Tag Archives: Verizon FiOS

The Cost of Overbuilding

Some big ISPs have big plans for more fiber expansion. I gleaned the following planned future fiber passings from various quotes from the ISPs in the second half of 2024. These ISPs have plans to build the following fiber passings by the end of 2029 or sooner.

  • AT&T – 21 million
  • T-Mobile/ Metronet – 3.5 million
  • T-Mobile/Lumos – 3.4 million
  • Frontier – 3 million
  • Brightspeed – 1.7 million
  • Verizon – 1.5 million
  • Cox – 1 million

These numbers don’t count the plans of numerous smaller fiber overbuilders that have aggressive expansion plans.

The magnitude of these numbers amaze me because of the history of fiber overbuilding. The two biggest overbuilders have been Verizon FiOS and AT&T. Both companies have always been extremely cost-conscious in deciding where to build fiber.

Verizon was famous for its discipline about where it built FiOS. The company clearly had an internal cost target, and the D.C. suburbs are a patchwork of neighboring subdivisions with and without FiOS that can only be explained by looking at the cost per passing to build the fiber.

AT&T has done the same. I’ve followed AT&T’s expansion in various communities, and the company has built fiber over the last five years where the cost to do so was the lowest. A lot of the AT&T expansion was done by overlashing fiber onto existing copper telephone wires.

A few of the companies on the list above are following that same model. It seems likely that as Frontier and Brightspeed extend fiber in the legacy telephone areas, they will first build the areas with the lowest cost. I will not be surprised to find in a few years that these companies have built only those parts of communities where the construction costs are the lowest. That kind of discipline is the best use of limited capital dollars. Cox and other cable companies have the same option to expand fiber by overlashing on existing cables.

The expansion plan by AT&T perplexes me. Jeff McElfresh, AT&T’s chief operating officer was quoted in Fierce Network in December saying that the company has 29 million fiber passings at the end of 2024 and plans to grow to 50 million by the end of 2029.

It seems likely to me that the 29 million existing fiber passings were mostly done in neighborhoods with the lowest costs in the AT&T footprint. In my own city I’ve driven around and looked at AT&T’s claimed fiber passings, and most are overlashed onto copper wires. I assume AT&T has been using an expansion metric that considers the availability of overlashing plus the density of homes.

Over the years I’ve heard many folks who believe that the big ISPs build strictly based on demographics – and perhaps that is the third part of the AT&T equation on where to build. But I see AT&T fiber in neighborhoods with huge homes as well those with small bungalows. At least in this city, it looks like construction cost is more important than demographics.

Every overbuilder has its own business model and a target construction cost. I know smaller overbuilders who say they can’t make a business case if construction costs are more than $3,000 per passing. For years, AT&T and Verizon touted overbuilding costs below $1,000 per passing.

It seems to me that for AT&T to meet its target of 50 million passings it is now willing to spend more per passing than in the past. Perhaps that willingness is based on the success the company has in converting customers to fiber in overbuilt neighborhoods. It also seems likely that the company is banking on the economy of scale savings from increasing the size of the fiber business. AT&T now has a new motivation, which is to cut folks off copper to cut down on maintenance and backoffice costs. Maybe the net savings from shutting down copper networks is the new factor in the AT&T metrics for where to build fiber.

Only AT&T knows the details behind its decision to expand rapidly. I find it interesting that the company is suddenly willing to build fiber in neighborhoods that were not in its plans just a few years ago.

Ten Years Ago

As a country we have a very short memory when it comes to broadband. Anybody in their late 40s or older clearly remembers twenty-five years ago when the predominant form of broadband was dial-up and we were seeing the first DSL and cable modem trials in the market. But I think most people have forgotten about the state of broadband just ten years ago.

I admit I have the same time bias. I was cleaning out some old bookmarks, and I ran across several articles from ten years that surprised me.  The big difference between 2014 and now is broadband speeds. Consider the following map that was published in the Washington Post in early 2014. This shows the average broadband download speed in the U.S. was 18.2 Mbps. The maps shows the parts of the country where speeds were faster or slower than average.

To put these speeds on this map into context, the FCC adopted the updated definition of broadband of 25/3 Mbps in 2015 – updated from 4/1 Mbps. At the time, there were critics who said that 25/3 Mbps was a ridiculously high definition, which can be understood when seeing the large parts of the country on this map where average speeds were under 10 Mbps. The map is an interesting way to see where fiber had already been widely built in 2014, mostly in Verizon FiOS markets in the Northeast and some of the PUDs in Washington. Many other smaller areas had fiber, but are not large enough to be seen on a map at this scale.

