Tag Archives: Verizon

First Look at Broadband Labels

The FCC’s Broadband Labels were implemented by ISPs with more than 100,000 customers on or before April 10. Not surprisingly, many ISPs waited until the last day. I think the FCC hoped that the labels would create “clear, easy-to-understand, and accurate information about the cost and performance of high-speed internet services.” I looked at a lot of the labels this past week. As you might expect, the actual labels often fall far short of the FCC’s goal. I’m not going to use this single blog to try to rate and rank the various labels but will highlight a few of the things I found.

The first observation is that the labels are generally hard to find – they are not prominently displayed on ISP websites. This is because the FCC rules say that ISPs only have to display the labels at ‘points of sale’. ISPs have interpreted this to mean that a customer must first submit a valid address to the ISP website, and then typically navigate through several more links to find the labels. Even after entering an address, the links to broadband labels are often not clearly identified, and it was a challenge to find the labels for some ISPs. I thought one of the purposes of the labels was to make it easier for the public to comparison-shop between ISPs – but finding the labels usually takes a lot of work, especially for somebody who isn’t familiar with navigating ISP websites.

The one big benefit of the labels for most ISPs is that they make it easier to find broadband prices. Over the last few years, it’s grown increasingly difficult to find the list price for broadband on big ISP websites – the price that customers pay at the end of a special promotion rate. ISPs are now disclosing the full list price on the labels.

One exception to showing list prices is Comcast. The company is showing the promotional rates in bold for many broadband products and only shows the list price in fine print. Comcast is also deceptive about the cost of its broadband modem. All they say is that it’s optional, without mentioning that their price for a modem rental is $15. They also don’t mention that to get some features a Comcast modem is mandatory. I rate the Comcast labels as still being as deceptive as their website was before the labels. But Comcast isn’t the only one not being open and clear about the modem rental. I’m guessing that big ISPs are rationalizing that WiFi and the modem are not a broadband product as a way to keep them off the label. Any ISP not disclosing modem prices and policies is creating a hidden fee.

One of the features of the labels is that an ISP is supposed to provide a plain English description if its technology and network practices. Most ISPs failed at this, and a customer trying to understand two competing ISPs is not going to understand the technology difference using the broadband labels.

Consider Verizon. It has a network management section of the label that mixes in descriptions of its wide range of different technologies rather than describing each separately. There are a few things that a shopper for FWA service ought to be told: 1) that the FWA product is delivered over the same network delivering bandwidth to cellphones, 2) that the key factor that determines the speed for a customer at a given tower is the distance between the customer and the tower, and 3) that broadband can be throttled if the cell site gets busy. They disclose the third item, but overall, they fail at describing how FWA works.

The labels are not going to tell the public much about speeds. A few ISPs, like Verizon FWA and T-Mobile FWA, are honest and report a range of speeds. Cox is relatively honest and says that speeds are ‘up-to’ the cited marketing speed for a given product. But most big ISPs are claiming they deliver speeds in excess of advertised rates. Charter says speeds are at the advertised speed or faster. Comcast, CenturyLink, Mediacom, and Sparklight all cite ‘typical speeds’ which are all faster than the advertised speed – some significantly faster. This is the first time I’ve seen the term ‘typical speed’, and I have no idea what ISPs mean by it.

Windstream took an interesting approach to broadband labels and only created labels for fiber customers and not for older DSL. I don’t know if that meets the FCC requirements, but Windstream is reporting 100 Mbps capability for DSL in some markets on the FCC map, and this feels like something that should have a label.

All of the labels must disclose latency, and many of the latency numbers cited seem significantly low. I think that the ISPs are citing the latency between their headend and the customer, not the latency that a customer can expect in getting to the Internet. If so, this also feels deceptive to me.

Overall, the Broadband Labels do not fulfill the FCC’s goals of making it easier for customers to understand broadband products. It is a relief to see most ISPs disclose prices – but if Comcast gets away with highlighting marketing promotional rates, the labels for other ISPs might change soon to match. Disclosures on speeds are mostly a joke – and most customers are going to be surprised to find that their ISP is bringing them faster speeds than what they are paying for (sarcasm alert). For the most part, the descriptions of network practices are not written in plain English to help a potential customer understand the technology being used. The carefully crafted lawyer language in these sections makes it hard for even experienced industry folks to understand network management policies.

Are There Two Broadband Markets?

In a recent survey of 8,000 broadband customers nationwide, Parks Associates found that FWA cellular wireless customers feel better about the price they pay for broadband than subscribers of other technologies.

