FCC Urban Rate Survey

The FCC collects retail prices annually from urban carriers for landline telephone and broadband services. These prices are used to determine benchmark rates for rural areas for incumbent local exchange rate-of-return carriers, incumbent price-cap carriers receiving CAF Phase II support, recipients of the Rural Broadband Experimental grants, and winners of the recent Connect America Fund Phase II Auction.

I find it ironic that the FCC says they no longer regulate broadband, yet they still define maximum broadband rates allowed for various classes of carriers. The fact is that there are still numerous ways that the FCC is regulating broadband and since many of these mandates come from Congress the FCC will never be able to back out of broadband regulations entirely.

The FCC publishes spreadsheets summarizing of the rates they collected. The benchmark rate for voice defines the highest and lowest rates that are allowable by the affected carriers. Starting in 2019 the lowest rate that can be charged for residential voice is $26.98 and the highest is $51.61.

The following table is for the residential broadband rates listed by AT&T in North Carolina, where I live. The rates listed are non-discounted rates and many customers pay less due to bunding or to negotiating a lower rate. It is striking to me that AT&T charges $70 per month for a 10/1 Mbps connection on DSL and also for a 100/100 Mbps connection on fiber. This is one of the issues that has rural customers up in arms – they pay high prices for less performance, particularly considering that they often only receive a fraction of the published speeds shown in the table. It’s also worth noting that AT&T has a monthly data cap on every product other than their symmetrical gigabit product.

Download Upload Data Cap
Mbps Mbps GB Price Technology
3 0.384 150 $56 DSL
5 1 1000 $60 DSL
5 5 1000 $60 FTTP
6 0.512 150 $61 DSL
10 1 1000 $70 DSL
18 1.5 1000 $70 DSL
25 25 1000 $70 DSL
25 5 1000 $70 FTTP
25 25 1000 $60 FTTP
50 50 1000 $70 DSL
50 10 1000 $70 DSL
50 50 1000 $70 FTTP
75 20 1000 $70 DSL
100 20 1000 $70 DSL
100 100 1000 $70 FTTP
300 300 1000 $90 FTTP
1000 1000 unlimited $100 FTTP

The benchmarks for broadband are extremely high and it’s doubtful that many carriers are even trying to charge the rates shown in the table below. There are separate rate caps calculated for Alaska and the rest of the US.

Download Bandwidth (Mbps) Upload Bandwidth (Mbps) Capacity Allowance (GB) 2019 U.S.

($)

2019 AK

 ($)

4 1 200 66.12 113.19
4 1 Unlimited 70.76 119.06
10 1 200 72.31 121.54
10 1 Unlimited 77.30 127.75
25 3 200 77.65 129.52
25 3 Unlimited 82.66 135.75
25 5 200 78.49 129.78
25 5 Unlimited 83.50 136.01
50 5 Unlimited 100.85 153.64
100 10 Unlimited 106.23 161.16
250 25 Unlimited 128.69 203.67
500 50 Unlimited 148.35 223.87
1000 100 Unlimited 162.33 232.38

This is one of the exercises that the FCC must go through that seems largely meaningless. They set a really high rate cap for those that participate in various FCC subsidy programs – but realistically it’s unlikely that many carriers would want to charge more than $100.85 for a 50/5 Mbps connection – but if they did, customers have a legal recourse. What’s more valuable from this exercise is seeing the list prices of the larger urban ISPs – something that’s getting harder to find on line.

AT&T is Not Launching Mobile 5G

AT&T recently took the next step in the 5G hype race by announcing that it is releasing the first mobile 5G device. The announcement was made at end of the year to cover past AT&T announcements that the company would launch mobile 5G in 2018. The company can now say that they beat Verizon and Sprint to the market.

The AT&T announcement is referring to the device they are calling a puck. It’s a small Netgear modem that is being touted as a 5G mobile hotspot. The puck is based upon at least a few aspects of the 3GPP NR standard, allowing AT&T to claim it’s 5G. AT&T has not been fully forthcoming about how the device works. Where available the device will supposedly grab bandwidth from AT&T’s 5G cellular network – but since the 5G network is mostly still imaginary, in most places it will grab signal from the existing 4G LTE network. Within a home the puck will transmit WiFi, just like any other WiFi router.

