Cable Company Gigabit

We are starting to get a look at what a gigabit product from the cable companies might look like. Late last year Comcast rolled out a gigabit product in parts of Atlanta, Detroit, Nashville and Chattanooga. They are now rolling implementation across the country and the company says that gigabit speeds will be available in all markets by 2018.

Comcast has elected to make the upgrades by implementing DOCSIS 3.1 technology on their networks. This technology allows the network to bond together numerous empty channels on the cable system to be used for broadband.

In markets where there is competition with Google Fiber or another fiber provider, the Comcast product is being sold at an introductory price of $70 per month with a 3-year contract. Month-to-month pricing without the contract is $140 per month. In reading group discussion websites where Comcast customers chat it sounds like there are already many markets where the $70 contract price is not available. I have read some customers say they have gotten prices at $110 to $120 per month, so perhaps the company is flexible with those willing to wade through the customer service maze and willing to sign a term contract.  

The current Comcast product delivers up to 1 Gbps download and 35 Mbps upload. You can expect Comcast to make future upgrades that will improve the upload speeds – but that upgrade is not included in this first generation of DOCSIS 3.1 technology. For now the upload speeds will be a barrier to any application that needs fast upload speeds.

The new technology also requires new hardware, meaning a new cable modem and a new WiFi router capable of handling the faster data speeds. So expect the price to be bumped higher to rent the hardware.

It’s hard to imagine that many customers are going to pony up more than $150 per month to get a gigabit connection and modem. When Google Fiber first introduced $70 gigabit to Kansas City (and when that was their only product), there were reports that there were neighborhoods where as many as 30% of the households subscribed to the gigabit product. But Google has a true $70 price tag and didn’t layer on fees for a modem or any other fees, like Comcast is surely going to do. It’s hard to imagine many customers agreeing to a 3-year contract for the gigabit product in competitive markets if they can buy it from somebody else without the contract. But perhaps Comcast will offer bundling incentives to pull the real cost under $70.

But we know when there are more choices that most customers will opt for the lowest-price product that they think is adequate for their needs. For example, when Google Fiber came to Atlanta they also had a 100 Mbps product for $50 per month and it’s likely that most customers chose that product rather than paying extra for the gigabit.

The Comcast pricing might reflect that Comcast doesn’t want to implement too many high-bandwidth customers at the same time. While DOCSIS 3.1 increases the size of the data pipes available to customers, it doesn’t make any significant improvements in the last mile network. To the extent that high-bandwidth customers use a lot more data, too many gigabit customers in a cable company node could degrade service for everybody else. But it’s likely that most gigabit customers don’t use a lot more data than 100 Mbps subscribers – they just get things done more quickly. But I am sure that Comcast still has worries about having too many high-bandwidth customers in the network.

Comcast and other cable companies are seeing more competition. For example, CenturyLink is selling $85 gigabit service in many western cities and passed about 1 million homes with fiber last year. Verizon FiOS just increased their data speeds in their fiber markets – not quite to a gigabit yet, but at ranges up to half a gigabit. But in the vast majority of the country the cable companies are not going to have significant competition with any foreseeable future.

FCC Commissioner Michael O’Reilly said a few weeks ago that ultrafast broadband is a marketing gimmick. While he was even referring to 100 Mbps broadband as a gimmick, it’s hard to not agree with him that a residential gigabit bandwidth product priced above $150 per month is more gimmick than anything else. There can’t be that many households in any market willing to pay that much extra just for the prestige of saying they have a gigabit.

But over time the prices will drop and the demand for bandwidth will grow and a decade from now there will be a significant portion of the market clamoring for an affordable gigabit product. Remember that we’ve seen this same thing happen a number of times in the past. I remember the big deal the cable companies made when they first increased speeds to 15 Mbps. The funny thing is that the market has a way of filling faster data pipes, and the day will come sooner than we expect where many households will legitimately want and need gigabit data pipes.     

