Charter Asks the FCC to Allow Data Caps

In a move that was probably inevitable, Charter has petitioned the FCC to allow the company to begin implementing broadband data caps. Charter has been prohibited from charging data caps as part of an agreement with the FCC when the agency approved the merger with Time Warner Cable in 2016. Charter is also asking the FCC to lift another provision of the merger agreement that prohibits the company from imposing interconnection fees on Netflix and other companies that generate large amounts of web data.

There was one other requirement of the original merger agreement that the FCC already modified in 2017. Charter had voluntarily agreed to pass 2 million new homes within five years of the merger agreement. The original agreement with the FCC required Charter to compete against other cable companies, but in 2017 that was changed to require Charter to instead pass 2 million new homes.

The merger agreement between the FCC and Charter is in effect until May 2023, but the original deal allowed Charter to ask to be relieved of the obligations after four years, which is the genesis of this request. If granted, the two changes would occur in May 2021.

Charter is asking to lift these restrictions now because the original order allowed them to do so this year. There seems a decent likelihood that the FCC will grant the requests since both Chairman Ajit Pai and Commissioner Michael O’Rielly voted against these merger conditions in 2016 and said the restrictions were too harsh.

What I find interesting is that Charter has been bragging to customers for the last four years about how they are the large ISP that doesn’t impose burdensome data caps on customers. This has likely given them a marketing edge in markets where the company competes against AT&T, which aggressively bills data caps.

Charter has to be jealous of the huge dollars that Comcast and AT&T are receiving from data caps. Back in 2016, there were not many homes that used more data than the 1 terabyte cap that AT&T and Comcast place on customers. However, home broadband usage has exploded, even before the COVID-19 pandemic.

OpenVault reported in early 2018 that the average home used 215 gigabytes of data per month. By the end of 2019, the average home usage had grown to 344 GB monthly. During the pandemic, by the end of March 2020, the average home used 402 GB.

What’s more telling is the percentage of homes that now use a terabyte of data per month. According to OpenVault, that’s now more than 10% of homes – including nearly 2% of homes that use more than 2 terabytes. Just a few years ago only a tiny percentage of homes used a terabyte per month of data. Charter has undoubtedly been measuring customer usage and knows the revenue potential from imposing data caps similar to Comcast or AT&T. If Charter can charge $25 for exceeding the data caps, with their 27 million customers the data caps would increase revenues by over $800 million annually – for usage they are already carrying on their network. Charter, like all of the big ISPs, crowed loudly that their networks were able to easily handle the increase in traffic due to the pandemic. But that’s not going to stop them from milking more money out of their biggest data users.

The US already has some of the most expensive broadband in the world. The US landline broadband rates are twice the rates in Europe and the Far East. The US cellular data rates rival the rates in the most expensive remote countries in the world. Data caps imposed by landline and cellular ISPs add huge amounts of margin straight to the bottom lines of the big ISPs and wireless carriers.

What saddest about all of this is that there is no regulation of ISPs and they free to charge whatever they want for broadband. Even in markets where we see a cable company facing competition with fiber from one of the telcos, there is seemingly no competition on price. Verizon, AT&T, and CenturyLink fiber cost roughly the same in most markets as broadband from cable companies, and the duopoly players in such markets gladly split the customers and the profits for the benefit of both companies.

I’ve written several blogs arguing against data caps and I won’t repeat the whole argument. The bottom line is that it doesn’t cost a big ISP more than a few pennies extra to provide service to a customer that uses a terabyte per month at home compared to a home that uses half that. Data cap revenue goes straight to the bottom line of the big ISPs. For anybody that doesn’t believe that, watch the profits at Charter before and after the day when they introduce data caps.

An Update on ATSC 3.0

This is the year when we’ll finally start seeing the introduction of ATSC 3.0. This is the newest upgrade to broadcast television and is the first big upgrade since TV converted to all-digital over a decade ago. ATSC 3.0 is the latest standard that’s been released by the Advanced Television Systems Committee that creates the standards used by over-the-air broadcasters.

ATSC 3.0 will bring several upgrades to broadcast television that should make it more competitive with cable company video and Internet-based programming. For example, the new standard will make it possible to broadcast over-the-air in 4K quality. That’s four times more pixels than 1080i TV and rivals the best quality available from Netflix and other online content providers.

ATSC 3.0 also will support the HDR (high dynamic range) protocol that enhances picture quality by creating a better contrast between light and dark parts of a TV screen. ATSC 3.0 also adds additional sound channels to allow for state-of-the-art surround sound.

