Improving Your Business

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.

Current News The Industry

Broadband in Canada

We 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.

The Industry

Farmers and Big Data

Probably the biggest change coming soon to crop farming is precision agriculture. This applies GPS and sensors to monitor field conditions like water, soil, nutrients, weeds, etc. to optimize the application of water, pesticides, and fertilizers in order to maximize the crop yields in different parts of the farm. Anybody who has ever farmed knows that fields are not uniform in nature and that the various factors that produce the best crops differ even within one field.

Precision agriculture is needed if we are to feed the growing world population, which is expected to reach almost 10 billion by 2050. As a planet we will need to get the best possible yield out of each field and farm. This might all have to happen against a back drop of climate change which is playing havoc with local weather conditions.

A number of farmers have started the process of gathering the raw data needed to understand their own farms and conditions. Farmers know the best and worst sections of their fields, but they do not understand the subtle differences between all of the acreage. In the past farmers haven’t known the specific yield differences between the various microcosms within their farm. But they are now able to gather the facts needed to know their land better. It’s a classic big data application that will recommend specific treatments for different parts of a field by sifting through and making sense of the large numbers of monitor readings.

In order to maximize precision agriculture new automated farm machinery will be needed to selectively treat different parts of the fields. The large farm equipment manufacturers expect that farming will be the first major application for drones of all types. They are developing both wheeled vehicles and aerial drone systems that can water or treat sections of the fields as needed.

This is a major challenge because farming has historically been a somewhat low technology business. While farms have employed expensive equipment, the thinking part of the business was always the responsibility of each farmer, and the farmers with the best knowledge and experience would typically out-produce their neighbors. But monitoring can level the playing field and dramatically increase yields for everybody.

There are several hurdles in implementing precision agriculture. First is access to the capital needed to buy the monitors and the equipment used to selectively treat fields. This need for capital is clearly going to favor large farms over small ones and will be yet one more factor leading to the consolidation of small farms into larger enterprises.

But the second need is broadband. Gathering all of the needed data, analyzing it, and turning it into workable solutions presupposes the ability to get data from the fields and sent to a supercomputer somewhere for analysis. And that process needs broadband. A farmer who is still stuck with dial-up or satellite broadband access is not going to have the bandwidth needed to properly gather and crunch the large amount of data needed to find the best solutions.

This doesn’t necessitate fiber to the fields because a lot of the data gathering can be done wirelessly. But it does require that farms are fed with high-speed Internet access and good wireless coverage, something that does require rural fiber. I published a blog a few weeks ago that outlined the availability of broadband on farms and it is not currently a pretty picture. Far too many farms are still stuck with dial-up, satellite, or very slow rural DSL.

Some farmers are lucky to live in areas where communications co-ops and rural telcos are bringing them good broadband, but most are in areas where there is neither broadband nor anybody currently planning on expanding broadband. At some point the need for farming broadband will percolate up as a national priority. Meanwhile, in every rural place I visit, the farmers are at the forefront of those asking for better broadband.


The Industry

Broadband and Farmers

The National Agricultural Statistics Service (NASS) just released their latest Computer Usage and Ownership report on Internet usage by American farmers. They have been doing this tracking for many years and looking through the statistics in this report is a good way to get an overall picture of rural broadband since the broadband that is available to farmers is the same that is available to many other rural people who don’t live in towns.

Since most farms are rural, the picture this report paints is not pretty and is much like what you would expect. Farmers are being forced to rely on the slowest forms of broadband due to where they live.

The report says that 70% of farms now have access to the Internet, up from 62% in 2011. It’s interesting to see how farms access the Internet now vs then:

‘                                   2011                2015

Dialup                           7%                   2%

DSL                              24%                 21%

Cable                             7%                   8%

Satellite                         9%                 15%

Wireless                       12%                 20%

Unknown type               2%                   5%

Total                             62%                 70%

What is obvious in this numbers is that dial-up has been abandoned in favor satellite and wireless access. The wireless category ought to be clarified in future surveys because this can consist of point-to-multipoint wireless provided by a WISP or cellular data from one of the big cellphone companies. There is a huge difference between those two kinds of access and in rural areas especially, cellular data is not broadband.