The survey asked broadband customers to react to the following statement: “I receive Internet service at a fair cost / good price”. The response by technology was as follows:

  • 61% of FWA cellular customers reacted positively to the question.
  • 51% of fiber customers feel they are paying a fair price.
  • 40% of DSL customers responded positively.
  • Only 35% of cable customers think they are paying a fair price.

These responses are measuring two things – the way customers feel about broadband performance of each technology combined with how they feel about the price.

These survey results have to be troubling to cable companies. Cable companies have been raising rates regularly for years. For example, Comcast already has rates far higher than FWA, and yet the company still raised rates by $3 in December 2023. There is no mystery why customers like FWA pricing more than cable company pricing. Comcast has a list price of $86 for a 200/5 Mbps broadband connection, and most customers also are charged $15 for a modem. This contrasts with Verizon FWA, which has a list price of $60 for speeds between 100 – 300 Mbps, with addition savings for using autopay or for bundling with Verizon cellular. T-Mobile FWA has a list price of $65 with a small discount for autopay.

However, the list price isn’t everything since a lot of customers are paying less than list price. Verizon had a recent promotion for FWA home broadband at $40 for new customers and $25 for existing cellular customers. T-Mobile has been advertising a price for home broadband for $30 for existing T-Mobile cellular customers. Comcast also has heavily discounted special prices. There are current web deals for buying the 200/5 Mbps plan for $30 ($45 with the modem). But every customer buying a low-price Comcast product knows the prices will eventually skyrocket when the promotion is over.

The customer reactions to fiber are more puzzling where 50% of customers don’t think they are paying a fair price. Many fiber providers have prices that aren’t that different than FWA wireless. AT&T sells 300 Mbps fiber for $65. CenturyLink sells 500 Mbps fiber for $50. Frontier sells 500 Mbps for $50.

My consulting firm conducts surveys, and we’ve been seeing similar results. I’ve recently come to the conclusion that there are two different broadband markets in the country – a market of customers who care about price and one where customers care about speed.

There has been a huge migration of customers upgrading to gigabit broadband. OpenVault reported that at the end of 2023 that one-third of all broadband customers are now subscribed to gigabit speeds. These are clearly the customers who care about speed, and these households are likely not interested in the slower speeds being delivered by FWA cellular wireless.

Eight million customers have elected to buy FWA home broadband that delivers top speeds between 100 and 300 Mbps. Some of these customers live in rural areas where this is the only fast option, but many of these customers are in towns and cities and are switching from cable companies and fiber ISPs. These are the customers for whom price is more important that broadband speeds. These customers find the FWA speeds to be good enough, at least in relation to the price they pay.

This creates a real dilemma for cable companies. They have lowered the promotional prices to the lowest level I’ve seen in many years to compete with FWA prices. At the same time, cable companies are seeing many customers migrate to the fastest speeds and higher-priced products – but these customers hate the prices. It’s easy to understand customer dissatisfaction when some customers are getting promotional prices at $30 while many other customers are pay far more than $100. It’s virtually impossible for a cable company to satisfy both sets of customers. The attempt to deal with the two drastically different market segments might be a major part of the reason why Comcast and Charter have stopped growing.

Telcos Shedding Jobs

I heard a chilling story recently. AT&T apparently notified a bunch of employees in Los Angeles that their jobs are being eliminated and that they need to report to other cities like Dallas or lose their job. Many of these employees were relocated to Los Angeles in the last five or six years, and the company paid for that past relocation. Employees now must move at their own expense. I was told the same thing was happening in other AT&T markets across the country. This is a particularly callous way to eliminate employees, and AT&T is clearly trying to induce employees to resign to avoid paying severance. This is not the kind of behavior that would normally be expected from a large corporation. It certainly tells the remaining employees of the company that they are not valued.

There is rarely a month that doesn’t go by without hearing that one of the big telcos is laying off a group of employees somewhere. The story piqued my interest, and it took only a little research to see that telcos have steadily been eliminating staff while the biggest cable companies have not.

Consider the following chart that shows employment at the biggest ISPs and carriers since 2018.

2018 2023 Change
AT&T 268,220 150,500 -44%
Verizon 144,500 105,400 -27%
Lumen 45,000 28,000 -38%
T-Mobile 80,500 67,000 -17%
Comcast 184,000 186,000    1%
Charter 98,000 101,100    3%

It’s not easy to make sense of the staffing changes at the various carriers. Consider some of the big trends at each company since 2018.

Some of the staff reductions at AT&T can be justified since the company suffered from several disastrous investments. The biggest was buying Time Warner Media and spinning it off just three years later to Discovery with a huge loss. The company had another big failure from its purchase of DirectTV. While AT&T flourished from 2018 to 2023 in adding cellular customers, competition dropped the average revenue per customer over that time period. AT&T lost only 3% of its net broadband customers over that period while it has been transitioning from copper to fiber.

