Access to Low-Price Broadband

The consumer advocate BroadbandNow recently made an analysis of broadband prices across the US and came up with several conclusions:

  • Broadband prices are higher in rural America.
  • They conclude that 45% of households don’t have access to a ‘low-priced plan’ for a wired Internet connection.

They based their research by looking at the published prices of over 2,000 ISPs. As somebody who does that same kind of research in individual markets, I can say that there is often a big difference between published rates and actual rates. Smaller ISPs tend to charge the prices they advertise, so the prices that BroadbandNow found in rural America are likely the prices most customers really pay.

However, the big ISPs in urban areas routinely negotiate rates with customers and a significant percentage of urban broadband customers pay something less than the advertised rates. But the reality is messier even than that since a majority of customers still participate in a bundle of services. It’s usually almost impossible to know the price of any one service inside a bundle and the ISP only reveals the actual rate when a customer tries to break the bundle to drop one of the bundled services. For example, a customer may think they are paying $50 for broadband in a bundle but find out their real rate is $70 if they try to drop cable TV. These issues make it hard to make any sense out of urban broadband rates.

I can affirm that rural broadband rates are generally higher. A lot of rural areas are served by smaller telcos and these companies realize that they need to charge higher rates in order to survive. As the federal subsidies to rural telcos have been reduced over the years these smaller companies have had to charge realistic rates that match their higher costs of doing business in rural America.

I think rural customers understand this. It’s a lot more expensive for an ISP to provide broadband in a place where there are only a few customers per road-mile of network than in urban areas where there might be hundreds of customers per mile. A lot of other commodities cost more in rural America for this same reason.

What this report is not highlighting is that the lower-price broadband in urban areas is DSL. The big telcos have purposefully priced DSL below the cost of cable modem broadband as their best strategy to keep customers. When you find an urban customer that’s paying $40 or $50 for broadband it’s almost always going to be somebody using DSL.

This raises the question of how much longer urban customers will continue to have the DSL option. We’ve already seen Verizon abandon copper-based products in hundreds of urban exchanges in the last few years. Customers in those exchanges can theoretically now buy FiOS on fiber – and pay more for the fiber broadband. This means for large swaths of the northeast urban centers that the DSL option will soon be gone forever. There are persistent industry rumors that CenturyLink would like to get out of the copper business, although I’ve heard no ideas of how they might do it. It’s also just a matter of time before AT&T starts walking away from copper. Will there even be any urban copper a decade from now? Realistically, as DSL disappears with the removal of copper the lowest prices in the market will disappear as well.

There is another trend that impacts the idea of affordable broadband. We know that the big cable companies now understand that their primary way to keep their bottom line growing is to raise broadband rates. We’ve already seen big broadband rate increases in the last year, such as the $5 rate increase from Charter for bundled broadband.

The expectation on Wall Street is that the cable companies will regularly increase broadband rates going into the future. One analyst a year ago advised Comcast that basic broadband ought to cost $90. The cable companies are raising broadband rates in other quieter ways. Several big cable companies have told their boards that they are going to cut back on offering sales incentives for new customers and they want to slow down on negotiating rates with existing customers. It would be a huge rate increase for most customers if they are forced to pay the ‘list’ prices for broadband.

We also see carriers like Comcast starting to collect some significant revenues for customers going over the month data caps. As household broadband volumes continue to grow the percentage of people using their monthly cap should grow rapidly. We’ve also seen ISPs jack up the cost of WiFi or other modems as a backdoor way to get more broadband revenue.

As the cable companies find way to extract more revenue out of broadband customers and as the big telcos migrate out of DSL my bet is that by a decade from now there will be very few customers with ‘affordable’ broadband. Every trend is moving in the opposite direction.

Rural America Deserved Better

I’ve often contended that the large telcos have made their money back several times over in rural America and could have comfortably rolled those profits back into rural networks. If they had done so then by now most of rural America would have at least 25/3 Mbps DSL and an upgrade to rural fiber would be underway.

Since the big telcos haven’t modernized rural networks for decades we are now faced with making the leap from poorly maintained copper straight to fiber. Sadly, the big telcos could have copied what smaller telcos have done – continually build a little fiber each year deeper into the rural areas to reduce the length of the copper loops. I’ve watched small telco clients over the last twenty years that have upgraded rural DSL from 1 Mbps to 6 Mbps to 15 Mbps and then to 25 Mbps or faster.

Instead, the big telcos built DSL in county seats and some other small towns in their service areas. Where the small telcos might have upgraded electronics three or four times since the late 1990s, the big telcos have likely upgraded the DSL in towns once, and perhaps in some lucky towns twice. This is why it’s still easy to go to rural towns all over the US and find maximum DSL speeds of 6 Mbps or 12 Mbps. The DSL electronics in many of these towns are now over ten or fifteen years old. The big telcos also rarely extended DSL outside of the town hubs. Customers that lived within a few miles of town were given DSL of perhaps 1 Mbps or 2 Mbps and customers further out were offered DSL that is often barely faster than dial-up.

