fiber no longer has to worry about being able to obtain the needed materials.

There are a lot of reasons for the supply chain improvements:

  • New Capacity. New factories have been built to manufacture fiber, conduit, and other components.
  • Re-Sourcing. Before the pandemic, a lot of fiber electronics were produced in the Wuhan province in China. When the pandemic largely shut down the province, manufacturers of electronics found other factories around the world ready to take on the manufacturing. This process took a few years, but China is no longer the only source of some key components.
  • Raw Materials. The pandemic also shut down the mining and shipping of rare metals and other raw materials that are key components of electronics. Those supply chains are now back and operating at pre-pandemic levels. There has also been a worldwide push by geologists to find new sources of ores, and there are new mines being opened around the world.
  • Logistics. During the pandemic, I saw daily stories about how the ports and the trucking industry in the U.S. were backed up and paralyzed. Even when materials were delivered from overseas, it could take months to get them through the ports. At the same time, the pandemic saw a lot of older truckers retire and created a trucker shortage. Logistics are getting back to normal, but I’ve noticed that the radio is still full of ads from trucking companies looking for drivers.
  • Reduced Demand. The largest ISPs in the county collectively trimmed their projected construction for 2023 by millions of passings. That alone frees up a lot of demand for materials that can be used elsewhere.

We may not be out of the woods completely for the supply chain. Future increases in demand from both the big ISPs and the billions that will be spent on grants are going to keep the pressure on manufacturers. But as long as the pandemic-related factors don’t return, this might mean slightly longer delivery times, but nothing like we saw during the pandemic. I recall getting calls from folks who were aghast that they were being given delivery times of over a year for fiber. It seems like those ugly times are behind us.

Rural Cellular Coverage

When working in rural areas, I find invariably that any county that has poor rural broadband also has poor cellular coverage. If you plot a 2 or 3-mile circle around the existing cell towers in many counties, it becomes quickly obvious that cell coverage is non-existent in many places. The real cellular coverage in rural areas is drastically different than the national coverage maps that cellular carriers have been advertising for years.

The FCC announced a process to address this issue in October 2020 when it announced the creation of a 5G Fund for Rural America. This will be a $9 billion fund that comes from the Universal Service Fund and that will provide subsidies for wireless carriers to build and equip new rural cell towers. This fund would work through a reverse auction in the same manner as RDOF, with the only bidders in the auction being licensed cellular carriers. The first reverse auction will be for $8 billion, with the rest specifically set aside for tribal areas.

The FCC tried this a few years earlier and abandoned the process when it became obvious that the cellular coverage maps created by the big cellular companies had little to do with reality. As part of that effort the FCC required cellular carriers to submit maps of cellular coverage as a prelude to launching this fund. The smaller cellular companies all complained that the big cellular company maps were wrong and were aimed at locking them out of the reverse auction. The FCC agreed and canceled plans for the fund until the 2020 announcement.

I haven’t been following this issue closely enough at the FCC to understand why it’s taking so long to launch the endeavor, but I have to think that mapping is still a primary issue. Then FCC has now included cellular coverage in the same BDC mapping process used for broadband. When the new maps were released there were a lot of public complaints that the new FCC cellular maps still overstate rural coverage.

There is a map challenge process for the public to provide feedback to try to fix the cellular maps by taking speed tests from rural locations – but the process is cumbersome, and it’s likely that few people know about it or are providing the speed tests in the specified way. The speed tests must be logged through an FCC app.

There is no question that something like this funding is badly needed. It’s hard to justify building rural cell towers and installing radios at a tower will only see a handful of homes. Remote rural cell sites can’t possibly generate enough money to justify the cost of the radios and backhaul, let alone the towers. One of the issues that the FCC is going to have to face is that any subsidy for this issue might need to be permanent if the goal is to keep cell towers operating where few people live.

Poor cell coverage is devastating to an area. There are huge swaths of the country where folks can’t reach 911 by cellphone. We can’t get serious about smart agriculture without the bare minimum network to provide connectivity. No cell coverage makes it hard to do tasks that the rest of us take for granted.

One of the interesting things about the timing of this effort is how the rural cellular industry will benefit from the BEAD grants. There is no fiber near many of the best spots for rural towers, and the BEAD grants will fund the construction of a lot of fiber in rural areas that could be used to provide backhaul to new cell sites.