The Widening Rural Broadband Gap

FunkstownThe gap between urban and rural broadband is widening quickly these days. Up until the late 1990s access to the Internet was the same for everybody using dial-up. But within a short period of time in the late 90s both DSL and then cable modems hit the market.

I remember back in the early 90s how jealous I was of friends who had Internet access at work using a T1. But then DSL became available and all of a sudden we could all get the equivalent of T1 access at our homes. At the time DSL felt amazingly fast, and it was at 20 – 30 times the speed of dial-up. The big limitation with dial-up was that it took several minutes to see a picture that accompanied a news story and it could take hours to download a software update. But DSL and cable modems fixed those problems and images became much faster and file downloads didn’t take half of the night.

But these new technologies were only available in towns and cities and that was the start of the urban / rural broadband gap. Over the years both technologies got faster. In most big cities it became routine to be able to buy DSL at speeds up to 15 Mbps, a nice improvement over the first generation. But cable modems improved even more and over the last decade became capable of speeds much faster than DSL.

What I found odd was that for the longest time the cable companies didn’t take advantage of their extra capabilities. They offered cable modem speeds that were just slightly faster than DSL. I can remember the CEO of Comcast telling people that they would supply the speed that people ‘needed’. But even at 15 Mbps the speeds were 250 times faster than the dial-up that many people rural people were still stuck with.

But over the last five years the cable companies woke up and started unilaterally raising speeds to be faster than DSL, and in doing so they started capturing the vast majority of the market. It was hard to justify staying on 6 Mbps DSL if you could get a 25 Mbps cable modem for the same price. The cable companies have generally offered speeds over the last five years up to 100 Mbps, although the vast majority of urban customers have opted for something slower. But even 25 Mbps is 450 times faster than dial-up.

Not all rural people have had dial-up as their only option. There have been several satellite companies that offered faster speeds, but the service was really expensive and there was so much latency in the signal that a lot of things other people could do on the Internet are not possible on a satellite connection. So a lot of rural people still use dial-up – or often just go without a connection – because on today’s web, dial-up can do little more than read emails.

In the last year or so the cable companies have really kicked it up a notch and they clearly now are competing with speed – probably as a way to fight off having somebody else build fiber. Late last year Comcast doubled the speed on my home connection from 50 Mbps to 100 Mbps, an eye-opening 1,800 times faster than dial-up.

And the cable companies aren’t finished. They are now talking about upgrading to DOCSIS 3.1 which will enable them to offer speeds up to a gigabit. But that is not the real news concerning the new technology, because Comcast says that they plan to increase speeds across the board again. So my 100 Mbps connection might become 150 Mbps to 200 Mbps. Or 3,500 times the speed of dial-up.

But there are cities that are really lucky and which have widespread gigabit speeds. Google and a few others are using fiber to provide a real competitor to cable modems. And customers on a gigabit are nearly 18,000 times faster than dial-up.

So rural folks with no broadband alternative have seen the people in the towns and cities around them climb over time from 20 times faster up to many thousands of times faster. I really don’t think most urban people understand how colossally terrible it is to be on dial-up. They remember all of the things that they could do on dial-up in the 90s and they don’t stop to think how the whole web has migrated to video. Imagine trying to look at Facebook or Pinterest or any other popular site on dial-up, or even on 1 Mbps rural DSL and you can quickly understand why rural areas are getting desperate and are willing to do almost anything to get faster broadband.

Finally, Speed Competition

cheetah-993774We are at the beginning of a big change in urban Internet speeds. Recently, there have been all sorts of announcements about companies upgrading speeds or wanting to build fiber in major markets.

For instance, Comcast says that they are going to upgrade all of their systems to DOCSIS 3.1 within about two years. This new CableLabs standard is going to allow them to offer far faster speeds to their customers. DOCSIS 3.1 allows a cable system to bond together empty channels to make one large data pipe and theoretically, if the networks were empty of television channels, they could offer download speeds up to 10 Gbps. But since there are still lots of cable channels on these network the more realistic maximum speeds for now will be a gigabit or maybe less depending upon the spare channels available in any given system.