This was all a deliberate decision. Upper management of the big telcos decided before 2000 that they weren’t going to extend DSL into the rural areas surrounding towns and they’ve made zero effort to do so since then. The big telcos failed their rural customers when they walked away from upgrading the copper and regulators mostly let them get away with it. The telcos had collected telephone revenues from the rural areas for decades before 2000. The telcos were all still regulated in 2000 and were all still considered as the carrier of last resort for telephone service. I think the FCC and state regulators screwed up when they didn’t also make them the carrier of last resort for broadband.

Some states tried to force the telcos to provide rural broadband. Pennsylvania is a famous example of bad behavior by the big telcos. In 1993 Bell Atlantic promised state regulators that they would bring universal broadband to cover over two million rural homes in the state. The state rewarded the telco by allowing a major rate increase, supposedly to help pay for the upgrades. It’s now 26 years later and the company that renamed itself as Verizon never made any of the promised upgrades. The rural valleys of central and western Pennsylvania have some of the worse rural broadband in America due to this broken promise.

The sad thing is that states like Pennsylvania had to try to bribe the telco to do the right thing. As regulated telcos, the companies should have routinely spent annual capital to improve the rural networks, a little each year. They were collecting the revenues to make it happen. What I find shortsighted about this decision by the telcos is that, if they had upgraded to decent rural broadband they likely would enjoy 80%+ broadband penetration rates in rural areas – all with zero competition. The telcos passed on the opportunity to make a lot of money.

It’s a lot harder today to make a business case to leap from copper to fiber – mostly because little rural fiber has already been built in many counties. If the big telcos had built fiber deep into the last mile, then the upgrade to fiber could have been gradually introduced over time. Instead, the big telcos simply all decided that they were quietly going to walk away from rural America without making any announcement they were doing so. For years they have talked about their commitment to rural America. They are putting out press releases even today patting themselves on the back for the CAF II upgrades – which was funded by the FCC but which should all have been funded over past decades using the revenues collected from rural customers.

If the big telcos had done what they were supposed to have done as regulated carriers, then the CAF II subsidies could have been used to aid them in upgrading to fiber in the last mile. We know this could work because most small rural telcos are making upgrades to fiber from the ACAM funds, which is equivalent to the CAF II funds, but for smaller telcos.

I lay a lot of blame on the regulators. Everybody in the industry understood what the big telcos were doing (and not doing). Regulators could have been a lot tougher and threatened to yank the big telco franchises in rural America. In the perfect world, regulators would have handed the rural service areas of the big telcos to somebody else twenty years ago when it was clear the telcos had all but abandoned the properties.

Telco regulation helped to build the copper networks that reach to rural homes and regulation should have been used to expand broadband. The sad part of all of this is that, if the telcos had done the right thing, then millions of homes in rural America would have decent broadband today, provided by the telcos, and the telcos would be benefitting from the revenues from those customers. Rural America deserved better.

Please, Not Another Mapping Debacle

There are numerous parties making proposals to the FCC on how to fix the broken broadband mapping program. Today I want to look at the proposal made by USTelecom. On the surface the USTelecom proposal sounds reasonable. They want to geocode every home and business in the US to create a giant database and map of potential broadband customers. ISPs will then overlay speeds on the detailed maps, by address. USTelecom suggests that defining broadband by address will eliminate the problems of reporting broadband by Census block.

Their idea should work well for customers of fiber ISPs and cable companies. Customer addresses are either covered by those technologies or they’re not. But the proposed new maps won’t do much better than current maps for the other technologies used in rural America for a number of reasons:

  • Telcos that provide rural DSL aren’t going to tell the truth about the speeds being delivered. Does anybody honestly believe that after taking billions of dollars to improve rural DSL that Frontier and CenturyLink are going to admit on these maps that customers in areas covered by CAF II are getting less than 10 Mbps?
  • In the telcos favor, it’s not easy for them to define DSL speeds. We know that DSL speeds drop with distance from a DSLAM transmitting point, so the speed is different with each customer, even with ideal copper.
  • Rural copper is far from ideal, and DSL speeds vary widely by customer due to local conditions. The quality can vary between wires in the same sheathe due to damage or corrosion over time. The quality of the drop wires from the street to the house can drastically impact DSL speeds. Even the inside copper wiring at a home can have a big influence. We also know that in many networks that DSL bogs down in the evenings due to inadquate backhaul, so time of day impacts the speed.
  • What is never mentioned when talking about rural DSL is how many customers are simply told by a telco that DSL won’t work at their home because of one of these reasons. Telcos aren’t reporting these customers as unservable today and it’s unlikely that they’ll be properly reported in the future.
  • Rural fixed wireless has similar issues. The ideal wireless connection has an unimpeded line-of-sight, but many customers have less than an ideal situation. Even a little foliage can slow a connection. Further, every wireless coverage area has dead spots and many customers are blocked from receiving service. Like DSL, wireless speeds also weaken with distance – something a WISP is unlikely or unwilling to disclose by customer. Further, while WISPs can report on what they are delivering to current customers they have no way of knowing about other homes until they climb on the roof and test the line-of-sight.
  • It’s also going to be interesting to see if urban ISPs admit on maps to the redlining and other practices that have supposedly left millions of urban homes without broadband. Current maps ignore this issue.

