Can the FTC Regulate Broadband?

When the FCC wrote themselves out of the regulation of broadband, one of the primary arguments made by Chairman Ajit Pai was that the Federal Trade Commission (FTC) would still be empowered to step in to stop any ISP abuses of broadband customers. The FTC has the general mandate to stop large corporations from engaging in unfair or abusive practices and Pai’s argument was made that ISPs are no different than other large corporations and that FTC oversight is sufficient.

There are several reasons why this argument is full of holes and the FTC cannot be an adequate replacement for the FCC. First, the FTC is not structured to regulate monopolies. We are now watching cable companies become a virtual broadband monopoly for residential service in most markets. The FCC loves to point out that there is still usually a telco DSL option, but when Comcast increases minimum broadband speeds to 150 Mbps while DSL is at a small fraction of that speed, then cable broadband and DSL are no longer equivalent services. The cable companies are winning the broadband war and becoming broadband monopolies as DSL disappears from the conversation.

One of the natural roles of government is to regulate monopolies. FERC heavily regulates local electric companies. The FCC was originally created to deal with the monopoly power that the old Ma Bell held over 95% of the country’s telephony needs. The government regulates industries where a few players hold all of the power like airlines and banks.

The government has always dealt with monopolies in one of two ways – regulate them to curtail abuse of monopoly power or else break up the monopolies up to create competition. The government forced the divestiture of the Bell System when it became apparent that their continued existence was a natural barrier to competition. It seems ironic that the FCC would wash its hands of regulating broadband at the point in time when cable companies are becoming classic monopolies.

The other primary reason that the FTC cannot regulate broadband is that they regulate purely by exception. The agency is empowered to pursue specific abuses by a specific corporation and can require and fine a given company for bad behavior. This puts the FTC in the role of corporate policeman – they can go after an ISP for a bad business practice but that doesn’t directly prohibit other ISPs from engaging in the same behavior. The FTC’s powers are pale compared to the ability of a regulatory agency like the FCC to make a ruling that instantly applies to every ISP in the industry. Ajit Pai’s argument that the FTC can take the FCC’s place is faulty because policing is not regulating.

As weak as the FTC’s power is over regulating broadband there is a chance they will lose even that ability. The FTC sued AT&T in 2014 because the company throttled data usage by unlimited customers to try to get them to drop their unlimited data plans. AT&T challenged that lawsuit and argued that the FTC had no authority over the company. Recall that this was at a time when the FCC still claimed jurisdiction over broadband issues.

The US District Court of Northern California recently ruled against AT&T in favor of the FTC. AT&T has until May 29 to appeal that ruling to the Supreme Court. If the company appeals, it will be to directly ask the Supreme Court if the FTC has jurisdiction over them. A ruling in AT&T’s favor would remove the last vestige of broadband regulation and would make broadband a completely unregulated industry.

It’s not hard to imagine how a truly unfettered broadband industry would react over time if not regulated. We will see big price increases, data caps, the free use and abuse of customer personal data and a violation of all of the principles of net neutrality. This would push broadband in the wrong direction by making it too expensive for many households while degrading the online experience for all broadband customers. The Internet as we know it can be broken if the ISPs are allowed to ignore customers and answer only to Wall Street.

We are already near to this point even if the AT&T suit against the FTC doesn’t conclude with an AT&T victory at the Supreme Court. After the FCC washed their hand of broadband regulation we now have the only regulation of the industry being the FTC which can tackle bad behavior at a single ISP on a single topic. Mass bad behavior by all of the big ISPs will quickly swamp the FTC, and within a few years the higher prices and bad ISP behavior will likely become the industry norm.

The fact that only a few companies own the wires of the broadband network makes this industry a natural monopoly just like electricity, water and natural gas delivery. Nobody likes to be regulated and I can’t even fully believe I am advocating for more regulation. Even before the FCC withdrew from broadband regulation it was one of the mostly lightly regulated monopoly industries in the country. Big ISPs have always fought against being regulated, but I don’t think even they thought that all broadband regulation would be removed in one fell swoop. We are going to have to somehow put regulations back in place or watch our industry go down a very ugly path.

The False 5G Narrative in DC

The FCC and some members of Congress have adopted a false narrative about our need for the rapid deployment of 5G. The narrative says that rest of the world is already ahead of the US with 5G deployment and warns about the huge downsides to our economy should we not sweep aside all barriers for deploying 5G.

This is the narrative being used to justify giving wireless carriers cheap and ubiquitous access to poles for 5G transmitters. The FCC and others want to sweep away all state and local rules for pole-related issues. They want rules that will allow wireless carriers to deploy electronics first and straighten out the paperwork later. They argue that all of this is needed so that the country can keep up with the rest of the world in 5G deployment, with some horrific, yet unspecific disastrous result should we fail to make this happen.