Earlier this year, Cord Cutters News reported that the new standard was to be introduced in 61 US markets by the end of 2020 – however, that has slowed a bit due to the COVID-19 pandemic. But the new standard should appear in most major markets by sometime in 2021. Homes will either have to buy ATSC-enabled TVs, which are just now hitting the market, or they can buy an external ATSC tuner to get the enhanced signals.

One intriguing aspect of the new standard is that a separate data path is created with TV transmissions. This opens up some interesting new features for broadcast TV. For example, a city could selectively send safety alerts and messages to homes in just certain parts of a city. This also could lead to targeted advertising that is not the same in every part of a market. Local advertisers have often hesitated to advertise on broadcast TV because of the cost and waste of advertising to an entire market instead of just the parts where they sell service.

While still in the early stages of exploration, it’s conceivable that ATSC 3.0 could be used to create a 25 Mbps data transmission path. This might require several stations joining together to create that much bandwidth. While a 25 Mbps data path is no longer a serious competitor of much faster cable broadband speeds, it opens up a lot of interesting possibilities. For example, this bandwidth could offer a competitive alternative for providing data to cellphones and could present a major challenge to cellular carriers and their stingy data caps.

ATSC 3.0 data could also be used to bring broadband into the home of every urban school student. If this broadband was paired with computers for every student, this could go a long way towards solving the homework gap in urban areas. Unfortunately, like most other new technologies, we’re not likely to see the technology in rural markets any time soon, and perhaps never. The broadband signals from tall TV towers will not carry far into rural America.

The FCC voted on June 16 on a few issues related to the ATSC 3.0 standard. In a blow to broadcasters, the FCC decided that TV stations could not use close-by vacant channels to expand ATSC 3.0 capabilities. The FCC instead decided to maintain vacant broadcast channels to be used for white space wireless broadband technology.

The FCC also took a position that isn’t going to sit as well with the public. As homeowners have continued to cut the cord there have been record sales in the last few years of indoor antennas for receiving over-the-air TV. Over-the-air broadcasters are going to be allowed to sunset the older ATSC 1.0 standard in 2023. That means that homes will have to replace TVs or will have to install an external ATSC 3.0 tuner if they want to continue to watch over-the-air broadcasts.

Many Libraries Still Have Slow Broadband

During the recent pandemic, a lot of homes came face-to-face with the realization that their home broadband connection is inadequate. Many students trying to finish the school year and people trying to work from home found that their broadband connection would not allow them to connect and maintain connections to school and work servers. Even families who thought they had good broadband found that they were unable to maintain multiple connections for these purposes.

The first thing that many people did when they found that their home broadband wasn’t adequate was to search for some source of public broadband that would enable them to handle their school or office work. Even in urban areas this wasn’t easy, since most of the places with free broadband, such as coffeeshops were closed and didn’t have the broadband connected to deliver meager broadband for those willing to sit outside.

School officials scrambled and were able in many cases to quickly activate broadband from schools, which in most places have robust broadband. Local government supplemented this with ideas like putting cellular hot spots on school buses and parking them in areas with poor broadband.

I’m sure that one of the first places that those without broadband tried was the local small-town libraries. Unfortunately, a lot of libraries in rural areas suffer from the same poor broadband as everybody else in the area.

The FCC established a goal in 2014 for library broadband in the E-Rate Modernization Order, setting a goal of having at least 100 Mbps broadband to every library serving a community of less than 50,000 people, The goal for libraries serving larger communities was set at a gigabit. Unfortunately, many libraries still don’t have good broadband.

In just the last few months, I’ve been working with rural communities where rural libraries get their broadband from cellular hot spots or slow rural DSL connections. It’s hard to imagine being a broadband hub for a community if a library has a 3 to 5 Mbps broadband connection. Libraries with these slow connections gamely try to share the bandwidth with the public – but it obviously barely works. To rub salt in the wounds, some of these slow connections are incredibly expensive. I talked to a library just a few weeks ago that was spending over $500 per month for a dedicated 5 Mbps broadband connection using a cellular hotspot.

The shame of all of this is that the federal funding is available through the E-Rate and a few other programs to try to get better broadband for libraries. Some communities haven’t gotten this funding because nobody was willing to slog through the bureaucracy and paperwork to make it happen.  But in most cases, rural libraries don’t have good broadband because it’s not available in many small rural towns. It would require herculean funding to bring fast broadband to a library in a town where nobody else has broadband.

