ATSC 3.0 – More Spectrum for Broadband?

This past February the FCC approved the voluntary adoption of the new over-the-air standard for ATSC 3.0. for television stations. There will be around twenty different standards included within the final protocol that will define such things as better video and audio compression, picture improvement using high dynamic range (HDR), a wider range of colors, the ability to use immersive sound, better closed captioning, an advanced emergency alert system, better security through watermarking and fingerprinting, and the ability to integrate IP delivery.

The most interesting new feature of the new standard is that it allows programmers to tailor their TV transmission signal in numerous ways. The one that is of the most interest to the telecom world is that the standard will allow a TV broadcaster to compress the existing TV transmission into a tiny slice of the spectrum which would free up about 25 Mbps of wireless bandwidth per TV channel.

A TV station could use that extra frequency themselves or could sell it to others. Broadcasters could use the extra bandwidth in a number of ways. For example, it’s enough bandwidth to transmit their signal in 4K. Stations could also transmit their signal directly to cellphones and other mobile devices. TV stations could instead the extra bandwidth to enhance their transmissions by the addition of immersive sound and virtual reality. They could also use the extra bandwidth to transmit additional digital channels inside one slice of spectrum.

But my guess is that a lot of TV stations are going to lease the spectrum to others. This is some of the most desirable spectrum available. The VHF bands range from 30 MHz to 300 MHz and the UHF bands from 300 MHz to 3 GHz. The spectrum has the desirable characteristics of being able to travel for long distances and of penetrating easily into buildings – two characteristics that benefit TV or broadband.

The first broadcasters that have announced plans to implement ATSC 3.0 are Sinclair and Nexstar. Together they own stations in 97 markets, including 43 markets where both companies have stations. The two companies are also driving a consortium of broadcasters that includes Univision and Northwest Broadcasting. This spectrum consortium has the goal of being able to provide a nationwide bandwidth footprint, which they think is essential for maximizing the economic value of leasing the spectrum. But getting nationwide coverage is going to require adding a lot more TV stations to the consortium, which could be a big challenge.

All this new bandwidth is going to be attractive to wireless broadband providers. One has to think that the big cellular companies will be interested in the bandwidth. This also might be an opportunity for the new cellular players like Comcast and Charter to increase their spectrum footprint. But it could be used in other ways. For instance, this could be used by some new provider to communicate with vehicles or to monitor and interface with IoT devices.

The spectrum could provide a lot of additional bandwidth for rural broadband. It’s likely that in metropolitan areas that the extra bandwidth is going to get gobbled up to satisfy one or more of the uses listed above. But in rural areas this spectrum could be used to power point-to-multipoint radios and could add a huge amount of bandwidth to that effort. The channels are easily bonded together and it’s not hard to picture wireless broadband of a few hundred Mbps.

But this may never come to pass. Unlike WiFi, which is free, or 3.65 GHz, which can be cheaply licensed, this spectrum is likely to be costly. And one of the major benefits of the spectrum – the ability to travel for long distances – is also a detriment for many rural markets. Whoever is using this spectrum in urban areas is going to worry about interference from rural uses of the spectrum.

Of course, there are other long-term possibilities. As companies are able to upgrade to the new standard they will have essentially have reduced their need for spectrum. Since the TV stations were originally given this spectrum to transmit TV signals I can’t think of any reason that they should automatically be allowed to keep and financially benefit from the freed spectrum. They don’t really ‘own’ the spectrum – it was provided to them originally by the FCC to launch television technology. There are no other blocks or spectrum I can think of that are granted in perpetuity.

TV station owners like Sinclair and Nexstar are watering at the mouth over the huge potential windfall that has come their way. I hope, though that the FCC will eventually see this differently. One of the functions of the FCC is to equitably allocate spectrum to best meet the needs of all users of spectrum. If the TV stations keep the spectrum then the FCC will have ceded their spectrum management authority and it will be TV stations that determine the future spectrum winners and losers. That can’t be in the best interests of the country.