Comcast has already started the process of upgrading customer speeds. For example, in much of the northeast they have upgraded customers from 25 Mbps to 75 Mbps and from 105 Mbps to 150 Mbps. They’ve announced that these same upgrades will be done in all of their systems. They’ve said in future years there will be more upgrades to go even faster.

Other cable companies are likely to follow suit. MediaCom has already made gigabit announcements. Time Warner in Austin also greatly increased speeds. Cox has announced aggressive plans for speeds. It’s likely almost all urban cable systems will be upgraded to DOCSIS 3.1 within a few years.

Meanwhile, CenturyLink has been starting the process of building fiber in most of their larger markets. It looks like they are building fiber in cities like Seattle, Portland, Minneapolis, Phoenix, Denver, Salt Lake City, and a number of other markets. They will offer speeds that vary from 40 Mbps for $30 to gigabit speeds for $80 as part of bundled packages. CenturyLink is also experimenting right now in Salt Lake City with G.Fast, testing a 100 Mbps product over copper. Between the two products the company thinks they will be able to offer faster speeds to a lot of urban and suburban customers.

And of course, Google has been rolling out fiber and can be credited with popularizing the concept of gigabit fiber. They have built or are launching in Kansas City, Austin, Atlanta, Provo, Salt Lake City, Nashville, Raleigh-Durham and now San Antonio. They have released a long list of other cities where they may go next.

Finally, there are numerous smaller companies and municipalities that are already building fiber or who have plans to build fiber.

Comcast’s new philosophy is a 180 degree turnabout from a few years ago when they said that customers didn’t need bandwidth and that they would give customers only what Comcast thought they needed. It seems now that Comcast is adopting the philosophy of unilaterally increasing speeds, even in markets where they might not have an immediate competitor on the horizon. They already have the customers and they already have the networks and they can take the wind out of the sales of a potential fiber competitor if customers in any given markets already have fast speeds at an affordable price.

I think Comcast and the other companies are smart to do this. The higher-priced data products are probably the highest margin products we have ever had in this industry. It doesn’t cost a whole lot more than a few dollars to buy the raw bandwidth needed to serve a data customer and it’s widely believed that for large companies the margins are in the 80% to 90% range. It’s a wise decision to protect these customers, and by being proactive with speeds the cable companies will make it a lot harder for other companies to take their customers. And I think they have finally begun to learn the little secret that many have already figured out – faster speeds don’t really hurt profitability and a customers with a 100 Mbps connection doesn’t use much more data than one with a 20 Mbps connection, they just download things faster.

So what we are seeing now is competition through speed rather than competition through pricing. All of the comparisons I have ever seen show that US broadband prices are significantly higher than in any other developed countries. When Google or CenturyLink enters a market with $70 to $80 gigabit they are not lowering prices, and are actually luring customers to pay more than today. It’s an interesting market when even in the most competitive markets the prices don’t really come down.

Can Cable Networks Deliver a Gigabit?

coax cablesTime Warner Cable recently promised the Los Angeles City Council that they could bring gigabit service to the city by 2016. This raises the question – can today’s cable networks deliver a gigabit?

The short answer is yes, they are soon going to be able to do that, but with a whole list of caveats. So let me look at the various issues involved:

  • DOCSIS 3.1: First, a cable company has to upgrade to DOCSIS 3.1. This is the latest technology from CableLabs that lets cable companies bond multiple channels together in a cable system to be able to deliver faster data speeds. This technology is just now hitting the market and so by next year cable companies are going to be able to have this implemented and tested.
  • Spare Channels: To get gigabit speeds, a cable system is going to need at least 20 empty channels on their network. Cable companies for years have been making digital upgrades in order to cram more channels into the existing channel slots. But they also have continued demands to carry more channels which then eats up channel slots. Further, they are looking at possibly having to carry some channels of 4K programming, which is a huge bandwidth eater. For networks without many spare channels it can be quite costly to free up this much empty space on the network. But many networks will have this many channels available now or in the near future.
  • New Cable Modems: DOCSIS 3.1 requires a new, and relatively expensive cable modem. Because of this a cable company is going to want to keep existing data customers where they are on the system and use the new swath of bandwidth selectively for the new gigabit customers.
  • Guaranteed versus Best Effort: If a cable company wants to guarantee gigabit speeds then they are not going to be able to have too many gigabit customers at a given node. This means that as the number of gigabit customers grows they will have to ‘split’ nodes, which often means building more fiber to feed the nodes plus an electronics upgrade. In systems with large nodes this might be the most expensive part of the upgrade to gigabit. The alternative to this is to have a best-effort product that only is capable of a gigabit at 3:00 in the morning when the network has no other traffic.
  • Bandwidth to the Nodes: Not all cable companies are going to have enough existing bandwidth between the headend and the nodes to incorporate an additional gigabit of data. That will mean an upgrade of the node transport electronics.

So the answer is that Time Warner will be capable of delivering a gigabit next year as long as they upgrade to DOCSIS 3.1, have enough spare channels, and as long as they don’t sell too many gigabit customers and end up needing massive node upgrades.

And that is probably the key point about cable networks and gigabit. Cable networks were designed to provide shared data among many homes at the same time. This is why cable networks have been infamous for slowing down at peak demand times when the number of homes using data is high. And that’s why they have always sold their speeds as ‘up to’ a listed number. It’s incredibly hard for them to guarantee a speed.

When you contrast this to fiber, it’s relatively easy for somebody like Google to guarantee a gigabit (or any other speed). Their fiber networks share data among a relatively small number of households and they are able to engineer to be able to meet the peak speeds.

Cable companies will certainly be able to deliver a gigabit speed. But I find it unlikely for a while that they are going to price it at $70 like Google or that they are going to try to push it to very many homes. There are very few, if any, cable networks that are ready to upgrade all or even most of their customers to gigabit speeds. There are too many chokepoints in their networks that can not handle that much bandwidth.

But as long as a cable network meets the base criteria I discussed they can sell some gigabit without too much strain. Expect them to price gigabit bandwidth high enough that they don’t get more than 5%, or some similar penetration of customers on the high bandwidth product. There are other network changes coming that will make this easier. I just talked last week about a new technology that will move the CMTS to the nodes, something that will make it easier to offer large bandwidth. This also gets easier as cable systems move closer to offering IPTV, or at least to finding ways to be more efficient with television bandwidth.

Finally, there is always the Comcast solution. Comcast today is selling a 2 gigabit connection that is delivered over fiber. It’s priced at $300 per month and is only available to customers who live very close to an existing Comcast fiber. Having this product allows Comcast to advertise as a gigabit company, even though this falls into the category of ‘press release’ product rather than something that very many homes will ever decide to buy. We’ll have to wait and see if Time Warner is going to make gigabit affordable and widely available. I’m sure that is what the Los Angeles City Council thinks they heard, but I seriously doubt that is what Time Warner meant.

What Does a Gigabit Get Us?

pro_MC220L-01This is the sort of blog I really like because it talks about the future. Last fall the Pew Research Center asked a number of industry experts what ubiquitous gigabit bandwidth would do for society. Since then there have been numerous articles written about the changes that might come with faster bandwidth. Interestingly, these are not distant Star Trek fantasies; industry experts are expecting these ideas to manifest in a decade or so. Following are some of the more interesting ideas that I’ve seen:

Enabling Hermits Everywhere. A large number of experts believe that one of the first and most practical aspects of gigabit bandwidth will be telepresence, which means the ability to meet with people holographically and feel like you are in the same room. This would largely eliminate business travel because people could meet together at any time as long as they are all connected with gigabit bandwidth.

This same technology also means you could sit for an evening with a remote family member, meet with a doctor, get a piano lesson, or do almost anything that involves meeting with somebody else without needing physical interaction. This will enable even the biggest hermits among us to interact from the safety of our living rooms. (But it will also change the way we dress when we work from home!)

