Starry Resurfaces

I’ve written a few times over the years about Starry, a wireless ISP that is originally launching in Boston. The company was founded by Chet Kanojia who readers might remember as the founder of Aereo – the company that tried to deliver affordable local programming through a wireless connection.

Starry’s product set is simple – $50 per month for 200 Mbps broadband. There’s a $50 install fee and then $50 per month with no add-ons or extra charges. This easily beats the regular broadband prices for Charter and Verizon FiOS, both at $70+ for the same speed when considering the charge for the modem.

Starry has changed its business plan. They had first announced a launch in 2016 that was going to beam to a small antenna placed in a customer’s window. I’m imagining they ran into a number of issues with this, including technical issues, because that plan never went beyond the first round of beta testing and Starry went quiet.

The new technology will use millimeter wave spectrum to beam broadband to a receiver on the top of apartment buildings and will then use existing wiring to connect to customers. This involves point-to-point radios. Starry launched a few years ago using licensed millimeter wave spectrum at 38.2 and 38.6 GHz. The company says they are going to be using spectrum between 37 GHz and 40 GHz, so they must be planning to engage in the upcoming auctions for 37 GHz and 39 GHz spectrum.

At the spectrum they are using they could easily be beaming between 1 – 2 gigabytes of data to a given apartment building today. That will increase if they get access to more bands of spectrum.  That’s plenty of bandwidth to provide a 200 Mbps product to every tenant. The company is advertising that they are using pre-5G technology. That’s an interesting phrase because they are likely delivering Ethernet over the wireless connection to each building. Perhaps if they buy more spectrum they will then claim to be using 5G. This is an interesting concept for point-to-point radios because the 5G standard doesn’t do anything to increase the speed on a connection. However, they might get some advantages from 5G which will make it easier to link multiple frequencies on the same point-to-point path.

The current business plan is to use the existing wiring in a building. That is interesting because they are bringing broadband to the roof, and the wiring from apartment buildings today always originates on the first floor or basement in a communications space. I have to think that Starry is dropping a fiber from the roof to the communications room in order to get access to wiring.

The only wiring that is almost always available in a home-run configuration to each apartment is the telco copper, and I guess this is the wiring they are using. With today’s G.Fast technology it’s easy in most cases to achieve speeds of at least 400 Mbps and sometimes faster. I’ve heard that G.Fast is achieving near gigabit speeds in labs, so it’s likely over time that Starry will be able to step up the speeds. Coaxial cables are a different matter and there are numerous different wiring schemes around and also a wide variety of situations where the cable incumbent can lay claim to those cables.

Starry is creating yet another competitor for anybody building broadband in an urban environment. I have a hard time seeing this technology making any sense in a small town or rural environment. In cities the technology probably only makes sense for somewhat sizable apartment buildings, or perhaps multi-tenant business buildings. It’s an intriguing technology for landlords because they can offer tenants another option other than the incumbent cable or telephone company.

It’s been interesting over the years to watch the evolution of broadband in apartment buildings. For many years there were hurdles for a competitor to deliver big bandwidth inside apartment buildings. The cost of rewiring older apartment buildings was often prohibitive. But today there are lower-cost techniques for stringing fiber inside older buildings as well as creative uses of existing wiring such as using G.Fast. Where apartment buildings were often left out of fiber business plans they are now a big focus for competitors.

The bottom line is that anybody planning on competing for downtown apartment buildings will have another potential competitor. Starry plans on being in most major metropolitan markets and there are likely going to be copycat ISPs that do this elsewhere. Urban apartment buildings have gone from being underserved to perhaps having some of the best broadband in any market.

Cellular Networks and Fiber

We’ve known for a while that the future 5G that the cellular companies are promising is going to need a lot of fiber. Recently Verizon CEO Lowell McAdam verified this when he said that the company will be building dense fiber networks for this purpose. The company has ordered fiber cables as large as 1,700 strands for their upcoming build in Boston in order to support the future fiber and wireless network there. That’s a huge contrast from Verizon’s initial FiOS builds that largely built a network using mostly 6-strand fibers in a lot of the Northeast.

McAdams believes that the future of urban broadband will be wireless and that Verizon intends to build the fiber infrastructure needed to support that future. Of course, with that much fiber in the environment the company will also be able to supply fiber-to-the-premise to those that need the largest amounts of bandwidth.

Boston is an interesting test case for Verizon. They announced in 2015 that they would be expanding their FiOS network to bring fiber to the city – one of many urban areas that they skipped during their first deployment of fiber-to-the-premise. The company also has engaged with the City government in Boston to develop a smart city – meaning using broadband to enhance the livability of the city and to improve the way the government delivers services to constituents. That effort means building fiber to control traffic systems, police surveillance systems and other similar uses.

And now it’s obvious that the company has decided that building for wireless deployment in Boston is part of that vision. It’s clear that Verizon and AT&T are both hoping for a world where most devices are wireless and that the wireless connections use their networks. They both picture a world where their wireless is not just used for cellphones like today, but will also be used to act as the last mile broadband connection for homes, for connected cars, and for the billions of devices used for the Internet of Things.

