Another BEAD Grant Complication

I’ve been thinking more about the NTIA’s definition of Reliable Broadband Service that was part of the recently issued Notice of Funding Opportunity (NOFO) for the $42.5 billion BEAD grants. That definition says that any grant cannot be used to overbuild a reliable broadband technology that meets or exceeds the 100/20 Mbps speed threshold of the grants. The NOFO said that the grants can’t be used where speeds are adequate for the following technologies: (i) fiber-optic technology; (ii) Cable Modem/ Hybrid fiber-coaxial technology; (iii) digital subscriber line (DSL) technology; or (iv) terrestrial fixed wireless technology utilizing entirely licensed spectrum or using a hybrid of licensed and unlicensed spectrum.

The policy behind this makes sense – the NTIA doesn’t think that valuable federal grant dollars should be used where adequate broadband technology is already in use. That would make them a good shepherd of the federal dollars.

But this particular definition is going to cause some complications the NTIA might not have considered. I’ve been running into rural FWA cellular wireless broadband in rural markets. So far, I’ve only encountered the new technology from T-Mobile and Verizon. But this will also be introduced by Dish Network. AT&T says it also has plans to roll out the faster cellular home product.

The FWA technology is enabled when a cellular company beefs up cell sites to provide home broadband in addition to cell phone service. This is being enabled by the introduction of new spectrum bands. For marketing purposes, the carriers are labeling these new bands as 5G, although the technology is still 4G LTE.

The cell carriers have been offering a weak version of home broadband for years, marketed as a hotspot or jetpack. But that technology shared the same frequencies used for cell phone service, and the broadband has been slow, weak, erratic, and expensive. However, putting home broadband onto new cellular spectrum changes the product drastically.

Recently I heard from a farmer who is getting 200 Mbps download broadband from a rural T-Mobile FWA connection – this farmer sits right next to a large cell tower. According to the NTIA, this farm should not receive any grant subsidy to bring fiber broadband with a grant. But as is usual, real life is a lot more complicated than that. This same farmer says that his nearest neighbors, only a little over a mile away, are seeing speeds significantly below 50 Mbps.

This makes sense because that’s how cellular technology works. Most people don’t realize how quickly broadband signal strength weakens with distance from a cell site. In cities, practically everybody is within half a mile or a mile from a cell site, so we never notice. But in rural areas, most people live too far from a cell site to get decent bandwidth from this technology. Consider the following heatmap of a real cell site.

The fastest broadband speeds would be within a few thousand feet, like with the farmer. The area that might get 100 Mbps broadband is in the orange and yellow areas on the map. The speeds in the green areas are where speeds fall below 100 Mbps, and by the time the broadband signal reaches the light blue areas the speeds are almost non-existent. The purple areas show where a voice signal might carry, but only unreliably.

What does this mean for the BEAD grants? As T-Mobile and the other cell carriers start updating rural cell sites they are going to be putting heatmaps like the one above into the FCC mapping system. It’s worth noting that most cell sites don’t create a roughly symmetrical coverage pattern because the wireless signal gets disrupted by any obstacles in the environment, even small rolling hills. It’s also worth noting that cellular coverage is dynamic and changes with temperature, precipitation, and even wind.

Recognizing cellular broadband coverage (licensed) as reliable broadband will have several consequences. First, this disrupts grant coverage areas since there will be cellular areas in every county that won’t be eligible for grants. This will create a swiss cheese phenomenon where there are areas where grants are allowed next to rural areas that are not allowed. That will complicate the engineering of a broadband solution for the areas that are left. This is the same thing the FCC did with the RDOF awards – chopped up potential grant areas into incoherent, illogical, and costly swiss cheese.

This also might mean this farmer won’t get fiber. His neighbors who can’t get good speeds on T-Mobile might be covered by a BEAD grant, but an ISP might be unwilling to fund the cost to reach this farmer if the cost is not covered by a grant.

I doubt that the NTIA thought of the practical consequences of the new definition, just like I can’t imagine the FCC had the slightest idea of the absolute mess they made with RDOF coverage areas. The only way to justify building a new network in a rural area, even with grants, is to cover large areas with one coherent network – not by building a network that has to somehow avoid RDOF areas and cell towers.

ISPs interested in BEAD awards are now going to have to wait until the new broadband maps come out to know what this might do to their grant plans. I’m thinking that, at least in some cases, this will be the final straw that breaks the camel’s back and convinces an ISPs to walk away and not even try.