In 2014, the national broadband penetration rate was around 80% of households, up from 20% of homes ten years earlier. 2014 is the year when the 18-34 age group spent more time online than watching television (the first this had ever happened for any age group).

Video streaming was becoming a big deal, and Netflix had 48 million customers by the end of 2014. In looking back at blogs and articles, there was widespread complaints about pixelated video streams. Livestreaming was still in its infancy and the Superbowl was livestreamed in 2014 by NBC along with a Verizon mobile app.

Video conferencing was also in its infancy, and before 2014 most videoconferencing required specialized hardware. Skype became the predominant software-based videoconferencing platform, in 2014, but was mostly used for business meetings. Apple users had been using FaceTime for one-on-one video conferencing since 2010.

Ten years ago is also when the cable company first started to lose customers. The year ending March 31, 2013 was the first 12-month period where the big cable companies collectively lost net cable TV customers. At the end of 2013 there were over 8 million homes that had cut the cord, but the cable companies had continued to add new customers to replace those who were leaving.

Apple sold 40% of cellphones in 2014 and Samsung had a 21% market share. BlackBerry still held a 5% market share.

How many of you remember the broadband speed you were buying in 2014? In 2013 I was served by a WISP that delivered about 5 Mbps. In 2014 I moved and subscribed to Comcast, but I can’t recall the speed they provided – my fuzzy memory says it was 30 Mbps.

The bottom line from this look back is a recognition of the extraordinary strides we’ve made with broadband speeds in just ten years. Cable companies now routinely offer gigabit speeds and millions of new fiber passings are being built every year. FWA cellular is bringing pockets of 100+ Mbps all around the country. New fixed wireless radios now have big bandwidth capabilities. I don’t think anybody in 2014 could have predicted where we are today with broadband.

Broadband Customers 2Q 2023

Leichtman Research Group recently released broadband customer statistics for the end of the second quarter of 2023 for the largest cable and telephone companies. Leichtman compiles most of these numbers from the statistics provided to stockholders other than for Cox and Mediacom, which are estimated, and now reported together. Leichtman says this group of companies represents 96% of all US landline broadband customers.

The first quarter of the year shows a continuation of the trend where all of the growth in broadband is coming from T-Mobile and Verizon FWA fixed cellular wireless. Those two companies added 903,000 customers, while the rest of the ISPs collectively lost over 52,000 customers.

2Q 2023 1Q 2023 1Q Change % Change
Comcast 32,305,000 32,324,000 (19,000) -0.1%
Charter 30,586,000 30,509,000 77,000 0.3%
AT&T 15,304,000 15,345,000 (41,000) -0.3%
Verizon 7,562,000 7,528,000 34,000 0.5%
Cox & Mediacom 7,035,000 7,035,000 0 0.0%
Altice 4,576,100 4,612,700 (36,600) -0.8%
T-Mobile FWA 3,678,000 3,169,000 509,000 16.1%
Lumen 2,909,000 2,981,000 (72,000) -2.4%
Frontier 2,865,000 2,863,000 2,000 0.1%
Verizon FWA 2,260,000 1,866,000 394,000 21.1%
Windstream 1,175,000 1,175,000 0 0.0%
Cable ONE 1,057,900 1,063,000 (5,100) -0.5%
Breezeline 680,785 687,519 (6,734) -1.0%
TDS 523,600 515,400 8,200 1.6%
Consolidated 376,829 369,862 6,967 1.9%
Total 112,894,214 112,043,481 850,733 0.8%
Cable 76,240,785 76,231,219 9,566 0.0%
Telco 30,715,429 30,777,262 (61,833) -0.2%
FWA 5,938,000 5,035,000 903,000 17.9%

The telcos collectively lost almost 62,000 customers in the quarter despite gains from Verizon FiOS, TDS, and Consolidated of 49,000 customers for the quarter. The biggest loser was Lumen, losing 72,000 broadband customers.

The only cable company with positive growth was Charter – its strategy of expanding its footprint into rural areas is clearly paying off.

It’s hard to see from these numbers where the huge growth of FWA wireless broadband is coming from. Much of the FWA growth is coming in rural markets where the competition is fixed wireless and satellite service. But FWA pricing seems to be aimed squarely at competing with DSL and probably counts for the overall losses for AT&T and Lumen. Both companies are adding fiber customers and are losing DSL customers more quickly than indicated by the overall numbers. I’m sure AT&T hates the loss of DSL revenue, but competition from FWA makes it that much easier for the company to eventually walk away from rural copper.

