Broadband in China

For years I’ve been hearing how we are losing the broadband battle with China, so I decided to take a look at the current state of broadband in the country. The China Internet Network Information Center (CNNIC) publishes statistics about the state of broadband in the country, and I used the Statistical Report on Internet Development in China from August 2019 in writing this blog.

Here are some of the more interesting statistics about the state of broadband in the country:

  • China is a lot larger than the US with a current population just below 1.4 billion, compared to an estimate of US population of around 327 million.
  • As of June 2019, China had 854 million people connected to the web in some manner, for an overall Internet penetration based on population of 61.2%. It’s not easy to compare that statistic to the US since we track Internet usage using subscriptions to households.
  • China is still rapidly adding people to the internet. In the first six months of 2019, the country added 26 million new Internet users.
  • The Chinese interface with the internet in a variety of ways, with the following statistics for June 2019:

Cellphone        847 million      99%

Desktop           394 million      46%

Laptop             308 million      36%

TV                     283 million      33%

Tablet              242 million      28%

  • As of June 2019, China had 396 million users on fiber-to-the-home. China is adding fiber faster than the US and there were over 67 million customers added for the year ending in June 2019.
  • Chinese speeds for landline connections averaged 31.3 Mbps in June 2019, up 25% since 2018. Mobile speeds in 2019 averaged 23 Mbps, up 7% from 2018.
  • Like the US, China has a rural digital divide. In 2018 the country had 225 million rural Internet users representing a 39% penetration. Urban Internet users were 630 million, a 77% penetration. There are 347 million rural Chinese without access to the Internet, almost 25% of all citizens in the country. It’s hard to compare that statistic to the US since the FCC does such a lousy job of counting households with broadband.
  • China is working to solve the rural digital divide and added 3 million rural Chinese to the Internet in the first half of 2019. However, much like here, that rate of growth is glacial, and at that rate of growth it will take 36 years for the rural population to grow to the same current penetration seen in urban areas.
  • The Chinese are heavy users of instant messaging with 96.5% of Internet users using messaging in 2018.
  • It’s important to remember that Chinese web users are monitored closely and live behind what the west calls the Great Firewall of China. The government tracks how people use broadband, and we don’t have direct statistics for the following:

Watch online video       88.8%

Use online news            80.3%

Shop online                   74.8%

Online bill payment      74.1%

Order meals online       49.3%

Car hailing services       39.4%

  • China’s mobile data traffic is growing even faster than in the US. In the first half of 2018, the Chinese mobile networks carried 266 petabytes of traffic. By the first half of 2019 that traffic had doubled to 554 petabytes. China’s cellular data usage doubled in one year, while here it’s taking two years to double. The numbers are huge, and a petabyte equals 100 billion gigabytes.
  • The average Chinese broadband user spent 27.9 hours online in 2019.
  • The CNNIC tracks why people don’t use the internet. 45% don’t have access to broadband; 37% lack the skills to use broadband; 15% don’t have computers; 11% say they have no need. The interesting thing about the list in China is that nobody said they couldn’t afford Internet access.

There was one interesting thing missing in the Chinese report. There was no mention of 5G. That means, at least to the government agency that tracks broadband usage in China, there is no 5G race. It’s obvious that the Chinese need 5G, probably more badly than here since the volumes of data on their mobile networks are doubling annually. But the topic wasn’t worth a mention in their annual report of the status of broadband.

There is No Artificial Intelligence

It seems like most new technology today comes with a lot of hype. Just a few years ago, the press was full of predictions that we’d be awash with Internet of Thing sensors that would transform the way we live. We’ve heard similar claims for technologies like virtual reality, block chain, and self-driving cars. I’ve written a lot about the massive hype surrounding 5G – in my way of measuring things, there isn’t any 5G in the world yet, but the cellular carriers are loudly proclaiming its everywhere.

The other technology with a hype that nearly equals 5G is artificial intelligence. I see articles every day talking about the ways that artificial intelligence is already changing our world, with predictions about the big changes on the horizon due to AI. A majority of large corporations claim to now be using AI. Unfortunately, this is all hype and there is no artificial intelligence today, just like there is not yet any 5G.

