Tag Archives: Broadband

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.

Build It, and They Will Fill It.

I assume that most people know the famous line from Field of Dreams where the disembodied voice promises, “Build it, and he will come.” For twenty years, I’ve been advising broadband clients against taking that advice. It doesn’t make any sense to invest a lot of money into building a broadband network without first having done enough market research to know that people will buy your services.

Today I want to talk about a similar-sounding idea – build it, and they will fill it. This is a shorthand way to describe the unbelievable growth in broadband demand. I’m now warning clients to build new networks that are robust enough to handle the future demand that will inevitably be coming from customers.

We have a lot of evidence of the fast growth of broadband usage. Center stage is statistics from OpenVault that has reported on the average nationwide broadband usage by homes as follows:

1st Quarter 2018          215 Gigabytes

1st Quarter 2019          274 Gigabytes

1st Quarter 2020          403 Gigabytes

1st Quarter 2021          462 Gigabytes

It’s easy to think that the usage spike created by the pandemic is an anomaly, but recent broadband growth has been only slightly higher than the long-term growth trend. The amount of bandwidth used by the average home has been doubling about every three years for several decades.

Another statistic from OpenVault tells a similar story. OpenVault has labeled households that use more than a terabyte of data per month as power users. The percentage of power users has grown from 4% of all homes at the end of 2018 to almost 11% by the middle of 2021.

There are two reasons that average household broadband usage has been growing. Over time, homes are finding new ways to use broadband while also using more broadband for the things we’ve always done.

I think most of us see how familiar tasks are using more broadband. A few years ago, I used Microsoft Word and Excel locally on my computer and the only time I used bandwidth was when I sent a document to somebody else. Today, my files are automatically stored in the cloud as I type, and I also keep another backup copy of everything in a different cloud. I also participate in collaboration software that stores some of the same documents again. For somebody that creates as many spreadsheets and word documents as me, this is a major increase in home broadband usage.

But it’s the new uses of broadband that really add up. New uses of broadband are coming along every day. Just a few years ago, I talked almost exclusively on my cellphone. Today I probably average three hours per day on video calls. As a sports fan, it’s not unusual for me to be streaming two or three 4K games at the same time. I’m not a gamer, but the major game platforms were all in the process of migrating to the cloud just as the pandemic hit. Our Subaru dumps a big file into the cloud every time we pull into our driveway. YouTube has started accepting 8K video that requires a 50 Mbps download stream. There are already early experimental HD virtual reality streams online.

I’m regularly asked why fiber is superior to technologies like wireless or satellite networks – and the answer is easy. Anybody who builds a new broadband network must be prepared for that network to carry ten times more broadband traffic in a decade and one hundred times more traffic in twenty years. Fixed wireless networks are not going to be able to do that. Satellite networks won’t even come close. Until the cable companies make major upgrades, they are already fallen badly behind the demand curve for upload bandwidth.

If you build a fiber network, your customers will fill it. When it gets too busy you can upgrade electronics and start the growth cycle all over again.

Broadband Statistics 4Q 2018

The Leichtman Research Group has published the statistics of broadband subscribers for the largest ISPs for the year ending December 31, 2018. Following compares the end of 2018 to the end of 2017.

 4Q 2018 4Q 2017 Change
Comcast 27,222,000 25,869,000 1,353,000 5.2%
Charter 25,259,000 23,988,000 1,271,000 5.3%
AT&T 15,701,000 15,719,000 (18,000) -0.1%
Verizon 6,961,000 6,959,000  2,000 0.0%
CenturyLink 5,400,000 5,662,000 (262,000) -4.6%
Cox 5,060,000 4,960,000 100,000 2.0%
Altice 4,118,100 4,046,000 71,900 1.8%
Frontier 3,735,000 3,938,000 (203,000) -5.2%
Mediacom 1,260,000 1,209,000 55,000 4.5%
Windstream 1,015,000 1,006,600 8,400 0.8%
Consolidated 778,970 780,794 (1,824) -0.2%
WOW! 759,600 732,700 26,900 3.7%
Cable ONE 663,074 643,153 19,921 3.1%
Cincinnati Bell 311,000 308,700 2,300 0.7%
98,247,744 95,822,147 2,425,597 2.5%

The large ISPs in the table control over 95% of the broadband market in the country. Not included in these numbers are the broadband customers served by the smaller ISPs – the telcos, WISPs, fiber overbuilders and municipalities.