 

Converged Networks

I’ve been reading and thinking about converged networks – networks that are enabled to tackle multiple market segments. The best example of this is the largest cable companies that are using their residential last-mile broadband networks to support the cellular business.

The cellular business is a perfect fit for a cable company. They already have fiber deep into every neighborhood, which makes it easy to strategically locate small cell sites without building additional fiber. The big cable companies have put a lot of effort into WiFi which can save money by capturing a lot of cellular backhaul traffic from customer phones.

Having the ability to leverage the existing network also gives cable companies a lot of flexibility. They can continue to buy wholesale cellular minutes in areas where the cell traffic volume is light and use their own cellular network where customer usage is high. This is a cost advantage over the cellular companies that must provide their networks everywhere.

It’s an interesting dynamic. I think the cable companies got into the cellular business as a way to increase customer stickiness – meaning making it harder for customers to leave them. The cable companies will only sell cellular to customers who buy their broadband, meaning that a customer that wants a new ISP must also change to a new cellular provider. But now that cable companies are gathering a mass of customers, I have to think they are now looking at cellular as a big profit opportunity.

To a lesser degree, large cellular companies are building a converged network when they are using excess capacity on the cellular network to provide FWA home broadband. This has obviously been a winning strategy in the last year when Verizon and T-Mobile were the only two ISPs with big growth.

But as I look at the long-term outlook for FWA, this doesn’t seem like as strong of a converged strategy as what the cable companies are doing. To me, the difference is in the capability of the two networks. A cable company’s last-mile network can absorb cellular backhaul from customers with barely a blip in network performance. But the same can’t be said for cell sites. It’s far easier for cell sites to reach capacity, and cellular companies have made it clear that they will prioritize cellular data over FWA broadband performance. Maybe cellular carriers can solve this problem by eventually fully implementing the 5G specifications. But for now, cable company networks can handle convergence much more easily than cellular networks.

I have been wondering why fiber providers have not made the same push for convergence. The one exception might be Verizon, which has said in recent years that it now considers all arms of its business when building fiber assets. In the past, the company treated its fiber Fios business, the cellular business, and the CLEC business as arms-length businesses. From what I can tell, Verizon is still not as converged into what the cable companies are heading for – but there might be a lot more of that going on behind the scenes that we don’t know about.

I’m surprised that nobody has tried to integrate the cellular business for small fiber providers. There is a pretty decent list of fiber providers today that have between 100,000 and 1 million customers – and most of them are growing rapidly. It would be a major challenge for a single ISP with a few hundred thousand customers to launch the same kind of MVNO cellular operation that has been done by Comcast and Charter. But it seems like there ought to be a business plan for fiber ISPs to collectively tackle the cellular business. A last-mile fiber company can bring all of the same benefits to an integrated cellular business as the cable companies and are only lacking economy of scale.

I can think of a few reasons nobody has made this work. Taking time to consider cellular is a major distraction for a fiber ISP that is building fiber passings as quickly as possible. There is also getting the many mid-sized fiber providers to trust each other enough to be partners. But at some point in the future, it’s hard to think that somebody won’t figure this out.

If fiber ISPs enter the cellular business, broadband becomes a truly converged market where cable companies, cellular companies, and independent fiber providers compete with the same suite of products. I know that’s what the public wants because it breaks some of the monopolies and increases choice. My crystal ball says we will get there – I’m just fuzzy about how long it will take.

Only Twenty Years

I’ve written several blogs that make the argument that we should only award broadband grants based on future-looking broadband demand. I think it is bad policy to provide federal grant funding for any technology that delivers speeds that are already slower than the speeds already available to most broadband customers in the country.

The current BEAD grants currently use a definition of 100/20 Mbps to define who households that aren’t considered to have broadband today. But inexplicably, the BEAD grants then allow grant winners to build technologies that deliver that same 100/20 Mbps speeds. The policymakers who designed the grants would allow federal funding to go to a new network that, by definition, sits at the nexus between served and unserved today. That is a bad policy for so many reasons that I don’t even know where to begin lambasting it.

One way to demonstrate the shortsightedness of that decision is a history lesson. Almost everybody in the industry tosses out a statistic that a fiber network built today should be good for at least thirty years. I think that numbers is incredibly low and that modern fiber ought to easily last for twice that time. But for the sake of argument, let’s accept a thirty-year life of fiber.