Verizon has a similar story of making bad investments in AOL and Yahoo. Due to the big surge of FWA cellular broadband and good sales in FiOS, Verizon has 54% more broadband customers today than it had in 2018. Verizon also thrived and grew cellular customers during this period.

Everybody has likely heard Lumen’s story. The company has struggled since it was spun off from AT&T as US West. The company divested it’s copper assets in twenty states and recently announced more layoffs.

T-Mobile is an interesting case. Cellular customer additions have been sluggish since it merged with Sprint. It recently added 4.8 million FWA broadband customers. The layoffs at T-Mobile seem to be clearly aimed at improving the bottom line – even though one of the big promises made to employees with the Sprint merger was that it would create new jobs, not lose jobs.

Comcast has thrived in everything except cable TV. Since 2018, the company added 5 million broadband customers and 6.5 million cellular customers.

Charter also did well except with cable TV. Charter added 5.3 million broadband customers since 2018 and 7.8 million cellular customers.

The bottom line of my quick analysis is that telcos have been reducing staff at a much greater pace than can be justified by looking at the overall trends of each business. I have to wonder how Comcast and Charter are going to react to the sudden slump in broadband growth? Will they now start shedding employees like the telcos have done?

Repeating Telecom History

This is a story I’ve told before, and I repeat it from time to time since I believe we can’t ignore the history of our industry if we want to avoid the worst of it from happening again.

We let the big telcos walk away from their responsibility to maintain rural networks. That resulted in a shameful situation where rural folks were never offered working broadband, and now the telcos are even walking away from landlines. What I find saddest about this, other than the situation this has caused for rural communities across the country, is that we don’t seem to have learned any lessons from the past. It’s likely that we are again going to hand billions of dollars to giant companies to take care of rural networks.

There are a variety of factors that led to the rural mess that created the need for BEAD and other broadband grant programs. While the primary blame goes to the big companies that allowed rural networks to deteriorate, a lot of the blame also goes to regulators and government. So let me talk about them first.

I think the downward trajectory started with the divestiture of AT&T into AT&T as a long-distance company and large regional telephone companies. Regulators had an opportunity to make sure that the regional RBOC companies remained fully regulated with mandates to maintain universal service. But for some reason, regulators did the exact opposite and told each RBOC to thrive in the open market. Companies like Verizon and Bell South quickly got sucked into the Wall Street game of caring more about stock prices than running a good telephone company. I worked at AT&T pre-divestiture, and this was a huge chance after divestiture. The employees of the giant Ma Bell monopoly took pride in doing the right thing for the public. I sat near the person who took the daily calls to the executive help desk – customers could call the top guy in each state if they had a problem, and that almost always meant the problem got solved.

The newly-formed telco lobbied hard to be able to make profits over and above the low, but steady profits that could be earned by a regulated utility. Unfortunately, lobbying works when it’s done right, and the Baby Bells lobbied everybody from city councils to federal legislators. Within a few years after divestiture, the process of deregulating the big telcos began. By promising to keep residential telephone rates low, regulators across the country deregulated the big telcos from their many obligations.

The big telcos ran with the power that came from deregulation. For example, Bell South grew a cellular business that grew to rival the telco business. All the Baby Bells except US West thrived under the relaxed regulatory regime.

I hesitate to say that the folks running the Baby Bells were bad people, but from the perspective of customers, they were. Telcos that once had always put customers first were suddenly obsessed with stock prices and the bottom line. They became just another set of corporations operated by MBAs that valued the stockholder over the customer.

The changes were mostly, but not always, gradual. Verizon was the abruptest of the Baby Bells and decided early on to divest itself of its rural networks. Unfortunately, they weren’t able to sell all rural copper. In places like West Virginia, when they couldn’t find a buyer, Verizon ceased maintaining the network. I saw this happen firsthand, and it was not pretty.

But the other Baby Bells ended up in the same place, just not as rapidly. Year after year, and budget cycle after budget cycle, the big telcos cut back on maintenance. Open technician jobs weren’t replaced, and there were occasionally big layoffs to help maintain stock prices. Hardware wasn’t upgraded when needed, and copper networks went to hell. We finally got to the point where whole counties have no working DSL – the telcos just quietly got out of the business.

We are now poised to do it all over again. We have a gigantic broadband grant program that clearly favors big companies over small ones, companies that can use equity instead of debt for grant matching, and companies with the resources to pursue giant multi-county grants. Big cable companies are joining the big telcos to pursue rural grants. The big cable companies have a similar history to the telcos. One only has to talk to folks in small communities where the cable companies eliminated business offices and cut back on maintenance staff. Cable companies have neglected small markets by not making needed upgrades while bragging to Wall Street that all of their networks are state of the art.