The biggest cable companies continue to dominate the broadband market and now have 64.3 million customers compared to 33.9 million customers for the big telcos. During 2018 the big cable companies collectively added 2.9 million customers while the big telcos collectively lost 472,000 customers.

What is perhaps most astounding is that Comcast and Charter added 2.6 million customers for the year while the total broadband market for the biggest ISPs grew by only 2.5 million. For years it’s been obvious that the big cable companies are approaching monopoly status in metropolitan areas and these statistics demonstrate how Comcast and Charter, in particular, have a stranglehold over competition in their markets.

CenturyLink and Frontier are continuing to bleed DSL customers. Together the two companies lost 465,000 broadband customers in 2018, up from a loss for the two of 343,000 in 2017.

It’s always hard to understand all of the market forces behind these changes. For example, all of the big cable companies are seeing at least some competition from fiber overbuilders in some of their markets. It would be interesting to know how many customers each is losing to fiber competition.

I’d also love to know more about how the big companies are faring in different markets. I suspect that the trends for urban areas are significantly different than in smaller markets. I know that deep data analysis of the FCC’s 477 data might tell that story. (hint, hint in case anybody out there wants to do that analysis!)

I’m also curious if the cable companies are seeing enough bottom-line improvement to justify the expensive upgrades to DOCSIS 3.1. Aside from Comcast and Charter I wonder how companies like Cox, Mediacom and Cable ONE justify the upgrade costs. While those companies are seeing modest growth in broadband customers, each is also losing cable customers, and I’d love to understand if the upgrades are cost-justified.

If there is any one takeaway from these statistics it’s that we still haven’t reached the top of the broadband market. I see articles from time to time that predict that younger households are going to bail on landline broadband in favor of cellular broadband. But seeing that over 2.4 million households added broadband in the last year seems to be telling a different story.

4Q 2017 National Broadband Statistics

As a nation we are approaching an 85% overall penetration of residential broadband. The following statistics come from the latest report from the Leichtman Group and compares broadband customers at the end of 2017 to the end of 2016.

 4Q 2017 4Q 2016 Change
Comcast 25,869,000 24,701,000 1,168,000 4.7%
Charter 23,903,000 22,593,000 1,310,000 5.8%
AT&T 15,719,000 15,605,000 114,000 0.7%
Verizon 6,959,000 7,038,000 (79,000) -1.1%
CenturyLink 5,662,000 5,945,000 (283,000) -4.8%
Cox 4,880,000 4,790,000 90,000 1.9%
Altice 4,046,200 3,962,500 83,700 2.1%
Frontier 3,938,000 4,271,000 (333,000) -7.8%
Mediacom 1,209,000 1,162,000 47,000 4.0%
Windstream 1,006,600 1,051,100 (44,500) -4.2%
WOW! 730,000 718,900 11,100 1.5%
Cable ONE 524,935 513,908 11,027 2.1%
Cincinnati Bell 308,700 303,200 5,500 1.8%
Fairpoint 301,000 306,624 (5,624) -1.8%
95,056,435 92,961,232 2,095,203 2.3%

These large ISPs control over 95% of the broadband market in the country – so looking at them provides a good snapshot of the industry. Not included in these numbers are the broadband customers of the smaller ISPs, the subscribers of WISPs (wireless ISPs) and customers of the various satellite services. Cable companies still dominate the broadband market and have 61.2 million customers compared to 33.9 million customers for the big telcos.

These overall numbers don’t tell the whole story since there is a lot of broadband upgrades happening around the country. Cable companies are starting to upgrade to DOCSIS 3.1 which will mean even faster download speeds. A number of telcos are building fiber to replace DSL, which they are hoping will stop the erosion of DSL customers fleeing to cable companies. There also is continued mergers in the industry, but Leichtman numbers include the impact from mergers into the prior year’s numbers – which is why the table of 2016 customer won’t match up with the same Leichtman table from a year ago.