Just over twenty years ago, I lived inside the D.C. Beltway, and I was able to buy 1 Mbps DSL from Verizon or from a Comcast cable modem. I remember a lot of discussion at the time that there wouldn’t be a need for upgrades in broadband speeds for a while. The 1 Mbps speed from the telco and cable company was an 18-times increase in speed over dial-up, and that seemed to provide a future-proof cushion against homes needing more broadband. That conclusion was quickly shattered when AOL and other online content providers took advantage of the faster broadband speeds to flood the Internet with picture files that used all of the speed. It took only a few years for 1 Mbps per second to feel slow.

By 2004, I changed to a 6 Mbps download offering from Comcast – they never mentioned the upload speed. This was a great upgrade over the 1 Mbps DSL. Verizon made a huge leap forward in 2004 and introduced Verizon FiOS on fiber. That product didn’t make it to my neighborhood until 2006, at which time I bought a 30 Mbps symmetrical connection on fiber. In 2006 I was buying broadband that was thirty times faster than my DSL from 2000. Over time, the two ISPs got into a speed battle. Comcast had numerous upgrades that increased speeds to 12 Mbps, then 30 Mbps, 60 Mbps, 100 Mbps, 200 Mbps, and most recently 1.2 Gbps. Verizon always stayed a little ahead of cable download speeds and continued to offer much faster upload speeds.

The explosion of broadband demand after the introduction of new technology should be a lesson for us. An 18-time speed increase from dial-up to DSL seemed like a huge technology leap, but public demand for faster broadband quickly swamped that technology upgrade, and 1 Mbps DSL felt obsolete almost as soon as it was deployed. It seems that every time there has been a technology upgrade that the public found a way to use the greater capacity.

In 2010, Google rocked the Internet world by announcing gigabit speeds. That was a 33-time increase over the 30 Mbps download speeds offered at the time by the cable companies. The cable companies and telcos said at the time that nobody needed speeds that fast and that it was a marketing gimmick (but they all went furiously to work to match the faster fiber speeds).

I know homes and businesses today that are using most of the gigabit capacity. That is still a relatively small percentage of homes, but the number is growing. Over twenty years, the broadband use by the average home has skyrocketed, and the average U.S. home now uses almost 600 gigabytes of broadband per month – a number that would have been unthinkable in the early 2000s.

I look at this history, and I marvel that anybody would think that it’s wise to use federal funds to build a 100/20 Mbps network today. Already today, something like 80% of homes in the country can buy a gigabit broadband product. The latest OpenVault report says that over a quarter of homes are already subscribing to gigabit speeds. Why would we contemplate using federal grants to build a network with a tenth of the download capacity that is already available to most American homes today?

The answer is obvious. Choosing the technologies that are eligible for grant funding is a political decision, not a technical or economic one. There are vocal constituencies that want some of the federal grant money, and they have obviously convinced the folks who wrote the grant rules that they should have that chance. The biggest constituency lobbying for 100/20 Mbps was the cable companies, which feared that grants could be used to compete against their slow upload speeds. But just as cable companies responded to Verizon FiOS and Google Fiber, the cable companies are now planning for a huge leap upward in upload speeds. WISPs and Starlink also lobbied for the 100/20 Mbps grant threshold, although most WISPs seeking grant funding are now also claiming much faster speed capabilities.

If we learn anything from looking back twenty years, it’s that broadband demand will continue to grow, and that homes in twenty years will use an immensely greater amount of broadband than today. I can only groan and moan that the federal rules allow grants to be awarded to technologies that can deliver only 100/20 Mbps. But I hope that state Broadband Grant offices will ignore that measly, obsolete, politically-absurd option and only award grant funding to networks that might still be serving folks in twenty years.

Who Has the Fastest Broadband?

Ookla recently released a report for the second quarter that summarizes its findings on speed tests conducted throughout the US. The report was generated using the results from 85.1 million speed tests taken during the quarter at the speed test site operated by Ookla. This kind of summary is always interesting, but I’m not sure how useful the results are.

The report looks at both wireless and landline speeds. Ookla says that AT&T was the fastest of the four major wireless carriers in the first quarter, with a ‘speed score’ of 41.23, with Verizon the slowest with a speed score of 30.77. The speed score is a unique metric from Ookla that weights 90% of the download speed and 10% of the upload speed. The reported speeds also toss out the slowest and fastest speeds and concentrate on the median speed.