This is not to say that all rural libraries don’t have good broadband. Some are connected by fiber and have gigabit connections. In many cases these connections are made as part of fiber networks that connect schools or government buildings. These ‘anchor institution’ networks solve the problem of poor broadband in the schools and libraries, but almost always are prohibited from sharing that bandwidth with the homes and businesses in the community.

Of course, there are rural libraries that have good broadband because somebody built a fiber network to connect the whole community. In most cases that means a rural telephone company or telephone cooperative. More recently that might mean an electric cooperative. These organizations bring good broadband to everybody in the community – not just to anchor institutions. Even in these communities the libraries serve a vital role since they can provide WiFi for those that can’t afford to buy the subscription to fiber broadband. Most schools and libraries have found ways to turn the WiFi towards parking lots, and all over rural America there have been daily swarms of cars parked all day where there is public WiFi.

Ultimately, the problems with library broadband are a metaphor for the need for good rural broadband for everybody. Society is not served well when people park all day in a parking lot just to get a meager broadband connection to do school or office work. Folks in rural communities who have suffered through this pandemic are not going to forget it, and local and state politicians better listen to them and help find better broadband solutions.

Our Uneven Regulatory Environment

I think everybody would agree that broadband is a far more important part of the American economy than landline telephone service. While something in the range of 35% of homes still have a landline, almost every home has or wants a broadband connection. If you knew nothing about our regulatory history in the U.S., you would guess that the FCC would be far more involved with broadband issues than landline telephone issues – but they’re not. Consider some of the recent regulatory actions at the FCC as evidence of how regulation is now unbalanced and mostly looks at voice issues.

Recently the FCC took action against Magic Jack VocalTec Ltd. The FCC reached a settlement with MagicJack to pay $5 million in contributions to the Universal Service Fund. MagicJack also agreed to implement a regulatory compliance plan to stay in compliance with FCC rules.

The contributions to the Universal Service Fund come from a whopping 26.5% tax on the interstate portion of telephone service, and MagicJack has refused for years to make these payments. MagicJack has been skirting FCC rules for years – which is what allows them to offer low-price telephone service.

The FCC also recently came down hard on telcos that are making a lot of money by billing excessive access charges for calls to service like Free Conference Calling.com and chat lines. These services made arrangements with LECs that are remote and that bill access on a lot of miles of fiber transport. The FCC ruled that these LECs were ‘access stimulators’ and that the long-distance companies and their customers were unfairly subsidizing free conference calling. In one of the fastest FCC reactions I can recall, just a few months after the initial ruling the FCC also published orders denying appeals to that order.

From a regulatory perspective, these kinds of actions are exactly the sort of activity one would expect out of a regulatory agency. These two examples are just a few out of a few dozen actions the FCC has taken in the last few years in their regulation of landline telephone service. The agency has been a little less busy, but also looked at cable TV issues over the last year.

Contrast this with broadband, which any person on the street would think would be the FCC’s primary area of regulation. After all, broadband is the far most important communications service and affects far more homes and businesses than telephone service or cable TV service.  But the regulatory record shows a real dearth of action in the area of broadband regulation.

In December 2019 Congress passed the Television Viewer Protection Act that prohibits ISPs and cable companies from billing customers for devices that the customer owns. It’s odd that a law would even be needed for something so commonsense, but Frontier and some cable companies have been billing customers for devices that were sold previously to customers. In one example that has gotten a lot of press, Frontier has been billing customers a $10 fee for a router that customers purchased from Verizon before Frontier bought the property.

Frontier appealed the immediate implementation of the new law to the FCC. The telco said that due to COVID-19 the company is too busy to change its practices and asked to be able to continue the overbilling until the end of this year. In a brave regulatory move in April, the FCC agreed with Frontier and will allow them to continue to overbill customers for such devices until the end of 2020.

I was puzzled by this ruling for several reasons. From a practical perspective, the regulators in the U.S. have normally corrected carrier wrongs by ordering refunds. It’s impossible to believe that Frontier couldn’t make this billing change, with or without COVID. But even if it takes them a long time to implement it, the normal regulatory remedy is to give customers back money that was billed incorrectly. Instead, the FCC told Frontier and cable companies that they could continue to rip off customers until the end of the year, in violation of the intent of the law written by Congress.

A more puzzling concern is why the FCC even ruled on this issue. When the agency killed Title II regulation, they also openly announced that they have no regulatory authority over broadband. My first thought when reading this order was to wonder if the FCC even has jurisdiction any longer to rule on issues like data modems. However, in this case, the Congress gave them the narrow authority to rule on issues related to this specific law. As hard as the FCC tries, these little nagging broadband issues keep landing in their lap – because there is no other place for them to go.