It’s obvious that the cable companies are still taking DSL customers away from telcos in the cities of America. The cable companies added 2.7 million customers last year, and a significant percentage of these are from DSL customers converting to cable modems. But the telcos as a whole lost only 626,000 customers as a group. What accounts for this difference?

Part of the answer has to be the FCC’s CAF II program. The telcos were give money to bring broadband to over 4 million rural households and the telcos all report that they’ve finished some portion of that buildout by the end of 2017. But 2017 was only the second of a six year program and we should be seeing more broadband customers for AT&T, CenturyLink, Frontier and the other big telcos starting with the 2018 statistics.

The company that surprises me the most is AT&T. They told the FCC and stockholders that they had built fiber to reach 4 million new customers by the end of 2017, out of their goal of 12 million new potential new customers. This goal of 12 million new fiber passings was a condition of their merger with DirecTV. Perhaps they lost a mountain of DSL customers – but you would expect between CAF II and the new fiber builds to see an increase in AT&T broadband subscribers.

CenturyLink is also a bit of a puzzle. They say that they built fiber past 900,000 passings last year and I would have expected to see some benefit from that effort. Granted, they would have converted a lot of DSL customers to fiber, but you would expect them to finally have a competitive advantage with fiber compared to cable networks. And they also claim a substantial rural build from CAF II.

Probably the most important thing about broadband growth in 2017 is that is 30% less than the growth in 2016. We are finally seeing broadband reach it’s peak, and if the rate of growth continues on that curve we are only a few years away from reaching broadband equilibrium where the only broadband growth will come from new housing units entering the market. That will be the point when we will see the big ISPs panic and start struggling to find ways to satisfy Wall Street’s demand for ever-continuing profits.

FCC Takes a New Look at 900 MHz

The FCC continues its examination of the best use of spectrum and released a Notice of Inquiry on August 4 looking at the 900 MHz band of spectrum. They want to know if there is some better way to use the spectrum block. They are specifically looking at the spectrum between 896–901 MHz and 935-940 MHz.

The FCC first looked at this frequency in 1986 and the world has changed drastically since then. The frequency is currently divided into 399 narrowband channels grouped into 10-channel blocks. This licensed use of the spectrum varies by MTA (Major Trading Area), where channels have been allocated according to local demand from commercial users.

One of the more common uses of the spectrum is for SMR service (Specialized Mobile Radio), which is the frequency that’s been used in taxis and other vehicle fleets for many years. The other use is more commonly referred to as B/ILT purposes (Business/Industrial Land Transportation). This supports radios in work fleets, and is used widely to monitor and control equipment (such as monitoring water pumps in a municipal water system). The frequency was also widely used historically for public safety / police networks using push-button walkie-talkies (although cellphones have largely taken over that function).

The FCC currently identifies 2,700 sites used by 500 licensees in the country that are still using B/ILT radios and technologies. These uses include security at nuclear power plants including public alert notifications, flood warning systems, smart grid monitoring for electric networks, and for monitoring petroleum refineries and natural gas distribution systems.

But we live in a bandwidth hungry world. One of the characteristics of this spectrum is that it’s largely local in nature (good for distances of up to a few miles, at most). When mapping the current uses of the frequency it’s clear that there are large portions of the country where the spectrum is not being used. And this has prompted the FCC to ask if there is a better use of the spectrum.

Typically the FCC always finds ways to accommodate existing users and regardless of any changes made it’s unlikely that they are going to cut off use of the spectrum in nuclear plants, electric grids and water systems. But to a large degree the spectrum is being underutilized. Many of the older uses of the spectrum such as walkie-talkies and push-to-talk radios have been supplanted by newer technologies using other spectrum. With that said, there are still some places where the old radios of this type are still in use.

The FCC’s action was prompted by a joint proposal by the Enterprise Wireless Alliance (EWA) and Pacific DataVision (PDV). This petition asks for the frequency to be realigned into three 3 MHz bands that can be used for wireless broadband and two 2 MHz bands that could be used to continue to support the current narrowband uses of the spectrum. They propose that the broadband channels be auctioned to a single user in each BTA but that the narrowband uses continue to be licensed upon request in the same manner as today.