Municipal Broadband

One of the fights that I expect to see resurface this year is on the topic of whether local governments should be allowed to build fiber networks and become ISPs. The last FCC tackled this issue in a small way when they granted petitions by Chattanooga, TN and Wilson, NC to expand their broadband networks beyond their electric service territories and municipal boundaries. That ruling got reversed by a US district court and was not appealed by the FCC. But the ruling was of limited scope anyway and only addressed those two cities and didn’t set any precedent for other communities.

There are a lot of moving parts on this topic and it’s hard to know where this might go with the current FCC. This FCC is obviously pro-big ISP and companies like Comcast and AT&T have been staunch opponents of municipal broadband. But by the same token, this administration seems to lean towards states’ rights – and up until now municipal broadband has been regulated on a state-by-state basis.

Interestingly, at the local level municipal broadband has broad bipartisan support. In most communities almost all local politicians of both major parties support local broadband efforts. In my experience in working around the country, the only local political opponents of municipal broadband I have seen are those who are strong opponents of government spending money for anything but essential services. Generally local, state and even federal politicians support local broadband efforts in the communities they serve. I think the broad bipartisan appeal is due to politicians recognizing the strong public support for broadband and that almost every household wants broadband these days.

But there are 22 states with some restrictions on municipal broadband. These range from hurdles that can be overcome, like a referendum, up through states that have a total prohibition on municipal broadband. There has been a continual effort by ALEC (American Legislative Exchange Council) – funded by large corporations – to pass new state restrictions on broadband. But most recent efforts to increase prohibition of local broadband have been rebuffed, because few politicians want to go on the record against broadband. But I would not be surprised to see the big ISPs try to press their current advantage at the FCC and try to pass new national restrictions.

Today I see the municipal world dividing into two separate constituencies – urban and rural. Very few big cities have any desire to become an ISP. But they have legitimate concerns that urban broadband isn’t benefiting everybody. For example, San Francisco and some other cities are unhappy that apartment residents don’t have the same broadband opportunities and options as single family homes. And a lot of cities are still unhappy that after all of these years there is no solution for the digital divide. The FCC said last year that there are still around six million people in pockets of urban areas that don’t have access to broadband that meets the 25 Mbps download standard. But while these issues are viewed as a major problem in urban areas, I don’t see much appetite for big city governments tackling the cost of building broadband networks, which is particularly expensive in cities.

Rural America is a totally different story. We have come to the point where communities without good broadband really suffer. Broadband is not just about Netflix but is necessary to take part in the modern world. Local governments are finding that nobody wants to buy homes without broadband if there is a nearby community with broadband. Worse, communities are seeing businesses move away or bypass them when considering new locations. Lack of broadband puts school kids at a definite disadvantage and there are still a lot of households that drive kids daily to public hotspots just to do homework. And lack of broadband takes away all the opportunities for working at home – probably the biggest area of job growth in rural America.

I see small communities – even down to really small sizes like townships with 700 residents – trying to find ways to build a broadband network. I’ve read a few hundred RFPs from rural communities over the last few years, and probably not more than 5% want to become an ISP. But they will do so if they can’t find a commercial company willing to do it. Rural communities largely favor of public-private partnerships. More and more of them are willing to kick money into a building a network if an ISP will invest in their community and operate a broadband network.

I believe that within a decade we are going to start seeing broadband ‘deserts’ where communities without broadband start withering – just as happened in the past to communities that didn’t get electricity, or that were bypassed by railroads or interstate highways. It’s hard to think that a community today can keep their kids at home without broadband – and this is starting to scare local governments.

I just hope that the FCC doesn’t wade into this battle on the side of the big ISPs. Those big companies are not spending money in rural America – or if they are, it’s only when handed to them by the federal government. And even then they are just putting band-aids on rural broadband rather than building fast new networks. I have a feeling that many of the states that have restrictions on rural broadband are going to start having second thoughts about those restrictions when they realize that broadband is at or near the top of concerns of most of rural America.