It’s easy to understand what real 5G will be like – it will include the many innovations embedded in the 5G specifications like frequency slicing and dynamic spectrum sharing. We’ll finally have 5G when a half dozen new 5G technologies are on my phone. Defining artificial intelligence is harder because there is no specification for AI. Artificial intelligence will be here when a computer can solve problems in much the way that humans do. Our brains evaluate available data on hand to see if we know enough to solve a problem. If not, we seek the additional data we need. Our brains can consider data from disparate and unrelated sources to solve problems. There is no computer today that is within a light-year of that ability – there are not yet any computers that can ask for specific additional data needed to solve a problem. An AI computer doesn’t need to be self-aware – it just has to be able to ask the questions and seek the right data needed to solve a given problem.

We use computer tools today that get labeled as artificial intelligence such as complex algorithms, machine learning, and deep learning. We’ve paired these techniques with faster and larger computers (such as in data centers) to quickly process vast amounts of data.

One of the techniques we think of artificial intelligence is nothing more than using brute force to process large amounts of data. This is how IBM’s Deep Blue works. It can produce impressive results and shocked the world in 1997 when the computer was able to beat Garry Kasparov, the world chess champion. Since then, the IBM Watson system has beat the best Jeopardy players and is being used to diagnose illnesses. These computers achieve their results through processing vast amounts of data quickly. A chess computer can consider huge numbers of possible moves and put a value on the ones with the best outcome. The Jeopardy computer had massive databases of human knowledge available like Wikipedia and Google search – it looks up the answer to a question faster than a human mind can pull it out of memory.

Much of what is thought of as AI today uses machine learning. Perhaps the easiest way to describe machine learning is with an example. Machine learning uses complex algorithms to analyze and rank data. Netflix uses machine learning to suggest shows that it thinks a given customer will like. Netflix knows what a viewer has already watched. Netflix also knows what millions of others who watch the same shows seem to like, and it looks at what those millions of others watched to make a recommendation. The algorithm is far from perfect because the data set of what any individual viewer has watched is small. I know in my case, I look at the shows recommended for my wife and see all sorts of shows that interest me, but which I am not offered. This highlights one of the problems of machine learning – it can easily be biased and draw wrong conclusions instead of right ones. Netflix’s suggestion algorithm can become a self-fulfilling prophecy unless a viewer makes the effort to look outside of the recommended shows – the more a viewer watches what is suggested, the more they are pigeonholed into a specific type of content.

Deep learning is a form of machine learning that can produce better results by passing data through multiple algorithms. For example, there are numerous forms of English spoken around the world. A customer service bot can begin each conversation in standard English, and then use layered algorithms to analyze the speaker’s dialect to switch to more closely match a given speaker.

I’m not implying that today’s techniques are not worthwhile. They are being used to create numerous automated applications that could not be done otherwise. However, almost every algorithm-based technique in use today will become instantly obsolete when a real AI is created.

I’ve read several experts that predict that we are only a few years away from an AI desert – meaning that we will have milked about all that can be had out of machine learning and deep learning. Developments with those techniques are not leading towards a breakthrough to real AI – machine learning is not part of the evolutionary path to AI. At least for today, both AI and 5G are largely non-existent, and the things passed off as these two technologies are pale versions of the real thing.

Can 5G Replace WiFi?

Verizon recently posted a webcast with investors where Ronan Dunne, EVP and CEO of the Verizon Consumer Group said that he believed that 5G hotspots using millimeter wave spectrum will eventually displace WiFi in homes.

He cites major benefits of 5G over WiFi. He believes that a 5G network will be more reliable and more secure. He thinks that people will value the safety that comes from having traffic inside their home being encrypted as it rides Verizon’s 5G network compared to the more public nature of WiFi where every neighbor can see a home’s WiFi network.

He also cites the convenience of being able to transfer 5G traffic between networks. He paints a picture where a customer making a call or watching a video using a home 5G hotspot will be able to walk out the door and seamlessly continue the session outside on their cellphone. That’s pretty slick stuff should that ever come to pass.

The picture he’s painting for Verizon investors is a future where homes buy a Verizon 5G subscription to use in place of WiFi. This is part of Verizon’s ongoing effort to find a business case for 5G. His vision of the future is possible, but there are a lot of hurdles for Verizon to overcome to achieve that vision.

It’s going to get harder to compete with WiFi since the technology is getting a lot better with two major upgrades. First, the industry has introduced WiFi 6, which brings higher quality performance, lower latency, and faster data rates. WiFi 6 will use techniques like improved beamforming to greatly reduce interference between WiFi uses within the home.

Even more importantly, WiFi will be incorporating the new 6 GHz spectrum band that will increase bandwidth capabilities by adding seven 160 MHz bands and fourteen 80 MHz bands. It will be much easier to put home devices on separate channels when these new channels are added to the existing channels available on 2.4 and 5 GHz. This means that 5G will be competing against a much improved WiFi compared to the technology we all use today.