T-Mobile had the best average latency at 31 milliseconds with Sprint the slowest at 39 milliseconds. The most interesting wireless statistic in the report is called the ‘consistency score’. This is the measure of the percentage of the traffic from each wireless carrier that was at least 5 Mbps download and 1 Mbps upload. AT&T had the highest consistency score at 79.7% with Sprint at the bottom with 66.1%. This score implies that between 20% and 35% of cellular data connections were are at speeds under 5/1 Mbps.

The landline speed results used the same criteria for summarizing the results of the many speed tests. For example, Ookla used the ‘speed score’ that uses 90% of the download speed and 10% of the upload speed – and the results also throw out the slowest and fastest speeds. Verizon had the highest speed score at 117.1, with Comcast and Cox being the only two other ISPs with speed scores over 100. Charter achieved a speed score of 95, AT&T at 82.8, and CenturyLink at 36.1. The AT&T and CenturyLink scores are lower due to customers still using DSL.

Verizon had the best latency at 9 milliseconds, which is a good indication that a large percentage of their customers are using Verizon FiOS on fiber. AT&T and Sprint had the highest latency of the big ISPs at 18 and 22 milliseconds, indicating that the two companies still have a lot of customers on DSL.

The consistency score is more of a headscratcher for the landline ISPs. For example. Spectrum and Comcast had the highest consistency ratings at over 84%, meaning that only 16% of the speed tests on these companies didn’t meet the 25/3 Mbps landline target speed. However, other than perhaps a few grandfathered customers that are still being sold slow products, these companies don’t sell products that should fail that test.

This raises the question of what speed test results mean since there are factors that likely influence the results. For example, I would guess that a lot of customers take a speed test when they are experiencing a problem. I know that’s what prompts me to take speed tests. The other issue that might make Comcast or Charter test at slower than 100 Mbps download is customer WiFi connections. It’s hard to know how many people get slow readings due to poor WiFi. I again understand this issue first-hand. I have a 3-story narrow and long house. The broadband enters on the first floor at the front of the house and my office is at the top of the rear of the house, with some thick hundred-year-old walls in between. Even with an array of WiFi repeaters, the speed in my office varies between 35 and 45 Mbps download – about one-third of the speed delivered at the router. How can Ookla understand the context of a given speed test result? Maybe it doesn’t matter since all of the ISPs have customers with WiFi issues and maybe it averages out. I would think situations like mine are what drive the consistency score. These kinds of questions make it hard to make meaningful sense out of the Ookla results in the report.

Ookla also uses the median broadband speeds to rank the 100 cities with the fastest broadband and also ranks the states. As would be expected, the states in the northeast with a lot of Verizon Fios like New Jersey, Massachusetts, and Rhode Island top the list as having the fastest average broadband speeds. More interesting to me is the bottom of the list. Ookla says that the states with the slowest median broadband are Wyoming, Montana, Idaho, and Alaska. Several other entities that rank state broadband usually put West Virginia and New Mexico at the bottom, followed by Idaho and Arkansas. Those other rankings include an assessment that there are many homes in some states with little or no broadband options at home, while a ranking using speed tests only counts home with broadband.

Overall, this is an interesting way to look at broadband. States with median download speeds under 50 Mbps (6 states) certainly have a different broadband environment than states with the median broadband speeds over 90 Mbps (11 states). But there are places in the highest-ranked states with no broadband options and places in the states with the poorest broadband that are served by fiber.

AT&T’s Fiber Play

AT&T has quietly become a major player in the fiber-to-the-home market. It’s reported that AT&T added 1.1 million customers on fiber in 2019, bringing its base of homes on fiber to 3.1 million. This puts the company in clear second place for residential fiber behind Verizon’s FiOS deployment.

AT&T got prompted to build fiber due to an agreement with the government as part of the approval for the merger with DirecTV. The company agreed in the summer of 2015 to build fiber to pass 12.5 million homes within four years.

AT&T has been in the fiber business for many years. Like all of the big telcos, AT&T built fiber to large businesses over the last couple of decades. AT&T got dragged into the FTTH business in a few markets when it reacted to the Google Fiber overbuild in markets like Atlanta and the North Carolina research triangle. AT&T has been selectively bringing fiber to large apartment complexes for much of the last decade.

In the first few years of the mandated buildout, AT&T seemed to be only halfheartedly going along with the mandated expansion. They claimed to have passed millions of homes with fiber builds, but there was no press or chatter from customers having received AT&T fiber service. For the first few years after the mandate, AT&T was meeting its mandate by counting passed apartment complexes – many which were likely already within range of AT&T fiber.