There is no real product here. For at least three months AT&T will be giving away the puck and service for free to selected users. After that they’ve said the pricing will be $499 for the puck plus $70 monthly for bandwidth with an incredibly stingy 15 GB data cap. My prediction is that this product never makes it to market because it’s hard to envision anybody in an urban area willing to pay $70 a month such a small amount of WiFi bandwidth. The only market for the puck is possibly a few early adapters with money to burn who want to be able to say they owned the first 5G devices.

This announcement sets a new low for 5G hype. What I found most disturbing is that dozens of news sites picked up the story and basically spit back the AT&T press release and called it news. Those dozens of articles give the public the impression that 5G mobile is right around the corner, which is exactly what AT&T intended – they want the public to equate 5G and the AT&T brand name together. To be fair, there are several industry articles that didn’t buy into the AT&T hype.

The AT&T announcement also made this sound like a breakthrough technology by implying that this will deliver faster cellular speeds. There is a lot needed before there is a faster 5G cellular network. First, AT&T would need to install 5G transmitters on residential streets, requiring them to build neighborhood fiber networks. For the puck to work with millimeter wave spectrum AT&T would need to put a small antenna on the outside of a home to receive the signal since millimeter wave bandwidth won’t pass through the walls of a home. A network that will deliver residential millimeter wave cellular bandwidth is nearly identical to a network that would deliver 5G fixed broadband.

AT&T is not taking any of those needed steps. In fact, AT&T’s CTO Andre Fuetsch spent the fall repeatedly taking potshots at Verizon’s 5G deployment, saying that Verizon is making a mistake chasing the ‘fixed’ 5G market.

To further deflate this announcement, AT&T’s CFO John Stephens recently told AT&T investors to not expect any 5G revenues in 2019. He admitted it will take many years until there are enough 5G phones in the market to make a noticeable difference in revenues. It seems the only cellular carrier being truthful about 5G is T-Mobile which says it will begin introducing some 5G characteristics into their cell sites starting in 2020.

The bottom line is that AT&T just announced the release of a WiFi router that works off their 4G LTE network, but which supposedly will incorporate at least some aspects of the 3GPP NR standard. The company isn’t planning to charge for the product and it’s hard to envision anybody buying hotspot bandwidth at the prices they announced. But AT&T got what they wanted, which was dozens of news articles declaring that AT&T was the first to market with mobile 5G. I bet a decade from now that’s exactly what the Wikipedia article on 5G will say – and that’s all AT&T was really shooting for.

The FCC Looks at 911

The FCC recently released its tenth annual report to Congress reporting on the collection and distribution of 911 fees nationwide. The report includes a number of interesting statistics, a few which will be listed below.

But first I’d like to look backwards a bit because we now take 911 for granted, but it hasn’t always been so. 911 has been implemented during my adult lifetime. The idea for having an emergency phone number was first introduced in 1967 by Lyndon Johnson’s Commission on Law Enforcement. AT&T selected the 9-1-1 digits the following year. An independent telco, the Alabama Telephone Company leaped on the concept and introduced 911 in Haleyville, Alabama in 1968 – but it then took decades for the implementation nationwide since this was deemed a local issue to be implemented by local governments. I recall the introduction of 911 in the DC suburbs in the mid-70s, accompanied by a flurry of radio, newspaper and TV ads to inform the public of the new safety service. There were major metropolitan areas like the Chicago suburbs that didn’t get 911 until the early 1980s.

911 service has been enhanced over the years. For example, by 2015 96% of homes in the US were covered by E-911 (enhanced) where the 911 operator knows the caller’s location according to the phone number for landlines or by using triangulation of cell sites for mobile phones. Currently 911 systems are upgrading to NG911 (next generation) that ties 911 systems into broadband to be able to relay text messages, photos and videos as part of the 911 process.

Some of the interesting statistics from the FCC report:

  • In 2017 almost $3 billion was collected in 911 fees to fund local 911 efforts. The total cost to provide 911 was reported at $4.8 billion, with 911 services in many states also funded partially by tax revenues.
  • States collect 911 fees in different ways. This includes flat rates per telephone or cellular lines, percentage of telecommunications bills, and flat rate per subscriber. Fees vary widely and range from $0.20 per residential landline in Arizona to $3.34 in West Virginia per cell phone. There are states that charge eve more for business landlines.
  • Most states use the 911 fees to fund the 911 service, but six states – Montana, New Jersey, New York, Rhode Island and West Virginia use some of their 911 fee to fund non-safety purposes or even just to go into the general funds of the state. In total $284 million was diverted from collected 911 fees.
  • Thirty-five states, Puerto Rico and the District of Columbia have begun the process of upgrading to NG911.
  • Sixteen states have deployed statewide Emergency Services IP Networks (ESInets) for exclusive use of public safety agencies.
  • Thirty states, Guam, Puerto Rico and the US Virgin Islands have not taken any steps for cybersecurity for 911 centers (PSAPs).
  • There are 5,232 PSAPs in the country. These range from tiny centers in sheriff stations in rural counties to massive 911 centers in major metropolitan areas. For example, Washington DC has one PSAP while there are 586 in Texas.
  • 1,381 PSAPs now had the ability to communicate with the public by text message. Another 1,103 PSAPs will be implementing that capability in 2018.
  • There were over 39,000 operators employed to take 911 calls in 2017.
  • Only 44 states reported 911 call volumes and in those states there were over 211 million calls to 911. Over 70% of calls now come from cellular phones.

I know it’s easy to hate regulation, but without it we wouldn’t have a 911 system that works so well. People in most of the country feel a lot safer knowing they can dial 911 and get help when needed.

AT&T Phasing out Lifeline?

A lot of homes still rely on the FCC’s Lifeline program to get a discount on their telecom bills. The program is funded through the Universal Service Fund and administered through USAC. The lifeline program provides a $9.25 discount per household that can be applied to landline telephone, cellular telephone or landline data – assuming customers use a provider that participates in the Lifeline program.

AT&T still touts that they participate in the Lifeline program, but numerous customers around the country received notifications this year notifying them that they were no longer eligible for the Lifeline program. This particular notification was from a customer in Houston, Texas. If you visit the USAC website and look for Lifeline providers in Houston, AT&T is the only company that is listed for landline service. There are numerous cellular providers listed in Houston, but AT&T is not among them.

People might wonder why landline Lifeline is still important. Landline penetration rates are reported each year by the Center for Disease Control. (CDC). They track landline and cellular penetration rates through a huge annual survey that studies the topic to understand how the medical community can communicate best with the public during a medical emergency. They reported last year that the nationwide landline penetration rate was at 45% of households – a number far greater than many people would guess.

I hadn’t looked at residential phone rates in a while and just looked at AT&T’s residential rates. In case you haven’t looked at landline rates, they are not cheap. AT&T has three packages: Complete Choice comes with Caller ID and 9 other features (not including Voice Mail) for $40 per month. Complete Choice Basic is a basic line plus Caller ID and Call Waiting for $36. A basic phone line with no features is $28 per month. None of these prices include taxes and fees that add at least another $10 per month. None of these packages includes long distance. AT&T offers lower rates for those that bundle telephone with Internet or cable TV (although they are actively knocking people off their TV product).

In Texas, AT&T mitigated the Lifeline discontinuation notices somewhat by offering discounts of between $8 and $12 per month for qualifying customers who will sign a term contract, and who know to ask for the discount. But since this wasn’t widely advertised there is a good chance that few people asked for the discount. Discount plans like this also come and go and there is no guarantee of this discount surviving into the future.

I can’t see that there are any penalties for AT&T no longer offering Lifeline. There was a time when the big telcos had to participate in the program, but as state Commissions have deregulated telephone service any such requirement probably no longer applies.

What’s shameful about this is that I am sure that any AT&T executive will say that the company supports the Lifeline program. It certainly says so on their website. Both the AT&T and the USAC website imply that customers in Texas can still enroll in Lifeline, but numerous reports on complaint sites show this not to be the case. Perhaps a really persistent customer can still fight through the customer service gauntlet to get the Lifeline discount, but many customers report they’ve lost the discount.

What’s also disturbing about this is that AT&T doesn’t even have to go through the process of qualifying customers for Lifeline eligibility. In Texas customers must certify eligibility by going through the Public Utility Commission. The big telcos complained in the past that certifying customers was expensive and exposed them to liability if they granted eligibility to unqualified households. But Texas and a number of other states took over the certification process, meaning the telcos have little cost or liability for participating in the program, since USAC reimburses them for discount granted to customers. Why would a big telco stop giving the discounts when it costs them so little?

AT&T and Connected Vehicles

AT&T just released a blog talking about their connected vehicle product. This blog paints a picture of where AT&T is at today and where they hope to be headed into the future in this market niche.

