Tag Archives: Fiber

The Continued Growth of Fiber

The Fiber Broadband Association announced the results of a fiber deployment survey from RVA LLC Market Research & Consulting. That firm has been tracking the deployment of fiber across the U.S. for many years. The survey was for the year ending in September 2024.

The survey reports the following:

  • ISPs built fiber to pass 10.3 million homes in the last year, a new all-time high. That includes 8.4 million new passings that got fiber and 1.9 million passings that got an additional fiber connection.
  • RVA estimates that fiber now passes 56.5% of U.S. homes.
  • Fiber ISPs are increasing penetration rates on fiber over time, with an overall take rate of 45%. ISPs are achieving a 20% penetration more quickly than in the past.
  • RVA claims that cable company penetration rates in fiber neighborhoods have fallen by 33%, with the other new fiber passings coming from customers that previously had DSL or other technologies.

The remaining fiber market is still immense, with almost 149 million homes that don’t have fiber. RVA estimates this at:

  • Densely populated mid to high-income areas – 90.6 million.
  • Densely populated low-income areas – 21.5 million.
  • Small towns / rural – 29.2 million.
  • Second homes – 7.3 million.

The following graph from RVA that shows fiber construction over time is interesting.

The early fiber growth from 2005 – 2008 mostly came from Verizon FiOS. No other large ISPs climbed on the fiber wagon for many years. The fall-off of fiber construction during the pandemic is dramatic, with over 3 million fewer new homes being passed with fiber in 2020.

There are a lot of different entities building fiber. The biggest market share is held buy the large telcos and their affiliates (63.8%). Next comes smaller tier 2 and 3 telcos (11.6%), fiber overbuilders (10.2%), cable companies (9.3%), municipalities (2.7%), and electric cooperatives (2.4%).

Why Customers Choose FWA

It’s been interesting to watch cable companies downplaying FWA cellular wireless. For example, in September, Comcast President Mike Cavanaugh said that FWA wireless is a ‘near term’ issue that is competing for the lower end of the market. CEO Brian Roberts was quoted this year about competing against FWA saying, “Three companies are all simultaneously within a short period of time are all offering a home connectivity product by their own admission a lower speed, more easily congested network.”

And yet, the carriers selling FWA continue to sell at astounding numbers. AT&T, T-Mobile, and Verizon have consistently added 900,000 customers per quarter since the second quarter of 2022. The big cable companies have been fighting back by significantly lowering the prices of their slowest bandwidth products, and this seems to be stemming the losses due to FWA. But those lower prices come with a cost with lower margins and average revenues per customer.

I think that what has been missing from the discussion of FWA of how the technology compares to the alternatives. Consider the following table that shows average speed tests for a 12-month period in three rural counties for all broadband technologies. There is nothing unusual about these counties – they are just three places where I happened to recently do some analysis. Each county has a county seat and a few towns with cable broadband and some fiber, but rural areas are largely still not served with any fast broadband.   It’s not hard to understand why FWA is so competitive in rural counties. It’s generally faster than fixed wireless and Starlink, and with generally a lower prices. FWA is being priced at roughly the same level as DSL in many markets.

The big limiting factor for FWA in rural markets is the broadband footprint and good speeds like those shown in the above table are only available within a few miles of cell towers. In all three counties, the FWA providers cover only roughly one fourth of the geographic footprint of the county.

Comparative speed tests are always interesting. Each county is served by a different cable company, and yet each is delivering almost the same average speeds – likely because each is operating similar DOCSIS 3.1 networks.

There are some noticeable difference in these counties that require local knowledge to explain. For example, fiber speed tests are lower in County 2 due to a fiber provider that offers a very affordable 100 Mbps fiber product that pulls down the average speed. FWA speeds are also slower in County 2 due to households still using cellular hotspots from cell sites that haven’t been upgraded to FWA.

