Tag Archives: New York City

New York City’s Broadband Reversal

New York City has done a 180-degree turnaround on the concept of the City providing broadband to low-income households. In 2020, then-May Bill de Blasio announced a plan to bring affordable broadband to low-income households. That Master Plan said that the City would make a $157 million infrastructure investment to provide broadband to around 600,000 homes that includes 200,000 residents of public housing.

The current mayor, Eric Adams, quietly killed the broadband Master plan after putting it on hold after coming into office a year ago. The Mayor recently announced a new plan called Big Apple Connect, where the City will pay either Charter or Altice to provide broadband, depending on the neighborhood. Qualifying low-income customers who take basic broadband will get the service for free, with customers paying if they want more than the basic broadband product or other products in the cable bundle.

It’s hard to imagine a bigger philosophical turnaround. The original Master Plan provided for reasonable access for ISPs to city-owned infrastructure like rooftops and poles to help build the needed infrastructure. Five ISPs began offering broadband service under a pilot project that covered 30,000 residents, including Silicon Harlem, Starry, Sky Packets, Flume, and NYC Mesh. The $157 million plan would have constructed a fiber backbone to make it easier to get broadband into the poorest parts of the city. It was rumored that de Blasio was in conversation with People’s Choice Communications to oversee the construction of the new infrastructure. This is a cooperative formed by former employees of Charter that were locked out for years over a labor dispute.

The new Big Apple Connect plan will instead have the City covering the cost of broadband connections from the cable companies. It’s likely that the City has negotiated a bulk purchase rate for the large volume of connections. Interestingly, there is no discussion of requiring residents to enroll in the FCC’s ACP plan that reduces cable rates for low-income and other qualifying households by $30 per month.

There are obvious big pros and cons for the two contrasting plans. The plan to build infrastructure would likely provide the lowest long-term cost to the City by using city-owned infrastructure to connect homes to ISPs. The downside to the infrastructure plan is that it would take time to build the infrastructure, delaying the time when folks get free or cheap broadband.

Paying the cable companies can mean connecting a lot of homes now (assuming that the cable companies are connected to the low-income buildings and are willing to promote the low-income connections). Paying the cable companies also means providing a solution for homes throughout the community and not just for those located in specific neighborhoods. But it also must mean a significant annual subsidy by the City to pay for home broadband connections. I’ve worked with many cities over the years that considered this idea, but the long-term cash obligation to pay for broadband always scared them off.

Like anything in a huge city, part of this is political theater. A mayor can score big points by bringing free broadband to folks now instead of a few years from now. This kind of subsidy always grows legs over time, and it will be difficult for a future mayor to ever end the subsidy if that means turning off broadband to huge numbers of homes. It will also be interesting to see how the City puts a cap on who is eligible for the subsidy.

I talked to a few advocates for broadband for low-income homes and got a mix of reactions. There were a few folks who think that infrastructure is the only way to go and that paying the cable companies is a dreadful idea. But a few folks I talked to said that a solution that bring broadband to the most homes quickly sounds like a reasonable plan.

In many ways, New York City is unlike anywhere else in the U.S., even other large cities. That means that a solution that works or don’t work for NYC might not be that instructive for other communities. But this big turnaround gives digital access advocates a lot to consider. Are other cities willing to pony up the monthly cost of broadband to solve the digital divide?

The Magnitude of the Urban Digital Divide

The web is full of stories of rural areas with no broadband options, and I’ve spent a lot of time in the last few decades helping rural areas get better broadband. There has not been nearly as much coverage of the huge broadband gap in urban areas. There are a lot of urban homes that can’t afford broadband and, in many cases got bypassed when the telcos and/or cable companies built their networks.

I just saw a statistic that made me realize the magnitude of the urban broadband divide. There has always been a lot of urban homes that don’t have broadband, but the issue took on new importance when schools were forced to send students home to work. I read an article in the Democrat and Chronicle, from Rochester, New York that says that 20% of residences in New York City don’t have access to home broadband. That’s a pretty typical percentage in looking at cities across the country. The statistic that astounded me was that this translates into 750,000 students who don’t have a way to tackle schoolwork from home.

That number is mind-boggling. There are more students in NYC without home broadband than the total number of residents of Alaska, Vermont, Wyoming, or Washington DC. The article says that the percentage of homes without broadband is in the same 20% range in Rochester and Buffalo. In Syracuse, the percentage of homes without broadband is much higher at 32%. Nationwide my firm has studied urban markets where the percentage of homes without broadband ranges from under 10% to as high as 35%.

