Another Idea for Rural Broadband

An rural area west of Route 41 and Lowell, Ind...

An rural area west of Route 41 and Lowell, Indiana. (Photo credit: Wikipedia)

The Fiber-to-the-Home Council (FTTHC) asked the FCC to give consideration for a new way to fund rural broadband. Their proposal asks the FCC to make available unused portions of the Universal Service Fund to supply grants to build gigabit fiber networks. They would have this done under a competitive process, meaning that the networks that could do this the most efficiently would be at the top of the grant list.

It’s an intriguing idea. I have often talked in this blog about the state of broadband in rural America. Consider some of the following rural broadband issues:

  • About a year and a half ago the FCC estimated that there was still about 14 million rural households with no access to any kind of terrestrial broadband. There have been some projects in the last year that now serve some of these customers, but the number is still probably not much smaller.
  • In the FCC’s last three Broadband Progress Reports the agency said that incumbent carriers were not upgrading to the FCC’s minimum definition of broadband fast enough. Those speeds are currently 4 Mbps download and 1 Mbps upload. And the FCC has promised that every few years they will revisit that definition of broadband, and supposedly will increase it over time.
  • There is often a big difference between advertised speeds and actual speeds. Getting 4 Mbps download is barely enough bandwidth for a household to participate in today’s web, and if the actual speeds delivered are less than this then it’s hard to call the service broadband by today’s reality.
  • The availability of rural broadband depends upon where a customer lives. If they live in a large enough rural town then they might have broadband available from either the telco or the cable company, and even sometimes from both. But cable networks rarely extend much past the borders of these small towns and DSL rarely carriers more than a mile or two from the center of town. So there are many rural counties that have some broadband in the towns but practically none outside the towns.
  • Most urban areas now have cable modem service that is advertised at between 10 Mbps and 20 Mbps. And urban broadband keeps improving. Rural areas are permanently falling behind and the gap is going to widen over time. This has huge implications for the long-term economic viability of rural America.

Of course, there are some organizations that have opposed this idea, mostly those organizations funded by incumbent telcos and cable companies. This always has me scratching my head. For the most part the large telcos and cable companies have ignored rural America for one or even two decades. They have not poured new capital into these areas to bring them up to the needed speeds and they spend as little as possible to keep these areas operating. I contrast this to the small independent telcos who generally do an excellent job in rural America, but there are still large swaths of rural area that have been largely ignored. And even while ignoring these areas the large telcos want to protect their revenue streams.

I guess that is good business, but it is poor policy. In my mind broadband is basic infrastructure and homes and businesses need adequate broadband in order to take part in modern society. And this is just about to become much more important as we move into the Internet of things. It’s one thing to not provide enough broadband to a rural home so that they can watch streaming videos. But when we are having our healthcare monitored by the Internet then broadband becomes an essential component of every home’s life.

The rural broadband crisis is already here and the broadband gap is already unacceptable. The FTTHC’s proposal is creative and doesn’t ask for any additional government funds. They are asking that the FCC make an investment today in rural areas as a down-payment to help those areas stay viable as places for people to live in the future. I would assume that any awards of funds are also going to expect the rural communities to chip in a lot of matching funds, and so all that is being asked is to help these communities help themselves. I think it is an idea worthy of FCC consideration.

At Least We are Not Europe

Europe Simulator

Europe Simulator (Photo credit: wigu)

In this country the FCC has undertaken various policy initiatives to promote broadband. However, except for some universal service funding that will bring broadband for the first time to tribal areas and very rural places, these initiatives come with no federal money. And so the real broadband policy in the country is to wait for the private sector to build the infrastructure. The FCC may make proclamations about creating gigabit cities, but it’s completely up to the private sector to make it happen.

And we all know how that is working out. We have a checkerboard of broadband coverage. At one end of the spectrum are the fiber networks – Google and a few others bringing gigabit fiber, Verizon with FiOS, and many smaller communities with fiber built by municipalities or independent telephone companies. In the middle most metropolitan areas are served by decently fast cable modem service and ADSL2 DSL. And then there are a lot of smaller cities and rural communities where the DSL and the cable modems are a generation or more old and which deliver far less bandwidth than advertised. And we have many rural areas still with no broadband.

But what we have, by and large, is still better than what has been happening in Europe. And this is because our regulatory policy for last-mile connectivity is mostly hands-off while the European markets are heavily regulated. After the European Union was formed the European regulators went for a solution that promoted low prices. They have required that all large networks be unbundled for the benefit of multiple service providers. This has turned out to be a short-term boon for consumers because it has brought down prices in every market where multiple providers are competing.

But there is a big catch and the European policy is not going to work out well in the long-run. Over the last five years the per capita spending on new telecom infrastructure in Europe is less than half of what it is in the US, and this is directly due to the unbundling policy. Network owners have no particular incentive to build new networks or upgrade existing ones because it brings their competitors the same advantages they get.

