Are Americans Abandoning Wireline Data?

Copper CableA study conducted for the Commerce Department by the U.S. Census Bureau shows that there has been an increase in households that have mobile data as their only source of broadband. Certainly this huge survey that got 53,000 responses must be considered as statistically valid. One thing the survey showed is that broadband has become a commodity and more people than ever before have some sort of broadband.

The survey also showed that having landline broadband is tied to household income. Nearly one third of households that make under $25,000 per year have mobile data as their only broadband product. And that is up from 16% of these households in 2013. This must be a function of affordability and it’s not hard to see how lower income homes can’t afford both smartphones and landline broadband.

But the survey showed other trends that were a surprise. The survey shows that 18% of homes making between $50,000 per year and $75,000 per year have mobile-only data, a huge jump upward from 8% in 2013. And 17% of homes making between $75,000 and $100,000 are now mobile-only, another big jump up from 8% in 2013. The survey showed that even 15% of homes making more than $100,000 have gone to mobile-only data, another big increase from 6% in 2013.

But there are other industry statistics that don’t seem to jive with these numbers. All of the publicly traded ISPs routinely report customer counts and for 2015, as a whole, the industry showed a net increase of over 3 million new landline broadband connections last year. Industry analysts are expecting almost the same increase for the whole ISP industry in 2016. With about 125 million total households in the country that will mean that nearly 5% more of total households will have added landline broadband in 2015 and 2016. That huge increase in landline data connections seems to contradict the survey numbers.

Certainly there must be many people (particularly in urban areas) that can get by without a landline data connection. In cities there is more and more WiFi available. People have WiFi at work and more and more businesses in the city provide it as a convenience to their customers. And there are plenty of people living in tightly packed apartments that share a WiFi connection with a nearby neighbor.

But it’s hard to think this can account for the huge shift shown by the survey. If the survey is correct, then as many as 10% of all homes have abandoned a landline data connection since 2013 – over 12 million homes – and the industry numbers just don’t back that up.

Certainly any big user of data at home must have a landline connection. Nobody is going to use mobile data for watching video or playing online games. Nobody is even going to use mobile data for any serious amount of school work or for taking work home from the office. The small data caps make that far too expensive.

Our big cellular companies have priced mobile data to be among the most expensive broadband in the world when measured as cost per downloaded gigabit. Nobody who uses any significant data is going to use data that is as much as 100 times more expensive as a landline data connection unless they have no choice. There are certainly plenty of households in rural areas who use their cellular data connection as the only source of broadband. They use it very sparingly and still report getting huge monthly bills for mobile data.

I have no idea how to reconcile these two very different set of facts. We know the number of landline data connections that ISPs sell and that number tells a very different story than this survey. And while it’s anecdotal, I can’t think of one of my hundreds of clients who is not seeing annual increases in landline data customers.

But this survey asked the question to 53,000 respondents, and in the world of statistics this means the information received from the survey should be extremely believable. The survey results would be very suspect if the questions were misleading or if the survey was not administered randomly. But I would think that an organization like the Census would have been careful to have gotten these things right. This difference between these two sets of facts is a puzzle and I am sure that over time that the trend will become clear – whatever it is. But for now I am very skeptical of the survey results until they have been collaborated with other data.

Who Has Fast Broadband?

The Department of Commerce issued the following graph recently as part of a report titled Competition Among US Broadband Service Providers. The graph is a little hard to read, so I include it here for easier viewing. The purpose of the graph is to show that there is not very much competition for data speeds of 25 Mbps and higher. The graph shows the number of households that are able to buy various speeds of broadband from a low of 3 Mbps to a high of 1 Gbps. It does a good job of demonstrating the story that the Commerce Department wants to tell – which is that for most markets there is only one provider of fast Internet.

commerce_department_broadband

But there is another story told by this graph that nobody seems to want to talk about, which is how the government is doing a really lousy job of counting the number of households that still can’t get the slower speeds of Internet access. This graph shows, for example that only two million US households can’t get 3 Mbps download speeds and that 6 million can’t get 10 Mbps. And those numbers are total bosh.

These numbers are based upon the database that supports the National Broadband Map, and frankly, for rural America, this data is a farce. The problem with the map is that the data speeds are self-reported by the telcos and cable companies and supposedly represents the speeds that the carriers advertise in various markets, not the speeds that people can actually get. Further, the speeds are counted by census block, and if only a few homes in a block can get a certain speed then it is assumed that most can. This blog is too short of a forum to go into a detailed discussion of why the sampling method behind the map is a misuse of statistics, which would require a math-based whitepaper, and maybe one of these days I’ll take the time to write it.

Consider the actual speeds that can be achieved with DSL, where the speed drops rapidly with distance from the DSL hub, called a DSLAM. On very good copper DSL can deliver 10 Mbps of speed for about 7,000 feet. That’s not 7,000 feet as the crow flies, but 7,000 feet of pole lines. In most places that is not a whole lot more than a mile. Good copper can deliver 3 Mbps up to about 13,000 feet, which is almost twice as far as 10 Mbps but which only still equates to maybe 2.5 miles. And the sad reality is that most rural copper is not very good and so actual distances that can be achieved are going to be less than these theoretical distances. It’s well known that the largest telcos like AT&T, Verizon and Qwest neglected rural copper for decades and their copper in many places is a disaster.

Further, a lot of rural towns are still equipped with older DSL technology that tops off at a capacity of between 1 Mbps and 6 Mbps. In those communities even the people in town can’t get 10 Mbps as is suggested by the National Broadband Map. The reality is that the large telcos generally advertise the same products everywhere in a region. So small towns will see advertisements that say something like “speeds up to 20 Mbps, with fine print at the bottom of the ad that will say “where available”. Thus the large companies are not lying when they say they advertise fast speeds in rural areas, but the whole point of the Map is supposed to be to measure the broadband that people can buy.

What is even worse is that the large telcos will sell you DSL that barely works. I’ve heard of rural customers who buy DSL with speeds as low as 144 kbps, just a little faster than dial-up. At peak times some of these people revert to dial-up which is faster. And they pay the same price as a customer in the nearby town who might have 6 Mbps. Households with these slow speeds are undoubtedly shown on the Broadband Map as able to buy broadband.

Cable companies have a more definable situation. Cable ends where the coaxial cable ends and if you live one home beyond the last connection you can’t get cable modem. Almost all of the faster speeds on this chart are from urban and suburban cable modems. Many of those systems have been upgraded to deliver over 100 Mbps, and in competitive places like Austin TX they can deliver over 300 Mbps. But rural cable systems share a problem with rural telcos in that many of the systems are old. Some older cable systems don’t yet offer cable modems. And many other older systems can’t deliver speeds greater than 6 Mbps, making them very similar to rural copper systems.

So this graph works for the story it wants to tell, which is that there is often only one provider in a market that will offer speeds of 25 Mbps and higher. But the government really needs to stop publishing statistics  that make it look like most of the country already can get speeds of 10 Mbps, because it simply is not true in much of rural America. I get a little angry every time I see the government make pronouncements based upon this bad data. It feels like a cover-up with the government and the FCC together to deny how poor our broadband is. I wish it was true that  only two million people can’t get 3 Mbps and only 6 million can’t get 10 Mbps, because we wouldn’t have as far to go to improve.