Tag Archives: Brightspeed

Epic Broadband Outages

Every once in a while I hear a customer story that reinforces the big mistake we made in largely eliminating broadband regulation. This particular story comes from the Chatham News + Record in Chatham County, North Carolina. Some customers there experienced what can only be described as epic outages.

The first outage occurred on October 1 to residents near Charlie Cooper Road from a downed line as the result of hurricane Ian. Duke Power restored power within two days, but it took twenty days for Brightspeed to repair the damage. This is the new incumbent telephone company that purchased the property from CenturyLink. Not to give Brightspeed an excuse, but the outage occurred while the network was still owned by CenturyLink – the sale of the network closed on October 3, two days after the outage. Twenty days is still an extraordinarily a long time to make a line repair, but I’ve been part of the aftermath of the sales of telecom properties, and the first thirty days are often rough on the buyer.

The second outage occurred in the same rural neighborhood on November 28 when a tractor-trailer pulled down wires that were hanging too low. Residents believe that the low wires were a result of a shoddy repair from the hurricane Ian outage. By this time, Brightspeed had owned the company for two months, and it took a full month, until December 27, to restore service.

Customers were highly frustrated because they got no useful response from Brightspeed customer service. There seemed to be no acknowledgment that there was an outage, even as multiple people called multiple times to complain about the outage.

This is not an unusual story in rural America. I’ve talked to dozens of folks who are rural customers of big telcos who have lost broadband for more than a week at a time, and some of them regularly lose service multiple times per year.

The article describes the problems the outages caused for residents. One resident was quoted as saying that broadband access has become as important as having water to the home.

One would think that consumers with this kind of problem could seek relief from the State – that a regulator could intervene to get the telephone company’s attention. When I was first in the industry, a customer complaint that was referred from sent a state commission got an instant priority inside a telephone company.

But a workable complaint process is now a thing of the past. The rules for making a consumer complaint with the North Carolina Utility Commission are a barrier to the average consumer and seem to favor big telcos. It’s not even clear if the NCUC has jurisdiction over broadband – that’s not clear anywhere after the FCC under Ajit Pai walked away from all broadband regulation. The NCUC still lightly regulates telephone service, but it’s not clear if that applies in the same way to broadband.

Regardless of the regulatory issues, the process for filing a complaint is not simple. A consumer must complete an official complaint form and file an original and 15 paper copies – complaints cannot be filed online or by email. The NCUC sends a copy of the complaint to the utility, which must respond in ten days. If the suggested solution from the utility is not adequate, the consumer can either drop the complaint or ask for a formal hearing – which would be an intimidating process for most folks, because the hearing is held in a formal court setting following normal court rules. Not many consumers are going to wade through this highly formal process, which is slanted in favor of utilities and their attorneys and not consumers.

The reality is that consumers have been at the mercy of the big telcos ever since state commissions deregulated telephone service. I’ve heard hundreds of stories over the years of big telcos who have run rough-shod over folks. One of the most common stories I’ve heard in the last few years is of telcos disconnecting DSL rather than trying to fix it.

The first outage for these folks could have slipped through the cracks due to the extraordinary event of the telephone company changing ownership right after the outage. But there is no possible excuse for the second month-long outage. Most of my clients are small ISPs, and they all would have fixed this second outage within a day. I’ve repeatedly cautioned about giving large rural grants to the large telcos, and this outage is one of a thousand reasons not to do so.

Big Telcos and the BEAD Grants

We’re finally starting to gain a picture of the plans of the big telcos for the upcoming BEAD grants. The bottom line is that some of the big telcos seem to be prepared to pursue the upcoming grants in a major way. Consider the following:

  • At a recent industry conference, Frontier’s CFO said that Frontier has ambitious plans to pursue grants for all of the three to four million rural homes that it serves today with DSL.
  • When the BEAD grants were first announced, AT&T added five million new passings to its goal for 2025, all due to pursuing rural grants. AT&T hasn’t said much about grants since that early announcement.
  • Brightspeed, which purchased twenty states of copper networks from CenturyLink, has made it clear that it will be seeking state and federal grants to build as much fiber as possible. CenturyLink has been aggressively pursuing grants in the states sold to Brightspeed, for the obvious benefit of the new company.
  • Windstream was a big winner in the RDOF reverse auction and has been aggressively pursuing ARPA funding. It seems obvious that the company will also pursue BEAD grants.

The two big telcos that have not said much about grants are CenturyLink and Verizon. There are rumors that CenturyLink is seeking somebody to buy the rest of its copper lines, but it also would not be surprising to see the company come out swinging for grant funding if a sale isn’t forthcoming. Verizon abandoned a rural strategy years ago, and it would be surprising but not impossible to see the company tackle grant funding if the math is good.

The other big ISP that has aggressively been pursuing grant funding is Charter. It would make sense for the company to pursue BEAD grants to fill in around where it has already won the RDOF auctions.

This is an interesting dilemma for rural communities. The telcos all say they will be building rural fiber with grant funding – which is what rural America most desires. But a lot of rural folks blame the big telcos for the current miserable state of rural broadband. It’s the big telcos that stopped maintaining copper, reduced staffing drastically, and basically walked away from rural America. I know a lot of folks who hope that anybody other than the big telcos wins the grant funding in their area.

There are several big fears that I hear voiced about the big telcos winning the grant funding. One is that the big telcos will not follow through after winning the grant funding. Many communities remember how some of these telcos walked away with huge amounts of CAF II funding without doing the promised DSL upgrades. I think the fear is that the big telcos might cut corners and not build to the most remote households in a grant award area. I’ve also heard the fear that the big telcos will accept grants and then decide not to build some areas in a state.

