The Fastest ISPs

PC Magazine has been rating ISPs in terms of speed for a number of years. They develop their rankings based upon speed tests taken at their own speed test site. They had about 124,000 speed tests taken that led to this year’s rankings. The scoring for each ISP is a composite number based 80% on the download speed and 20% of upload speeds. To be included in the rankings an ISP needed to have 100 customers or more take the speed test.

You always have to take these kinds of rankings with a grain of salt for several reasons. For example speeds don’t only measure the ISP but also the customer. The time of day can affect the speed test, but probably the type of connection affects it the greatest. We know these days that a lot of people are using out-of-date or poorly located WiFi routers that affect the speeds at their computer.

Measured speeds vary between the different speed tests. In writing this blog I took four different speed tests just to see how they compare. I took the one at the PC Magazine site and it showed my speeds at 27.5 Mbps down / 5.8 Mbps up. I then used Ookla which showed 47.9 Mbps down / 5.8 Mbps up. The Speakeasy speed test showed 17.6 Mbps down and 5.8 Mbps up. Finally, I took the test from Charter Spectrum, my ISP, which showed 31.8 Mbps down / 5.9 Mbps up. That’s a pretty startling set of different speeds measured just minutes apart – and which demonstrates why speed test results are not a great measure of actual speeds. I look at these results and I have no idea what speed I actually am receiving. However, with that said, one would hope that any given speed test would probably be somewhat consistent in measuring the difference between ISPs.

The results of the speed test ‘contest’ are done for different categories of ISPs. For years the winner of the annual speed test for the large incumbents has been Verizon FiOS. However, in this year’s test they fell to third in their group. Leading that category now is Hotwire Communications which largely provides broadband to multi-tenant buildings, with a score of 91.3. Second was Suddenlink at 49.1 with Verizon, Comcast and Cox and closely behind. The lowest in the top 10 was Wow! at a score of 26.7.

Another interesting category is the competitive overbuilders and ISPs. This group is led by Google Fiber with a score of 324.5. EPB Communications, the municipal network in Chattanooga, is second at 136.1. Also in the top 10 are companies like Grande Communications, Sonic.net, RCN, and Comporium.

PC Magazine also ranks ISPs by region and it’s interesting to see how the speeds for a company like Comcast varies in different parts of the country.

Results are also ranked by state. I find some of the numbers on this list startling. For instance, Texas tops the list with a score of 100.3. Next is South Dakota at 80.3 and Vermont at 70.6. If anything this goes to show that the rankings are not any kind of actual random sample – it’s impossible to think that this represents the true composite speeds of all of the people living in those states. The results of this contest also differs from results shown by others like Ookla that looks at millions of actual connection speeds at Internet POPs. Consider Texas. Certainly there are fast broadband speeds in Austin due to Google Fiber where all of the competitors have picked up their game. There are rural parts of the state with fiber networks built by telcos and cooperatives. But a lot of the state looks much like anywhere else and there are a lot of people on DSL or using something less than the top speeds from the cable companies.

But there is one thing this type of study shows very well. It shows that over the years that the cable companies are getting significantly faster. Verizon FiOS used to be far faster than the cable companies and now lies in the middle of a pack with many of them.

This test is clearly not a statistically valid sample. And as I showed above with my results from various speed tests the results are not likely even very accurate. But ISPs care about these kinds of tests because it can give them bragging rights if they are near the top of one of the charts. And, regardless of the flaws, one would think the same shortcomings of this particular test are similar across the board, which means it does provide a decent comparison between ISPs. That is further validated by the fact the results of this exercise are pretty consistent from year to year.

AT&T’s CAF II Solution

We now know the details of AT&T’s fixed broadband solution being installed to satisfy the FCC’s CAF II plan.

Let me start with some numbers to explain the FCC funding from the FCC. In the second round of the CAF II proceeding AT&T accepted a payment from the Universal Service Fund of about $428 million per year for six years, or over $2.5 billion dollars. That money is to be used to bring broadband to about 1.1 million homes. That works out to $2,300 per home.

