Broadband Grants and Affordable Rates

One of the things that I don’t hear discussed enough is that some of the ISPs chasing rural broadband grants have high broadband rates. I’m curious how much emphasis State Broadband offices will put on the retail rates of grant applicants when evaluating grant winners.

The two most easily identified ISPs with high broadband rates are Charter and Comcast. Charter rates for standalone basic broadband are now over $90 in many markets, and Comcast is nearing $100 per month. Both ISPs don’t give any indication that they are going to slow down with annual rate increases. In fact, now that broadband customer growth has slowed, rate increases are the best path for these companies to satisfy Wall Street expectations.

But these two companies aren’t the only expensive ISPs that are winning grants. Any other big cable companies that will be pursuing grant funding have rates similar to Charter and Comcast. Many of the RDOF winners have high rates. Nextlink has affordable slower speeds but charges $100 for 300 Mbps – the starting speed for cable companies. Resound Networks currently charges $99 for 100 Mbps. I’ve seen several smaller RDOF winners with base rates starting around $100.

We already know that the high broadband rates of the cable companies in cities are a major factor in the growth of broadband deserts where many households can’t afford broadband. Numerous studies have shown a direct correlation between household income and broadband adoption – high rates make it harder to afford broadband.

To be fair to the big cable companies, most have special low rates for low-income residents, but that also comes with slower speeds. But I have to wonder if cable companies will be as willing to connect low-income homes on a newly built fiber network where it can easily cost over $1,000 to add a new subscriber. It’s relatively inexpensive in cities to add a customer to a coaxial cable network, but will the cable companies be willing to make a significant investment for homes that will have low rates that will take many years to break even?

A lot of ISPs participate in the FCC’s ACP plan that gives low-income subscribers a $30 monthly discount. But the funding for that program will be gone around the end of the first quarter of 2024, and it’s anybody’s guess if a divided Congress will approve the continuation of a low-income program.

What is not being discussed enough is that most of the ISPs that participate in ACP or have their own low-income plan don’t aggressively push saving to low-income households. It’s easy for public relations purposes to have these programs but not let customers know the discounts exist. The ISP that brags the loudest about serving low-income households is Comcast. The company’s website says that it has brought its low-income product to 10 million people since 2011. That’s impressive and probably equates to something like 4 million homes. It’s less impressive when you realize that Comcast passes over 61 million homes. ACP is eligible to homes with household incomes up to 200% of the level of poverty. My quickie estimate is that perhaps 13 million homes in the Comcast footprint are eligible for the ACP discount (I’d appreciate other estimates).

But back to high rates. There is a significant level of poverty in many rural areas. In the states I’ve been working in recently, the level of poverty in rural counties is generally higher than the statewide average. How much good are we doing for rural counties when we fund broadband networks where the rates will be over $90? Even with the ACP discount the cost of broadband will be over $60.

I contrast this to many cooperatives and even the larger telco overbuilders. Most of them have broadband rates in the $60 – $70 range. If I’m a rural customer and some giant ISP is going to bring fiber using grant money, I’d prefer the rates from AT&T or Frontier over the big cable companies. But the surveys I’ve done show that folks prefer local ISPs over big ISPs – they are hoping that grants will go cooperatives, small telcos, and other local ISPs.

I expect the BEAD grants will have the most complicated scoring of any broadband grant program ever. There are so many requirements for qualifying for a BEAD grant that it’s hard to think broadband rates can play a significant role in determining who wins the grants. That’s unfortunate because, in the long run, rates might be the most important factor for an ISP that comes to a rural area.

Using 42 GHz Spectrum for Broadband

The FCC circulated draft rules to govern the lower 42 GHz spectrum (between 42 – 42.5 GHz). This is within the range of spectrum referred to as millimeter wave spectrum.

This is one of the more unusual FCC spectrum deliberations because this spectrum is totally empty – there is nobody currently authorized by the FCC to use the spectrum band. The FCC is starting this deliberation with a clean slate.

FCC Chairperson Jessica Rosenworcel says that this gives the FCC an opportunity to come up with a spectrum-sharing model that will be easy for wireless carriers to use while maximizing the benefits for the public.

