The Future According to CenturyLink

telephone cablesRecently the CFO of CenturyLink, Stewart Ewing, spoke at the Bank of America / Merrill Lynch 2014 Global Telecom and Media Conference. He had some interesting things to say about the future of CenturyLink that contrasts with some of the things that other large carriers like AT&T and Verizon have been saying.

The most interesting thing he had to say is that CenturyLink sees the future of broadband in the landline link to a home. He cannot foresee 4G wireless as a substitute for a landline wireless connection. He doesn’t see wireless delivering enough bandwidth in coming years as demand at homes keeps growing. Already today the average CenturyLink residence uses slightly less than 50 Gigabits of data per month and that is far above the data caps for 4G plans. He doesn’t think cellular can deliver the needed speeds, and unless the cellular model is drastically changed, it’s too expensive and capped at really low levels.

So CenturyLink plans to continue to upgrade its rural plant. About two thirds of CenturyLink’s customers can get 10 Mbps or higher today and the company is working to make that available everywhere. Contrast this to AT&T and Verizon. They have both told the FCC that they have plans to convert millions of rural lines to 4G LTE. I have written about this many times and see it as one of the biggest threats on the horizon to rural broadband. LTE is a great product when you want a burst of fast data to your cell phone. But the LTE network is not designed to serve multiple video streams to large numbers of households. 4G is also capable of some fairly impressive speeds that are significantly in excess of 10 Mbps, but those speeds drop quickly as you move away from a cell site.

It’s fairly obvious that AT&T and Verizon favor LTE since it is their own best economic benefit – their wireless operations dwarf their landline businesses. Nobody can argue with a straight face that LTE is the best way to provide data for customers from either a a performance or a cost basis. Cellular coverage is still poor in a lot of rural America and so forcing people off of copper and onto wireless will  degrade the ability of many rural households to get broadband. But these two companies have a big financial incentive to move people from low-priced landlines to expensive cellular connections. It makes me think that if the FCC really cares about rural America that they ought to be divesting the landline business from AT&T and Verizon to remove the wireless bias.

CenturyLink says they are worried about the FCC changing the definition of rural broadband to be higher than 10 Mbps. They say that speed is difficult to achieve in their DSL plant and that they are far more comfortable with a definition of around 6 Mbps. It’s honestly refreshing to hear a telco executive tell people the truth for a change. The other big telcos spew a lot of rhetoric to sway the FCC or to assuage the public and it’s unusual to hear somebody tell the unvarnished truth to the public.

Those who follow my blog know that I promote a high definition of broadband. Households want the ability to stream multiple videos simultaneously. And you can expect in just a few years for there to be a much greater demand for HD quality video and a climbing demand for 4K video. The average urban household that has choice is already finding 10 Mbps to be far too slow. Just this week Verizon increased its minimum FiOS speeds to a symmetrical 35 Mbps. I know this is a really big technological expectation for CenturyLink and other rural telcos still using copper, but the definition of broadband needs to keep pace with what the normal household wants to buy, and that number is going to keep climbing year after year. If we don’t set the bar high then rural places are going to fall further behind the speeds available in cities.

CenturyLink does expect to continue to expand the footprint of its Prism TV product. This is a paired and bonded DSL product that can deliver up to 50 Mbps for customers somewhat close to a central office. CenturyLink has made this available to over 2 million customers and plans to make it available to 300,000 more in 2015.

Interestingly, CenturyLink does not plan to expand WiFi hotspots. Some other carriers seem to be in a race to put in hot spots but CenturyLink cannot see a way to monetize the effort. Of course, CenturyLink will put a hotspot in for a business that asks for one, but they don’t intend to build hotspots of their own. I have also written about this topic several times. Nobody who is not serving a captive audience like at an airport or in an airplane has been able to get much money from selling Internet by the hour. And while the giant cellular carriers benefit greatly by more WiFi, I have yet to hear of a deal where they are paying somebody to install public hot spots. Comcast says they have installed hundreds of thousands of hot spots and they recently announced that they are turning the wireless modems of all of their residential customers into hot spots. But to me that seems more like a move that is going to antagonize the public greatly with little obvious monetary benefit. I think CenturyLink is being prudent to stay away from this business until somebody shows a way to make money with it.

Expanding Public WiFi

Wi-FiComcast began the process last week of turning home WiFi routers into public hotspots. They announced that they were turning up 50,000 home routers in Houston, and that this was going to be followed up nationwide with millions of home routers being opened up to allow access to anybody with a Comcast password or anybody willing to buy bandwidth by the hour.

Comcast says that this is being implemented by opening up a second channel in each router so that external users won’t be using the same bandwidth as paying customers. Comcast promises this won’t degrade the bandwidth purchased by customers. Interestingly, they are going to match the bandwidth from each public channel to match the home bandwidth that has purchased.

I must say as a Comcast customer that this feels both good and also a bit scary. It certainly would be convenient when walking around my town to be able to be connected to Comcast WiFi and not use cellphone data. And it certainly could make it convenient for me to go outside and still be able to work on my laptop or tablet. So for someone like me who is always connected this sounds promising.

But as the owner of a Comcast router of my own I am somewhat worried by the security aspects of this. There is a nagging part of my brain that tells me that even if this is done on separate channels that there are people smart enough to hack this. So I worry that this could give somebody access into what I am doing inside my own home on my own network. I hope I am wrong about this, but it seems a lot easier to think somebody could hack me when starting inside my router rather than having to start outside of it. Comcast does offer the option, for now, of turning off the second public channel of your router. I’m not sure what they’ll do if everybody chooses that option.

One thing to remember is that this is not Hotspot 2.0 which is a suite of technologies that is going to let people automatically connect to WiFi routers as they move from place to place. That new technology is supposed to come with new security features that will make it safer to be on a public WiFi router. But Comcast is still deploying current WiFi technology, and a user just has to log on one time to any Comcast hotspot and they will then automatically log on to other hotspots with the same password and ID.

Certainly as I move around town on Comcast hotspots I am going to use the same security measure that I would use at a Starbucks. I won’t log into financial institutions or make credit card purchases. Those are common sense security measures to take when sharing a hotpot with people you don’t know. But over the last few days I read a lot about hotspot security and there are a lot more dangers out there. A smart hacker can get into your computer and dig out whatever data you have stored including passwords to accounts and other damaging data. So this is the scary side of using Comcast hotspots or allowing my home router to become one of them.

I also now have to worry that I am giving Comcast the same sort of data about my whereabouts that I give to the cell phone companies. Comcast will be able to follow me as I move around and the knowledge of when and where I go has to be worth something in terms of profiling me.

Why would Comcast do this? They began deploying public hotspots in areas where they are having significant competition with Verizon FiOS. For example, it’s been reported that you can go almost anywhere on the Jersey shore and stay connected to Comcast. So in those kinds of markets it is a feature and a service that they think gives them a competitive edge.

But I see less advantage from deploying this in the average suburban neighborhood. It makes a lot of sense in downtown areas, even in small towns, where WiFi can be deployed where people shop and dine and congregate. But a WiFi signal doesn’t propagate very far from any one hotspot and so in suburban areas one can imagine your cell phone gaining and losing WiFi access as you take a walk. I shudder to think about what that is going to do to the battery on my cell phone as it constantly searches and adds and drops WiFi connections.

The big beneficiaries of this are the wireless companies and one can speculate that Comcast has figured out a way to charge them something for WiFi offload of cellular data. If not they are missing an opportunity. I know that Cisco and other manufacturers have been talking up WiFi offload as a new business line, but I have not yet heard of any specific deal being struck anywhere for this as a revenue generating service.