Starlink speeds are consistent with the national average numbers I’ve been seeing – but Starlink has the most erratic variance in speed tests with a range of tests between a few Mbps and several hundred Mbps. In the three counties, the speeds on fixed wireless (from WISPs) are relatively slow since the WISPs have not upgraded to faster radios. There are counties where WISP speeds are much faster. The speed that might surprise some folks is DSL. As the copper networks have emptied of customers, the remaining customers are seeing faster speeds than just a few years earlier.

Are There Superior Technologies?

It’s easy to fall into a lazy mental habit and say that some technologies are better than others. I know I tend to do this. It’s easy to say that fiber is better than cable technology or fixed wireless when in real life, broadband customers make this decision.

My firm does a lot of broadband surveys every year, and we find customers who are happy with most broadband technologies. I say most because I don’t think I ever found a customer who praised their cellular hotspot of high-orbit satellite service on HughesNet or Viasat. But other broadband technologies and the ISPs that deploy them have their fans.

As an example, we recently talked to a bunch of businesses in a community that buy broadband from the cable company. This is a small rural town where the cable company is still using the older DOCSIS 3.0 technology. Speed tests show download speeds at a maximum of 150 Mbps download and less than 10 Mbps upload. Most of the businesses complained about the cable company. They said that service was spotty and was sometimes good and sometimes bad. They complained about the inability to perform functions that needed upload speeds, such as using cloud software, making Zoom calls, or using VoIP.

But there were several businesses that were happy with the cable company. They said they rarely had problems and had nothing negative to say about the cable company. There are two possible reasons for this. First, the happy customers might not be using the broadband in the same way as other businesses. However, the satisfied customers included a law firm and an insurance agent, who both said they worked all day with cloud software.

There is another possible reason why these customers are happier. There is a chance that the network in their part of town performs better than other parts of the network. We tend to think of networks as ubiquitous, but that is not the case. The neighborhood with satisfied customers might have fewer customers sharing a node. It might have newer coaxial cable. It might not be configured with a lot of amplifiers. It might have a faster fiber connection feeding the node. It might have suffered fewer cable cuts over the years. It might be superior in a number of ways to the parts of the network serving the businesses that complained about service.

Fiber is not always great. I have an ISP client that built one of the first fiber BPON networks. BPON delivered 622 Mbps download and 155 Mbps upload bandwidth to share with up to 32 customers. Over time, this network got full and many PONs were completely subscribed. Before this ISP finally upgraded, the network performance grew terrible. PONs with business customers delivered terrible speeds in the daytime, and residential PONs bogged down badly in the evenings. Fiber does not automatically mean a great network – any network where there is more demand for broadband than is being delivered will see big problems and unhappy customers.

I still find business customers who are happy with DSL. They live close to the DSLAM core, and their part of the network isn’t oversubscribed. Telcos are delivering as much as 100 Mbps download speeds to selected DSL customers for a decent price.

The same goes for fixed wireless. I run across customers who hate the technology and others who love it. A lot of this difference is the underlying philosophy and customer service of the local WISP. Some WISPs  do everything right while others oversubscribe sectors, try to sell more bandwidth than is available, or try to serve customers who are too far away from the tower.

I’ve found the same with Starlink. There are customers who love the service and others who tried and dropped it. I’m already starting to see this same dichotomy with FWA cellular wireless, with customers who love it or hate it.

The bottom line is that any broadband technology or ISP that a customer likes is good for them. For a customer to remain happy for a long time requires technology that works, customer service that is responsive, and a price that customers are happy with. ISPs often build a new network and wonder why they don’t instantly get a huge penetration rate. Some of this is due to customers who don’t want to put any effort into changing ISPs – but other customers are happy with the quality, service, or price of the existing broadband.

Are there superior technologies? Some networks clearly outperform competitors in a given neighborhood. But the superior technology for any given customer is the one they choose to buy that they are satisfied with. Who am I to argue with a happy customer?

DOCSIS 4.0 vs. Fiber

Comcast and Charter previously announced that they intend to upgrade cable networks to DOCSIS 4.0 to be able to better compete against fiber networks. The goal is to be able to offer faster download speeds and drastically improve upload speeds to level the playing field with fiber in terms of advertised speeds. It’s anybody’s guess if these upgrades will make cable broadband equivalent to fiber in consumers’ eyes.