I would also love to see future reports of this type look at download speeds. The picture painted is not a good one in terms of probable speed. Rural DSL is often very slow since the bandwidth delivered by DSL drops with distance. Just getting back to a lot of farm lanes would be enough to eat much of the speed out of a DSL connection and it’s very unlikely that many of these farms are sitting next to a DSLAM cabinet. Rural DSL is very regularly reported to have speeds of 1 Mbps, and often considerably less – sometimes not much faster than dial-up.

I have talked about satellite data many times. Some of the newer satellites offer faster speeds and I’ve seen reports of speeds up to 12 Mbps from satellite broadband. But there are two big problems with satellite data. A functional problem is the latency, meaning that the signal takes a long time to get to the end user due to having been bounced to and from a satellite. This latency means that real-time functions are hard or impossible to do. So this kills applications like Skype, but more importantly it kills myriad applications that require you to maintain a connection. That could be all sorts of things like gaming, logging onto an email server, or trying to buy something from a web site. It can be aggravating when a satellite connection forces you to log into applications over and over again.

The other problem with satellite data is the tiny data caps. An end user can download some small amount of data per month and there are monthly caps of anywhere from 5 gigabits to 50 gigabits, with most caps on the low end of that scale. This makes a satellite connection unusable for many of the things the rest of us take for granted like watching video or distance learning.

And then there is cellular data where the monthly caps are even smaller and it’s hard to find a plan with more than 10 gigabits of monthly download. Not only that, but cellular data is incredibly expensive at around $10 per downloaded gigabit.

What this reports shows is that, overall, the condition of broadband on farms is miserable. Not surprisingly, a large percentage of farmers have the slowest forms of connectivity. And many of these farms are multi-million dollar enterprises that could greatly benefit from better broadband. I’ve been reading about a lot of research for implementing IoT solutions at farms to micro-monitor fields to improve crop yield, and such applications are going to require bandwidth. But I guess farmers are only going to get better broadband when we figure out a way to give all rural people better broadband.

Regulation - What is it Good For?

A Better Way to Fund USF

The Universal Service Fund (USF) is shifting its focus dramatically and this leads me to ask if there ought to be a more equitable way to fund this effort.

Historically, the USF was established to help pay for providing telephone service in high cost and remote parts of the country. Largely, it worked and telephone networks were expanded to places that certainly never would have gotten service without these funds. Then, over the years, Congress and the FCC expanded the role of the USF and it was also used to provide telecom services to schools and libraries and to bring telecom and data services to rural health care providers. And as each of these new functions was added the size of the fund grew to over $8 billion.

But now there are big shake-ups in all of the traditional functions of the USF. Subsidies for rural telephony are being phased-out and instead these subsidies are going to be used to promote rural broadband. A significant number of billions of dollars are going to be given to companies over the next seven years that are willing to build rural broadband to places that don’t have it today. The money provided for schools and libraries has been refocused on getting gigabit connections to schools and libraries.

And so the fund is becoming very much focused on bringing better broadband to places that need it. But surprisingly, this is still being funded almost entirely by a surcharge on interstate and international telecommunications services. And there are some real problems with using interstate long distance as the base for collecting the fee.

First, the revenues used for long distance have dropped annually since the turn of the century. Long distance has gotten so cheap that it’s not something that is even noticed much by consumers any more, except perhaps in some rural communities that still charge a lot for long distance. Long distance has become such a commodity that it is often built into the base rate for telephone service. About the cheapest charge I’ve seen for this is where Charter is selling telephone lines with unlimited long distance in some of their markets for $15 per month.

The same thing has happened to interstate transport for special access service. It was routine just a decade ago to charge $4,000 – $6,000 per month for a DS3, which is about 45 Mbps of dedicated bandwidth. But today you can buy a gigabit of bandwidth for a fraction of that cost – and buy it from somebody who is not selling it as special access and who does not add a fee for USF to that charge.