There are companies building great rural broadband networks. The small telcos are almost all expanding their service areas to build broadband networks. And many of them are working with or partnering with local governments. But all of these small companies collectively can only solve a relatively small percentage of the rural broadband gap – together they do not have the capacity to borrow anything close to the billions needed to build broadband everywhere. Many rural electric cooperatives are now looking hard at the issue, and they could satisfy another slice of the rural market. But that’s still going to leave millions of rural residents with no broadband on their horizon. And I predict these folks are going to become a vocal constituency that politicians will be unable to ignore.

Michael O’Rielly’s Vision of Broadband Expansion

FCC_New_LogoA whole lot of the telecom industry is anxiously watching the news to see if there will be a federal program to expand rural broadband. We’ve already had new FCC Chairman Pai come out in favor of closing the digital divide and bringing broadband to everyone. And there are those in Congress pushing for money to expand rural broadband.

Last week FCC member Michael O’Rielly entered the fray with a blog post about funding rural broadband expansion. There are things in that blog I heartily agree with, and others that I disagree with (as you might expect).

O’Rielly warns that the government should not shovel money at a rural solution in such a way as to drastically overspend to get a solution. I completely agree and I wrote a series of blogs last year (1, 2, 3, and 4) that make the same point. The government wasted a lot of money when handing out stimulus grants in the past and I’d hate to see them make the same mistakes again. There is a long list of things that were done poorly in that grant program, but a lot of this was because it was cobbled together quickly. Hopefully, if we give out new federal money to help deploy broadband we can take the time to get it right.

O’Rielly suggests that any rural broadband expansion program be handled through the Universal Service Fund. No matter which part of government tackles this there will be a need to staff up to implement a major broadband expansion program. But I agree it makes more sense to hand this to an existing program rather than to hand it to somebody like the NTIA again.

He stated one thing that has me scratching my head. He stated that he has heard of ‘countless’ examples of where stimulus middle-mile fiber routes hurt commercial providers. I have hundreds of clients, most of them commercial ISPs, and I have never once heard anyone complain about this. Many of my clients instead are enjoying lower-cost rural transport on the BTOP networks. These complaints have to be coming from AT&T and Verizon who don’t like lower-cost alternatives to their massively overpriced special access. Special access transport is one of the biggest killers of rural business plans.

It’s clear that O’Rielly has a bias towards having commercial solutions for broadband rather than government ones. I don’t know anybody that disagrees with that concept. But by now it’s pretty obvious that the big commercial ISPs are never going to invest in rural America and it’s disingenuous to keep pretending that if government funds rural broadband that it will somehow harm them. The big ISPs have been working hard to withdraw from rural America and the providers that are left – the independent telcos, cooperatives, and rural governments – are the ones we should trust to deploy the broadband we know is needed.

I take major exception to his contention that “ultra-fast residential service is a novelty and good for marketing, but the tiny percentage of people using it cannot drive our policy decisions.” This statement has two glaring omissions. First, there are many households that need fast speeds today for home-based businesses, education, and reasons beyond just watching videos or playing games. When 10% of homes in the US don’t have broadband those homes are excluded from participating in the benefits of the digital economy. It’s hard to put a dollar value on what that is costing our economy – but it’s huge.

But second – and more importantly – this ignores the inevitable increase in demand over time. US households have been doubling their need for speed and the amount of total download every three years since 1980 – and there is no sign that growth in demand is over. This means any network that is just adequate today is going to feel obsolete within a decade – and this also means you don’t make policy for today’s demands, but for demands that we already know will be here in another decade. This is why there has to continue to be a focus on fiber first. As much as O’Rielly might hate some of the worst practices of the stimulus grants, his FCC approved the disastrous giveaway of billions to the big telcos to expand rural DSL in the CAF II program. We can’t take that path again.