I saw news last week about an AT&T CAF II ‘trial’ in Georgia. AT&T plans on using existing cellular spectrum to deliver a fixed broadband product. This will require the installation of a small exterior antenna at a customer site as well as the use of an AT&T modem inside of the home.

We’ve known for a while that AT&T planned to utilize their cellular spectrum rather than build or try to upgrade any copper plant, so this is no surprise. What is a bit of a surprise to me is the speeds being offered in the trial. AT&T will be providing a 10 Mbps download speed, which is the bare minimum required by the FCC’s CAF II program. We know from other trials AT&T has had around the country that this technology is capable of delivering at least twice that much bandwidth.

And the service won’t be cheap. The product is priced at $60 per month if a customer will sign a contract, and $70 per month with no contract. It’s a pretty interesting comparison between this and Verizon’s announcement of now offering gigabit speeds throughout its fiber footprint for $70 per month. I didn’t see any mention of a fee for use of the AT&T modem, but most ISPs charge for such devices, so that is probably going to be added to the price.

The AT&T product also comes with severe data caps. It comes with a monthly data cap of 160 gigabytes of total download. Overages will cost $10 for each additional 50 gigabytes, up to a maximum of $200 per month. I suspect a lot of rural homes that buy this as their first broadband product are going to be shocked at their first bill when they splurge on watching Netflix for the first time. My 3-person household uses about 700 gigabytes per month, which under this plan would cost $170 per month for somebody with a contract.

Like with all ISPs, I’m sure that the 10 Mbps data speed is undoubtedly best effort, meaning that at peak times (or if customers are too far away from a cellular tower) the speeds will be slower. That slow speed is going to severely hamper the ability for customers to use huge amounts of data since they aren’t easily going to be able to watch many simultaneous video streams.

I can’t be entirely negative, because for many households this will be their first broadband product, other than perhaps satellite data, which is largely unusable. And so to these homes it’s going to feel great to finally be able to stream data or have their kids able to do on-line homework from their homes.

But what is irksome about this product is that the federal government handed AT&T the money to do this. Certainly they will use some of the $2,300 per customer to build some new towers or to build a little fiber to towers. But the equipment to serve a customer is going to cost a lot less than this. I would bet that most customers will be served from existing towers using existing spectrum. This means that the federal government is paying for the full cost of implementing this product, but for which AT&T will reap all of the revenues and profits. That’s a pretty handsome return on investment for AT&T and amounts to an unneeded handout to one of the richest companies in the country.

Customers are going to quickly understand that, while they now have a minimal broadband capability, they don’t have anything close to the same broadband that much of the rest of the country has. Almost all of the big cable companies now sell broadband with minimum speeds of at least 50 Mbps download, often more. As households keep needing more data capacity over time – with the average household use of data doubling every three years – this AT&T product will become the broadband equivalent of dial-up within a decade.

The worst thing about this whole fiasco from my perspective is that the FCC is take big credit for bringing broadband to the parts of the country who get this kind of CAF II product, and they will probably count this as a job well done. Instead the FCC will have spent many billions on foisting broadband into rural America that is obsolete before it’s even launched. The shame is that this same money could have been used to seed matching grants in rural America that would have built fiber to a lot of these same homes. Small ISPs and telcos got excited when they first heard of the reverse auctions for the CAF II funding. But then, rather than holding those auctions, the FCC just handed this money to the big telcos with no competition for the funding – and this AT&T product is the end result of that bad decision.

Rural America is not going to be long fooled and will quickly recognize this as inferior broadband, but they are going to have no real alternatives. There is the small hope that there might be an infrastructure program from the current administration and Congress, but there is no assurance that such money might not also go to the big ISPs to do more of the same.

The End of Data Privacy?

Congress just passed a law that reverses the privacy rules that were ordered by the prior FCC. Those rules were recently put on hold by the current FCC and this new laws makes sure the privacy rules never go into effect. Congress did this to ensure that a future FCC cannot implement privacy rules without Congressional approval. It’s important to note that this law applies equally to both terrestrial and cellular broadband.