Another big hurdle for Verizon to overcome is that WiFi is ubiquitous today. WiFi is built into a huge number of devices, and a homeowner might already own a dozen or more devices capable of using WiFi. Verizon will have to somehow convince homeowners that 5G is so superior that it’s worth replacing the panoply of WiFi devices.

Another hurdle is that there is going to be WiFi vendors painting almost the same picture as Verizon. The makers of WiFi routers are already envisioning future devices that will introduce millimeter-wave spectrum including 5G into the home. There are vendors already working on devices that will provide both WiFi 6 and 5G using millimeter-wave connections simultaneously, using the publicly available 60 GHz V band. These solutions envision offering everything that Verizon can do, except the ability to roam seamlessly in and out of a home – and it will be done by selling a box instead of a new monthly subscription.

Another interesting hurdle to switching home networks to 5G is that there might be separate 5G solutions for each cellular carrier that uses different bands of spectrum. It’s relatively easy for device makers today to build a cellphone or other device that can use different cellular carriers because the carriers all use similar spectrum. But as each cellular company picks a different mix of frequencies moving forward, there is likely going to be cellphones and other devices that are specific to one carrier. It’s impossible to build a cellphone with today’s battery technology that can receive a huge range of spectrums – the multiple antenna systems would drain a cellphone dry in no time.

The largest hurdle of all is that WiFi is free to use after buying a WiFi router or meshed WiFi devices for the home. There is no monthly subscription fee to use the wireless WiFi connections within the home. Verizon clearly foresees a world where every home has a new monthly subscription to use its in-home 5G network.

Mr. Dunne makes one good point. It’s becoming increasingly clear that public WiFi networks are susceptible to hacking. A 5G network controlled by a carrier should be a lot safer than a WiFi hotspot managed by a coffee shop. The big question is if this enough incentive for people to buy 5G-capable devices or for coffee shops to switch to 5G networks. Even should coffee shops go with a 5G solution, will homes follow suit?

Mr. Dunne vision has an underlying assumption that people will value data security enough to be willing to pay more for it. He envisions people choosing a managed network when they have a choice. He could be right, and perhaps there will be enough data breaches in coming years with WiFi that the paradigm will change from WiFi to 5G. But it’s going to be incredibly hard to dislodge WiFi, particularly when it’s evolving and improving along with 5G.

Even if Mr. Dunne is right, this shift is not coming soon, probably not within this decade. For now, WiFi has won the device war and any shift to 5G would drag out over many years. It’s going to be incredibly difficult for the cellular carriers to convince everybody to switch to 5G.

I sympathize with Mr. Dunne’s dilemma. Investors want to understand where the revenues will come from to fund the expensive upgrades to 5G. Verizon and the other cellular carriers have tossed out a lot of ideas, but so far none of them have stuck to the wall.  Investors are getting rightfully nervous since there doesn’t appear to be any significant 5G revenues coming in the next few years. The carriers keep painting pictures of an amazing 5G future as a way to not have to talk about lack of 5G revenues today.

The 5G Experience in 2020

The cellular carriers are in full 5G marketing mode. If you believe the TV commercials, you’d now think that the country is blanketed by 5G, as each cellular carrier claims a bigger coverage area than their competitors. However, almost all of their claims are marketing hype. What’s the reality of 5G coverage in 2020?

What does it mean when the carriers claim wide coverage of 5G? In 2020 there will be no cellular deployment that can be legitimately called 5G. Full 5G will not arrive until the carriers have implemented the bulk of the new features described in the 5G specifications. For now, none of the important features of 5G have been developed and introduced into the market. 5G deployment will come in stages as each of the 5G features reaches markets – the same thing that happened to 4G. For now, all of the major 5G improvements are still under development in the labs.

Then what are the carriers calling 5G? Most of what is being called 5G is the introduction of new bands of spectrum. New spectrum does not equal 5G – the 5G experience only comes with 5G features. Existing cellphones cannot receive the new spectrum bands, and so the carriers are selling new phones that can receive the new spectrum and labeling that as 5G.

What does the new spectrum mean for cellular performance? At first, anybody lucky enough to grab new spectrum will likely have a great experience. This will mostly be because almost nobody else is using the spectrum at a given cell site. We will see some early claims of blazingly fast speeds that will fade away over time. As more phones can use the new spectrum, the performance will drop back to normal 4G speeds – and maybe even a little slower. Much of the first wave of spectrum being released is in lower frequency bands such as 600 MHz for T-Mobile and 850 MHz for AT&T. These lower frequency bands don’t carry as much data as higher frequencies, and in the long-run these lower frequencies will be used to bolster voice traffic.