Finally, O’Rielly says that the government should not be picking broadband winners and losers. That sounds like a great political sentiment, but if the government is going to supply funding to promote rural broadband that money has to go to somebody – and by definition that is picking winners. But O’Rielly does temper this statement by saying that funding shouldn’t just go to the ‘well-connected’. I hope he really means that and gets behind a plan that doesn’t just hand federal broadband funding to AT&T, Verizon and CenturyLink.

Improving Our Digital Infrastructure, Part 1

FCC_New_LogoLast week the FCC published a document that is their vision of a roadmap to improve the nation’s digital infrastructure. Today’s blog is going to look at the positive aspects of that roadmap and tomorrow I will look at some of the FCC’s ideas that I find to be troublesome.

I find this to be an interesting document for several reasons. First, it was published on Ajai Pai’s first day as FCC Chairman. It’s obvious that this paper has been under development for a while, but it clearly reflects the new Chairman’s views of the industry.

This paper is not so much a complete broadband plan as it is a roadmap of principles that the FCC supports to get broadband to rural areas. The FCC recognizes that they only have the power today to institute a few of the goals of this plan and that Congress would need to act to implement most of the suggestions in the plan.

The obviously good news about this document is that it clearly lays forward the principle that rural America deserves to have real broadband that meets or exceeds the FCC’s definition of 25 Mbps. This is a clear break from the FCC’s decision just a few years ago to fund the CAF II program which is spending $19 billion to fund rural broadband that only has to meet a 10/1 Mbps standard. One of my first thoughts in reading this document is that it seems likely that if this new roadmap is implemented that the FCC would have to cancel the remainder of the CAF II deployment. It’s really too bad the that FCC didn’t support real bandwidth for rural America before tossing away money on the CAF II plan.

The FCC plan looks at bringing broadband to the 14% of the households in the country that don’t have broadband today capable of delivering 25/3 Mbps. The FCC estimates that it will cost roughly $80 billion to bring broadband to these areas. Interestingly, they estimate that it would take only $40 billion to reach 12 out of the 14%, and that the last little sliver of the country would cost the remaining $40 billion. But the FCCs goal is to find a way to get broadband to all of these places (except I’m sure for the most remote of the remote places).

The paper calls for aggressive federal assistance in funding the rural broadband. They recognize that there has not been commercial deployment in these areas because commercial providers can’t justify the investments due to the high cost of deployment. And so they suggest that the government should provide grants, loans and loan guarantees that are aggressive enough to improve the returns for private investment. They suggest that grants could be as high as 80% of the cost of deployment in the most remote places.

The paper suggests that most of the areas will have enough customer revenue to support the properties without further federal support. In looking at some of the business plans I have built for rural counties I think that they are probably right. What sinks most rural business plans is not the ongoing maintenance costs, but rather the heavy burden of debt and a return on equity during the first 10 years of deployment. Rural fiber deployment will look like better financial opportunity if the government can find a way to provide enough up-front funding support. The FCC does recognize that most rural markets in the country will require ongoing federal support to be viable. They suggest it will require about $2 billion per year in ongoing support that will probably be similar to how the Universal Service Fund works today.

The roadmap document also suggests other financial incentives to fiber builders such as faster depreciation, tax credits, and changes to the IRS rules which require today that grant funding be considered as income. That provision stopped a number of companies from accepting the stimulus funding a few years ago and is a definite roadblock to accepting grant funding.

Overall these are great goals. It’s going to require significant fiber in rural areas to meet the stated speed goals. It’s great to see the FCC change direction and suggest that rural America deserves real broadband. I just wish they had adopted this policy a few years ago rather than supporting the CAF II program that is throwing money at propping up rural DSL.