In the long-run, Europe is going to fall far behind everybody else in fiber deployment because nobody wants to invest in fiber to connect to homes and businesses. There have been several major fiber initiatives in recent years in Europe, but these have largely been driven by large cities who are spending the money on the fiber infrastructure, much as is happening with some cities here. But the normal kinds of companies that ought to be investing in last-mile fiber in Europe, the cable companies and the telcos, are not doing so.

We tried something similar here for a few years. When the Telecommunications Act of 1996 was enacted, one of the major provisions was that the RBOCs (Bell companies) had to unbundle their networks, much as is being done in Europe. This was to spur competition by allowing new competitors to get a start in the business without having to invest in a new network. And this brought short-term benefits to consumers for a while. Companies were leasing RBOC unbundled loops and providing voice and data (DSL at the time) to businesses and residences all over the country.

But the FCC didn’t go the whole way like they did in Europe or else they would have also unbundled the large cable networks in this country. The unbundled telecom network business plans broke apart after cable modem service began winning the bandwidth war. And of course, there was the telecom crash that killed the larger new competitors. There are still a few companies out there pursuing this unbundled business model, but for the most part it didn’t work. And the reason it didn’t work is that it is a form of arbitrage. The business plan only worked because federal regulators made the RBOCs unbundle their networks and then state regulators set the prices for the network elements low to spur competition. But the services the competitors were able to offer were no better than what the RBOCs could offer on the same networks.

It’s always been clear to me that you can’t build a solid business on arbitrage. A smart provider can take advantage of temporarily low prices to make a quick profit when they find arbitrage, but they must be ready to ditch the business and run when the regulatory rules that created the opportunity change.

And Europe is currently engaged in one gigantic arbitrage situation. There are multiple service providers who are benefitting by low network costs, but with no burden to make capital investments. Customers there are winning today due to the lower prices due to competition. But in the long run nobody wins. The same rules that are making prices low today are ensuring that nobody makes any serious investment in building new fiber networks. So the competitors will fight it out on older networks until one day when the arbitrage opportunity dies, the competitors will all vanish like the wind. We know it will happen because it happened here. The CLECs in this country had tens of millions of customers, and they disappeared from the market and stranded those customers in a very short period of time.

The only policy that is really going to benefit consumers here, or in Europe, is one that fosters the building of state-of-the-art networks. The commercial providers have not stepped up nearly enough in this country and there is still not a lot of fiber built to residences. But in Europe it’s even worse. So, as much as I read about people criticizing the broadband policies in the US, I have to remind myself – at least we are not Europe.

G.Fast

You are going to start hearing about a new technology that may infuse some life back into existing copper networks. The technology is being referred to as G.Fast. This technology promises to be able to deliver very fast speeds up to a gigabit over copper for very short distances.

Some are referring to G.Fast as a last mile technology, but it is really a drop technology. The distances supported by the technology are so short that this is going to require fiber to the curb, or as some are now calling it, fiber to the distribution point.

Alcatel-Lucent and Telekom Austria just announced a field trial of G.Fast. That trial achieved a maximum speed of 1.1 Gbps over 70 meters and 800 Mbps over 100 meters for brand new copper. On older copper the speed dropped to 500 Mbps for 100 meters.

Current copper technologies use only a small portion of the theoretical bandwidth available on a copper wire. For example, most VDSL2 systems deployed today use up to 17 MHz of spectrum on the copper. G.Fast can provide more speeds by using more of the available spectrum and will be able to use somewhere between 70-140 MHz on copper. Plus G.Fast will be more efficient. Today DSL functions by dividing the data path into sub channels which each contain about 15 bits of data. Engineers are looking at coding and modulation techniques that will increase the bits per sub channel for G.Fast and thus increase speeds more.

G.Fast also will benefit by an existing technique called vectoring. This technology is used today with VDSL2 and eliminates crosstalk interference between copper pairs. It does this by monitoring the noise on copper and then creating an anti-noise signal which cancels the noise in the same was as is done by noise-canceling headphones.

Right now Alcatel-Lucent is spending a lot of time on G.Fast because they see a big opportunity to make more money out of the old copper networks. So let’s look at the issues that a large telco like AT&T will face when considering the technology:

  • Because the distances to deploy G.Fast are so short, the carrier is going to have to build fiber past every customer, just like in a FTTH network. A large carrier like AT&T has some advantages over a fiber overbuilder in that they can overlash fiber onto existing copper on pole lines. This is cheaper and faster than putting up fiber for a new provider who has to deal with pole make-ready costs.
  • Copper drops are generally the worst copper in the network. These wires get banged around by wind and suffer from repetitive water damage and are the weak point in the copper network. The promised savings from G.Fast is to lower the cost of installation at a customer. Some of this savings disappears if too many homes need a new drop to make it work.
  • G.Fast will save the cost of getting into the house. Once connected to an existing telephone NID on the outside of the house the signal can go anywhere in the home that is already wired for telephone. But the distance issue quickly kicks in and I would expect carriers to take this to a wireless right inside the house.
  • Savings are going to depend on how inexpensive the G.Fast electronics are compared to FTTH electronics.
  • Large telcos have relied for years upon customer self-installation of DSL and they will need G.Fast to work the same way.