I have read predictions that this is going to mean that we do away with emails, phone calls, and other methods of communications, but I don’t buy that. It’s human nature to not always want to communicate in real time with people and I think telepresence is going to make us very careful about who we let into our lives. I suspect we will become very selective about who we will share our presence with and that we won’t let salespeople and strangers into our telepresence.

Holodecks? Big bandwidth ought to bring about new forms of entertainment. If we can sit holograhically in a meeting we can also holograhically attend a concert, take a ride on a gondola in Venice, or sit on the beach in the Caribbean. It also means a huge leap forward in gaming where we can become characters within a game rather than controlling characters from without. And I am guessing that the sex industry will probably be one of the earliest to monetize these abilities.

The Ever-present Infosphere. Huge bandwidth coupled with the cloud and supercomputers means that we can have a computerized world with us anywhere there is bandwidth. This will eventually do away with computers, smartphones and other devices since the infosphere will always be there. We will have multiple screens and holographic projectors in the home and some future indiscrete wearable when away from home. We will each have a useful personal assistant that will help us navigate in a gigabit world.

The Internet of Things Becomes Useful. Rather than just having a smart thermometer and a door that we can unlock with our smartphones, we will be surrounded by devices that will tailor to our individual needs to create the environment we want. We will be constantly medically monitored and will be far healthier as a result.

Just-in-time Learning. With the infosphere always around us we will be able to access the facts we need when we need them. This will revolutionize education because we will have access to all of the ‘how-to’ manuals in the world and we will have a personal assistant to use them. This makes a lot of traditional education obsolete because everybody will be able to learn at their own pace. There might not be home-schooling, but rather personal assistant schooling. Obviously there will still need to be traditional types of training for specialties and physical skills. But the idea of needing to sit through months-long classes will become obsolete for most topics. This also will make education ubiquitous and a motivated person from anywhere on the planet and from any walk of life can learn whatever they want.

Always Monitored. Privacy will become a major issue when everything we do is being monitored. This can go one of two ways and we will either all adapt to living in a monitored society, or else there will be a outcry for a technological solution for guaranteeing our privacy. How this one issue is resolved will have a huge impact on everything else we do.

Something Unexpected. Many experts predict that ubiquitous bandwidth will probably not bring us only the things we expect, but rather things that we have not yet imagined. Who, just a decade ago, really understood the impact of smartphones, social media, and the other applications that are forefront in our lives today? It’s likely than many of the things listed above will happen, but that the most important future developments aren’t even on that list.

The Digital Divide Becomes Critical. Those without bandwidth are quickly going to be left out of the mainstream of the new society that is going to rely on gigabit tools for daily life. This will probably drive communities to find ways to get fiber at any cost, or else look at being left far behind. But we also might see some people drop out of the gigabit world and have segments of the population who refuse to partake in the bandwidth-driven future. One also has to wonder how we will cope when we lose the infosphere due to hurricanes or other acts that kill our connectivity for an extended period of time. Will we become too dependent upon the infosphere to function well without it?

 

Broadband in Big Cities

san_francisco_skyline-wideI’ve often written about the issues with rural broadband, but today I thought I would take a look at the state of broadband in the large cities. As people read and hear about Google and other fiber projects I think the natural assumption is that the cities either have fiber or soon will get fiber. I don’t think that’s true.

Let’s look at a few of the larger fiber builders and what they have done with cities. First is Verizon FiOS. It’s a great service and I had it at one of my previous homes. But for the most part it’s not been built deep in the heart of the larger cities. FiOS has been a suburban and medium town product and you are far more likely to be able to get FiOS in a suburb than if you live downtown.

Google is currently building a few cities. Both they and AT&T have also released a list of possible candidate cities for fiber. But Google only builds in neighborhoods where enough customers sign to buy fiber. And AT&T’s fiber construction seems to be more press release for now than substance.

And nobody wants to talk about is that none of these providers builds to MDUs. Not FiOS, not Google, not AT&T, not the munis and pretty much not anybody else. Nobody has solved the inside wiring issues that come with multi-dwelling units, and so none of the big fiber providers are building to them. In some cities over half of the living units are in MDUs, and even when fiber comes, these residents don’t get it.