The Plight of Pinetops, North Carolina

pinetopsnc-640x125Most of my readers are probably aware that last year the FCC voted to overturn the restrictions on municipal competition in Tennessee and North Carolina. Specifically, the FCC gave permission to the Electric Power Board of Chattanooga and to the City of Wilson, North Carolina to extend their fiber networks to provide broadband to nearby communities.

But both states appealed the FCC decision and this past August the courts overturned the FCC order in favor of the states. The FCC has decided to not appeal that court decision.

During the time when the FCC order was in effect, the City of Wilson extended their Greenlight fiber network and brought fiber to the tiny town of Pinetops, NC. This is a small town that had a population of 1,374 in the 2010 US Census. When the Courts overturned the FCC rules, Wilson’s City Attorney interpreted the reversal of the FCC ruling to mean that Wilson had no authority to serve broadband in Pinetops.

The local governments of both Wilson and Pinetops have appealed to Governor Pat McCrory to allow the broadband service to continue. The mayor of Pinetops reports that 31% of the households in his community are below the poverty line and that the network had brought the opportunity for the town to do better economically. The town has been hoping to grow by attracting new residents.

In the telecom world we are often faced with similar situations, where the industry will react to a regulatory ruling that might eventually be overturned. We just saw this recently as the FCC took actions related to net neutrality in 2016 at the same time that the net neutrality rules were under appeal. The large incumbent telcos and cable companies routinely appeal decisions they don’t like from the FCC, and it has become somewhat common practice for parties to act as if the new rules are in effect, even during the appeal process.

It seems that Chattanooga took a conservative approach and did not expand their network, waiting for a resolution of the Court appeal. But Wilson expanded their network when the FCC said they had the right to do so, with the uncomfortable result that we now have a  small town that has lost access to fast broadband. Customers have been disconnected as Wilson turned off the network.

One would hope that the powers-to-be can find a way to keep the broadband going in Pinetops. It’s very easy for lawmakers and regulators who live in urban areas with good broadband to fail to understand how hard it is for rural households to live without broadband. It’s particularly cruel to provide broadband to a small town like Pinetops and then withdraw it.

Wilson constructed the network using regulations that were in place at the time of the construction. It’s also true that today, after the appeal the same fiber construction would no longer be allowed.  But common sense would say to grandfather the broadband in Pinetops while restricting Wilson from constructing fiber to any additional communities.

Unfortunately, common sense often doesn’t prevail in these situations. I’m sure that AT&T and Comcast have put pressure on the state to rollback the broadband, even if those companies are not providing a decent alternative in Pinetops. But these big companies have taken the position that all competition is bad and they take extraordinary measures to stop competition when they can. I just hope that somebody in North Carolina uses some common sense and compassion to let the folks in Pinetops keep the broadband they were recently given. To not do so would be inhumane. It would be surreal if the people in Pinetops are denied broadband when the fiber is already on their streets or connected to their homes.

AT&T’s CAF II Plans

att-truckWe’ve known all along that AT&T was likely to use its cellular network to satisfy CAF II requirements to bring broadband to rural America. But we are now starting to see it happening. AT&T presented its plan recently in California and is probably in the process of doing so elsewhere.

In California AT&T proposes to provide fixed cellular broadband. Many of the rural areas affected by CAF II have not yet been upgraded to 4G LTE, and so AT&T’s first step will be to upgrade cell sites to the higher bandwidth capability. Once that is done, AT&T will offer fixed data to homes and businesses in the effective area using the LTE bandwidth. They will provide a receiver about the size of a dinner plate that will receive LTE data in the same way that cell phones do today. This wireless router will be connected to the home’s broadband network, probably a WiFi router provided by customers.

So it looks like AT&T will use the CAF II money to upgrade cell sites to LTE (something they were certainly going to do anyway). They also might build a few new rural cell sites and build some fiber to feed them. Finally, they will buy the customers the LTE receivers. My guess is that they are going to have a very hard time showing that they spent all of the CAF II money and so I expect some overinflated reporting of CAF II costs to the FCC. But these upgrades are far less costly than the rural DSL upgrades being contemplated by CenturyLink and Frontier.