This docket is a perfect example of the complexities that the FCC always has deal with in changing the way that we use spectrum. The big question that has to always be addressed by the FCC is what to do with existing users of the spectrum. Any new allocation plan is going to cause many existing users to relocate their spectrum within the 900 MHz block or to spectrum elsewhere. And it’s generally been the practice of the FCC to make new users of spectrum pay to relocate older uses of spectrum that must be moved. And so the FCC must make a judgement call about whether it makes monetary sense to force relocation.

The FCC also has to always deal with technical issues like interference. Changing the way the spectrum will be used from numerous narrowband channels to a few wideband channels is going to change the interference patterns with other nearby spectrum. And so the FCC must make a determination of the likelihood of a spectrum change not causing more problems than it solves.

This particular band is probably one of the simpler such tasks the FCC can tackle. While the users of the spectrum perform critical tasks with the current spectrum, there is not an unmanageable number of current users and there are also large swaths of the US that have no use at all. But still, the FCC does not want to interfere with the performance at nuclear plants, petroleum refineries or electric grids.

For anybody that wants to read more about how the FCC looks at spectrum, here is the FCC Docket 17-200. The first thing you will immediately notice is that this document, like most FCC documents dealing with wireless spectrum, is probably amongst the most jargon-heavy documents produced by the FCC. But when talking about spectrum the jargon is useful because the needed discussions must be precise. But it is a good primer on the complications involved in changing the way we use spectrum. There has been a recent clamor from the Congress to free up more spectrum for cellular broadband, but this docket is a good example of how complex of an undertaking that can be.

The Market Power of Millennials

wraparound-glassesFour or five times in just the last week I’ve seen news articles that reminded me that we are moving into a millennial world. It’s starting to become clear that millennials are already having a big impact on numerous traditional industries.

We certainly can see the impact of millennials in the telecom industry. New millennial households aren’t buying traditional cable TV packages and landlines. Because of this the average viewer age for traditional TV programming has skyrocketed, which is upsetting the advertising in our industry. Millennials love their smartphones and are happy to use them for the majority of their computing needs. And some are even starting to leave smartphones behind in favor of wearable devices like the Apple iWatch.

This is the first generation that had a radically different childhood than earlier generations. This generation grew up with computers and that seems to have changed them more than past technologies changed other generations. I’m a baby boomer, and we were the first generation to grow up with television and that changed us a bit from our parents. But at the core, the baby boomers still shared mostly the same experiences growing up as their parents, be that with school, church, leisure or social activities.

But it’s becoming obvious that growing up with computers changed the millennials from their parents. This is the first generation that was fully immersed in social networking, texting, smartphones, online shopping and all of the many things that come with being computer-centric.

The millennial phenomenon is not limited to telecom and computers. Millennials are walking away from ‘traditional’ institutions of all kinds. Interest in the NFL and Major League Baseball is dropping – largely due to the fact that millennials aren’t interested. NASCAR has seen attendance and interest drop like crazy – which is something you might expect from a generation that values connectivity more than the past car-centric generations. Church attendance is down. Voting in elections is down. Subscriptions to newspapers, magazines, and traditional news outlets of all kinds are down. Millennials are shunning fast food restaurants, shopping malls and traditional department stores. The bottom line is that this generation has made a big break from the way their parents did things.

So what does this all mean for ISPs, telcos and cable companies? First, it seems to me that millennials also have a different expectation for what it means to be a customer. They are used to buying things online and having the package delivered the next day. They are used to making appointments online and communicating in real time. This is a generation that has already walked away from email and is in the process of walking away from texting. It looks to me like this generation won’t do business with companies that don’t make it easy. For example, everybody in my generation moans about how painful it is to deal with the big cable company – but the millennials seem willing to walk away completely from the cable company or anybody else that is too hard to use.

I build business plans that look forward anywhere from five years to twenty years and sometimes I am not quite sure what to do about millennials in these plans. The one thing our industry sells that millennials seem to like is fast broadband. They live in a video-rich world and like to have multiple streams of video and music running at the same time. It looks like they are ready to slide easily into virtual and enhanced reality technologies which should strengthen their need for broadband. My guess is that millennials will be the ones forcing us oldsters to participate in virtual meetings and using other new technologies.