But it looks like everything changed at AT&T a few years ago and fiber suddenly appeared in pockets of the many cities where AT&T is the incumbent telephone provider. There were several changes in the industry that likely prompted this turnaround at AT&T. First, they won the FirstNet contract to provide modern connectivity to all first responders nationwide. In many cases this requires building new fiber – financed by the federal government. Second, AT&T needs to connect to huge numbers of small cell sites – something that was not predicted in 2015.

It seems that AT&T management looked at those two opportunities and decided that they could best capitalize on the new fiber by adding residential and small businesses to the fiber network. That was a big change at AT&T. They had long refused to follow in the wake of Verizon and their FiOS network. They instead took the path of beefing up urban DSL with their U-verse business where they paired two copper wires to offer DSL speeds as fast as 48 Mbps. I think the company was likely surprised about how quickly that offering became obsolete as cable companies now routinely offer two to four times that speed.

For the past several years AT&T has been losing DSL customers in droves to the cable companies. For example, in the year ending in the third quarter of 2019, AT&T had lost a net of 123,000 broadband customers, even with the big gains during that period for fiber. The company will likely continue to lose DSL customers as copper networks age and the speeds fall further behind cable company offerings. AT&T has been petitioning the FCC to tear down copper wires, particularly in rural areas, further killing the DSL business.

AT&T’s new strategy for building fiber is interesting. They are only building FTTH in small pockets where they already have fiber. That fiber might be there to serve a large business, a school, or a cell tower. AT&T extends fiber for two to four blocks around these fiber hubs, only where construction costs look reasonable. AT&T has a big cost advantage of building fiber cheaply in areas where the company already has copper wires on poles – the new fiber is overlashed to the existing copper wires.

Late last year, AT&T announced they had met their government mandate and were taking a pause in building new fiber in neighborhoods. The company is instead focused in selling where it has fiber and has a goal of a 50% market share in those areas. That’s an aggressive goal when considering that Comcast and Charter are likely their most common competitor.

AT&T fiber must be considered by anybody building a new fiber network. If AT&T is already in the market, they will likely have sewn up small pockets of the community. It also wouldn’t be hard for AT&T to expand these small pockets to become larger, making them a real competitor to a fiber overbuilder. This will be an odd kind of competition where AT&T is on some blocks and not others – almost making an overbuilder have two marketing plans, for the neighborhoods with and without fiber.

Counting Gigabit Households

I ran across a website called the Gigabit Monitor that is tracking the population worldwide that has access to gigabit broadband. The website is sponsored by VIAVI Solutions, a manufacturer of network test equipment.

The website claims that in the US over 68.5 million people have access to gigabit broadband, or 21% of the population. That number gets sketchy when you look at the details. The claimed 68.5 million people includes 40.3 million served by fiber, 27.2 million served by cable company HFC networks, 822,000 served by cellular and 233,000 served by WiFi.

Each of those numbers is highly suspect. For example, the fiber numbers don’t include Verizon FiOS or the FiOS properties sold to Frontier. Technically that’s correct since most FiOS customers can buy maximum broadband speeds in the range of 800-900 Mbps. But there can’t be 40 million people other people outside of FiOS who can buy gigabit broadband from other fiber providers. I’m also puzzled by the cellular and WiFi categories and can’t imagine there is anybody that can buy gigabit products of either type.

VIAVI makes similar odd claims for the rest of the world. For example, they say that China has 61.5 million people that can get gigabit service. But that number includes 12.3 million on cellular and 6.2 million on WiFi.

Finally, the website lists the carriers that they believe offer gigabit speeds. I have numerous clients that own FTTH networks that are not listed, and I stopped counting when I counted 15 of my clients that are not on the list.

It’s clear this web site is flawed and doesn’t accurately count gigabit-capable people. However, it raises the question of how to count the number of people who have access to gigabit service. Unfortunately, the only way to do that today is by accepting claims by ISPs. We’ve already seen with the FCC broadband maps how unreliable the ISPs are when reporting broadband capabilities.

As I think about each broadband technology there are challenges in defining gigabit-capable customers. The Verizon situation is a great example. It’s not a gigabit product if an ISP caps broadband speeds at something lower than a gigabit – even if the technology can support a gigabit.

There are challenges in counting gigabit-capable customers on cable company networks as well. The cable companies are smart to market all of their products as ‘up to’ speeds because of the shared nature of their networks. The customers in a given neighborhood node share bandwidth and the speeds can drop when the network gets busy. Can you count a household as gigabit-capable if they can only get gigabit speeds at 4:00 AM but get something slower during the evening hours?