AT&T promises that the bandwidth will meet the 10 Mbps down and 1 Mbps up speeds required by the FCC’s CAF II order. They also promise that there will be no monthly data caps smaller than 150 gigabits, also a threshold set by the CAF II rules. They have not yet specified specific prices, but say that prices will be at ‘market rate’ for broadband.

Even though we’ve seen this coming, this is a giant disappointment. Already today a 10/1 Mbps connection is inadequate for a large percentage of households. Cisco recently published statistics showing that the average home in the US today wants 24 Mbps to meet their needs, just a hair under the FCC definition of broadband. Cisco predicts that by 2020 that the average household demand is going to grow to 54 Mbps. That means the 10/1 speeds are going to feel really slow even by the end of the CAF II period ending in 2021.

These upgrades will improve broadband in the affected areas, but only by a small amount. Some residents in these areas today can get very slow DSL, under 1 Mbps. There are also numerous WISPs operating in the area offering speeds under 5 Mbps. And everybody always has the option of satellite broadband, which is universally disliked due to the latency and data caps.

The really bad news for these areas is that this upgrade is going to be in place for a long time. The FCC is probably not going to think about the CAF II areas again until well past the end of the CAF timeline, perhaps not until 2025. By 2025 the average household in the country is going to probably want a 100 Mbps connection if the current broadband growth trends continue. The folks in these areas will be just as far behind the rest of the country by then as they today. This whole CAF II program seems like a political sham that pretends to be bringing broadband to rural America, but it’s really nothing more than a temporary bandaid that only makes a marginal change in bandwidth delivery.

I also have no doubt that AT&T is going to use the CAF II upgrades as the excuse to walk away from the copper lines in the affected area. The FCC recently created rules for disconnecting copper, and once the CAF II wireless network is in place people are going to be forced onto the wireless network if they still want landline service.

This is all such a shame. We’ve seen in states like Minnesota that even modest government investments in broadband can bring amazing results. There are dozens of rural fiber networks being built in the state due to modest amounts of grant money from the state’s DEED grant program. The FCC could have used this CAF money to seed huge amounts of rural fiber construction – a solution that would have provided broadband for the next century. Instead they are helping AT&T pay for cellular upgrades that they would have done anyway and are abetting them in cutting down the rural copper networks. As I’ve said a number of times, I don’t know that I’ve ever seen a more wasteful use of federal money.

The Increasing Importance of Broadband

4cb1f2dc96040Anybody who does what I do for a living has all sorts of evidence that the demand for broadband has been growing. For example, I have worked with rural communities without broadband for many years and have found that the number of people in those communities who say they will buy broadband is growing larger every year. I now have clients who have built rural networks and who have gotten 75% to 80% of the customers in the market footprint. These kinds of take rates would have been extraordinary five years ago but are now becoming the expected.

Pew Research Center has done a new survey that tries to quantify the importance that people place on broadband. They gave this same survey in 2010 and the new survey lets us see how the response to questions about broadband have changed over time. Here are a few of the new results:

  • 52% of people feel that those without the Internet are at a major disadvantage for finding out about job opportunities or obtaining new career skills. Only 25% thought that this is not a disadvantage.
  • 46% thought those without broadband are at a major disadvantage for learning about or accessing government services.
  • 44% think lack of broadband is a disadvantage for learning new things that will improve or enrich people’s lives.
  • And probably most significant, 69% of respondents in general felt that people without internet access have a major disadvantage.

We can also see how those same three responses have changed just since 2010.

  • Those that feel that the Internet is needed for job skills has grown from 43% to 52%.
  • Those that feel that the Internet is needed for access government services has grown from 29% to 46%.
  • Those that feel that access to broadband enriches people’s lives has grown from 41% to 44%.
  • In 2010 56% of people overall thought not having access to the Internet was a disadvantage, and that is now 69%.