As the amount spent on interstate long distance has continued to drop, the USF assessments have climbed as a percentage of the interstate revenues. I have a few clients who now have a USF assessment of over 17% of their interstate billings. Years ago this started as a rather small fee, but it is a noticeable item on customers’ bills, particularly on buyers of special access.

So if the new data-centric USF is going to work, we need to somehow expand the assessment base. Interstate telco revenues are going to continue to drop. There are only a few places that the assessment base can be expanded, but they are major sources of new revenue. First, cell phones get some USF assessment today, but not as large of a share as landlines. There is also the possibility of expanding USF to include intrastate long distance, but that gets into a messy jurisdictional fight.

The biggest way to spread out the USF fee and make it more reasonable and more sustainable is to assess it on broadband services. This is now easier to do since broadband is covered under Title II. But Congress has real heartburn against ‘taxing the Internet’ which I can’t understand. The original push to not tax the Internet came during the late 1990s as the new broadband services were growing. At that time the political wisdom was that you don’t tax a burgeoning industry and give it a chance to get on its feet.

But there is probably not a more mature industry in the country now than broadband. As far as home utilities, it now comes in third in penetration rates behind electricity and water. Adding a 50 cent per month tax on broadband would not cause any great economic burdens and would spread out the funding to the USF fund. Besides, who better to tax to get broadband to rural places and schools than all of the people who already have broadband?

Unfortunately it will take an act of Congress to change the way that the USF is funded. That is likely only to happen as part of a larger new Telecom Act, something that is overdue. But I can’t see any realistic way that this is going to happen with our split government. Republicans are likely to use a new telecom act to try to defund network neutrality and to cut back on the FCC’s powers in general. And as long as there is a democratic president a new act is not going to get signed. So I guess USF funding reform goes on hold with many other telecom issues that we ought to be addressing.

Current News Regulation - What is it Good For?

The Homework Gap

A newly released Pew Research Center poll looks at the impact of household income on the percentage of homes with Internet connectivity. The study shows that homes with children and with annual household incomes under $50,000 have significantly lower broadband penetration than higher income homes.

FCC Jessica Rosenworcel issued a statement after the release of the poll and called this phenomenon the ‘homework gap”. There have been discussions since the 1990s about the digital divide; this survey shows that the divide is still there and that it correlates with household income.

This finding comes at a time when computers are routinely integrated into schools. Most classrooms and schools now have computers. Also, though I was unable to tie down any precise statistic, what I’ve read suggests that a majority of teachers assign homework that requires a computer. There is also a new way of teaching becoming vogue. Referred to as the ‘flipped classroom’, this teaching philosophy requires students to watch videos and other online content at home and be prepared to discuss the materials in class (as opposed to the traditional way of showing content in class).

As somebody who has been helping carriers sell into different kinds of neighborhoods for years, the statistics are not surprising to me. The Pew study shows that over 31% of households with children do not have high-speed Internet at home. This low-income group makes up about 40% of all households with school age children. This contrasts to only 8% of homes with kids who make over $50,000 that lack Internet access.

The study looked at a wide range of incomes and is one of the more complete surveys I’ve seen showing broadband penetration rates. For example, it shows that all households under $25,000 per year have a 60% penetration of broadband while households making more than $150,000 per year have a penetration of 97%.

One thing this study didn’t consider was the other digital divide, which is the urban/rural one. According to the FCC statistics, there are at least 14 million homes in the country that don’t have physical access to broadband. And as I’ve written a number of times, I think that number is too low and skewed due to the underlying statistics being self-reported by the large carriers.

The FCC is considering if it should expand its Lifeline program to include broadband coverage for low-income households. Today that fund will chop a few dollars per month off of a phone for low-income families. The Universal Service Fund spends approximately $1.5 B per year for the program.

I understand the sentiment behind this kind of assistance. But I would be surprised if a few dollars per month will make much impact on whether a household can afford to buy broadband. It’s going to take a whole lot more than $1.5 billion per year to solve the obviously large gap for student homes without broadband. And of course, such a program will do no good in those rural places where no broadband exists.