The Upcoming Marketing Wars

In April 2019 my daughter and I were watching the NCAA final between Virginia and Texas Tech (and rooting for her school TTU). We noticed about halfway through the game that practically every ad we had seen was about 5G. Verizon was busy showing us speed tests from millimeter-wave cellphones receiving gigabit speeds. Not to be outdone, there were a ton of commercials also from T-Mobile and AT&T.

I found it extraordinary that the cellular carriers would spend that much money to buy premium-rate ads for a major sports event. We now know this was part of an all-out blitz on 5G to put pressure on Congress and the FCC to give them more spectrum.

I think that by this fall we’re going to wish we could go back to the 2019 level of ads because I’m predicting by this fall that all we’re going to hear about is cellular and broadband. A lot has changed in the industry since 2019. In more recent sporting events, I noticed that a lot of the ads were from the cable companies touting low-cost cellular service. The cable companies view bundling with cellular as one of the best ways to retain broadband customers – bundling means that when a customer drops broadband they will also lose cheap cellular service.

Dish network will be hitting the market sometime this summer, promising a rollout in a hundred smaller markets and 25 large markets in June. The company already owns Boost Mobile, but Dish is going to spend a lot of money to convince America to consider it for cellular service. This means mountains of advertising to make us aware that Dish is now a cellular company. Dish promises to be aggressive with pricing, so expect this advertising effort to set off a price war from the other carriers.

T-Mobile has already been blitzing the air this year in an attempt to sell its cellular broadband product. The company picked up 400,000 new cellular broadband customers in 2021, most at the end of the year. T-Mobile has a goal to pick up several million new broadband customers this year. T-Mobile’s ultimate goal is to reach 6 to 7 million FWA customers by 2025.

Verizon is also selling fixed wireless broadband and plans to hit the market hard later this summer. The company has a goal to reach 4 to 5 million FWA customers by 2025.

AT&T isn’t going to hit the national market with a push for FWA until some time in 2023, but there is no way that the company is going to sit by and watch the other cellular carriers lure away its customers. Expect AT&T to also be on the air nonstop.

It’s hard to think that national advertising this fall will be much more than cellular and political ads. I’m warning you now to find an outdoor hobby if you don’t want to hear any more about 5G.

We’re also going to see an unprecedented marketing blitz from cable companies and fiber overbuilders. All of the big telcos are furiously building fiber this year. There are aggressive plans to build fiber underway from AT&T, Verizon, Frontier, Windstream, Consolidated, Ziply, Lumen, and many smaller fiber builders. Much of the construction this year will be in cities and county seats, and that is going to mean a whole lot of advertising.

We’ve not seen a lot of national advertising about home broadband, and the marketing wars will likely be local. That’s going to translate to salespeople knocking on doors and a lot of mailers about fiber broadband.

There was some unexpected growth in cellular customers last year. For example, in the third quarter of last year, there was a net addition of 2.3 million new nationwide cellular customers. Industry analysts are chalking this up to businesses buying cell phones for remote employees and more students buying phones because of remote learning during the pandemic.

This kind of market growth is not sustainable since most people have cell phones. That means that the coming cellular marketing wars will largely be a zero-sum game. The only way for a cellular company to grow will be to take customers from another carrier. That’s going to lead to some real desperation – and even more ads. When you watch the first football game this fall, don’t say I didn’t warn you.

Stock Buybacks

All of the big ISPs brag to the public about how much they spend on their networks. There is barely a press release when they don’t remind the public how much money they are pouring back into making their networks better. Even at the local level, it’s rare to ask a big ISP to a local government meeting where they don’t open the conversation by reminding local politicians how much money they have spent in a given town or county.

The story is often just the opposite when problems with networks are pointed out, and communities ask the ISPs to beef up networks and improve service. That’s when we hear that money for capital spending is tight, but an ISP will make upgrades a priority in the future.

What’s never heard in conversation about capital spending is how much big ISPs spend to buy back shares of their own stock. This is a practice where big ISPs (and many other large corporations) use profits to purchase and retire stock. The transaction reduces the number of shares of outstanding stock and consequently nudges up the announced earnings per share. The first time I encountered the practice, I was flabbergasted.

Let’s consider the Comcast stock buybacks. Comcast paused stock buybacks in 2019, but in 2021 repurchased 73.2 million shares of stock for $4 billion. The company has over 4.5 billion outstanding shares of stock, so the buyback reduced the shares of outstanding stock by 1.6%. Comcast earnings for 2021 were announced as $3.06 per share for the year. Without the stock buyback, the earnings would have been $3.01.