For every question studied the percentage of African-Americans, Hispanics and young adults (ages 18-29) that thought the Internet was vital was higher than other groups.

Interestingly, those without home broadband access at home were slightly less likely to think that not having broadband is a major disadvantage. For example, in the recent poll 65% of them thought not having broadband was a major disadvantage compared to 69% of all respondents. But this is also the group that saw the biggest change since 2010 when only 35% of non-broadband households thought that was a disadvantage.

These kinds of surveys are interesting, but of course there are a hundred other questions you’d like to see asked. But sticking to the same questions that were asked in 2010 show how much the importance of broadband has grown in just five years.

I see this shift every day. I’ve been helping communities look for broadband solutions for nearly 15 years. Years ago when a community wanted to talk about broadband there were generally two reasons for it. First was economic development, meaning either attracting new jobs to a community or keeping the existing jobs from leaving. Secondly, communities wanted to get some price competition and thought that the incumbent providers didn’t care about their communities.

But today the demand for better broadband comes from citizens demanding a solution from local politicians. People hear of other communities that have found a way to bring broadband and they want the same. People without broadband are starting to feel like they are being left behind – and to a great extent they are. This kind of survey just reaffirms what we already know.

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.

Paying for Rural Fiber

I am in an interesting place in the industry in that our firm works for both municipalities as well as lots of small commercial ISPs like telcos, cable companies and CLECs. One thing that I have noticed over the years is that there is a huge amount of distrust by commercial ISPs towards municipalities that explore building fiber optic networks.

And I think for the most part this distrust is misplaced. It’s been my experience that there are almost no cities that want to be an ISP. I think perhaps the idea that cities want to do this has been caused by the big telcos and cable companies spreading alarms about the cities that have done this. I think that most of the cities that have built fiber, except for a few like Chattanooga, would have much preferred to have a commercial company bring competitive broadband to their city.

It’s easy to forget about the fear and angst in rural America concerning broadband. Rural communities keep seeing other rural places that are getting gigabit broadband while they still have homes that don’t even have DSL. They look around and see little towns of their own size with broadband that are thriving and they realize that if their town stays on the wrong side of the digital divide that their long term viability is at risk.

Perhaps the best example of this that I’ve heard came from Hiawatha Broadband of Winona, Minnesota. This is a commercial overbuilder who built broadband networks to a number of small towns in their region. They have been at this for a while and what they observed in the last census is that every one of the towns with one of their broadband networks gained significant population while every town around them that doesn’t have broadband is losing population.

People need broadband and they are going to live where they can get it. New homes are going to be built where there is broadband. People want to work at home and can only do that where there is broadband. And people with kids want broadband so that their family is not at a disadvantage. Towns and rural areas without broadband understand these issues and they don’t want their area to dry up and disappear.

I remember a bunch of articles back in 2012 where somebody had estimated that it would cost $140 billion to build fiber everywhere in the country. I have no idea if that is a good estimate, but obviously it would cost a lot. What I think is important to understand is that even if all of the small telcos and cable companies and electric coops wanted to build fiber everywhere that the combined borrowing power of those companies in aggregate is not large enough to get the job done. As much as folks want to think that small carriers are the national solution, as a whole they could not borrow the needed billions.

What I am finding is that communities are starting to wake to the fact that they are going to have to contribute to financing fiber if they want broadband. The likelihood of an ISP just showing up and building fiber in most rural communities is very small. It’s hard to make a good business case with rural fiber, and even if you can make the case it’s exceedingly difficult to borrow the money.

So I think it’s time to get rid of the mistrust between municipalities and small ISPs and instead come together to get the job done. I’ve done a lot of financial analysis of rural America and fiber projects are a lot more feasible when part of the project is funded by municipal bonds and not just from bank debt.