As different as the millennials are, I really wonder about how different their kids are going to be. If you have recently watched a five year old kid with a smartphone you quickly realize that they really don’t live in the same world as we do, or even as their millennial parents. I don’t know that any of us knows what to expect from the post-millennial generation. That generation is going to grow up in a world of virtual reality, artificial intelligence and all of the new technologies that will be hitting the streets over the next decade. The gulf between them and their grandparents is going to be immense.

An Effective Federal Broadband Program, Part 2

CCG LogoI wrote a blog last week that talked about the things the feds ought to avoid if they design a huge program to build rural broadband. The industry has been buzzing with the possibility that large amounts of federal money might become available for this purpose. But it’s not good enough just to avoid pitfalls. If we really want an effective plan to construct and operate rural broadband there are some positive steps that need to be taken. This series of blogs looks at how to best design a federal broadband construction program to bring broadband to areas that currently don’t have it.

Build for the Future. It would be a huge mistake if a rural broadband expansion builds only to meet today’s definition of broadband. Cisco recently said that the average home today needs about 24 Mbps to meet their needs, which is nearly identical to the FCC’s current definition of broadband. Historically we have seen broadband speeds for customers double about every three years. But Cisco’s latest broadband report suggests this might have slowed down to about every four years. Cisco predicts by 2020 that households will need almost 50 Mbps. Look out a decade from now and the math says that households will need over 140 Mbps.

It would be totally irresponsible to spend billions of federal dollars to build infrastructure that will be inadequate by the time it’s installed. The current CAF II program is a travesty because it is spending billions on DSL and cellular data to achieve 10/1 Mbps speeds and won’t even be completed until 2021. CAF II is not building broadband infrastructure – it’s spending gold-plated federal money to build a lead solution for rural broadband. It’s not going to be very long before all of the rural people getting CAF II networks will be screaming again for something better.

This means a federal broadband program should not be used to fund cellular wireless, point-to-point fixed wireless or DSL. Those technologies all have a place in the marketplace today, but they can’t come close to meeting tomorrow’s needs, so let’s not toss away billions of tax dollars on the wrong technologies.

Use Federal Loan Guarantees. A federal broadband program does not have to rely only on matching grants. The federal government has several loan guarantee programs that can be expanded to bring banks into the funding process. Banks love loan guarantees because they greatly reduce the risk of projects by having the federal government act as the backstop for bad loans. If the review process is done well and funding is only given to companies with a good chance of success, then there should be few loan defaults and the loan guarantee program would cost the federal government very little.

Don’t Forget the Small Towns. It’s easy when looking to fund a rural broadband solution to concentrate only on areas that are categorized as either unserved or underserved. But business plans to serve only the neediest customers are hard to make work. Rural business plans work best if they can also incorporate the small towns and county seats.

The stimulus grants ignored these towns because they are considered to have adequate broadband. That is shortsighted because small towns do not have networks that are up to snuff with urban networks. For example, they may have cable modems, but these little towns are unlikely to get upgraded to the next generation of cable electronics for a long time, if ever. If we want to have successful business plans then the funding needs to also cover the small towns in the middle of the unserved areas to help the service providers achieve an economy of scale.

Don’t Try to Serve Every Home. Any broadband program ought to have the goal of reaching the most homes as possible with the funding available. This means that there should not be rules that require that every customer within a Census block get broadband. Rural Census blocks can be large and can cover diverse topology. A census block might have most customers along a river valley with a few high up nearby mountains, or on the other side of a lake or river. In my experience when designing rural networks the hardest-to-reach 10% of the customers can easily represent 40% of the cost to build. If we want to stretch federal dollars we need flexible rules that allow for realistic business plans. There comes a point where the guy who built on the top of a mountain shouldn’t get broadband, just like it’s hard for him to get electricity or city water or other utilities. What matters more is stretching federal dollars smartly to serve as many homes as possible.

Broadband and the Elderly

Caduceus.svgAlmost every list of potential Internet benefits I have ever seen includes the goal of using broadband to allow people to remain in their homes as they age. It’s one of those uses of broadband that has always been right around the corner. And yet, there is still no suite of products that can deliver on this goal.

This is a bit surprising because America is aging and surveys show that a large majority of aging person wants to stay in their home as long as possible. Nursing home and other kinds of care are expensive and people are willing to spend the money on home care if that is possible.

