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Broadband Access to Apartment Buildings

Seal_of_San_FranciscoMark Ferrel of the Board of Supervisors for San Francisco has proposed an ordinance that would require multi-tenant buildings to provide access to broadband providers. This would apply to both residential and commercial properties.

You can understand why the city wants to tackle this issue. The nationwide percentage of families living in apartments is around 35%, but in San Francisco apartments represent 63% of housing units. And the percentage of families living in apartments is high in a lot of big cities – in New York City it’s 68%; in Seattle it’s 54%; in Atlanta it’s 56%.

Cities understand that bringing fiber to their city is not enough if it only benefits single-family homes and standalone businesses. As I wrote in a recent blog there are millions of urban households that don’t have access to broadband, and a lot of these situations are due to apartment owners that have excluded broadband providers. It’s fairly normal for apartment owners to have made deals years ago with service providers to serve their buildings on a revenue-sharing basis. The landlord may or may not include the triple-play products in the rent, but they get a kick-back from the service providers as a reward for exclusive access.

A few years back the FCC put some restrictions on cable companies and ISPs from entering into certain kinds of exclusive arrangements with building owners. It was a fairly common practice, for example, for an ISP to agree to wire a building for free, but then retain ownership of all of the wiring. In these cases the owner gave up all rights to the cable company or telco and it’s those entities that keep out competition.

I think there is a general impression that the FCC order forbade the cable companies from entering into all exclusive arrangements. But unfortunately it did not and it instead bans only certain types of arrangements – but not all. So I would expect at some point for this ordinance to be challenged at the FCC when it bumps into arrangements that are still allowed. But I think cities expect legal challenges when they tackle new ground.

This is also not going to be as clean-cut as Mr. Ferrel is hoping for. The ordinance grants access to multi-tenant buildings to any state-licensed ISP. Unfortunately, in many buildings there are physical restrictions to allowing even a second ISP. There might be very limited space for an ISP to put a rack of equipment. There are often issues with having enough space in the risers (the conduits that carry wires between floors).

And many apartments can’t accommodate having ‘open access’ where any ISP can gain access to the wiring for any unit from some central location. Unfortunately many apartments are not wired with ‘home run’ drops that go from a core to each unit, but instead often share the same cabling for multiple units.

There are often limited options for getting new wires to apartments. I can picture some really messy situations if multiple ISPs are granted access to the same buildings and each tries to string cables through hallways or other public areas. You can picture the same sort of clutter that we often see on urban poles with too many wires crammed into limited space.

But even with all of these issues, Mr. Ferrel is on the right track. The fact is that many apartment dwellers are being denied access to fast Internet due to arrangements made by the building owners. This ordinance is the first attempt I’ve seen for solving the lack of broadband and choice for a large percentage of urban households.

The ordinance tries to be fair to apartment owners and allows them to expect reasonable compensation for access to their buildings. Obviously that concept will need work to put into practice, but the ordinance doesn’t open up buildings to anybody to build without rules.

There is one thing the ordinance doesn’t tackle. What if nobody wants access to an apartment? A significant portion of urban apartments without good broadband access are low-income housing and ISPs and incumbents have been accused of redlining such customers for years. So this kind of ordinance can’t solve everything – but it’s a start.

The Industry Uncategorized

The Urban Broadband Gap

It’s natural to think that all city-dwellers have great broadband options. But when you look closer you find out it’s often not really so. For various reasons there are sizable pockets of urban folks with gaping broadband needs.

Sometimes the broadband gap is just partial. I was just talking to a guy yesterday from Connecticut who lives in a neighborhood that largely commutes to New York City for work. These are rich neighborhoods of investment bankers, stockbrokers and other white collar households. They have cable modem service from Comcast and can get home broadband, but he tells me that cell phone coverage is largely non-existent. He can’t even use his cellphone outside of his house. There is a lot of talk about broadband migrating to wireless, but 5G broadband isn’t going to benefit people that can’t even get low-bandwidth cellular voice service.

I also have a good friend who lives in a multi-million dollar home in Potomac, Maryland – the wealthiest town in one of the wealthiest counties in the country. He has no landline broadband – no cable company, no Verizon FiOS, and not even any usable DSL. His part of the town has winding roads and sprawling lots and was built over time. I’m sure that it never met the cable company’s franchise density requirement of at least 15 or 20 homes per street mile of fiber – so it never got built. I am sure that most of the city has broadband, but even within the richest communities there are homes without.

You often see this problem just outside of city boundaries. Cities generally have franchise agreements that require the cable company to serve everybody, or almost everybody. But since counties rarely have these agreements the cable and phone companies are free to pick and choose who to serve outside of town. You will see some neighborhoods outside of a city with a cable company network while another similar neighborhood nearby goes without. It’s easy to find these pockets by looking for satellite TV dishes. The difference between the two neighborhoods is often due to nothing more to the whim of the telco and cable companies at the time of original construction.

