FCC to Hide the Digital Divide?

The next big decision on the FCC’s agenda is to consider the agency’s definition of broadband and to also consider if cellular data should be considered as broadband as part of that definition. This is slated to come up for a vote on February 3. The FCC raised the issue back in August and asked for feedback on the two issues.

To put this discussion into context, the FCC previously defined the speed of broadband while issuing mandated reports to Congress about the national state of broadband. These mandated broadband reports are issued every year and discuss major broadband issues, as well as quantifying the number of households that are considered to have broadband.

The FCC used the annual broadband report in 2015 to increase the definition of landline broadband to 25 Mbps download and 3 Mbps upload. The FCC is thinking about using this year’s report to revise the definition of broadband lower again. At least two of the Commissioners are in favor of lowering the definition for landline broadband back to the old speed threshold of 10 Mbps download and 1 Mbps upload.

Further, the FCC is considering counting cellular data speeds as a substitute for landline broadband, using a 10/1 Mbps definition. This would mean that a customer who can receive either cellular data or landline data that meets the appropriate speed would be considered to have broadband available.

Even if the FCC doesn’t lower the landline definition of broadband, adding cellular broadband into the test will mean that millions of homes would now be considered to have adequate broadband. That is a significant change, because by law, the FCC is mandated to work towards bringing broadband to any parts of the US that don’t have it. In effect, by a definition change the FCC will have done away with a lot of the digital divide. And if they lower the definition of landline broadband they will categorize even more homes as having adequate broadband.

There are a lot problems with using cellular data speeds to define broadband.  Here are several major ones to consider:

Hard to Measure Cellular Speeds. In the real world cellular speeds are nearly impossible to accurately measure. First, speeds differ by distance from a cell site, much like DSL. Customers more than a few miles from a given cell site get significantly slower speeds. Cellular data speeds also suffer from the same kind of interference as any wireless technology. For instance, homes behind a hill or tall building won’t get speeds as fast as those with a clear line-of-sight. Cellular data speeds change with variations in temperature or with precipitation. And most cell sites are still capable of making both 4G and 3G connections – which obviously has a major impact on speed.

Broadband Speeds are Reported by the Carriers. The cellular carriers are likely to report speeds by cell site, meaning that they will ignore all of the variations of speeds listed above. Further, there is more than one way to measure broadband speeds, which I have discussed before in this blog. There is over a 100% difference in reported cellular broadband speeds between Ookla and Akamai, the two major entities tracking data speeds. The carriers typically use the higher Ookla numbers when bragging about their speeds.

Makes No Assessment of Affordability. There is a monstrous difference in price between landline and cellular data. A household using 100 gigabytes of cellular data in the month might pay nearly $1,000 per month. Most ISPs report that the average US household now uses between 150 and 200 gigabytes of broadband per month. It’s hard to think of cellular broadband as a substitute for landline broadband with such disparate pricing.

Ignores Latency. One of the problems with cellular broadband is latency. This is one of the major reasons that downloading a web site on a cellphone sometimes seems to take forever. (The other reason is that cellular operating systems aren’t really designed to maximize web browsing). The poorer latency means that a 10 Mbps landline connection will feel much faster than 10 Mbps cellular connection.

Takes the FCC Off the Hook. But the major reason that counting cellular data as equivalent to landline data is that it’s going to largely take the FCC off the hook for promoting broadband. They currently have directed billions from the Universal Service Fund to help build faster broadband networks, mostly in rural America. They can discontinue such programs and not expand their effort if most of rural America is considered to have broadband. With a simple vote a large percentage of rural homes on the wrong side of the digital divide will suddenly have broadband. That’s going to be big news to rural people who already understand that cellular broadband is not really broadband.

California Lowers the Definition of Broadband

California Governor Jerry Brown just signed a bill into law that lowers the official definition of broadband in the state while also providing state funding to upgrade rural broadband. The bill, AB 1665, goes into effect immediately. It lowers the definition of broadband in the state to 10 Mbps down and 1 Mbps up. But it goes even further and lowers the definition of an unserved customer to somebody who can’t get speeds of 6 Mbps and 1 Mbps up.

The bill reinstates a telecom tax that will provide a $300 million fund intended to be used to improve rural broadband. The California press believes that the fund will largely go to AT&T and Frontier, which both lobbied hard for the bill. My reading of the bill is that the incumbent carriers have first shot at the funding and anybody else only gets it when they don’t take it. In practical terms, assuming those two companies take the funding, almost none of this money would be made available to anybody who wants to build something faster in unserved areas.

We know that state funding done the right way can be a tremendous boon to broadband expansion. Consider, for example, the Minnesota DEED grants that have coaxed dozens of telecom providers to expand fiber networks deep into unserved and underserved areas of the state. It’s commonly understood that it can be hard to justify bringing fiber to rural areas, but some grant funding can be an effective tool to attract private money to fund the rest.