I think the way to get this done is through the creation of public private partnerships (PPPs). There are already a number of examples of places where this has worked, but there needs to be a whole lot more PPPs created. If rural towns and counties really want to get broadband then they ought to be willing to put skin in the game to make it happen. It’s something that taxpayers want and rural surveys are generally overwhelmingly in favor of local government helping to solve their broadband problems.

There are some very specific steps that ought to be taken to put together a good PPP for rural fiber. It would probably take a dozen blogs to discuss this topic thoroughly. I may or may not do that, but meanwhile, if your community needs a broadband solution give me a yell. I can tell you how other communities have gotten this done and point you in the right direction towards finding a PPP broadband solution for your area.

Broadband in Canada

canada_flag-1920x1080We can get a bit myopic and tend to think that issues in the US are somehow different than the issues elsewhere. But Canada is having the same issues with broadband that we are experiencing in the US. There is considerable activity in Canada to bring gigabit speeds to its major cities. Like in the US, there are various incumbents building or upgrading networks in cities.

Bell Canada is spending over $20 billion to pass 2.2 million homes with fiber in Ontario and Quebec under the tradename of Gigabit Fibe (‘r’ intentionally not included). This will bring fiber to major cities like Montreal and Toronto. Unlike the pricing in the US, they will upgrade customers to a gigabit speed for an additional $10 per month.

Telus has announced it is going to spend several billion to bring fiber to Edmonton and Vancouver. Their plan is to extend fiber over a 5-year period but to eventually cover the cities.

Not to be outdone by Bell Canada, Rogers Communications, the cable incumbent, has announced plans to upgrade to gigabit speeds in Toronto and Atlantic Canada by the end of 2016.

But just like in the US, Canada has poor broadband outside of the cities. Their rural areas are much like the ones here with slow satellite or dial-up access. Last year the Canadian government announced a $305 million plan to bring better broadband over five years to about 280,000 rural households. This is a successor to the Broadband Canada Program which spent $225 million over three years to bring faster broadband to remote northern parts of the country.

These national programs are very analogous to the Connect America Fund in the US which is being used to upgrade rural areas to 10 Mbps download speeds. The funding in Canada is also being largely used to extend rural DSL or wireless and to bring some broadband to rural areas that have little or no broadband today.

Both countries are putting band-aids on rural broadband while large commercial companies are bringing gigabit speeds to the urban areas. While the rural areas in both countries are going to welcome getting faster broadband, especially if they never had it before, these areas will soon be further behind the cities in terms of the difference in broadband speeds than they were just a few years ago.

The governments of both countries face a major rural dilemma. It is going to cost many billions to bring real broadband to rural places. The governments in both countries are throwing federal money at old broadband technologies in order to take off some of the political heat from rural citizens. But by doing so they are doing a long-term disservice to rural areas.

In the US a lot of rural counties are willing to tackle bringing fiber to their areas. These efforts would be greatly improved if the federal government would have made the federal subsidies available for fiber instead of for tweaking obsolete DSL.

Federal and state governments in the US have further made it harder for rural business plans to succeed by funding broadband to ‘anchor institutions’ like schools and local governments. In a lot of rural America fiber has been built to those entities but to nobody else, thus removing those anchor revenues from any local effort to fund fiber projects.

And in both countries there is an additional swath of citizens who will soon be on the wrong side of the digital divide. While large cities are getting gigabit fiber, there is not nearly as much interest in bringing faster broadband to the smaller cities in either country. While smaller towns and cities in the US have somewhat okay broadband today, they are quickly falling behind the push for urban gigabit speeds. I don’t see a lot of business plans from anybody to fund and build fiber in places under 50,000 in population – which includes many county seats across the country.

I guess it’s not surprising to see Canada’s path so closely paralleling ours. Since they have fewer large cities it is likely that they will have widespread urban gigabit broadband before we do. But in both countries the gulf between urban and rural broadband, between the haves and have-nots, is growing rapidly.