Why are the carriers claiming widespread 5G? I can only guess that carriers have gotten so caught up in 5G hype that they feel compelled to show something new to the market. The carriers don’t like to talk about it, but their 4G networks are in big trouble in urban areas. The amount of cellular data being used by customers is doubling every two years. You don’t have to be a network engineer to understand that continuous doubling of traffic can quickly swamp any network and degrade performance. Most of the carrier activity in 2020 is aimed at propping up the 4G networks until 5G is a mature technology.

When will we see 5G features? From what I read in the IEEE forums, most of the 5G features are 2 – 5 years away. The same thing happened with 4G and it took most of a decade to see 4G fully implemented – in fact, the first US cell site fully meeting the 4G standards was not activated until late 2018. Over time we’ll see a new 5G features implemented as they are released from labs to field. New features will only be available to those that have phones that can use them, so there will be a 2 to 3-year lag until there are enough phones in the market capable of using a given new feature. This means every 5G phone will be out of date as soon as a new 5G feature is released.

What about millimeter wave spectrum – is that 5G? No, it’s just another new frequency band. The characteristics of millimeter wave spectrum are so different from traditional cellular frequencies that it’s even hard to call this a cellular frequency. The frequency is 10-30 times faster than traditional cellular frequency. It only travels short distances, mostly under 1,000 feet from a cell site. It needs line-of-sight and can be easily blocked by any impediment in the environment. It’s not going to pass from outdoor transmitters into buildings. It’s easier to understand millimeter wave spectrum if you think of it as a broadband hotspot that is mounted outside, and which can be received by special phones designed to use the frequency.

Does all of this mean a better cellular experience in 2020? It will for some people. Those who buy new phones that can receive the new frequency bands, and who live or work within two miles of an upgraded cell site will likely see improved performance – no drastically so, but a little better. Anybody who wants blazing data speeds on a cellphone and who lives or works in the urban city centers might be able to get outdoor broadband from millimeter wave hotspots. The rest of us are going to see a gradual degradation of our 4G experience as existing cell sites grow busier. This means more dropped calls, fewer bars. Until the cellular carriers have deployed a lot of small sites and started to implement the 5G features our cellular experience is likely to get worse before it gets better.

Finally, what about rural America in 2020? It’s going to still be more likely for a rural caller to snag a 3G connection than a 5G one using the new frequencies. The FCC figured out last year that the cellular carriers had greatly exaggerated their rural 4G coverage areas – something that is not news to rural residents. Rural cell sites aren’t under the same stress as urban ones due to fewer customers trying to use a given cell site, so calling should remain the same this year. There is hope over the next 2-4 years to see money from the FCC’s 5G Fund bring better 4G coverage to rural areas. True 5G features will make little noticeable difference in rural America for many years to come.

5G and Rural America

FCC Chairman Ajit Pai recently told the crowd at CES that 5G would be a huge benefit to rural America and would help to close the rural broadband divide. I have to imagine he’s saying this to keep rural legislators on board to support that FCC’s emphasis on promoting 5G. I’ve thought hard about the topic and I have a hard time seeing how 5G will make much difference in rural America – particularly with broadband.

There is more than one use of 5G, and I’ve thought through each one of them. Let me start with 5G cellular service. The major benefits of 5G cellular are that a cell site will be able to handle up to 100,000 simultaneous connection per cell site. 5G also promises slightly faster cellular data speeds. The specification calls for speeds up to 100 Mbps with the normal cellular frequencies – which happens to also have been the specification for 4G, although it was never realized.

I can’t picture a scenario where a rural cell site might need 100,000 simultaneous connections within a circle of a few miles. There aren’t many urban places that need that many connections today other than stadiums and other crowded locations where a lot of people want connectivity at the same time. I’ve heard farm sensors mentioned as a reason for needing 5G, but I don’t buy it. The normal crop sensor might dribble out tiny amounts of data a few times per day. These sensors cost close to $1,000 today, but even if they somehow get reduced to a cost of pennies it’s hard to imagine a situation where any given rural cell site is going to need to more capacity than is available with 4G.

