Starlink and RDOF

In August, the FCC denied the SpaceX (Starlink) bid to receive $885 million over ten years through the RDOF subsidy. This is something that Starlink won in a reverse auction in December 2020.

In the press release for the rejection, FCC Chairman Jessica Rosenworcel was quoted as saying, “After careful legal, technical, and policy review, we are rejecting these applications. Consumers deserve reliable and affordable high-speed broadband. We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks. We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”

The FCC went on to say in the order that there were several technical reasons for the Starlink rejection. First was that Starlink is a “nascent” technology, and the FCC doubted the company’s ability to deliver broadband to 642,925 locations in the RDOF areas along with serving non-RDOF areas. The FCC also cited the Ookla speed tests that show that Starlink speeds decreased from 2021 into 2022.

Not surprisingly, Starlink appealed the FCC ruling this month. In the Starlink appeal, the company argued, “This decision is so broken that it is hard not to see it as an improper attempt to undo the commission’s earlier decision, made under the previous administration, to permit satellite broadband service providers to participate in the RDOF program. It appears to have been rendered in service to a clear bias towards fiber, rather than a merits-based decision to actually connect unserved Americans”.

Rather than focus on the facts in dispute in the appeal, today’s blog looks at the implications on the broadband industry during the appeal process. Current federal grant rules don’t allow federal subsidies to be given to any area that is slated to get another federal broadband subsidy. This has meant that the RDOF areas have been off-limits to other federal grants since the end of 2020. This has included NTIA grants, USDA ReConnect grants, and others. Federal grant applicants for the last few years have had to carefully avoid the RDOF areas for Starlink and any other unresolved RDOF award areas.

As a reminder, the RDOF areas were assigned by Census block and not in large coherent contiguous areas. The RDOF award areas have often been referred to as Swiss cheese, meaning that Census blocks that were eligible for RDOF were often mixed with nearby ineligible Census blocks. A lot of the Swiss cheese pattern was caused by faulty FCC maps that excluded many rural Census blocks from RDOF that should have been eligible, but for which a telco or somebody else was probably falsely claiming speeds at least 25/3 Mbps.

ISPs that have been contemplating grant applications in the unresolved RDOF areas were relieved when Starlink and other ISPs like LTE Broadband were rejected by the FCC. It’s difficult enough to justify building rural broadband, but it’s even harder when the area to be built is not a neat contiguous study area.

The big question now is what happens with the Starlink areas during an appeal. It seems likely that these areas will go back into the holding tank and remain off-limits to other federal grants. We’re likely going to need a definitive ruling on this from grant agencies like the USDA to verify, but logic would say that these areas still need to be on hold in case Starlink wins the appeal.

Unfortunately, there is no defined timeline for the appeal process. I don’t understand the full range of possibilities of such an appeal. If Starlink loses this appeal at the FCC, can the agency take the appeal on to a court? Perhaps an FCC-savvy lawyer can weigh in on this question in the blog comments. But there is little doubt that an appeal can take some time. And during that time, ISPs operating near the widespread Starlink grant areas are probably still on hold in terms of creating plans for future grants.

Another RDOF Auction?

There was a recent interview in FierceTelecom with FCC Commissioner Brandon Carr that covered a number of topics, including the possibility of a second round of RDOF. Commissioner Carr suggested that improvements would need to be made to RDOF before making any future awards, such as more vetting of participants upfront or looking at weighting technologies differently.

The FCC is building up a large potential pool of broadband funding. The original RDOF was set at $20 billion, with $4.4 billion set aside for a second reverse auction, along with whatever was left over from the first auction. The participants in the first RDOF auction claimed only $9.2 billion of $16 billion, leaving $6.8 billion. When the FCC recently decided not to fund LTD Broadband and Starlink, the leftover funding grew by another $2 billion. Altogether that means over $11 billion left in funds that were intended for RDOF.

We also can’t forget that around the same time as the RDOF that the FCC had planned to fund a 5G fund to enhance rural cellular coverage. Due to poor mapping and poor data from the cellular carriers, that auction never occurred. That puts the pool of unused funding at the FCC at $20 billion, plus whatever new FCC money might have accrued during the pandemic. That’s a huge pool of money equal to half of the giant BEAD grants.

The biggest question that must be asked before considering another RDOF reverse auction is how the country will be covered by the BEAD grants. It would be massively disruptive for the FCC to try to inject more broadband funding until that grant process plays out.

Commissioner Carr said that some of the FCC’s funding could go to enhance rural cellular coverage. Interestingly, once BEAD grant projects are built, that’s going to cost a lot less than was originally estimated. A lot of the money in the proposed 5G fund would have been used to build fiber backhaul to reach rural cell sites. I think the BEAD last-mile networks will probably reach most of those places without additional funding. However, there is probably still a good case to be made to fund more rural cell towers.