The early draft rules ask the industry to comment on three different approaches to the use of the spectrum.

  • A nationwide non-exclusive licensing approach, in which licensees would apply for a license and then register and coordinate specific deployment sites with a third-party database administrator.
  • A site-based licensing approach, in which licensees would directly apply to the FCC for each deployment site.
  • A technology-based sensing approach, in which operators would employ certain technologies to avoid harmful interference from other users of the spectrum – all coordinated locally without the use of a database administrator.

Since this spectrum is being made available for the first time, the FCC is also asking about the general rules that ought to apply to the spectrum, such as buildout requirements for carriers getting a license, the technical rules like power levels, and any synergies with the spectrum sharing approaches already being considered for the lower 37 GHz spectrum. The FCC specifically asks how using this spectrum can be done in such a way as not to interfere with radioastronomy sites that use spectrum from 42.5 GHz to 43.5 GHz.

The FCC is proposing to subdivide this 500 MHz of spectrum into five 100-MHz channels.

Millimeter-wave spectrum is interesting. Folks might recall that Verizon and T-Mobile used similar spectrum in the early days of the 5G marketing craze to deliver gigabit speeds to specially equipped cell phones. There were TV and print ads everywhere showing the gigabit+ speeds that were being delivered. Of course, those ads didn’t mention that this was not a serious attempt at a new technology. The public trials were done in the centers of large cities and needed small cell sites every 500 feet or so. Millimeter-wave spectrum has no ability to penetrate anything, and it was quickly discovered by the users of the technology that the signal could be blocked if the user positioned their body between the cell site and the phone. The penetration of the spectrum was so poor that it had trouble making it through panes of glass.

But the new proposal is for big channels that can carry an immense amount of bandwidth. It’s not hard to imagine a multi-gigabit point-to-point connections between nearby buildings – bring fiber to one building and use this spectrum to reach buildings in the vicinity. One of the most intriguing uses of millimeter wave spectrum is indoors in factories or offices using ceiling-mounted transmitters that can beam immense bandwidth within a confined space.

It will be interesting to see where this investigation leads. CTIA, the trade association for the largest cellular carriers, generally favors exclusive licenses, which is the opposite of what is being proposed by the FCC. As I wrote in a recent blog, the docket ought to attract the full range of wireless constituencies, each with a different idea about how to make this work.

Another Red Flag – the BEAD Labor Requirements

The BEAD grant rules established by the NTIA are going to be a difficult hurdle for many ISPs to cross. I think most ISPs reading the NTIA’s Notice for Funding Opportunities (NOFO) will find things on the list of requirements that will be hard or difficult to meet. If you are thinking of applying to BEAD, you should read these rules carefully after reading this blog. The rules start on page 56 of the NOFO.

Without trying to sound too critical, the labor requirements sound like something written by bureaucrats who are designing a hypothetically perfect labor system instead of written by folks who have ever built a broadband network and have dealt with broadband contractors. Let’s run through some of the requirements to make this point:

Those seeking grants must demonstrate that they intend to comply with federal labor and employment laws. I think every grant I’ve ever worked with has this same requirement, which is usually satisfied by having an officer of the applicant attest that they will follow the law. However, the NOFO goes much further than that. A grant office must obtain an applicant’s record of compliance with federal laws, as well as the records of any entities that will participate in the project, including contractors and subcontractors.

This will require an ISP to specifically identify contractors and subcontractors before filing for a grant. All of these entities must prove their past compliance with federal labor laws. This is not how the industry functions. The entire industry works on a system of primary construction contractors and a host of smaller subcontractor crews. Big ISPs like Charter and Frontier can easily identify their primary contractor because they will have them under contract to handle whatever future work comes along. Smaller ISPs typically find a primary contractor after they know they have a project – like after they win a grant.

I wrote a recent blog that talked about the problems that small ISPs are having in getting projects constructed. I gave an example of a financially stable ISP that couldn’t find a contractor in today’s market to build a few small projects funded by ARPA grants. This difficulty came after the ISP already had the projects and funding in hand. I can’t imagine rural contractors that will be willing to sign on to a grant project at the application stage when they don’t even know if the ISP will win the grant. This requirement shows a total lack of understanding of how small construction contractors function. Their number one goal is to always keep crews working. They choose projects based on the timing of the work, the level of payment, and the location.