We know the primary reasons that homes don’t have broadband. Surveys and studies over the years in different markets have uncovered the same list of primary reasons homes don’t have broadband. Some homes simply aren’t interested in broadband and wouldn’t use it if was free. Some homes have low broadband needs and are happy with what they can get from a cellular plan. The biggest single barrier is the price – broadband has grown to be more expensive over time and many homes have a hard time justifying paying for broadband when they are struggling to pay for food or rent. Some homes can afford broadband but can’t also afford to keep a working computer in the home. Some people don’t know how to use a computer and need training in basic computer skills. The last reason we see given for not having broadband is a dislike for the way that ISPs and social media misuse personal data.

Around the country, some communities have found solutions for some of these problems. The gigantic challenge is how to apply solutions at the scale of a big city. How can a city provide digital literacy training on computer skills to several hundred thousand people? How do you get hundreds of thousands of computers into homes that need them? And the big dollar question is how to subsidize the cost of a monthly broadband connection to half a million homes.

What’s scary is that every other city is similar, with some in even worse shape than New York City. How do you scale up and provide solutions when the universe of people on the wrong side of the digital divide is 10 million to 20 million?

Local communities have tackled some of these issues during the pandemic. I’ve talked to rural counties that are making sure that every student has a computer at home and that every student has enough broadband to connect to school servers – usually using cellular hot spots. However, local governments are not going to be able to keep paying the fees for home broadband – even in a small community that will add up to a lot of money over time.

We can’t shy away from tackling digital divide issues just because the problem is so large and is found in almost every community. Local solutions can make a real difference, particularly in smaller communities – but the magnitude of the digital divide is too immense to easily tackle in larger cities.

WiFi Kiosks

One of the first thing a visitor to New York City will notice these days is the proliferation around the city of LinkNYC kiosks. There are now about 1,300 of the 9.5 foot tall kiosks scattered around the city with hopes eventually have 7,500 of them. The kiosks are being installed in sites that used to have public payphones.

The kiosks offer a range of connectivity and other services. Each kiosk offers a free blazing fast gigabit WiFi hot spot. Each terminal has a phone that can be used to make free calls to anywhere in the US and allows for calling cards to be used for international calling. There is a button for an instant connection to 911. Each device has a tablet that can be used to access city maps, directions and other services. The kiosks off a fast charger for cellphones and other devices.

Probably most striking about LinkNYC are the two large 55-inch high definition displays on each side. The screens are used to display local ads and public service announcements. The business model for the kiosks relies solely upon advertising revenues from these screens.

The launch of the kiosks was not without some issues. Early kiosks allowed for web browsing on the tablets and there were reports of crowds using the kiosks to view pornography. There are concerns from privacy groups that the network can be used to track the 2.7 million people who have signed up to use the kiosks. The system is essentially a big ISP in terms of being able to match web browsing habits with users who log onto the network.

The kiosks have the potential for more uses in the future. Since they have fast connectivity they are natural places to collocate 5G small cell sites. There was talk when the project started of using the kiosks as platforms for municipal security cameras, although it doesn’t seem like there is much public support for that concept.

One interesting aspect of LinkNYC is the ability to tackle at least some portion of the digital divide in the city. The homeless, or those who can’t afford home broadband can gain access to the web through the WiFi connections at the links. Anybody with a WiFi-enabled phone can be connected to the web or make and receive phone calls without having to subscribe to a cellular plan. The kiosks are bringing some level of Internet access to those who otherwise might never have it.

There are obvious drawbacks to using the kiosks to solve the digital divide. The devices are outdoors and only the hearty are going to use them for very long during the winter. While the WiFi is fast, this isn’t going to make it easier for kids to do schoolwork or for people to take online training or do anything else that takes much time.

I’ve also been wondering how viable these kiosks might be in other cities? New York City is unique in that it’s both the largest US city and also one where people walk everywhere. That means a lot of potential viewers to support an advertising-funded model. Something similar is being built in London. How many other places in the US have the demographics to support this same funding model? Places like San Francisco, parts of Chicago and other major cities come to mind – but none of them have the same potential as New York City. There are other places that have a lot of people, like college campuses, but students are already connected to the web.

The idea is probably not going to be financially viable in more places until some other way to help fund them is found. There are cities that are probably willing to pay to support part of the cost of these systems – many cities have been searching for ways to expand public WiFi access. Getting the wireless companies to install 5G cell sites could be another difference maker. I’m sure that if these platforms become more widely available that other entrepreneurs will find ways to monetize them.