But I think there is some hope on the horizon. AARP has been holding annual expos to allow vendors to display new products for the elderly. In the broadband / technology area the number of vendors at these demos have grown from 80 in 2012 to 228 in 2015. So there are companies working on the needed technologies and products.

It’s not hard to picture what such a suite of products would look like. It certainly would contain the following:

  • A health monitoring system that would check on vitals statistics such as heartbeat, blood pressure, blood sugar and whatever factors were most important for a particular person.
  • A monitoring system that can track the movements of an elderly person and report when they have fallen or not moved for a while.
  • A system that prompts people to take pills or other needed treatments on time.
  • A 2-way communications system that allows the elderly to stay socially connected to the outside world, to have visits with doctor, etc.
  • A smart bot of some sort (like the Apple Siri or the Amazon Echo) that can help the elderly get things done like make appointments or call for groceries.
  • Eventually there would be a robot or robots to make life easier. They could perform everyday functions like taking out the trash, washing dishes or other tasks that are needed by the stay-at-home person.

We are just now starting to see the first generation of useful personal bots, and it should not be too many more years before a smart bot like Siri can become the interface between an elderly person and the world. We still need bots to get better at understanding natural language, but that seems to be improving by leaps and bounds.

We are probably a decade before there will be the first truly useful house robots that can tackle basic household chores. But once these become common it won’t take long for them to improve to the point where they could become nurse, housekeeper and cook for an elderly person.

According the AARP, the biggest hurdle to developing the needed suite of products is the lack of investors willing to fund the needed technologies. For whatever reason investors are not readily backing companies that want to develop products in this space. This is not unusual for complex technologies like this one. Since the solution is complex, investments in any one part of the product suite are risky. Even should a new product work well there is no guarantee that any given product will be included in the eventual bundles of home care products. This makes investors leery about backing any one solution at the early stage of the industry.

But the pressure will remain to develop these products. The US (and much of the rest of the world) is aging. I just read yesterday that there are over 50,000 people in Japan over 100 years old, up from only a thousand or so a few decades ago. Health breakthroughs are letting people live longer and more productive lives. As a society we need to find a solution for our aging population (since we are all going to get there soon enough).

One thing is for sure – good broadband is a key component of this suite of products. If we don’t find a way to get broadband to everybody by the time these products hit the market, then we will be punishing the elderly that live where there is poor broadband. If you think there is a loud public outcry today from folks without broadband, wait until people’s lives depend upon it.

Tennessee Broadband Study

TennesseeThe State of Tennessee recently undertook the biggest investigation into broadband that I’ve seen from any state. More than 23,000 homes and businesses participated in the study process. What the study found was very familiar to those of us who work every day with broadband issues.

The genesis of the report was from a number of meetings held around the state by Randy Boyd, the new state Commissioner of Economic and Community Development. He reported that during his numerous ‘listening’ sessions around the state that the issue raised the most was about lack of access to broadband. This showed him that the state has a big broadband problem and led to this report.

The report asked what the definition of broadband ought to be in the state. The settled on the 25 Mbps download and 3 Mbps upload used by the FCC. The study showed that 71% of homes with speeds at or above 25 Mbps said they had enough speed while only 48% of homes with 10 Mbps or less said they had enough speed. They discovered that upload speeds matter to businesses and that 3 Mbps seemed to be the minimum threshold for business-level service.  Possibly the most important finding in the study was a warning that the use of bandwidth continues to grow dramatically and that any definition of broadband will need to be continually increased in the future.

The study looked at actual broadband utilization in the state. They determined that 125,000 people in the state have no access to wireline broadband. The report also found that:

  • 69% of businesses and 76% of homes don’t have access to 25 Mbps broadband.
  • Competition means better speeds. For businesses, areas with only one facility-based ISP averaged 22.5 Mbps while areas with three ISPs averaged 43.8 Mbps.
  • 54% of households were connected with the slowest technologies – DSL, cellular wireless, satellite and dial-up.
  • They found that half of households that chose not to buy broadband cite the cost of broadband as their barrier to buying it.

The consultants hired by the state were asked to estimate how much it would cost to build broadband to all of those that didn’t have it. They estimated that it would cost $1.26 billion to build fiber to areas that today have broadband speeds less than 10/1 Mbps. They estimated it would cost $1.72 billion to build fiber to areas that don’t have 25/3 Mbps broadband.