It’s inconceivable to me that the typical contractor will agree to sign onto a grant project even before the grant application – that is forcing contractors to pick ISPs they think will win grants. This NTIA rules seems to want to make sure that all work is done by quality contractors by making applicants and contractors pair off even before winning a grant. I can think of a dozen ways how this can backfire on a contractor that agrees to work for a given grant project when it can’t possibly know if and when that grant will be awarded and when construction will start.

This requirement also shows a lack of understanding about the makeup of the construction companies that build broadband infrastructure. Underneath the prime contractors are normally a host of smaller subcontractors – even for projects built by the giant ISPs. Subcontractors are often single crews who hire on to projects. These small crews come and go. I’ve never heard of any sizable broadband project that could identify the small subcontractors that would eventually work on the project. Crews regularly leave and get replaced as needed during most projects. There is no way that these small 6-technician crews will sign on to theoretical grant projects two years before the start of construction. Only in a fantasy world can a contractor promise the make-up of the subcontractor workforce over the life of a multi-year construction project.

The NOFO suggests ways around this requirement, which it knows is hard, by suggesting that ISPs directly hire the labor force. I laughed out loud at that idea in an environment where ISPs are having trouble keeping existing staff or hiring new staff. Trying to build a grant project with employees might be the riskiest strategy of all. Most ISPs I know have an ethical problem hiring crews that will be let go in three or four years at the end of grant construction – and it’s hard to envision that an ISP can attract technicians who understand that work will be temporary.

Building networks with employees will also require buying expensive construction equipment that would have no use past the term of the grant. This idea is impractical since there is still a multi-year backlog in the supply chain for specialized fiber construction equipment. Plus, do we really want to require that an ISP must buy a million dollars of boring equipment just to win a grant? Can the NTIA please invent more ways to make it even more expensive to take the BEAD funding?

The NOFO also has a strong preference for using unionized contractors and getting a labor agreement specific to the grant project. The NOFO even suggests labor peace accords where workers agree to not strike or disrupt work during the life of the grant. It seems like a big stretch to get unions to make such agreements for theoretical grant projects that may not be built for many years into the future.

The NOFO also places a huge emphasis on having an “appropriately skilled and credentialed workforce (including by the subgrantee and each of its contractors and subcontractors)”. This means using a workforce where all members of the project workforce will have appropriate credentials, e.g., appropriate and relevant pre-existing occupational training, certification, and licensure.

For projects that don’t use union labor, NTIA wants to see that every employee, including contractors and subcontractors, has safety training, certification, and/or licensure requirements (e.g. OSHA 10, OSHA 30, confined space, traffic control, or other training as relevant depending on title and work), including whether there is a robust in-house training program with established requirements tied to certifications, titles; and information on the professional certifications and/or in-house training in place to ensure that deployment is done at a high standard.

Whoever wrote the NOFO has no understanding of the construction crews who build networks. There has been only a handful of certification programs around the industry for decades, and only a small percentage of technicians who build networks have any formal certification. I think every ISP will agree with me that they want a crew made up of construction veterans with a decade or two of experience rather than a crew that has technicians with newly minted certifications.

It’s hard to know if this is intentional, but like many of the BEAD requirements suggested by NTIA, these labor requirements greatly favor large ISPs over small ones. I think most smaller ISPs will be unable to identify contractors and subcontractors ahead of time and convince contractors to provide their history of adherence to federal law, have all certified employees, and jump through a mountain of paperwork. If I was a contractor, I wouldn’t touch a BEAD grant project with a 10-foot pole – there is plenty of other work available.

I hope that State Broadband Offices push back hard on these requirements to make them realistic. That won’t be easy because some of these rules seem mandatory – but not all.  I strongly urge State Broadband Offices to sit and talk with local ISPs and construction contractors about the hurdles created by these rules – because these requirements will stop quality ISPs from pursuing the BEAD grants.

