The Fixation with Broadband Speeds

Leichtman Research Group recently conducted a nationwide poll of 2,000 households asking about broadband usage. LRG has been tracking broadband for many years and reports that overall broadband subscriptions are at 87% of all households in 2021, up from 83% in 2016, and 69% in 2006. There are a few results of the survey that I think warrant additional examination.

According to the LRG survey, 63% of broadband subscribers rate the speed of their Internet connection as 8 to10 on a 10-point scale with 10 being excellent. In a similar question, 69% of respondents who subscribe to speeds of at least 100 Mbps are satisfied with their broadband service.

The big news here isn’t that many homes are satisfied with broadband speeds – it’s that one-third of all households don’t think their broadband speeds are great. The news is that over 30% of homes with speeds over 100 Mbps are not satisfied with their broadband.

My consulting firm conducts surveys at the community level, and I often see similar results. LRG only released the high-level summary responses to the survey, so we don’t know all of the questions they asked. But if LRG only asked about broadband speeds, they asked the wrong question. This was borne out by the response to a different survey question where 45% of the respondents in the LRG poll don’t even know their subscribed broadband speed.

What I’ve found through surveys is that people don’t really care about broadband speeds – they care if their broadband connection works. Most people haven’t the slightest idea at any given time how much broadband speed is being delivered to their home. I sometimes hear dismay when people finally take a speed test and find out that they are only receiving a portion of what they are paying for – but even these people might not be unhappy with broadband if it works.

Here are the things I hear from the public when we ask the same kinds of questions that LRG asked:

  • One of the most common complaints I hear about big cable company broadband is outages. The issue in most markets is not big hours-long outages but frequent small outages of a few minutes in duration. These small drive people mad because it invariably disrupts whatever they were doing with the broadband.
  • Right behind unhappiness with outages is unhappiness with slowdowns. The complaint I hear is that broadband works most of the time but then gets maddingly slow at times. It’s almost as disruptive as an outage when broadband slows to a crawl.
  • The other big recurring complaint I hear is when broadband won’t perform an expected function. People become quickly unhappy with their broadband connection when they can’t do something like maintain a Zoom call or if they get kicked off a school or office connection. Somebody might have no trouble streaming Netflix movies but find that they can’t stream the more demanding live sports broadcasts.

This survey reminded me of something that has become clear to me over the last year – policymakers are fixated on broadband speeds but people care about broadband performance. These are not the same thing. I’ve never talked to anybody outside the industry who cares one iota about the definition of broadband – they only care if everybody in the household can use the Internet at the same time.

From a policy perspective, it seems like we’ve decided that there are no urban broadband problems because everybody can buy Internet faster than 100 Mbps download. Even if we set aside the issue that many homes can’t afford broadband, this survey points out that a lot of urban households find their broadband connection to be inadequate.

Our policies are all due to the fixation with broadband speeds. Concentrating on speeds as the only way to measure broadband means that policymakers can yield to cable company lobbying that says we have no urban broadband issues.

I am absolutely thrilled that we are finally going to use some money to bring faster broadband to rural areas that have little or no broadband. But policymakers need to understand that this will not eliminate broadband problems elsewhere. A huge number of people in urban areas are still not happy with their broadband connection – and that’s a problem that’s not going to go away by throwing grant money at rural markets. If anything, building rural fiber is going to remind urban residents that they have something of lesser quality.

Another Story of Lagging Broadband

We don’t really need any more proof that the FCC broadband data is massively out of touch with reality. However, it seems like I see another example of this almost weekly. The latest news comes from Georgia where the Atlanta Journal-Constitution published an article that compared actual broadband speeds measured by speed tests to the FCC data. The newspaper analyzed speed tests from June through December 2017 and compared those results to the FCC databases of supposed broadband speeds for the same time period. Like everywhere else that has done this same comparison, the newspaper found the FCC data speeds to be overstated – in this case, way overstated.