On paper this law doesn’t change anything since the FCC privacy rules never went into effect. However, even before the prior FCC adopted the privacy rules they had been confronting ISPs over privacy issues which kept the biggest ISPs from going too far with using customer data. Just the threat of regulation has curbed the worst abuses.

How will the big ISPs be likely to now use customer data? We don’t have to speculate too hard because some of them have already used customer data in various ways in the recent past, all of which seem to be allowable under this new law.

Selling Data to Marketers. This is the number one opportunity for big ISPs. Companies like Facebook and Google have been mining customer data, but they can only do that when somebody is inside their platforms – they have no idea what else you do outside their domains. But your ISP can know every keystroke you make, every email your write, every website you visit, and with a cellphone, every place you’ve been. With deep data mining ISPs can know everything about your on-line life.

We know some of the big ISPs have already been mining customer data. For example, last year AT&T offered to sell connections that were not monitored for a premium price. AT&T also has a product that has been selling masses of customer phone and data usage to federal and local law enforcement. Probably other ISPs have been doing this as well, but this has been a well-guarded secret.

Inserting Ads. This is another big revenue opportunity for the ISPs. The companies will be able to create detailed profiles of customers and then sell targeted advertising to reach specific customers. Today Google and a few other large advertising companies dominate the online advertising business of inserting ads into web sites. With the constraints off, the big ISPs can enter this business since they will have better customer profiles than anybody else. We know that both AT&T and Charter have already been doing this.

Hijacking Customer Searches. Back in 2011 a bunch of large ISPs like Charter, Frontier and others were caught hijacking customer DNS searches. When customers would hit buttons on web sites or on embedded links in articles the ISPs would sometimes send users to a different web site than the one they thought they were selecting. The FCC told these companies to stop the practice then, but the new law probably allows the practice again.

Inserting Supercookies. Verizon Wireless inserted Supercookies on cellphones back in 2014. AT&T started to do this as well but quickly backed off when the FCC came down hard on Verizon. These were undetectable and undeletable cookies that allowed the company to track customer behavior. The advantage of the supercookies is that they bypass most security schemes since they grab customer info before it can be encrypted or sent through a secure connection. For example, this let the company easily track customers with iPhones.

Pre-installing Tracking Software on Cellphones. And even better than supercookies is putting software on all new phones that directly snags data before it can be encrypted. AT&T, T-Mobile and Sprint all did this in the past – just using a different approach than supercookies. The pre-installed software would log things like every website visited and sent the data back to the cellular carriers.

Ready or Not, IoT is Coming

We are getting very close to the time when just about every appliance you buy is going to be connected to the IoT, whether you want it or not. Chips are getting so cheap that manufacturers are going to soon understand the benefits of adding chips to most things that you buy. While this will add some clear benefits to consumers it also brings new security risks.

IoT in everything is going to redefine privacy. What do I mean by that? Let’s say you buy a new food processor. Even if the manufacturer doesn’t make the device voice-controlled they are going to add a chip. That chip is going to give the manufacturer the kind of feedback they never had before. It’s going to tell them everything about how you use your food processor – how long before you take it out of the box, how often you use it, how you use the various settings, and if the device has any problems. They’ll also be able to map where all of their customers are, but more importantly they will know who uses their food processor the most. And even if you never register the device, with GPS they are going to know who you are.

Picture that same thing happening with everything you buy. Remember that Tostitos just found it cost effective to add a chip to a million bags of chips for the recent Superbowl. So chips might not just be added to appliances, but could be built into anything where the manufacturer wants more feedback about the use of their product.

Of course, many devices are going to go beyond this basic marketing feedback and will also include interactions of various kinds with customers. For instance, it shouldn’t be very long until you can talk to that same food processor through your Amazon Alexa and tell it what you are making. It will know the perfect settings to make your guacamole and will help you blend a perfect bowlful. Even people who are leery of home automation are going to find many of these features to be too convenient to ignore.

There is no telling at this early stage which IoT applications will be successful. For instance, I keep hearing every year about smart refrigerators and I can’t ever picture that ever fitting into my lifestyle. But like with any consumer product, the public will quickly pick the winners and losers. When everything has a chip that can communicate with a whole-house hub like Alexa, each of us will find at least a few functions we love so much that we will wonder how we lived without them.