But there are larger questions involved in having another reverse auction. The big problem with the RDOF reverse auction was not just that the FCC didn’t screen applicants first, as Carr and others have been suggesting. The fact is that a reverse auction is a dreadful mechanism for awarding broadband grant money. A reverse auction is always going to favor lower-cost technologies like fixed wireless over fiber – it’s almost impossible to weight different technologies for an auction in a neutral way. It doesn’t seem like a smart policy to give federal subsidies to technologies with a 10-year life versus funding infrastructure that might last a century.

Reverse auctions also take state and local governments out of the picture. The upcoming BEAD funding has stirred hundred of communities to get involved in the process of seeking faster broadband. I think it’s clear that communities care about which ISP will become the new monopoly broadband provider in rural areas. If the FCC has a strict screening process up front, then future RDOF funding will only go to ISPs blessed by the FCC – and that probably means the big ISPs. I would guess that the only folks possibly lobbying for a new round of RDOF are companies like Charter and the big telcos.

The mechanism of awarding grants by Census block created a disaster in numerous counties where RDOF was awarded in what is best described as swiss cheese serving areas. The helter-skelter nature of the RDOF coverage areas makes it harder for anybody else to put together a coherent business plan to serve the rest of the surrounding rural areas. In contrast, states have been doing broadband grants the right way by awarding money to coherent and contiguous serving areas that make sense for ISPs instead of the absolute mess created by the FCC.

A reverse auction also relies on having completely accurate broadband maps – and until the FCC makes ISPs report real speeds instead of marketing speeds, the maps are going to continue to be fantasy in a lot of places.

Finally, the reverse auction is a lazy technique that allows the FCC to hand out money without having to put in the hard effort to make sure that each award makes sense. Doing grants the right way requires people and processes that the FCC doesn’t have. But we now have a broadband office and staff in every state thanks to the BEAD funding. If the FCC is going to give out more rural broadband funding, it ought to run the money through the same state broadband offices that are handling the BEAD grants. These folks know local conditions and know the local ISPs. The FCC could set overall rules about how the funds can be used, but it should let the states pick grant winners based upon demonstrated need and a viable business plan.

Of course, the simplest solution of all would be for the FCC to cut the USF rate and stop collecting Universal Service Fund revenues from the public. The FCC does not have the staff or skills needed to do broadband grants the right way. Unfortunately, that might not stop the FCC from tackling something like another RDOF auction so it can claim credit for having solved the rural digital divide. If the FCC plans on another RDOF auction I hope Congress stops them from being foolhardy again.

How Fast is Starlink Broadband?

We got a recent analysis of Starlink broadband speeds from Ookla, which gathers huge numbers of speed tests from across the country. The U.S. average download speeds on Starlink have improved over the last year, from an average of 65.72 Mbps in 1Q 2021 to 90.55 Mbps in 1Q 2022. But during that same timeframe, upload speeds got worse, dropping from an average of 16.29 Mbps in 1Q 2021 to 10.70 Mbps in 1Q 2022.

It’s likely that some of this change is intentional since ISPs have a choice for the amount of bandwidth to allocate to download versus upload. It seems likely that overall bandwidth capacity and speeds are increasing due to the continually growing size of the Starlink satellite constellation – now over 2,500. Starlink subscriptions are climbing quickly. The company reported having 145,000 customers at the start of the year and recently announced it is up to 400,000 customers worldwide. This fast growth makes me wonder when Starlink will stop calling the business a beta test.

These speed tests raise a few interesting questions. The first is if these speeds are good enough to qualify Starlink to be awarded the RDOF awards that have now been pending from the FCC for over a year and a half. While these speeds are now approaching the 100 Mbps speed promised by Starlink in its RDOF bids, it’s worth noting that the 90 Mbps number is an average. There are some customers seeing speeds of over 150 Mbps while others are seeing only 50 Mbps or even less. I’ve talked to a number of Starlink customers and what they’ve told me is that Starlink needs a view of the ‘whole sky’ from horizon to horizon to operate optimally, and many homes don’t have the needed view. This doesn’t bode well for the Starlink RDOF awards areas of heavy woods and hills like the awards in western North Carolina.

There is a lot of speculation that Starlink is limiting the number of subscribers in a given geographic area in order to not dilute speed and performance. The RDOF awards require any winning ISP to serve everybody, and there is still a big question about the kinds of speeds that can be delivered for a geographic area that has a lot of subscribers.

