Will Broadband Labels Do Any Good?

The FCC is still considering the use of broadband labels that are supposed to explain broadband to customers. This sounds like a really good idea, but I wonder if it’s really going to be effective?

Some of the items included on the FCC sample label are great. The most important fact is the price. It has become virtually impossible to find broadband prices for many ISPs. Many ISP, including the largest ones, only show special pricing online that applies to new customers. These ISPs show the public the sale prices, but it’s often impossible to know the list prices. It’s often the same if somebody calls an ISP – they’ll be offered different promotional packages, but it’s like pulling teeth to get the truth about the everyday price that kicks in at the end of a promotion.

I’m curious about how the broadband labels will handle bundling. The surveys we’ve done recently show that half or more of homes in many markets are still buying a bundle that might include broadband plus voice, cable TV, security, smart home, or cellular. Big ISPs have never wanted to disclose the cost of individual products inside of a bundle and I can’t wait to see how ISPs handle a bundled broadband product.

There are also hidden fees and other ways to disguise the real price. Disclosing pricing will be a huge breath of fresh air – if ISPs are forced to be totally honest. I can imagine the PR and marketing groups at the bigger ISPs are already agonizing over how to disclose pricing while still keeping it cloudy and mysterious.

More perplexing is the broadband speed issue. The sample label that the FCC circulated for comment would require ISPs to list the typical download speeds, typical upstream speeds, typical latency, and typical packet loss. What does typical mean? Consider a Comcast market where the company sells residential broadband that ranges between grandfathered 50 Mbps and 1.2 Gbps. What is the typical speed in that market? How will any consumer be able to judge what a typical speed means?

I’ve written about broadband speeds a lot, and for many technologies, the speeds vary significantly for a given customer during the day. What’s the typical broadband speed for a home that sees download speeds vary by 50% during a typical day? I don’t always want to come across as skeptical, but I’m betting that the big cable companies will list the marketing speeds of their most popular broadband product and call it typical. Such a number is worthless because it’s what customers are already being told today. I don’t have a proposed solution for the various speed dilemmas, but I fear that whatever is told to customers will be largely uninformative.

What will the typical consumer do when told the typical latency and packet loss? It’s hard to think many homes will understand what those terms mean or what the typical values mean.

ISPs are also supposed to disclose network management processes. Does this mean a cable company must be truthful and tell some neighborhoods that their coaxial cable is too old and needs to be replaced – because that is s specific network practice? Will a cable company tell a customer that their neighborhood node is oversubscribed, which accounts for slowdowns at peak times? I’m guessing the network management processes will be described at the total market level instead of at the neighborhood level – again, making them largely uninformative.

I’m also curious how the FCC will know if customers are being told the truth. Folks who read this blog might tell the FCC if a broadband label is deceptive or wrong – but what is the FCC going to do with such complaints? Broadband issues are often hyper-local, and what happens on my block might be different than somebody living just a few blocks away.

I want to be clear that I am not against the broadband labels. Forcing ISPs to be public with prices is long overdue, as long as they disclose the truth. But I’m skeptical about many other things on the labels, and I fear big ISPs will use the labels as another marketing and propaganda tool instead of disclosing what people really need to know.

Revisiting the Definition of Broadband

There has been talk for over a year that the new FCC under Chairwoman Jessica Rosenworcel is planning to raise the definition of broadband to 100/20 Mbps. It looks like that probably doesn’t happen until Congress approves a fifth Commissioner.

As much of a welcome relief as that would be, I think we also need to understand that a 100/20 Mbps definition of broadband is not forward-looking and will start being obsolete and too slow from the day it is approved. I’ve always argued that we need a mechanism to change the definition of broadband annually, or at least more often than we have been doing.

Consider a few facts that ought to be part of the discussion of the definition of broadband. The first is that the need for faster speeds has been growing since the 1980s, and there is no reason to think it will stop growing today. If we accept that 25 Mbps download was a decent definition of speed when it was adopted in 2015 and that 100 Mbps is a decent definition in 2022, then that is an acknowledgment that the public’s need for speed has increased by 21% annually during those years.

As it turns out if we look back at history that the demand for broadband speed has been growing at the same pace for a long time. The FCC set the definition of broadband at 200 kbps/200 kbps in 1996 and upped the definition to 4/1 Mbps in 2010. Plot those on a growth curve, and we can see the steady and inexorable growth of broadband since the dial-up days. You’d have to be a fool to think that we’ve reached the end of that growth curve. We’re finding new ways to use broadband in our homes every year, and the demand for better broadband keeps growing.