But all of this comes with a big price. The big thing we will be giving up is privacy. Not only will the maker of each device in our house know how we use that device, but anybody that accumulates the feedback from many appliances and devices will know a whole lot more about us than most of us want strangers to know. If you are even a little annoyed by targeted marketing today, imagine what it’s going to be like when your house is blaring everything about you to the world. And there may be no way to stop it. The devices might all talk to the cellular cloud and be able to bypass your home WiFi and security – that’s why both AT&T and Verizon are hyping the coming IoT cloud to investors.

There is also the added security risk of IoT devices being used in nefarious ways. We’ve already learned that our TVs and computers and other devices in the house can listen to all of our private conversations. But even worse than that, devices that can communicate with the world can be hacked. That means any hacker might be able to listen to what is happening in your home. Or it might mean a new kind of hacking that locks and holds your whole house and appliances hostage for a payment like happens today with PCs.

One of the most interesting things about this is that it’s going to happen to everybody unless you live in some rural place out of range of cell service. Currently we all have choices about letting IoT devices into our house, and generally only the tech savvy are using home automation technology. But when there are chips embedded in most of the things you buy it will spread IoT to everybody. It’s probably going to be nearly impossible to neutralize it. I didn’t set out to sound pessimistic in writing this blog, but I really don’t want or need my toaster or blender or food processor talking to the world – and I suspect most of you feel the same way.

Content Finally is King

One of the more common memes in our industry is the phrase “content is king.” This was first said by Sumner Redstone of Viacom in 1994 but made more famous by Bill Gates in 1996. The phrase has been used since then to describe how the creators of content have the power in our industry – be that programming or web content.

John Stankey, the CEO of AT&T Entertainment, recently emphasized this same concept in talking about the company’s planned merger with Time Warner. At the recent Mobile World Congress in Barcelona he said, “We just cannot envision a future where AT&T is relevant if we don’t directly participate in some of the water flowing through our pipes.”

All of the big ISPs have decided that content is key to their survival. Comcast already owns a mountain of programming, and after the merger with Time Warner, AT&T will be a content powerhouse as well. Verizon has climbed into the game with the acquisitions of AOL and Yahoo. There are web companies with the same philosophy. Netflix has built a new industry by creating new content. Google is pushing content heavily through YouTube. Amazon has started to create unique content and recently said they are going to make that a priority. Facebook is becoming a content force through Facebook Now.

I remember having this conversation with Derrel Duplechin of CCG back in 2000. We were asked by several clients to speculate about the future of the carrier industry and we foresaw that most carriers were likely on the path to eventually become what we called “dumb pipe” providers. I remember that this was a story that many of our clients did not want to hear.

We lived in a different carrier world in 2000. Most homes still had telephones and voice was the most profitable product for most carriers. The cable TV product that many of our clients sold then also had decent margins. But we predicted that both products would eventually sink in importance and in margins and that eventually most of our clients would earn most of their profits from broadband. We thought this would happen to all carriers, small and large, and we figured that the most profitable future companies would be those that found some other line of business other than just selling data pipes to end users.

We had some clients take this to heart and some of them have made a really good living by providing extra value to customers. For example, we have several clients who thrive by bringing a suite of products to businesses other than just plain connectivity. But for the most part, the majority of the ISP industry sells dumb pipes today. They compete with the speed of those pipes and with price and with good customer service – but the primary products (and the driver of most of the profits) are now data pipes.

The big companies like AT&T, Verizon and Comcast looked at that future and it scared them. It’s pretty obvious that if your only product is dumb pipes that your earnings are not going to continue to grow fast enough to satisfy Wall Street. This is probably what convinced Verizon to stop expanding their FiOS network. Both AT&T and Verizon got huge earnings boosts from expanding their cellular businesses, but that industry also seems to be heading towards the same plateau as landline ISPs – cell service is becoming a commodity.