In this case, the FCC dipped briefly into a broadband issue and got it 100% wrong. Rather than rule for the customers who were being billed fraudulent charges, and going against the intent of Congress that passed the law clarifying the issue – the FCC bought into the story that Frontier couldn’t fix their billing systems until a year after the law was passed. And for some reason, even after buying the story, the FCC didn’t order a full refund of past overbilling.

If we actually had light-touch broadband regulation, then the FCC would be able to weigh in when industry actors act badly, like happened in the two telephone dockets listed above. But our light-touch regulation is really no-touch regulation and the FCC has no jurisdiction over broadband except in snippets where Congress gives them a specific task. The FCC ruling is puzzling. We know they favor the big ISPs, but siding with Frontier’s decision to openly rip off customers seems like an odd place to make a pro-ISP stand. As much as I’ve complained about this FCC giving up their broadband regulatory authority – perhaps we don’t want this to be fixed until we get regulators who will apply the same standards to broadband as they are applying to telephone service.

The FCC Muddles the RDOF Grants

Last week the FCC ‘clarified’ the RDOF rules in a way that left most of the industry feeling less sure about how the auction will work.  The FCC is now supposedly taking a technologically neutral position on the auction. That means that the FCC has reopened the door for low-earth orbit satellites. Strangely, Chairman Ajit Pai said that the rules would even allow DSL or fixed wireless providers to participate in the gigabit speed tier.

Technologically neutral may sound like a fair idea, but in this case it’s absurd. The idea that DSL or fixed wireless could deliver gigabit speeds is so far outside the realm of physics as to be laughable. It’s more likely that these changes are aimed at allowing the providers of satellite, DSL, and fixed wireless providers to enter the auction at speeds faster than they can deliver.

For example, by saying that DSL can enter the auction at a gigabit, it might go more unnoticed if telcos enter the auction at the 100./10 Mbps tier. There is zero chance for rural DSL to reach those speeds – the CAF II awards six years ago didn’t result in a lot of rural DSL that is delivering even 10/1 Mbps. It’s worth remember that the RDOF funding is going to some of the most remote Census blocks in the country where homes are likely many miles from a DSL hub and also not concentrated in pockets – two factors that account for why rural DSL often has speeds that are not a lot faster than dial-up.

Any decision to allow low orbit satellites into the auction has to be political. There are members of Congress now pushing for satellite broadband. In my State of North Carolina there is even a bill in the Senate (SB 1228) that would provide $2.5 million to satellite broadband as a preferred solution for rural broadband.

The politics behind low orbit satellite broadband is crazy because there is not yet any such technology that can deliver broadband to people. Elon Musk’s satellite company currently has 362 satellites in orbit. That may sound impressive, but a functional array of satellites is going to require thousands of satellites – the company’s filed plan with the FCC calls for 4,000 satellites as the first phase deployment.

I’ve seen a lot of speculation in the financial and space press that Starlink will have a lot of challenge in raising the money needed to finish the constellation of satellites. A lot of the companies that were going to invest are now reluctant due to COVID-19. The other current competitor to Starlink is OneWeb, which went bankrupt a few months ago and may never come out of receivership. Jeff Bezos has been rumored to be launching a satellite business but still has not launched a single satellite.

The danger of letting these various technologies into the RDOF process is that a lot of rural households might again get screwed by the FCC and not get broadband after a giant FCC grant. That’s what happened with CAF II where over $9 billion was handed to the big telcos and was effectively washed down the drain in terms of any lasting benefits to rural broadband.

It’s not hard to envision Elon Musk and Starlink winning a lot of money in the CAF II auction and then failing to complete the business plan. The company has an automatic advantage over any company they are bidding against since Starlink can bid lower than any other bidder and still be ahead of the game. It’s not an implausible scenario to foresee Starlink winning every contested Census block.

Allowing DSL and fixed wireless providers to overstate their technical capacity will be just as damaging. Does anybody think that if Frontier wins money in this auction that they will do much more than pocket it straight to the bottom line? Rural America is badly harmed if a carriers wins and the RDOF money and doesn’t deliver the technology that was promised – particularly if that grant winner unfairly beat out somebody that would have delivered a faster technology. One has to only look back at the awards made to Viasat in the CAF II reverse auction to see how absurd it is when inferior technologies are allowed in the auction.

Probably the worst thing about the RDOF rules is that somebody who doesn’t deliver doesn’t have to give back all of the grant money. Even should no customer ever be served or if no customer ever receives the promised speeds, the grant winner gets to keep a substantial percentage of the grant funding.