There are a few companies that are specializing in MDUs, but they either concentrate on student housing or on that small slice of apartment buildings that have already been wired with category 5 cable. And most apartments and condos are wired only with traditional coaxial cable and telephone copper. And then you have to layer the contractual issues on top of the wiring issues. The FCC took a stab a few years ago of fixing some of the more egregious abuses where cable companies had tied up the rights to the existing wire inside MDUs. But they didn’t close all of the loopholes and there are plenty of apartment complexes that are still contractually locked into allowing only the cable company.

But then one has to ask if any of this is all that bad, because the cable companies in the large cities have increased cable modem speeds and it’s hard to find a city that doesn’t have speeds of at least 100 Mbps available. But you have to look a little closer to see that is not as good as it sounds.

The faster cable modem products are expensive. In many cities the 100 Mbps products are around $100 or more per month, absent any sign-up specials. But that is not the only cost customers face. For example, I have Comcast and they wouldn’t let me buy a 50 Mbps cable modem without having to take some of their cable product. Cable companies don’t have to sell naked cable modems, and so there are a lot of households that just can’t afford the big packages that are needed to get the faster cable modem speeds. This goes back to the same categorization of broadband as an information service, and just like with net neutrality, the FCC doesn’t have the authority to force cable companies to sell naked cable modems. Finally, there are problems with cable modems in some MDUs. Some of them with older wiring will not allow the delivery of faster data speeds. Or, in some MDUs the internet comes with the rent and you get whatever the landlord will pay for.

There is some good news for cities in that over the next decade the cable companies are going to be able to offer speeds as fast as a gigabit. They have a lot of work to do on their networks to get to those speeds, but the technology to get there is already developed or on the drawing boards at Cable Labs. One has to wonder if the cable companies will upgrade in cities where they don’t have a real competitor. One has to think that the cable companies will be as judicious in handing out gigabit speeds as they today are handing out 100 Mbps speeds. It’s one thing to be in a market that has the potential for very fast data speeds, but it’s something else to be able to actually order it or to be able to afford it.

I am afraid that most cities are going to be at the mercy of the cable monopoly for decades to come. FiOS is no longer expanding. Google is going to go where they go, and that is not going to be everywhere, even in the cities where they do build.

There is some hope in the future for apartment buildings. I’ve reported before on a technology that uses ultrawideband that looks to be able to deliver gigabits of data over existing coax without disturbing the cable traffic. Think of it as DSL for cable systems. But the fast versions of that technology are still a few years away, and even that is going to require somebody to build a fiber to the front of an apartment.

An Industry of Hype?

Bandwidth_thickAlmost every day I see somebody in this industry making a claim that makes wince a little bit. It might be vendors talking about gigabit speeds. It may be service providers talking about gigabit cities. And to some extent I get it. It’s a world driven by marketing and everybody competes first with hype. Those in the know quickly figure out the truth, but I guess what bothers me is that others don’t.

Let’s start with the equipment vendors. The country is pushing hard to get gigabit bandwidth into our schools. And since schools are already wired with coaxial cable, this led me to look at the technologies that are in use today that can deliver bandwidth over existing cable in schools. After all, what good is bringing a gigabit to a school if you can’t actually get it to the classroom? The various technologies including HPNA, MOCA and HomePlug all claim gigabit-capable speeds. Additionally, the new WiFi standard of 802.11ac promises gigabit and above speeds. Another upcoming technology is G.Fast that is promising to do gigabit speeds on copper.

But none of these technologies actually delivers a gigabit at the application layer, which is the usable speed of bandwidth that is available to an end user. Some of these technologies do provide a gigabit of theoretical data at the transport layer, but after accounting for the various overheads, noise, interference and other factors, the actual bandwidth is much slower than advertised. Additionally, the speeds they tout are the total bandwidth of the technology and those speeds need to be divided into an upstream and downstream component, further diluting the bandwidth.

