Tag Archives: AT&T

Upgrades for FWA Cellular Wireless

In the recent third quarter earnings call, Verizon CEO Hans Vestberg expressed strong support and belief in the future of the company’s FWA wireless broadband product. This product provides home and business broadband that uses the same cellular spectrum used today to provide bandwidth for cellphones.

There is good reason for the company to be optimistic about the broadband product. In only a few short years the company has added almost 2.7 million FWA customers, and most of its broadband customer growth in the third quarter of this year came from FWA. As noted by Vestberg, rapid growth has continued even after the company increased the price of the product by $10 per month.

As I have addressed in several blogs, there are some limitations on the current FWA product. The biggest downside is that the fast speeds advertised for FWA by Verizon and T-Mobile are only available for customers that live within a mile or so of a cell tower. Speeds seem to cut in half in the second mile from a tower and drop significantly by the third mile.

Another drawback is that both Verizon and T-Mobile throttle the bandwidth for FWA any time that cellphone usage gets heavy. In scouring through multiple speed tests, we have found customers who vary between fast and extremely slow speeds – which might be evidence of this throttling.

But Vestberg mentioned a big technology boost that will be coming to the Verizon FWA product. Verizon purchased a lot of C-Band spectrum in an FCC auction in 2021. This is spectrum that sits between 3.7 GHz and 3.98 GHz. The licensed spectrum provides Verizon with anywhere from 140 MHz to 200 MHz of cellular bandwidth in markets across the country.

Vestberg says the company is starting to upgrade busy urban towers with the extra C-Band spectrum. He implied that the upgrades will be coming to other urban towers and some suburban towers in 2024.

He said the C-Band spectrum will double or triple the cellular bandwidth depth in most markets. He said that using the new spectrum for FWA could result in speeds as fast as 900 Mbps to 2.4 Gbps. Like all speed claims made by ISPs, those speeds are likely faster than anybody will see in real life and probably represent theoretical maximums. However, FWA users can expect a big boost in speeds, particularly those living near towers.

I have to assume that Verizon has already built C-Band capabilities into its home FWA receivers, so speed upgrades ought to be realized immediately after an upgrade. A lot of the newest cell phones also already include C-Band capabilities. Verizon seems to have the most aggressive plan for C-Band, but AT&T has started to deploy the spectrum in a few markets. T-Mobile owns C-Band spectrum, but still seems to be hanging on the sidelines for upgrades.

Significant speed increases to FWA can make the product into a potent competitor to cable companies, at least for customers within a close distance of a cellular tower. The FWA prices are far lower than the prices charged by the big cable companies for broadband, and fast speeds can make this a viable alternative.

The first generation of FWA has delivered speeds in the 100-300 Mbps range. That has been fast enough to attract millions of customers. But the first generation product has felt more like a big upgrade to DSL rather than a direct threat to cable companies. But if the current speeds are really doubled or tripled, many households are going to be attracted by the lower prices on FWA. It’s an interesting product to market since the attractiveness for customers is in a direct relationship to the strength of the cellular signal that reaches their home –  an extremely local situation.

Cable Company Speed Claims

I don’t know if it’s just me, but my perception of ISP and cellular advertising is that the big ISPs and cellular carriers push the envelope more every year in trying to make claims that can give them a marketing edge over the competition.

The advertising for 5G cellular has repeatedly made claims over the years that are far in excess of the ability of the technology to deliver. If your only view of the state of broadband technology is ads seen on TV during sporting events, you would be fully convinced that we live in a completely wireless world and that 5G is the end-all-and-be-all of the broadband world.

What’s funny about many ads is that carriers try to differentiate themselves from their competitors, even though their peers are delivering essentially the same product to the market. There is not much difference in the cellular technology being delivered by AT&T, T-Mobile, and Verizon – although ads claim that each is by far the superior company. In real life, the biggest differentiator between the three carriers is the strength of their signal at your home, office, and other places you frequent – a strictly local difference based on the location of cell towers.