This is not going to be an easy issue to solve. To close this gap we have to find a way to get broadband into many millions more homes. But we also would need to make sure that those homes have working computers that are up to the tasks required by homework. I’ve seen numerous studies over the years that show that low-income households have an equally low penetration of home computers as they do broadband. There are many school systems today that give laptops to kids for the school year and perhaps that would at least solve half of the issue if this was more widespread. But until all kids in a school can use those laptops at home, the kids without internet access are going to fall behind those that have it.

Current News

FCC Approves New Spectrum for Public Use

On April 17 the FCC approved the use of a 150 MHz continuous band of spectrum that will be available for public use within the 3.5 MHz band, which they designated as Citizens Broadband Radio Service. This is not necessarily a replacement for traditional CB radio, but that is one of the possible uses of the spectrum.

The spectrum already has some existing users, mostly federal government use of radar and a few users who transmit to and from satellites. These existing users sit in the bands between 3550 and 3650 MHz. Additionally, this new offering will add a 50 MHz band up to 3700 MHz. There are also existing commercial users, including a handful of rural wireless ISPs using the higher end of the spectrum.

The FCC will be implementing a new way to share this spectrum among potential users. They want to implement a two-tiered approach to reduce interference with existing spectrum users. First, a radio that wants to use the spectrum must check with an FCC database to see if there is an existing user in their geographic neighborhood. Second, the radio must use what the FCC is calling ‘sensing technology’ that would first listen to be sure no one else is using the spectrum before transmitting. These two requirements differentiate this spectrum from other public bands used for WiFi where unlimited numbers of users are allowed to transmit simultaneously, and where interference is accepted.

The FCC hopes that this spectrum can support a wide variety of uses such as small cell deployment, fixed wireless broadband, and a category the FCC is calling general consumer use. The spectrum could be used to support CB-like radios, leading to the chosen name of the spectrum block. It’s anticipated that the spectrum could be used by wireless providers to extend LTE. There are already a few users that have been allowed to use the spectrum in rural markets to provide point-to-point data services.

The existing radar is mostly at naval bases near the coast. The FCC is not particularly worried about these bases being affected by the new users since they broadcast high-powered, strong signals. It’s likely the radar sites would overwhelm any attempted commercial use of the spectrum.

This announcement is part of the FCC’s response to widespread request for more public spectrum, and it furthers one of the goals set in the National Broadband Plan to have 500 MHz of spectrum available for wireless data. In many areas, the current public spectrum bands, such as those used for WiFi, are getting congested. At a time when there is a major proliferation of wireless devices and applications in the marketplace, the pressure is going to stay on the FCC to continue to find new slices of spectrum for public use.

There are several steps needed now that this order has been issued. First, somebody must be chosen to administer the geographic database of existing users. Verizon has already volunteered to take that role. Next, the FCC will be issuing a Further Notice of Proposed Rulemaking that will define the specific rules for using the spectrum. There is still a bit of a tug of war going on and the CTIA doesn’t want the spectrum to available to everybody, but the FCC seems somewhat determined on that point. Finally, vendors will need to get radios certified to meet the new requirements. Fortunately, many of them say that they now have radios that meet the expected final requirements.

This is a very interesting spectrum to consider for rural broadband deployment. The operating characteristics of the spectrum provide for long distance transmission and the deployment of significant bandwidth 5–8 miles from a transmitter. Further, it’s unlikely that in rural places there will be other users of the spectrum, particularly if using it for point-to-point connections to customers. Rule-compliant radios for the spectrum are expected to be affordable and this could be used to provide rural broadband links from 20–50 Mbps download. That is pretty good broadband for places that have no broadband alternatives today.

Current News Regulation - What is it Good For?

How Many Households Have Broadband? – Part I

FCC Chairman Wheeler made a speech last week about the lack of broadband competition in the country. As part of the speech he released four bar charts showing the percentage of households that have competitive alternatives at the download speeds of 4 Mbps, 10 Mbps, 25 Mbps and 50 Mbps. His conclusion was that a large portions of the households in the US can only buy broadband from one or two service providers. I was glad to hear him talking about this.