It’s great if rural cell sites get upgraded, but there can’t be many rural cell sites that are overloaded enough to demand 5G. There is also the economics. It’s hard to imagine the cellular carriers being willing to invest in a rural cell site that might support only a few farmers – and it’s hard to think the farmers are willing to pay enough to justify their own cell site

There has also been talk of lower frequencies benefitting rural America, and there is some validity to that. For example, T-Mobile’s 600 MHz frequency travels farther and penetrates obstacles better than higher frequencies. Using this frequency might extend good cellular data coverage as much as an extra mile and might support voice for several additional miles from a cell site. However, low frequencies don’t require 5G to operate. There is nothing stopping these carriers from introducing low frequencies with 4G (and in fact, that’s what they have done in the first-generation cellphones capable of using the lower frequencies). The cellular carriers are loudly claiming that their introduction of new frequencies is the same thing as 5G – it’s not.

5G can also be used to provide faster data using millimeter wave spectrum. The big carriers are all deploying 5G hot spots with millimeter wave technology in dense urban centers. This technology broadcasts super-fast broadband for up to 1,000 feet.  The spectrum is also super-squirrely in that it doesn’t pass through anything, even a pane of glass. Try as I might, I can’t find a profitable application for this technology in suburbs, let alone rural places. If a farmer wants fast broadband in the barnyard I suspect we’re only a few years away from people being able to buy a 5G/WiFi 6 hot spot that could satisfy this purpose without paying a monthly fee to a cellular company.

Finally, 5G can be used to provide gigabit wireless loops from a fiber network. This is the technology trialed by Verizon in a few cities like Sacramento. In that trial, speeds were about 300 Mbps, but there are no reason speeds can’t climb to a gigabit. For this technology to work there has to be a transmitter on fiber within 1,000 feet of a customer. It seems unlikely to me that somebody spending the money to get fiber close to farms would use electronics for the last few hundred feet instead of a fiber drop. The electronics are always going to have problems and require truck rolls, and the electronics will likely have to be replaced at least once per decade. The small telcos and electric coops I know would scoff at the idea of adding another set of electronics into a rural fiber network.

I expect some of the 5G benefits to find uses in larger county seats – but those towns have the same characteristics as suburbia. It’s hard to think that rural America outside of county seats will ever need 5G.

I’m at a total loss of why Chairman Pai and many politicians keep extolling the virtues of rural 5G. I have no doubt that rural cell sites will be updated to 5G over time, but the carriers will be in no hurry to do so. It’s hard to find situations in rural America that demand a 5G solution that can’t be done with 4G – and it’s even harder to justify the cost of 5G upgrades that benefit only a few customers. I can’t find a business case, or even an engineering case for pushing 5G into rural America. I most definitely can’t foresee a 5G application that will solve the rural broadband divide.

 

Is 5G Radiation Safe?

There is a lot of public sentiment against placing small cell sites on residential streets. There is a particular fear of broadcasting higher millimeter wave frequencies near to homes since these frequencies have never been in widespread use before. In the public’s mind, higher frequencies mean a higher danger of health problems related to exposure to radiofrequency emissions. The public’s fears are further stoked when they hear that Switzerland and Belgium are limiting the deployment of millimeter wave radios until there is better proof that they are safe.

The FCC released a report and order on December 4 that is likely to add fuel to the fire. The agency rejected all claims that there is any public danger from radiofrequency emissions and affirmed the existing frequency exposure rules. The FCC said that none of the thousand filings made in the docket provided any scientific evidence that millimeter wave, and other 5G frequencies are dangerous.

The FCC is right in their assertion that there are no definitive scientific studies linking cellular frequencies to cancer or other health issues. However, the FCC misses the point that most of those asking for caution, including scientists, agree with that. The public has several specific fears about the new frequencies being used:

  • First is the overall range of new frequencies. In the recent past, the public was widely exposed to relatively low frequencies from radio and TV stations, to a fairly narrow range of cellular frequencies, and two bands of WiFi. The FCC is in the process of approving dozens of new bands of frequency that will be widely used where people live and work. The fear is not so much about any given frequency being dangerous, but rather a fear that being bombarded by a large range of frequencies will create unforeseen problems.
  • People are also concerned that cellular transmitters are moving from tall towers, which normally have been located away from housing, to small cell sites on poles that are located on residential streets. The fear is that these transmitters are generating a lot of radiation close to the transmitter – which is true. The amount of frequency that strikes a given area decreases rapidly with distance from a transmitter. The anecdote that I’ve seen repeated on social media is of placing a cell site fifteen feet from the bedroom of a child. I have no idea if there is a real small cell site that is the genesis of this claim – but there could be. In dense urban neighborhoods, there are plenty of streets where telephone poles are within a few feet of homes. I admit that I would be leery about having a small cell site directly outside one of my windows.
  • The public worries when they know that there will always be devices that don’t meet the FCC guidelines. As an example, the Chicago Tribune tested eleven smartphones in August and found that a few of them were issuing radiation at twice the FCC maximum-allowable limit. The public understands that vendors play loose with regulatory rules and that the FCC largely ignores such violations.