So these big companies are now pursuing content because it looks to be the last area in our industry with the potential for significant bottom line growth. It’s going to be an interesting race to watch. Content providers have succeeded or failed over the years according to their ability to find smash hits. A huge hit movie or TV series can mean huge returns to the bottom line. But content providers that don’t create what the public wants to watch suffer badly in terms of stock prices and earnings. Being a content provider is not predictable in the same way as telecom.

Interestingly. AT&T, Verizon, and Comcast are now direct competitors of Facebook, Google, Amazon and Netflix. Content certainly is king, but content also brings the risk from competition. The companies that fall behind in this race are likely to be gobbled up by their more successful competitors. I find it extremely unlikely that all of these big companies will still be in existence in 10 years.

There is no real barrier to entry into the world of content creation other than having a pile of money. It’s likely that other big companies will join the content fray. But all of these companies are entering a world that is in big flux. For example, traditional video and web content might well be replaced by virtual and enhanced reality. The companies that succeed in content will have to spend a lot of money staying one step ahead of the competition, and my money is on the more nimble technology companies. Twenty years ago I would have been shocked to know that someday AT&T would have a CEO of Entertainment – and that may turn out to be the most important job in the corporation.

Unlimited Cellular Data Pricing

SONY DSCI recently wrote a blog about how all of the cellular companies are now offering unlimited data plans. Today I’m going to look at their plans in some detail to discuss what they really mean by “unlimited.”

AT&T. AT&T now has two unlimited plans. Unlimited Choice starts at $60 for one phone with unlimited voice, text and data. It’s $55 for a second line and $20 each for lines up to ten. There is an extra fee of $5 per month for one line or $10 for multiple lines if the customer doesn’t elect autopay. Data comes with lots of limits. Video is capped at 480p standard resolution. Total download speed is limited to 3 Mbps with video capped at 1.5 Mbps, regardless of the quality of the 4G stream available. And while there is no data cap, AT&T starts throttling data speeds for the month when a customer hits 22 GB of download. And last – and what will be a killer for most potential customers – it doesn’t allow tethering.

The Unlimited Plus plan starts at $90 for the first phone. It also includes a penalty for not using autopay. It undoes all of the speed restriction of the choice plan and can stream HD video. It also allows up to 10 GB per month for tethering. It has the same monthly cap of 22 GB before the data gets throttled. This still is not an alternative for home use because of the 10 GB cap on tethering. But it’s a good business travel plan. And a home user with a tablet might find this to be a good, if expensive, broadband alternative.

Verizon. Verizon’s unlimited plan is $80 for the first phone, $60 for a second, $22 for a third and $18 for a fourth. This also has unlimited voice and text. The data has a very unusual daily cap and speeds get throttled after hitting 500 MB download in a day. There is also a monthly cap of 22 GB, after which all data gets throttled. There is a 10 GB monthly allowance for tethering, with speeds throttled to 3G after hitting that cap. Verizon allows HD video streaming.

T-Mobile. T-Mobile’s plan is priced at $70 for the first phone, $30 for a second, $41 for a third and $19 for a fourth. This also has unlimited voice and text. There is a monthly cap of 28 GB after which data gets throttled. There is a 10 GB monthly allowance for tethering, with speeds throttled to 3G after hitting that cap. T-Mobile allows HD video streaming.

Sprint. Sprint’s plan is priced at $50 for the first phone, $40 for a second. But these are promotion prices and the company warns they will probably price to ‘market’ after March 31. This also has unlimited voice and text. There is a monthly cap of 23 GB after which data gets throttled. There is a 10 GB monthly allowance for tethering, with speeds throttled to 2G (which has been discontinued in much of the country) after hitting that cap. Note that at 2G you can’t even read email, so this is effectively a hard cutoff.  Sprint allows HD video streaming capped at 1080p quality.

Various Issues. There are activation fees to consider with some of the companies. AT&T and Sprint charge $25 and Verizon $30. T-Mobile has no activation fee. T-Mobile also includes all taxes and fees in its price, something that can be fairly expensive in some parts of the country.