The big problem with this narrative is that it’s based upon false premises. The narrative is nothing more than a fairy tale spun by the wireless industry as a way to justify bypassing the normal regulatory process, to hand them fast and cheap connections on poles for wireless devices.

First, there is no big impending needed to deploy huge numbers of 5G devices, because the technology doesn’t yet exist. There are two distinct 5G technologies – 5G cellular and 5G millimeter wave broadband. The industry agrees that it’s going to take a decade until we have a 5G-compliant cellular technology available. There are thirteen key aspects of the new 5G standard that must now be tackled by engineers and then woven into the next generation electronics. We made numerous gradual incremental improvements in technology to evolve from 3G to 4G and it was only last year that we finally saw the first deployments of 4G technology that meets most of the original 4G specifications. There is no reason to think that we are going to progress any faster towards 5G and we will upgrade over time to 4.1G, 4.2G, etc. until a decade from now we finally have a 5G cellular network. By then we will no doubt start over and begin implementing 6G.

There is similarly no pressing need to deploy millimeter wave 5G. This is a technology that promises to potentially offer a gigabit alternative in residential neighborhoods. We have a long way to go before we are going to see wide-spread deployments of this technology. We are just now seeing the first early trials of the technology and it’s going to take years before electronics are widely available and affordable. Further, this technology is going to require a lot of concurrent fiber deployment, and that is likely to be the biggest cost barrier to deployment – not getting onto poles. I even have to wonder who is going to be deploying the 5G millimeter wave radios on a big scale – every one of the big telcos has made it clear that they are backing away from residential broadband, and the big cable companies have, or will soon have, gigabit-capable networks. We might never see the gigabit wireless networks that are the bait being used to tout 5G, because there might not be any deep-pocket ISPs willing to tackle such a large infrastructure investment.

What the wireless carriers are starting to deploy today are 4G small cell sites. These cell sites are being used to supplement and boost the existing cellular networks. The original big-tower cellular network was built to provide voice services and the cell site spacing is terrible for delivering broadband, which uses frequencies that don’t carry as far as the lower frequencies used for voice. The exploding demand for cellular broadband is driving the need for more cell sites just to accommodate the number of users and the amount of bandwidth that can be deployed in a given neighborhood.

The existing cellular networks are clearly under stress in urban areas. But the real issue we should be talking about is how to bolster 4G networks, not how we are already behind in the mythical 5G race. The cellular carriers are crafty and they are using the 5G race narrative as a way to get politicians to support their demands. They are promising wireless gigabit cellular speeds in just the next few years and cheap wireless gigabit broadband soon coming into every home. They have created a feigned panic that the current regulatory rules will stop this progress dead in it’s track unless carriers get fast and cheap pole access.

If this 5G narrative was true we’d be seeing a collapse of cable company stock prices. Cable companies have the most to lose if they are suddenly faced with gigabit cellular and gigabit wireless to the home. We are probably decades away from seeing cellular speeds approaching anything close to a gigabit – that’s the biggest myth in this narrative. And even when the new technology is developed for wireless gigabit to the home one has to ask what ISPs are going to spend the huge billions needed to build that network to compete against the entrenched cable companies.

I don’t want to minimize some of the barriers faced by wireless companies when trying to get onto poles today. Wireless carriers have cited a few horror stories in FCC filings. But like anything else brand new, most pole owners aren’t sure yet how to respond to requests for wireless attachments. There are a lot of issues to work through including safety, pricing, aesthetics and the long-term impact on the real estate space on poles. These are all issues that need solutions, but I can’t find one reason why we need to tackle this at breakneck speed or why we need to give the wireless carriers everything on their wish list. It’s important to bolster the stressed 4G network and we will want to be ready for the 5G technology when it is finally available. We have the time to make the needed regulatory changes in the deliberative manner that makes sure that all aspects of the issues are considered. We don’t need a fast knee-jerk response to a false 5G narrative that might create more problems than it solves.

Light Poles and 5G

There is a lot of regulatory activity right now concerning wireless providers adding small cell site and 5G electronic to poles. A few states have adopted legislation setting low prices for such connections and similar bills are moving through many state legislatures. There is discussion at the FCC for mandating nationwide rules on some of the issues, and one of the FCC’s BDAC advisory groups was created to look at these specific issues.

One topic I haven’t seen covered in any of these efforts is how to deal with light poles – that is poles that don’t carry wires. I think this is a germane issue for many reasons. There are many poles that have been built solely for the purpose of providing street lights and I don’t think these poles are automatically covered by any of these regulatory or legislative efforts.