The competition between cable companies and fiber overbuilders is not based on equivalence. There is a clear technical advantage of a 300 Mbps broadband connection on fiber versus the same connection on a cable company. Fiber has a steadier signal throughout the day with lower latency and jitter, and any consumer comparing the two can quickly spot the difference. This puts cable companies in a tough spot. They know that fiber ISPs have a quality advantage for downloading and a huge advantage for upload speeds. Fiber networks tend to also have fewer glitches and outages.

Cable companies know when a fiber network shows up in a market that they will lose customers who care about signal quality. Since cable company prices are normally higher than the prices of fiber ISPs, the cable companies have to scramble and lower prices drastically with special prices to try to hang on to customers and lure new ones.

But cable company marketers never stop trying to make a pitch that makes them sound better than fiber. One of the latest examples comes from Comcast, which has started to advertise itself as the 10G ISP. The company now refers to its broadband network as the ‘Xfinity 10G Network’. This is based on the CableLabs 10G standard that lays out a future upgrade path for cable companies to eventually achieve an overall speed as fast as 10 Gbps download and 6 Mbps upload.

Verizon took exception to Comcast’s advertising and asked the National Advertising Division (NAD) of BBB National Programs to get Comcast to stop using the term 10G. The NAD program is something that many of the big ISPs voluntarily participate in to avoid expensive lawsuits between each other over advertising claims. NAD ruled that the 10G term was not factual and said Comcast should stop using it. The participants in the NAD generally comply with NAD rulings, but this time, Comcast is appealing the ruling. An interesting sidebar of the NAD ruling is that it also felt that consumers would interpret 10G as some advanced version of cellular 5G.

As an outsider, it’s pretty easy to agree with Verizon in this case. The 10G term was based on some theoretical future upgrade to meet the CableLabs 10G specifications, and Comcast’s coaxial networks today cannot achieve that speed. The only example of where Comcast has a 10 Gbps capability today is where it has upgraded to a 10 Gbps fiber platform – a tiny portion of the overall Comcast network. Comcast’s advertising implies to consumers that the future upgrades are already in place.

In a similar dispute, AT&T took exception to Cox ads that claim that Cox cable broadband is ‘powered by fiber’. NAD agreed with AT&T and ruled that Cox could not imply in advertising that its coaxial network is fiber-to-the-home. Again, it’s easy to agree with NAD on this ruling. Having fiber somewhere in a network does not mean that the network can deliver the same quality of broadband as an all-fiber network. Many DSL fiber nodes are fed with fiber, and I don’t recall any telcos making the claim that their DSL is “powered by fiber”.

More aggressive cable marketing is inevitable in a market where cable companies have stopped growing. There has to be a lot of angst in cable company board rooms about finding ways for the companies to claim fast broadband speeds and stop losing customers.

Starlink Promising Satellite Cellular Service

Starlink recently launched a new webpage that advertises the future ability to deliver text, voice, and data to 4G cell phones via satellite.

The texting service is supposed to be available in 2024 with voice and data coming in 2025. The service will require a user to have a view of the open sky. I would also guess that a user will have to be stationary and not in a moving vehicle. The service is likely going to be aimed at people who spend a lot of time outdoors, in places out of reach of cell towers. There is no talk yet about price, but this seems like a premium service and will probably be priced accordingly.

T-Mobile’s service will be able to connect through any of its many satellites, and reports have said that speeds will be relatively slow, at perhaps only a few Mbps.

Starlink says that users of the service will be able to connect to users in cellular networks that participate in the program. The initial list of network partners includes T-Mobile in the U.S., Rogers in Canada, Optus in Australia, One NZ in New Zealand, Kodi in Japan, and SALT in Switzerland.

There is already an early version of satellite texting. Apple provides texting to 911 through a satellite connection to those using an Apple 14  or newer iPhone. The text connection to 911 is slow and takes about 15 seconds to complete a transaction. The service allows very limited follow-up texts between public safety and the person initiating the 911 call. Apple is providing this service for free today but will eventually likely charge for using it.