But unfortunately there is a lot of inaccuracy in the underlying data that he used to come to this conclusion, particularly at the charts showing the slower speeds. The data that the FCC relies on for measuring broadband is known as the National Broadband Map. While the data gathered for that effort results in a Map, it’s really a database, by census block, that shows the number of providers and the fastest data speed they offer in a given area.

A census block is the smallest area of population summarized by the US Census. It is generally bounded by streets and roads and will contain from 200 – 700 homes (with the more populated blocks generally just in urban areas with high-rise housing). A typical rural census block is going to have 200 – 400 homes. The National Broadband Map gathers data from carriers that describe the broadband services they offer in each census block. As it turns out, self-reporting by carriers is a big problem when it comes to the accuracy of the Map. In tomorrow’s blog I will show a real life example of how this affects new deployment of rural broadband.

Broadband service providers don’t generally track their network by census blocks, so part of the problem is that census block don’t match the physical way  that broadband networks are deployed in a rural area. Anybody who lives in rural America understands how utilities work there. In every small town there is a very definite line where utilities like City water and cable TV stop. Those utilities get to the edge of the area where people live and they stop. That doesn’t match up well with Census blocks that tend to extend outward from many small towns to include rural areas. Rural census blocks are not going to conveniently stop where the utilities stop.

There are three widely used rural broadband technologies – cable modem, DSL and fixed wireless. Let’s look briefly at how each of these match with the broadband mapping effort. Cable is the easiest because every cable network has a discrete boundary. There is some customer at the end of every cable route and the next house down the road cannot get cable. So it is not too likely that the cable companies are claiming to serve census blocks where they have no customers.

DSL and fixed wireless are a lot trickier. Both of these technologies share the characteristic that the bandwidth available with the technology drops quickly with distance. For example, DSL can transmit over a few miles of copper from the last DSLAM in the network. The household right next to that DSLAM can get the full speed offered by the specific brand of DSL while the last house at the end of the DSL signal gets only a small fraction of the speed, often with speeds that are not really any better than dial-up.

The same thing happens with fixed wireless. A WISP will install a transmitter on a tower or tall structure and the customers close to that tower will get decent broadband, and those transmitters tend to be installed in small towns where people live. But wireless broadband speeds drop rapidly with distance from the transmitter and if you go more than a few miles from any tower there is barely any bandwidth.

Both telcos and WISPs input their coverage areas into the National Broadband Map database. And in doing so, it appears that they claim broadband anywhere where they can provide service of any kind. But for DSL and fixed wireless, that service-of-any-kind area is much larger than the area where they can deliver actual broadband. Remember that broadband is currently defined as the ability to deliver 4 Mbps download. Because of the nature of their technologies, a lot of the people who can buy something from them will get a product that is slower than 4 Mbps, and at the outer ends of their network speeds are far slower than that.

I don’t necessarily want to say that the carriers inputting into the system are lying, because in a lot of cases customers can call and order broadband and a technician will show up and install a DSL modem or a wireless antenna. But if that customer is too far away from the network hub, then the product that gets delivered to them is not broadband. It is something slower than the FCC definition of broadband, but it is probably better than dial-up. But customers with slow connections can’t use the Internet to watch Netflix or do a lot of the basic things that require actual broadband. And as each year goes by, and as more and more video is built into everything we do on the Internet there are more and more web sites and services that out of reach for such customers.

But unfortunately, there are also areas where it appears that the carriers have declared that they offer broadband where there isn’t any. If you were to draw something like a 5-mile circle around every rural DSLAM and every WISP transmitter you will see the sort of broadband coverage that many rural carriers are claiming. But the reality is that broadband can only be delivered for 2-3 miles, which means that the actual broadband coverage area is maybe only a fourth of what is shown on the Map. If you go door-to-door and talk to people outside of rural towns you will find a very different story than what is shown on the National Broadband Map. Unfortunately, the Chairman’s numbers are distorted by these weaknesses and distortions underlying the Map. There are a lot more rural Americans without broadband than are counted in the Map and rural America has far fewer broadband options than what the Chairman’s charts claim.

Tomorrow, a real life example.