USTelecom also wants to test-drive the idea of allowing individuals to provide feedback to the maps. Again, this sounds like a good idea. But in real life this is full of problems:

  • Homeowners often don’t know what speeds they are supposed to get, and ISPs often don’t list the speed on bills. The broadband map is supposed to measure the fastest speed available, and the feedback process will be a mess if customers purchasing slower products interject into the process.
  • There are also a lot of problems with home broadband caused by the customer. ISPs operating fiber networks say that customers claiming low speeds usually have a WiFi problem. Customers might be operating ancient WiFi routers or else are measuring speed after the signal has passed through inside multiple walls.

I still like the idea of feedback. My preference would be to allow local governments to be the conduit for feedback to the maps. We saw that work well recently when communities intervened to fix the maps as part of the Mobility Fund Phase II grants that were intended to expand rural 4G coverage.

My real fear is that the effort to rework the maps is nothing more than a delaying tactic. If we start on a new mapping effort now the FCC can throw their hands up for the next three years and take no action on rural broadband. They’ll have the excuse that they shouldn’t make decision based on faulty maps. Sadly, after the three years my bet is that new maps will be just as bad as the current ones – at least in rural America.

I’m not busting on USTelecom’s proposal as much as I’m busting on all proposals. We should not be using maps to decide the allocation of subsidies and grants. It would be so much easier to apply a technology test – we don’t need maps to know that fiber is always better than DSL. The FCC can’t go wrong with a goal of supplanting big telco copper.

Comcast the ISP

Occasionally I see a statistic that really surprises me. I just read a quote from Dave Watson, the President of Comcast Cable where he told investors that Comcast has an overall 47% broadband market penetration rate, meaning that 47% of the households in their footprint buy broadband from Comcast. I would have guessed that their market penetration rate was higher. He did say that they have markets where they exceed a 60% market share.

There are a few reasons why their overall market share isn’t higher. For one thing, the company overlaps a lot of the same big markets where Verizon competes with fiber-based FiOS. The company also competes with fiber overbuilders like US Internet in Minneapolis and Sonic in the Bay Area that are chipping away at broadband customers. The company is also competing against a few municipal fiber overbuilders like in Chattanooga where the city-based fiber ISP has won the lion’s share of the market. It’s clear that fiber is a formidable competitor for any cable company.

Comcast also faces significant competition in the MDU market where there are numerous companies vying to serve large apartment buildings and complexes. For example, a big percentage of AT&T’s fiber expansion goal to pass 12 potential customers has been achieved through building fiber to large MDUs all around the country. There are also a number of successful ISPs that compete nationwide in the large MDU market.

Comcast, like all of the big cable companies, was a latecomer in competing for the business market. Historically the cable companies didn’t build their network in business districts and the telcos and CLECs gained early control of this market. Comcast and other cable companies now compete vigorously in the business market, but this is the one market segment that is competitive almost everywhere.

It is clear that Comcast is winning the battle against DSL. Comcast added 1.35 million broadband customers in 2018, while the telcos collectively lost nearly half a million customers.

I believe that the secret to the recent Comcast success is from offering faster broadband speeds. The company has upgraded to DOCSIS 3.1 and now offers gigabit broadband speeds. More importantly, the company has unilaterally increased speeds across-the-board several times to give them a significant speed advantage over DSL. The most recent speed increase last year increased base product speeds to 200 Mbps. It’s now an easy marketing advantage for the company to contrast this with the top DSL speed of 50 Mbps. Comcast is betting that speed wins and looking at the trend of their customers versus the telcos they seem to be right.

Comcast is also benefitting from the fact that many homes now find themselves bumping against the speed limits on slower products. Many homes that use multiple devices simultaneously are starting to find that a broadband speed of even 50 Mbps isn’t adequate for the way they want to use broadband. We are finally reaching the point where even the best DSL is becoming obsolete for many families. This trend is certainly accelerating and we saw 3.5 million new cord-cutting households last year who now watch all video online.

Even knowing all of the above market trends I was still surprised by the 47% market share. My firm does broadband surveys and we’ve never seen a Comcast or Charter market share below 60% in the markets we’ve studied. Of course, our experience is biased by the fact that we are only studying markets where somebody is thinking about building fiber, and there are undoubtedly Comcast markets that are considerably higher or lower than the 47% average market share.