I doubt there is anything that can be done to stop this, but we are on the verge of doing it all over again. Over the last decade we awarded tens of billions of subsidies to big telcos to improve rural broadband, and the money mostly got pocketed. I find it impossible to believe that the giant companies are going to care and nurture newly built grant networks any better than they have taken care of rural or small community networks in the past. A few big companies might try to do the right thing. But they will be under pressure to maintain earnings, and over time, they will cut staff, maintenance, and repairs – and the cycle will eventually repeat. It’s virtually impossible to believe that the giant ISPs will devote the needed resources for decades to come to properly support rural networks.

The ironic thing is that we know what works in rural areas  and it’s not giant ISPs. We’ve seen small telcos and cooperatives take care of rural networks while big companies let networks rot in place. But lobbying is still king, and regulators are not brave enough to do the right thing – which is to not give grants to publicly traded companies. Watching this cycle repeat itself will give me fodder to write about how we screwed it all up again – but I’d much rather be writing about rural success stories.

Will FWA Wireless Peak Soon?

This almost sounds like a silly question when looking at the recent growth of FWA wireless, where the big cellular carriers are selling home broadband using cellular spectrum. But I find myself having to ask the question after discussing this with some of my peers. Universally, every person that I put the question to dismissed FWA wireless as a temporary technology with no real long-term legs.

The observations I heard about FWA included the following:

  • The product is already oversubscribed, and customers are already getting tired of it.
  • Cell towers weren’t designed to handle all-day broadband connections, and this is going to harm the carriers more than help them in the long run.
  • The speeds aren’t fast enough, and people will tire of the broadband performance.
  • The coverage is spotty and swings from fast to slow during the day.

Interestingly, the numbers seem to be telling a different story. Consider national quarterly broadband growth over the last two years, as shown in the following table. These numbers come from Leichtman Research Group, and they say the big companies represented in these numbers represent about 95% of all broadband subscribers in the country.

FWA

 Big Cable Companies Big Telcos

Total
1Q22

532,000

 482,830 50,350

1,065,180
2Q22

816,000

 (60,289) (87,837)

667,874
3Q22

920,000

 39,035 (136,101)

822,934
4Q22

913,000

 55,527 (95,204)

873,323
1Q23

916,000

 67,472 (21,196)

962,276
2Q23

903,000

 9,566 (61,833)

850,733
3Q23

941,000

 4,777 3,392

949,169
Total

5,941,000

 598,918 (348,429)

6,191,489

Since the beginning of 2022, T-Mobile and Verizon FWA captured 96% of net new customer gains. While cable companies grew by 600,000 over that time, 80% of those gains were in the first quarter of 2022. Since then, the big cable companies have stagnated and collectively added less than 20,000 net new subscribers per quarter. Telcos have continued to bleed customers as they continue to lose DSL customers, but underneath those losses, the telcos are replacing DSL customers with fiber customers.

Some of the observations of FWA I heard ring true. Cell sites weren’t designed for the kind of connections people expect for home broadband. But after seeing this unexpected success, I’m sure that the carriers are working to bolster cell sites. I know that there are a lot of requests floating around the industry asking for faster broadband connections to cell sites. In the long run, accommodating FWA permanently means changing the way that cell sites operate.

It’s also true that the bandwidth is not guaranteed. Both carriers warn customers that FWA broadband might be curtailed any time there is a lot of demand for cellphone traffic. As much as the carriers love this new business, it’s hard to think they will endanger their cellular business. However, a few of the folks I talked to think that’s exactly what they are doing.

The one observation that nobody made to me was that FWA cellular costs less – particularly less than big cable broadband. The standalone list price for T-Mobile FWA is $65 and is $60 for Verizon. Both companies offer a discount for autopay, and Verizon offers an additional $15 discount for existing Verizon cellular customers. Both are clearly trying to grab market share. I saw an advertisement this past weekend for Verizon FWA with a price of $30 guaranteed for four years for existing Verizon cellular customers. In my experience, there are a lot of customers for whom price is the predominant factor.

While my peer group thinks FWA is a flash-in-the-pan, T-Mobile and Verizon predict they will collectively reach 15 million customers, about twice where they sit today. This is clearly the most interesting dynamic in the broadband industry, but I don’t think anybody knows for sure where these carriers are going to top out. But it doesn’t feel to me like they’ve already hit the top of the market.

What’s Up With Comcast and Charter?

The two biggest cable companies in the country have clearly bogged down. In the third quarter of 2023, Comcast lost 18,000 broadband customers while Charter gained 63,000. To contrast the extent of the slowdown, Charter gained over 1.3 million customers in 2021 while Charter gained 1.2 million. The growth during the pandemic was not extraordinary, and both companies added 1.4 million customers in 2019 before the pandemic.