The newspaper relied on speed tests provided by Measurement Labs, an Internet research group that includes Google, the Code for Science & Society, New America’s Open Technology Institute, and Princeton University’s PlanetLab. These speed tests showed an average Internet speeds of only 6.3 Mbps for areas where the FCC data reported speeds of 25 Mbps are available.

Anybody that understands the FCC mapping methodology knows that you have to make such a comparison carefully. The FCC maps are supposed to show available speeds and not actual speeds, so to some degree the newspaper is comparing apples and oranges. For instance, when multiple speeds are available, some people still elect to buy slower speeds to save money. I would expect the average speed in an area where 25 Mbps is the fastest broadband to be something lower than that.

However, the ultralow average speed test results of 6.3 Mbps points out a big problem in rural Georgia – homes electing to buy lower speeds can’t possibly account for that much of a difference. One thing we now know that is an area shown by the FCC to have 25 Mbps broadband speeds is probably served by DSL and perhaps by fixed wireless. The vast majority of cable companies now have speeds much faster than 25 Mbps and areas shown on the maps that are served by cable companies will show available speeds of at least 100 Mbps, and in many cases now show 1 Gbps.

The only way to explain the speed test results is that the FCC maps are wrong and the speeds in these areas are not really at the 25 Mbps level. That highlights one of the big fallacies in the FCC database, which is populated by the ISPs. The telcos are reporting speeds of ‘up to 25 Mbps’ and that’s likely what they are also marketing to customers in these areas. But in reality, much of the DSL is not capable of speeds close to that level.

The newspaper also gathered some anecdotal evidence. One of the areas that showed a big difference between FCC potential speed and actual speed is the town of Social Circle, located about 45 miles east of Atlanta. The newspaper contacted residents there who report that Internet speeds are glacial and nowhere near to the 25 Mbps as reported on the FCC maps. Several residents told the newspaper that the speeds are too slow to work from home – one of the major reasons that homes need faster broadband.

Unfortunately, there are real-life ramifications from the erroneous FCC maps. There have been several grant programs that could have provided assistance for an ISP to bring faster broadband to places like Social Circle – but those grants have been limited to places that have speeds less than 25 Mbps – the FCC definition of broadband. Areas where the maps are wrong are doubly condemned – they are stuck with slow speeds but also locked out of grant programs that can help to upgrade the broadband. The only beneficiary of the bad maps are the telcos who continue to sell inadequate DSL in towns like Social Circle where people have no alternative.

The State of Georgia has undertaken an effort to produce their own broadband maps in an attempt to accurately identify the rural broadband situation. The University of Georgia analyzed the FCC data which shows there was 638,000 homes and businesses that couldn’t get Internet with speeds of at least 25 Mbps. The state mapping effort is going to tell a different story, and if the actual slow speeds indicated by the speed tests are still true today then there are going to by many more homes that actually don’t have broadband.

It seems like every examination of the FCC mapping data shows the same thing – widespread claimed broadband coverage that’s not really there. Every time the FCC tells the public that we’re making progress with rural broadband, they are basing their conclusions on maps they know are badly flawed. It’s likely that there are many millions of more homes that don’t have broadband than claimed by the FCC – something they don’t want to acknowledge.

Broadband Usage Continues to Grow

The firm OpenVault, a provider of software that measures data consumption for ISPs reported that the average monthly data use by households grew from 201.6 gigabytes in 2017 to 268.7 gigabytes in 2018 – a growth rate of 33%. The company also reported that the medium use per household grew from 103.6 gigabytes in 2017 to 145.2 gigabytes in 2018 – a growth rate of 40%. The medium represents the midpoint of users, with half of all households above and half below the medium.

To some degree, these statistics are not news because we’ve known for a long time that broadband usage at homes, both in total download and in desired speeds has been doubling every three years since the early 1980s. The growth in 2018 is actually a little faster than that historical average and if the 2018 growth rate was sustained, in three years usage would grow by 235%. What I find most impressive about these new statistics is the magnitude of the annual change – the average home used 67 more gigabytes of data per month in 2018 than the year before – a number that would have seemed unbelievable only a decade ago when the average household used a total of only 25 gigabytes per month.