For a company like AT&T, the only reason to be excited about a new market niche is the creation of a new revenue stream. AT&T claims to have 24 million connected cars on its network as of the end of 3Q 2018. They also claim 3 million additional connected fleet vehicles. They also have over 1 million customers who are buying mobile WiFi hotspots from AT&T.

What does that look like as a revenue stream? AT&T has relationships with 29 global car manufacturers. Most new cars today come with some kind of connectivity plan that’s free to a car buyer for a short time, usually 3 to 6 months. When the free trial is over consumers must subscribe in order to retain the connectivity service.

As an example of how this works, all new Buicks and Fiats come with AT&T’s UConnect Access for a 6-month free trial period. This service provides unlimited broadband to the vehicle for streaming video or for feeding the on-board mapping system. After the trial customers must subscribe to the service at a monthly rate of $14.99 per month – or they can buy a la carte for connectivity at $9.99 per day or $34.99 per month.

In the blog AT&T touts a relationship with Subaru. The company provides a trial subscription to Starlink that provides on-board navigation on a screen plus safety features like the ability to call for roadside assistance or to locate a stolen vehicle. Subaru offers different plans for different vehicles that range from a Starlink trial of between 4-months and 3-years. Once the trial is over the cost of extending Starlink is $49 for the first year and then $99 per year to extend just the security package or $149 per year to extend the whole service. Starlink is not part of AT&T, so only some portion of this revenue goes to the carrier.

I wonder how many people extend these free trials and become paying customers? I have to think that the majority of the AT&T connected vehicles are under the Starlink relationship which has been around for many years. Families that drive a lot and watch a lot of video in a vehicle might find the UConnect Access to be a much better alternative than using cellular data plans. People who want the feature of locating their car if stolen might like the Starlink. However, most drivers probably don’t see a value in these plans. Most of the features offered in these packages are available as part of everybody’s cellular data plans using the Bluetooth connectivity in these vehicles.

The vehicle fleet business, however, is intriguing. Companies can use this connectivity to keep drivers connected to the home office and core software systems. This can also be done with cellphones, but I can think of several benefits to building this directly into the vehicle.

The second half of their blog discusses the possibility for 5G and automated cars. That’s the future revenue stream the company is banking on, and probably one of their biggest hopes for 5G. They have two hopes for 5G vehicle connectivity:

  • They hope to provide the connectivity between vehicles using 5G and the cloud. They believe that cars will be connected to the 5G network in order to ‘learn’ from other vehicle’s driving experience in the immediate vicinity.
  • They also hope to eventually provide broadband to driverless cars where passengers will be interested in being connected while traveling.

The first application of connecting nearby vehicles is no guarantee. It all depends on the technology path chosen to power driverless vehicles. There is one school of thought that says that the majority of the brains and decision making will be done by on-board computers, and if cars connect to nearby vehicles it will be through the use of on-board wireless communication. AT&T is hoping for the alternate approach where that connectivity is done in the cloud – but that’s going to require a massive investment in small cell sites everywhere. If the cloud solution is not the preferred technology then companies like AT&T will have no incentive to place 5G cell sites along the millions of miles of roads.

This is one of those chicken and egg situations. I liken it to smart city technology. A decade ago many predicted that cities would need mountains of fiber to support smart cities – but today most such applications are being done wirelessly. Any company banking on a fiber-based solution got left behind. At this point, nobody can predict the technology that will ultimately be used by smart cars. However, since the 5G technology needs the deployment of a massive ubiquitous cellular network, the simpler solution is to do it some other way.

Where Will 5G Find Fiber?

I was talking to one of my clients about 5G. This particular client is a fiber-overbuilder and they verified something I’ve suspected – they don’t plan to ever make any of their fiber available for a 5G provider wanting to deploy 5G small cell sites. They reason that 5G point-to-point radios, like Verizon is now launching, would compete directly with their retail broadband products and they can’t think of a scenario where they would assist a competitor to poach their own retail customers.

This is a break with the past because this client today provides fiber to a number of the big cellular towers and hopes to continue those sales. These are good revenue and help to offset the cost of building fiber to the towers. This leads me to ask the title question of this blog – where are the 5G providers going to find the needed fiber? A lot of the rosy predictions I’ve read for widespread 5G deployment assume that 5G providers will be able to take advantage of the fiber that’s already been deployed by others, and I’m not so sure that’s true.