I’ve recently looked again at the various pole attachment rules to see if I’m right. One of the primary laws affecting pole attachments was the Pole Attachment Act of 1978 that determined a price structure for pole attachments and that authorized the FCC to develop specific rules for pole make-ready which included in Section 224 of the FCC rules. The right for carriers to use poles was bolstered significantly by the Telecommunications Act of 1996 that granted carriers the ability to use the poles, conduits and rights-of-way of existing utilities. That act defined poles as structures that carry telecommunications wires.

In many cases light poles fall naturally into this definition. In my neighborhood the streetlights are placed at the top of existing utility poles that carry wires for the various utilities. Clearly such light poles are covered by the FCC rules. One has to wonder how useful these poles are for 5G since light fixtures occupy the coveted top space on the poles that wireless carriers want to use, but from a regulatory perspective such poles are covered.

There are a lot of light poles that don’t fit into the current regulatory regime. A lot of light poles have been erected in neighborhoods where the other utilities are buried. These poles are not designed to carry wires. They are connected to the buried power lines to provide electricity for the street lights, but otherwise have no connection to other utility wires. A similar class of poles are ornamental ones. The last neighborhood I lived in had street lights that looked like they came straight out of a Sherlock Holmes story – metal poles with a big light globe at the top.

I’ve read the FCC rules several times this week and I can’t see where poles that aren’t intended to carry wires fall under FCC jurisdiction. Such poles often can’t even easily accommodate pole connections and might be made out of metal or concrete.

Cities of all sizes have required utilities to bury wires. The regulatory question is if the FCC will try to claim jurisdiction over poles that were built in such neighborhoods to only support street lights? This would pull millions of light poles under FCC jurisdiction, something that shouldn’t be done without deliberation.

The 5G legislation I’ve seen doesn’t recognize these issues. Some of these laws grant carte blanc authority to wireless carriers to deploy 5G networks without regard to local oversight. This could results in 5G transmitters being added to ornamental poles. It might mean constructing new poles in neighborhoods where the other utilities are buried. It could even allow wireless carriers to string fiber between such new poles, even though other utilities are buried. 5G networks are also going to want an unobstructed line-of-sight to buildings and wireless carriers might use aggressive tree trimming to get the paths they want. Such deployments are going to be wildly unpopular to homeowners and local governments.

None of this is going to happen without a big fight. Current federal pole attachment rules derive from acts of Congress, and anything short of a new federal law on the issues can’t easily change what has been done in the past. It’s questionable if the FCC can preempt state and local laws concerning pole attachments without a new federal law since earlier legislation granted states to optionally claim jurisdiction over pole issues.

One thing that is clear to me is that any new laws need to carefully consider all of the issues. A law that just gives carte blanc authority for wireless carriers to do whatever they want to going to be widely unpopular and will eventually get huge pushback. Even the idea of expanding regulatory authority over standalone light poles would likely be challenged as a state versus federal issue, meaning big court fights. I’m seeing a mad regulatory rush to give wireless carriers the ability to deploy 5G, but there are numerous issues involved that demand careful deliberation if we want to do this right.

Telephone versus Broadband Privacy

We now have an unusual regulatory world where there is more privacy protection in place for telephone customers than there is for broadband customers. One of the many things done in the Congressional Review Act (CRA) for the new budget that went into effect on April 3 was to nullify the FCC’s privacy rules for ISPs. These rules were implemented in the fall of 2016 and prohibited ISPs from using customer data without customer consent.

There have been no equivalent changes in the rules for landlines, cellular phones and cable TV subscribers. The rules for telephone privacy were established by the Telecommunications Act of 1996 and are referred to as CPNI (Customer Proprietary Network Information). These rules prohibit phone companies from using calling records unless they have customer permission. There is a good summary of a customer’s rights on this FCC web page.

Telephone companies routinely capture details of customer calling – who you call and who calls you. This is familiar to anybody who’s seen a TV crime show since one of the first things detectives routinely do is to ask to see telephone calling records for a suspect. The telephone companies can’t release this information without a warrant if a customer has elected to keep their records private. In addition to calling records these rules also require phone companies to keep other customer data secure, such as billing records, credit card numbers etc. Telephone companies are even prohibited from marketing their own products to customers if the customers opt out.

The 2016 privacy rules for broadband had implemented the same sort of privacy rules. Customers were given the choice to allow or deny access to their records. This was a far more reaching protection due to the large volume of information that an ISP has about their customers. At a minimum an ISP knows every web page you have visited since they control the DNS routing that connects you to web sites. There are numerous other things an ISP can know about a customer should they choose to look deeper into the packets to and from customers.