Interestingly, one of the things that was missed in creating the BEAD rules was any requirement for BEAD grant winners to provide fiber connectivity to rural cell towers at a fair price. That would have been a good opportunity for these different federal programs to mesh together for the benefit of both wireless and wireline rural broadband. One of the legitimate complaints made by cellular companies is that they are often quoted extremely high prices for broadband connectivity at cell towers – a lot of ISPs look at cell towers as a chance to make a lot of money.

Communities with poor cellular coverage need to keep an eye on this FCC program to make sure that some cellular carrier seeks the funding for building in their county. Just like with the BEAD grants, I have no idea of $9 billion is enough to get cellular coverage everywhere – but it is a good start.

Digital Payments

When the iPhone first hit the market, the pundits started touting the huge benefits that would come from carrying around a computer in our hands. Some of those benefits have been transformational. There used to be a rack with maps inside every gas station and convenience store to help travelers figure out directions. The map industry has been completely displaced by online GPS and driving instructions that have brought huge efficiency and a lot fewer lost travelers wandering rural roads.

We were also told that the Rolodex was dead and that you would be carrying everybody’s contact information with you – something that quickly became true. When was the last time that you called information to get somebody’s telephone number?

At the top of the claimed benefits was the promise that we’d quickly be paying for everything seamlessly with our smartphone. We’d be able to buy from a vending machine or shop at a store by just waving our phone.

There has been some movement in recent years to make this easier. You can load credit or debit cards into your phone and use Apple Pay, Google Pay, or Samsung Pay at places that accept the payments. There is a more recent movement to allow people to seamlessly pay each other through direct bank debits without having to use an intermediary service.

But we are nowhere near universal acceptance of payments through a phone. There are a number of reasons why this is still the case 16 years after the promise that this was right around the corner.

  • A bank survey in 2022 showed that 38% of Americans would refuse to use such a payment system. But that is not an excuse for making it easier for everybody else.
  • For many years, financial institutions didn’t have any interest in accepting micropayments. Banks were not interested in enabling a system that would generate millions of $1 transactions at vending machines or other types of small transactions. The fees the banks wanted for the transaction were too high to make this reasonable.
  • There were always a lot of concerns about security. Somebody could steal a phone with an automatic payment system and spend it without scrutiny. That’s being solved in many cases by phones tied into biometrics.
  • All of the proposed payment solutions require sellers and retailers to foot the bill for the electronic readers that can accept payments. This is particularly challenging when there isn’t a universal reader that would accept payments for multiple payment systems. The different payment systems have been pushing unique hardware solutions. This has led to many merchants unwilling to embrace electronic payments.
  • It’s even more of a challenge to equip millions of vending machines, gas pumps, and other payment portals with readers, particularly those in an outdoor environment.
  • There are still plenty of merchants in rural areas that have problems accepting credit cards the traditional way. A credit card transaction doesn’t require the transfer of a lot of data, but it requires a stable connection to be held during the length of a transaction. A lot of rural broadband fluctuates and kills a lot of credit card transactions.

Perhaps the most important reason it’s not widespread here is that the U.S. took the high-technology approach, like we do with many things. Requiring a new set of payment readers is good business for the merchant service companies that provide the readers and the software for merchants.

To demonstrate how we might have taken the wrong path, we only need to look at India. A common payment method for outdoor street vendors is to have a QR code posted. A buyer scans the QR code, which sends them to a portal where they approve the amount of payment. When the payment is complete, a message is sent and is usually played out loud on the merchant’s cell phone. When somebody buys food from a food cart, the payment can be completed by the time the seller is ready to hand over the food. Maybe we are just making this too complicated.

The Need for Mid-Band Spectrum

5G Americas recently released its annual white paper discussing the lack of activity at the FCC in making more mid-band spectrum available for cellular broadband. The group is made up of large cellular carriers and various vendors or other companies associated with the cellular business.

Midband spectrum is an industry-defined term for the spectrum between 1 GHz and 7 GHz spectrum. This is the sweet spot for cellular broadband because these bands of spectrum can cover the distances needed for cell phone data along and carry a decent amount of bandwidth.