They also looked at the cost of a fixed wireless network and those costs were $1 billion for places with less than 10/1 Mbps broadband and $1.36 billion for those without 25/3 broadband. Those estimates seem high to me. But they might include building a lot of backbone fiber to feed towers and also take into consideration the rugged terrain in much of the state.

The report is concluded by looking for solutions. The report recommended that the state has to get involved if it wants to help to bring broadband everywhere. And so it recommends the following as necessary for the state’s involvement:

  • Strong public leadership that champions broadband
  • Formation of a state broadband office or similar agency
  • Need to find ways to promote effective public-private partnerships
  • Public seed funding and grant programs to encourage investment in broadband
  • Transparency
  • Proper planning and due diligence

This study looked at broadband in Tennessee at a much more granular level than is done by various federal studies. Tennessee is a diverse state and is a mixture of big cities and rural back roads, much of it with rough terrain. But looking at 23,000 homes and businesses represents a big sample of the state and adds validity to the findings. Like a lot of Appalachia, Tennessee has more houses using older technologies for broadband than other parts of the country.

It will be interesting to see if the state acts on this report. Normally this kind of report is followed by a lot of lobbying by the big telcos and cable companies to discredit the results. The conclusions of the report are dead on. As much as governments might sit and hope that the commercial sector will somehow solve their broadband problems, we know in rural America that this will largely not happen. If a state wants to bring broadband to rural residents it must get involved – and the recommended solutions have proven to be effective in states like Minnesota.

The Increasing Importance of Broadband

4cb1f2dc96040Anybody who does what I do for a living has all sorts of evidence that the demand for broadband has been growing. For example, I have worked with rural communities without broadband for many years and have found that the number of people in those communities who say they will buy broadband is growing larger every year. I now have clients who have built rural networks and who have gotten 75% to 80% of the customers in the market footprint. These kinds of take rates would have been extraordinary five years ago but are now becoming the expected.

Pew Research Center has done a new survey that tries to quantify the importance that people place on broadband. They gave this same survey in 2010 and the new survey lets us see how the response to questions about broadband have changed over time. Here are a few of the new results:

  • 52% of people feel that those without the Internet are at a major disadvantage for finding out about job opportunities or obtaining new career skills. Only 25% thought that this is not a disadvantage.
  • 46% thought those without broadband are at a major disadvantage for learning about or accessing government services.
  • 44% think lack of broadband is a disadvantage for learning new things that will improve or enrich people’s lives.
  • And probably most significant, 69% of respondents in general felt that people without internet access have a major disadvantage.

We can also see how those same three responses have changed just since 2010.

  • Those that feel that the Internet is needed for job skills has grown from 43% to 52%.
  • Those that feel that the Internet is needed for access government services has grown from 29% to 46%.
  • Those that feel that access to broadband enriches people’s lives has grown from 41% to 44%.
  • In 2010 56% of people overall thought not having access to the Internet was a disadvantage, and that is now 69%.

For every question studied the percentage of African-Americans, Hispanics and young adults (ages 18-29) that thought the Internet was vital was higher than other groups.

Interestingly, those without home broadband access at home were slightly less likely to think that not having broadband is a major disadvantage. For example, in the recent poll 65% of them thought not having broadband was a major disadvantage compared to 69% of all respondents. But this is also the group that saw the biggest change since 2010 when only 35% of non-broadband households thought that was a disadvantage.

These kinds of surveys are interesting, but of course there are a hundred other questions you’d like to see asked. But sticking to the same questions that were asked in 2010 show how much the importance of broadband has grown in just five years.

I see this shift every day. I’ve been helping communities look for broadband solutions for nearly 15 years. Years ago when a community wanted to talk about broadband there were generally two reasons for it. First was economic development, meaning either attracting new jobs to a community or keeping the existing jobs from leaving. Secondly, communities wanted to get some price competition and thought that the incumbent providers didn’t care about their communities.

But today the demand for better broadband comes from citizens demanding a solution from local politicians. People hear of other communities that have found a way to bring broadband and they want the same. People without broadband are starting to feel like they are being left behind – and to a great extent they are. This kind of survey just reaffirms what we already know.