I expect the Comcast market share to keep climbing. I think they have now won the war with DSL and in those markets where they aren’t facing a fiber competitor they will continue to pick up customers who realize they need more speed. As the household demand for broadband continues to double every three years, the migration from DSL to cable broadband is likely to accelerate.

I think it’s likely that telcos with copper networks are starting to lose steam. As the telcos keep losing DSL customers one has to wonder how much money the telcos will spend on advertising to support a sinking market. Just like I’m always surprised when I find out that there are still a few million dial-up customers remaining across the country, I think we have reached the tipping point on DSL, and DSL will start to be considered as a dead and dying technology. It might take another decade for DSL to finally die, but that slow death is finally underway.

Where’s the CAF II Success?

If you’ve read this blog you know I’ve been a big critic of the FCC’s CAF II program that gave over $10 billion in federal subsidies to the biggest telcos to improve rural broadband. My complaint is that the program set the embarrassingly low goal of improving rural broadband to speeds of at least 10/1 Mbps. My complaint is that this money could have done a huge amount of good had it been put up to reverse auction as was done with the leftover customers from this program last year – many ISPs would have used this funding to help to build rural fiber. Instead, the telcos are using the money mostly to upgrade DSL.

While I think the program was ill-conceived and was a giveaway to the big telco lobbyists, I am at least glad that it is improving rural broadband. For a household with no broadband, a 10 Mbps product might provide basic access to broadband services for the first time. We are now into the fifth year of the six-year program, so we ought to be seeing the results of these upgrades. USTelecom just published a blog saying that deployments are ahead of schedule and that CAF II is a quiet success.

The telcos have told the FCC they are largely on track – by the end of 2018 they should have upgraded broadband for at least 60% of the required households. AT&T and Windstream report that they have made at least 60% of the needed upgrades everywhere. Frontier says they are on track in 27 of the 29 states needing upgrades. CenturyLink says they are on track in only 23 of 33 states that are getting CAF II upgrades. According to USTelecom, over 2.1 million households should now be seeing faster speeds.

It’s also worth noting that the CAF II program should improve broadband for many more households that are not covered directly by the program. For example, when upgrading DSL for a CAF II area that surrounds a town, those living in the town should also see better broadband. The secondary benefit of the CAF program is that rural towns should be seeing speeds increasing from 6 Mbps or slower to as fast as 25 Mbps. By now many more millions of households should be seeing faster broadband due to CAF II.

What I find puzzling is that I would expect to see an upward burst of broadband customers for the big telcos because of CAF II. But the numbers aren’t showing that. There were four telcos that accepted more than $1 billion from the program, as follows, and three of them lost broadband customers in 2018:

Funding Households Per Household 2018 Broadband Customers
CenturyLink $3.09 B 1,190,016 $2,593 (262,000)
AT&T $2.96 B 1,265,036 $2,342 (18,000)
Frontier $1.7 B 659,587 $2,578 (203,000)
Windstream $1.07 B 413,345 $2,595 8,400
Total CAF II $10.05 B 4,075,840 $2,467

Windstream is the only telco of the four that gained customers last year. Windstream’s footprint is probably the most rural of the four telcos. We know that every telco is losing the battle for customers in towns where cable companies are increasing speeds on coaxial networks. Windstream seems to be offsetting those losses, and I can conjecture it’s because they have been selling more rural broadband.

AT&T is in a category all by itself. It’s impossible to know how AT&T is faring with CAF II. They are largely implementing CAF II using their cellular network (with the goal of tearing down rural copper). The company has also been deploying fiber past millions of homes and business in urban areas. They are clearly losing the residential broadband battle in urban markets to companies like Comcast and Charter. However, I can tell you anecdotally that AT&T hasn’t given up on urban copper. They have knocked on my door in Asheville, NC at least three times in the last year trying to sell DSL. I have to assume that they are also marketing broadband improvements in rural areas.

CenturyLink and Frontier are clearly bleeding broadband customers and each lost over 200,000 customers just in the last year. I have to wonder how hard these companies are marketing improved rural broadband. Both companies work in urban and suburban markets but also in numerous county seats situated in rural counties. Like every telco they are losing DSL customers in these markets to the cable company competitors.

Just like I have anecdotal evidence that AT&T is still pushing copper I hear stories that say the opposite for CenturyLink and Frontier. I worked in a few rural counties last year where the CAF II upgrades were reported as complete. And yet the communities seemed unaware of the improvements. Local politicians who bear the brunt of complaints from households that want better broadband weren’t aware of any upgrades – which tells me their rural constituents weren’t aware of upgrades.

I honestly don’t know what this all means. I really expected to find more positive evidence of the impact of CAF II. From what I know of rural America, households ought to leap at the opportunity to buy 10/1 Mbps DSL if they’ve had no broadband in the past. Are the upgrades being done but not being followed up with a marketing and public awareness campaign? Are actual upgraded speed not meeting the 10/1 Mbps goal? Are the upgrades really being made as reported to the FCC? We’re perhaps a year and a half away from the completion of CAF II, so I guess we’ll find out soon enough.