We have other evidence that the public demand for faster broadband continues to grow. That is evidenced by the new customer adoption statistics announced by OpenVault for December 31, 2021.

Dec 2021
Under 50 Mbps 9.4%
50 – 99 Mbps 7.6%
100 – 199 Mbps 36.9%
200 – 499 Mbps 28.5%
500 – 999 Mbps 5.5%
1 Gbps 12.2%

According to OpenVault, only 17% of broadband subscribers are buying broadband products with advertised speeds under 100 Mbps. 46% of all households are buying broadband of 200 Mbps or faster – and that’s going to climb quickly as the big cable companies push faster speeds on all of their customers.

What do these statistics say about using 100 Mbps download as the definition of broadband? First, I think the market has already told the FCC that 100 Mbps is quickly becoming last year’s news. Within a year, when 60% or 70% of the public is buying broadband speeds of at least 200 Mbps, it will be obvious that 100 Mbps broadband is already in the rearview mirror for most Americans.

But we can also go back to the historic growth curve. If the demand for broadband keeps growing at the rate it’s grown since 1996, then the future demand for download speeds will be as follows:

Download Speeds in Megabits / Second

2022 2023 2024 2025 2026 2027 2028
100 121 146 177 214 259 314

Hopefully, the FCC doesn’t change the definition and then rest on its laurels. Even by the time of the next presidential election, the definition ought to be 150 Mbps, and by 2028 would be expected to grow to over 300 Mbps.

Unfortunately, the definition of broadband has political and financial overtones. It determines who can win grants. A higher definition of broadband can declare that certain technologies are no longer considered to be broadband. In a perfect world, directed by the public demand for broadband, the definition of broadband would increase every year, something like the above.

 

FCC Investigating Cost of Pole Replacements

The FCC recently issued a Second Notice of Proposed Rulemaking concerning the allocation of costs when replacing poles to accommodate adding fiber or other communications wires communications devices to poles. The traditional rule has been that the new attacher must pay for 100% of the cost of make-ready, including the cost of pole replacement if there is not sufficient room to add a new wire or device (like a small cell).

In January 2021, the FCC issued an order that clarified that it is unreasonable for a new attacher to automatically have to pay the full cost of swapping a pole. This current NPRM now asks the industry for comments to clarify some of the stickier situations that arise out of trying to allocate the costs of pole replacement. For example, the NPRM asks for comments on the following situations and questions:

  • How do you determine the extent to which a pole owner will benefit from a pole replacement? There are plenty of cases where poles are clearly at the end of life and should have been replaced by the pole owner as a part of routine maintenance.
  • What standards or formulas should be applied to calculate the amount that a pole owner should be responsible for?
  • How should any new rules handle having to replace a pole that is not near the end of economic life – what the FCC is calling early pole replacement.
  • Will requiring pole owners to pay a share of pole replacement negatively impact the negotiation between telecom companies and pole owners?
  • Is there any mechanism that can be used to minimize disputes or to expedite the resolution of disputes?
  • Finally, the FCC is looking at the question of pole attachment rates and asks if there should be refunds to pole attachers if a finding is made that pole attachment rates are too high?

The FCC is asking the right questions. Carriers wanting to add wires or devices to poles have had two common complaints – the process takes too long and is too expensive.

The dilemma faced by the FCC is that anything other an iron-clad, non-debatable formula for allocating costs for pole attachments will make the timelines worse. If there is even a sliver of a chance for the costs to be negotiated, there will be a lot of disputed negotiations that will be to be resolved by regulators – and that will inevitably add even more time to the pole attachment process.

Let’s put this into perspective with a few examples. I know of several rural electric cooperatives where the poles are in dreadful condition. The poles are old, short, and starting to rot and fall down. I know fiber builders who have walked away from bringing fiber in these areas because they were told that practically every pole must be replaced – at a cost of $20,000 or more per pole. A fair finding might be that these cooperatives should pay for 100% of the cost of pole replacement since it is needed for the electric grid – it’s something they should have been doing anyway. Should a new attacher pay a penalty because pole owners had no pole maintenance and replacement plan? But these cooperatives are in poor counties, and the cooperatives don’t feel they can afford to replace the poles. An order that makes the cooperative quickly replace all of the poles could be an unaffordable burden. There may be no winners in this kind of dispute.

Remember that all pole owners are not neutral parties. Some poles are owned by telcos or by a utility that plans to offer broadband. In both cases, the pole owner has a financial incentive to delay or drive away potential pole attachers who are competitors. These owners might avail themselves of every possible delay that comes from any regulatory established timeline to settle disputes on the pole replacement issue.