As usual, this FCC is hiding their real intentions under the technology neutral stance. This auction doesn’t need the FCC to be ‘technology neutral’, and technologies that don’t exist yet today like LEO satellites or technologies that can’t deliver the speed tiers should not be allowed into the auction. I’m already cringing at the vision of a lot of grant winners that have no business getting a government subsidy at a time when COVID-19 has magnified the need for better rural broadband.

Expanding the Universal Service Fund

A bipartisan bill has been introduced in Congress that would expand the size of the FCC’s Universal Service Fund by adding a fee on top of broadband bills. This fund is currently funded by fees added to landline telephone and cellular bills. The USF assessment on Interstate traffic recently increased to 26.5% – which is an extraordinarily high tax.

The bill was introduced by Collin Peterson (D-Minn.) and Don Young (R-Alaska). Also sponsoring the bill are T.J. Cox (D-Cal.), Hal Rogers (R-Ky.), Angie Craig (D-Minn.), Frank Lucas (R-Oklahoma), Luis Correa (D-Cal.) Jeff Van Drew (R-N.J.), Ed Case (D- Hawaii), and Vicente Gonzalez (D-Texas).

I’ve been advocating this for a decade because the Universal Service Fund is the FCC’s only tool to tackle the rural broadband issue. The USF already does a lot of good. The Fund is used to bring affordable gigabit broadband to schools. It’s used to bring affordable broadband to rural health care facilities. And even though the FCC keeps fighting it, the USF is used to hold down broadband bills for low-income households, with the Lifeline program that makes ISPs whole for providing lower prices.

In the past the Fund was used to fund two large-dollar broadband expansion projects – one successful and one a total bust. The successful program was ACAM, which has provided the funding to build rural fiber networks by small telcos. I see people around the industry praising the rural broadband in states like North and South Dakota – and that fiber was largely funded by the ACAM program.

Unfortunately, the USF doesn’t always get used wisely. This was the source of funding for the CAF II program that handed $11 billion to the big telcos to ostensively upgrade rural broadband speeds to 10/1 Mbps. It appears that money was largely frittered away or pocketed by the telcos because it’s still hard to find rural households with DSL speeds of 10/1 Mbps. The entire project basically shoveled billions to the bottom line of the telcos.

The Universal Service Fund is about to be used again in big ways. USF is the source of the $16.4 RDOF grants that will be awarded later this year, with another $4 billion to be awarded next year. Assuming this reverse auction doesn’t go cockeyed by awarding money to satellite providers instead of fiber networks, then this will be the biggest boost to rural broadband ever. I’ve been working with a lot of ISPs planning to use this money to build fiber in rural counties all over the country.

The Universal Service Fund is also the source of the proposed $9 billion 5G Fund with a goal of bringing cellular coverage to everybody in the US. Again, assuming the FCC does this right, this would make it a lot easier to live in rural America. Done poorly, this could instead line the pockets of the giant cellular companies.

What nobody is talking about is that those two programs – the RDOF grants and the 5G Fund will use all of the dry powder in the Universal Service Fund. These programs will both award funding over 10 years, and if we don’t find a new source of funding, there will be no additional big grants coming from the USF for the next decade.

What’s even scarier is that the revenues into the Universal Service Fund are dropping as people continue to drop landline telephones. Without some bolstering, there is no assurance that future FCCs will be able to meet the obligations to the recipients of the RDOF and 5G grants.

The revenue impact of imposing a $1 fee on broadband connections is gigantic. There are currently around 106 million broadband customers in the US. A $1 monthly fee on broadband would add $1.3 billion annually to the USF, or over $13 billion over the next decade. That would allow for another big rural broadband grant program.

The members of Congress sponsoring this bill seem to trust the FCC to disperse grant funding. Honestly, their track record on choosing winning grants is mixed. There are also plenty of policy people who think we should take every step possible to keep broadband affordable and that even a $1 monthly fee helps to push broadband out of the affordability range for homes.

If the Universal Service Fund is not expanded, then the only other source for funding rural broadband is Congress. There is a lot of talk about broadband funding coming out of the various COVID-19 stimulus packages. But if that doesn’t happen, we are likely facing an economy with a lot of problems for the next few years. In that environment, rural broadband funding might get shuttled behind other priorities.

What is Light-Touch Regulation?

One thing I’ve noticed recently is that a lot of people are climbing on board the idea of building better broadband to rural America. A lot of people seem to think that the FCC can somehow act to fix a lot of the shortcomings of rural broadband – but in doing so they have missed the entire point of what the FCC calls ‘light-touch’ regulation – because, from a practical perspective, broadband is not regulated at all.