I have no doubt that big backhaul fiber providers like Level 3 or Zayo will sell 5G connectivity where they have the capacity. However, much of their fiber network is not strategically located for 5G. First, 5G networks are going to need to get to numerous poles, and that requires fiber with existing access point. Much of the fiber built by companies like Level 3 was built to get to specific buildings or big cellular towers that anticipate the need for other access points. These fiber companies are also leery about tapping into fibers feed their largest customers, who often pay extra for guaranteed service. A lot of their fiber is underground and not easy to get to the needed pole connections.

Of more relevance is that these carriers are not going to own a lot of fiber that goes deep into neighborhoods where the 5G providers want to deploy. Most of the fiber built deep into residential neighborhoods has been built by fiber-to-the-premise overbuilders or cable companies. These companies use their fiber to sell retail broadband to residents and businesses. Fiber overbuilders, from Google Fiber down to the smallest municipal fiber network are not likely to sell fiber to the pole in neighborhoods where they are already a retail ISP.

The cable companies are not going to make their fiber available for 5G – they’ve made it clear that their future path lies in the DOCSIS 3.1 upgrades, including upgrading beyond gigabit speeds as needed. All of the major cable companies have said that have the ultimate end-game of fiber-to-the-premise. They’ve all cited 5G as one of the reasons they are increasing speeds and are not likely to sell access to a major competitor.

AT&T is the only other carriers with an extensive fiber network that goes deep into many neighborhoods. However, AT&T has been building FTTP connections in neighborhoods where they have fiber. For now, they don’t intend to mimic Verizon and are going to stick with FTTP rather than 5G. It would be tactically smart for AT&T to refuse to sell 5G connections to others. But AT&T is the hardest company in the industry to predict because they wear so many hats, and their retail fiber ISP business is in a different business silo than their wholesale fiber connection business – so who knows what they will do.

I don’t see a glut of existing fiber sitting waiting to sell to 5G providers. That seems to be the major hurdle for the rapid 5G deployment that the FCC, the White House and the cellular carriers have all been loudly touting. How many 5G companies are going to want to make the gigantic needed investment in fiber to get deep into neighborhoods?

I think the folks in Washington DC have gotten a false sense of the potential for 5G by seeing what Verizon is doing. But Verizon is taking advantage of the many billions of dollars of fiber they have already built over the years, and their 5G network is going to follow that fiber footprint. There are not many other companies with a glut of fiber that can be leveraged it in the same manner as Verizon.

Verizon has already announced that they will be passing roughly 11 million homes with fiber. They can be that specific because they know what’s close to their existing fiber. I doubt that they are going to expand anywhere else, just like they didn’t expand FiOS where the construction costs weren’t low. If Verizon can’t afford to deploy 5G where they don’t already have fiber, then how can anybody else justify it? Deploying 5G is like deploying any new network – it is only going to make financial sense where deployment costs are reasonable – and for now that means where there is already easy access to fiber. I think the opportunities for rapid 5G deployment are a lot less than what policy-makers think.

Disasters and Regulation

Both Ajit Pai, the Chairman of the FCC and Governor Rick Scott of Florida have expressed frustration over the speed of recovery of communication in the Florida Panhandle following hurricane Michael. I don’t think anybody expects communications to be restored quickly in the neighborhood by the shore where even the houses are gone, and the frustration is more with lack of communications in areas that were damaged, but not totally devastated.

There are a number of issues to be considered when looking at the slow recovery – regulation, technology and the profitability of the telecom carriers.

The regulatory issues are pretty clear. Back when AT&T or some smaller independent telephone company would have served this area we would have seen the same sort of response from the telephone companies as we see today from the power companies. AT&T and other telcos from around the country would have mobilized swarms of technicians to replace fallen wires. The electronics vendors would have gone to extraordinary lengths to shuffle and direct all of their resources to the disaster areas.

We had plenty of hurricanes during the time when we had telephone monopolies and the telephone linemen were out working as furiously as the power companies to restore service. I remember from the time when I worked at Southwestern Bell that the company had disaster plans in place and routinely reviewed the plans with employees who might be activated during emergencies – the company made disaster a recovery an everyday part of operating the monopoly business.

But the days of monopoly are long past. The phone company is now far from a monopoly and probably only serves a small percentage of the customers in any given area. The big telcos have had huge layoffs over the years and don’t have the staffs that can swarm the area. I wouldn’t be surprised if they don’t even have disaster plans.