AT&T claims to have made the first broadband connection with an unmodified cell phone and a satellite in September. The company used AT&T’s 5G spectrum and a Samsung Galaxy S22 to connect a caller from a dead cellular zone in Maui, Hawaii to one in Madrid, Spain. This test was done in conjunction with AST SpaceMobile. The first test achieved a download speed to the phone in Maui of 10 Mbps, but AST has subsequently been able to boost the speed to 14 Mbps. AST plans to launch five BlueBird satellites in the first quarter of 2024 to support the cellular satellite effort.

It’s unlikely that any of these services are going to be competing with mainstream cell phone connectivity. The speeds will be slower, and the satellite constellations will not be equipped to process the amount of data associated with normal cellphone service. There is no need to pay extra to use a satellite connection for anybody in reach of a cell tower or a WiFi connection.

I’m not sure if most people appreciate how much of the land mass of the U.S. has little or no cell service. Practically every county I’ve worked in has large dead cellular zones. Providing even rudimentary cell coverage in remote areas is a valuable new service for the many people who work in remote places. I can picture that farmers, park rangers, and anybody who spends a lot of time in unconnected areas will want this service as soon as it is available. I envision the satellite companies and cellular companies generating good revenue while filling this needed market niche.

Industry Shorts September 2023

Following is a discussion of a few topics I found to be interesting, but which are not long enough for a separate blog.

Starlink is massively far behind its original business plan. Starlink ended 2022 with around 1 million customers, while its original 2015 plan projected 20 million customers by the end of 2022. The 2022 revenues were $1.4 billion, far under the original projection of over $12 billion. The original projection was for Starlink to make $7 billion in profits in 2022, but the company still had monthly operating losses last year – although the company now claims a small profit at the end of the first quarter of 2023. Starlink company currently has over 4,700 satellites in orbit. The FCC has approved the launch of over 30,000 satellites, and Starlink says that 11,000 are needed to complete the first full constellation.

The company is currently up to around 1.5 million customers worldwide, which is impressive. But Starlink has a new competitor in FWA cellular wireless in many rural parts of the country. T-Mobile and Verizon added almost 3.2 million customers in 2022 and another 1.8 million in the first two quarters of this year. Much of rural America should be getting faster broadband over the next four years from the many federal grants, and I have to wonder if Starlink will ever meet it’s rosy projections for rural America.

Starlink has also been delivering slower broadband speeds than it originally advertised. The company now claims the following speed capabilities on its website, which are slower than what was reported a year ago. For example, in September 2022, residential speeds were claimed to be between 50 – 200 Mbps with upload speeds of 10 – 20 Mbps.

Download                   Upload

Residential      20 – 100 Mbps            5 – 15 Mbps

Business          40 – 220 Mbps            8 – 25 Mbps

RV                  5 – 50 Mbps                2 – 10 Mbps

There is still a lot of pent-up demand for Starlink. In every county I’ve worked in this year, I’ve talk to people on the Starlink waiting list.

AT&T Internet Air. AT&T has not taken the same aggressive approach to selling FWA cellular broadband as Verizon and T-Mobile, which together had over 5.9 million FWA customers at the end of the second quarter of this year.

But AT&T recently announced that it is now installing several thousand FWA connections every day. The product will use the frequencies that AT&T has labeled as 5G for customers living in range of a 5G-enabled tower and will use LTE spectrum elsewhere. AT&T said customers could be provisioned with a combination of 4G and 5G.

Chris Sambar, the President of AT&T Networks, wrote a recent blog that says that the AT&T cellular network has seen a 30% annual increase in the amount of bandwidth used per cellular customer. Any network engineer will tell you that is a huge increase. Landline broadband usage has historically grown at a rate of about 20% annually. At a 30% annual increase, network traffic will double in less than three years.