There are still many in the industry who are surprised by these numbers. I’ve heard people claim that now that homes are watching all the video they want that the rate of growth is bound to slow down – but if anything, the rate of growth seems to be accelerating. We also know that cellular data consumption is also now doubling every two years.

This kind of growth has huge implications for the industry. From a network perspective, this kind of bandwidth usage puts a big strain on networks. Typically the most strained part of a network is the backbones that connect to neighborhood nodes. That’s the primary stress point in many networks, including FTTH networks, and when there isn’t enough bandwidth to a neighborhood then everybody’s bandwidth suffers. Somebody that designed a network ten years ago would never have believed the numbers that OpenVault is reporting and would likely not have designed a network that would still be sufficient today.

One consequence of the bandwidth growth is that it’s got to be driving homes to change to faster service providers when they have the option. A household that might have been happy with a 5 Mbps or 10 Mbps connection a few years ago is likely no longer happy with it. This has to be one of the reasons we are seeing millions of homes each year upgrade from DSL to cable modem each year in metropolitan areas. The kind of usage growth we are seeing today has to be accelerating the death of DSL.

This growth also should be affecting policy. The FCC set the definition of broadband at 25/3 Mbps in January of 2015. If that was a good definition in 2015 then the definition of broadband should have been increased to 63 Mbps in 2019. At the time the FCC set that threshold I thought they were a little generous. In 2014, as the FCC was having this debate, the average home downloaded around 100 gigabytes per month. In 2014 the right definition of broadband was probably more realistically 15 – 20 Mbps and the FCC was obviously a little forward-looking in setting the definition. Even so, the definition of broadband should be increased – if the right definition of broadband in 2014 was 20 Mbps, then today the definition of broadband ought to have been increased to 50 Mbps today.

The current FCC is ignoring these statistics for policy purposes – if they raise the definition of broadband then huge numbers of homes will be classified as not having broadband. The FCC does not want to do that since they are required by Congressional edict to make sure that all homes have broadband. When the FCC set a realistic definition of broadband in 2015 they created a dilemma for themselves. That 2015 definition is already obsolete and if they don’t change it, in a few years it is going to be absurdly ridiculous. One only has to look forward three years from now, when the definition of broadband ought to be 100 Mbps.

These statistics also remind us of the stupidity of handing out federal subsidies to build technologies that deliver less than 100 Mbps. We still have two more years of CAF II construction to upgrade speeds to an anemic 10 Mbps. We are still handing out new subsidies to build networks that can deliver 25/3 Mbps – networks that are obsolete before they are completed.

Network designers will tell you that they try to design networks to satisfy demands at least seven years into the future (which is the average life of many kinds of fiber electronics). If broadband usage keeps doubling every three years, then looking forward seven years to 2026, the average home is going to download 1.7 terabytes per month and will expect download speeds of 318 Mbps. I wonder how many network planners are using that target?

The final implications of this growth are for data caps. Two years ago when Comcast set a terabyte monthly data cap they said that it affected only a few homes – and I’m sure they were right at the time. However, the OpenVault statistics show that 4.12% of homes used a terabyte per month in 2018, almost double from 2.11% in 2017. We’ve now reached that point when the terabyte data cap is going to have teeth, and over the next few years a lot of homes are going to pass that threshold and have to pay a lot more for their broadband. While much of the industry has a hard time believing the growth statistics, I think Comcast knew exactly what they were doing when they established the terabyte cap that seemed so high just a few years ago.

Worldwide Broadband Prices has updated their comparison of worldwide broadband prices. Their report consists of a spreadsheet that compares broadband prices in 195 countries. If you didn’t know there were that many countries, many of the ones on the list are small island countries. The study considered the products offered by the major ISPs in each country. I assume they are using published prices and not some estimate of speeds that customers actually receive.

It’s not easy to compare broadband products because broadband speeds vary significantly around the world. The spreadsheet ranks countries by monthly price, expressed in US dollars, but you can use the spreadsheet to compare other factors. For example, looking at the cost per megabit provides a different perspective.