The two companies are still the largest ISPs. Comcast had 32.3 million broadband customers at the end of the third quarter of 2023, while Charter had over 30.6 million. Third in size is AT&T at 15.3 million.

Charter is still slowly adding customers due to its strategy of building broadband in rural markets. In the third quarter, half of its growth came from rural areas. Charter won a significant amount of rural subsidy in the RDOF reverse auction in 2020 and has been aggressively pursuing state broadband grants since then. Comcast has also been chasing state grants, and analysts expect that both companies will pursue the upcoming BEAD grants.

There are a number of reasons for the sudden slowdown. At the top of the list is probably prices. The following are the current list prices for the most common broadband products. For both companies, the prices and speeds vary in some markets.

  Download Upload Price
Charter 300 Mbps 10 Mbps $84.99
500 Mbps 20 Mbps $104.99
1 Gbps 35 Mbps $124.99
Comcast 200 Mbps 10 Mbps $90 + $15 for router
400 Mbps 10 Mbps $105 + $15 for router
800 Mbps 20 Mbps $110 + $15 for router
1 Gbps 20 Mbps $115 + $15 for router
1.2 Gbps 35 Mbps $120 + $15 for router

These prices are significantly higher than the prices being charged by fiber competitors:

  Download Upload Price
AT&T 100 Mbps 100 Mbps $60
300 Mbps 300 Mbps $65
1 Gbps 1 Gbps $80
2 Gbps 2 Gbps $110
Frontier 500 Mbps 500 Mbps $59.99
1 Gbps 1 Gbps $79.99
2 Gbps 2 Gbps $109.99
Windstream 500 Mbps 500 Mbps $60
1 Gbps 1 Gbps $85
Verizon 300 Mbps 300 Mbps $49.99
500 Mbps 500 Mbps $69.99
1 Gbps 1 Gbps $89.99

To offset the big price difference with competitors, both companies offer substantial discounts for new customers. Charter tends to continue to renew special pricing while a customer has to work harder to get the discounts at Comcast. Both companies are pushing bundles that include discounted cellular.

As the two charts demonstrate, another big difference is the upload speeds. Both cable companies are upgrading upload speeds to speeds between 100 Mbps and 300 Mbps using mid-split technology upgrades. Both have been talking about upgrading to DOCSIS 4.0 to get symmetrical speeds.

The other new competitor is FWA Cellular Wireless from T-Mobile and Verizon. We don’t know how much traction these companies have in competing against cable companies, but the two companies have added over 7 million customers in the last two years, while Comcast and Charter have stagnated.

  Download Upload Price
T-Mobile 100 Mbps Best Effort $65
100 Mbps Best Effort $60 with Autopay
Verizon 300 Mbps Best Effort $45 with Verizon Cell Plan
300 Mbps Best Effort $60
  300 Mbps Best Effort $50 with Autopay

It’s going to be interesting to see if the two cable companies increase rates in 2024. If they don’t, then the only path to higher earnings would be to cut back on customer or slash expenses.

Both companies have thrived on the combination of customer growth and revenue growth from rate increases. Both companies face a serious earnings challenge in the next few years as competitors chip away at customers.

Where is FWA Finding Customers?

Several people have asked me where the cellular carriers are finding the millions of customers they are adding to FWA cellular broadband. T-Mobile added 550,000 customers in the third quarter to reach 4.6 million total subscribers. Verizon added 380,000 in the third quarter to reach 2.7 million customers. AT&T is late to the game but says it is now adding 2,000 a week and plans to step this up significantly. Other carriers like UScellular are poised to enter the market.

The new FWA customers have to be coming from somewhere – and there are a lot of possibilities. In urban areas, the customers would have to be coming from cable companies, telco DSL, or fiber. In rural areas, customers would be coming from DSL, fixed wireless, satellite, or cellular hot spots. I’ve not seen any discussion or announcements from T-Mobile or Verizon about where they are gaining customers.

T-Mobile and Verizon together now have almost 6% of all broadband customers using the new wireless product. I’ve seen those companies speculating about growing to a 15% market share, which would mean adding another 10 million customers. That would make FWA collectively the third largest ISP behind Comcast and Charter.

I’ve been doing some digging, but my research is far from scientific. I’ve looked in detail at half a dozen counties using detailed Ookla speed tests to see where the FWA customers live. I looked at a few rural counties with only one or two sizable towns, and I looked at two suburban counties where cable companies serve the large majority of the geography. The first thing I noticed is that speeds are only good for around two miles from a cell tower – that’s not far in a rural area, but the carriers are now passing a lot of customers.