The paper laments that are no actions currently at the FCC to consider any new bands of spectrum in the range for cellular data. This is a concern for the cellular industry because it takes many years to open up a frequency for a new use. All parts of mid-band spectrum are currently in use. Any plan to free existing spectrum for cellular use means either relocating the current users to a different frequency or finding a way to accommodate them to coexist with cellular carriers.

The report does a great job of looking at the status of each mid-band spectrum block. Reading through the uses, it becomes quickly apparent that a lot of these spectrum bands are reserved for the U.S. government and includes uses like air traffic control, commercial and military radar, airplane altimeters, and numerous military applications.

I’m always instantly leery of any statistics, but the paper cites a report by Ericsson that the worldwide demand for cellular data is growing at 40% annually. Even if that number is true, I have to imagine that most of the increased demand comes in third-world countries where cellular is the predominant way to use the Internet and where the technology in many networks is still far behind what we have here. This statistic feels like a scare tactic, because 40% growth per year would mean a doubling of network demand every 2.5 years. If that growth was true in the U.S., we’d have heard a lot more about this growth outside of this whitepaper.

But I don’t know anybody who doesn’t think that we’ll eventually need more spectrum for mobile services. All uses of broadband keep growing, and it’s not hard to look out ten and twenty years and see a much larger demand for using wireless spectrum.

The report includes one statistic that I hadn’t seen anywhere else. It says that at the end of 2022 that North America had 108 million connections on the spectrum carriers have labeled as 5G and 506 connections that are still using 4G LTE. The initial goal for using the new mid-band 5G spectrum was to de-load 4G networks – the goal was never to move everybody to 5G. I would have expected more users of the 5G spectrum bands, but there still are a lot of cell sites that have not been upgraded to the 5G spectrum.

I think cellular carriers are going to have a challenge making their case to the public. The carriers have done a magnificent job, at least in cities, of increasing cellular speeds. According to the latest report from Ookla, the median nationwide download speed in March 2023 was over 81 Mbps, with speeds in cities over 100 Mbps.

It’s going to be more of a challenge since cellular carriers have lost some credibility with the public and politicians. They badly needed additional spectrum five years ago, but rather than openly plead that case, the carriers invented an imaginary 5G war with China and convinced the public that giving them more spectrum would transform the world. The dilemma for cellular companies now is that it’s clear that most of the public isn’t willing to spend more to get faster cellular speeds. There is no public outcry supporting more spectrum for cellular companies.

But the public has a short memory. Five years ago, a lot of markets were having huge cellular problems. It was so bad in some places that it was getting hard to make and hold mobile voice calls. The new spectrum bands that we’re labeling as 5G had a big role in solving that problem. As this whitepaper argues, we don’t want to wait until the networks degrade to have the conversation again.

Buy America and BEAD

In the State of the Union speech earlier this year, President Biden made it clear that he wants to see the monies spent on infrastructure projects follow the Buy America rules. The Buy America rules were enacted in 1933. The Act says that purchasing funded by the U.S. government should have a preference for using American-made products. The rules allow for waivers from this provision, but the presumption is that without a waiver that American goods must be used.

The NTIA reacted to the president’s speech by writing a blog talking about the use of the Buy America rules in the upcoming $42.5 billion BEAD grants. The blog states, “The president made clear that while Buy America has been the law of the land since 1933, too many administrations have found ways to skirt its requirements. We will not.”

The NTIA requested waivers from Buy America rules when administering past grant programs, including the recent $1 billion middle-mile grants. The USDA sought a 6-month waiver of these rules that applied to some earlier rounds of the ReConnect grants. But the NTIA has made it clear that it doesn’t see any need for a waiver to buy American fiber optic glass or cable. The NTIA says there should be sufficient time for manufacturers to re-shore or expand U.S. manufacturing to meet the demands from the BEAD grants.

In the requested waiver for the Middle Mile Grant Program, the NTIA identified components of a fiber network that are sourced almost exclusively in Asia. This includes electronics like broadband switching equipment, broadband routing equipment, dense wave division multiplexing transport equipment, and broadband access equipment. It doesn’t seem likely that U.S. vendors are going to step up to create an American source for these components in time to meet the needs of the BEAD grants. And while the BEAD grants are substantial, they are not alone enough inducement to manufacture these goods in this country.