The US didn’t fare well in a comparison of overall pricing and came in at 119, with a monthly price for broadband at $67.69. This is down three places from last year. The US price was calculated using 25 ISP packages that had an average speed of 54 Mbps and a price per megabit of $1.26.

The cheapest broadband in the world is in Ukraine where the month price is US $5.00 with average download speed of 112 Mbps. To show how hard these comparisons are to make, the second cheapest broadband is in Sri Lanka with a monthly price of $US $5.56, but an average speed of only 11 Mbps, followed by Iran with a monthly price of US $8.20 per month, but a download speed of only 3 Mbps. The largest country at the top of the rankings is Russia, at number 4, where the average cost of broadband is US $9.77 per month with average speeds of 31 Mbps.

At the bottom of the list were two sub-Saharan countries: Mauritania with an average price of US $768.16 for 6 Mbps and Namibia with an average price of US $383.83 for 22 Mbps. Also at the bottom was Papua New Guinea with an average price of US $571.67 for 7 Mbps.

The US fares a little better when ranking by cost per megabit. With a price of $1.26 per megabit we’re at number 56. Number 1 on this comparison is Singapore with a price of US $0.03 per megabit, due to delivering an average speed of 1.6 Gbps for a price of US $50.43 per month. At the bottom of the list were two other sub-Saharan countries, Somalia and Niger that have average broadband speeds of less than 1 Mbps.

Finally, I compared countries by average Internet download speeds. The US came in at number 39 with an average speed of 54 Mbps. At the top of the list is Singapore with the 1.6 Gbps speed. Second is Jersey, in the Channel Islands off Normandy with a speed of 468 Mbps and Panama with an average speed of 273 Mbps.

Like all statistics there is a story go with all of the various countries. For example, China has an average broadband speed of 98 Mbps with an average price of US $41.29 per month. However, China is similar to the US and their data speed blends cities with gigabit speeds with smaller markets with much slower speeds. Among the countries with fast download speeds are places like Hong Kong, Bulgaria and Ireland where the government has set a priority and dedicated public money to building broadband infrastructure.

Since these comparisons are made using advertised prices and speeds, they don’t represent the total actual cost to consumers. For example, in this country some ISPs jack up the price of broadband by requiring an expensive monthly modem rental. In some markets in the US the ISPs deliver significantly slower speeds than advertised, making the products a lot more expensive on a per megabit basis. Many ISPs here also offer bundled discounts, making the prices lower than advertised. I’ve studied broadband prices in specific US markets and I know how hard it is to understand the real cost of broadband – and I’m sure these sorts of things are true in other countries as well. However, the average price of $67.69 for the US doesn’t seem out of line.

US broadband trends will change our rankings over the next few years. For example, prices by the big ISPs are on the increase, as witnessed by the recent $5 monthly increase by Charter for bundled broadband. Wall Street analysts all expect broadband prices in the US to now increase every year after a decade of stable prices. However, the cost per megabit ought to be tumbling here since the big cable companies recently increased customer speeds unilaterally – meaning millions of US customers now have broadband that is significantly faster than just a year ago.

Even with all of the issues of comparing broadband in countries with widely disparate conditions, this kind of comparison is useful. The main takeaway for me from this table is that most of the economic rivals of the US in Asia and Europe have faster broadband speeds than here, and lower monthly prices. Our trend is to increase broadband speeds, at least in urban areas, but prices are going to climb at the same time. If you look at broadband as a basic utility that’s necessary to be competitive, we aren’t stacking up very well.

Rising Broadband Speeds

For the second year in a row the coalition M-Lab measured broadband speeds in 200 countries. This coalition includes New America’s Open Technology Institute, Google Open Source Research, Princeton University’s PlanetLab and others, compiled by Cable of the UK. The statistics are based upon over 163 million speed tests. The results are available in a spreadsheet and are worth looking at for those that love numbers.