For every one of the questions that the FCC is asking, there are real-life examples of sticky situations that are hard to resolve. A solution cannot include a dispute resolution process, or bad actor pole owners are going to fight every pole replacement request.

The very questions that the FCC is asking would lead to the grounds for a dispute. For example, what party can determine the condition of a given pole and if a pole owner will benefit from a free replacement? Who is to define what an early pole replacement looks like – in a way that can’t be disputed? Regulators must be cringing when they read this NPRM because they know they will be flooded with individual disputes over single poles filed by a fiber builder that wants a fast resolution.

Even the simplest solution I can think of would lead to disputes. Consider a solution that uses a formula that determines the share of costs allocated to the pole owner by the age of the pole – the older the pole, the more a pole owner pays. I can promise even that will lead to arguments about the age of a given pole.

New FCC Mapping Deadlines Announced

On March 4, the FCC released its long-awaited new instructions for how ISPs are to report broadband coverage, speeds, and customers to the FCC. The order also provides a timeline for reporting to the FCC in the new formats. The new reporting is still called the FCC 477 data filing, but the format has changed significantly.

These reporting rules are the culmination of several years of effort by the FCC to revamp the way the agency collects broadband data. The current broadband data is so erroneous today from some ISPs that it’s hard to take any statistics coming out of the FCC seriously. But today’s blog is not to bash the FCC’s past mapping performance but to let ISPs know what must be reported this summer. Following are the highlights of the new rules, which can be found here.

Who Must File? Any fixed or mobile entity that acts as the ISP for at least one customer on June 30, 2022 must file. It seems like in almost every county I work in, I find an ISP or two that is not reporting to the FCC. I’m wondering if the agency is going to make any effort to find the non-filers.

Interestingly, any federal agency along with state, local, and Tribal governments can also file broadband mapping and coverage data. I don’t think this data is automatically going into the new FCC map, but rather starts building what the FCC is calling a challenge process for those that don’t agree with what ISPs report.

Due Date. The new FCC reporting portal will be open on June 30. ISPs must complete filings by September 1. The FCC expects to be on the normal schedule with two filings due in 2023.

The FCC warned separately a few weeks ago that it may accelerate and shorten the September 1 date, so I advise ISPs to report early. If this is like any other large government reporting portal, there are bound to be glitches this first time – so don’t wait until the last minute.

The New Reporting Data.

The big change is that ISPs must submit shapefiles for polygons that define the service territory. Each polygon should include existing customers along with homes or businesses that can be connected within 10 business days of a request for service. If an ISP doesn’t want to provide shapefiles it can provide the detailed location of each customer. WISPS and cellular carriers must file propagation maps from each transmitter along with details of signal strength and heat map data. The 477 reporting now also requires traditional telephone and VoIP subscriber data. Cellular carriers must show broadband and voice coverage separately if it’s not the same service area.

This is the most material change in the new 477 data and will have the biggest impact if ISPs file correctly. For example, if done right, these maps will identify the last home served along every road leaving towns served by a cable company. This reporting is a lot more complicated for rural ISPs, and as I’ve written recently, I don’t know how rural WISPs can meet this requirement with any accuracy.

How to File. ISPs can either input data into the new FCC portal or submit data to the FCC using an API.

Double Reporting. An important thing to note is that ISPs are required for this filing to file in both the new and the old 477 system – you must file twice.

The FCC is banking heavily on this new data being more accurate than the past 477 data. I think in some ways it will, if ISPs like the cable companies draw accurate shapefiles. But I’m extremely skeptical that this is going to fix the problem of ISPs overstating broadband speeds – and that’s the issue the FCC has promised will be fixed to support the BEAD grants. I guess we’ll find out some time this winter after the FCC crunches the new data.

Note that anybody who analyzes FCC data for broadband coverage and speed is likely to have a steep learning curve to understand the new data.

The FCC Tackles MDU Broadband

The FCC recently adopted new rules that are aimed at bringing competition to apartments, condominiums, and other multi-tenant residential buildings. The FCC press release on the order is titled, “FCC Bans Exclusive Contracts for Telecommunications Services in Apartment Buildings”. The new FCC ruling found that exclusive arrangements between ISPs and landlords hurt consumers. The new rules passed with a 4-0 bipartisan vote.