I also noticed in this tiny sample is that there are a lot more FWA speed tests in rural areas than in towns. That makes sense. In many places the FWA product delivers speeds of between 100-300 Mbps download – and for rural customers who have had no decent broadband option, this is a spectacular upgrade option. Upgrading to FWA from a creaky 10/1 Mbps DSL probably feels like the change we remember from going from dialup to DSL. I’ve noticed that there are still a lot of rural towers that have not yet been upgraded to the product, and perhaps those upgrades will provide a lot of the path to adding another 10 million customers.

There are FWA customers in cities and dense suburbs, but the relative penetration of FWA in densely populated areas looks to be relatively miniscule. The FWA sales proposition in urban areas is price. It’s still not unusual to find a 15% market penetration of DSL in cities, and it should be easy to sell faster speeds and better reliability at the same price as DSL. CenturyLink recently said that its rapid drop in DSL is due mostly to FWA.

One place that the cellular carriers are getting the customers is from their own embedded customer base. In many rural counties, T-Mobile and Verizon already have a 2 to 4% market penetration of cellular hotspot customers. These older broadband products delivered whatever cellular speed was available on the rural 4G network – and were exceedingly expensive due to severe data caps. It’s a pretty easy sell for a cellular company to tell customers they are sending them a new receiver that will get faster speeds and that will provide unlimited broadband – but with the small print caveat that bandwidth can be throttled any time that cell phone traffic is heavy.

I know that AT&T is using the product to convert its rural DSL customers. I happened to be in an AT&T store recently and heard them tell a customer that their copper DSL and voice line was soon going to be cut dead and replaced with FWA. The sales pitch to compete against satellite is also pretty easy. The FWA product is faster and costs less than any of the satellite options. Competing against WISPs using fixed wireless is more of a local situation since the quality of WISP broadband ranges from miserable to great.

The big question everybody wants answered is the impact of FWA on cable companies. In the last quarter, the big cable companies collectively added only 8,000 customers, and only Charter grew a little. The big cable companies have made themselves vulnerable due to high prices and in many markets due to reliability. Converting to FWA can almost cut a broadband bill in half. In cities, almost everybody lives within a decent distance of a cell tower – but the big concern for urban FWA is the capacity to support the product. While the cellular carriers love the new FWA product, they still view this as a footnote product in their annual reports. They are not about to jeopardize cellphone quality by oversubscribing fixed broadband customers on networks that weren’t designed to provide continuous broadband connections.

I still have no idea of the extent to which cable companies are losing customers to FWA or fiber. They are certainly losing to both – but the cable companies and their competitors are staying mum on the topic.

Upgrades for FWA Cellular Wireless

In the recent third quarter earnings call, Verizon CEO Hans Vestberg expressed strong support and belief in the future of the company’s FWA wireless broadband product. This product provides home and business broadband that uses the same cellular spectrum used today to provide bandwidth for cellphones.

There is good reason for the company to be optimistic about the broadband product. In only a few short years the company has added almost 2.7 million FWA customers, and most of its broadband customer growth in the third quarter of this year came from FWA. As noted by Vestberg, rapid growth has continued even after the company increased the price of the product by $10 per month.

As I have addressed in several blogs, there are some limitations on the current FWA product. The biggest downside is that the fast speeds advertised for FWA by Verizon and T-Mobile are only available for customers that live within a mile or so of a cell tower. Speeds seem to cut in half in the second mile from a tower and drop significantly by the third mile.

Another drawback is that both Verizon and T-Mobile throttle the bandwidth for FWA any time that cellphone usage gets heavy. In scouring through multiple speed tests, we have found customers who vary between fast and extremely slow speeds – which might be evidence of this throttling.

But Vestberg mentioned a big technology boost that will be coming to the Verizon FWA product. Verizon purchased a lot of C-Band spectrum in an FCC auction in 2021. This is spectrum that sits between 3.7 GHz and 3.98 GHz. The licensed spectrum provides Verizon with anywhere from 140 MHz to 200 MHz of cellular bandwidth in markets across the country.

Vestberg says the company is starting to upgrade busy urban towers with the extra C-Band spectrum. He implied that the upgrades will be coming to other urban towers and some suburban towers in 2024.

He said the C-Band spectrum will double or triple the cellular bandwidth depth in most markets. He said that using the new spectrum for FWA could result in speeds as fast as 900 Mbps to 2.4 Gbps. Like all speed claims made by ISPs, those speeds are likely faster than anybody will see in real life and probably represent theoretical maximums. However, FWA users can expect a big boost in speeds, particularly those living near towers.