From a marketing perspective, there are plenty of people who see no difference between symmetrical gigabit broadband offered by a cable company or a fiber overbuilder. However, a lot of the public has already become convinced that fiber is superior. AT&T and a few other big telcos say they quickly get a 30% market share when they bring fiber to a neighborhood, and telcos claim aspirations of reaching a 50% market share within 3-4 years.

At least a few big cable companies believe fiber is better. Cox is in the process of overbuilding fiber in some of its largest markets. Altice has built fiber in about a third of its markets. What’s not talked about much is that cable companies have the same ability to overlash fiber on existing coaxial cables in the same way that telcos can overlash onto copper cables. It costs Cox a lot less to bring fiber to a neighborhood than a fiber overbuilder that can’t overlash onto existing wires.

From a technical perspective, engineers and broadband purists will tell you that fiber delivers a better broadband signal. A few years back, I witnessed a side-by-side comparison of fiber and coaxial broadband delivered by ISPs. Although the subscribed download speeds being delivered were the same, the fiber connection felt cleaner and faster to the eye. There are several technical reasons for the difference.

  • The fiber signal has far less latency. Latency is a delay in getting bits delivered on a broadband signal. Higher latency means that a smaller percentage of bits get delivered on the first attempt. The impact of latency is most noticeable when viewing live sporting events where the signal is sent to be viewed without having received all of the transmitted bits – and this is seen to the eye as pixelation or less clarity of picture.
  • Fiber also has much less jitter. This is the variability of the signal from second to second. A fiber system generally delivers broadband signals on time, while the nuances of a copper network cause minor delay and glitches. As one example, a coaxial copper network acts like a giant radio antenna and as such, picks up stray signals that enter the network and can disrupt the broadband signal. Disruptions inside a fiber network are comparatively minor and usually come from small flaws in the fiber caused during installation or later damage.

The real question that will have to be answered in the marketplace is if cable companies can reverse years of public perception that fiber is better. They have their work cut out for them. Fiber overbuilders today tell me that they rarely lose a customer who returns to the cable company competitor. Even if the cable networks get much better, people are going to remember when they used to struggle on cable holding a zoom call.

Before the cable companies can make the upgrade to DOCSIS 4.0, which is still a few years away, the big cable companies are planning to upgrade upload speeds in some markets using a technology referred to as a mid-split. This will allocate more broadband to the upload path. It will be interesting to see if that is enough of an upgrade to stop people from leaving for fiber. I think cable companies are scared of seeing a mass migration to fiber in some neighborhoods because they understand how hard it will be to win people back. Faster upload speeds may fix the primary issue that people don’t like about cable broadband, but will it be enough to compete with fiber? It’s going to be an interesting marketing battle.

The Fiber Land-Grab

It’s becoming clear that we are now deep into a fiber land-grab. By that, I mean that companies that overbuild fiber are moving as quickly as possible into markets to build fiber. The biggest ISPs have publicly discussed their plans for building a lot of fiber in 2023. Following are some of the latest projections for 2023:

  • AT&T plans to build past 2 – 2.5 million new passings.
  • Frontier plans to pass 1.3 million new homes.
  • Altice is aimed for 900,000 new fiber passings.
  • Brightspeed is planning on 600,000 new passings.
  • Verizon hasn’t announced a number, but built 550,000 new passings in 2022.
  • MetroNet is aiming for 500,000 new passings.
  • Lumen plans to build 500,000 passings.
  • Consolidated Communications is planning on 350,000 passings.
  • Charter announced plans for 300,000 passings.
  • Comcast announced plans to pass more than 200,000 homes.
  • TDS plans on 175,000 new passings.

This list doesn’t include the numerous smaller companies that are building fiber. The largest among the rest include fiber builders like Bluespeak, Clearwave, Omni Fiber, Surf Internet, WOW!, and Ziply Fiber. I would guess that there are a few hundred other companies with aggressive fiber plans. This also doesn’t even count the fiber being built by over 200 electric cooperatives.