The new FCC Chairman Ajit Pai led the charge to kill the 2016 ISP privacy rules. Those were put into place just before the 2016 election and he had voted against the rules then. His primary argument is that the protections put barriers onto ISPs while there was nothing similar to ‘edge providers’, that is web companies like Facebook or Google. Those companies have no restrictions on what they can collect from users of their software and platform. Chairman Pai argued that the privacy rules didn’t really protect customers and just ended up putting ISPs at a disadvantage compared to Google.

It’s a valid argument, but killing ISP privacy protection is not the only way to get more parity between web companies. The European Union has taken an opposite approach and has placed restrictions on what both ISPs and edge providers can collect without customer permission.

Regulations are often squirrely and it’s not hard to find regulatory rules that make no sense or that have lasted far past their usefulness. I find it particularly odd, though, that I can tell my cellular provider to keep details of my phone calls private, but I can’t stop them from recording all of the web sites I visit. I’m sure the average citizen is far more concerned about web usage records than they are about who called them.

People who are concerned about their web privacy are taking steps to protect their information. Many people have changed to VPNs to encrypt their web usage and keep the details away from the ISP. There are alternate providers that can do DNS searches so that you ISP doesn’t know the web sites you visit. People are using web browsers that don’t track their usage. Large numbers of people are reportedly dropping off Facebook and other platforms that routinely and openly benefit from their personal data.

What’s most disconcerting about all of this is that privacy is the kind of regulation that has now become partisan. It’s not hard to envision a future Democratic FCC putting the privacy rules back in place and we might see this and similar issues yo-yo with changes in the administration. Of course, the easiest way around that is to do what my smaller ISP clients do – they don’t record customer information, so they don’t really care what the FCC says about privacy – they just provide it as another aspect of good customer service.

Are There Any Level Playing Fields?

If you follow regulatory filings, one of the most common arguments you will encounter from the big ISPs is the concept of a level playing field. The idea behind the level playing field is that every competitor in the industry should be working from the same set of rules and nobody should have a market advantage due to regulatory rules. AT&T and Verizon have both rolled out the argument many times when arguing to tighten rules against potential competitors.

There are several good examples of the level playing field argument anywhere that the big ISPs fight to keep municipal entities from building fiber networks. They argue, for example, that municipal entities have an unfair market advantage because they don’t pay state and federal income taxes. But this argument falls apart quickly under examination. First, many municipal ventures such as electric or broadband entities pay in lieu of taxes. This is a tax-like fee that the local government charge to a municipal business. While it’s not really a tax, the fees ac like taxes and can be substantial.

Even more importantly, I can remember many years when AT&T or Verizon made the news due to paying no federal income taxes. Big corporations have numerous tax shelters that allow them to shield income from taxes, and the telcos have gotten numerous favorable rules into the tax code to allow them to walk away from most of their expected tax obligations. You can’t really fault a big corporation for legally avoiding taxes (unless you fault them for the lobbying that slanted the tax codes in their favor to begin with). It’s dishonest for these big ISPs to claim that a municipality has an advantage due to their tax-free status when they pay little or no taxes themselves. Under deeper examination, a municipal fiber venture paying 5% of revenues for in lieu of taxes is often paying a larger percentage of taxes than the big ISPs.

The big ISPs also claim that municipalities have an unfair advantage due to being able to finance fiber networks with municipal bonds. While it’s true that bonds often have a lower interest rate, I have compared bond and bank financing side-by-side many times and for various reasons that are too long to discuss in a blog, bond financing is usually more expensive than commercial loans. It’s also incredibly difficult for a municipality to walk away from a bond obligation while we have numerous examples, such as the Charter bankruptcy a few years back that let a big ISP walk away from repaying the debt used to build their networks.

The big ISPs don’t only use this argument against municipal competitors. AT&T is using the argument as a way to justify hanging 5G wireless devices on poles everywhere. They think there should be a level playing field for pole access, although at this early stage they are one of the few companies looking to deploy 5G small cells. Interestingly, while AT&T wants the right to easy and cheap pole access everywhere, in those places where they own the poles they fight vigorously to keep competitors from getting access. They effectively stopped Google Fiber plans to build in Silicon Valley by denying them access to AT&T poles.

Every time I hear the level playing field argument my first thought is that I would love it if we really had a level playing field. I look at the way that the current FCC is handing the big ISPs their wish list of regulatory rule changes and wish that my clients could get the same kind of favorable regulatory treatment.