The Status of the CAF II Deployments

The Benton Foundation noted last month that both CenturyLink and Frontier have not met all of their milestones for deployment of CAF II. This funding from the FCC is supposed to be used to improve rural broadband to speeds of at least 10/1 Mbps. As of the end of 2018, the CAF II recipients were to have completed upgrades to at least 60% of the customers in each state covered by the funding.

CenturyLink took funding to improve broadband in 33 states covering over 1 million homes and businesses. CenturyLink claims to have met the 60% milestone in twenty-three states but didn’t make the goal in eleven states: Colorado, Idaho, Kansas, Michigan, Minnesota, Missouri, Montana, Ohio, Oregon, Washington, and Wisconsin.

Frontier received CAF II funding to improve broadband to over 774,000 locations in 29 states. Frontier says they’ve met the milestone in 27 states but haven’t reached the 60% deployment milestone in Nebraska and New Mexico.  There were a number of other large telcos that took CAF Ii funding like AT&T, Windstream, and Consolidated, and I have to assume that they’ve reported meeting the 60% milestone.

Back in 2014 when it looked like the CAF II program might be awarded by reverse auction, we helped a number of clients take a look at the CAF II service areas. In many cases, these are large rural areas that cover 50% or more of most of the rural counties in the country. Most of my clients were interested in the CAF II money as a funding mechanism to help pay for rural fiber, but all of the big telcos other than AT&T announced originally that they planned to upgrade existing DSL. AT&T announced a strategy early on to used fixed cellular wireless to satisfy their CAF II requirements. Since then a few big telcos like Frontier and Windstream have said that they are also using fixed wireless to meet their obligations.

To us, the announcement that the telcos were going to upgrade DSL set off red flag alarms. In a lot of rural counties there are only a small number of towns, and those towns are the only places where the big telcos have DSLAMs (the DSL hub). Rural telephone exchanges tend to be large and the vast majority of rural customers have always been far out of range of DSL that originates in the small towns. One only has to go a few miles – barely outside the towns – to see DSL speeds fall off to nothing.

The only way to make DSL work in the CAF II areas would be to build fiber to rural locations and establish new DSL hub sites. As any independent telco can tell you who deployed DSL the right way, this is expensive because it takes a lot of the rural DSLAMs to get within range of every customer. By electing DSL upgrades, the big telcos like CenturyLink and Frontier had essentially agreed to build a dozen or more fiber DSLAMs in each of the rural counties covered by CAF II. My back-of-the-envelope math showed that was going to cost a lot more than what the companies were receiving from the CAF fund. Since I knew these telcos didn’t want to spend their own money in rural America, I predicted execution failures for many of the planned DSL deployments.

I believe the big telcos are now facing a huge dilemma. They’ve reached 60% of customers in many places (but not all). However, it is going to cost two to three times more per home to reach the remaining 40% of homes. The remaining customers are the ones on extremely long copper loops and DSL is an expensive technology use for reaching these last customers. A DSLAM built to serve the customers at the ends of these loops might only serve a few customers – and it’s hard to justify the cost of the fiber and electronics needed to reach them.

I’ve believed from the beginning that the big telcos building DSL for the CAF II program would take the approach of covering the low hanging fruit – those customers that can be reached by the deployment of a few DSLAMs in a given rural area. If that’s true, then the big telcos aren’t going to spend the money to reach the most remote customers, meaning a huge number of CAF II customers are going to see zero improvements in broadband. The telcos mostly met their 60% targets by serving the low-hanging fruit. They are going to have a huge challenge meeting the next milestones of 80% and 100%.

Probably because I write this blog, I hear from folks at all levels of the industry about rural broadband. I’ve heard a lot of stories from technicians telling me that some of the big telcos have only tackled the low-hanging fruit in the CAF builds. I’ve heard from others that some telcos aren’t spending more than a fraction of the CAF II money they got from the FCC and are pocketing much of it. I’ve heard from rural customers who supposedly already got a CAF II upgrade and aren’t seeing speeds improved to the 10/1 threshold.

The CAF II program will be finished soon and I’m already wondering how the telcos are going to report the results to the FCC if they took shortcuts and didn’t make all of the CAF II upgrades. Will they say they’ve covered everybody when some homes saw no improvement? Will they claim 10/1 Mbps speeds when many households were upgraded to something slower? If they come clean, how will the FCC react? Will the FCC try to find the truth or sweep it under the rug?

Facebook Takes a Stab at Wireless Broadband

Facebook has been exploring two technologies in its labs that they hope will make broadband more accessible for the many communities around the world that have poor or zero broadband. The technology I’m discussing today is Terragraph which uses an outdoor 60 GHz network to deliver broadband. The other is Project ARIES which is an attempt to beef up the throughput on low-bandwidth cellular networks.