The public has no particular reason to trust this FCC. The FCC under Chairman Pai has sided with the large carriers on practically every issue in front of the Commission. This is not to say that the FCC didn’t give this docket the full consideration that should be given to all dockets – but the public perception is that this FCC would side with the cellular carriers even if there was a public health danger.

The FCC order is also not particularly helped by citing the buy-in from the Food and Drug Administration on the safety of radiation. That agency has licensed dozens of medicines that later proved to be harmful, so that agency also doesn’t garner a lot of public trust.

The FCC made a few changes with this order. They have mandated a new set of warning signs to be posted around transmitters. It’s doubtful that anybody outside of the industry will understand the meaning of the color-coded warnings. The FCC is also seeking comments on whether exposure standards should be changed for frequencies below 100 kHz and above 6 GHz. The agency is also going to exempt certain kinds of transmitters from FCC testing.

I’ve read extensively on both sides of the issue and it’s impossible to know the full story. For example, a majority of scientists in the field signed a petition to the United Nations warning against using higher frequencies without more testing. But it’s also easy to be persuaded by other scientists who say that higher frequencies don’t even penetrate the skin. I’ve not heard of any studies that look at exposing people to a huge range of different low-power frequencies.

This FCC is in a no-win position. The public properly perceives the agency of being pro-carrier, and anything the FCC says is not going to persuade those worried about radiation risks. I tend to side with the likelihood that the radiation is not a big danger, but I also have to wonder if there will be any impact after expanding by tenfold the range of frequencies we’re exposed to. The fact is that we’re not likely to know until after we’ve all been exposed for a decade.

Spectrum and Weather Forecasting

There is currently a brewing controversy over the allocation of various radio frequencies for 5G that could have a negative impact on weather forecasting. Weather forecasting has become extremely sophisticated and relies on masses of data gathered from weather satellites and other data-gathering devices. The masses of data, along with modern supercomputers and data center computing have significantly improved the ability to predict future weather.

There are numerous bands of spectrum used in weather forecasting. For an in-depth look at the complexity of the spectrum needs, see this guide for spectrum used for meteorology from the World Meteorological Association and the ITU (warning: highly technical document). It goes into depth about the various bands of frequency that are used for various weather gathering purposes.

The current controversy involves the use of spectrum at 23.8 GHz. It turns out this frequency has the characteristic that it is absorbed by water vapor. This makes it valuable for meteorological purposes since it can be used by devices in satellites called sounders to measure the different levels of water vapor in the air. This is one of the most valuable tools in the weather data gathering system, particularly over oceans where there are few other measuring devices.

The sounders work by emitting the 23.8 GHz spectrum and measuring the return signals, working similarly to radar. The process of measuring water vapor is extremely sensitive to interference because the return signals to the sounders are extremely faint. The weather community is worried that even a little bit of interference will kill the utility of this valuable tool.

In May 2019 the FCC raised over $2.7 billion through the auction of spectrum in the 24 GHz and 28 GHz bands, including spectrum sitting directly adjacent to the 23.8 GHz band. Before the auction, the administrator of NASA warned the FCC that leakage from the newly auctioned spectrum could degrade the use of the 23.8 GHz spectrum. NOAA (the National Oceanic and Atmospheric Administration) told Congress the same thing. NOAA said that a 30% degradation in the accuracy of the sounders could worsen the ability to predict where hurricanes will land by two or three days – something that would have a huge negative dollar cost.

It’s a convenient fiction in the wireless world that radios stay within the exact frequency bands they are supposed to use. However, in real life radios often stray out-of-band for various reasons and cause interference in adjacent frequency bands. This happens up and down the radio spectrum, but in this case, scientists say that even a little interference could make it difficult or impossible to read the faint signals that are read by the sounders to measure water vapor.

Both NASA and NOAA have proposed that the FCC lower the chances of interference by lowering the power level and the ‘noise’ that comes from cross-band interference. They asked for a limit of -42 decibel watts of noise for nearby spectrum bands while the FCC is recommending -20 decibel watts. The lower the decibel watts number, the less the interference. The World Radiocommunications Conference has a current recommendation of -33 decibel watts, which is scheduled to lower to -39 decibel watts in 2027.