The market reality is that most of the costs of any broadband grant project will be spent on American inputs. The cost of labor is usually the largest component of network costs, and the grants require this work be done by American firms. As the NTIA points out, there are plenty of sources for American fiber and conduit. There are American sources of cabinets, huts, and enclosures. There are American vendors making handholes and pedestals.

But the sticky item is going to be electronics. If the NTIA plays hardball on fiber electronics, it will be nearly impossible that any ISP can fulfill the Buy American provision. I’m not as familiar with where wireless electronics are manufactured, but I assume that WISPs have a lot of the same concerns. Electronics are a relatively tiny slice of the total cost of a fiber network but a larger percentage for a new wireless network. .

The arbiter of the Buy American rules is the U.S. Office of Management and Budget (OMB), which recently solicited nationwide comments about how firmly the Buy American rules should be enforced for projects that will be funded by the Infrastructure Investment and Jobs Act. There is a possibility that the OMB will be stingy with waivers even if the NTIA asks for them, but that’s a bridge that can’t be crossed until it happens.

What’s most disturbing is that this joins a list of other issues that create a lot of uncertainty for ISPs considering the BEAD grants. If we don’t start clearing up the uncertainties, states might find that the ISPs they are hoping will request grants will sit out the BEAD grants. ISPs are naturally attracted to grants, but not if the hurdles are too hard to overcome.

GM Wants to Curate Your Car Experience

General Motors recently announced that it is going to stop supporting Apple CarPlay and Android Auto in some of its vehicles. These are smartphone mirroring apps that let a driver use their cellphone to connect to music, get driving directions, listen to eBooks, etc. GM announced that it plans to block the smartphone connection capability and will instead run a Google infotainment suite that includes Google Maps, Google Assistant, Spotify, and other apps that will be built into the dashboard display.

The company is not alone, and other companies like Mercedes and VW don’t like smartphone mirroring. GM says that it is doing this to take back control over customers and the in-car experience. I had to pause at that statement because I can’t think of a time when carmakers had that kind of control.

An article in Light Reading quoted an analyst saying that this means that the bandwidth used by the average car would grow from a few hundred megabytes per month to 4-8 gigabytes per month. That seems like a gigantic increase in bandwidth to me to take over the functions that were already going through a cellphone. Does this mean that the average driver really uses 4-8 gigabytes per month on the cellphone while driving? That can’t be true, and there is more at play here.

This raises a lot of questions for me. Does this finally mean that AT&T will reach its dream of requiring car owners to subscribe to a cellular subscription? That’s something the company has been angling for since the first conversations about smart cars and 5G. It seems likely that the cost of this service will be embedded in the cost of the car for the first year, but will all car owners be required to subscribe to this service when the paid year lapses? You might not have a choice if you can’t use your cell phone. Perhaps the car makers will pay this for a longer period if gaining control of the customer experience can generate additional monetary benefits higher than the cost of the cellular subscription.

Car companies have been trying to force subscriptions on car owners for years with the OnStar service. But most people drop that service at the end of the free period after buying a new car. I may be wrong, but I can’t see most car owners willing to buy a new monthly data subscription. There is no doubt that a 4–8 gigabyte cellular subscription is not going to come cheap.

Carmakers wouldn’t be considering this unless it will make them money. I can think of several ways this could financially benefit them. They might get a share of any revenues paid to AT&T for a subscription. I have to imagine Google will pay them for getting access to a car’s data – having a car connected to a cellular plan will let car makers gather detailed analytics on how the car is being driven, and I imagine that creates a revenue opportunity for selling driver data to insurance companies and others. A car is not going to use 8 gigabytes of data monthly by connecting only to GPS and listening to music. That much data has to mean transferring a lot of base analytics about the car and the driver. I can’t imagine paying for a subscription that would let GM and Google spy on me.

This also raises questions about tying my car to a cellular carrier. The new FCC maps for the big cellular companies are a joke. There are huge areas of the country that have little or no cellular coverage. I live in Appalachia, and I don’t have to drive far to find areas with no cell coverage. One town we visit is Boone, NC, and over half of the drive between here and there has zero cell coverage. How will car companies deal with irate customers that require a service that doesn’t function where they live? My wife listens to an eBook from her phone on that drive – I know how upset she would be if that no longer works because she can’t connect her cellphone to the car speakers.