The theory is this small nudge is good for investors. But it’s hard to envision a worse use for cash. Comcast could have gotten a far better return for investors from using that money to extend networks around their current markets, upgrading older networks to keep customers loyal, or marketing to add new customers. Those kinds of changes would result in long-term value gain for shareholders. Comcast recently announced that it is increasing the stock buyback in 2022 to $10 billion. To put that into perspective, Comcast’s capital spending for the last two years was $11.6 and $12.1 billion.

ISPs vary in the amount put towards stock buybacks according to their current cash situation and Board philosophy. Here are a few other stock buyback plans for large ISPs.

  • Charter has actively been buying back its stock. The company repurchased $15.4 billion of its own stock in 2021 and $11.2 billion in 2020.
  • T-Mobile has plans to really step up stock buybacks and plans to repurchase $60 billion of its own stock between 2023 and 2025.
  • AT&T is not currently buying back stock and only repurchased $104 million of stock in 2021.
  • Verizon told investors it would buy back 100 million shares of stock in 2022 – the stock is currently trading at $54 per share.
  • The one that is hardest to understand is Lumen. The company generated $700 million in free cash flow in 2021 and spent $1 billion to buy back its stock. That probably demonstrates the pressure that Wall Street is exerting for stock buybacks.

This makes me wonder if corporations that are engaging in stock buybacks should be allowed to get federal grants. For example, should we have allowed a company like Charter to get $1.2 billion in RDOF funding in 2020 at a time when the company was spending $11 billion to buy back its own stock? Did Charter really need a federal subsidy, or does grant funding just allow a company to even further increase stock buybacks? I don’t have an answer for that other than it just doesn’t feel right.

Fixed Cellular Broadband Performance

One of the first in-depth reviews I’ve found for T-Mobile’s fixed cellular broadband was published in the Verve. It’s not particularly flattering to T-Mobile, and this particular customer found the performance to be unreliable – fast sometimes and barely functioning at other times. But I’ve seen other T-Mobile customers raving about the speeds they are receiving.

We obviously can’t draw any conclusions based upon a single review by one customer, but his experience and the contrasting good reviews by others prompted me to talk about why performance on cellular broadband networks can vary so significantly.

I’ve always used the word wonky to describe cellular performance. It’s something I’ve tracked at my own house, and for years the reception of the cellular signal in my home office has varied hour-by-hour and day-by-day. This is a basic characteristic of cellular networks that you’ll never find the cellular carriers talking about or admitting.

The foremost issue with cellular signal strength is the distance of a customer from the local cellular tower. All wireless data transmissions weaken with distance. This is easy to understand. Wireless transmissions spread after they leave a transmitter. The traditional way we depict a wireless transmission shown in the diagram below demonstrates the spread. If two customers have the same receiver,  a customer who is closer to the tower will receive more data bits sooner than somebody who is further after the signal has spread. The customer in the bad review admitted he wasn’t super close to a cell tower, and somebody in his own neighborhood who lives closer to the cell site might have a stronger signal and a better opinion of the product.

There are other factors that create variability in a cellular signal. One is basic physics and the way radio waves behave outdoors. The cellular signal emanating from your local cell tower varies with the conditions in the atmosphere – the temperature, humidity, precipitation, and even wind. Things that stir up the air will affect the cellular signal. A wireless signal in the wild is unpredictable and variable.

Another issue is interference. Cellular companies that use licensed spectrum don’t want to talk about interference, but it exists everywhere. Some interference comes from natural sources like sunspots. But the biggest source of interference is the signal from other cell towers. Interference occurs any time there are multiple sources of the same frequency being used in the same area.

The customer in the review talks about the performance differing by the time of day. That is a phenomenon that can affect all broadband networks and is specific to the local robustness of the T-Mobile network. Performance drops when networks start getting too busy. Every DSL customer or cable company broadband customer has witnessed the network slowing at some times of the day. This can be caused by too many customers sharing the local network – in this case, the number of customers using a cell tower at the same time. The problem can also because caused by high regional usage if multiple cell towers share the same underlying broadband backbone.

The final issue that is somewhat unique to cellular networks is carrier priority. It’s highly likely that T-Mobile is giving first priority to customers using cell phones. That’s the company’s primary source of revenue, so cell phones get first dibs at the bandwidth. That means in busy times that the data left over for the fixed cellular customers might be greatly pinched. As T-Mobile and other carriers sell more of the fixed product, I predict the issue of having second priority will become a familiar phenomenon.