It’s not hard to understand why people would misunderstand the situation, because ‘light-touch regulation’ is one of those euphemisms that governments invent to disguise what they are really doing. Chairman Pai at the FCC never misses an opportunity to talk about his regime of light-touch regulation. I have to wonder if there would be as much support for the light-touch regulation if that phrase was replaced with the simpler and more descriptive phrase ‘deregulated’. I suspect a lot of people would be uncomfortable that one of our largest industries is largely deregulated.

The FCC pulled off this huge change by hiding the deregulation inside of their move to undo net neutrality. The FCC didn’t just reverse the net neutrality rules put into place by the previous FCC, they killed Title II regulation – which is the authority given to the FCC by Congress to regulate ISPs as common carriers. The FCC gave up Title II authority and gave the tiny remaining vestiges of broadband regulation to the Federal Trade Commission – even though the FTC is not a regulatory agency. The FTC doesn’t create or enforce new rules – they are more like corporate police that fine corporations when they’ve abused their customers too egregiously.

What does it mean to give up Title II authority? The FCC can no longer judge, or even track broadband prices. ISPs are free to raise rates to any level they want and make any profits they want. There hasn’t been an FCC since the dawn of the broadband industry that has invoked price regulation – but the fact that they could always acted as a brake on bad ISP behavior.

The FCC can no longer intervene in disputes between ISPs or with their biggest customers. Under Title II regulation, the FCC could decide if an ISP was fairly dealing with Netflix or some other large user of broadband. When Title II regulation was killed, the FCC stopped acting as the arbiter in industry disputes – ISPs are free to act in any way they want.

The FCC can’t even intervene when ISPs abuse customers. I recently wrote about the FCC complaint process. Before the end of Title II regulation, ISPs would try to resolve issues raised during the complaint process. The FCC had the authority to make ISPs treat customers fairly if they decided to exercise it – and it was the threat of the FCC creating new rules that made ISPs willing to curb some of their worst behavior. But now the FCC is nothing more than a gatekeeper – they lamely pass on consumer complaints to ISPs, which the ISPs largely toss into the wastebasket since the FCC no longer has any regulatory teeth.

It’s not completely fair to say that ISPs are 100% deregulated because there are a few areas of regulation that were not created under Title II authority that are still in place. For example, the Patriot Act created the requirement that ISPs have to allow federal law enforcement to be able to ‘wiretap’ broadband connections in the same way they used to wiretap telephone connections. The FCC can’t shed that responsibility and so they still enforce the CALEA rules that require ISPs to respond to subpoenas.

There are also various types of privacy and billing rules that were the result of other acts by Congress, and the FCC still oversees these remaining vestiges of regulation. As an example, the whole recent controversy over removing Section 230 protections for online companies like Twitter also applies to ISPs and is enforced by the FCC.

But the core basis for FCC regulation of ISPs was due to the fact that ISPs are common carriers, similar to telephone companies or cellular carriers. ISPs provide a two-way communications path with customers, and it is that basic function that justified regulating them under Title II regulations.

The FCC undertook one of the most bizarre steps in regulatory history when their voluntarily neutered themselves as broadband regulators. They no longer have the authority to force the big telcos to provide better rural broadband. They no longer have the authority to stop an ISP from raising rates to the point of unaffordability. They no longer even have the power to stop an ISP from billing customers for non-existent products. This is all easy to remember if you replace the term light-touch regulation with unregulated.

Say No to Data Caps

Last week I had a blog that asked why the FCC is seemingly supporting data caps by allowing caps on broadband built with federal grant money. The FCC has established grants that place premium value on fast broadband speeds and low latency but that ignores one of the most important aspects of broadband today – usability.

A broadband connection that doesn’t let homes partake in the same online world as the rest of America is inferior broadband – and there is no better example of an unusable data plan than one a low data cap. The FCC’s RDOF rules support monthly data caps of 250 gigabytes for plans offering 25/3 or 50/5 Mbps. The FCC is clearly saying to rural America – we’ll give grant money to ISPs to bring you better broadband, but we’re going to let the ISPs cripple that broadband so that they can bill you an extra $50 or $100 per month if you want to use that broadband like everybody else in the country.