Sambar also said that AT&T was starting to test what he calls standalone 5G. That means using cellular technology that incorporates the 5G standards. For the last five years, everything offered by cellular companies that has been labeled as 5G was actually 4G LTE delivered using a new set of frequencies. It will be interesting to see what 5G can actually do differently. The blog mentions network slicing, which is perhaps the most important 5G feature – it will allow a cell tower to match the bandwidth being delivered to a customer to match the demand – small bandwidth for simple uses, and bigger bandwidth when needed. If network slicing works as originally intended, the bandwidth at a cell site will be used far more efficiently and a cell site will be able to handle a lot more simultaneous connections.

Reflecting on AT&T

I was talking to somebody about AT&T recently – we both worked at the company before the divestiture of the company into the Baby Bells in 1984. This set me to contemplate the odd path the company has taken since the days when it was perhaps the premier U.S. corporation.

AT&T was divested as a long-distance company in 1984 and thrown into a competitive environment where long distance rates and revenues plummeted. AT&T’s fortunes and status decreased to the point where SBC, Southwestern Bell, was able to acquire the company in 2005 while keeping the AT&T brand name.

The reunited Baby Bell companies and AT&T were far diminished from the days when AT&T was at the top of the world. SBC and the other Baby Bells started to cut back on the maintenance and upgrade of copper infrastructure soon after the divestiture. The companies felt emboldened to do this since divestiture also brought the beginning of telephone deregulation. The big telcos were no longer strictly required to meet quality and performance standards, and they responded by trimming technicians and capital repair and upgrade budgets.

During the 1990s, AT&T turned its attention to becoming the largest cellular carrier. The company spent most of its capital in the 1990s on cellular networks, which was timed perfectly with the explosion of the cellular business where practically everybody in the country came to have a cellphone. But even in the cellular world, AT&T didn’t put as much money into its cellular infrastructure and spectrum as its competitors. When AT&T won an exclusive contract to market the iPhone in 2007, it quickly became clear to customers that the AT&T (Cingular at the time) network was inadequate.

AT&T next made several devastatingly bad investments. It bought DirectTV, which then lost half of its customers in a few ensuing years. AT&T was also apparently trying to keep up with Comcast when it spent $100 million to buy Warner Media. A few years later, AT&T unspun this deal and recognized a $47 billion loss to shareholders.

In the last decade, AT&T has been forced to spend a lot of money to upgrade its 4G and 5G networks. While cellular performance has improved dramatically for consumers, 5G still looks like a business plan looking for a revenue stream. Over the last decade, cellular competition has resulted in lower cellular prices for consumers, and it can be argued net 5G revenues for the industry have been a big negative. And now, the biggest cable companies are siphoning off valuable cellular market share.

AT&T and the other big telcos might also be facing an expensive effort to remove lead cables from the environment. Smaller telcos mostly replaced lead cables a long time ago, but it seems the big telcos never quite got around to getting rid of the lead.

AT&T has finally gotten serious over the last few years about building last-mile fiber networks for the future. The company built 500,000 fiber passings in the second quarter of this year to bring it up to 20.2 million fiber passings – with a goal to reach 30 million by the end of 2025. AT&T added 272,000 fiber customers in the second quarter to bring the company to over 7.7 million fiber subscribers. The company is still losing non-fiber customers and dropped 25,000 net broadband customers in the second quarter.

AT&T is late to the game compared to its cellular competitors in selling FWA cellular broadband and just rolled out its Internet Air product in April of this year. AT&T CEO John Stankey characterizes the company’s FWA plans as being used to replace copper infrastructure and perhaps to bid on BEAD grants in remote areas. But for now, the company is far behind Verizon and T-Mobile in selling cellular home broadband. But AT&T recently announced it now signing a ‘few thousand’ FWA customers daily.