This blog is not intended to be a slam against fixed cellular broadband. The customer that wrote the review switched to cellular broadband to get a less expensive connection than from his cable company. This customer clearly bought into the T-Mobile advertising hype because a cellular broadband signal will never be as reliable as a signal delivered through wires.

We can’t forget the real promise of fixed cellular broadband – bringing broadband to folks who have no alternatives. Somebody that switched to T-Mobile from a 1 Mbps rural DSL product would have written a different and more glowing review of the same product. The bottom line is that anybody buying cellular broadband should recognize that it’s a wireless product – and that means the product comes with the quirks and limitations that are inherent with wireless broadband. I imagine that we’re going to continue to see bad reviews from customers who want to save money but still want the performance that comes with wired broadband. This is another reminder that it’s a mistake to judge a broadband product strictly by the download speed – a 100 Mbps cellular broadband product is not the same as a 100 Mbps cable company connection.

The FCC and Broadband Outages

Comcast had a widespread network outage in early November. The problems started in San Francisco and spread the next day to Chicago, Philadelphia, parts of New Jersey, and three other states. The outage knocked out broadband customers along with Comcast cellular customers. Comcast has never disclosed the reason for the outage and announced only that it was due to a ‘network issue’.

In 2020 CenturyLink suffered an even larger outage that not only knocked out CenturyLink customers but spread into other networks, including Amazon, Cloudflare, and Hulu. The problem was blamed on a software update that blocked the establishment of Border Gateway Protocol (BGP) sessions and impeded broadband traffic routing.

T-Mobile also had a major network outage in 2020 that knocked out broadband customers and also cut off some voice calls and most texting for nearly a whole day. T-Mobile blamed the issue on problems with a leased circuit that was compounded by two previously undetected flaws in third-party software. Reports at the time said that the electronics failed on a leased circuit, and then the backup circuit also failed. This then caused a cascade that brought down a large part of the T-Mobile network.

In 2019 CenturyLink had perhaps the largest outage that knocked out much of its network and customers that relied on the Level 3 network for transport. The company blamed the outage on a bad circuit card in Denver that somehow cascaded to bring down a large swath of fiber networks in the West, including numerous 911 centers.

The FCC investigates big outages from time to time and opened an inquiry in October 2020 in a few of the outages listed above. The FCC also recently adopted a Notice of Proposed Rulemaking to investigate the disaster resiliency plans of major telecom providers to take a harder look at how cellular and broadband carriers make repairs after big storms.

Interestingly, the FCC recently fined T-Mobile $19.5 million for the 2020 outage, but not the other carriers. This is not because T-Mobile’s outage was worse than the others. T-Mobile was fined because they are a cellular carrier and still fully regulated by the FCC. But Comcast and CenturyLink are ISPs and under different regulatory rules.

Oddly, the FCC has very little power to do anything about ISP network outages because the FCC has very little regulatory authority over ISPs in general. The FCC abrogated its authority to regulate ISPs when it killed Title II regulation and handed a few vestiges of regulation to the Federal Trade Commission. The FCC only regulates ISPs tangentially through the specific authority given directly by Congress. Any authority the FCC once had as a result of claiming Title II regulatory authority is gone.

The process has finally started to seat a fifth FCC Commissioner, and the industry speculates that one of the early acts with five Commissioners will be to reinstate Title II authority. This effort might be a little more streamlined in the past because federal courts have already ruled that the FCC can choose to regulate or not regulate broadband.

Unfortunately, any move to regulate ISPs and broadband will only last until we have another shift in administration that wants to kill regulation again. We have ended up in an absurd regulatory merry-go-round where regulating or not regulating ISPs depends on the party that controls the White House. It makes no sense to not regulate ISPs at a time when cable companies have nearly total monopoly power in some markets. Overall, broadband might be the most important industry in the country because it powers just about everything else. Local jurisdictions around the country regulate occupations like nail salon technicians, plumbers, and masseuses, and yet we can’t get our act together as a country to regulate an industry where a handful of giant ISPs openly manifest monopoly behavior.

There is a really simple fix for this. Congress could give authority to the FCC to regulate broadband so that future FCCs or administrations could not undo it. It would only take a simple law that says something like, “The FCC shall regulate the broadband industry for the benefit of the citizens of the United States.” Obviously, lawyers could word this to be more ironclad – but giving the FCC the authority to regulate broadband doesn’t have to be complicated.

Big Regional Network Outages

T-Mobile had a major network outage last week that cut off some voice calls and most texting for nearly a whole day. The company’s explanation of the outage was provided by Neville Ray, the president of technology.