Recall that ISPs that win the RDOF grants have six years to build the new networks. How will a 250 GB data caps look by the time these networks are built? OpenVault says that the average home used 274 GB per month in 2018 – already higher than the FCC’s proposed data cap. By the end of 2019 average usage had grown to 344 GB for the average home and exploded to 402 GB by March due to people and students working from home during the pandemic. Trending household usage forward until 2026 would suggest that the average home will be using more than a terabyte of data each month by then. That’s not a big stretch since more than 10% of homes are already using a terabyte or more of data today.

The FCC is not the only one to point a finger at. There are plenty of state broadband programs that have awarded grants to ISPs that have data caps. This has happened because policymakers have not viewed data caps as providing inferior broadband. This is easy to understand since just a few years the vast majority of homes used a lot less broadband than the data caps. You might recall in 2015 when there was big public pushback when Comcast tried to introduce a 300 GB data cap. At that time, Comcast said that only a tiny number of customers used more data than 300 GB per month – but in five short years, the national average data usage is significantly higher than the cap Comcast wanted to impose in 2019.

We need a new policy at the state and federal level that says that ISPs with data caps are not welcome to broadband grant funding. Not only should they not be able to impose data caps on grant-funded networks – an ISP that has routine data caps for others should be prohibited from participating in any grant funding anywhere.

There are still ISPs that say that data caps help to protect the integrity of their network. This argument went out the door when most ISPs stopped billing for data caps during the pandemic – the one time when protecting the network would have been important.

What hasn’t been said enough is that a broadband connection with a data cap is an inferior broadband connection. A home with data caps faces the monthly choice of either curtailing broadband usage or else spending a lot more for broadband. Are we going to fix the rural broadband gap by transitioning rural homes with slow broadband connections to ones with tiny data caps that cost a lot more than everybody else in the country?

It’s always been clear that data caps are mostly about greed. There is no better example of this than the AT&T rural hotspot that has a data cap that allows for as much as an extra $200 in monthly fees to a subscriber. It’s outrageous that the FCC gave grant money last year to Viasat which has tiny monthly data caps. The whole proposed 5G Fund is outrageous if billions of federal money will allow the cellular carriers to sell more rural hotspots with tiny data caps and huge monthly fees.

It’s time for broadband policymakers at all levels to categorically say no to data caps. Shame on the FCC for allowing data caps into the discussion of the RDOF grant. But also shame on Congress for not issuing a new telecom bill to stop all of this nonsense. And shame on any state policymaker or regulator who has allowed state resources to be used to support broadband with data caps. It’s time to say no.

Why Does the FCC Support Data Caps?

Most people may not have noticed that the upcoming RDOF grants allow, and even encourage ISPs to enforce data caps on customers. I have a hard time thinking of even one reason why the FCC would suggest that ISPs use data caps.

The RDOF grants have four performance tiers for ISPs, with the auction rules weighted to give preference to faster data speeds. Each of these performance tiers comes with a suggested monthly usage allotment – which means a data cap. ISPs that will deliver speeds of either 25/3 Mbps or 50/5 Mbps can introduce a data cap of 250 gigabytes or the U.S. average, whichever is higher. ISPs offering speeds of 100/20 Mbps or 1 Gbps/500 Mbps can set a data cap at 2 terabytes.

The natural question is to ask why the FCC is setting any data cap at all? Remember, this is an FCC that no longer regulates broadband, and yet they are suggesting rules that encourage ISPs that win the grant funding to introduce data caps. Past experience says that if the rules allow for data caps, the ISPs that win the money are likely to implement them.

I find the data caps for the 25/3 Mbps and 50/5 Mbps to be intriguing since ISPs can’t set the data caps at less than the US average. Who is going to measure that? The FCC doesn’t gather the kind of data needed to measure data caps around the country. Further, there are companies like CenturyLink that have data caps but that often don’t enforce them. I haven’t the foggiest idea how anybody would measure the national average data cap.

It’s important to put these data caps into perspective. The data caps on the slower products are incredibly stingy at 250 gigabytes per month.  OpenVault reported earlier this year that the average US home used 344 gigabytes of data per month in December 2019, up from 274 gigabytes a year earlier. Due to the impact of COVID-19, that number exploded to 402.5 gigabytes by the end of March. Homes being limited to using 250 gigabytes of data are being told not to use their broadband like everybody else. It’s nearly impossible for a home that has people working from home or students doing schoolwork at home to limit themselves to only 250 gigabytes of data per month.

Even the 2 terabyte data caps for faster broadband will become problematic is a few years. OpenVault says that over 10% of homes were already using more than 1 terabyte of data as of the end of the first quarter of 2020 and 1.2% were using over 2 terabytes. By the time these networks are built with RDOF money it wouldn’t be surprising for 10% of homes to be using more than the 2-terabyte cap.