The Terragraph technology was originally intended as a way to bring street-level WiFi to high-density urban downtowns. Facebook looked around the globe and saw many large cities that lack basic broadband infrastructure – it’s nearly impossible to fund fiber in third world urban centers. The Terragraph technology uses 60 GHz bandwidth and the 802.11ay standard – this technology combination was originally called AirGig.

Using 60GHz and 801.11ay together is an interesting choice for an outdoor application. On a broadcast basis (hotspot) this frequency only carries between 35 and 100 feet depending upon humidity and other factors. The original intended use of the AirGig was as an indoor gigabit wireless network for offices. The 60 GHz spectrum won’t pass through anything, so it was intended to be a wireless gigabit link within a single room. 60 GHz faces problems as an outdoor technology since the frequency is absorbed by both oxygen and water vapor. But numerous countries have released 60Ghz as unlicensed spectrum, making it available without costly spectrum licenses, and the channels are large enough to still be able to deliver bandwidth even with the physical limitations.

It turns out that a focused beam of 60 GHz spectrum will carry up to about 250 meters when used as backhaul. The urban Terragraph network planned to mount 60 GHz units on downtowns poles and buildings. These units would act as both hotspots and to create a backhaul mesh network between units. This is similar to the WiFi networks we saw being tried in a few US cities almost twenty years ago. The biggest downside to the urban idea is the lack of cheap handsets that can use this frequency.

Facebook took a right turn on the urban idea and completed a trial of the technology deployed in a different network design. Last May Facebook worked with Deutsche Telekom to deploy a fixed Terragraph network in Mikebuda, Hungary. This is a small town of about 150 homes covering 0.4 square kilometers – about 100 acres. This is drastically different than a dense urban deployment with a far lower housing density than US suburbs – this is similar to many small rural towns in the US with large lots, and empty spaces between homes. The only current broadband in the town was about 100 DSL customers.

In a fixed mesh network every unit deployed is part of the mesh network each unit can deliver bandwidth into that home as well as bounce signal to the next home. In Mikebuda the two companies decided that the ideal network would be to serve 50 homes (not sure why they couldn’t serve all 100 of the DSL customers). The network is delivering about 650 Mbps to each home, although each home is limited to about 350 Mbps due to the limitations of the 802.11ac WiFi routers inside the home. This is a big improvement over the 50 Mbps DSL that is being replaced.

The wireless mesh network is quick to install and the network was up and running to homes within two weeks. The mesh network configures itself and can instantly reroute and heal to replace a bad mesh unit. The biggest local drawback is the need for pure line-of-sight since 60 GHz can’t tolerate any foliage or other impediments, and tree trimming was needed to make this work.

Facebook envisions this fixed deployment as a way to bring bandwidth to the many smaller towns that surround most cities. However, they admit in the third world that the limitation will be for backhaul bandwidth since the third world doesn’t typically have much middle mile fiber outside of cities – so figuring out how to get the bandwidth to the small towns is a bigger challenge than serving the homes within a town. Even in the US, the cost of bandwidth to reach a small town is often the limiting factor on affordably building a broadband solution. In the US this will be a direct competitor to 5G for serving small towns. The Terragraph technology has the advantage of using unlicensed spectrum, but ISPs are going to worry about the squirrelly nature of 60 GHz spectrum.

Assuming that Facebook can find a way to standardize the equipment and get it into mass production, then this is another interesting wireless technology to consider. Current point-to-multipoint wireless network don’t work as well in small towns as they do in rural areas, and this might provide a different way for a WISP to serve a small town. In the third world, however, the limiting factor for many of the candidate markets will be getting backhaul bandwidth to the towns.

No Takers for Faster DSL

It’s been obvious for over a decade that the big telcos have given up on DSL. AT&T was the last big telco to bite on upgraded DSL. They sold millions of lines of U-verse connections that combined two pairs of copper and using VSDL or ADSL2 to deliver up to 50 Mbps download speeds. Those speeds were only available to customers who lived with 3,000 – 4,000 feet from a DSL hub, but for a company that owns all of the copper, that was a lot of potential customers.

Other big telcos didn’t bite on the paired-copper DSL and communities served by Verizon, CenturyLink, Frontier and others are still served by older DSL technologies that delivers speeds of 15 Mbps or less.

The companies that manufacture DSL continued to do research and have developed faster DSL technologies. The first breakthrough was G.fast that is capable of delivering speeds near to a gigabit, but for only short distances up to a few hundred feet. The manufacturers hoped the technology would be used to build a fiber-to-the curb network, but that economic model never made much sense. However, G.fast is finally seeing use as a way to distribute high bandwidth inside apartment buildings or larger businesses using the existing telephone copper without having to rewire a building.