A good case in point is again the 5G small cell deployment issue. The FCC has already said that they are in favor of making it cheap and easy for wireless carriers to deploy 5G cell sites. It seems likely that the FCC is going to pass rules to promote 5G deployments unless Congress beats them to the punch. Yet these regulatory efforts to make it easier to deploy 5G conveniently are not asking to make it easier to deploy fiber. If things go in favor of the big ISPs they will have a market advantage where it’s easier to deploy last mile 5G instead of last mile fiber. This will give them a speed-to-market advantage that will let them try to squash anybody trying to compete against them with a FTTP network.

The FCC is supposedly pro-competition, and so if we really had a level playing field they would be passing rules to make it easier to deploy all broadband technologies. They have had decades to fix the pole attachment issues for fiber deployment and have not done so. But now they are in a rush to allow for 5G deployments, giving 5G ISPs a market advantage over other technologies. The consequences for this will be less competition, not more, because we’ve already seen how AT&T and Verizon don’t really compete with the cable companies. In markets where we have both Verizon FiOS and Comcast cable networks both companies charge high prices and are happy with high-margin duopoly competition. There is no reason to think these big ISPs won’t do the same with 5G.

I look around and I don’t see any level playing fields – particularly not any that give small competitors any advantages over the big ISPs. I do, however, so scads of regulatory rules that provide unequal protection for the big ISPs, and with the current FCC that list of advantages is expanding quickly. The big ISPs don’t really want a level playing field because they don’t want actual competition. There are many reasons why other countries have far more last-mile fiber deployed than the US – but one of the biggest reasons are regulatory rules here that protect the big ISPs.

Carrier-of-Last-Resort Obligations

Earlier this month the U.S. District Court for the District of Columbia upheld FCC orders that still require large telcos to be the carrier-of-last-resort provider of telephone service for at least some of their service territory. The ruling is the result of appeals made by CenturyLink and AT&T that required them to provide telephone service to new rural households.

The idea of carrier of last resort has been part of the telephone industry for nearly as long as the FCC has been regulating the industry. The concept was a key component of spreading the telephone network to all corners of the country – the Congress and the early FCC understood that the whole country was better off if everybody was connected.

Over the years the FCC and various state regulatory commissions ruled that telcos had to make a reasonable effort to connect rural customers. Telcos always had the option to petition against adding customers in really hard to reach places like mountaintops, but for the most part telcos routinely added new homes to the telephone network.

Carrier-of-last-resort started to weaken with the introduction of competition from the Telecommunications Act of 1996. Since that time the big telcos have been able to walk away from carrier-of-last-resort obligations in most of their territory. This court order ruled that in areas where the telcos are still receiving federal high cost support that the telcos are still obligated to connect homes that request service.

I worked for Ma Bell pre-divestiture and there was a real pride in the telephone industry that the network reached out to everybody. Telcos then also deployed huge numbers of pay telephones throughout the network to reach those that couldn’t afford phone service – even though they lost money on many of the payphones. The Bell company and the smaller independent telcos made it their mission to extend the network to everybody.

This order made a few comments, though, that puzzled me. They point out that many of the high-cost areas served by the big telcos are up for new funding from the upcoming CAF II auctions. Any winners of that auction are required to file to become the Eligible Telecommunications Carrier (ETC) for any areas they receive funding. The discussion in the court order implies that these new ETCs will become the carrier-of-last-resort in these areas.

That surprised me because there are plenty of carriers that have ETC status and yet are not the obligated carrier-of-last-resort. The best example is the same big telcos examined in this case who are the ETC of record for their whole footprints but now only have carrier-of-last-resort obligations for the last most rural areas covered by this case. There have been stories for years of people who built new homes, even in urban areas, and are refused service by both the telco and cable company. The cable companies have no carrier-of-last-resort obligations, but it’s clear that in many places the telcos have been able to walk away from the obligation.

I think that companies seeking the CAF II reverse auction funding might be surprised by this interpretation of the rules. Being carrier-of-last-resort means that a carrier is obligated to build to reach anybody in the covered area that requests telephone service. The reverse auction doesn’t even require total coverage of the covered census blocks and that seems to be in conflict with the court’s interpretation. The reverse auction census blocks are some of the most sparsely populated areas of the country and building to even one remote customer in some of these areas could be extremely expensive.

Unfortunately, the carrier-of-last-resort obligation only applies to telephone service and not to broadband. It would be nice to see this concept applied to broadband and the FCC missed a good opportunity to do this when they handed out billions of federal dollars in the CAF II plan. With that plan the big telcos are only required to make their best effort to reach customers with broadband in the areas that got the CAF II funding – I’m hearing from rural people all over the country that a lot of the CAF II areas aren’t seeing any upgrades. For the most part the idea of carrier-of-last resort and universal coverage are becoming quaint concepts of our past.