Getting DOCSIS 4.0 to Market

If you read the press releases or listen in on investor calls for the big cable companies over the last year, you might think that the latest cable network technology, DOCSIS 4.0, is right around the corner and will be installed soon. Cable companies have been leaving this impression to fend off competition with fiber. There are millions of new fiber passings being constructed this year where cable companies serve today, and most of the companies building fiber say that they reach at least a 30% market penetration rate within the first year after fiber reaches a neighborhood.

The reality is that it will still be a while until DOCSIS 4.0 networks make it out into neighborhoods. A recent blog from CableLabs spells this out well. This month (July 2023), CableLabs is holding the first big interoperability testing event where different manufacturers will test if their DOCSIS 4.0 equipment is interoperable with other vendors. This kind of interoperability testing is a standard step in the process of moving toward gear that is approved for manufacturing.

Per the CableLabs blog, this testing is a pre-cursor for CableLabs to be able to certify specific brands of modems. The blog describes this as the first interoperability testing event that will look to see if a cable modem can be operational when working with the latest version of DOCSIS 4.0 core equipment. This test also will check if new modems are backward compatible with earlier existing versions of DOCSIS. This is only the first of multiple interoperability tests, and later tests will go deeper into more specific functions such as interfacing with the overall network, backoffice functions, etc.

It’s normal during this kind of testing that bugs are found in the software and hardware, and it’s likely that there will still be tweaks in many of the components of the DOCSIS 4.0 network.

Only after all of the testing is done and CableLabs is happy that all components of the system are operating correctly and will work together properly can the process of certifying equipment from each vendor begin. That involves sending devices to CableLabs for extensive testing and final approval by the CableLabs Certification Board. Only then will any manufacturer put a device into mass production. Any device that doesn’t pass certification will have to be reworked, and the process started again.

It’s hard to think that it won’t be at least another year until devices start to get certified. After that will be the time needed to mass produce, distribute, and install devices. That could easily mean two years before we might see the first DOCSIS 4.0 network being installed.

With that said, this entire process has been exceedingly fast by industry standards. The DOCSIS standards was completed in early 2020. This process is far ahead of where most new technologies would be only three years after standards are completed.

The cable companies are in a huge hurry to be able to declare superfast symmetrical speeds to compete against fiber. I’m sure there has been tremendous pressure on CableLabs to speed up each step of the process. This likely meant faster than normal efforts to create breadboard chips and the components needed for equipment. For example, the normal timeline for getting a new chip designed and built can easily take 18 months. DOCSIS 4.0 chips are likely on an accelerated timeline.

Who can say how long it will take cable companies to upgrade networks to DOCSIS 4.0? They will certainly start in the markets where they think the technology makes the most market sense. It could easily take several years to make this upgrade nationwide, assuming that manufacturers will be able to keep up with the demand.

Beware the Fake Reviews

The Internet is awash with fake reviews. The reviews on sites like Amazon, Yelp, Tripadvisor, Google, and numerous review sites have grown to be totally untrustworthy since many of the reviews are fake. It’s not hard to find evidence of fake reviews, such as for a sketchy product on Amazon that has a thousands 5-star reviews. The problem is so widespread that last year Amazon sued the leaders of over 10,000 fake review sites.

You may ask what this has to do with broadband. When I read review sites about experiences with smaller ISPs, I almost always find fake reviews sprinkled in with real ones. For every review that talks about a technician that was late for an installation or that complains about the price, there are short flowery reviews that say that the ISP is amazing at customer service or that the ISP is perfect. The problem is that it’s hard to completely know which reviews are fake, although many of the short saccharine reviews are likely not real.

The Federal Trade Commission has proposed new regulations to deter fake reviews. Fake reviews are already illegal – it’s against the law to purposefully try to deceive consumers.  The FTC is proposing giant fines to try to stop the practice. The agency is proposing a fine of up to $50,000 for each fake review, which can be levied for each consumer that sees the fake review. The agency says that officially creating and enforcing these rules and penalties will help the agency in court when it pursues companies and people who post fake reviews.

The FTC particularly wants to tamp down the companies that buy and sell fake reviews. Some of the consumer advocates who track the issue say that as many as 40% of all reviews are fake and that most fake reviews are coming from a fake-review industry that pays people to write fake reviews. (how do people who write fake reviews for a living describe their jobs – writer or con artist?)