I call it a land grab because these ISPs are all hoping to get to towns and neighborhoods first in order to dissuade anybody else from building fiber. Since most places getting fiber are already served by a cable company, most of this land grab is not going to create monopolies – but these fiber builders all think they can win a significant share of the market away from the cable competitor.

It doesn’t always work out the way that the fiber overbuilders hope. I talked to somebody in Lansing, Michigan who was amazed that there were three different fiber providers in their alley offering fiber broadband. As somebody who builds fiber business plans, I have to wonder about the third company that constructed fiber when there were already two other competitive fiber providers on the poles. Will any of the three ISPs get enough customers to be successful? But most markets are not seeing that kind of competition, although some of the announced plans on the list above must be in markets where somebody else has already built fiber.

This level of fiber construction bodes poorly for cable companies. Every one of these fiber providers will tell you that they will get at least a 30% market share, and most are hoping for 50%. They are all banking on the current public sentiment that fiber is the superior technology compared to cable company coaxial networks. These ISPs almost all have lower broadband prices than the big cable companies.

Of course, cable companies are rushing to fight back by upgrading upload speeds to become symmetrical. You can expect when that happens to see a huge blitz everywhere talking about symmetrical gigabit speeds. Cable companies also compete by offering very low introductory rates intended to win or keep customers from leaving for fiber. But much of the public has gotten tired of that cycle of having to renegotiate rates every few years.

Only time will tell if cable companies will be successful with this strategy. If enough of the public believes fiber is superior, then any cable marketing plan is going to fall on deaf ears for some portion of every market.

Rural fiber land grabs are different because anybody building fiber in a rural market probably will have a monopoly for fast landline broadband. It’s hard to think that many companies will consider building a second fiber network in places with low housing density. The rural fiber builders will likely face competition from WISPs deploying the latest radios. Just like with competition with cable companies in cities, it’s going to be interesting to see who wins that battle. It’s likely going to be a neighborhood-by-neighborhood battle. I suspect local WISPs with good local reputations will fare well against fiber built by the giant telcos or cable companies. On the flip side, local cooperatives and other local fiber builders will likely do extremely well against the giant WISPs. It’s going to be an interesting battle to watch.

I have no idea how Starlink and FWA cellular wireless fit into this battle. Fiber and fixed wireless with the newest radios will both be faster than these two technologies, and the market battle might come down to prices. The next decade is going to be an epic battle for broadband customers, and a boon to ISP marketers.

The Public Loves Fiber

The latest Customer Satisfaction Index is out from ACSI, which measures the public satisfaction of a wide range of U.S. industries and institutions. The survey this year continued to show that the public has a poor opinion of ISPs. As a group, ISPs had an average ACSI annual rating of 68. The only industry with a lower rating is gas stations at 65. Subscription TV had an average rating of 69, and the U.S. Post Office had a rating of 70.

But there is some interesting good news for some ISPs. Companies serving customers with fiber rated higher with the public than other ISPs, including cable companies using coaxial networks. Consider the following table that shows the 2023 ranking for fiber and non-fiber ISPs.

Fiber Non-Fiber
Altice 58
AT&T 80 72
Cable One 71
CenturyLink 78 62
Charter 64
Comcast 73 68
Cox 64
Frontier 74 61
Google Fiber 76
Mediacom 65
T-Mobile 73
Verizon 75
Windstream 70

For companies that offer both fiber and another technology, customers served by fiber liked an ISP more than non-fiber customers. CenturyLink has the biggest difference in satisfaction (78 for fiber and 62 for non-fiber). Frontier also has a dramatic difference (74 fiber and 61 non-fiber). The only cable company ranked for both technologies also has a sizeable difference, and Comcast has a ranking of 73 for its fiber network versus 68 for the coaxial network.