Several companies like AdTran and Huawei have continued to improve DSL, and through a technique known as supervectoring have been able to goose speeds as high as 300 Mbps from DSL. The technology achieves improved bandwidth in two ways. First it uses higher frequencies inside the telephone copper. DSL works somewhat like an HFC cable network in that it uses RF technology to create the data transmission waves inside of the captive wiring network. Early generations of DSL used frequencies up to 8 MHz and the newer technologies climb as high as 35 MHz. The supervectoring aspect of the technology comes through techniques that can cancel interference at the higher frequencies.

In the US this new technology is largely without takers. AdTran posted a blog that says that there doesn’t seem to be a US market for faster DSL. That’s going to be news to the millions of homes that are still using slower DSL. The telcos could upgrade speeds to as much as 300 Mbps for a cost of probably no more than a few hundred dollars per customer. This would provide for another decade of robust competition from telephone copper. While 300 Mbps is not as fast as the gigabit speeds now offered by cable companies using DOCSIS 3.1 it’s as fast as the cable broadband still sold to most homes.

This new generation of DSL technology could enable faster broadband to millions of homes. I’ve visiting dozens of small towns in the country, many without a cable competitor where the DSL speeds are still at 6 Mbps speeds or less. The big telcos have milked customers for years to pay for the old DSL and are not willing to invest some of those earnings back into another technology upgrade. To me this is largely due to deregulating the broadband industry because there are no regulators pushing the big telcos to do the right thing. Upgrading would be the right thing because the telcos could retain millions of DSL customers for another decade, so it would be a smart economic decision.

There is not a lot of telephone copper around the globe it was only widely deployed in North America and Europe. In Germany, Deutsche Telekom (DT) is deploying the supervectoring DSL to about 160,000 homes this quarter. The technical press there is lambasting them for not making the leap straight to fiber. DT counters by saying that they can deliver the bandwidth that households need today. The new deployment is driving them to build fiber deeper into neighborhoods and DT expects to then make the transition to all-fiber within a decade. Households willing to buy bandwidth between 100 Mbps and 300 Mbps are not going to care what technology is used to deliver it.

There is one set of companies willing to use the faster DSL in this country. There are still some CLECs who are layering DSL onto telco copper, and I’ve written about several of these CLECs over the last few months. I don’t know any who are specifically ready to use the technology, but I’m sure they’ve all considered it. They are all leery about making any new investments in DSL upgrades since the FCC is considering eliminating the requirement that telcos provide access to the copper wires. This would be a bad regulatory decision since there are companies willing to deliver a faster alternative to cable TV by using the telco copper lines. It’s obvious that none of the big telcos are going to consider the faster DSL and we shouldn’t shut the door on companies willing to make the investments.

Getting Militant for Broadband

My job takes me to many rural counties where huge geographic areas don’t have broadband. I’ve seen a big change over the last two years in the expectations of rural residents who are now demanding that somebody find them a broadband solution. There have been a number of rural residents calling for better broadband for a decade, but recently I’ve seen the cries for broadband grow into strident demands. As the title of this blog suggests, people are getting militant for broadband (but not carrying guns in doing so!)

The perceived need for broadband has changed a lot since the turn of this new century. In 2000 only 43% of homes had a broadband connection – and in those days that meant they had a connection that was faster than dial-up. In 2000 DSL was king and a lot of homes had upgraded to speeds of 1 Mbps. There have always been homes that require broadband, and I’m a good example since I work from home, and when I moved fifteen years ago my offer on a new house was contingent on the home having broadband installed before closing. My real estate agent at the time said that was the first time she’d ever heard about broadband related to home ownership.

As I’ve cited many times, the need for broadband has continued to grow steadily and has been doubling every three years. By 2010 the number of homes with broadband grew to 71%, and by then the cable companies were beginning to dominate the market. By then DSL speeds had gotten better, with the average speeds at about 6 Mbps, but with some lucky customers seeing speeds of around 15 Mbps. But as DOCSIS 3.0 was implemented in cable networks we started seeing speeds up to 100 Mbps available on cable systems. It was a good time to be a cable company, because their rapid revenue growth was fueled almost entirely by adding broadband customers.

Broadband in urban areas has continued to improve. We’re now seeing Comcast, Charter, Cox and other cable company upgrade to DOCSIS 3.1 and offer speeds of up to 1 Gbps. DSL that can deliver 50 Mbps over two bonded copper lines is becoming old technology. Even urban cellular speeds are becoming decent with average speeds of 12 – 15 Mbps.

But during all of these upgrades to urban broadband, huge swaths of rural America is still stuck at 2000 or earlier. Some rural homes have had access to slow DSL of 1 – 2 Mbps at most. Rural cellular speeds are typically half of urban speeds and are incredibly expensive as a home broadband solution. Satellite broadband has been available the whole time, but the high prices, gigantic latency and stingy data caps have made most homes swear off satellite broadband.

Rural homes look with envy at their urban counterparts. They know urban homes who have seen half a dozen major speed upgrades over twenty years while they still have the same lousy choices of twenty years ago. Some rural homes are seeing an upgrade to DSL due to the CAF II program of speeds of perhaps 10 Mbps. While that will be a relief to a home that has had no broadband – it doesn’t let a home use broadband in the same way as the rest of the country.