I’m not sure why carmakers think folks want or will accept this. I might be the exception, but I would never buy a car that forced this on me unless I had the option to disable it. I don’t want to be curated and monitored by my carmaker. Their relationship with me ends the day I pay for the car. My wife avidly dislikes Android and wouldn’t buy a car that forced her to connect to Google and Android instead of her preferred IOs. If GM or any other company mandates this, we’d take them off our list of cars to consider.

Shutting Down Obsolete Technologies

There was an interesting statement during the recent Verizon first quarter earnings report call. The company admitted that shutting down the 3G cellular networks cost it about 1.1 million retail cellular customers along with the corresponding revenues.

This was long expected because there are still a lot of places where 3G technology was the only cellular signal available to rural customers living in remote areas. There were also a lot of people still happy with 3G flip phones even where 4G was available. Some of these customers will likely come back with 4G phones, but many might be angry with Verizon for cutting them off and go elsewhere.

Verizon has been trying to shut down the 3G network for at least five years. Its original plans got delayed due to discussions with the FCC and then got further delayed because of the pandemic – it didn’t seem like a good idea to cut folks dead when cellular stores were shuttered.

This change was inevitable. The bandwidth that can be delivered on the 3G networks is tiny. Most of you remember when you used 3G and a flip phone to check the weather and sports scores. Cellular carriers want to repurpose the spectrum used for 3G to support 4G and 5G. This is something that is inevitable – technologies become obsolete and have to be upgraded or replaced. The 3G transition is particularly abrupt, because the only possible transition is to cut the 3G signal dead, and 3G phones become bricks.

All of the technologies used for broadband and telecom eventually become obsolete. I remember when we used ISDN to deliver 128 Kbps broadband to businesses. I remember working with n-carrier and other technologies for creating data connections between central offices. Telephone switches took up a big room instead of being housed inside a small computer. The earlier version of DOCSIS technology were largely abandoned and upgraded to new technology. BPON became GPON and is now becoming XGS-PON.

Most transitions to new technologies are phased in over time. You might be surprised that there are still working ISDN lines chugging along that are being used to monitor remote sensors. There are still tiny rural cable companies operating the early versions of DOCSIS. But the industry inevitably replaces ancient technology in the same way that none of you are reading this blog on an IBM 5150 or a Macintosh 128k.

But some upgrades are painful. There were folks who lost cellular coverage when 3G was cut dead since they lived in a place that might not be able to receive the 4G replacement. A 3G phone needed only a tiny amount of bandwidth to operate – at levels that newer phones would perceive to be far under one bar of service.

The other painful technology replacement that keeps getting press is the big telcos killing off the copper networks. When copper is cut off in an area, the traditional copper landlines and DSL go dead. In some cases, customers are offered to move to a fiber network. The price might be higher, but such customers are offered a good permanent technology replacement. But not every DSL customer in a city that loses copper service is offered a fiber alternative. Customers find themselves likely having to pay $30 or $40 more to move to the cable company.

In rural areas, the telcos often offer to move customers to wireless. For a customer that lives within a decent distance from a cell tower, this should be an upgrade. Fixed wireless delivered for only a few miles should be faster than rural DSL. But like all wireless technologies, there is a distance limitation around any given tower, and the FWA signal isn’t going to work for everybody. Some customers that lose rural copper are left with whatever alternatives are available – because the telephone company is basically abandoning them. In many rural areas, the broadband alternatives are dreadful – which is why many were sticking with slow rural DSL.

I hear a lot of complaints from folks who lose traditional copper who are upset that they lose the ability to use services that work on copper technology, such as fax machines and medical monitors. It may sound uncaring, but these folks need to buy something newer that works with today’s broadband. Those are the kind of changes that are inevitable with technology upgrades. Just like you can’t take your old Macintosh to get fixed at Best Buy, you can’t keep using a technology that nobody supports. That’s an inevitable result of technology getting better over time. This is not a comfort to the farmer who just lost his 3G cell coverage – but there is no way to keep older technology operating forever.