Customer satisfaction involves many other factors than just technology, but the differences for the companies that offer multiple technologies have to be mostly related to fiber. However, there are other factors in play. For example, it seems likely that CenturyLink and Frontier provide better customer service and faster repairs for fiber customers than for DSL customers.

Cable companies have to be noticing this giant difference as part of any consideration of how to upgrade their networks. The big cable companies are all at the beginning of the upgrades to improve upload speeds on coaxial networks, and they must be hoping that customers like them more after the upgrades. But there is a chance that the public has come to think of fiber as a superior technology and will not rank a coaxial system as highly even after speed increases. There is still a noticeable difference in latency and jitter between cable and fiber networks, and customers who see both in action believe fiber is better.

There is still a noticeable range of ISP rankings within each list. Non-fiber customers rate T-Mobile and AT&T the highest and rank Altice and Frontier DSL as the worst ISPs. It’s interesting to see Charter near the bottom of the rankings.

Fiber customers clearly rate AT&T as the best and Comcast Fiber as the lowest. Fiber technical performance should be consistent regardless of the ISP, so the difference in rankings between fiber providers has to be related to customer service and the other non-technical aspects of being an ISP.

Can WISPs Compete Against fiber?

I already know that when certain WISP readers see this blog headline that they are going to say, “There goes that damned Dawson again. This is going to be another anti-WISP rant”. I think they might be surprised if they read past the headline.

I know WISP operators who are some of the best ISPs in the country. When I rate them as best, I’m talking about how they deliver products their customers are happy with and how they provide great customer service and timely repairs. They are the kind of ISP that builds customer loyalty. I fully expect high-quality WISPs to be able to compete against fiber networks. While the industry lately seems to be fixated on broadband speeds, there are customers that value other aspects of being an ISP, such as trust and reliability.

I’ve never built a business plan that assumes that any fiber ISP will sweep the market and get every customer, so there will always be room for other ISPs. There is some portion of customers in any market that will switch immediately to fiber. There has been so much hype about fiber that many folks accept it as the gold standard. But the penetration rate of a new fiber network builder is going to depend on who builds and operates the network.

I think WISPs (and every other ISP) will have a hard time competing against a cooperative that builds fiber, particularly one that sets low prices like $50 or $60 for a gigabit. But not all coops will have affordable rates, and not all coops are loved by their members.

WISPs will have a much easier time competing against big telcos that win broadband grants. My firm does a lot of surveys, and a lot of the public has a massive dislike of big telcos like Frontier, CenturyLink, Windstream, AT&T, and some others. The public rightfully blames these big ISPs for walking away from rural America. I don’t think that folks will flock to these big ISPs just because they build fiber – particularly in cases where there is already a high-quality WISP that customers like. I will not be surprised in the future to find some markets where a great WISP will outsell a big ISP with a fiber network. A WISP might survive and thrive in such a market for a long time.

WISPs should also do well against a cable company that builds rural fiber if the cable company charges the same high rates as in cities. There are a lot of homes that can’t or won’t pay $90 – $100 per month for broadband.

But not all WISPs will be able to compete. There is a quiet truth that you will never hear WISPA talk about. There are some absolutely dreadful WISPs in the country. Lousy WISPs come in all sizes, but some of the largest WISPs are among the worst. Our broadband surveys often show rural folks who despise some of the WISPs in their neighborhood and either refuse to use them or plan to drop them with the first better broadband alternative. These are the WISPs that are not upgrading technology. These are the WISPs that will sell broadband to customers who are too far away from a tower where a WISP might deliver only 1 Mbps broadband but still charge full price. These are the WISPs that build long chains of wireless backhaul through tower after tower until there is not enough bandwidth for customers. These are the WISPs that have terrible customer service.

Interestingly, the most pointed critcism I hear about these poor WISPs comes from the high-quality WISPs. Good WISPs complain about how some WISPs cheat by exceeding power limits or constantly changing channel assignments just to goof up competing WISPs. There are WISPs who might read that as an anti-WISP statement, but these folks have not been reading my blog. I have been complaining about the big telcos non-stop for the last ten years. Small telcos that do a great job have spent the last few decades explaining how they are different from the big telcos. Great WISPs have to point out that they are different than the lousy WISPs that are poisoning the WISP brand name.