It not particularly easy to equate AT&T with some of the recent events in the company, because for all practical purposes, the company has been run by folks from SBC. But a lot of mistakes have been made in AT&T’s name, and it’s somewhat sad to see how far the company has fallen since the early 1980s. AT&T has made mistakes that would have sunk a lot of other businesses, but it is still diverse enoughto generate the cash to keep trying over and over again.

A Tale of Two Markets

I wrote a blog the other day that got me thinking about the huge disparity in regulating two distinct but highly intertwined industries – broadband and voice. Before you stop reading because you might think voice is no longer relevant, voice regulation includes the cellular business, and in terms of revenue, the voice market is larger than broadband. JD Powers reported in April of this year that the average household is spending $144 for cellular per month.

I call these industries intertwined because the players at the top of both industries are the same. The big ISPs are Comcast, Charter, AT&T, and Verizon. The biggest voice players are AT&T, Verizon, and T-Mobile. Comcast and Charter are making aggressive moves to develop a wireless business, and T-Mobile is aggressively selling broadband.

The two markets are intertwined in a household. Most people connect their cell phones directly to landline broadband when they are home. The primary use for cell phones is to connect to the Internet. My twenty-something daughter is amazed that I predominantly use my cell phone to actually talk to people.

This handful of giant companies control the lion’s shares of both the voice and broadband industries. Yet we’ve decided to regulate the two business lines completely differently. You must admit that this it’s an odd national decision to regulate AT&T’s voice business but not its broadband business, particularly considering how intertwined the two businesses are. Comcast and Charter are proof of the link between the two industries since the companies will only sell cellular plans to customers who are buying broadband.

A regulatory expert from another country would look at the U.S. regulatory environment with incredulity. They would instantly wonder how we can treat the two industries so differently since they engage in such similar business lines, particularly since the same companies lead both markets.

The average American has no idea of how differently we treat the two industries and would be just as confused as a foreign regulator expert. It’s really hard to explain the difference in regulations since that quickly devolves into a discussion of things like Title II regulation, and the average person listening will quickly have no idea what you are talking about.

The easiest way to explain the difference in regulation is that we don’t regulate according to common sense but base regulation on the original legislation that established regulations for each industry. Voice is still regulated because, in the past, various pieces of federal legislation, like the Telecommunications Act of 1996, specifically mention voice. There were also laws that specifically defined how to regulate cable TV – but there has never been a definitive legislative declaration that broadband must be regulated.

This all started when interest in home broadband mushroomed. AOL, CompuServe, and others created a robust ISP industry that took off rapidly when DSL and cable modems increased speed to the point that people could do useful things with broadband. In those early days, there was a lot of discussion about regulating broadband, but the consensus among legislators was that regulators should leave the fledgling new broadband industry alone until it grew large enough. No doubt, this hands-off approach was whispered into the ears of legislators by lobbyists for the big ISPs.

With no direction from Congress, the FCC and various States tried to find ways to regulate broadband over the last few decades. But as hard as it is to believe, we weren’t even able to define what broadband is without legislative direction – is broadband a telecommunications service or an information service? All of the wrangling about regulating broadband ultimately comes down to this simple designation.

Regulation gets really bizarre the deeper you go into the details. Cell phones calls are regulated for voice, but the broadband on a cellphone is considered to be an information service. What is the regulatory regime of a cell phone call that is handed off to a broadband network through WiFi but then eventually reconnected with the cellular network? The average cell phone user regularly bounces between regulated and unregulated functions.

The title of the blog refers to A Tale of Two Cities, which opened with, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”. That’s as good of a description of our odd regulatory environment as anything else I can think of.

Broadband Customers 2Q 2023

Leichtman Research Group recently released broadband customer statistics for the end of the second quarter of 2023 for the largest cable and telephone companies. Leichtman compiles most of these numbers from the statistics provided to stockholders other than for Cox and Mediacom, which are estimated, and now reported together. Leichtman says this group of companies represents 96% of all US landline broadband customers.