The BEAD grant rules also open the door for Starlink and other satellite providers to some extent. While satellite technology is not deemed reliable enough to directly be used for grant awards, the NTIA has also opened the door to using alternate technologies like satellite and fixed wireless using unlicensed spectrum in areas where landline technologies are too costly. Each state will have to decide if grants can be awarded for satellite broadband in such cases, and it seems likely that some states will allow this.

The Ookla article also shows the Starlink average speeds around the globe. Some of the average speeds are much faster than U.S. speeds, and this might be due to smaller countries that cover a smaller and less diverse terrain than the U.S. Here, speeds are likely much higher in the open plains states than for customers located in hills, mountains, and woods. There can’t be a technology difference since the same satellites serve around the globe.

There is an interesting app that shows the location of the Starlink satellites. It’s fascinating to watch how they circle the globe. What is most striking about the world map is how few satellites there are over the U.S. at any given time. The app shows a few closely packed strings of satellites that are recent launches that haven’t yet been deployed to their final orbits.

The skies are going to soon get a lot busier. The original business plan for Starlink was to deploy 11,000 satellites. Jeff Bezos and Project Kuiper have FCC permission to deploy satellites, with launches starting this year. OneWeb, which is now aiming to serve business and government customers, has much of its constellation launched but has yet to begin delivering services. Telesat is still marching slowly forward and has fallen behind due to supply chain issues and funding concerns – but still has plans to have a fleet in place in the next few years. I would imagine that in a few years, we’ll see Ookla reports comparing the different constellations.

The Challenge of Accepting RDOF

I’ve been wondering lately if some of the RDOF reverse auction winners are having second thoughts about accepting the RDOF awards. It’s amazing how much the broadband world has changed since the end of that auction in December 2020.

It’s gotten more expensive to build fiber projects over the last year. The supply chain has played havoc with the costs of the raw components needed to build fiber networks. Many clients tell me that the cost of fiber components like conduit are collectively up by 40% or more over the last year. As somebody who has worked through several periods of inflation in the past, there is not a big likelihood that prices will return to the old levels even after the supply chain gets back to normal.

A bigger concern is the cost of labor. The explosion in the volume of fiber construction projects is almost too hard to grasp. The demand for construction crews is going to soon outstrip the number of experienced technicians. That means big challenges for finding and keeping construction crews. Shortages always lead to higher labor costs.

The federal government also layered on a new requirement that didn’t exist at the time of the auction. The Buy American Act now applies to infrastructure projects awarded with federal funds after November 18, 2021. These rules will apply to any RDOF winner that is approved by the FCC after that date. These rules don’t automatically add to the cost of building a fiber network, but they kill any thoughts of using lower-cost foreign fiber or components. The Act makes it clear that components like fiber and conduit must be 100% sourced to U.S. manufacturers. The new rules also make it seem unlikely that there will be many waivers allowed – these new rules have teeth.

The biggest kick in the teeth to an RDOF winner are the huge new grants are offering far more funding than anybody won in the RDOF auction. The giant BEADS grants can fund up to 75% of the cost of building a network for a rural project. Grants like ReConnect also have a 75% grant option. An RDOF winner that was unopposed in the auction got 60% of the FCC’s bid price – and that price was not set at the full cost of building a network but based upon some screwball federal cost models. An electric cooperative that won the RDOF auction could get a lot more funding from ReConnect grants or the upcoming BEAD grants – but nobody in the industry knew this at the time of the RDOF auction.

Another issue to consider is that RDOF winners might have missed out on the opportunity for matching state grants. While some states might make matching grants to go along with RDOF awards, many will not. That means the RDOF funding is all such winners will see.

What I’ve never figured out is why some RDOF winners bid the awards down to ridiculously low levels. There are places where bidders accepted RDOF awards under 10% of the expected cost of building a network – in some cases as low as 1%. In one county I’m familiar with, an RDOF bidder accepted less than 5% of the cost of building the network. This is a county with some of the easiest costs in the country to bury fiber. But this county is typical of rural areas and is sparsely populated, so the cost per passing is still high. Even considering the relatively low construction costs in the area, I couldn’t make a business case in this county for accepting less than 50% outside funding to make the project viable. I’m still scratching my head, wondering how this RDOF winner expects to make a business plan out of such a low award.

It’s not hard to imagine that some RDOF winners are having second thoughts. There are penalties for walking away from RDOF, but those penalties might be a lot smaller than the downside of being forced to build a rural network that will never generate enough revenue to cover the cost of construction. I was mystified by some of the winning RDOF bids in 2020 – and those bids make a lot less sense when viewed from 2022.