The carriers that bought the spectrum, through filings made by the CTIA, say that the frequencies would be a lot less valuable to them if they have to lower power to meet the noise levels recommended by NASA and NOAA, and the FCC is siding with the carriers.

This is just the first of many frequency battles we’re going to see as the thirst for more 5G spectrum invades spectrum that has been used for scientific or military purposes. The FCC often tries to mitigate interference by moving existing spectrum users to some different frequency band in order to accommodate the best use of spectrum. However, in this case, the weather satellites must use 23.8 GHz because that’s where nature has set the interference with water vapor.

It’s hard not to side with the weather scientists. Everybody, including the carriers, will suffer great harm if the ability to predict hurricanes is degraded. When it comes to something as vital as being able to predict hurricanes, we need to use common sense and caution rather than give the 5G companies every possible slice of available spectrum. It’s not hard to predict that the carriers will fight hard to keep this spectrum even if there is too much interference. Unfortunately, the current FCC is granting the carriers everything on their wish list – expect more of this in 2020.

The Government’s Role in 5G

It’s been really interesting to watch how much the federal government talks about 5G technology. I’ve not seen anything else like this in my adult lifetime, although there may have been times in the past, such as the advent of railroads or electricity that the federal government took such an active interest in new technology.

The government gets involved to some extent in many new technologies, but with 5G there has been a steady and persistent dialog about how 5G is vital to our economic future, and pronouncements of why we must implement 5G as quickly as possible to stay ahead of the rest of the world. As I’ve watched the way the government talks about 5G, it makes me wonder why we never heard the same urgency for breakthroughs like personal computers, the world wide web, or understanding the human genome.

A good example of what I’m talking about came in November when a bipartisan group of senators sent a letter to Robert O’Brien, the current national security advisor asking for a better government strategy for 5G. They claimed they are concerned that China is winning the 5G war, which they believe creates a security threat for the US.

I’ve been hearing about the 5G war for a few years now and I still don’t know what it means. 5G is ultimately a broadband technology. I can’t figure out how the US is harmed if China gets better broadband. If there is now a 5G war, then why hasn’t there been a fiber-to-the-home war? I saw recently where China passed us in the number of last-mile fiber connections, and there wasn’t a peep about it out of Congress.

The market reality of 5G looks a lot different than the rhetoric from the politicians. Cellular carriers worldwide are crowing about 5G deployment, yet those deployments contain none of the key technology that defines 5G performance. There is no frequency slicing. There is no bonding together of multiple frequencies to create larger data pipes. There is no massive expansion of the number of connections that can be made at a website. Cellphones can’t yet connect to multiple cell sites. What we have instead, for now, are new frequencies layered on top of 4G LTE.

New frequency does not equal 5G. The millimeter wave spectrum is faster in the handful of neighborhoods where people can go outside in the winter to use it. The carriers admit that the 600 MHz and the850 MHz spectrum being deployed won’t result in faster speeds than 4G LTE.

AT&T recently announced a significant cut in its capital budget for 2020 – something that is hard to imagine if there is an urgent need to deploy 5G faster than the Chinese. The reality is that the big cellular companies are struggling to find a business case for 5G. They are starting to realize that a lot of people aren’t willing to pay more for faster cellular data. Some of their other big uses for 5G such as using it for self-driving cars, or for supplanting WiFi as the technology to handle IoT devices are still years into the future and may never come to fruition.

The other Washington DC talking point is that 5G networks will be 100 times faster than today’s cellular data. That may be true in the tiny downtown urban areas that get saturated with outdoor millimeter wave broadband. I have a hard time thinking this is anything more than a gimmick that will never become widespread. A dense fiber network is needed to support the millimeter wave transmitters, and it’s hard to think that the revenues from millimeter wave broadband will ever justify building the needed network.

It’s starting to look like the real reason for the talk about a 5G war is to drum up sympathy for the big cellular carriers as a justification for big government giveaways. The FCC has been generous to the cellular carriers in the last few years. They killed broadband regulation and net neutrality. They gave the cellphone carriers the right to place cellular equipment anywhere in the public right-of-way. Just recently the FCC created a 5G Fund to give $9 billion to the cellular carriers to expand their networks in rural areas. The FCC has been freeing up every imaginable band of spectrum for 5G.