It’s going to get even harder to count gigabit capability when there are reliable cellular networks using millimeter wave spectrum. That spectrum is only going to able to achieve gigabit speeds outdoors when in direct line-of-site from a nearby cell site. Can you count a technology as gigabit-capable when the service only works outdoors and drops when walking into a building or walking a few hundred feet away from a cell site?

It’s also hard to know how to count apartment buildings. There are a few technologies being used today in the US that bring gigabit speeds to the front of an apartment building. However, by the time that the broadband suffers packet losses due to inside wiring and is diluted by sharing among multiple apartments, nobody gets a true gigabit product. But ISPs routinely count them as gigabit customers.

There is also the issue of how to not double-count households that can get gigabit speeds from multiple ISPs. There are urban markets with fiber providers like Google Fiber, Sonic, US Internet, EPB Chattanooga, and others where customers can buy gigabit broadband on fiber and also from the cable company. There are even a few lucky customers in places like Austin, Texas and the research triangle in North Carolina where some homes have three choices of gigabit networks after the telco (AT&T) also built fiber.

I’m not sure we need to put much energy into accurately counting gigabit-capable customers. I think everybody would agree an 850 to 950 Mbps connection on Verizon FiOS is blazingly fast. Certainly, a customer getting over 800 Mbps from a cable company has tremendous broadband capability. Technically such connections are not gigabit connections, but the difference between a gigabit connection and a near-gigabit connection for a household is so negligible as to not practically matter.

AT&T and Verizon Fiber

If you look at the annual reports or listen to the quarterly investor calls, you’d think that AT&T and Verizon’s entire future depends upon 5G. As I’ve written in several blogs, there doesn’t seem to be an immediate financial business case for 5G and the big carriers are going to have to figure out how to monetize 5G – something that’s going to take years. Meanwhile, both companies have been expanding their fiber footprints and aggressively adding fiber-based broadband customers.

According to the Leichtman Research Group, AT&T added only 34,000 net broadband customers in the first quarter of this year – not an impressive number when considering that they have 15.7 million broadband numbers. But the underlying story is more compelling. One the 1Q investor call, the company says they added 297,000 fiber customers during the first quarter, and the smaller net number recognizes the decline of DSL customers. The overall financial impact was a net gain of 8% for broadband revenues.

AT&T is starting to understand the dynamics of being a multimedia company in addition to being a wireless carrier and an ISP. According to John Stephens, the AT&T CFO, the company experiences little churn when they are able to sell fiber-based Internet, a video product and cellular service to a customer.

The company views its fiber business as a key part of its growth strategy. AT&T now passes over 20 million homes and businesses with fiber and is aggressively pushing fiber broadband. The company has also undergone an internal consolidation so that all fiber assets are available to every business unit. The company has been expanding its fiber footprint significantly for the last few years, but recently announced they are at the end of major fiber expansion. However, the company will continue to take advantage of the new fiber being built for the nationwide FirstNet network for first responders. In past years the company would have kept FirstNet fiber in its own silo and not gotten the full value out of the investment.

Verizon has a similar story. The company undertook an internal project they call One Fiber where every fiber asset of the company is made available to all Verizon business units. There were over a dozen Verizon business units with separate fiber networks in silos.

Verizon is currently taking advantage of the One Fiber plan for expanding its small cell site strategy. The company knows that small cell sites are vital for maintaining a quality cellular network and they are also still weighing how heavily to invest in 5G wireless loops that deliver wireless broadband in residential neighborhoods.

Verizon has also been quietly expanding its FiOS fiber footprint. The company has gotten regulatory approval to abandon the copper business in over 100 exchanges in the northeast where it operates FiOS. In those exchanges, the company will no longer connect customers to copper service and says they will eventually tear down the copper and become fully fiber-based. That strategy means filling in neighborhoods that were bypassed by FiOS when the network was first built 20 years ago.

Verizon is leading the pack in terms of new fiber construction. They say that are building over 1,000 route miles of fiber every month. This alone is having a big impact on the industry as everybody else is having a harder time locating fiber construction crews.

Verizon’s wireline revenues were down 4% in the first quarter of this year compared to 2018. The company expects to start benefitting from the aggressive fiber construction program and turn that trend around over the next few years. One of the most promising opportunities for the company is to start driving revenues in markets where it’s owned fiber but had never fully monetized the opportunity.