It’s an issue that the FCC has been chasing for years, including a ruling in 2007 that banned a list of exclusive arrangements between ISPs and landlords. The main purpose of that order was to ban deceptive contracts that ISPs enforced to keep exclusive rights to buildings against the will of landlords. But the order did not create an outright ban of mutually-agreed-upon arrangements, and many landlords still have an exclusive arrangement with a single ISP.

The current ruling bans specific practices between ISPs and landlords that the FCC says block competition.

  • The order bans exclusive revenue share arrangements where the ISP and a landlord agree that the ISP is the only one who can give a cut of revenues to the landlord.
  • Also banned are graduated revenue sharing arrangements where the percentage of revenues shared with a landlord increases as the number of tenants subscribed to an ISP grows.
  • Also banned are sale-and-leaseback arrangements where an ISP sells inside wiring to the landlord and then leases it back in an exclusive basis so that other ISPs can’t use the wiring.
  • Finally, the order requires ISPs that marketing in apartments to disclose to tenants in plain language if they have an exclusive marketing arrangement with the landlord. The intent of this ruling is to let tenants know if there are other competitive choices.

It’s hard to develop regulatory rules for a market that encompasses a wide range of circumstances in multi-tenant buildings. For instance, there is fierce competition to become the ISP for high-end apartments and off-campus student housing at large universities. The ISPs that serve these kinds of buildings compete by bringing amenities other than tenant broadband, such as WiFi everywhere inside and outside of buildings, and smart home functions that use the ubiquitous broadband.

But many apartment buildings aren’t attractive to ISPs. Some older buildings are hard to serve because of physical challenges like not having a place for an ISP to house electronics or no separate electric meters for ISP equipment. Some apartments have high churn, which increases an ISP’s costs. No change in FCC rules will lure ISPs to compete inside of buildings that are hard to serve or that aren’t financially lucrative.

One simple challenge is the ability for multiple ISPs to string fiber to apartment units. A common fiber wiring technique hides the fiber in the upper corners of hallways, and it’s hard to imagine how multiple ISPs can use this same wiring process, so the first ISP in place will have an advantage over later ISPs.

One issue the FCC ruling didn’t acknowledge is the popularity of bundling broadband in with the rent. A Parks Associates survey released last July showed that 40% of apartment tenants liked having broadband included in the rent. This ruling might make it a challenge for a landlord to bundle broadband with the rent.

I also foresee some market risks from the ruling. There are now many ISPs that specialize in serving apartments that might decide that the added competition and risk make it impossible to profitably serve buildings. It’s likely, at least in some cases, that open competition rules might discourage ISP investments in MDUs and decrease choices rather than promote it.

But the FCC is reacting to a slew of consumer complaints it received as a result of an FCC request for comments in September 2021. There are a lot of unhappy apartment tenants who complain of high prices, slow speeds, and poor customer service from ISPs. An ISP with an exclusive arrangement is a monopoly in that building, and there is a long track record of ways that monopolies cut corners to maximize profits.

It’s a tough issue. Since every apartment building is unique, there will be buildings where the tenants benefit from these new rules and others that might be harmed by them – and the same might said of anything that regulators try to do in such a complicated market. It’s hard to fault the FCC for trying to pinch off additional arrangements between ISPs and landlords that harm tenants. Over the years, ISPs have found legal loopholes around any new FCC rules concerning apartments, and it’s likely that determined ISPs and landlords can still find ways to create exclusive arrangements. I doubt that we’ve heard the end of this topic.

Dates for the New FCC Mapping

The FCC just announced that ISPs must file new mapping data with the FCC by September 1. The portal for accepting the new mapping data will open on June 30. The FCC cautioned that it could accelerate the final due date before September 1.

The FCC is under tremendous pressure to implement the new mapping data because the Infrastructure Investment and Jobs Act legislation is basing the $42.5 billion BEAD grant program on the FCC maps. The FCC may move the date sooner depending upon the resolution of a challenge by LightBox to the award of the mapping software creation to CostQuest. If that gets resolved sooner, the FCC is likely to require that new mapping information be filed sooner.

The new mapping data will be submitted in the form of shapefiles that are supposed to precisely define where ISPs have active customers today or are capable of implementing a request for new service within ten working days. Every ISP in the country is supposed to create and submit these maps by the FCC’s due dates.

I’m highly skeptical that the first round of the new maps will be correct. It’s not easy to get these maps right in rural America, where the maps should reflect the ability to serve a given house, but not the neighbor. I think the first set of reporting under the new maps will include tons of errors just from the inability of ISPs to get coverage areas to fit the new rules. ISPs will get better at this – but expect some big problems the first time that ISPs try this.