Cable companies are the closest thing we have to monopolies and I expect them to put wires back in a reasonable time after a bad storm – but there are many parts of the hurricane-struck area that aren’t served by a cable company. A cable company is still not likely to get the same swarm of technicians like we saw in the regulated telco days.

As we saw with hurricane Sandy, the telcos no longer rushes to fix the damage. After that storm Verizon decided that they weren’t going to fix the copper and used the storm as an opportunity to switch customers to all-wireless cellular broadband. That’s not a change that can be implemented quickly and we saw some of the areas after Sandy without telecom for months. I expect AT&T is going through the same thought process for much of the area from hurricane Michael and is not going to put back copper wires.

There are also technical issues to consider. I’m willing to bet that the primary cause of frustration is the slow recovery of the cellular towers. Unlike the telephone network there is little redundancy built into the cellular networks. When the towers, antennae and equipment huts around a tower are damaged there is no quick fix, and replacements need to be shipped in. Unlike the major coordinated disaster plans of the old Ma Bell, I doubt that the cellular carriers have react-immediately disaster recovery plans. That kind of planning costs money. The companies would need to hold dozens of cell sites in place as spares that were ready to be shipped out on a moment’s notice. That’s not profitable and there is no regulatory agency insisting that the cellular companies have such plans in place.

As the technology at the edge increases, the time needed for recover from a disaster increases. I remember that this was a concern for telcos when they first placed DSL cabinets in neighborhoods – they knew it would take a lot longer to recover from destroyed electronics compared to the days when the outside network was most just copper wires. The cellular networks are the same, and we are about to enter a time when 5G and other new technologies will place electronics deep into neighborhoods. As slow as the recovery might be for hurricane Michael, it’s going to be worse when we are relying on dispersed 5G electronics deep in the field – it takes longer to fix the electronics and the backhaul networks than it is to put wires back on poles.

The issue that nobody wants to talk about is that all of the big companies in the telecom market are now publicly traded companies that exist to maximize quarterly earnings. Having disaster plans in place costs money – and the big companies these days don’t spend anything extra that’s not mandatory. Call it lack of regulation or call it an emphasis on the profit motive, but the big ISPs and cellular companies have no motivation or incentive to make extraordinary efforts after a disaster. I doubt that the existing regulatory powers even give the FCC any authority to impose such rules – particular with broadband, since the FCC says they are no longer regulating it.

False Advertising for 5G

As has been expected, the wireless carriers are now actively marketing 5G cellular even though there are no actual 5G deployments. The marketing folks are always far in front of the engineers and are proclaiming 5G today much in the same way that they proclaimed 4G long before it was available.

The perfect case in point is AT&T. The company announced the launch of what they are calling 5G Evolution in 239 markets. They are also claiming they will be launching what they are calling standards-based 5G in at least 19 cities in early 2019.

The 5G Evolution product doesn’t contain any part of the new 5G standards. Instead, 5G Evolution is AT&T’s deployment of 4G LTE-Advanced technology, which can be characterized as their first fully-compliant 4G product. This is a significant upgrade that they should be proud of, but I guess their marketing folks would rather call this an evolutionary step towards 5G rather than admit that they are finally bringing mature 4G to the market – a claim they’ve already been making for many years.

What I find most annoying about AT&T’s announcement is the claim that 5G Evolution will “enable peak theoretical wireless speeds for capable devices of at least 400 megabits per second”, although their footnote goes on to say that “actual speeds are lower and will vary”. The 4G standard has been theoretically capable of speeds of at least 300 Mbps in a lab setting since the standard was first announced – but that theoretical speed has no relevance to today’s 4G network that generally delivers an average 4G speed of less than 15 Mbps.

This is like having a fiber-to-the-home provider advertise that their product is capable of speeds of 159 terabits per second, although actual speeds might be something less (that’s the current fastest speed achieved on fiber by scientists at the NICT Network System Research Institute in Japan). The intent of the statement on the AT&T website is clearly aimed at making people think they will soon be getting blazingly fast cellular data – which is not true. This is the kind of false advertising that is overstating the case for 5G (and in this case for 4G) that is confusing the public, politicians and regulators. You can’t really blame policy-makers for thinking that wireless will soon be the only technology we will need when the biggest wireless provider shamelessly claims speeds far in excess of what they will be ever be deploying.