The first quarter of the year shows a continuation of the trend where all of the growth in broadband is coming from T-Mobile and Verizon FWA fixed cellular wireless. Those two companies added 903,000 customers, while the rest of the ISPs collectively lost over 52,000 customers.

2Q 2023 1Q 2023 1Q Change % Change
Comcast 32,305,000 32,324,000 (19,000) -0.1%
Charter 30,586,000 30,509,000 77,000 0.3%
AT&T 15,304,000 15,345,000 (41,000) -0.3%
Verizon 7,562,000 7,528,000 34,000 0.5%
Cox & Mediacom 7,035,000 7,035,000 0 0.0%
Altice 4,576,100 4,612,700 (36,600) -0.8%
T-Mobile FWA 3,678,000 3,169,000 509,000 16.1%
Lumen 2,909,000 2,981,000 (72,000) -2.4%
Frontier 2,865,000 2,863,000 2,000 0.1%
Verizon FWA 2,260,000 1,866,000 394,000 21.1%
Windstream 1,175,000 1,175,000 0 0.0%
Cable ONE 1,057,900 1,063,000 (5,100) -0.5%
Breezeline 680,785 687,519 (6,734) -1.0%
TDS 523,600 515,400 8,200 1.6%
Consolidated 376,829 369,862 6,967 1.9%
Total 112,894,214 112,043,481 850,733 0.8%
Cable 76,240,785 76,231,219 9,566 0.0%
Telco 30,715,429 30,777,262 (61,833) -0.2%
FWA 5,938,000 5,035,000 903,000 17.9%

The telcos collectively lost almost 62,000 customers in the quarter despite gains from Verizon FiOS, TDS, and Consolidated of 49,000 customers for the quarter. The biggest loser was Lumen, losing 72,000 broadband customers.

The only cable company with positive growth was Charter – its strategy of expanding its footprint into rural areas is clearly paying off.

It’s hard to see from these numbers where the huge growth of FWA wireless broadband is coming from. Much of the FWA growth is coming in rural markets where the competition is fixed wireless and satellite service. But FWA pricing seems to be aimed squarely at competing with DSL and probably counts for the overall losses for AT&T and Lumen. Both companies are adding fiber customers and are losing DSL customers more quickly than indicated by the overall numbers. I’m sure AT&T hates the loss of DSL revenue, but competition from FWA makes it that much easier for the company to eventually walk away from rural copper.

 

The Public Loves Fiber

The latest Customer Satisfaction Index is out from ACSI, which measures the public satisfaction of a wide range of U.S. industries and institutions. The survey this year continued to show that the public has a poor opinion of ISPs. As a group, ISPs had an average ACSI annual rating of 68. The only industry with a lower rating is gas stations at 65. Subscription TV had an average rating of 69, and the U.S. Post Office had a rating of 70.

But there is some interesting good news for some ISPs. Companies serving customers with fiber rated higher with the public than other ISPs, including cable companies using coaxial networks. Consider the following table that shows the 2023 ranking for fiber and non-fiber ISPs.

Fiber Non-Fiber
Altice 58
AT&T 80 72
Cable One 71
CenturyLink 78 62
Charter 64
Comcast 73 68
Cox 64
Frontier 74 61
Google Fiber 76
Mediacom 65
T-Mobile 73
Verizon 75
Windstream 70

For companies that offer both fiber and another technology, customers served by fiber liked an ISP more than non-fiber customers. CenturyLink has the biggest difference in satisfaction (78 for fiber and 62 for non-fiber). Frontier also has a dramatic difference (74 fiber and 61 non-fiber). The only cable company ranked for both technologies also has a sizeable difference, and Comcast has a ranking of 73 for its fiber network versus 68 for the coaxial network.

Customer satisfaction involves many other factors than just technology, but the differences for the companies that offer multiple technologies have to be mostly related to fiber. However, there are other factors in play. For example, it seems likely that CenturyLink and Frontier provide better customer service and faster repairs for fiber customers than for DSL customers.