The new maps, if done right, will require cable companies to identify the last house served on their networks on every street and road leaving every town that is served by a cable company. I’m guessing that’s a whole lot of work if the cable companies didn’t create detailed electronic maps of service areas over the years. I must give the FCC credit on this one issue because there are homes just past the edge of every cable company that the current FCC mapping shows as being served, but which aren’t. I won’t be surprised if cleaning up the reporting at the edges of cable companies won’t show a half-million homes that can’t buy fast broadband.

The group with the biggest challenge is WISPs. If this is done right, a WISP must basically show a map of the coverage area from each antenna that reflects areas that can’t be served due to obstructions like hills. I have no idea how a WISP will determine who can be served in ten days in places with trees and foliage. The process most WISPs undertake with a prospective new customer is to visit and see if the customer can get a signal – they often don’t really know until they try. The old maps required WISPs to guess if they could reach a Census block – now they are expected to map exact coverage areas.

A bigger question is if ISPs want to tell the truth about coverage. For example, I know of a Western WISP that claims 100% coverage of two adjoining counties when the WISP operates from a single radio on top of a mountain. The area claimed as coverage by this WISP is 90% fiction, and I have to wonder if this WISP or the many other ISPs that exaggerate broadband coverage, are going to come clean just because the FCC implements a new reporting system? Is the FCC really going to climb into the weeds to understand the local details of the coverage areas for rural ISPs? The FCC has the power to impose fines and penalties for ISPs that file incorrect coverage data – but it has only exercised this authority a few times.

To me, the biggest concern of the new mapping is the FCC’s intentions on how to use the mapping data. It’s clear that the revised FCC maps are supposed to identify households that can’t buy broadband at speeds of at least 25/3 Mbps or of 100/20 Mbps. It’s possible that the FCC can fix the problem of exaggerated coverage areas, but this likely will take years to sort out. But the FCC has already set itself to fail for its primary objective by still allowing ISPs to exaggerate broadband speeds. ISPs are still allowed to report marketing speeds, meaning they can largely make up any broadband speed story they want to tell.

Rural communities are going to rightfully be irate when the much-awaited new maps don’t change the blatantly exaggerated broadband speeds. The first draft of the new maps will still include exaggerated coverage areas, and it might take years of concentrated effort by the FCC to clean up coverage reporting. But I can’t see any way that the new maps will fix the speed story.

The FCC has created a false expectation that the first round of new maps will clean up all of the reporting sins of the past. They’ve been promising Congress that the new maps will be better – and they might be. To us in the industry, marginally better maps would be a great first step. But that’s not what the FCC says is coming. I predict a firestorm when everybody realizes that many of the old mapping problems have been translated into the new maps.

Big ISP Fear of Rate Regulation

Policy fights often take bizarre directions. You might remember the furor seven years ago when the FCC under Chairman Tom Wheeler was contemplating imposing net neutrality. There were over 22 million public comments filed in the case. There was a big controversy when some of those against net neutrality filed bulk comments labeled as being from people who knew nothing about the comments, including several politicians.

I’m not entirely sure why the public got so stirred over the topic, because up until that time, there had been only a few blatant cases where ISPs had violated the net neutrality principles, with the most common being something the public largely favored – ISPS giving free access to a video service for buying broadband.

The big ISPs all lobbied hard against the net neutrality rules, but the CEO of every big ISP was on the record at least once saying that the net neutrality rules were not a big deal and that they could live with net neutrality. So why did the big carriers lobby so hard about what the FCC was doing?

The answer is that the carriers were far more worried about the FCC’s regulations that came along with FCC’s planned net neutrality rules. The FCC under Tom Wheeler was planning on strengthening the Title II regulatory policies that gave the FCC the right to regulate ISPs. The real fear that ISPs had was that the FCC would eventually use Title II authority to impose rate regulation on broadband. I think in hindsight that the big ISPs seven years ago already had long-term plans to migrate broadband rates as high as possible. Today we’re seeing the big cable companies starting to narrow in on basic broadband rates of $100 per month.

But the big ISPs couldn’t publicly lobby against rate regulation and Title II. The ISPs would have had a hard time convincing folks to file comments against controlling ISPs rates. The big ISPs would have had to argue that ISPs don’t need to be regulated – something the public would clearly and strongly disagree with. Most broadband customers of the big ISPs had at least one story of when they had an uncomfortable interaction with their ISP. The big ISPs were so unpopular at the time that they had the lowest ranking of all industries on surveys of how people rank U.S. corporations.