Auditing RDOF Performance

Today’s blog covers an issue that gets my blood boiling every time I think about it. The FCC just announced increased testing for ISPs accepting funding from FCC High Cost programs, which includes CAF II and RDOF. The new rules include the following:

  • The number of audits and verifications will double in 2022 compared to 2021 and will include some on-site audits.
  • There will be more verification prior to the first required deployment milestone.
  • Large dollar funding recipients will be subject to an on-site audit in at least one state.
  • High-risk recipients will be subject to additional audits and verifications.
  • Audit results, speed tests, and latency performance will now be posted online.

That all sounds good until you look at the practical results of the testing program. The worse that can happen to an ISP for failing the FCC tests will be to lose some small portion of any remaining funding.

Under current rules, ISPs can choose between three methods for testing. They may elect what the FCC calls the MBA program, which uses an external vendor approved by the FCC to perform the testing. ISPs can also use existing network tools if they are built into the customer CPE that allows test pinging and other testing methodologies. Finally, an ISP can install ‘white boxes’ that provide the ability to perform the tests. What’s not easy to dig out of the rules is that ISPs have a hand in deciding who gets tested.

In the past, the number of required tests was as follows. For award areas with 50 or fewer households the test was for 5 customers; for 51-500 households the test was 10% of households. For 500 or more households the test was 50 households. ISPs declaring a high latency had to test more locations with the maximum being 370. Doubling the testing probably means doubling the number of locations that are tested.

Tests for a given customer are done for a full week each quarter. Tests must be conducted in the evenings between 6:00 PM and 12:00 PM. Latency tests must be done every minute during the six-hour testing window. Speed tests, run separately for upload speeds and download speeds,  must be done once per hour during the 6-hour testing window.

ISPs are expected to meet latency standards 95% of the time. Speed tests must achieve 80% of the expected upland and download speed 80% of the time. An example of this requirement is that a carrier guaranteeing a gigabit of speed must achieve 800 Mbps 80% of the time. ISPs that meet the speeds and latencies for 100% of customers are excused from quarterly testing and only have to test once per year.

The real kicker of all of this is that the penalties for failing the tests have no teeth. The following financial penalties are applied only to the remaining subsidy payments:

  • If between 85% and 100% of households meet the test standards, the ISP loses 5% of any remaining FCC support.
  • If between 70% and 85% of households meet the test standards, the ISP loses 10% of future support.
  • If between 55% and 75% of households meet the test standards, the ISP loses 15% of future FCC support.
  • If less than 55% of households meet the test standard, the ISP loses 25% of their future support.

The penalties for an ISP that doesn’t perform on RDOF are minor. Consider a WISP that accepted $100 million of RDOF to build gigabit wireless but only delivers a few hundred Mbps speeds. The first chance for testing is in the third year of RDOF, where an ISP is required to have completed 40% of the buildout. My example WISP will fail more than 55% of speed tests and will incur the maximum FCC penalty. That means the ISP will collect $10 million in the first two years and $7.5 million in years 3 – 10. By the end of the 10-year payout, the ISP will still have collected $80 million of the original $100 million RDOF award. That is not much of a penalty for massive underperformance.

I think these weak penalties emboldened ISPS to lie about the speeds of their technologies in the RDOF auction. ISPs are still paid handsomely even if they don’t come close to meeting the promised speeds. And that’s not the entire story. There were bidding penalties for ISPs promising speeds slower than gigabit. A WISP that told the truth about speeds in the auction (and many did) likely lost in the auction if bidding directly against a WISP that exaggerated speeds.

These penalties are shameful and are another example of the FCC favoring ISPs over the public.  If an ISP whiffs the test in the third year they should stop receiving all future subsidies. If an ISP fail the tests badly enough, such as delivering 200 Mbps when promising a gigabit, then they ought to be forced to return 100% of the previous RDOF awards. If those were the rules, any ISPs that lied about speed capabilities would all withdraw from RDOF tomorrow.

People will ask why it’s so bad that an ISP that overstated speed capabilities won the RDOF. This cheats the people living in the RDOF award area. Residents thought they would get gigabit broadband and will get something far less. While customers might be pleased with the initial speeds in this example, the network being built is not ready to provide good broadband for the rest of the century. There is a good chance that in a decade or two we’ll be looking at these same award areas again and asking if these areas need more federal subsidy to swap out to a faster technology.

If an ISP takes big federal money and fails to perform there should be real penalties. If that was made clear upfront, then ISPs that can’t meet speed requirements would not be tempted to apply. One only has to look back at CAF II to see how ineffective this testing is. Does anybody remember any big penalties for the big telcos not upgrading DSL?

FCC – Please Do the Right Thing with RDOF

The $42.5 federal BEAD broadband grants that are being funded from the Infrastructure Investment and Jobs Act should be a gamechanger for rural broadband. There will be many hundreds of millions of grants given to each state to fund the construction of broadband networks. This is likely once-in-a-generation funding, so there will only be one chance to do this right.