Cable companies have to be noticing this giant difference as part of any consideration of how to upgrade their networks. The big cable companies are all at the beginning of the upgrades to improve upload speeds on coaxial networks, and they must be hoping that customers like them more after the upgrades. But there is a chance that the public has come to think of fiber as a superior technology and will not rank a coaxial system as highly even after speed increases. There is still a noticeable difference in latency and jitter between cable and fiber networks, and customers who see both in action believe fiber is better.

There is still a noticeable range of ISP rankings within each list. Non-fiber customers rate T-Mobile and AT&T the highest and rank Altice and Frontier DSL as the worst ISPs. It’s interesting to see Charter near the bottom of the rankings.

Fiber customers clearly rate AT&T as the best and Comcast Fiber as the lowest. Fiber technical performance should be consistent regardless of the ISP, so the difference in rankings between fiber providers has to be related to customer service and the other non-technical aspects of being an ISP.

Should We Trust the Companies that Created the Digital Divide?

For those of you who don’t know Bruce Kushnick, he’s been tracking the promises made and broken by Verizon since the 1990s and written extensively on the issue. His latest article is “NTIA: Require Every State Broadband Agency to Investigate Those Responsible for Creating the State’s Digital Divide.”

Bruce has been arguing eloquently for years that the big telcos like Verizon, AT&T, and CenturyLink caused the rural digital divide by extracting profits from the regulated telephone and broadband businesses in rural and low-income areas while neglecting maintenance and not using any of the profits to modernize the technology. According to Bruce, the only reason we need massive federal grant programs today is to make the investments that the big telcos refused to make for the last several decades.

He argues that the NTIA should require states to investigate how the digital divide was created in rural areas and center cities. He uses the two examples of New Jersey and Los Angeles to make his point. He’s been tracking the promises made by Verizon to the State of New Jersey for the last thirty years. Verizon repeatedly sought regulatory relief through deregulation along with rate increases that were supposed to fund modernizing the network in the State – upgrades that were never done. When Verizon finally upgraded to fiber, it did so only in neighborhoods with the lowest costs, avoiding rural areas and most low-income neighborhoods.

I’ve been tracking this issue during my career as well. Consider West Virginia. I remember when Verizon was looking for a buyer of the telco network there as far back as the early 1990s. When big companies are trying to sell a property, they do what valuation folks call ‘dressing up the pig”. This means cutting expenses to make the property look more profitable. The cuts are usually deep, and drop maintenance below the level needed to keep up with routine repairs and maintenance.

Verizon didn’t end up selling the West Virginia network until the sale to Frontier in 2010. By then, the networks had been neglected for more than fifteen years. Frontier made only minimal upgrades to the properties they purchased – but it’s hard for an outsider to know if this was due to an intention to continue to milk cash flow out of the acquired network like Verizon had done or due to a lack of the capital and impact of the heavy debt used to buy the property. In any case, the West Virginia network continued to degrade under Frontier’s ownership.

For years, Bruce has made the point that there has not been any financial or regulatory cost to the big telcos for their bad behavior. They’ve repeatedly broken promises made to states. They’ve routinely milked profits out of networks while ignoring customers as the properties deteriorate.

In fact, we’ve seen the opposite of penalties. For example, the big telcos were rewarded with over $10 billion of CAF-II subsidies to support dying and neglected rural DSL networks. That money was supposed to be used to increase rural data speeds to 10/1 Mbps at a time when that speed was already obsolete. We’ve seen far too many places where even that basic upgrade was not made.

Bruce’s conclusion is that it would be ludicrous to give grant funding now to the companies that caused the digital divide in the first place. That would be using public money to upgrade the networks for these companies when profits should have been used over the decades to do so. He makes a solid argument that giving money to these same companies will not solve the digital divide since there is no reason to think the big telcos won’t turn around and do it all over again.

GM Wants to Curate Your Car Experience

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

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

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

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

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

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

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

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