The big ISPs certainly could not have publicly told the truth and said that the only squabble with net neutrality rules was the risk of being told that rates are too expensive. That would be a public argument that even public allies of the big ISPs would have shied away from.

Seven years ago, the big ISPs pulled out all stops to lobby against net neutrality, although all they really cared about was the ability of some future FCC to tell them to stop raising rates. The big ISPs lost that battle in the Wheeler FCC, which everybody expected – because the FCC at the time had a Democrat majority.

The big ISPs didn’t have to wait long to get what they wanted after Donald Trump unexpectedly won the presidency. He promoted Ajit Pai to head the FCC, and his first order of business was to completely dismantle Title II regulation. This was again framed by the big ISPs as eliminating unneeded net neutrality rules – but the real issue that still was never said out loud was the goal of eliminating the threat of rate regulation.

Now that Democrats are back in charge of the White House, the whole issue has surfaced again. The big ISPs have been trying to derail or delay confirmation of Gigi Sohn as the fifth FCC Commissioner because they know that one of the first actions of the FCC under Chairman Jessica Rosenworcel will be to reintroduce Title II regulation.

I’ve seen a lot of pro-ISP articles lately talking about how net neutrality was an empty issue and how there have been no bad consequences from killing net neutrality. That may be largely true other than a few ugly examples like Verizon disconnecting firefighters battling forest fires.

But the lack of a threat of rate regulation has allowed big ISPs to raise rates with impunity. In the last five years, we’ve seen Comcast and Charter regularly raise broadband rates. Comcast rates are now north of $90, and after a series of $5 rate increases, Charter is not far behind. Other big cable companies like Cox and Atlantic Broadband charge even more than the big two. The public is currently complaining about inflation due to supply chain issues, but the cable companies have been busy raising broadband rates at a pace that far outstrips inflation.

In the recent confirmation hearing, Gigi Sohn said she was not in favor of rate regulation. I’m positive we’ll never hear the big ISPs publicly ask that question again because it will remind people about the impact of broadband on their pocketbooks. But I think we need to brace for another gigantic lobbying effort against rate regulation – disguised as arguments against net neutrality again.

FCC to Tackle Data Breaches

The FCC has a new Notice of Proposed Rulemaking (NPRM) concerning an update of customer proprietary network information (CPNI) rules. The FCC wants to strengthen the rules concerning notifying customers of a data breach.

CPNI rules are codified at the FCC from Section 222(a) of the Telecommunications Act of 1996. CPNI rules are intended to protect customer data. For those that haven’t read CPNI rules for a while, Section 222(a) rules state:

Except as required by law or with the approval of the customer, a telecommunications carrier that receives or obtains customer proprietary network information by virtue of its provision of a telecommunications service shall only use, disclose, or permit access to individually identifiable customer proprietary network information in its provision of (A) the telecommunications service from which such information is derived, or (B) services necessary to, or used in, the provision of such telecommunications service, including the publishing of directories.

In plain English, this means that every telecom carrier must take steps to protect customer data that is collected as part of providing a telecommunications service.

There have been a number of well-known data breaches in the industry, and the FCC is proposing to tighten the rules related to notifying customers about data breaches. For example, the current rules give carriers seven days to notify customers of breaches of their personal data, and the NPRM will propose to drastically shorten that time frame. The FCC will also be proposing that carriers must disclose inadvertent breaches of data that were caused by the carrier, as opposed to a malicious outside party. Finally, carriers will be required to report all data breaches to the FCC, the FBI, and the U.S. Secret Service.

For those of you not familiar with the NPRM process, the FCC uses this method to notify the industry of proposed changes in regulations. An NPRM spells out the specific proposed rule changes by showing the proposed change in FCC rules. The FCC then invites comments on the proposed rule changes and often asks additional questions to get feedback. The FCC sometimes adopts the NPRM as proposed but often modifies the proposed rules based upon the comments received.

It doesn’t seem likely that the FCC will allow an opt-out of these rule changes for small carriers and these rules are likely to apply to everybody, like the current CPNI rules.

As is usual these days, there is a regulatory twist. As it sits today, the FCC no longer regulates broadband since it is not classified as a telecommunications service. The Section 222 rules only apply to telecommunications carriers and the new rules might only apply to carriers that offer traditional telephone service, cellular services, or anything else remaining under FCC jurisdiction. An ISP that only provides broadband might be exempt from CPNI rules – although you could face an expensive legal fight if the FCC sees it otherwise. An awful lot of our regulatory rules are sitting in the gray areas these days.