WISPA often responds to my blogs by saying I have a fiber bias and am anti-WISP. I admittedly think fiber should be the first choice for grant funding, but that’s a topic for another blog. But I am not anti-WISP, and I have WISP clients that are terrific. I know many other wonderful WISPs. I fully expect some of these WISPs will be around and thriving a decade from now. WISPs who thrive will do so for the same reasons as any other successful ISP – they will deliver a reliable product, priced reasonably, and will provide great customer service.

Who’s On First?

I saw a short article in Business Wire that said that Comcast Business had landed a project to provide a private wireless network for the guests of The Sound Hotel Seattle Belltown. This is an example of the continuing convergence in the industry where the big cable companies, ISPs, and wireless carriers are freely competing on each other’s turf. For decades we’ve neatly categorized companies as telcos, cable companies, or wireless carriers, but this convenient categorization is starting to fray around the edges, and its getting a lot harder to distinguish between the big industry players.

If we look back ten or fifteen years, the distinctions between these companies were clearly defined. The big telcos served residences and small businesses using DSL. The big telcos were clearly structured in silos. There was practically no interface between the wireless companies at Verizon and AT&T and the broadband business. Verizon went so far as to set up Verizon FiOS, its fiber business, separately in every aspect from the copper and DSL business.

The cable companies had faster broadband than DSL after the upgrades were made to DOCSIS 3.0. Speeds up to 300-400 Mbps blew away the capabilities of DSL. Once those upgrades were completed, the cable companies took market share in cities from the telcos year after year until the cable companies had a near-monopoly in many markets.

The market with more balanced competition has been the large business market. This is the market where fiber quickly became king. At one point the telcos controlled most of this market, with their fiercest competition coming from a handful of big CLECs. Verizon responded to this competition by buying MCI, XO, and others in the northeast. CenturyLink become one of the nationwide market leaders through the acquisition of Qwest and then Level 3. The big cable companies cautiously launched fiber ventures for this market twenty years ago and have picked up a decent market share.

But those simple explanations of the business plans of the big ISPs is now history. As the Business Wire announcement showed, the big companies are crossing technology barriers in new ways. Comcast

Providing a private wireless network for a large hotel is emblematic of a new trend in competition. In doing this, Comcast is crossing technical lines that it would never have considered years ago. From a business perspective, Comcast is going after the full suite of services for businesses like this hotel, not just the wireless network. The newest word in the competitive market is stickiness, and Comcast is likely tying down this hotel as a customer for a long time, assuming it does a great job.

These crossovers are even more evident in the residential and small business markets. Comcast, Charter, and other cable companies are bundling cellular service with broadband and the triple play, something that the telcos have never managed to pull off. Telcos have decided to reclaim urban market share by building huge amounts of fiber. And the cable companies are reacting to that threat by rushing some early versions of DOCSIS 4.0 to the market in order to fix the upload bandwidth issues. The big wireless companies have joined the fray with the FWA cellular wireless broadband products. While these products can’t compete with the bandwidth on fiber or cable networks, the product is still adequate for many homes and hits the market at a much lower price.

This has to be confusing to the average residential consumer. Consumers who abandoned DSL years ago are being lured back by to the telcos by fiber. Folks who have been paying far too much for cellular service are moving to the more affordable cable company wireless service. And people who can’t afford the high price of cable broadband are seemingly flocking to the more affordable FWA wireless. I have to imagine that the customer service desks at the various ISPs are being flooded by customers canceling service to try something different.

Markets always eventually reach an equilibrium. But for now, both the residential and business markets in many cities are seeing a fresh new marketing efforts. A decade from now, it’s likely that we’ll reach a predicable mix of the various technologies. We know this from having watched the markets where Verizon FiOS battled with the cable companies for several decades. But much of the country is just now entering the era of refreshed competition.