To make matters feel worse, rural customers without broadband see some parts of rural America get fiber broadband being built by independent telephone companies, electric cooperatives or municipalities. It’s hard for them to understand why there is funding that can make fiber work in some places, but not where they live. The most strident rural residents these days are those who live in a county where other rural customers have fiber and they are being told they are likely to never see it.

This disparity between rural haves and have nots is all due to FCC policy. The FCC decided to make funds available to rural telcos to upgrade to better broadband, but at the same time copped out and handed billions to the giant telcos to instead upgrade to 10 Mbps DSL or wireless. To make matters worse, it’s becoming clear that AT&T and Verizon are intent in eventually tearing down rural copper, which will leave homes with poor cellular coverage without any connection to the outside world.

The FCC laments that they cannot possibly afford to fund fiber everywhere. But they missed a huge opportunity to bring fiber to millions when they caved to lobbyists and gave the CAF II funding to the big telcos. Recall that these funds were originally going to be awarded by a reverse auction and that numerous companies had plans to ask for the funding to build rural fiber.

It’s no wonder that rural areas are furious and desperate for better broadband. Their kids are at a big disadvantage to those living in towns with broadband. Farmers without broadband are competing with those using agricultural IoT. Realtors report that they are having a hard time selling homes with no broadband access. People without broadband can’t work from home. And rural America is being left behind from taking part in American culture without access to the huge amount of content now available on the web.

Buying a Home with No Broadband

A few weeks ago attended a public meeting at one of my clients and I met a guy there who recently purchased a house in the area that has no broadband. He was told by both customer service at bth the cable company and the local telco that broadband was available – but when he showed up they would not serve him.

It seems like everywhere I travel today I hear this or similar stories and it makes me realize the gigantic value difference between homes with and without broadband. This particular guy works from home and is now scratching his head looking for a solution. He’s not unique and most families with school kids and even most families without look at broadband today as a necessity. Buying a house without broadband is starting to feel a lot like buying a house without electricity or running water – it’s not a home that most people would willingly buy.

Unfortunately, people like this guy, who are not familiar with rural broadband are often told there is broadband when there isn’t. People who move from urban areas often have no clue about the atrocious state of broadband in rural America. They can’t imagine a world where there isn’t even DSL and where folks have to somehow get by on cellular data or satellite data to have connection to the outside world.

I purchased several homes over the last few decades and I’ve always made proof of broadband a contingency in my purchase offer. I then contacted the ISPs and placed an order to be sure that the broadband was real. Sadly, like the guy in this story, one often gets the wrong answer from a call to customer service and I’ve always gone a step further and placed an order. Even that is not always a great solution – when I moved to Florida I was in the house for over a month before Comcast finally connected my home – even though there was a Comcast pedestal at the end of my driveway!

I’ve spoken to a number of rural real estate agents over the last few years and they say almost universally that home broadband is now at or near to the top of homebuyer’s wish these days. They are often surprised by homebuyers who don’t understand the lack of rural broadband. They all have stories about buyers who quickly abandon searches in all parts of a county that don’t have broadband.

There have been numerous studies done that show that a home with broadband is worth more than one without. But I don’t buy the results of those studies any more. We are now at an overall 84% national penetration for broadband and a huge majority of people don’t want a home without broadband. Those studies show an increase of a few thousand dollars in value for home without broadband – but what is value of broadband if you are unable to find a buyer for a home that doesn’t have it? That’s the story that real estate agents tell me today – the inability to sell rural homes without broadband.

One of the interesting things about rural broadband is that the people in rural areas know exactly where the broadband line stops. They know the home closest to them with cable service, they know where DSL becomes too slow to be relevant, and they know where cell phones lose their bars for broadband connectivity. Many rural customers are irate because many of them live just past the broadband dividing line. I hear it all of the time, “The home two houses away has cable TV”, “I’m within a quarter of a mile of good DSL”, “The people on the other side of that hill have a good WISP”, “I can walk to the fiber”.

I remember when I was house-hunting here in Asheville. I live a mile from center city and I can look out my window and see homes with no broadband. My wife had assembled a list of homes to check out and I recall saying a lot, “This area has no broadband, turn the car around”. It is often surprising how close you can be to a town and have no broadband. I think this area is not untypical of a rural county seat where broadband extends only sporadically past the city limits. Folks who don’t know how to look at the wires on poles often don’t realize how broadband often ends at, or just past the city boundary.

This issue is going to get more severe over the next decade and I predict that we’ll start seeing people walk away from rural homes due to lack of willing buyers. I keep expecting to see a lawsuit from a homebuyer who sues a realtor for not telling them the truth about lack of broadband. Such a suit will inevitably bring another piece of paper into home disclosures – a broadband disclosure – which most people care more about than termites and the dozen other things we check off before buying a home.