Technology The Industry

Changes to Unlicensed Spectrum

Earlier this year in Docket ET No. 13-49 the FCC made a number of changes the unlicensed 5 GHz band of unlicensed spectrum. The docket was intended to unify the rules for using the 5 GHz spectrum. The FCC had made this spectrum available over time in several different chunks and had set different rules for the use of each portion. The FCC was also concerned about interference with some parts of the spectrum with doppler radar and with several government uses of spectrum. Spectrum rules are complex and I don’t want to spend the blog describing the changes in detail. But in the end, the FCC made some changes that wireless ISPS (WISPs) claim are going to kill the spectrum for rural use.

Comments filed by WISPA, the national association for WISPs claim that the changes that the FCC is making to the 5725 – 5850 MHz band is going to devastate rural data delivery from WISPs. The FCC is mandating that new equipment going forward use lower power and also use better filters to reduce out-of-band emissions. And WISPA is correct about what that means. If you understand the physics of wireless spectrum, each of those changes is going to reduce both the distance and the bandwidth that can be achieved with this slice of spectrum. I didn’t get out my calculator and spend an hour doing the math, but WISPA’s claim that this is going to reduce the effective distance for the 5 GHz band to about 3 miles seems like a reasonable estimate, which is also supported by several manufacturers of the equipment.

Some background might be of use in this discussion. WISPs can use three different bands of spectrum for delivering wireless data – 900 MHz, 2.4 GHz and 5 GHz. The two lower bands generally get congested fairly easy because there are a lot of other commercial applications using them. Plus, those two spectrums can’t go very far and still deliver significant bandwidth. And so to the extent they use those spectrums, WISPs tend to use them for customers residing closer to their towers. They save the 5 GHz spectrum for customers who are farther away and they use it for backhaul between towers. The piece of spectrum in question can be used to deliver a few Mbps to a customer up to ten miles from a transmitter. If you are a rural customer, getting 2 – 4 Mbps from a WISP still beats the heck out of dial-up.

Customers closer to a WISP transmitter can get decent bandwidth. About the fastest speed I have ever witnessed from a WISP was 30 Mbps, but it’s much more typical for customers within a reasonable distance from a tower to get something like 10 Mbps. That is a decent bandwidth product in today’s rural environment, although one has to wonder what that is going to feel like a decade from now.

Readers of this blog probably know that I spent ten years living in the Virgin Islands and my data connection there came from a WISP. On thing I saw there is the short life span of the wireless CPE at the home. In the ten years I was there I had three different receivers installed (one at the end) which means that my CPE lasted around 5 years. And the Virgin Islands is not a harsh environment since it’s around 85 degrees every day, unlike a lot of the US which has both freezing winters and hot summers. So the average WISP will need to phase in the new CPE to all customers over the next five to seven years as the old customer CPE dies. And they will need to use the new equipment for new customers.

That will be devastating to a WISP business plan. The manufacturers say that the new receivers may cost as much as $300 more to comply with the filtering requirements. I take that estimate with a grain of salt, but no doubt the equipment is going to cost more. But the real issue is the reduced distance and reduced bandwidth. Many, but not all, WISPs operate on very tight margins. They don’t have a lot of cash reserves and they rely on cash flow from customers to eke out enough extra cash to keep growing. They basically grow their businesses over time by rolling profits back into the business.

If these changes mean that WISPs can’t serve customers more than 3 miles from an existing antenna, there is a good chance that a lot of them are going to fail. They will be faced with either building a lot of new antennas to create smaller 3-mile circles or else they will have to abandon customers more than three miles away.

Obviously spectrum is in the purview of the FCC and some of the reasons why they are changing this spectrum are surely valid. But in this case they created an entire industry that relied upon the higher power level of the gear to justify a business plan and now they want to take that away. This is not going to be a good change for rural customers since over time many of them are going to lose their only option for broadband. While it is important to be sensitive to interference issues, one has to wonder how much interference there is out in the farm areas where these networks have been deployed. This impacts of this change that WISPA is warning about will be a step backward for rural America and rural bandwidth.