We also understand today that there are huge economic benefits for areas that have good broadband. The farmers in Minnesota that benefit from the grant program there are going to have a competitive advantage over farmers elsewhere that have little or no broadband. I’ve been looking at the IOT and other fiber-based technologies on the horizon for farming that are going to vastly increase productivity.

We also know that having good broadband benefits the small communities in rural America as well. These communities have been experiencing brain drain and economic flight as people are forced to go to metropolitan areas to find work. But broadband opens up work-at-home opportunities that ought to make it possible for families to thrive in rural America.

This move by California is a poor decision on many levels. First, it funnels money to the incumbent providers to make tiny tweaks to the existing networks so that existing broadband is just a little better. The new 10/1 Mbps broadband definition is also nothing more than a legislative definition of broadband and has no relevance in the real world. Many homes need more broadband than that, and as household broadband demand grows, a 10/1 Mbps connection will become inadequate for every home.

Another reason this is a bad idea is that the incumbents there are already making improvements to increase broadband to the 10/1 Mbps level. AT&T took $361.4 million of FCC CAF II funding that is to be used to upgrade broadband to 141,500 homes in California. That works out to $2,554 per home passed. Frontier took another $36.6 million, or $2,853 per home passed to improve broadband to 12,800 homes. That federal money requires that speeds increase to the 10/1 Mbps speed. This state funding will be an additive to those large federal amounts that these two companies have already received from the government.

AT&T has also already said that it plans to meet its CAF II obligations by upgrading rural cellular speeds. Frontier is mostly going to improve DSL on ancient copper and also is now looking at using point-to-point wireless technology to meet the CAF II obligations.

I don’t know how much it’s going to cost these companies to upgrade their rural customers to 10/1 Mbps. But the federal funding might be enough to pay for all of it. Adding the state funding means it’s likely that these two companies will make an immediate profit from upgrading rural customers to barely adequate broadband speeds. As we’ve seen many times in the past, this bill is good evidence that the big companies get value out of their lobbying efforts. The losers in all of this are the homes that won’t get anything faster than CAF II broadband. This $300M could have been used as matching grants to bring much faster broadband to many of these homes.


AT&T’s CAF II Plans

att-truckWe’ve known all along that AT&T was likely to use its cellular network to satisfy CAF II requirements to bring broadband to rural America. But we are now starting to see it happening. AT&T presented its plan recently in California and is probably in the process of doing so elsewhere.

In California AT&T proposes to provide fixed cellular broadband. Many of the rural areas affected by CAF II have not yet been upgraded to 4G LTE, and so AT&T’s first step will be to upgrade cell sites to the higher bandwidth capability. Once that is done, AT&T will offer fixed data to homes and businesses in the effective area using the LTE bandwidth. They will provide a receiver about the size of a dinner plate that will receive LTE data in the same way that cell phones do today. This wireless router will be connected to the home’s broadband network, probably a WiFi router provided by customers.

So it looks like AT&T will use the CAF II money to upgrade cell sites to LTE (something they were certainly going to do anyway). They also might build a few new rural cell sites and build some fiber to feed them. Finally, they will buy the customers the LTE receivers. My guess is that they are going to have a very hard time showing that they spent all of the CAF II money and so I expect some overinflated reporting of CAF II costs to the FCC. But these upgrades are far less costly than the rural DSL upgrades being contemplated by CenturyLink and Frontier.

AT&T promises that the bandwidth will meet the 10 Mbps down and 1 Mbps up speeds required by the FCC’s CAF II order. They also promise that there will be no monthly data caps smaller than 150 gigabits, also a threshold set by the CAF II rules. They have not yet specified specific prices, but say that prices will be at ‘market rate’ for broadband.

Even though we’ve seen this coming, this is a giant disappointment. Already today a 10/1 Mbps connection is inadequate for a large percentage of households. Cisco recently published statistics showing that the average home in the US today wants 24 Mbps to meet their needs, just a hair under the FCC definition of broadband. Cisco predicts that by 2020 that the average household demand is going to grow to 54 Mbps. That means the 10/1 speeds are going to feel really slow even by the end of the CAF II period ending in 2021.

These upgrades will improve broadband in the affected areas, but only by a small amount. Some residents in these areas today can get very slow DSL, under 1 Mbps. There are also numerous WISPs operating in the area offering speeds under 5 Mbps. And everybody always has the option of satellite broadband, which is universally disliked due to the latency and data caps.