Unfortunately, this new competition isn’t everywhere. There is already evidence that new investments are not being made at the same pace in lower-income neighborhoods. Some cities are seeing widespread fiber construction while others are seeing almost none. There will still be a lot of work to do to make sure that everybody gets a shot at the best broadband – but the obvious convergence in the industry shows that we’re headed in the right direction.

Measuring Sustainability

I’ve seen folks around the country suggesting that State Broadband offices ought to put a priority on sustainability when selecting winners of broadband grant funding. It’s a concept that has instant appeal, but I immediately asked myself what it means. How do you measure sustainability in a way that can be used to score grant requests?

It’s likely that most folks would agree on the definition of sustainability. If we are going to use government grant money to build a broadband network, we want that network to be providing broadband service for as long as possible. We expect sustainability for other kinds of infrastructure, such as roads, bridges, and buildings, so why shouldn’t we expect the same thing from a grant-funded broadband network?

But what does sustainable mean for a broadband network? The first test of sustainability is the expected life of the assets being constructed.

  • The longest-lived asset that is being constructed with grants is conduit. There is no reason why a well-maintained conduit system shouldn’t still be fully functional a century from now.
  • There are big debates about the economic life of fiber. If you go by the economic lives allowed by IRS depreciation, then the expected life of fiber is 25 or 30 years. We know that’s ridiculous because there is plenty of forty-year-old fiber still chugging along in the field. We also know that fiber constructed today is far better than fiber built forty years ago. The manufacturers have learned to make higher-quality glass with less impurities. But the big change in the industry is that the folks that install fiber have learned techniques that minimize damage during construction. Poor handling of fiber manifests twenty years later as micro-fissures – and that means cloudy glass. Nobody will give an expected life for well-maintained fiber, but scientists at some of the manufacturers have privately told me that they think it’s at least 75 years – we’ll just have to wait to find out.
  • The assets that cause the most concern for sustainability are electronics – be that fiber electronics or fixed wireless electronics. All electronics must periodically be replaced. I’ve seen some fiber electronics last fifteen years – but that seems to be near the upper end of economic life. The general industry wisdom is that fixed wireless systems have to be replaced every 7 to 10 years.
  • We largely eliminated some ISPs from grant eligibility due to poor sustainability. For example, low-orbit satellites like Starlink are designed to only last 5 to 7 and then fall from orbit. It’s hard to make an argument that grant funding buys great value with this kind of asset.

This all means that the sustainability of electronics must be a concern for all technologies. Any ISP that wins grant funding will likely be replacing some electronics within a decade. One test of any ISP on sustainability is the financial ability and willingness to replace those electronics. That’s hard to judge.

There is another measure of sustainability that is even harder to measure. A big factor in sustainability is the operating philosophy of the ISP that owns the networks. We know there is a big range of what I would call corporate responsibility between ISPs.

If we go strictly by the past, then the ISPs that have the most likely chance of operating a sustainable network for the long term are cooperatives or other ISPs that expect to still be serving the same customers fifty years from now. But not all cooperatives are the same. We see this when looking at how some electric cooperatives have allowed their poles to deteriorate badly over time.

Next in line in trustworthiness might be small telcos that have been around for as long as a hundred years. But over the last few decades, a large percentage of these companies sold to larger ISPs – so, the question for a grant reviewer is if the small telco that gets a broadband grant today will be the same owner of the network a decade or two from now?

A big question mark for many folks is the large ISPs. We saw the big telephone companies let copper and DSL networks rot in place by basically ceasing all maintenance years ago. This was clearly done as a cost savings measure. These companies will argue that there was no sense in continuing to support a dying technology, but we know that is nonsense. The copper networks in places like Germany were well-maintained and still offer DSL today with speeds in many places over 100 Mbps. The big telcos decided to unilaterally cut costs at the expense of customers. Should a grant office award funding to a company that has already failed the public once before? I’m guessing that grant offices will make awards to the big companies by reasoning that fiber networks will last a long time, so maintenance doesn’t matter. But I would argue just the opposite. I think a fiber network can deteriorate even faster without good maintenance than a copper network because the technology is less forgiving. There is still 20-year old DSL cards chugging away, something that likely won’t happen with fiber. If an ISP ignores and doesn’t maintain fiber network electronics, a fiber network could quickly turn into a brick.