The trigger event is known to be a leased fiber circuit failure from a third party provider in the Southeast. This is something that happens on every mobile network, so we’ve worked with our vendors to build redundancy and resiliency to make sure that these types of circuit failures don’t affect customers. This redundancy failed us and resulted in an overload situation that was then compounded by other factors. This overload resulted in an IP traffic storm that spread from the Southeast to create significant capacity issues across the IMS (IP multimedia Subsystem) core network that supports VoLTE calls.

In plain English, the electronics failed on a leased circuit, and then the back-up circuit also failed. This then caused a cascade that brought down a large part of the T-Mobile network.

You may recall that something similar happened to CenturyLink about two years ago. At the time the company blamed the outage on a bad circuit card in Denver that somehow cascaded to bring down a large swatch of fiber networks in the West, including numerous 911 centers. Since that outage, there have been numerous regional outages, which is one of the reasons that Project THOR recently launched in Colorado – the cities in that region could no longer tolerate the recurring multi-hour or even day-long regional network outages,

Having electronics fail is a somewhat common event. This is particularly true on circuits provided by the big carriers which tend to push the electronics to the max and keep equipment running to the last possible moment of its useful life. Anybody visiting a major telecom hub would likely be aghast at the age of some of the electronics still being used to transmit voice and data traffic.

I can recall two of my clients that have had similar experiences in the last few years. They had a leased circuit fail and then also saw the redundant path fail as well. In both cases, it turns out that the culprit was the provider of the leased circuits, which did not provide true redundancy. Although my clients had paid for redundancy, the carrier had sold them primary and backup circuits that shared some of the same electronics at ley points in the network – and when those key points failed their whole network went down.

However, what is unusual about the two big carrier outages is that the outages somehow cascaded into big regional outages. That was largely unheard of a decade ago. This reminds more of what we saw in the past in the power grid, when power outages in one town could cascade over large areas. The power companies have been trying to remedy this situation by breaking the power grid into smaller regional networks and putting in protection so that failures can’t overwhelm the interfaces between regional networks. In essence, the power companies have been trying to introduce some of the good lessons learned over time by the big telecom companies.

But it seems that the big telecom carriers are going in the opposite direction. I talked to several retired telecom network engineers and they all made the same guess about why we are seeing big regional outages. The telecom network used to be comprised of hundreds of regional hubs. Each hub had its own staff and operations and it was physically impossible for a problem from one hub to somehow take down a neighboring hub. The worst that would happen is that routes between hubs could go dark, but the problem never moved past the original hub.

The big telcos have all had huge numbers of layoffs over the last decade, and those purges have emptied out the big companies of the technicians that built and understood the networks. Meanwhile, the companies are trying to find efficiencies to get by with smaller staffing. It appears that the efficiencies that have been found are to introduce network solutions that cover large areas or even the whole nation. This means that the identical software and technicians are now being used to control giant swaths of the network. This homogenization and central control of a network means that failure in any one place in the network might cascade into a larger problem if the centralized software and/or technicians react improperly to a local outage. It’s likely that the big outages we’re starting to routinely see are caused by a combination of the  failure of people and software systems.

A few decades ago we somewhat regular power outages that affected multiple states. At the prodding of the government, the power companies undertook a nationwide effort to stop cascading outages, and in doing so they effectively emulated the old telecom network world. They ended the ability for an electric grid to automatically interface with neighboring grids and the last major power outage that wasn’t due to weather happened in the west in 2011.

I’ve seen absolutely no regulatory recognition of the major telecom outages we’ve been seeing. Without the FCC pushing the big telcos, it’s highly likely nothing will change. It’s frustrating to watch the telecom networks deteriorate at the same time that electric companies got together and fixed their issues.

Can LTE Fixed Wireless Solve the Rural Digital Divide?

I’ve been working in rural counties all over the US and have found that a lot of rural homes are using a fixed 4G LTE wireless product for home broadband. All three big cellular companies have a fixed LTE product for the home. The product typically involves installing a small dish outside of a home that receives broadband using 4G LTE broadband from a nearby cell tower.

The big cellular companies have bombarded the press for the last several years touting how 5G cellular might solve rural broadband gaps. The way the wireless companies price and market these products is a precursor for what they will likely do with 5G (assuming 5G even comes to rural places). I haven’t looked into the LTE products in a while and so I researched the LTE broadband products intended as home broadband. I knew these products were expensive, but I had forgotten how stingy these plans are with broadband.