There is one pending issue that could really gum up the BEAD grants – there are pending RDOF awards that should not be funded. These pending RDOF grants fall into three categories.

First are RDOF auction winners that have probably bitten off more than they can chew. An example of this might be LTD Broadband. I don’t have any inside knowledge of the company, but I’ve seen estimates that the company would need to raise something north of $7 billion dollars to go along with the $1 billion RDOF award. There are likely other similar companies in the auction. The FCC has had almost a year to determine the financial ability of grant winners to fund the rest of the projects they won. If these companies don’t have the needed funding, it’s time for the FCC to cut them loose. This shouldn’t be a hard determination.

The second category is unique. Starlink won nearly a billion dollars of RDOF funding. There are still a lot of unknowns about the company’s capabilities. I know some of the RDOF areas won by Starlink are heavily wooded, and from what I hear, that’s a big problem for the technology. There are also still questions about the ability of Starlink to serve every home in a grant area – which is what the RDOF requires. I have nothing against Starlink, and if I lived in a rural area, I would have been first in line for the beta test. But the company is still an unproven technology in terms of being able to serve everybody. The company is still a start-up with no guarantee of success or longevity. At the end of the day, Starlink doesn’t meet the basic requirement that federal funding should only go to companies that can guarantee to meet the requirements of the award.

Finally, are the RDOF auction winners that claim to be able to deliver gigabit wireless technology. Like Starlink, these are not field-proven technologies and likely will never deliver what is being promised. Over the last year, I haven’t talked to a single engineer who thinks it’s possible to deliver a wireless gigabit to every customer in rural Census blocks with gigabit wireless. I have no doubt that the new wireless technologies have the capability of being a lot faster than current fixed wireless technology. But these grants weren’t awarded to deliver a few hundred megabits per second. These grant winner should be tossed for overclaiming the technology, since doing so gave them an unfair advantage in the auction. If they had bid with the ability to deliver 200 Mbps the auction results would have been very different. These companies gamed the auction rules and that alone should have invalidated the awards. Unfortunately, the FCC might be ready to make these awards, having recently awarded funding to Resound Networks to provide gigabit wireless broadband.

It’s obvious that the FCC is already wrestling with all of these issues because it’s been eleven months since the RDOF winners filed their long-form information. But the FCC must know that the BEAD grants change everything. If it had known that BEAD grants were coming, the FCC probably would not have held the reverse auction. This new federal grant money changes the equation and brings a new paradigm that should make it easier for the FCC to make up its mind about questionable RDOF awards.

If the FCC gets this wrong, then the RDOF areas in question won’t be seeing the same broadband solutions that are coming everywhere else. The BEAD grants make it easy for the FCC to reject applicants that have not demonstrated the financial wherewithal to fund the promised RDOF solution. The BEAD grants should make it easy to reject Starlink – the company is still free to market broadband to all of rural America, and it already has a huge waiting list of people willing to buy service. The BEAD grants should make it easier for the FCC to admit it erred in letting bidders overclaim technology.

It’s not going to be easy for the FCC to publicly admit that it made some big mistakes in the RDOF auction. Most of these issues could have been avoided if the FCC had pre-screened applicants. Any technology that was not already proven to work in the real world should have been excluded from the auction. Applicants should have been given a dollar limit for participation in the auction based on their balance sheet. But the FCC has a chance to set this right by rejecting the questionable awards and letting the folks that live in these areas have a chance for a better and more permanent broadband solution through BEAD grants. FCC – please do the right thing.

Penalizing Bad FCC Broadband Reporting

It’s universally understood throughout the industry that the broadband data reported by ISPs to the FCC is full of big problems. Some of the problem in the database can be blamed on the FCC, which allows an ISP to claim an entire Census block as having good broadband even if only one customer in the Census block can actually get that faster speed.

However, in looking in detail at counties all over the country, this seems to be a relatively minor part of the overstatement of broadband. For example, the issue crops the in Census blocks near to a town that has cable broadband, and the FCC reporting system usually assumes that some homes past the end of the cable network can get fast broadband. The FCC has proposed to fix this by asking ISPs to draw polygons around customers, and if the ISPs serving towns do that right, this issue would disappear.

The much bigger problem in the FCC database come from ISPs that overstate broadband coverage, broadband speeds, or both.  I’ve seen entire counties where the FCC database claims broadband coverage that doesn’t exist.

Part of this problem is due to a poor interpretation of the FCC rules. A lot of ISPs interpret the FCC rules to  mean they should report the fastest speed they advertise instead of the fastest speed they can deliver. I’ve seen numerous places where the big telcos have claimed 15 Mbps or 25 Mbps download on DSL, when speed tests can’t find anybody in the area getting more than 5 Mbps download. I’ve looked at counties where WISPs claim speeds of 50 Mbps up to 300 Mbps when customers largely have speeds under 10 Mbps.