However, if the FCC eventually brings broadband back into the regulatory fold, as is expected, then these rules would apply to all ISPs selling broadband services.

Auditing RDOF Performance

Today’s blog covers an issue that gets my blood boiling every time I think about it. The FCC just announced increased testing for ISPs accepting funding from FCC High Cost programs, which includes CAF II and RDOF. The new rules include the following:

  • The number of audits and verifications will double in 2022 compared to 2021 and will include some on-site audits.
  • There will be more verification prior to the first required deployment milestone.
  • Large dollar funding recipients will be subject to an on-site audit in at least one state.
  • High-risk recipients will be subject to additional audits and verifications.
  • Audit results, speed tests, and latency performance will now be posted online.

That all sounds good until you look at the practical results of the testing program. The worse that can happen to an ISP for failing the FCC tests will be to lose some small portion of any remaining funding.

Under current rules, ISPs can choose between three methods for testing. They may elect what the FCC calls the MBA program, which uses an external vendor approved by the FCC to perform the testing. ISPs can also use existing network tools if they are built into the customer CPE that allows test pinging and other testing methodologies. Finally, an ISP can install ‘white boxes’ that provide the ability to perform the tests. What’s not easy to dig out of the rules is that ISPs have a hand in deciding who gets tested.

In the past, the number of required tests was as follows. For award areas with 50 or fewer households the test was for 5 customers; for 51-500 households the test was 10% of households. For 500 or more households the test was 50 households. ISPs declaring a high latency had to test more locations with the maximum being 370. Doubling the testing probably means doubling the number of locations that are tested.

Tests for a given customer are done for a full week each quarter. Tests must be conducted in the evenings between 6:00 PM and 12:00 PM. Latency tests must be done every minute during the six-hour testing window. Speed tests, run separately for upload speeds and download speeds,  must be done once per hour during the 6-hour testing window.

ISPs are expected to meet latency standards 95% of the time. Speed tests must achieve 80% of the expected upland and download speed 80% of the time. An example of this requirement is that a carrier guaranteeing a gigabit of speed must achieve 800 Mbps 80% of the time. ISPs that meet the speeds and latencies for 100% of customers are excused from quarterly testing and only have to test once per year.

The real kicker of all of this is that the penalties for failing the tests have no teeth. The following financial penalties are applied only to the remaining subsidy payments:

  • If between 85% and 100% of households meet the test standards, the ISP loses 5% of any remaining FCC support.
  • If between 70% and 85% of households meet the test standards, the ISP loses 10% of future support.
  • If between 55% and 75% of households meet the test standards, the ISP loses 15% of future FCC support.
  • If less than 55% of households meet the test standard, the ISP loses 25% of their future support.

The penalties for an ISP that doesn’t perform on RDOF are minor. Consider a WISP that accepted $100 million of RDOF to build gigabit wireless but only delivers a few hundred Mbps speeds. The first chance for testing is in the third year of RDOF, where an ISP is required to have completed 40% of the buildout. My example WISP will fail more than 55% of speed tests and will incur the maximum FCC penalty. That means the ISP will collect $10 million in the first two years and $7.5 million in years 3 – 10. By the end of the 10-year payout, the ISP will still have collected $80 million of the original $100 million RDOF award. That is not much of a penalty for massive underperformance.

I think these weak penalties emboldened ISPS to lie about the speeds of their technologies in the RDOF auction. ISPs are still paid handsomely even if they don’t come close to meeting the promised speeds. And that’s not the entire story. There were bidding penalties for ISPs promising speeds slower than gigabit. A WISP that told the truth about speeds in the auction (and many did) likely lost in the auction if bidding directly against a WISP that exaggerated speeds.

These penalties are shameful and are another example of the FCC favoring ISPs over the public.  If an ISP whiffs the test in the third year they should stop receiving all future subsidies. If an ISP fail the tests badly enough, such as delivering 200 Mbps when promising a gigabit, then they ought to be forced to return 100% of the previous RDOF awards. If those were the rules, any ISPs that lied about speed capabilities would all withdraw from RDOF tomorrow.

People will ask why it’s so bad that an ISP that overstated speed capabilities won the RDOF. This cheats the people living in the RDOF award area. Residents thought they would get gigabit broadband and will get something far less. While customers might be pleased with the initial speeds in this example, the network being built is not ready to provide good broadband for the rest of the century. There is a good chance that in a decade or two we’ll be looking at these same award areas again and asking if these areas need more federal subsidy to swap out to a faster technology.