The main competitor for all of the fiber construction by both companies are the big cable companies. The big telcos have been losing broadband customers for years as the cable company broadband has been clobbering DSL. The two telcos are counting on their fiber products to be a fierce competitor to cable company broadband and the companies hope to start recapturing their lost market share. As an outsider I’ve wondered for years why they didn’t do this, and the easy answer was that both companies sunk most of their capital investments into wireless. Now they are seeing that 5G wireless needs fiber, and both companies have decided to capitalize on the new fiber by also selling landline broadband. It’s going to be an interesting battle to watch since both telcos still face the loss of huge numbers of DSL customers – but they are counting on fiber to position them well for the decades to come.

The Fastest and Slowest Internet in the US

The web site HighSpeedInternet.com has calculated and ranked the average Internet speeds by state. The site offers a speed test and then connects visitors to the web pages for the various ISPs in each zip code in the country. I have to imagine the site makes a commission for broadband customers that subscribe through their links.

Not surprisingly, the east coast states with Verizon FiOS ranked at the top of the list for Internet speeds since many customers in those states have the choice between a fiber network and a big cable company network.

For example, Maryland was top on the list with an average speed of 65 Mbps, as measured by the site’s speed tests. This was followed by New Jersey at 59.6 Mbps, Delaware at 59.1 Mbps, Rhode Island at 56.8 Mbps and Virginia at 56 Mbps.

Even though they are at the top of the list, Maryland is like most states and there are still rural areas of the state with slow or non-existent broadband. The average speed test results are the aggregation of all of the various kinds of broadband customers in the state:

  • Customers with fast Verizon FiOS products
  • Customers with fast broadband from Comcast, the largest ISP in the state
  • Customers that have elected slower, but less expensive DSL options
  • Rural customers with inferior broadband connections

Considering all of the types of customers in the state, an average speed test result of 65 Mbps is impressive. This means that a lot of households in the state have speeds of 65 Mbps or faster. That’s not a surprise considering that both Verizon FiOS and Comcast have base product speeds considerably faster than 65 Mbps. If I was a Maryland politician, I’d be more interested in the distribution curve making up this average. I’d want to know how many speed tests were done by households getting only a few Mbps speeds. I’d want to know how many gigabit homes were in the mix – gigabit is so much faster than the other broadband products that it pulls up the average speed.

I’d also be interested in speeds by zip code. I took a look at the FCC broadband data reported on the 477 forms just for the city of Baltimore and I see widely disparate neighborhoods in terms of broadband adoption. There are numerous neighborhoods just north of downtown Baltimore with broadband adoption rates as low as 30%, and numerous neighborhoods under 40%. Just south of downtown and in the northernmost extremes of the city, the broadband adoption rates are between 80% and 90%. I have to guess that the average broadband speeds are also quite different in these various neighborhoods.

I’ve always wondered about the accuracy of compiling the results of mass speed tests. Who takes these tests? Are people with broadband issues more likely to take the tests? I have a friend who has gigabit broadband and he tests his speed all of the time just to see that he’s still getting what’s he’s paying for (just FYI, he’s never measured a true gigabit, just readings in the high 900s Mbps). I take a speed test every time I read something about speeds. I took the speed test at this site from my office and got a download speed of 43 Mbps. My office happens to be in the most distant corner of the house from the incoming cable modem, and at the connection to the Charter modem we get 135 Mbps. My slower results on this test are due to WiFi and yet this website will log me as an underperforming Charter connection.

There were five states at the bottom of the ranking. Last was Alaska at 17 Mbps, Mississippi at 24.8 Mbps, Idaho at 25.3 Mbps, Montana at 25.7 Mbps and Maine at 26 Mbps. That’s five states where the average internet speed is at or below the FCC’s definition of broadband.

The speeds in Alaska are understandable due to the remoteness of many of the communities. There are still numerous towns and villages that receive Internet backhaul through satellite links. I recently read that the first fiber connection between the US mainland and Alaska is just now being built. That might help speeds some, but there is a long way to go to string fiber backhaul to the remote parts of the state.

Mostly what the bottom of the scale shows is that states that are both rural and somewhat poor end up at the bottom of the list. Interestingly, the states with the lowest household densities such as Wyoming and South Dakota are not in the bottom five due to the widespread presence of rural fiber built by small telcos.

What most matters about this kind of headline is that even in the states with fast broadband there are still plenty of customers with lousy broadband. I would hope that Maryland politicians don’t look at this headline and think that their job is done – by square miles of geography the majority of the state still lacks good broadband.