At best of these various technologies today deliver maybe a total of 400 Mbps in total bandwidth, and a few of them are quite a bit slower than that. So it turns out that these gigabit technologies are not really a gigabit, or even half a gigabit. But a non-engineer would not know this by looking at how they are advertised.

We have the same thing going on by service providers. For years broadband providers have sold ‘up-to’ data speeds that they were never able to achieve. There is still a lot of that going on, particularly in smaller markets where the advertisements talk about the speeds in nearby urban areas and are far in excess of what can actually be achieved in small towns.

But the one that really gets me is the term gigabit cities. When I hear gigabit cities I picture a place that is building a network that will make a gigabit data product available to every home and business in the community. And there are almost no cities like that.

People think Google is bringing gigabit everywhere, but they aren’t. First, they only go to neighborhoods that guarantee a certain penetration rate for Google. And once there they don’t serve any apartment complexes or businesses. Google is basically cherry-picking residents willing to pay $70 per month for data. While laudable (and I wish I could get it), Google is not building gigabit cities.

There seems to be other cities announcing themselves as gigabit cities almost weekly. Some of them offer gigabit speeds to residents, but at very high prices as much as $250 per month. Most of these cities only supply gigabit speeds to schools and a handful of large businesses. Again, very laudable and I am happy to see anybody invest in fiber. But gigabit to the schools and factories does not make a gigabit city. It just makes fast schools and factories.

There are a small handful of places that really are gigabit communities. There are some small telcos, municipalities and cooperatives that are offering gigabit to everybody in their footprint. But this is really rare and for the most part these are small communities. Interestingly, the folks that actually do it don’t tout themselves and just quietly deliver fast speeds to customers. I’m starting to think that the ones who yell loudest are the least likely to actually be doing it. I hope somebody can prove me wrong about this.

Funding Faster Internet in Schools

Indianola_High_SchoolThe FCC announced this week that they will be providing an additional $750 million in the E-Rate program to promote high speed broadband to schools. This was mentioned in President Obama’s State of the Union address. And this is a follow-up to the announcement last year that the administration wants all schools to have access to 100 Mbps by 2015 and access to a gigabit by the end of the decade.

I want clarify that this does not increase the size of the Schools and Library Fund that is part of the Universal Service Fund. That fund is still at $2.4 billion per year and will stay at that level of funding. So this announcement, while sounding like a big increase, is really a reallocation of the existing fund.

More of the fund will help to pay for fast internet connections, but that means other things will no longer be funded. Many who are getting reimbursed from this fund today for older technologies are going to see their payments decrease or cease. Today this fund pays for a lot of old technologies, and so funding for things like voice lines, dial-up connections for faxes, paging services, and email programs will be eliminated or severely curtailed. For every school who gets more funding there will be another that gets less and this is a zero sum game.

For those who don’t follow this program, let me give you a short primer in how it work. Schools receive funding based upon the percentage of their students who are eligible for the school lunch program. Schools with the highest percentages of school lunches will get some or all of their communications costs for the schools covered by the fund. The lower the percentage of school lunch students, the smaller the amount that the fund will pay, as a percentage of the bill. The funds are awarded from neediest downward until all of the funds for a year are allocated.

The funds pay for a variety of different costs, and one assumes that the menu of things that can be compensated from the plan is going to change with this announcement. But today the fund will not only cover some monthly recurring costs, such as for an Internet connection, but it will pay for one-time costs like wiring a school for Internet.

Every school who gets funding must have an ISP partner who provides the services. Let’s use an example of a school that gets a 60% reimbursement to show how this works. The ISP will sell services to the school at competitive rates. In most places the ISPs are picked using state purchasing laws requiring the low cost bidder to win the job. The school will pay the ISP its unfunded percentage of the bill, in this case 40%. The ISP must be registered with the USF fund to get paid, and they would bill the fund for the remaining 60%. This means that the ISP gets full payment, but that the school in this example saved 60% on their bill.