Metering Broadband

A lot of the controversy about Comcast data caps disappeared last year when they raised the monthly threshold for data caps from 300 gigabytes to 1 terabyte. But lately I’ve been seeing folks complaining about being charged for exceeding the 1 TB data cap – so Comcast is still enforcing their data caps rules.

In order to enforce a data cap an ISP has to somehow meter the usage. It appears that in a lot of cases ISPs do a lousy job of measuring usage. Not all ISPs have data caps. The biggest ISPs that have them include Comcast, AT&T, CenturyLink for DSL, Cox and Mediacom. But even these ISPs don’t enforce data caps everywhere, like Comcast not enforcing them where they compete directly against Verizon FiOS.

Many customer home routers can measure usage and there are reports of cases where Comcast data usage measurements are massively different than what is being seen at the home. For example, there are customers who have seen big spikes in data measurement from Comcast at a time when their routers were disconnected or when power was out to the home. There are many customers who claim the Comcast readings always greatly exceed what they are seeing at their home routers.

Data caps matter because customer that exceed the caps get charged a fee. Comcast charges $10 for each 50 GB of monthly over the cap. Mediacom has the same fees, but with much smaller data caps such as a 150 GB monthly cap on customers with a 60 Mbps product.

It’s not hard to imagine homes now exceeding the Comcast data cap limit. Before I left Comcast a year ago they said that my family of three was using 600 – 700 GB per month. Since I didn’t measure my own usage I have no idea if their numbers were inflated. If my measurements were accurate it’s not hard to imagine somebody with several kids at home exceeding the 1 TB. The ISPs claim that only a small percentage of customers hit the data cap limits – but in world where data usage keep growing exponentially each year there are more homes that will hit the limit as time goes by.

What I find interesting is that there is zero regulation of the ISP data ‘meters’. Every other kind of meter that is used as a way to bill customers are regulated. Utilities selling water, electric or natural gas must use meters that are certified to be accurate. Meters on gas pumps are checked regularly for accuracy.

But there is nobody monitoring the ISPs and the way they are measuring data usage. The FCC effectively washed their hands from regulating ISPs for anything broadband when they killed Title II regulation of broadband. Theoretically the Federal Trade Commission could tackle the issue, but they are not required to do so. They regulate interactions with customers in all industries and can select the cases they want to pursue.

There are a few obvious reasons why the readings from an ISP would differ from a home, even under ideal conditions. ISPs measure usage at their network hub while a customer measurement happens at the home. There are always packets lost in the network due to interference or noise on the network, particularly with older copper and coaxial networks. The ISP would be counting all data passing through the hub as usage although many of the packets never make it to customers. But when you read some of the horror stories where homes that don’t watch video see daily readings from Comcast of over 100 GB in usage you know that there is something wrong in the way that Comcast is measuring usage. It has to be a daunting task to measure the usage directed for thousands of users simultaneously and obviously Comcast has problems in their measurement algorithms.

I’ve written about data caps before. It’s obvious that the caps are just a way for ISPs to charge more money, and it’s a gigantic amount of extra revenue if Comcast can bill $10 per month extra to only a few percent of their 23 million customers. Anybody that understand the math behind the cost of broadband understands that a $10 extra charge for 50 GB of usage is almost 100% profit. It doesn’t cost the ISP anything close to $10 for the connections for the first terabyte let alone an incrementally small additional amount. And there certainly is no cost at all if the Comcast meters are billing for phantom usage.

I don’t know that there is any fix for this. However, it’s clear that every customer being charged for exceeding data caps will switch to a new ISP at the first opportunity. The big ISPs wonder why many of their customers loathe them, and this is just one more way for a big ISP to antagonize their customers. It’s why every ISP that builds a fiber network to compete against a big cable companies understand that they will almost automatically get 30% of the market due to customers who have come to hate their cable ISP.

The Migration to an All-IP Network

Last month the FCC recommended that carriers adopt a number of security measures to help block against hacking in the SS7 Signaling System 7). Anybody with telephone network experience is familiar with the SS7 network. It has provided a second communication path that has been used to improve call routing and to implement the various calling features such as caller ID.

Last year it became public that the SS7 network has some serious vulnerabilities. In Germany hackers were able to use the SS7 network to connect to and empty bank accounts. Those specific flaws have been addressed, but security experts look at the old technology and realize that it’s open to attack in numerous ways.

It’s interesting to see the FCC make this recommendation because there was a time when it looked like SS7 would be retired and replaced. I remember reading articles over a decade ago that forecast the pending end of SS7. At that time everybody thought that our legacy telephone network was going to be quickly migrated to all-IP network and that older technologies like SS7 and TDM would retired from the telecom network.

This big push to convert to an IP voice network was referred by the FCC as the IP transition. The original goal of the transition was to replace the nationwide networks that connect voice providers. This nationwide network is referred to as the interconnection network and every telco, CLEC and cable company that is in the voice business is connected to it.