The penalties would apply to a wide variety of deceptive practices. Fines can be levied against the people who write fake reviews, the companies that pay for them, and the companies that buy fake reviews. There are other categories of fakes spelled out in the proposed rules, such as reviews that are written by people who don’t exist or reviews written by employees of the company being reviewed.

The new rules would prohibit companies from posting fake reviews on its own website where it sells products. The rules would stop businesses from suppressing bad reviews by intimating people to take them down – a practice a friend of mine saw first-hand when an angry restaurant owner called after he left a so-so review.

An ISP does not want to be the poster child for this new law because the fines can quickly become gigantic, and your reputation could be quickly shot in your local market. People assume that the FTC only goes after giant companies, but it also chases small offenders as a way to dissuade bad practices. Reviews from customers are powerful, and most of us are swayed when somebody says something good about a company. This rule is a warning to avoid taking the easy path of creating fake positive reviews instead of encouraging customers who love you to write and sign real positive reviews.

The Fiber Land-Grab

It’s becoming clear that we are now deep into a fiber land-grab. By that, I mean that companies that overbuild fiber are moving as quickly as possible into markets to build fiber. The biggest ISPs have publicly discussed their plans for building a lot of fiber in 2023. Following are some of the latest projections for 2023:

  • AT&T plans to build past 2 – 2.5 million new passings.
  • Frontier plans to pass 1.3 million new homes.
  • Altice is aimed for 900,000 new fiber passings.
  • Brightspeed is planning on 600,000 new passings.
  • Verizon hasn’t announced a number, but built 550,000 new passings in 2022.
  • MetroNet is aiming for 500,000 new passings.
  • Lumen plans to build 500,000 passings.
  • Consolidated Communications is planning on 350,000 passings.
  • Charter announced plans for 300,000 passings.
  • Comcast announced plans to pass more than 200,000 homes.
  • TDS plans on 175,000 new passings.

This list doesn’t include the numerous smaller companies that are building fiber. The largest among the rest include fiber builders like Bluespeak, Clearwave, Omni Fiber, Surf Internet, WOW!, and Ziply Fiber. I would guess that there are a few hundred other companies with aggressive fiber plans. This also doesn’t even count the fiber being built by over 200 electric cooperatives.

I call it a land grab because these ISPs are all hoping to get to towns and neighborhoods first in order to dissuade anybody else from building fiber. Since most places getting fiber are already served by a cable company, most of this land grab is not going to create monopolies – but these fiber builders all think they can win a significant share of the market away from the cable competitor.

It doesn’t always work out the way that the fiber overbuilders hope. I talked to somebody in Lansing, Michigan who was amazed that there were three different fiber providers in their alley offering fiber broadband. As somebody who builds fiber business plans, I have to wonder about the third company that constructed fiber when there were already two other competitive fiber providers on the poles. Will any of the three ISPs get enough customers to be successful? But most markets are not seeing that kind of competition, although some of the announced plans on the list above must be in markets where somebody else has already built fiber.

This level of fiber construction bodes poorly for cable companies. Every one of these fiber providers will tell you that they will get at least a 30% market share, and most are hoping for 50%. They are all banking on the current public sentiment that fiber is the superior technology compared to cable company coaxial networks. These ISPs almost all have lower broadband prices than the big cable companies.

Of course, cable companies are rushing to fight back by upgrading upload speeds to become symmetrical. You can expect when that happens to see a huge blitz everywhere talking about symmetrical gigabit speeds. Cable companies also compete by offering very low introductory rates intended to win or keep customers from leaving for fiber. But much of the public has gotten tired of that cycle of having to renegotiate rates every few years.

Only time will tell if cable companies will be successful with this strategy. If enough of the public believes fiber is superior, then any cable marketing plan is going to fall on deaf ears for some portion of every market.

Rural fiber land grabs are different because anybody building fiber in a rural market probably will have a monopoly for fast landline broadband. It’s hard to think that many companies will consider building a second fiber network in places with low housing density. The rural fiber builders will likely face competition from WISPs deploying the latest radios. Just like with competition with cable companies in cities, it’s going to be interesting to see who wins that battle. It’s likely going to be a neighborhood-by-neighborhood battle. I suspect local WISPs with good local reputations will fare well against fiber built by the giant telcos or cable companies. On the flip side, local cooperatives and other local fiber builders will likely do extremely well against the giant WISPs. It’s going to be an interesting battle to watch.