If an ISP takes big federal money and fails to perform there should be real penalties. If that was made clear upfront, then ISPs that can’t meet speed requirements would not be tempted to apply. One only has to look back at CAF II to see how ineffective this testing is. Does anybody remember any big penalties for the big telcos not upgrading DSL?

FCC Proposes Broadband Labels

The FCC recently issued a Notice of Proposed Rulemaking (NPRM) in CG Docket No. 22-2 that asks questions related to the requirement that ISPs provide broadband labels. This new requirement was created by the Investment Infrastructure Investment and Jobs Act. The Act requires that ISPs must display broadband consumer labels and disclose information to consumers about broadband service plans.

The FCC has taken the directive from Congress and turned it into a proposed set of regulations. ISPs and consumers will have a short 30-day window to file comments on the FCC’s suggested rules. Note that for most NPRMs, the final rules largely follow the proposed rules unless the industry makes a compelling case in comments that sway’s the FCC’s thinking.

Following are a few key aspects of the proposed new regulations:

  • This would apply seemingly to all ISPs – those that deliver broadband through wired or wireless connections. I assume that wireless includes satellite ISPs.
  • The disclosures of broadband information to customers would be summarized in a broadband label similar to ones used for food products. The FCC contemplated labels in 2016 as part of the order that required net neutrality, but when net neutrality was killed, the label requirement was also killed. The FCC is proposing using the same labels that were created in 2016.
  • The labels include a detailed description of the broadband product. ISPs must report broadband speeds. ISPs must report prices, and if a customer has a promotional price they must disclose when that price will expire and the regular price that will be charged. ISPs have to include information on data caps or any other restrictions on broadband usage. ISPs also must disclose network management practices and disclose latency and jitter.

The NPRM asks how the FCC will be able to judge the accuracy of labels. To me, this is the key question in the docket, and there is no easy answer. Many ISPs are not going to want to tell the truth about their products since the labels allow for easy side-by-side comparison between competitors. Probably an even more important question is how the FCC can enforce accuracy and how the agency might discipline ISPs that won’t disclose accurate labels. Food manufacturers that lie on the label can be forced from the market, but it’s not that easy to discipline ISPs, except perhaps with monetary damages. Remember that for now, this FCC has little direct authority over ISPs. The FCC will be in charge of these labels, but the agency doesn’t regulate much else related to broadband.

If done accurately, the labels should allow a consumer to quickly identify the difference between two ISPs. This has to scare any ISP competing against a fiber network. The fiber network will show symmetrical speeds, lower latency, and likely pricing with no gotchas. I have to think that cable companies, DSL providers, and some WISPs do not want these labels.

There are a lot of practical concerns about the labels. How does an ISP report on a technology that doesn’t deliver the same broadband speeds and quality everywhere in a market? DSL speeds vary from customer to customer, and even a next-door neighbor can have a drastically different DSL experience. Will a big telco that is still reporting rural DSL speeds of 25/3 Mbps come clean with customers on the actual expected speed?

Most people probably don’t realize it, but the speeds delivered by many cable companies can also differ significantly from neighborhood to neighborhood. In most cities, we find some neighborhoods where a cable company has a clean network that nails the desired speeds and latency. But just blocks away might be a neighborhood with network problems that the cable company has not addressed where speeds are far lower than expected. Are cable companies going to reveal this to customers in the neighborhoods with poor performance? I’ll be shocked if they do.

Fixed wireless broadband also can deliver a wide range of customer experiences. A customer close to the tower with a perfect line-of-sight will get the best speeds, while a host of issues like distance and impediments in the environment can slow down speeds for other customers. Will a WISP that is serving customers past the recommended range of the radios really come clean with a potential customer about how lousy the broadband will be?

If the FCC implements this rule without some way to police it, the big ISPs will continue to tell customers the story they want them to hear instead of the truth. But it sounds impossible for FCC to monitor the whole country to see if ISPs are reporting the truth. The FCC might consider some sort of customer feedback process like they are planning with the FCC maps. But I can’t see the FCC getting bogged down in dealing with hundreds of thousands or even millions of complaints about the labels.

We also can’t forget that the ISP is not always the reason for a poor broadband experience. There are millions of customers that insist on using the cheap WiFi router they bought a decade ago that is killing the broadband speeds inside the house. The FCC is never going to get involved deeply enough to know if an ISP or the customer is at fault.

The labels sound like a good idea, and if ISPs are even only partially truthful, the labels will highlight the difference between competitors. But I can’t imagine any set of requirements that will suddenly force a bad actor ISP to tell the unvarnished truth.