You have to give kudos to New York City for tackling this. Having kiosks spread all over the city is bringing benefits to citizens and providing access to those who would otherwise not have it. I wonder, though, if the city would be willing to step in to keep these operating if this trial is not financially sustainable? Cities have found many times that it’s not easy to kill a service that is widely popular.

Make it Faster

Cable modem Motorola SurfBoard for broadband i...

Cable modem Motorola SurfBoard for broadband internet (Photo credit: Wikipedia)

Whenever I look at my client’s data products I almost have the same advice – make it faster. I am constantly surprised to find companies who deliver small bandwidth data products when their networks are capable of going much faster. I have come to the conclusion that you should give customers as much bandwidth as you technically can deliver, within any technical restraints.

I know that networks are operated largely by engineers and technicians and very often I hear the engineers warn management against increasing speeds. They typically are worried that faster speeds mean that customers will use more bandwidth. They worry that will mean more costs with no additional revenue to pay for the extra bandwidth.

But the experience in the industry is that customers don’t use more data when they get more speeds, at least not right away. Customers do not change their behavior after they get faster data – they just keep doing the same things they were doing before, only faster.

Of course, over time, internet data usage is steadily increasing on every network as customers watch more and more programming on the web. But they are going to increase usage regardless of the speed you deliver to them as long as that speed is fast enough to stream video. Going faster just means they can start watching content sooner without having to worry about streaming glitches.

The engineers do have one valid point that must be taken into consideration, in that many networks have chokepoints. A chokepoint is any place in a network that can restrict the flow of data to customers. Chokepoints can be at neighborhood nodes, within your network backbone, at devices like routers, or on the Internet backbone leaving your company. If your network is getting close to hitting a chokepoint you need to fix the issue because the data usage is going to grow independently of the speeds you give your customers. When I hear worry about chokepoints it tells me that the network needs upgrades, probably sooner rather than later.

Historically telecom companies were very stingy with data speeds. The first generations of DSL didn’t deliver speeds that were much faster than dial-up and even today there are many markets that still offer DSL with downloads speeds of 1 Mbps. Then cable modems came along and they upped speeds a little, with the first generation of cable modems offering speeds up to 3 Mbps. And over time the telcos and the cable companies increased data speeds a little, but not a lot. They engaged in oligopoly competition rather than in product competition. There are many notorious quotes by the presidents of large cable companies saying that their customers don’t need more speed.

But then Verizon built FiOS and changed the equation. Verizon’s lowest speed product when they launched service was 20 Mbps, and it was an honest speed, meaning that it delivered as advertised. Many of the DSL and cable modem speeds at that time were hyped at speeds faster than could be delivered in the network. Cable modems were particular susceptible to slowing down to a crawl at the busiest times of the evening.

Over time Verizon kept increasing their speeds and on the east coast they pushed the cable companies to do the same. Mediacom in New York City was the first cable company to announce a 50 Mbps data product, and today most urban cable companies offer a 100 Mbps product. However, the dirty secret cable companies don’t want to tell you is that they can offer that product by giving prioritization to those customers, which means that everybody else gets degraded a little bit.

And then came Google in Kansas City who set the new bar to 1 Gbps. Service providers all over the country are now finding ways to 1 Gbps service, even if it’s just to a few customers.

I am always surprised when I find a company who operates a fiber network which does not offer fast speeds. I still find fiber networks all the time that have products at 5 Mbps and 10 Mbps. In all of the fiber-to-the-premise technologies, the network is set up to deliver at least 100 Mbps to every customer and the network provider chokes the speeds down to what is sold to customers. It literally takes a flick of a switch for a fiber provider to change the speed to a home or business from 10 Mbps to 100 Mbps.

And so I tell these operators to make it faster. If you own a fiber network you have one major technological advantage over any competition, which is speed. I just can’t understand why a fiber network owner would offer speeds that are in direct competition with the DSL and cable modems in their market when they are capable of leaping far above them.

But even if you are using copper or coax you need to increase speeds to customers whenever you can. Customers want more speed and you will always be keeping the pressure on your competition.

What is Behind the Aereo Controversy?

Image representing iPad as depicted in CrunchBase

The Aereo ruling on April 1 certainly has the cable industry in an uproar. In that ruling a federal appeals court upheld a lower court ruling that Aereo’s wireless streams to customers are not a ‘public performance’ and thus do not constitute copyright infringement. On Friday Glenn Britt, the CEO of Time Warner, said that his company was considering pulling the broadcast networks off of his cable TV systems and sending them to customers over a radio in the same way that is being done by Aereo. And recently, in response to the Aereo ruling the broadcast networks threatened to pull all of their content off the air and move their programming to cable TV. So what is up with Aereo, and can these companies do what they have threatened?