Perhaps the biggest fear about big telcos building rural fiber networks is that we’ll see a repeat of the past. They will build the new network as funded. But if the telcos don’t hire enough technicians or cut corners on maintenance, the fiber networks will deteriorate over time.

This is a real concern because there is a big difference between copper networks and fiber networks. It’s been possible to keep a copper network limping along for decades with minimum maintenance. This is due to the relative simplicity of the DSL technology. There are twenty-year-old DSL cards still limping along, long past the expected economic life. But fiber networks are not likely to be so tolerant. Fiber technology is complicated and precise, and when a card starts going bad, it most commonly means the fiber will go dark. I think the big fear in rural America is that the big telcos will build fiber but let it go dark in 10 or 15 years if they can’t get additional subsidies. This is an impossible scenario to imagine the big telcos demanding future subsidies to keep networks working.

One of the most important aspects of the BEAD grants will be community approval and partnerships with the grant applicants. It will be curious to see if the big telcos seriously court local support for grant applications or do little more than ask for a letter of support when it’s time to file grants. If a community really wants to keep out the big telcos, the best strategy is to partner with somebody you trust more.

Can the Big Telcos Turn the Corner with Fiber?

I was asked an interesting question recently: will fiber help the big telcos turn the corner to success? It’s a good question when looking at telcos like Frontier, Windstream, Lumen, and any others who are late to the game for converting copper to fiber. There are a lot of factors that will come into play, so the answer is likely to be different by telco.

On the plus side is a general consensus by many households that fiber is the best technology. There is a sizable percentage of homes in any market that will move to fiber given a chance. I’m sure this differs by community, but my experience is that 20% to 30% of homes will almost automatically switch to fiber, and that percentage is likely growing. It seems that all of the talk about broadband over the last few years has sold the idea that fiber is a superior technology.

We know telcos are hoping this perception is true. AT&T is the most optimistic of the big telcos and says that it will get a 50% market penetration anywhere it builds residential fiber. That’s an extraordinary prediction after considering the 10%-15% of homes in most places that still don’t have broadband and another 10%-15% of homes that will choose the low-cost alternative like DSL or cellular broadband just because of price. A 50% market share would mean largely obliterating the cable company in a given market.

But any perceived superiority of fiber is going to be relatively short-lived as cable companies upgrade networks to have faster upload speeds. Fiber today is winning the battle for consumers who care about upload speeds – but what percentage of homes is that? Fiber also has noticeably better latency and jitter – a connection on fiber is perceived by the eye to be faster even if the speeds are the same. But how many households care about that?

Telcos have a long way to go to get back to a decent market share. By delaying the transition to fiber, big telco let cable companies clobber them quarter after quarter in taking away DSL customers. While they hope that having a superior technology will help them claw back those lost customers, it’s no slam dunk that they will. The cable companies have smartly bundled broadband with cheap cellular service. The telcos are also going to see fierce competition for price-conscious consumers as they see cellular broadband offered by T-Mobile, Verizon, Dish Networks, and maybe AT&T.

One of the biggest handicaps that telcos face is that they have destroyed their brand names through poor treatment of customers. Big telcos have slowly let the copper networks die by cutting back on maintenance staff. There are millions of consumers who have a poor opinion of a telco because of week-long DSL outages or repair technicians who never showed up. People are not going to easily forgive them. Perhaps the smartest ones of all will be Ziply and Brightspeed, which purchased copper from Frontier and CenturyLink and rebranded to feel like a new company.

Another challenge will be for the big telcos to earn a decent margin from the conversion to fiber. The big telcos have a cheaper path to upgrade than fiber overbuilders due to the savings from overlashing fiber onto existing copper wires. But they are still making a significant outlay to make the conversion. There is no new revenue to the telcos from existing copper customers they move to fiber – and that means that they are paying for the new fiber networks only with the revenues from customers they lure back from cable companies. We won’t know for a few years what that means for the bottom line, but my back-of-the-envelope math says they’ll have a hard time making any noticeable return on the conversion to fiber – at least for the first 5-10 years. In the long run, the fiber customers will become cash cows, just like what happened with copper customers in the past. But will the long run be good enough for Wall Street, which will want to see a fast turnaround?

I think many of the big telcos are banking on getting giant federal grants to help them get back on their feet. But there are a lot of factors that say this might not be the great strategy they are trying to sell. First, most grants will be in the range of 75% grant funding. But covering the 25% is still expensive when the cost to reach rural passings ranges from $7,000 – $15,000. There are also higher operating costs in rural America due to longer truck rolls.

The biggest hurdle for getting grants is that the awards are going to be made at the State level – there won’t be any FCC to influence through lobbying. Many states are beyond angry with the big telcos since they rightly blame them for the poor condition of rural broadband. Additionally, the most likely grant winner in any county will be the one that partners with the county. I’ve worked in nearly 100 counties in recent years, and not one of them had any desire to partner with one of the big telcos. I know the big telcos all have huge goals of winning grant funding – I’m going to be really surprised if they achieve it.

To summarize and answer the original question – there is no guaranteed path to success for a telco that finally gets around to converting to fiber. The incremental new revenues from the conversion may not be high enough to make the math work. The big telcos will be battling a negative public perception of them as quality and reliable ISPs. They might be successful just because of the advantages that fiber has over cable company copper networks – but those advantages might not be enough to make a bottom-line difference.