The fault for not having broadband can’t always be laid on the cable company. Apartment owners and real estate developers for new neighborhoods are often at fault. For example there are many apartments around where the apartment owner made a deal years ago with a satellite TV providers to provide bulk cable TV service on a revenue sharing basis. In electing satellite TV the apartment owner excluded the cable company and today has no broadband.

Real estate developers often make the same bad choices. For instance some of hoped to provide broadband themselves but it never came to fruition. I’ve even seen some developments that just waited too long to invite in the cable company or telco and the service providers declined to build after the streets were paved. The National Broadband Map is a great resource for understanding local broadband coverage. In my own area there are two neighborhoods on the map that show no broadband. When I first saw the map I assumed these were parks, but there are homes in both of these areas. I don’t know why these areas are sitting without broadband, but it’s as likely to be a developer issue as a cable company issue.

There have also been several articles written recently that accuse the large cable companies and telcos of economic redlining. These companies may use some of the above excuses for not building to the poorer parts of an urban area, but overlaying broadband coverage and incomes often paints a startling picture. Since deciding where a cable company expands is often at the discretion of local and regional staff it’s not hard to imagine bias entering the process.

I’ve seen estimates that between 6 and 8 million urban people don’t have broadband available. These have to be a mixture of the above situations – the neighborhoods are outside of a franchise area, or the developers or apartments owners didn’t allow ISPs in, or the ISPs are engaging in economic redlining. But for whatever the reasons this is a lot of people, especially when added to the 14 million rural citizens without broadband.

I spend a lot of my time working on the rural broadband gap, but I don’t see much concentrated effort looking at the urban gap. That’s probably because this gap is one where it’s one subdivision, one apartment building or one street at a time with surrounding households having broadband. It’s hard to cobble together a constituency of these folks and even harder to find an economic solution to fix the problem.

Technology The Industry

Starry Shooting for Wireless Last Mile

Chet Kanojia, the man behind Aereo, is back with another industry play. He has founded Starry, a company that promises to deliver very fast internet speeds – up to a gigabit – wirelessly. Where his last play took on cable TV competition, he is now going after broadband providers.

Starry intends to tackle this by combining multiple frequencies to provide a direct link between a customer and a tower. It’s a really intriguing idea, but I can think of a number of challenges the company has to overcome:

  • This is going to require a complicated antenna array capable of receiving a bunch of different frequencies. But so did Aereo, although this is lot more complicated.
  • The company says it will be using ‘millimeter’ frequencies and short frequencies don’t travel very far. The company says they will need to have towers that are no more than a kilometer apart, and to support this kind of bandwidth those towers will need to be fiber fed. That sounds like a challenge in a world where people fight against new towers. But this might work well in a downtown with plenty of highrises to use as transmitter locations. Starry says they are shooting to cover 20% of the public and that infers only bringing service to major metropolitan areas.
  • Those kinds of frequencies and bandwidth don’t travel well through walls or much of anything else. The Starry website shows their receiver will sit in a window. These kinds of frequencies will require a direct line-of-sight and in an urban area that can get problematic since it’s easy for a building to be in a radio ‘shadow’ if there is another building between it and the tower. Starry is going to rely on customer self-installation and I foresee a number of customers who go through the process only to find out that they can’t see the transmitter. Rooftop outdoor antennas would enable a lot more customers to get service, but would also require a fleet of technicians.
  • Distance really matters with very high frequencies and a customer close to a tower will be able to get much faster speeds than one only a relatively short distance further away (like a quarter-mile).

This is obviously only an urban solution because the network needs multiple fiber-fed transmitters. The first market is going to be Boston. The company says that they will sell broadband for significantly less than the competition but has not yet announced the pricing. The company will require customers to buy a $350 proprietary router that enables the technology. Their only product for now is broadband so this is going to be aimed at those who want a lot of speed and aren’t dependent on the cable company bundle for cable TV. If they can make this work they ought to get a lot of interest.

I saw a few other articles about Starry that worried that their would be regulatory pushback from the cable companies. But as long as Starry uses frequencies in ways that the FCC has approved, then there doesn’t seem to be any potential way to push back against this. Their biggest regulatory hurdle will be getting cities to agree to the many needed towers, but there are no state or federal rules that I can think of that can be used to stop such a wireless deployment. The country is already full of WISPs and they are relatively free to deploy wherever they want.

The company has some significant financial backers including FirstMark Capital and Barry Diller’s IAC, Tiger Global, KKR, HLVP and Quantum Strategic Partners. So certainly they have convinced those investors that the technology works. The concerns I listed above are mostly about deployment and if the company can find a make this easy to use for enough customers then they might have something.

Certainly nobody is going to be upset (other than the cable companies) to see another broadband competitor in urban markets. It’s something the country badly needs. We have entered an era where the big ISPs are competing on speed but not on price. In fact, the introduction of data caps is threatening to jack up the prices a lot more for large data users. It would be good to see a low cost alternative as a way to bring some price competition into the market.