Even more aggrevating are ISPs that claim broadband coverage that doesn’t exist. For example, I’ve seen WISPs that claim coverage of an entire county when they are only located on one or two towers. But this isn’t done only by fixed wireless providers, and the FCC is finally talking about fining an ISP for faulty reporting.

The FCC is threatening to fine Barrier Communications Corp. from New York that markets under BarrierFree. In 2017 the ISP made big news when they falsely claimed that they were providing fiber broadband to 62 million customers that largely didn’t exist. The FCC went published an annual report to Congress that included the imaginary broadband, which led the agency to crow about the big nationwide improvement in broadband coverage. The FCC got egg on their face when the issue was brought to its attention, and the agency was forced to reissue the annual report to Congress. As part of that process, the FCC warned BarrierFree to cease the overreporting.

Apparently, the ISP is at it again because the FCC is now threatening a fine of $164,000 for BarrierFree for continued overreporting. The FCC says that’s the maximum penalty allowed by law. There were supposedly substantial overreporting in both the September 2019 and March 2020 data. To the best of my knowledge this would be the first fine due against an ISP due to false reporting in the 477 process. The FCC has threatened fines against Verizon and a few other ISPs for falsely reporting rural 4G cellular coverage, but I’m not aware of any fines being levied.

The idea of levying fines against ISPs for blatant broadband overreporting is long overdue. There can be huge consequences when ISPs can freely claim broadband coverage that doesn’t exist. The biggest current consequence of such overreporting is that it can block eligibility for grants. The FCC used the faulty 477 data when determining the areas that are eligible for the $16.4 billion in RDOF grants that will be awarded in October. I know of counties where no RDOF grants are being offered due to the FCC data falsely showing counties to already have adequate broadband. There are many rural counties where at least some portion of the county has been incorrectly excluded from RDOF grant eligibility due to ISP overreporting of broadband speeds and coverage.

I have to believe the FCC when they report this is the biggest penalty allowed by law – but it’s not nearly high enough. How large should a fine be if an ISP keeps tens of millions of grant dollars from coming to a county? That question is even more pointed if the overreporting ISP gains a market advantage by keeping out grant funding. In my mind, if an ISP blatantly overreports broadband and keeps $10 million of grant funding from benefitting a county, then that ISP owes that community $10 million. I’m sure there are ISPs that are glad I’m not an FCC Commissioner.

Time to Stop Talking about Unserved and Underserved

I work with communities all of the time that want to know if they are unserved or underserved by broadband. I’ve started to tell them to toss away those two terms, which are not a good way to think about broadband today.

The first time I remember the use of these two terms was as part of the 2009 grant program created by the American Recovery & Reinvestment Act of 2009. The language that created those grants included language from Congress that defined the two terms. In that grant program, unserved meant any home or business that has a broadband speed of less than 10/1 Mbps. Underserved was defined as homes having speeds above 10/1 Mbps but slower than 25/3 Mbps.

As far as I can tell, these terms have never been defined outside of broadband grant programs. However, the terms began to be widely used when talking about broadband availability. A decade ago, communities all wanted to know if they were unserved or underserved.

The terms began to show up in other grant programs after 2009. For example, the FCC’s CAF II grant program in 2015 gave money to the largest telephone companies in the country and funded ‘unserved’ locations that had speeds less than 10/1 Mbps.

The same definition was used in the ReConnect grants created by Congress in 2018 and 2019. Those grants made money available to bring better broadband to areas that had to be at least 90% unserved, using the 10/1 Mbps definition.

The biggest FCC grant program of 2020 has scrapped the old definition of these terms. This $20.4 billion Rural Digital Opportunity Fund (RDOF) grant program is being made eligible to Census blocks that are “entirely unserved by voice and with broadband speeds of at least 25/3 Mbps”. That seemingly has redefined unserved to now mean 25/3 Mbps or slower broadband – at least for purposes of this federal grant program.

There are also states that have defined the two terms differently. For example, following is the official definition of broadband in Minnesota that is used when awarding broadband grants in the state:

An unserved area is an area of Minnesota in which households or businesses lack access to wire-line broadband service at speeds that meet the FCC threshold of 25 megabits per second download and 3 megabits per second upload. An underserved area is an area of Minnesota in which households or businesses do receive service at or above the FCC threshold but lack access to wire-line broadband service at speeds 100 megabits per second download and 20 megabits per second upload.

It must also be noted that there are states that define slower speeds as unserved. I’m aware of a few state broadband programs that still use 4/1 Mbps or 6/1 Mbps as the definition of unserved.