Aereo has an interesting product that seems to have found a market niche, at least in New York City where it is now operating. Aereo sets up a radio link to each customer and sends them a 28 channel packagethat includes the major networks, some other low-cost networks and some spanish and asian-language channels. Aereo can be installed on any Windows or Mac computer and can then be streamed to iOS devices like the iPhone, iPad or Apple TV. It can also be made to work with a Roku box. And one would imagine it will soon be made to work with other pads and tablets. The service also lets a consumer record some programming for later playback. The pricing is cheap compared to cable TV with a $1 per day plan, monthly or annual plans, including a monthly plan for $8 that lets a customer watch everything live plus record and play back 20 hours of programming per month.

Why does this controversy even exist? Can’t people just receive the broadcast networks over the air? On June 12, 2009 all full-power analog television transmissions ended and starting with that date the full-power television stations, which include all of the major networks like ABC, CBS, NBC and Fox could only broadcast in digital. Customer now need a Digital Television Adapter (DTA) to receive the signals and any home that is near to a station can receive it for free. But it is not easy for the average consumer to get these signals from the TV to mobile devices, and Aereo’s real marketing niche is providing signals to computers, iPhones and iPads.

Why are Time Warner and the cable companies so stirred up over Aereo? Aereo seems to have found the niche of people who want to watch mainstream programming without being tethered to their TV. If Aereo was limited to New York City this probably wouldn’t be a huge deal, but they have announced that the service is coming to 22 other major markets in 2013.

As is the case with all big business controversies it all comes down to money. In the 1992 Cable Television Consumer Protection and Competition Act, Congress required that all cable operators obtain the permission from broadcasters before carrying their signals on their cable systems. For a while this permission was granted for free, but in recent years the broadcasters have asked for significant fees and it is not unusual to see each local broadcast network charging $1 or more per customer per month for retransmission consent. So a cable system now has to pay that much each for ABC, CBS, NBC and Fox, and in some markets multiple stations of some of these. This has driven large increases in cable rates and is now a point of huge contention between broadcasters and the cable companies.

The broadcasters are angry that Aereo is able to bypass their fees since retransmission fees currently make up as much as 10% of their revenue. And the cable companies are angry that Aereo has gotten out of paying the same fees that they must pay. And they are worried that Aereo will accelerate the trend of customers who are ditching traditional cable TV in favor of programming from the web and elsewhere, the trend referred to as the cord-cutters.

Can Time Warner really do the same thing that Aereo is doing? Certainly Time Warner or anybody could form a company that does the same thing as Aereo and compete with them. Such a company could sell the same sort of line-up and do it using radios like Aereo has done. But they first must recognize that it’s important that Aereo is using radios because this is what allows them to not be a cable TV company, which is defined as somebody who delivers cable content using cables. So Time Warner would have to use radios also. And Time Warner is still hoping that the Supreme Court will look at the issue so it’s not entirely certain that Aereo, or anybody, has the legal last word that this is okay.

So Time Warner could establish an Aereo-clone company and do exactly what Aereo is doing. But they could not do this as an alternative to putting the network channels onto their cable system. In the aforementioned 1992 Cable Act, Congress set forth the rules for cable systems to carry broadcast channels, referred to as the must-carry rules. Congress said that a cable system with 12 or fewer channels must carry at least three local broadcast channels. Larger cable systems must carry all local broadcast channels, up to a maximum of 1/3 of their system. This means that Time Warner could not pull the local broadcast networks off of their cable and deliver it in a different way. But Time Warner could probably sell an Aereo-like product to somebody if that is the only product they sell to that customer.

Finally, can the broadcast networks pull their signals off the air and move them to be cable only? I can’t think of any reason why not. At that point they would no longer be a broadcaster and they would avoid all of the FCC rules applicable to over-the-air broadcasters. But if they do this they would become like any other cable network, and so ABC would be treated the same as HBO or TBS or any other cable network. It is likely that such a change would infuriate Congress since around 15% of the people in cities still receive free TV over the air. There would certainly be political repercussions from a broadcast network deciding to become just another cable network. For instance, might they lose their ability to carry professional football?

At the bottom of this controversy are huge dollars and also the underlying fear of the cable industry that Aereo is one more factor that is accelerating the bypass of their systems. It seems like Aereo might be in a similar position to MCI back when they broke the long distance monopoly. Aereo has stuck a sharp stick in the eyes of both the cable companies and the broadcasters and there is one hell of an interesting fight yet to come.