With these grant rules the FCC is actively supporting ISP to introducing data caps that are smaller than the national average broadband usage at the end of 2018 and that will easily be less than half of the national average usage by the time the networks funded by the RDOF grants are constructed.

It seems like the FCC never learns any lessons. Every grant program they have administered has some major flaws. The FCC is handing out billions of dollars to provide broadband to home that don’t have it today. This program is a major boon for the rural communities that get broadband because of the grants. But with these rules, the RDOF money will be used to bring broadband to homes for the first time and immediately cripple homes from using that broadband due to data caps. For the federal government to support a 250-gigabyte data cap is an incredibly bad policy. They are saying to folks – here, we funded broadband, but don’t use it. I can’t conceive of any reason why data caps are even mentioned in the grant rules unless this is another case of bowing to the lobbyists from the big ISPs or the satellite broadband providers.

Looking at the bigger picture, it’s somewhat surprising that the FCC would take any position on things like data caps since they have given away their authority to regulate broadband. What these grant rules tells us is that this FCC would heartily support data caps if they still had that authority. This provision in this grant program provides tacit support to Comcast and AT&T to bill customers huge amounts of extra money for exceeding arbitrary and stingy data caps.

A New National Broadband Plan?

Senator Edward Markey (D-Mass) introduced a bill that would require that the FCC create a new National Broadband Plan by July 2021. This plan would lay out the national goals needed for broadband going forward and also provide an update on how the COVID-19 crisis has impacted Internet access. I am not a big fan of the concept of a national plan for many reasons.

Can’t Trust FCC Data. The FCC would base any analysis in a new plan on the same flawed data they are using for everything else related to broadband. At this point, the best description of the FCC’s broadband data is that it is a fairy tale – and not one with a happy ending.

Gives Politicians Talking Points rather than Action Plans. A national broadband plan gives every politician talking points to sound like they care about broadband – which is a far cry from an action plan to do something about broadband. When politicians don’t want to fix a problem they study it.

Makes No Sense if Broadband is Unregulated. Why would the government create a plan for an industry over which the government has zero influence? The FCC has gifted the broadband industry with ‘light-touch regulation’ which is a code word for no regulation at all. The FCC canned Title II regulatory authority and handed the tiny remaining remnant of broadband regulation to the Federal Trade Commission – which is not a regulatory agency.

The Last National Broadband Plan was a Total Bust. There is no need for a National Broadband Plan if it doesn’t include a requirement that the FCC should try hard to tackle any recommendations made. Almost nothing from the last broadband plan came to pass – the FCC and the rest of the federal government stopped even paying lip service to the last plan within a year after it was published. Consider the primary goals of the last National Broadband Plan that were to have been implemented by 2019:

  • At least 100 million homes should have affordable access to 100/50 Mbps broadband. Because the cable companies implemented DOCSIS standards in urban areas, more than 100 million people now have access to 100 Mbps download speeds. But only a tiny fraction of that number – homes with fiber, have access to the 50 Mbps upload speed goal. It’s also impossible to make a case that US broadband is affordable – US broadband prices are almost double the rates in Europe and the far East.
  • The US should lead the word in mobile innovation and have the fastest and most extensive wireless network of any nation. US wireless broadband is far from the fastest in the world – our neighbor Canada is much closer to that goal than is the US. Everybody acknowledges that there are giant areas of rural America without good wireline broadband, but most people have no idea that cellular coverage is also miserable in a lot of rural America.
  • Every American Community should have gigabit access to anchor institutions such as schools, libraries, and government buildings. We probably came the closest to meeting this goal, at least for schools, and over 90% of schools now have gigabit access. However, much of that gain came through poorly-aimed federal grants that paid a huge amount of money to bring fiber to anchor institutions while ignoring the neighborhoods around them – and in many cases, the fiber serving government buildings is legally blocked from being used to help anybody else.
  • Every American should have affordable access to robust broadband and the means and the skills to subscribe. A decade after the last National Broadband Plan there are still huge numbers of rural homes with no broadband, or with broadband that barely functions. Instead of finding broadband solutions for rural America, we have an FCC that congratulates itself each year for being on the right trajectory for solving the broadband gap.
  • To ensure that America leads in the clean energy economy, every America should be able to use broadband to track and manage their real-time energy consumption. I can’t come up with anything other than a facepalm for this goal.

As hard as I try, I can’t think of even one reason why we should waste federal dollars to develop a new national broadband plan. Such a plan will have no teeth and will pass out of memory soon after it’s completed.