I’ve not said anything above that is not common knowledge. But I am at a loss of how to turn what we’ve learned from the past behavior of ISPs in a way to consider sustainability when awarding grants. If sustainability was the most important factor in awarding a grant, I personally would give all of the money to cooperatives and none to big ISPs. And I wouldn’t fund technologies that must be largely replaced within a decade. This is probably why nobody is asking me to award grants!

AT&T in the News

AT&T has not been in the headlines a lot this year, but recently I’ve seen the company’s name everywhere.

In the recently released financial results for the third quarter, AT&T noted that it now has more fiber broadband customers than non-fiber customers. At the end of the quarter, AT&T had 6.93 million fiber customers compared to 6.86 million remaining non-fiber customers. Non-fiber customers are predominantly U-Verse customers served by two pairs of telephone copper. The company still also has 340,000 DSL customers served by a single copper pair. There are also some rural fixed-wireless customers.

In the third quarter, AT&T added 338,000 fiber customers. The company lost 367,000 non-fiber customers in the second quarter – although counting them as lost is probably a misnomer since many were likely upgraded to fiber.

Upgrading to fiber is good for the company’s bottom line. For the quarter, the average revenue per user (ARPU) was $62.62 for fiber customers compared to only $54.60 for non-fiber customers. AT&T has also been saying for years that the cost of maintenance for copper is a lot higher, so the company is likely shedding costs as it sheds customers served on copper.

We also got a peek at market AT&T’s penetration. AT&T says it passes 18.5 million potential customers with fiber, meaning the company has achieved an overall 37% market penetration on fiber. In the third quarter, the company added fiber to pass 500,000 new locations.

I saw another interesting news blurb about AT&T. Bloomberg reported that AT&T is looking for an equity partner to invest in a major expansion of fiber. That would be a big departure from the past since AT&T has always funded its own capital expenditures and networks.

But it’s not hard to see from the third quarter results why AT&T might be seeking additional funding. In the third quarter, the company generated $9.87 billion of cash. It invested $4.71 billion in new infrastructure and paid $3.75 billion in dividends – leaving only $1.41 billion in free cash.

I would conjecture that AT&T wants to invest more heavily in fiber immediately since it’s clear that there is a mad rush nationwide to build fiber in cities. Fiber overbuilders hope that if they are the first to a market with fiber that it might dissuade other fiber overbuilders – so we are currently seeing a fiber land grab. In the long run, sharing fiber profits with an investor will decrease future AT&T earnings. The calculus that the company is betting on is that the market share gained by building first to markets outweighs the cost of sharing profits.

AT&T is currently debt-heavy. AT&T hasn’t had a recent track record of making good investment decisions. It’s been reported that AT&T lost as much as $50 billion from its purchase of DirecTV. In almost the same time frame, the company lost as much as $42 billion from its purchase and sale of WarnerMedia. The company might not be able to easily borrow the money, particularly at current interest rates.

The final news is that AT&T was fined $23 million to resolve a federal investigation that the company had “unlawfully influenced” the former Illinois Speaker of the House, Michael J. Madigan. AT&T admits that it paid Madigan, through an ally, to promote legislation that would eliminate carrier of last resort in the state – meaning that the company is obligated to serve people who ask for a telephone line. That obligation also comes with legacy regulatory requirements that AT&T wanted to ditch.

What always dismays me, but never surprises me, is that nobody at a big company like AT&T got in trouble for breaking the law – in this case, bribing a government official. The size of the fine might be appropriate for the magnitude of the crime, but I’ve always thought that the folk at big companies would be more likely to hesitate to be unethical if they saw others going to jail for breaking the law. The only real consequence for AT&T, in this case, is that they got caught, and the fine will just be viewed as the cost of doing business.