But somewhere along the line AT&T and Verizon high-jacked the IP transition. All of a sudden the transition was talking about converting last-mile TDM networks to digital. Verizon and AT&T want to tear down rural copper and largely replace it with cellular. This was not the intention of the original FCC plans. The agency wanted to require an orderly transition of the interconnection network, not the last-mile customer network. The idea was to design a new network that would better support an all-digital world while also still connecting to older legacy copper networks until they die a natural economic life. As an interesting side note, the same FCC has poured billions into extending the life of copper networks through the CAF II program.

Discussions about upgrading connections between carriers to IP fizzled out. The original FCC vision was to take a few years to study the best path to an all-IP interconnection network and then require telcos to move from the old TDM networks.

I recently had a client who wanted to establish an IP connection with one of the big legacy telcos. I know of some places where this is being done. The telco told my client that they still require interface using TDM, something that surprised my client. This particular big telco was not yet ready to accept IP trunking connections.

I’ve also noticed that the costs for my clients to buy connections into the SS7 network have climbed over the past few years. That’s really odd when you consider that these are old networks and the core technology is decades old. These networks have been fully depreciated for many years and the idea that the cost to use SS7 is climbing is absurd. This harkens back to paying $700 per month for a T1, something that sadly still exists in a few markets.

When the FCC first mentioned the IP transition I would have fully expected that TDM between carriers would have been long gone by now. And with that would have gone SS7. SS7 will still be around in the last-mile network and at the enterprise level since it’s built into the features used by telcos and in the older telephone systems owned by many businesses. The expectation from those articles a decade ago was that SS7 and other TDM-based technologies would slowly fizzle as older products were removed from the market. An IP-based telecom network is far more efficient and cost effective and eventually all telecom will be IP-based.

So I am a bit puzzled about what happened to the IP transition. I’m sure it’s still being talked about by policy-makers at the FCC, but the topic has publicly disappeared. Is this ever going to happen or will the FCC be happy to let the current interconnection network limp along in an IP world?

Is the FCC Disguising the Rural Broadband Problem?

Buried within the FCC’s February Broadband Deployment Report are some tables that imply that over 95% of American homes can now get broadband at speeds of at least 25/3 Mbps. That is drastically higher than the report just a year earlier. The big change in the report is that the FCC is now counting fixed wireless and satellite broadband when compiling the numbers. This leads me to ask if the FCC is purposefully disguising the miserable condition of rural broadband?

I want to start with some examples from this FCC map that derives from the data supporting the FCC’s annual report. I started with some counties in Minnesota that I’m familiar with. The FCC database and map claims that Chippewa, Lyon, Mille Lacs and Pope Counties in Minnesota all have 100% coverage of 25/3 broadband. They also claim that Yellow Medicine County has 99.59% coverage of 25/3 Mbps broadband and the folks there must be wondering who is in that tiny percentage without broadband.

The facts on the ground tell a different story. In real life, the areas of these counties served by the incumbent telcos CenturyLink and Frontier have little or no broadband outside of towns. Within a short distance from each town and throughout the rural areas of the county there is no good broadband to speak of – certainly not anything that approaches 25/3 Mbps. I’d love to hear from others who look at this map to see if it tells the truth about where you live.

Let me start with the FCC’s decision to include satellite broadband in the numbers. When you go to the rural areas in these counties practically nobody buys satellite broadband. Many tried it years ago and using it is a miserable experience. There are a few satellite plans that offer speeds as fast as 25/3 Mbps. But satellite broadband today has terrible latency, as high as 900 milliseconds. Anything over 100 milliseconds makes it hard or impossible to do any real-time computing. That means on satellite broadband that you can’t stream video. You can’t have a Skype call. You can’t connect to a corporate WAN and work from home or connect to online classes. You will have problems staying on many web shopping sites. You can’t even make a VoIP call.

Satellite broadband also has stingy data caps that make it impossible to use as a home broadband connection. Most of the plans come with a monthly data caps of 10 GB to 20 GB, and unlike cellular plans where you can buy additional data, the satellite plans cut you off for the rest of the month when you hit your data cap. And even with all of these problems, it’s also expensive and is priced higher than landline broadband. Rural customers have voted with their pocketbooks that satellite broadband is not broadband that many people are willing to tolerate.

Fixed wireless is a more mixed bag. There are high-quality fixed wireless providers who are delivering speeds as fast as 100 Mbps. But as I’ve written about, most rural fixed broadband delivers speeds far below this and the more typical fixed wireless connection is somewhere between 2 Mbps and 6 Mbps.