Because the results use speed tests, the vagaries of those tests must be factored into the results. Hopefully all of the reading use the same speed test, because each speed test on the market uses a different algorithm to calculate speed. For example, the algorithm for operated by Ookla discards the fastest 10% and the slowest 30% of the results obtained. Speed tests are overinflated in many instances when ISPs use a burst technology that provides a faster broadband speed for the first minute or two or any web connection. The results are also lowered due to any network issues at a customer such as an underperforming WiFi network. The bottom line is that any given speed test number must be taken with a grain of salt, but comparing millions of speed test results ought to make a valid relative comparison.

Overall the tests show a worldwide increase in broadband speeds in just one year of 23%. However, to put that in perspective that’s an increase worldwide going only from 7.4 Mbps to 9.1 Mbps. It’s more interesting to look at the results from the countries with the fastest and slowest broadband. The top 25 fastest broadband countries on the list increased speeds by 28.9% while the bottom 25 only increased by 7.4%.

The US moved up one slot, from number 21 to number 20 to this year – increasing average speeds from 25.0 Mbps to 25.9 Mbps. This is a substantial increase that I think can be attributed to three factors. The most significant is probably that several large cable companies have unilaterally increased base speeds due to the introduction of DOCSIS 3.1. Average speeds also continue to climb as several million customers per year migrate from DSL to cable modems. Finally, we are slowly building fiber to residences and probably added a few million fiber passings last year.

The worldwide broadband leader is Singapore with an average speed of 60.4 Mbps. They are followed by Sweden, Denmark, Norway, Romania, Belgium and the Netherlands. Romania is interesting because they rose 13 places with a jump in speed from 21.3 Mbps to 38.6 Mbps – they obviously have been implementing a lot of fiber. The biggest drop on the chart is Hong Kong that fell 10 places on the list as their broadband speeds dropped slightly from 27.2 Mbps to 26.5 Mbps. It wasn’t too many years ago when Hong Kong was way ahead of the US, but that gap has completely closed.

One of the more important things this research shows is that good broadband can be found in North America, most of Europe and some of southeast Asia. Broadband speeds everywhere else are far behind. The gap between the haves and have-nots is growing. The increase in average speeds for the top 100 countries on the list was 5.4 Mbps in one year while the increase for the bottom countries was only 0.4 Mbps.

It’s also worth remembering that speeds differ within each country. In this country we still have millions of rural homes that have no Internet access or access at third world speeds. The same is likely true around the world with better broadband in urban areas compared to rural areas. It’s also worth remembering that only about 4.1 billion people, or 54% of the population of the world have access to broadband.

These kinds of statistics are useful because they probably act as a goad to governments that are far down the list to find ways to improve broadband. We know that good Internet brings a huge number of economic and other advantages, and countries with good broadband are implementing new technologies that aren’t going to be available in countries with slow broadband networks.

There is hope for those areas with little or now broadband. Several groups are proposing satellites that can bring broadband everywhere. Endeavors like Google’s Loon are looking at bringing broadband to rural areas across the globe. Hopefully we will see speeds in the third world increasing significantly over the next decade. While only in the second year, the work being done by M-Lab is another good measuring stick for governments to measure their progress.

Cisco’s Latest Web Predictions

cheetah-993774Cisco recently published their annual Visual Networking Index and as usual it’s full of interesting facts and predictions. Here are a few of the key highlights that I think small carriers will find interesting:

Busy-hour (or the busiest 60–minute period in a day) Internet traffic increased 51 percent in 2015, compared with 29–percent growth in average traffic. And it’s expected to continue to grow faster with Cisco predicting that by 2020 busy hour traffic will have increased 4.6 times while overall web usage will only double. This is a big change for network providers. Since the advent of web video we’ve seen the evenings become the busiest times on the web, but this trends shows that the evening usage is going to be far greater than the rest of the day. If a network wants to offer a satisfactory service they must design to satisfy the busy evening hours, which in four short years will be over four times busier than today.