With the kind of money Verizon is talking about spending in Boston this might just become the test case for a connected urban area that is both fiber rich and wireless rich. To the extent that they can do it with today’s technology it sounds like Verizon is hoping to serve homes in the City with wireless connections of some sort.

I’ve discussed several times how millimeter wave radios have become cheap enough to be a viable alternative for bringing broadband to urban apartment buildings. That’s a business plan that is also being pursued by companies like Google. But I still am not aware of hardware that can reasonably be used with this same technology to serve large numbers of single family homes. At this point the electronics are still too expensive and there are other technological issues to overcome (such as having fiber deep in neighborhoods for backhaul).

So it will be interesting to watch how Verizon handles their promise to bring fiber to the homes in Boston. Will they continue with the promised FTTP deployment or will they wait to see if there is a wireless alternative on the horizon?

It’s also worth noting that Verizon is tackling this because of the density of Boston. The city has over 3,000 housing units per square mile, making it, and many other urban centers, a great place to consider wireless alternatives instead of fiber. But I have to contrast this with rural America. I’m working with several rural counties right now in Minnesota that have housing densities of between 10 and 15 homes per square mile.

This contrast alone shows why I don’t think rural areas are ever going to see much of the advantages of 5G. Even though it’s expensive to build fiber in a place like Boston, the potential payback is commensurate with the cost of the construction. I’ve always thought that Verizon made a bad strategic decision years ago when they halted their FiOS  construction before finishing building in the metropolitan areas on the east coast. Verizon has fared well in its competition with Comcast and others.

But there is no compelling argument for the wireless companies or anybody else to build fiber in the rural areas. The cost per subscriber is high and the paybacks on investment are painfully long. If somebody is going to invest in rural fiber they might as well use it to connect directly to customers rather than to spend the money in fiber plus adding a wireless network on top of it.

We are going to continue to see headlines about how wireless is the future, and for some places like Boston it might be. Past experience has shown us that wireless technology often works a lot different in the field compared to the lab, so we need to see if the wireless technologies being considered really work as promised. But even if they do, those same technologies are going to have no relevance to rural America. If anything the explosion of urban wireless might further highlight the stark differences between urban and rural America.

Verizon Bringing Fiber to Boston

fios vanEvery once in a while something in the industry comes as a true surprise and that happened last week when Verizon announced that it was going to invest $300 million to build FiOS in Boston. There hasn’t been any new FiOS constructed for many years and the company had announced at the end of 2011 that it was done with FiOS expansion. Then the company went on to sell a lot of customers to Frontier including a big chunk of the FiOS fiber network and it looked like Verizon was inching their way out of the residential landline business.

There was never any doubt that Verizon was interested in fiber to serve large businesses and to serve its own cellular towers. And this desire was emphasized a few months ago when the company announced the intention to buy XO Communications from Carl Icahn. That will provide a vast new fiber network throughout downtowns and business districts around the country.

Verizon says that there are a few reasons it wants to build Boston. Probably first on the list is a shift in the cellular business to add smaller neighborhood cell sites. The whole industry has started the migration from relying mostly on the big cell towers to smaller cell sites dispersed where there is demand. But these mini-cell sites need fiber. And so expanding the FiOS network in Boston will give the company fiber everywhere in the City and give it a competitive advantage over AT&T for providing cellular data.

Verizon also says that it wants to get into the ‘smart city’ business and it views Boston as an attractive market to pursue that goal. Verizon announced a smart city initiative last October and is working on plans to build things like smart traffic grids in cities. Again, this kind of big dollar business requires fiber throughout a city.

Verizon also says that it would like to tear down all of the copper in Boston. Of course, Boston’s copper is not older or in worse shape than the copper in other east coast cities and this justification doesn’t seem like a reasonable reason to invest $300 million in fiber. I’m betting that management took a new look at their existing FiOS business and saw how profitable it is now that broadband penetration rates keep climbing. Broadband is a very high margin business.

It’s also my guess that Verizon might be getting more realistic about the future of its cellular business. That business has thrived for a few decades due to astronomically high prices and margins compared to the cost of providing the service. And those margins are under attack throughout the industry as alternate cellular companies are offering cheaper rates. Even the new discounted rates are high margin, but they have forced Verizon and AT&T to bring their prices down out of the stratosphere. So perhaps the company is quietly going to build up the landline data business as a way to insure future profits.

One has to wonder what this means for other east coast cities. Verizon largely built FiOS in the suburbs and to a large extent ignored the downtowns of the major northeast cities. If there was any downtown fiber built it was spotty and only to neighborhoods where the construction costs were the lowest. There certainly would be a big sigh of relief if other cities could know that they were also going to finally get a fiber network to compete with Comcast.

One thing we’ve always known about big companies is that they can change strategies at will and something they say they will never do one day can end up as a major corporate initiative a few years later. Verizon gave every sign for the last few years that it was walking away from landline networks. One has to go many pages deep into their annual reports to even see that business mentioned.

But this Boston initiative is no small deal and requires a major investment. And the reasons why this benefits Verizon are just as true for many other cities. Verizon says that one reason they are willing to do this now is that city hall in Boston was receptive to making it easier to build fiber – something that has not been true in the past. Just like many cities are bending the old rules for Google, I imagine that there are discussions going on today in many east coast cities about what they might be able to do to get Verizon fiber too.