Verizon. Verizon’s hotspot product has four available pricing tiers based upon the monthly data allowance. The 10 GB plan is $60, the 20 GB plan is $90, the 30 GB plan is $120, and the 40 GB plan is $150. The real cost killer is that Verizon bills additional gigabits for $10 each.

Verizon says that broadband speeds average from 5 – 12 Mbps download and 2 – 5 Mbps upload. I recently talked to a customer using this plan who told me that when a customer doesn’t agree to pay the overage charges that Verizon throttles speeds to a crawl once the monthly data limit has been reached.

T-Mobile. T-Mobile has six hotspot pricing plans based upon the monthly data usage. The 2 GB plan is $10. The 6 GB plan is $25, the 10 GB plan is $40, the 14 GB plan is $55, the 18 GB plan is $70, and the 22 GB plan is $85. Each plan offers a $5 discount for customers who authorize autopay. The killer with this plan is that speeds revert to 3G speeds when the cap has been met. The plans also include unlimited texting.

It’s worth noting that T-Mobile will offer a plan that provides 100 GB of monthly data to qualified students for the next 5 years as one of the promises made to merge with Sprint. I haven’t seen the definition of eligible households, but the company estimated 10 million homes would be eligible.

AT&T. AT&T has two plans. In areas where AT&T is the incumbent telephone provider and accepted CAF II funding, the company decided to provide 4G LTE fixed cellular broadband to satisfy their CAF II requirements. The company had accepted $2.56 billion from the FCC’s Universal Service fund with payments spread over six years. That funding covered 1,117,806 rural homes, providing AT&T with a subsidy of $2,296 per home.

That CAF II product is priced at $50 per month and comes with a 250 GB data cap. AT&T says that speeds are at least 10/1 Mbps (since that was the FCC requirement). The killer with this plan is that customers pay $10 for each additional 50 GB block of data, and payments aren’t capped until a customer spends $200 extra.

Outside of the CAF II areas, AT&T has three hotspot plans. That includes 3 GB of data for $25, 10 GB of data for $50, and 18 GB of data for $75. Extra data ranges from $10 for 1 GB with the $25-dollar plan to $10 for 2 extra GBs with the $72 plan.

Do These Products Solve the Rural Digital Divide? I think not – the core hotspot products define the digital divide. Rural customers who have no other options are paying for some of the most expensive broadband in the world. You have to look at distressed third world countries to see similarly high prices per gigabyte. Recall in looking at these prices that these products are for home broadband – not for cellphones.

  • Verizon’s plans range from $3.75 to $6.00 per gigabyte. Additional gigabytes are $10 each.
  • T-Mobile data prices range from $3.86 to $5 per gigabyte. After hitting the data cap, the company throttles customers rather than provide more expensive data.
  • AT&T hotspots are the most expensive and range from $4.16 to $8.22 per gigabyte. Extra gigabytes on AT&T range between $5 and $10 per gigabyte.
  • AT&T’s CAF II product is much more affordable. However, customers can still spend up to $250 per month. Additionally, AT&T charges $100 for installation, which is outrageous considering the company collected $2,296 from the FCC for each of the 1.1 million potential customers. The CAF II money had to have gone almost entirely to AT&T’s bottom line.

What is somewhat ironic is that the cellular companies don’t aggressively advertise the product in rural America, even at these incredibly high prices. I guess that the cellular carriers don’t want to sink any money into rural cell sites or pay for more backhaul, so they are reluctant to sell very much of these products in any one location.

T-Mobile Needs to Step Up

The T-Mobile Sprint merger became official on April 1. Since we are in the middle of the Covid-19 pandemic, the country needs T-Mobile to keep a few of the promises it made that were contingent upon the merger.

First, T-Mobile promised to offer wireless home broadband immediately after the merger for 50% of the people in the US, including many rural subscribers. T-Mobile envisions packaging excess cellular capacity as home broadband, at a reasonable price. The company does not envision putting fixed wireless antennas on homes like the products of AT&T and Verizon. The T-Mobile home product just requires a billing change where people pay less for cellular data usage inside their home. T-Mobile could effectuate this product almost immediately. This product could immediately help millions of homes that are struggling without affordable broadband right now.

The other T-Mobile promise addressed the digital divide and the company promised to serve 10 million homes that don’t have broadband today. This offer came with a promise to provide free devices to homes to receive the broadband. This is a digital divide product and could bring relief to poor households struggling with students trying to work from home. The product had a catch, in that annual usage was limited to 100 GB for free – but that’s enough usage to get students through the rest of this school year. As cellular plans in general go that’s not bad, meaning a monthly data allowance of over 8 GB per month in data allowance.