None of these plans is truly “unlimited” and I won’t be shocked to see the Federal Trade Commission going after all of these carriers for advertising them that way. Certainly none of these are going to be a good alternative for home broadband, except perhaps for rural customers with no better alternative. But I think even rural users will find the cap on tethering and the throttling after a fairly stingy amount of download to be impossible to live with. It’s a shame because many rural homes using traditional cellular broadband have monthly bills of $500 to $1,000.

Interestingly, I just saw yesterday that some Wall Street analysts are slamming Verizon because they fear that their network cannot handle these new ‘unlimited’ plans. But as you can see these plans are not unlimited. They are effectively capped at 2 – 3 times the size of existing family plans, that that assumes that customers will use all of the allotted data-  which many will not. There is already plenty of excess capacity to handle this at the vast majority of cell sites. And this isn’t going to much hurt the cell sites that are already over-busy.

For customers that routinely go over the current cellular data caps these might be a great alternative. Current cellular data is priced at $10 per gigabyte and these plans have reduced data prices to a more affordable price under $2 – $3 per gigabyte for somebody that uses the full allowance. But compared to traditional plans these plans all have hard monthly caps – and while those caps are at 22 GB or higher, they are effectively hard caps since data gets throttled and becomes largely unusable after hitting the cap. These plans will all tease you into watching a lot of video and then penalize you heavily for watching too much.

The Transition to IP Telephony

ATTAT&T reported to the FCC about the progress of its transition of customers from a traditional TDM network to an all-IP network. AT&T had undertaken two trials of such a conversion in Carbon Hill, AL and Delray Beach, FL.

These were voluntary trials. AT&T had advertised widely and asked customers to move to the new IP-based services. In Carbon Hill 36% of residents and 28% of businesses voluntarily moved to the new service. In Delray Beach the numbers were similar with 38% and 25% converting. AT&T reported there were no reports of degraded service, including the transition of business customers to IP-based Centrex and similar services.

Since the trials were announced AT&T has also grandfathered Centrex and TV1-Analog Video service, meaning they will take no new orders for the services. The company also asked the FCC’s permission to discontinue 13 legacy services that are obsolete. This includes products that most people never heard of like 4-wire and voice-grade telemetry and various alarm bridging services. The company also has asked permission to discontinue six operator services including collect calling, person-to-person calling, billed to third party, busy line verification, busy line interrupt and international directory assistance.

These trials need to be put into perspective. From a technical perspective there is no reason to think that transitioning these service from TDM to IP-based technology wouldn’t work because a lot of the rest of the telephony world made that transition years ago. Cable companies like Comcast and anybody operating on an all-fiber network has been offering IP-based telephone products for many years. AT&T’s offerings include many products that are strictly copper-based, such as the legacy products they want to discontinue.

And that leads to the whole purpose behind these trials. AT&T wants to move customers off old copper networks to either a landline or wireless IP-based solution. Since the company’s goal is to tear down copper, the vast majority of such transitions will be to the company’s cellular network. A miniscule percentage of AT&T’s customers are on fiber – particularly residential customers since the company has launched very little FTTP in that market.

The trials are largely the result of what happened to Verizon on Fire Island a few years ago after Hurricane Sandy. There Verizon didn’t replace destroyed copper but moved people to a cellular-based service. But unlike these trials, which were meticulously slow and careful, it seems that in many of the Fire Island cases Verizon did not offer equivalent services to what they had offered before the hurricane. Apparently things like burglar alarms, medical monitoring devices, and other services didn’t work on the new wireless connections.

The FCC has already granted these big telcos the ability to tear down copper as long as they follow customer notification processes. My guess is that after these trials are blessed by the FCC that the companies will begin ripping down rural copper all over the country.

I expect that many customers are going to be unhappy when they lose their copper. Anybody who has traveled in rural areas understands that cellular coverage is often spotty, or even non-existent. Customers are worried about being cut off from telephony services inside their homes. It’s a legitimate concern for somebody with poor cellular service and with little or no broadband options, like we see in millions of rural homes and businesses.

But the time is coming soon when these transitions will not be voluntary like was done in these two communities. The big telcos will issue the legally required notices, and then they will proceed to shut off and tear down the copper. In doing so they will have undone the original FCC’s goal set by the Telecommunications Act of 1934, which was to make telephone service available everywhere. There are now going to be homes and communities that are going to be cut off from a workable alternative to make reliable voice calls.