There are a number of factors needed to make a quality fixed broadband connection. First, the technology must be only a few years old because older radios older were not capable of reaching the 25/3 speeds. Customers also need a clear line-of-sight back to the transmitter and must be within some reasonable distance from a tower. This means that there are usually s significant number of homes in wireless service areas that can’t get any coverage due to trees or being behind a hill. Finally, and probably most importantly, the wireless provider needs properly designed network and a solid backhaul data pipe. Many WISPs pack too many customers on a tower and dilute the broadband. Many wireless towers are fed by multi-hop wireless backhaul, meaning the tower doesn’t have enough raw bandwidth to deliver a vigorous customer product.

In the FCC’s defense, most of the data about fixed wireless that feeds the database and map is self-reported by the WISPs. I am personally a big fan of fixed wireless when it’s done right and I was a WISP customer for nine years. But there are a lot of WISPs who exaggerate in their marketing literature and tell customers they sell broadband up to 25/3 Mbps when their actual product might only be a tiny fraction of those speeds. I have no doubt that these WISPs also report those marketing speeds to the FCC, which leads to the errors in the maps.

The FCC should know better. In those counties listed above I would venture to say that there are practically no households who can get a 25/3 fixed wireless connection, but there are undoubtedly a few. I know people in these counties gave up on satellite broadband many years ago. My conclusion from the new FCC data is that this FCC has elected to disguise the facts by claiming that households have broadband when they don’t. This is how the FCC is letting themselves off the hook for trying to fix the rural broadband shortages that exist in most of rural America. We can’t fix a problem that we won’t even officially acknowledge, and this FCC, for some reason, is masking the truth.

FCC to Tackle Rural Call Completion

The FCC announced it is taking another shot at solving the rural call completion problem. Those not living in rural America might be unaware of this issue, but for a number of years calls placed to rural locations have been dropped, making it difficult at times to contact someone in a rural area.

We know why it’s happening. There are long-distance providers who don’t want to pay the higher access charges associated with calling high-cost rural areas. Since 1984 there has been a system where long-distance companies pay to get ‘access’ to local networks in order to complete calls. Originally these access rates were high, over 5 cents per minute even for the large Bell telephone companies. But over the years the access rates have been drastically trimmed through FCC actions.

Today it costs long distance companies a fraction of a penny to call urban locations or rural communities that have telephone service from AT&T, Verizon or CenturyLink. But the access rates are still more expensive for calls placed to areas served by smaller telephone companies, with the rates as much as a penny a minute. But even those rates are being trimmed.

That may not sound like a lot. But some wholesale long distance carriers charge a flat rate per minute to other retail telephone providers, like cellular or cable companies, to complete their calls. These carriers don’t want to pay the higher access fees and many of them simply abandon calls made to places with the higher access charge rates. Not all long-distance carriers do this, but there definitely some bad actors in the industry.

The last time the FCC addressed this they tried to just ban the practice of abandoning calls, and they hoped that would stop the practice. But it didn’t. They are now trying a new approach in WC Docket 13-39. They are now proposing to make the companies that sell long distance to customers responsible for making sure that calls go through.

Here’s how this might work in practice. If you buy telephone service from a cable company there is a high likelihood that the company is not a long-distance provider, but rather buys long distance from somebody else – let’s call them Company A. It’s also likely that Company A uses a number of other long-distance carriers to complete calls. Most wholesale long distance providers like Company A use what they call least-cost routing, meaning they pick a different underlying long-distance carrier to reach each location in the country according to cost at the time the call is placed.

It’s the least-cost routing that is causing the problem. If a carrier selling to Company A offers the same price per minute everywhere in the country they are going to likely be the lowest-cost provider to rural places. Other carriers will charge more to route to a rural place because of the higher access charge there. Because of the automated nature of least-cost routing,  Company A, wittingly or not will choose some sub-carriers who are dropping calls.

The FCC wants to make Company A responsible for the quality of its calling. In the docket the FCC calls Company A the ‘entity that selects the initial long-distance route’. The FCC wants these companies to keep detailed records of how and to whom calls are routed. I assume the FCC will start then asking to trace specific calls that were dropped to start identifying the bad actors in the industry. This docket also likely will allow the FCC to levy fines against any carriers involved in the practice, including Company A, the first router of calls.

Let’s hope this new approach works. The practice of purposefully dropping calls goes against the century-long industry goal of having universal voice connectivity. It’s bad for business, bad for rural residents and bad for the country as a whole when calls can’t be made to rural communities. There are examples of people making multiple attempts to call a rural place and unable to get through, and this practice needs to end. For this to be effective the FCC will have to play detective and sift through the call records to identify carriers who drop calls, and hopefully they will do just that.