So the savings to somebody like AT&T come from a) cheaper fiber installation costs because of the ability to overlash, 2) the ability in many cases to use existing drop and inside telephone wires, and 3) the ability to have customers self-install the product to avoid having to go into the home.

There are still a lot of technical issues to consider and overcome. Some issues that come to my mind include things like overcoming existing splices in the copper, and making sure there is no interference with existing DSL.

The expected time line for the deployment of G.Fast is as follows:

  • Standards finalized by spring of 2014.
  • Chip sets developed in 2015.
  • First generation hardware available in 2016 that probably won’t support vectoring.
  • Mature second generation equipment available in 2017.

Since a carrier has to build fiber everywhere for this to work, the technology is really competing against FTTH. By the time this is readily available there may be lower-cost units for FTTH deployment and I think any carrier would prefer an all-fiber network if possible.

Choosing the Lesser of Two Evils?

FTTH fiber-to-the-home

FTTH fiber-to-the-home (Photo credit: dvanzuijlekom)

Today our guest blogger is Ron Isaacson, a former employee and still a good friend of CCG’s.

A number of years ago, the large ILEC in our area installed fiber optic lines in our neighborhood and soon started offering their FTTH product line in the area. The cable provider had already been in the neighborhood for a while and was already fiercely pushing their bundled service packages. We finally were going to have the competitive market version of a boxing match. SWEET!!

Our family had “Dish” TV service, satellite access that worked most of the time – except when bad weather interrupted the signal. We had dial-up Internet through a local ISP, back when the bandwidth offered on dial-up was still relatively decent, and we had our telephone service through a local CLEC. Being a telecom consultant I liked splitting services between the different vendors because no one monopolist had their claws fully in my back pocket. I might have been paying a little more for this split service, but it made sense to me.

However, the FTTH offerings changed the whole equation. Cable offered a full package too, so we had a choice.

Having had previous horrendous customer service experiences with both the ILEC and the cable company we were at a quandary as to which 21st Century telecom service to commit to, so I decided to take a poll: I asked a bunch of my neighbors which service they subscribed to and why, and how were the services provided?

The results were a classic case of monopolistic bad reputations! Either a family absolutely hated the ILEC and had signed up with cable, or they absolutely hated the cable company and had signed up with the ILEC. Apparently, no one truly loved either telecom provider and they just chose the company that they hated the least. (It’s been a few years, hopefully this has changed!) I couldn’t help but thinking that both companies are as bad as the worst of the stories about the airlines!

We chose the ILEC, but the notorious nature of the story was just getting started. Our telephone number, which we had for over 25 years, was an exchange-level “FX” number, meaning that all of the customers with that exchange were billed as if the service was down-county, closer to the metro-area. The rep advised that this was not a problem, that they could still do the switch.

Once the FTTH was installed, the Internet and TV service worked beautifully, but it took another 35 days for the phone service to be re-connected because, and this is a quote, “The fiber can’t handle the FX line.” At this point I laughed and replied, “I beg to differ. The fiber doesn’t know the difference, and doesn’t care….it is your systems that are messed up!”

After 35 days, they decided to run the telephone service over the old copper pair, and bill it as if it was on the fiber. This actually proved to be a good thing when the electric power went out due to an electric utility that also possessed byzantine customer service skills.

Years later the ILEC came back and reconfigured the FTTH to include the telephone service on the fiber. Incredibly, the telecom service that was the most troublesome for the telephone company to install….who knew?

Years later, this experience still shades my view of the ILEC, the gang that proved to me beyond a shadow of a doubt that they can and will shoot themselves in both feet.

Thinking of my installation experience with fiber made me think back to something that had happened to me earlier. Many years ago, in the hay-day of the long distance marketplace during a customer service training seminar, the class discussed the results of a poll showing the reasons that customers cancel their service with carriers. A couple of facts stuck with me: First, 3% of customers die and there’s not much one can do about that. Additionally, about 5 to 10% of customers move, or otherwise change locations. Again, not much (at that time) that could be done about that.

However, over 50% of customers cancel because of rudeness or indifference from customer service personnel in reference to a given incident. There were reasons filling in the rest of the 100%, but those three points stuck out to me – two that you can’t do anything about and one that we definitely can.

The bottom line I took away from that training, and my experience with the telephone company is to be sure that every customer is treated as if their service matters, as if their patronage is appreciated.