I have no idea how Starlink and FWA cellular wireless fit into this battle. Fiber and fixed wireless with the newest radios will both be faster than these two technologies, and the market battle might come down to prices. The next decade is going to be an epic battle for broadband customers, and a boon to ISP marketers.

Working at Home Here to Stay

The U.S. Bureau of Labor Statistics released a report in June that indicates that the percentage of people working at home, which grew rapidly during the pandemic, is still much higher today than before the pandemic.

The U.S. Census and the Bureau gather this data by interviewing thousands of workers and asking how they spent the previous 24 hours. The survey not only gathers information on work habits, but also statistics on time spent on leisure, housework, and other activities.

Here are some of the key statistics from that report:

  • 34% of workers did some or all of their work from home in 2022. That has dropped – during the pandemic, 42% of workers worked at home in 2020 and 38% in 2021. But before the pandemic, the percentage of workers who worked at home was 24% in 2018 and 2019.
  • Working at home seems to be tied to having higher levels of education. 54% of adults over 25 years old with a bachelor’s degree or higher worked at home in 2022 compared to 18% of those with a high school diploma or no degree.
  • Women are more likely to work from home. 41% of women worked from home in 2022 compared to 28% of men.
  • The average person who said they were working from home did so for 5.4 hours per day.

Most labor experts are interpreting the survey results to mean that there has been a permanent shift in the way that people work. In 2022, there were 42% more people working at home than before the pandemic. To put that statistic into perspective, there are roughly 164 million adults in the U.S. workforce. This means that in 2022, almost 56 million people worked at home, up from 39 million before the pandemic. That’s an increase of over 16 million additional people working from home.

It’s possibly a little early to predict where the percentage of those working from home will stabilize, but it seems unlikely that the percentage will ever return to the pre-pandemic levels.

The statistics show a big gap in those working at home by education level. There are three times as many people with a bachelor’s degree or higher working at home than those without. It’s not too hard to conjecture that a lot of those working from home are likely to be working on computers and needing a good broadband connection.

The disparity between the percentage of men and women working at home probably has a lot to do with the daycare crisis in the country. I’ve read numerous articles describing the cost and the difficulty of finding daycare. In those articles, many women talk about working at home as a way to cope with daycare issues.

I’ve seen several other surveys over the last year that have interviewed generation Z and millennial workers, and a large percentage of these generations do not want to work in the classic office environment. I have to think over the next decade that this trend will continue to nudge the percentage of folks who work at home even higher.

My consulting firm conducts a lot of interviews about broadband usage, and we are still finding a lot of homes that don’t have adequate broadband for working at home or for students doing homework. I regularly participate in online discussions with folks working from home with a poor broadband connection who struggle to maintain an online chat session. I have to think that as we bring better broadband to millions of rural locations, the percentage of homes that will include somebody working at home will continue to climb.

FWA Mapping and BEAD Grants

There is one mapping issue that unfortunately messed up the NTIA’s count of eligible passings for BEAD, grants and that is going to be a real concern for folks who file BEAD grants. Over the last year, both T-Mobile and Verizon have activated rural cell sites that can deliver home broadband using licensed cellular spectrum that can be 100/20 Mbps or a little faster. According to the way that the NTIA and the BEAD grants determine grant eligibility, these locations are considered as served.

There are several reasons why this is going to be a practical problem in the BEAD grant process. First, the claimed areas claimed by the cellular carriers on the FCC maps are not accurate. Cellular broadband signal strength decreases with the distance between the cell tower and a customer. The easiest way to explain that is with an example. I talked to a farmer in Illinois who has the T-Mobile FWA broadband and is thrilled with it. The T-Mobile tower is on his farm and he’s getting over 200 Mbps download speed. He bragged about the technology to his neighboring farmers. One of his neighbors over a mile away is getting download speeds over 100 Mbps. But another neighbor over two miles away is getting speeds closer to 50 Mbps and doesn’t like the product.