That sounds like that ought to be enough, but since these giveaways are behind us, I wonder why I’m still hearing the rhetoric, such as the recent letter from Senators. Are we going to be seeing other big giveaways? Is the government perhaps going to give billions of dollars to build urban and suburban 5G networks so that we don’t lose the 5G war? I’m at a loss to think of anything else that the government could do to push 5G beyond what they’ve already done.

There doesn’t seem to be anything that the US government can do in terms of developing 5G technology faster. Corporations all over the world are furiously working to implement the many new aspects of the 5G specifications. Many of the corporations doing the key research are not even American, and labs at Nokia and several Chinese companies are among the leaders in developing the core equipment used to transmit 5G. It’s hard to think there is anything the US government could do to help us win the 5G war from a technical perspective.

I must admit that I’m starting to cringe when I hear federal officials talk about the 5G war. It makes me believe that there more big handouts coming to the cellular carriers. I hate the idea of the federal government handing billions to these big carriers while we continue to have lousy rural broadband – which is largely the fault of these same big carriers. My response to these Senators is that we shouldn’t be trying to win the 5G war if that means losing the landline broadband war.

AT&T Cutting Capital Spending

AT&T announced it will be reducing capital spending in 2020. That news is significant for several reasons. AT&T’s capital plans are always big news because they have the largest annual capital budget of the big telcos and cable companies. The AT&T capital budget for 2019 was $23 billion. It’s big news when they are only planning on spending $20 billion in 2020.

It’s worth noting that some of AT&T’s capital spending is not being done with their own money. In 2020 they will be receiving the final installment of $428 million for the sixth year of the CAF II program. AT&T recently announced that they are 75% finished the construction of the FirstNet network for first responders, so the company should be receiving the last 25% of the $6.5 billion of federal funding next year. In future years AT&T will likely be collecting some significant share of the recently announced $9 billion 5G Fund paid out of the Universal Service Fund to bring better cellular service for the most rural parts of the country.

There are ripples throughout the telecom sector when AT&T increases or decreases its capital budget. For example, a significant slash of AT&T spending has a significant impact on the various major electronics vendors that will now have to lower their revenue expectations for 2020. While the whole telecom sector is busy, this still means lower revenues for the major telecom vendors.

This reduction in AT&T spending makes me wonder about the 5G war we are supposedly having with China. If you listen to the carrier-driven rhetoric in Washington DC, you would think that there is an urgent need to spend huge amounts of capital immediately on 5G infrastructure. It was that rhetoric that gave the FCC cover to double the size of the recently announced 5G Fund to $9 billion.

It’s hard to imagine that AT&T would be cutting its capital budget if 5G implementation was truly a national priority and a crisis. The truth about 5G can be seen by how the cellular carrier CEOs communicate with their stockholders – the big carriers are struggling right now to find an immediate business case that justifies huge spending on 5G. It turns out that much of the public isn’t willing to pay more for faster cellular broadband. Every carrier has a list of future benefits from 5G, but there are no applications that will create the quick revenues that would prompt AT&T to keep spending capital at historic levels.

This is not to say that AT&T and the other wireless carriers aren’t spending money on 5G – but AT&T is fitting 5G expansion into its shrinking capital budget. Contrary to everything that the carriers have been telling Washington DC, the carriers are not planning on spending massive amounts of their own money on 5G just yet.

Lower capital spending by AT&T also takes the wind out of the sails of the FCC’s argument that net neutrality was holding back the big ISPs from making capital expenditures. This was the primary reason cited by FCC Chairman Ajit Pai for killing net neutrality and Title II regulation. He argued that overregulation was stopping the big carriers from investing, and he’s still making this same argument today to justify his decision. If Chairman Pai was right, we should be seeing AT&T increase capital spending rather than cutting it.

The idea that there is a direct correlation between capital spending and regulation was always fictional. Big ISPs spend money on capital that they think will increase future returns – it’s hard to imagine regulations that would stop the big companies from pursuing good business ideas. AT&T’s capital spending is much more related to what its competitors like Verizon, T-Mobile, and Comcast are doing. When the FCC killed Title II regulation and net neutrality, the agency was removing the last regulations major from a broadband industry that was already barely regulated. It’s hard to think that change had much impact in the Board room or the business development groups at the big ISPs.

It’s worth noting that AT&T has now joined many other big US corporations and is using free cash to buy back its own stock. The company already announced plans to buy back $4 billion of its own stock in the first quarter of 2020 – retiring roughly 100 million shares. I’m sure that decision had some impact on the capital budget. This might mean that AT&T upper management values stock buy-backs to increase earnings per share more than they value capital spending.