The main reason to scrap these terms is that they convey the idea that 25/3 Mbps broadband ought to be an acceptable target speeds for building new broadband. Urban America has moved far beyond the kinds of broadband speeds that are being discussed as acceptable for rural broadband. Cable companies now have minimum speeds that vary between 100 Mbps and 200 Mbps. Almost 18% of homes in the US now buy broadband provided over fiber. Cisco says the average achieved broadband speed in 2020 is in the range of 93 Mbps.

The time has come when we all need to refuse to talk about subsidizing broadband infrastructure that is obsolete before it’s constructed. We saw during the recent pandemic that homes need faster upload speeds in order to work or do schoolwork from home. We must refuse to accept new broadband construction that provides a 3 Mbps upload connection when something ten times faster than that would barely be acceptable.

Words have power, and the FCC still frames the national broadband discussions in terms of the ability to provide speeds of 25/3 Mbps. The FCC concentrated on 25/3 Mbps as the primary point of focus in its two recent FCC broadband reports to Congress. By sticking with discussions of 25/3 Mbps, the FCC is able to declare that a lot of the US has acceptable broadband. If the FCC used a more realistic definition of broadband, like the one used in Minnesota, then the many millions of homes that can’t buy 100/20 Mbps broadband would be properly defined as being underserved.

In the last few months, the FCC decided to allow slow technologies into the $16.4 billion RDOF grant program. For example, they’ve opened the door to telcos to bid to provide rural DSL that will supposedly offer 25/3 Mbps speeds. This is after the complete failure in the CAF II program where the big telcos largely failed to bring rural DSL speeds up to a paltry 10/1 Mbps.

It’s time to kill the terms unserved and underserved, and it’s time to stop defining connections of 10/1 Mbps or 25/3 Mbps as broadband. When urban residents can buy broadband with speeds of 100 Mbps or faster, a connection of 25/3 should not be referred to as broadband.

Charter Considering RDOF Grants

Charter let the world know that it plans to pursue RDOF grant funding in its most recent 8-K filing with the Securities and Exchange Commission. The company says that it might pursue grant funding to build to ‘multi-million passings’ involving ‘multi-billion investments’. It’s an interesting strategy. Charter already serves rural county seats and other towns across the country which puts them close to many of the areas where RDOF funding is available.

The RDOF grants cover the most rural and remote pockets of customers in the country. While there are some small rural towns included in the RDOF grant footprint, most of the customers covered by the grants are truly rural, consisting of farms and scattered homes in rural counties.

Charter will have to make some technology choices about how to serve rural America. The company can win the most money in the grant process if they file as a gigabit-speed provider. Gigabit speeds are available today with fiber technology and also with the hybrid fiber-coaxial networks operated by Charter and other cable companies. The RDOF grants can be awarded to technologies that support speeds over 25/3 Mbps. However, the grant includes incentives to favor ISPs willing to use faster technologies.

Charter could pursue slower technologies, like fixed wireless, but that funding is harder to win. To date, none of the big cable companies have ventured into wireless technology, other than a few trials. It’s always been a bit of a mystery why Charter and other cable companies haven’t erected wireless antennae at the fringes of their network to cheaply capture customers just out of reach of the HFC networks. My theory has always been that big cable companies are not nimble enough to handle drastically different technology platforms since all of their processes are designed for around coaxial and fiber technologies.

Charter is likely considering building fiber-to-the-home networks if they win RDOF grant funding. The hybrid fiber-coaxial technology that cable companies use in urban areas is poorly suited to serving scattered rural customers. The signal on an HFC network has to be boosted every two miles or so, and every time the signal is amplified some of the effective bandwidth carried on the network is lost. It would be a major challenge to maintain gigabit speeds required by the grants on a rural HFC network. It would only be possible with lots of fiber and tiny neighborhood nodes serving only a few homes. Charter has often cited the technology challenges of uses HFC technology in low-density areas as the reason it doesn’t expand outward from existing markets – and those reasons still hold true.

Charter claims to have expanded to add 1.5 million homes to its existing networks over the last two years, and in the 8-K filing says these are mostly rural customers. However, from what I’ve heard, most of these new Charter neighborhoods are in small subdivisions surrounding existing Charter markets. Charter has not been building rural networks to reach 1.5 million farms.

Charter and the other big cable companies have quietly introduced last-mile fiber technology into their networks. When cable companies build into new subdivisions today, they mostly do so with fiber technology.

It would be interesting if Charter’s strategy is to use the grant money to build fiber to farms. I know plenty of other ISPs considering the same business plan in places where there is enough RDOF grant funding available to make a business case.