The really bad news for these areas is that this upgrade is going to be in place for a long time. The FCC is probably not going to think about the CAF II areas again until well past the end of the CAF timeline, perhaps not until 2025. By 2025 the average household in the country is going to probably want a 100 Mbps connection if the current broadband growth trends continue. The folks in these areas will be just as far behind the rest of the country by then as they today. This whole CAF II program seems like a political sham that pretends to be bringing broadband to rural America, but it’s really nothing more than a temporary bandaid that only makes a marginal change in bandwidth delivery.

I also have no doubt that AT&T is going to use the CAF II upgrades as the excuse to walk away from the copper lines in the affected area. The FCC recently created rules for disconnecting copper, and once the CAF II wireless network is in place people are going to be forced onto the wireless network if they still want landline service.

This is all such a shame. We’ve seen in states like Minnesota that even modest government investments in broadband can bring amazing results. There are dozens of rural fiber networks being built in the state due to modest amounts of grant money from the state’s DEED grant program. The FCC could have used this CAF money to seed huge amounts of rural fiber construction – a solution that would have provided broadband for the next century. Instead they are helping AT&T pay for cellular upgrades that they would have done anyway and are abetting them in cutting down the rural copper networks. As I’ve said a number of times, I don’t know that I’ve ever seen a more wasteful use of federal money.

Lifeline and Rural America

FCC_New_LogoEarlier this year Chairman Tom Wheeler of the FCC proposed to change the Lifeline program to support broadband in addition to voice. In that proposal he suggested that a household should get at least 10 Mbps download and 1 Mbps upload in order to qualify for a Lifeline subsidy.

Here is where it gets weird. Frontier has filed comments that the 10/1 Mbps threshold is too high and that using such a high standard will stop a lot of rural households from getting Lifeline assistance. They are right, of course, but their solution is to lower the Lifeline threshold to whatever level is necessary to meet actual speeds in a given rural market.

Meanwhile, Frontier has taken a huge amount of money recently from the Connect America Fund for the purpose of raising rural DSL up to the 10/1 Mbps level. But they have six years to get to those speeds, and most of us in the industry think that even after all of their upgrades a lot of the rural households in the upgraded areas still won’t get 10/1 speeds. It’s going to be very hard for Frontier to do that with DSL in a rural setting where people are on scattered farms or back long lanes. I find it unlikely that Frontier, or any of the big telcos, are going to put enough fiber in the rural areas to actually achieve that goal.

But far more importantly, 10/1 DSL is not broadband. It’s not broadband by today’s current FCC definition that says broadband must be at least 25/3 Mbps, and it’s not broadband for real life applications.

I use my own household as the first example. There are two adults and one teenager. We work at home and we are cord cutters and get all of our video online. We have a 50 Mbps cable modem, and as cable modems tend to do, sometimes it slows down. When our speed hits 25 Mbps we’re all asking what is wrong with the Internet. So our household needs something greater than 25 Mbps for normal functioning. If we get less than that we have to cut back on something.

I have a friend with two teenage boys who are both gamers. He has a 100 Mbps Verizon FiOS connection on fiber, and when there are multiple games running everything else in the house comes to a screeching halt. For his household even 100 Mbps is not enough speed to meet his normal expected usage.

And yet here we are having discussion at the federal level of setting up two major programs that are using 10/1 Mbps as the standard goal of Internet speed. As a nation we are pouring billions of dollars into a project to improve rural DSL up to a speed that is already inadequate and by the time it is finally finished in six years will be massively below standard. It won’t take very many years for the average household to need 100 Mbps and we are instead taking six years to bring a huge amount of the rural parts of American up to 10/1 DSL.

I know that the FCC is trying to help. But it’s sad to see them crowing about having ‘fixed’ the rural broadband problem when instead they are condemning millions of households to have nearly worthless broadband for the next couple of decades. Imagine if they had instead allowed those billions of dollars to become matching funds for communities willing to invest in real broadband? Communities wanting to do this are out there and many of them were hoping to get some federal help to bring broadband to their areas. Building rural fiber is expensive, and even a little federal help would be enough to allow many rural areas to find the rest of the funding needed to build their own solutions.

And the problems are going to get worse, not better. Verizon didn’t even bother to take the federal subsidies to improve DSL because they don’t want to invest anything in rural copper. AT&T has told the FCC repeatedly that they want to tear down copper to millions of households and put rural households on cellular data. And while Frontier is going to try to make their rural copper plant better, how much can they realistically accomplish with 50–70 year-old copper that was neglected for decades before they bought it?

I just shake my head when I see that Frontier and the FCC are going to be wrangling about households getting Lifeline subsidies for speeds slower than 10/1 Mbps. The FCC has already decided that they are going to throw billions at rural copper and call it job done. It’s about time that we instead start having a conversation about bringing real broadband to rural America.