I have to assume that Verizon has already built C-Band capabilities into its home FWA receivers, so speed upgrades ought to be realized immediately after an upgrade. A lot of the newest cell phones also already include C-Band capabilities. Verizon seems to have the most aggressive plan for C-Band, but AT&T has started to deploy the spectrum in a few markets. T-Mobile owns C-Band spectrum, but still seems to be hanging on the sidelines for upgrades.

Significant speed increases to FWA can make the product into a potent competitor to cable companies, at least for customers within a close distance of a cellular tower. The FWA prices are far lower than the prices charged by the big cable companies for broadband, and fast speeds can make this a viable alternative.

The first generation of FWA has delivered speeds in the 100-300 Mbps range. That has been fast enough to attract millions of customers. But the first generation product has felt more like a big upgrade to DSL rather than a direct threat to cable companies. But if the current speeds are really doubled or tripled, many households are going to be attracted by the lower prices on FWA. It’s an interesting product to market since the attractiveness for customers is in a direct relationship to the strength of the cellular signal that reaches their home –  an extremely local situation.

Cable Company Speed Claims

I don’t know if it’s just me, but my perception of ISP and cellular advertising is that the big ISPs and cellular carriers push the envelope more every year in trying to make claims that can give them a marketing edge over the competition.

The advertising for 5G cellular has repeatedly made claims over the years that are far in excess of the ability of the technology to deliver. If your only view of the state of broadband technology is ads seen on TV during sporting events, you would be fully convinced that we live in a completely wireless world and that 5G is the end-all-and-be-all of the broadband world.

What’s funny about many ads is that carriers try to differentiate themselves from their competitors, even though their peers are delivering essentially the same product to the market. There is not much difference in the cellular technology being delivered by AT&T, T-Mobile, and Verizon – although ads claim that each is by far the superior company. In real life, the biggest differentiator between the three carriers is the strength of their signal at your home, office, and other places you frequent – a strictly local difference based on the location of cell towers.

The competition between cable companies and fiber overbuilders is not based on equivalence. There is a clear technical advantage of a 300 Mbps broadband connection on fiber versus the same connection on a cable company. Fiber has a steadier signal throughout the day with lower latency and jitter, and any consumer comparing the two can quickly spot the difference. This puts cable companies in a tough spot. They know that fiber ISPs have a quality advantage for downloading and a huge advantage for upload speeds. Fiber networks tend to also have fewer glitches and outages.

Cable companies know when a fiber network shows up in a market that they will lose customers who care about signal quality. Since cable company prices are normally higher than the prices of fiber ISPs, the cable companies have to scramble and lower prices drastically with special prices to try to hang on to customers and lure new ones.

But cable company marketers never stop trying to make a pitch that makes them sound better than fiber. One of the latest examples comes from Comcast, which has started to advertise itself as the 10G ISP. The company now refers to its broadband network as the ‘Xfinity 10G Network’. This is based on the CableLabs 10G standard that lays out a future upgrade path for cable companies to eventually achieve an overall speed as fast as 10 Gbps download and 6 Mbps upload.

Verizon took exception to Comcast’s advertising and asked the National Advertising Division (NAD) of BBB National Programs to get Comcast to stop using the term 10G. The NAD program is something that many of the big ISPs voluntarily participate in to avoid expensive lawsuits between each other over advertising claims. NAD ruled that the 10G term was not factual and said Comcast should stop using it. The participants in the NAD generally comply with NAD rulings, but this time, Comcast is appealing the ruling. An interesting sidebar of the NAD ruling is that it also felt that consumers would interpret 10G as some advanced version of cellular 5G.

As an outsider, it’s pretty easy to agree with Verizon in this case. The 10G term was based on some theoretical future upgrade to meet the CableLabs 10G specifications, and Comcast’s coaxial networks today cannot achieve that speed. The only example of where Comcast has a 10 Gbps capability today is where it has upgraded to a 10 Gbps fiber platform – a tiny portion of the overall Comcast network. Comcast’s advertising implies to consumers that the future upgrades are already in place.

In a similar dispute, AT&T took exception to Cox ads that claim that Cox cable broadband is ‘powered by fiber’. NAD agreed with AT&T and ruled that Cox could not imply in advertising that its coaxial network is fiber-to-the-home. Again, it’s easy to agree with NAD on this ruling. Having fiber somewhere in a network does not mean that the network can deliver the same quality of broadband as an all-fiber network. Many DSL fiber nodes are fed with fiber, and I don’t recall any telcos making the claim that their DSL is “powered by fiber”.

More aggressive cable marketing is inevitable in a market where cable companies have stopped growing. There has to be a lot of angst in cable company board rooms about finding ways for the companies to claim fast broadband speeds and stop losing customers.