There is no guarantee that Charter will ultimately win any grant funding and filing the grant short form on July 15 only gives Charter the option to participate in the auction in October. However, if the company bids in the auction, it will be good news for markets where Charter would build fiber technology. The big downside to the RDOF grant process is that in markets where no ISPs propose to build gigabit technology, the funding could end up going to satellite broadband providers – and there is no rural neighborhood that would prefer Viasat over Charter.

The FCC Finally Tackles New Mapping

Almost a year after having first approved the concept, the FCC recently started the process of developing new databases and maps. Last August the FCC approved the concept of having ISPs report broadband coverage by polygons, meaning that ISPs would draw lines around areas where they have active broadband customers or areas where ISPs can install a customer within a week of a request for service.

The FCC has been slow-rolling the process for the last year. They made announcements over a year ago that made rural America think that better maps are coming that will make it easier to correctly identify areas that have poor broadband. But last year’s big announcement only adopted the concept of better maps, and the recent vote took the first step towards implementing the concept.

Even now, it’s not clear that the FCC is ready to implement the new maps and the agency is still saying that it doesn’t have the money to change the ISP reporting process. This is hard to believe from an agency that is self-funded by fees and by spectrum auctions – the agency could have required the industry to pay for the new mapping at any time – but the FCC wants a specific allocation of funding from Congress. This feels like another delaying tactic.

There are good reasons for the FCC to not want better mapping. The FCC is required by law to take action to solve any big glaring difference between broadband availability in urban and rural areas. The agency has been doing everything possible over the last decade to not have to take such extraordinary steps.

Everybody involved in rural broadband knows that the current maps are dreadful. ISPs are free to claim broadband coverage and speeds in any manner they want, and from my experience, most rural counties have areas where broadband coverage or speeds are overstated. In many cases the overstatement of broadband is unbelievable. I recently was working with counties in Washington, New Mexico, and Minnesota where the FCC databases show 100% broadband coverage in rural areas when in real life there is almost zero broadband outside of towns.

This same mandate is the primary reason why the FCC doesn’t increase the definition of broadband, which has been set at 25/3 Mbps since 2015. Residents in well over half of the country, in cities and suburbs, have the option to buy broadband of 100 Mbps or faster. But the FCC sticks with the slower definition for rural America so that it doesn’t have to recognize that millions of rural homes, many in county seats in rural counties, don’t have broadband as good as in larger cities.

It is that same requirement to solve poor broadband that has driven the FCC to stick with mapping that FCC Commissioners all admit is inadequate. If the FCC fixes the maps, then many more millions of homes will become properly classified as not having broadband, and the FCC will be required to tackle the problem.

Unfortunately, I don’t hold out a lot of hope for the new broadband mapping process. The biggest reason that today’s mapping doesn’t work is that ISPs are not required to tell the truth. Drawing polygons might decrease some of the areas where the ISPs claim coverage that doesn’t exist – but there is nothing in the new rules that force ISPs to report honest speeds. A rural county is still going to have overstated broadband coverage if ISPs continue to claim imaginary speeds – sometimes amazingly exaggerated. One of the counties I recently was working with has two wireless ISPs that claim countywide coverage of 100 Mbps broadband when it looks like the ISPs don’t operate in the county. The new mapping is not going to fix anything if an ISP can draw false polygons or report imaginary speeds. The new maps aren’t going to stop the exaggeration of rural DSL speeds by the big telcos.

Unfortunately, there are huge negative repercussions for areas where the ISPs lie about broadband coverage. The best example is the current RDOF auction where the FCC is awarding $16.4 billion in grants. None of the areas where ISPs have lied about broadband coverage are included in that grant program and won’t be included in future grants as long as ISPs keep lying about broadband coverage.

Lets not forget that ISPs have motivation for lying to the FCC about broadband coverage. Keeping grants our of rural areas shields the ISPs already operating there and protects rural ISPs that are selling 2 Mbps broadband for $70 per month. If these areas get grants the ISPs lose their customers. The penalties for overstating broadband speeds and coverage ought to be immense. In my mind, if an ISP deprives a rural county from getting broadband grants, then the ISP ought to be liable for the lost grant funding. If the FCC was to assess huge penalties for cheating the maps would be cleaned up overnight without having to switch to the polygons.

As usual, the FCC is pursuing the wrong solution and I suspect they know so. The big problem with the current maps is that ISPs lie about their coverage areas and about the speeds that are being delivered to customers. The FCC has the ability to require truthfulness and to fine ISPs that don’t follow its rules. The FCC could have implemented penalties for false reporting any time in the last decade. Implementing new mapping without implementing penalties for lying is just kicking the can down the road for a few more years so that the FCC won’t have to address the real rural broadband shortfalls in the country.