At some future point, the FCC is supposed to require heat maps around each cell site to more accurately show the actual speeds that can be delivered, But for now, T-Mobile and Verizon are typically claiming speeds of 100/20 Mbps or faster for a sizable area around each cell site. This speed is true for the folks close to the tower, but at the outer fringe of each claimed circle are customers who are not able to receive 100/20 Mbps broadband. Those areas should be eligible for BEAD grant funding. I have no idea how State Broadband offices are going to deal with this. Any Grant office that decides to stick with the FCC maps will be condemning small pockets of folks to have worse broadband than everybody around them.

This is also another problem to deal with for an ISP seeking BEAD grants. I’ve described in the past how RDOF carved up the unserved and underserved areas in many counties into a jumbled mess, and FWA cellular coverage makes it that much harder to put together a BEAD serving area that makes both engineering and financial sense.

There is a more subtle issue that is even more troubling. The cellular carriers have no intention of serving everybody within the range of a cell site. There are constraints on the number of people they are willing to serve. This is similar to the constraints that Starlink has with serving too many people in a given small geographic area. This makes it hard to understand why NTIA rushed to define this technology as qualifying as served broadband. The willingness and ability to serve everybody ought to be one of the most prominent factors when declaring a technology to be creating served areas.

Even worse, T-Mobile says in the terms of service that it reserves the right to throttle usage on the FWA service. The bread and butter product for cellular companies is people with cell phones, and they are giving those customers priority access to the bandwidth at each tower. Any time cellular traffic demand gets too high, the usage to FWA customers will be restricted. That may not be a problem for low-population cell towers – but customers at any tower that has this restriction are going to be unhappy if broadband slows to a crawl in the evening.

My final issue with FWA cellular technology is that is expanding rapidly. Soon, it won’t just be Verizon and T-Mobile deploying the technology. UScellular, DISH, and AT&T are likely to start popping up in rural areas. I’ve been scratching my head wondering how State Grant offices and ISPs are going to deal with the technology if it’s activated during the grant review process. Cellular companies have every motivation in the world to intervene in grant applications and declare that areas are served and ineligible for grants. If the FWA carriers are allowed to make this claim for new cell sites, I can foresee numerous ISPs walking away from BEAD applications if the serving areas get carved up too badly.

This is a new technology, and, in my opinion, the NTIA rushed to accept these areas as served. The technology is so new that there was almost nobody served with cellular FWA back when the IIJA legislation enabled the BEAD grants. For the reasons I’ve discussed, it makes no sense to give cellular companies little broadband monopolies around their cell sites.

The Worsening Labor Supply Chain

I’m not sure what other people are seeing, but I’m starting to see situations where a shortage of construction labor is causing problems for some ISPs. Everything I’m hearing says that the supply chain issues for materials have largely been solved but that the supply chain for construction contractors is a worsening situation for many ISPs.

To give an example, I know an ISP with a long history of building networks that recently went to bid for two projects that are being funded by local ARPA grant funding. The ISP went to its normal pool of fiber contractors, many that it has worked with for many years, and got zero responses. Nobody was willing to even bid on the projects. The ISP called and talked to a lot of contractors and then reissued the bid package a second time. This time the ISP got two bids – one that is 50% higher than rates it has been paying for fiber construction and one that was almost double.

When the ISP talked to the two bidders and others that didn’t bid, it was told that contractors already have their construction schedules filled for the next two years. The two contractors that bid a high price would only take on the work if this ISP was willing to pay more than other projects. The ISP was also told that its projects were too small and that it would have gotten a much better response if it had a project that guaranteed several years of solid work.

Another story comes from an electric cooperative. Its strategy for its electric grid, and now for its fiber network, has always been to minimize the amount of contractor labor needed by doing a lot of the work inhouse. For example, with fiber construction, the coop planned to tackle all of the make-ready and drop construction and only bring in contractors to hang fiber on poles or to bury fiber.

The coop never had a hard time finding qualified technicians because it offered decent wages for the local economy and the stability for technicians to be able to stay home with their families. It always had seen a steady stream of technicians asking if there were openings.