FWA Cellular Speeds

One of the most interesting things about getting access to a lot of speed tests is that it provides a way to test broadband issues you always suspected but couldn’t prove. If you can collect enough speed tests, you might find proof of a lot of different things. For example, speed tests might show that a broadband network is slower in the evening than during the night – something that customers have always complained about. Speed tests might show that an ISP delivers speeds that are far slower than what an ISP claims on the FCC broadband maps.

I’ve been trying to understand the speed characteristics of FWA cellular wireless. I’ve been interviewing folks for a few years who have FWA wireless, and they all told me that speeds are fast for those living close to a tower but slower as the distance to the tower increases. For example, the first customer I talked to who was using the FWA broadband from T-Mobile is a farmer who had a T-Mobile tower on his property and got almost 300 Mbps download speeds. He was thrilled with the product compared to the much slower WISP he had been using. But when he recommended the FWA wireless to his neighbors, they received a far different bandwidth product. A neighboring farm a little over a mile away was getting speeds closer to 100 Mbps, which they also thought was good. But some farms further away said that the FWA broadband was too slow.

I heard similar stories from elsewhere, but it’s hard to make any universal statements about the FWA product based on a handful of anecdotes from different parts of the country. I recently got access to enough speed tests to understand the performance of the FWA cellular wireless product.

The map below shows a lot of speed tests from Verizon tower in a suburban county. The yellow dots on the map are the locations of actual speed tests. The colored circles on the map show the distance from a cell tower – with purple showing locations within a mile of the tower, red showing locations between 1 and 2 miles, blue/greed showing speed tests within 2 and 3 miles, and the surrounding white areas at more than 3 miles. I didn’t cherry-pick this particular tower as the best example – there are more than a dozen other Verizon towers in the same county that show similar speed test results. I must note that speed tests are not a prefect indicator of broadband performance, and there might be explanations behind some of the slower readings. But I have to think that seeing this same speed pattern around multiple tower sites is a good indication that this is how the technology works.

This map demonstrates what the farmer told me to a tee. There are some locations close to the tower getting 300 Mbps. Customers just over a mile from the tower are getting slower speeds, with the highlighted ones around 75 Mbps. By the third mile band, speeds have dropped a lot closer to 25 Mbps download, and outside the three-mile circle, speeds drop significantly. There is no easy way to tell if the customers with slower speeds are buying FWA wireless, which uses the spectrum that Verizon labels as 5G, or the older Verizon hotspots that use traditional LTE spectrum.

On the FCC map in this county, Verizon reports two speeds – 300 Mbps or 50 Mbps. It’s not easy to understand how Verizon makes the distinction, but it seems like locations for a fairly good distance around towers are claimed at 300 Mbps.

Somebody who doesn’t understand the FCC mapping rules might think that Verizon is breaking the rules by reporting 300 Mbps speeds in places where actual speeds are a lot lower. But the FCC allows ISPs to report marketing speeds for the FCC maps as long as Verizon is advertising the claimed speeds. But that doesn’t mean that the Verizon FCC reporting is ethical. Customers who might refer to the FCC map when looking for an ISP, or customers that see Verizon advertising are hoping to get something close to the 300 Mbps speed – and many will not.

I have some major concerns about cellular FWA technology related to the upcoming BEAD grants. First, any state broadband grant offices that accept the claimed Verizon speeds in the FCC mapping might not award any grants where a fast FWA speed is claimed. That would be a travesty if folks who can’t get speeds of at least 100/20 Mbps with FWA are denied another broadband option.

It’s also possible that the cellular companies will challenge grants that come close to their towers. I knew this was likely going to become an issue the day that the NTIA said that it considers wireless broadband using licensed spectrum to be broadband for purposes of the BEAD program.

It’s also possible that Verizon, T-Mobile, AT&T, and others will try to win BEAD grant funding using this technology. At least in this county, there are very few customers outside of one or two miles from a tower who can get the 100/20 Mbps required for BEAD grants.

I hope that state broadband offices take a hard look at this. Many of them have purchased detailed speed test data, and they can search around towers in the same manner done above. I don’t think it will take much investigation for them to be convinced that FWA cellular broadband can meet the speeds required for BEAD – but only for short distances from cell towers. Broadband offices should also take note that both Verizon and T-Mobile warn customers that speeds can be throttled any time there is increased demand for bandwidth from cellphones.

I am not busting on the cellular FWA technology. If I was in a rural area without a good broadband alternative, I’d buy this product in a second. But I’d be unhappy if I was hoping for 300 Mbps and got 25 Mbps. What is being deployed today is the first generation of the technology, and I assume that it will improve over time. My only concern is the timing of the rollout of this new technology and how it might negatively affect an already complicated BEAD grant process.