If T-Mobile is brave enough to launch these products immediately, they will reap mountains of marketing goodwill, which is exactly what the newly merged company needs. They will have created millions of fans who likely would become loyal to the company for helping them during this pandemic.

If T-Mobile doesn’t step up, ideally the FCC would turn the screws hard to make the company meet these promises now, rather than years from now. However, these plans involve broadband data and the feckless FCC has written themselves out of the broadband business. The FCC can huff and puff, but they no longer have the power to blow anybody’s house down.

Unfortunately, the history of the telecom industry is full of broken promises made as part of mergers. One of the biggest wireless mergers in the past was the 2005 merger of Sprint with Nextel. The companies had promised that the merger would allow them to bring Nextel’s popular ‘push to talk’ technology everywhere. The companies also promised they would blanket the country with cellular data, including rural America, using the 2.5 GHz spectrum. None of those promises ever came to pass – which was perhaps the first of many broken promises made for rural broadband. Like with most mergers, this merger also promised a lot of new jobs, but instead cut jobs.

There are plenty of other failed mergers. Consider the 2011 merger of Comcast with NBC Universal. Comcast promised it would offer affordably-priced standalone Internet everywhere – a product that was created but never marketed. Comcast promised to not discriminate against other programmers, but immediately disadvantaged Bloomberg by moving it to an obscure part of the channel lineup since it competed against the newly acquired MSNBC and CNBC. Comcast also promised to not discriminate against rival streaming services, but soon after the merger implemented its data caps, which applied to everybody’s video except Comcast’s.

One of the most blatant examples of carriers that tossed away pre-merger promises came after the 2006 merger of AT&T and BellSouth. Almost none of the promises made were kept. For example, AT&T promised to bring affordable broadband to all rural customers in the 22 states served by the two companies. Ask the folks in Mississippi and Alabama if this promise was fulfilled. AT&T has promised to build wireline networks in at least 30 cities outside its footprint and compete for voice and data – but this never happened. The companies promised to spend $16.5 billion to upgrade broadband in California and instead shut down expansion soon after the merger. The company claimed it would spend $1 billion wiring schools and libraries – another promise never met.

T-Mobile has an opportunity right not to become a legend in the industry by aggressively bringing affordable broadband to the students and workers who were sent home without broadband. This would distinguish them for the next decade as the carrier that met its promises and would likely propel them into the number one position in the industry. Let’s all hope they step up and do what they promised and do it quickly. Unfortunately, history has shown us that pre-merger promises are often forgotten before the ink is dry. But it would be so refreshing to see a company do what it promised, so we can hope.

FCC Reports on Poor Rural 4G Coverage

The FCC released a report in January that shows that the cellular networks of the major carriers underperform in rural America. This is no news to anybody who lives and works in a rural county. The tests allowed the FCC to conclude that the national coverage maps for 4G LTE are largely fiction in rural America.

The FCC conducted 25,000 tests in twelve states to verify the coverage maps of Verizon, T-Mobile, and US Cellular. The majority of tests were done in Arizona, New Mexico, Oklahoma, Vermont, Alabama and Montana. Speeds were tested from both stationary locations and in a moving vehicle. AT&T and Sprint weren’t tested because the maps they provided to the FCC showed only the combined upload and download speeds – something that is meaningless to test. The other three carriers reported what they claimed were actual upload and download speeds, shown separately.

The FCC undertook the testing in response to numerous complaints filed in the FCC’s docket for the Mobility Fund Phase II grants. The intention of this fund was to improve 4G coverage in rural areas with little or no cellular coverage. Smaller cellular carriers and the public complained to the FCC that the cellular data coverage claimed by the large cellular carriers was overstated. Small cellular carriers worried that the overstatements would stop them from asking for funding for areas that need upgrading. Local governments were worried that the overstated coverage meant that their areas wouldn’t see upgrades and they’d be doomed for another decade with poor cellular coverage.

The tests were conducted in areas where the carrier maps showed cellular data coverage. The results of the testing were rather bleak. 16% of all calls tried on Verizon were unable to make a data connection. The failures to connect were 23% on T-Mobile and 38% on US Cellular.

Overall, the three carriers met the FCC’s minimum requirement of 5 Mbps download for 4G only 62% of the time. That was 64% on Verizon, 63% on T-Mobile and only 45% for US Cellular. However, even within those reported results, the testers said that they experienced intermittent dropped calls on all three networks.