AT&T’s second claim of launching standards-based mobile 5G in 19 markets is a little closer to the truth, but is still not 5G cellular. That service is going to deploy millimeter spectrum hotspots (a technology that is being referred to as Mi-Fi) in selected locations in 19 cities including Las Vegas, Los Angeles, Nashville, Orlando, etc.

These will be true hotspots, similar to what we see in Starbucks, meaning that users will have to be in the immediate vicinity of a hotspot to get the faster service. Millimeter wave hotspots have an even shorter propagation distance than normal WiFi hotspots and the signal will travel for a few hundred feet, at best. The hotspot data won’t roam and will only work for a user while they stay in range of a given hot spot.

AT&T hasn’t said where this will be deployed, but I have to imagine it will be in places like big business hotels, convention centers and indoor sports arenas. The deployment serves several purposes for AT&T. In those busy locations it will provide an alternate source of broadband for AT&T customers who have a phone capable of receiving the Mi-Fi signal. This will relieve the pressure on normal cellular data locally, while also providing a wow factor for AT&T customers that get the faster broadband.

However, again, AT&T’s advertising is deceptive. Their press releases make it sound like the general public in these cities will soon have much faster cellular data, and they will not. Those with the right phone that find themselves in one of the selected venues will see the faster speeds, but this technology will not be deployed to the wider market in these cities. Millimeter wave hotspots are an indoor technology and not of much practical use outside. The travel distances are so short that a millimeter wave hot spot loses a significant percentage of its strength in the short distance from a pole to the ground.

I can’t really blame the marketing folks at AT&T for touting imaginary 5G. It’s what’s hot in the marketplace today and what the public has been primed to expect. But just like the false hype when 4G was first introduced, cellular customers are not on the verge of seeing blazingly fast cellphone service in the places they live and work. This advertising seems to be intended to boost the AT&T brand, but it also might be defensive since other cellular carriers are making similar claims.

Unfortunately, this kind of false advertising plants the notion for politicians and policy-makers that cellular broadband will soon be all we will need. That’s an interesting corporate tactic to take by AT&T which is also building more fiber-to-the-premise right now than anybody else. These false claims seems to be most strongly competing with their own fiber broadband. But as I’ve always said, AT&T wears many hats and I imagine that their own fiber folks are as annoyed by this false advertising as the rest of us in the industry.

Broadband Redlining

The National Digital Inclusion Alliance (NDIA) recently asked the FCC to investigate the practice of digital redlining, where big ISPs only bring the best technology to more affluent neighborhoods while ignoring poor ones.

The NDIA has statistics to back up it’s claims. They used the FCC’s data in 2017 to look in detail at how AT&T had deployed DSL in Cleveland. Years ago, AT&T deployed the first generation of DSL almost everywhere in the market. However, the company became far more selective in where they upgraded to faster DSL.

NDIA mapped where AT&T had deployed VDSL and later DSL technologies in Cleveland and found that the company had deployed faster DSL mostly in affluent neighborhoods and in the suburbs while leaving older downtown neighborhoods with the older DSL. VDSL offers speeds of at least 18 Mbps, up to nearly 50 Mbps when deployed using two copper pairs. NDIA found that the 55% of the census blocks in downtown Cleveland still had DSL speeds of 6 Mbps or less while 22% had speeds below 3 Mbps, with some as slow as 768 Kbps. It’s likely that AT&T marketed all versions of DSL the same, advertising ‘up-to’ speeds that described the fastest product in the market.

The AT&T deployment in Cleveland is not an isolated incident and the same is true in communities across the country. It’s not just AT&T that’s done this and Verizon deployed its fiber FiOS product in a similar manner and largely ignored northeast downtowns in favor of serving suburbs. We also tend to think of cable company networks being deployed ubiquitously in cities, but there are pockets in every major city that don’t have cable broadband.

In the industry this practice is generally referred as cherry-picking. It means deploying a new network in the places where the costs are lower or the expected penetration rates are higher – and ignoring the parts of a market that don’t fit a desired financial profile.

Historically the big telcos weren’t allowed to cherry-pick or redline. AT&T was still largely a regulated company when the first DSL was deployed. But the trend over time to deregulate telephone providers has led to laxer regulation, and obviously in Ohio and many other states the telcos were not required to build later generations of DSL everywhere.