But over the last year, the coop has lost a number of its most experienced technicians who were lured away to higher-paying jobs. The coop also found itself suddenly unable to attract new technicians. Over the last year, there has been a total flip of the technical workforce situation. The company doesn’t know how it’s going to stick with its original plans.

At first, I thought these were local situations – but I’m starting to hear similar stories across the country. I know a bunch of ISPs and contractors who are struggling to hire experienced technicians. I haven’t seen any other bids that were double what was expected, but I’m hearing that the cost of projects is increasing steadily.

Not all ISPs are having a problem. There are many ISPs who have locked down construction firms for large grant projects or other major upgrades. It seems likely that the biggest ISPs all have multiyear contracts with contractors and are mostly able to find crews. However, even AT&T cited labor shortages as one of the reasons the company trimmed the planned fiber passings for 2023.

The ISPs most at risk for not finding construction crews are ones with small projects or ones that haven’t built fiber in a while. These are the companies that are going to be quoted the highest prices for getting a contractor if they can find anybody at all. How will these ISPs handle the cost overruns compared to the original budget?

The other concern for a lot of ISPs is the ticking clock of grant timelines. For example, many state grants require that projects get built within two years. The date for finishing ARPA-funded projects will be here in a few years. It’s looking like a lot of ISPs will be asking for waivers to extend construction timelines – but in many cases where the money was guaranteed by legislation, extensions might not be possible.

I don’t know if it is time yet to call this a crisis since there are ISPs that say they have the construction crews they need. But I think there is a growing list of ISPs that are seeing real problems arising from a shortage of technicians – and this is likely to only get worse when BEAD money finally hits the market.

 

The FCC’s Environmental Obligations

I think a lot of ISPs will be surprised by this blog. The FCC has a specific set of environmental rules that must be followed when building any telecommunications infrastructure. ISPs that haven’t built on park lands or were funded by certain federal broadband grants probably never heard of these rules. But the rule apply to all telecommunications construction.

The FCC’s Environmental rules are codified in section 47 C.F.R. § 1.1307 of FCC regulation. These rules require that an environmental review may be required for infrastructure being proposed in the following circumstances:

  • Facilities to be located in an officially designated wilderness area.
  • Facilities to be located in an officially designated wildlife preserve.
  • Facilities that may affect listed threatened or endangered species or designated critical habitats
  • Facilities that may affect districts, sites, buildings, structures, or objects, significant in American history, architecture, archeology, engineering, or culture, that are listed, or are eligible for listing, in the National Register of Historic Places.
  • Facilities that may affect Indian religious sites.
  • Facilities to be located in a floodplain, if the facilities will not be placed at least one foot above the base flood elevation of the floodplain.
  • Facilities whose construction will involve a significant change in surface features (e.g., wetland fill, deforestation, or water diversion).
  • Antennas or supporting structures that will be equipped with high-intensity white lights and located in residential neighborhoods.

The reason ISPs probably haven’t heard about these specific rules is that the FCC has largely put ISPs on the honor system to meet these guidelines. The only times that an ISP might be required to follow these rules is if they were funded by a federal broadband grant or if they tried to get a permit to build on federal land. Those situations often require some level of environmental review to get the funding or the permit. Many of the ISPs who will be pursuing the BEAD grants will be required to comply with these rules.

There are a few specific FCC rules for notifying the public before building a new cell tower – but there are no specific public notification requirements for building other kinds of infrastructure. Carriers often flaunt the cellular notification rules. ProPublica recently wrote about the public outcry in New York City when a carrier erected large three-story tall wireless towers on city streets. After the intervention from the public and local politicians, the FCC eventually halted the construction for not complying with the rules, but only after 200 towers had been erected.

The obligation for the FCC to enforce environmental rules was put in place in 1969. The agency has rarely taken its environmental obligations seriously and didn’t issue any fines for breaking the rules until the early 2000s. Even today, the FCC only learns about most infractions after infrastructure has been built. The agency only issues fines in about 10% of the cases brought before it by local governments, states, or the public.

There are parts of the country where companies routinely build through flood plains or near wetlands to lay fiber. I’m sure many ISPs have unwittingly build close to areas that are home to endangered species. While the FCC hasn’t issued a lot of fines for flouting the rules, but ISPs ought to at least be aware that these rules exist.