One has to imagine that the fund is now going to have some sort of incentive to reimburse schools for connections that are at least 100 Mbps download. Connections that are slower than that are going to have to somehow be given a lower rating for the fund to help foster the goal of faster Internet.

I worry a bit in that revising the rules to promote fast Internet might inadvertently disadvantage those schools with the slowest Internet. There are schools that happen to be located in a broadband desert who have no access to fiber, and those schools might lose compensation that helps them to pay for the fastest speed they can get.

Many ISPs already take part in this program. But if you are in a position to sell a high-speed connection to a school or library you should get registered with the USF fund. It’s fairly easy to do and CCG can help you with the paperwork. This program is run well and ISPs report no problems getting reimbursed. There is no reason for ISPs and school partners who qualify to not get help from this fund.

Always More Bandwidth

UHDTV_resolution_chartNetFlix has announced that they will be shooting the second season of ‘House of Cards’ in ultra HD. This is a video technology that uses over 4,000 pixels per frame. Obviously this is going to result in really amazing picture quality.

But this is also going to mean a big increase in the bandwidth needed to deliver the show across the Internet. SONY is working on TV that can display this new technology and they estimate that it is going to require about a 15 Mbps streaming download in order to view an ultra HD video without interruptions. And long before TVs are ready to view this it’s going to be available on computers and tablets.

This is going to increase the pressure on networks to increase speeds yet again. There are a huge number of households in the country who can’t get 15 Mbps downloads. But even a household who gets 15 Mbps download speeds is going to have problems streaming this big of a stream. We all know that the amount of bandwidth that comes across an Internet connection varies constantly, and thus somebody who has a 15 Mbps data connection has that speed sometimes, but often has less than that.

Plus, households today routinely are using their Internet bandwidth for multiple functions simultaneously, and while one family member is watching ‘House of Cards’ it is likely that there are other family members who want to watch some different video, play a game, browse the Internet, offload data from a cell phone or make a VoIP call.

I am going to be the first to say that many network providers have worked hard over the last few years to increase their bandwidth. Cable companies have converted to digital to free up bandwidth formerly used for TV channels. DSL providers have gone to more bonded pair DSL and have also moved DSLAMs closer to homes.

But the unfortunate truth for network providers is that every time they increase the bandwidth available on their networks, the world finds a way to use the new bandwidth, and usually in short order. There is no end in sight of this escalation. Looking out just a few years it’s easy to see even more uses for the bandwidth in our homes. Modern security alarms are putting ubiquitous HD video cameras throughout the home that can be viewed remotely. Multiple companies are working on medical monitoring products that will constantly monitor our health. More and more devices in the home are being made smart and will be integrated into the Internet of Things. And there is already an 8,000 pixel ultra HD video standard on the drawing boards.

There is a move in the country today to create gigabit communities. This means communities that are capable of delivering 1 Gbps download speeds to homes and businesses. It is really hard to think of enough uses today to fill up a gigabit of capacity. But it is not a big stretch into the future to look at homes routinely needing wanting 100 megabits, 200 megabits and more.

It’s easy to forget that it was just back in the 90’s when we were all using dial-up Internet that got 56 kbps bandwidth at best. Homes have grown from that tiny trickle and twenty years later it’s not hard to find homes that need 50 mbps to function smoothly. That is a thousand-fold increase in bandwidth over twenty years. And we are nowhere close to the end game.

In the not too distant future we are going to routinely need to be delivering more than 100 Mbps. That is going to require fiber networks or cable networks that have been converted to a full digital capacity including IPTV. Both of those networks will provide the capacity to grow to a full gigabit. After that speed we probably exhaust the capacity of coaxial cable and ultimately everything is going to have to be fiber.

Communities that have fiber today are the ones who are not going to get throttled as the bandwidth needs continue to grow. The need for faster bandwidth is growing so rapidly today that cities that look to have good bandwidth today – say 15 mbps to 30 mbps networks  – are going to look very slow in five years. Network providers who are doing anything other than fiber are going to be constantly frustrated as people always want more bandwidth.