One of the reasons we see so much cherry-picking is that many states have adopted statewide cable franchising. Cable franchises were historically negotiated in each community, and cities insisted that a cable provider build to the whole community as a condition for getting a franchise. However, AT&T and other broadband companies lobbied hard for statewide franchising rules, using the storyline that they wanted to deploy fast DSL to bring cable service. The statewide franchises generally give a cable provide the ability to build anywhere in a state. The telcos argued that the cost of negotiating with every community was killing innovation and deployment of faster broadband. What these companies really wanted was the ability to cherry-pick with no obligation to serve whole communities.

The practice of cherry-picking is still common today and most commercial fiber overbuilders engage in it to some degree. Most overbuilders have limited financial resources and they deploy fiber or other broadband technologies in those places where they get the best return for their investment. Many communities have seen fiber built to businesses and to new subdivisions while ignoring the rest of the town.

It’s hard to fault s smaller fiber overbuilder for maximizing the return on their fiber investment. On the flip side, there are few communities that don’t want fiber everywhere. However, most communities are realistic and know that if they always insist on getting fiber everywhere they might not get it anywhere.

Communities that really care about good broadband everywhere are the ones that are building fiber themselves or trying to attract a partner that will build the whole community. However, there are numerous states that hinder or prohibit communities from building broadband networks, and many other cities find the costs to build new networks to be prohibitive. The majority of communities must rely on the good behavior of the incumbents, and unfortunately they don’t always do the right thing.

The Zero-rating Strategy

The cable companies are increasingly likely to be take a page from the cellular carriers by offering zero-rating for video. That’s the practice of providing video content that doesn’t count against monthly data caps.

Zero-rating has been around for a while. T-Mobile first started using zero-rating in 2014 when it provided its ‘Music Freedom’ plan that provided free streaming music that didn’t count against cellular data caps. This highlights how fast broadband needs have grown in a short time – but when data caps were at 1 GB per month, music streaming mattered.

T-Mobile then expanded the zero-rating in November 2015 to include access to several popular video services like Netflix and Hulu. AT&T quickly followed with the first ‘for-pay’ zero-rating product, called FreeBee Data that let customers (or content providers) pay to zero-rate video traffic. The AT&T plan was prominent in the net neutrality discussions since it’s a textbook example of Internet fast lanes using sponsored data where some video traffic was given preferential treatment over other data.

A few of the largest cable companies have also introduced a form of zero-rating. Comcast started offering what it called Stream TV in late 2015. This service allowed customers to view video content that doesn’t count against the monthly data cap. This was a pretty big deal at the time because Comcast was in the process at the time of implementing a 300 GB monthly data cap and video can easily push households over that small cap limit. There was huge consumer pushback against the paltry data caps and Comcast quickly reset the data cap to 1 terabyte. But the Stream TV plan is still in effect today.

What’s interesting about the Comcast plan is that the company had agreed to not use zero-rating as part of the terms of its merger with NBC Universal in 2011. The company claims that the Stream TV plan is not zero-rating since it uses cable TV bandwidth instead of data bandwidth – but anybody who understands a cable hybrid-fiber coaxial network knows that this argument is slight-of-hand, since all data uses some portion of the Comcast data connection to customers. The prior FCC started to look into the issue, but it was dropped by the current FCC as they decided to eliminate net neutrality.

The big cable companies have to be concerned about the pending competition with last-mile 5G. Verizon will begin a slow roll-out of its new 5G technology in October in four markets, and T-Mobile has announced plans to begin offering it next year. Verizon has already announced that they will not have any data caps and T-Mobile is also unlikely to have them.

The pressure will be on the cable companies to not charge for exceeding data caps in competitive markets. Cable companies could do this by eliminating data caps or else by pushing more video through zero-rating plans. In the case of Comcast, they won’t want to eliminate the data caps for markets that are not competitive. They view data caps as a potential source of revenue. The company OpenVault says that 2.5% of home currently exceed 1 TB in monthly data usage, up from 1.5% in 2017 – and within a few years this could be a lucrative source of extra revenue.

Comcast and the other big cable companies are under tremendous pressure to maintain earnings and they are not likely to give up on data caps as a revenue source. They are also likely to pursue sponsored video plans where the video services pay them to provide video outside of data caps.

Zero-rating is the one net neutrality practice that many customers like. Even should net neutrality be imposed again – through something like the California legislation or by a future FCC – it will be interesting to see how firmly regulators are willing to clamp down on a practice that the public likes.