The FCC responded to these tests by revamping the reporting of cellular data speeds in the future, asking for far more granular speed data by location. The FCC also convened a group of experts to recommend to the FCC how to better test cellular speeds. Finally, the FCC issued an Enforcement Advisory on the accuracy of the cellular data on form 477. That’s a step short of issuing fines and likely will have little impact on the carriers. It doesn’t appear that any of them have pared back their national coverage maps that still claim coverage across most of rural America.

There are significant real-life implications of overstated cellular coverage maps. Just like with the RDOF grant program that will rely on faulty maps of landline broadband, poor maps of cellular coverage mean that many areas with overstated cellular coverage won’t be eligible for federal grants to help fix the problem.

The big downside is that many rural households have no 4G LTE coverage, or at best have slow and intermittent 4G data available. These are often the same areas where landline broadband is slow or non-existent. As hard as it is to live without good cellular coverage or good landline broadband, homes without both are cut off from the rest of the world. To make matters worse, there is still 3G coverage in a lot of rural America and all of the carrirs have plans to cut that dead over the next few years.

The FCC has revamped the Mobility Fund II grant program by doubling the amount of funding to $9 billion and renaming it as the 5G Fund. That’s a silly name because the goal of the program is to bring at least minimal 4G coverage to rural areas, not 5G. Remember that the grant program was originally aimed only at areas that showed no coverage by the carriers. Ideally the FCC would also  direct funding to the many areas where the carriers were lying about their coverage – but It’s doubtful that they have any meaningful maps of real 4G coverage.

Taking Advantage of the $9B 5G Fund

The FCC will be moving forward with the $9 billion 5G Fund – a new use of the Universal Service Fund – that will be providing money to expand cellular coverage to the many remote places in the US where 4G cell coverage is still spotty or nonexistent. There is a bit of urgency to this effort since the big cellular companies all want to shut down 3G within a year or two. This money will be made available to cellular carriers, but the funding still opens up possible benefits for other carriers and ISPs.

Some of this funding is likely to go towards extending fiber into rural places to reach cell towers, and that opens up the idea of fiber sharing. There are still a lot of places in the country that don’t have adequate fiber backhaul – the data pipes that bring traffic to and from the big hubs for the Internet. In the last six months alone I’ve worked with three different rural projects where lack of backhaul was a major issue. Nobody can consider building broadband networks in rural communities if the new networks can’t be connected to the web.

By definition, the 5G Fund is going to extend into rural places. If the FCC was maximizing the use of federal grant funds, they would demand that any fiber built with this new fund would be available to others at reasonable rates. This was one of the major provisions of the middle mile networks built a decade ago with stimulus funding. I know of many examples where those middle mile routes are providing backhaul today for rural fixed wireless and fiber networks. Unfortunately, I don’t see any such provisions being discussed in the 5G Fund – which is not surprising. I’m sure the big cellular companies have told the FCC that making them share fiber with others would be an inconvenience, so this idea doesn’t seem to be included in the 5G Fund plan.

I think there is a window of opportunity to partner with wireless carriers to build new fiber jointly. The cellular carriers can get their portion of new fiber funded from the 5G Fund and a partner can pick up new fiber at a fraction of the cost of building the route alone. This could be the simplest form of partnership where each party owns some pairs in a joint fiber.

This is worth considering for anybody already thinking about building rural fiber. The new routes don’t have to be backhaul fiber and could instead be a rural route that is part of a county-wide build-out or fiber being built by an electric cooperative. If somebody is considering building fiber into an area that has poor cellular coverage, the chances are that there will be 5G Fund money coming to that same area.

It has always been challenging to create these kinds of partnerships with AT&T and Verizon, although I am aware of some such partnerships. Both Sprint and T-Mobile have less rural coverage than the other carriers and might be more amenable to considering partnerships – but they might be consumed by the possibility of their merger.

There are a lot of other cellular carriers. The CTIA, the trade association for the larger cellular carriers, has thirty members that are facility-based cellular providers. The Competitive Carriers Association (CCA) has over one hundred members.

Ideally, a deal can be made to share fiber before the reverse auction for the 5G Fund. Any carrier that has a partner for a given route will have a bidding advantage since cost-sharing with a partner will lower the cost of building new fiber. It might be possible to find partnerships after the auction, but there could be restrictions on the newly built assets as part of the grants – we don’t know yet.

My recommendation is that if you are already planning to build rural fiber that you look around to see if one of the cellular carriers might be interested in serving the same area. Both parties can benefit through a cost-sharing partnership – but the real winners are rural customers that gain access to better cellular service and better broadband.