Telco companies remember that this was the same historical pattern for voice traffic and now we see the same thing with residential broadband. It means networks must be engineered for the busy hour and are underutilized the rest of the time. Failure to design for this growth means customer dissatisfaction during the busiest hours. It also implies growing demand for faster speeds.

IP video traffic will be 82 percent of all consumer Internet traffic by 2020, up from 70 percent in 2015. As you might expect, much of the increased data traffic on the web will be driven by video and more people use the web for entertainment.

Globally, Internet traffic will reach 21 GB per capita by 2020, up from 7 GB per capital in 2015. This demonstrates that the total amount of data on the web is going to continue to grow at a torrid pace. Part of this growth will come by adding new users to the web, but web traffic everywhere is still growing rapidly.

Broadband speeds will nearly double by 2020 . . . global fixed broadband speeds will reach 47.4 Mbps, up from 24.7 Mbps in 2015. So, not only Internet volumes grow, but customers are going to demand faster speeds. These numbers are a little deceptive in that they combine business and residential fixed broadband speeds together. But still, service providers need to be prepared to increase customer speeds to keep them happy. Expect networks that can’t increase speeds to grow increasingly unpopular.

Business IP traffic will grow at a CAGR of 18% from 2015 to 2020. It’s easy to assume that video is causing consumer data usage to grow much faster than business usage, but business broadband demand is growing almost as quickly as consumer broadband demand.

Smartphone traffic will exceed PC traffic by 2020. This is pretty amazing considering that in 2015 PCs drove 53% of all web traffic while smartphones generated only 8%. But by 2020 Cisco is predicting that traffic from PCs will fall to 29% and traffic from smartphones will grow to 30%. Of course, in North America with our extensive WiFi, a lot of this smartphone traffic will end up on landline connections. To reach these numbers, mobile broadband usage will grow 53% per year through 2020.

The Continued Growth of Broadband

Broadband sales continue to boom at Comcast and Time Warner and the largest cable companies as a group added over 787,000 customers in the third quarter of the year. The largest telcos lost 143,000 customers for a net increase of 644,000 new broadband customers for the quarter. Not included in these numbers are the small telcos and cable companies as well as the FTTP providers and municipalities.

The counts for the largest companies are as follows for the quarter:

‘                                                           End of 3Q                   New in 3Q

Comcast                                              22.9 M                         320,000

Time Warner Cable                            13.0 M                         246,000

Charter                                                  5.4 M                         147,000

Cablevision                                           2.8 M                              3,000

Suddenlink                                            1.2 M                           21,600

Mediacom                                             1.1 M                           16,000

WOW                                                      0.7 M                              (800)

Cable ONE                                             0.5 M                              (171)

Other large cable companies              6.7 M                          35,000

Total Large Cable                                54.3 M                        787,629

AT&T                                                     15.8 M                      (129,000)

Verizon                                                   9.2 M                            2,000

CenturyLink                                           6.1 M                         (37,000)

Frontier                                                  2.4 M                          27,000

Windstream                                           1.1 M                        (11,200)

FairPoint                                                 0.3 M                          (1,338)

Cincinnati Bell                                       0.3 M                            6,200

Total Large Telcos                                35.2 M                      (143,338)

Total Large Companies                       89.5 M                        644,291

You have to be a little careful in looking at the telco numbers because many of those companies are seeing increases in higher bandwidth products while seeing continuing erosion in the older and slower DSL products. For example, Verizon FiOS added 114,000 fiber customers for the quarter but lost almost the same number of DSL customers. AT&T said they gained 172,000 IP broadband customers, which is a combination of those on U-verse and fiber.

The 89.5 million broadband customers of these large companies represent over 66% of all households in the country (135 million total households). These companies actually serve more customers than shown. For example, there are many cases where these companies sell broadband to an apartment owner that then distributes it to the apartment units.

For the cable companies the quarterly increase of 787,629 is an annual growth rate of 5.8% and will annualize out to over 3 million new broadband subscribers. It’s obvious that more and more households are finding it mandatory to have a broadband connection and the whole market keeps creeping upward.