I honestly never thought I’d see this happen. But I guess it was the pretty obvious end game after it became clear decades ago that the big telcos were not going to properly maintain their rural copper networks. We aren’t too far from the day when copper telephone networks join the list of other technologies that outlived their usefulness and are a thing of the past – at least for the giant telcos. There are still other companies like Frontier and Windstream that are fighting to extend the life of their copper, but we’ll have to see what the future holds for them and their customers.

The Challenges of Fixed Gigabit Wireless

webpass_logoWe got a preview this week of what fixed wireless service might look like in urban environments. Google announced it is aggressively expanding the footprint of Webpass, the wireless ISP that Google purchased last year. The company has been operating in six cities and will now be expanding to nine more markets. These will all be downtown urban deployments.

The deployment uses high-capacity microwave links to serve high-rise buildings. Webpass already has 20,000 residential customers in the six markets, all which live in downtown high-rises. The company focuses more on serving business customers. This business plan has been around for years and I was actually helping to launch a business years ago with the same plan that died with the 2000 telecom crash.

The network consists of microwave shots to each building on the network. The first hurdle in getting this to work is to get enough quality radio sites to see buildings. As I noted in a blog last week, access to this kind of real estate is at a premium in urban areas, as cellphone providers have found when trying to deploy small cell sites.

The radios required to make the links are not gigantic, but you need one full radio and a dish at both ends of every link. This means that from any one given hub building there will be a limited number of links that can be made to other buildings, just due to space limitations. If you imagine half a dozen companies trying to this same thing (this will be the same basic deployment method for urban 5G), then you can picture a proliferation of companies fighting over available radio space on roofs.

Webpass in the past has limited their deployment to buildings that are either already wired with category 5 cable or fiber. They face the same issue that any broadband provider faces in bringing broadband into older buildings – only they are starting on the roof rather than from a basement wiring closet like other ISPs. There are very few ISPs yet willing to tackle the rewiring effort needed in large older buildings that serve residences. As you will see from the pricing below, Webpass and other ISPs are a lot more willing to tackle business buildings and absorb some rewiring costs.

The primary thing for the public to understand about this new roll-out is that it’s very limited. This won’t go to single family homes. It will go to downtown residential high-rises, but only to those that are pre-wired or easy to wire. And even in those buildings Webpass won’t go unless they get at least 10 customers. However, they will contract with landlords to serve whole buildings.

The Webpass pricing is interesting. For residential customers the price is $60 per month regardless of the speed achieved. Webpass says they deliver speeds between 100 Mbps and 500 Mbps, but in reading numerous reviews, there are complaints that speeds can get slower at peak evening time in some buildings (as one would expect when there are a lot of customers sharing one radio link).

Webpass’ pricing for businesses varies according to the number of other customers they get in a building. For example, if there are 10 or more business customers in a building they will sell a 100 – 200 Mbps connection for $250 per month with a 10 TB monthly data cap. But prices are much higher for customers in buildings with fewer than 10 customers:

Speed              Cost                 Data Cap         Price with no Cap

10 Mbps          $125                   1 TB                $375

20 Mbps          $250                   2 TB                $750

50 Mbps          $500                   5 TB                $1,500

100 Mbps        $1,000                10 TB              $2,000

250 Mbps                                                           $2,500

500 Mbps                                                           $4,000

1 Gbps                                                                $5,500

From a technical perspective Webpass is deploying in line with the way the technology works. The radios are too expensive to deploy to smaller customers or to smaller buildings. A building also need to be within a mile of the base transmitter (and hopefully closer) to get good speeds. That is largely going to mean downtown deployments.

We know there are a number of other companies considering a similar plan. Starry announced almost two years ago that they were deploying something similar in Boston, but has yet to launch. We know AT&T and Verizon are both exploring something similar to this Google product using 5G radios. But all of these companies are going to be fighting over the same limited markets.

The cellular companies keep hinting in their press releases that they will be able to use 5G to bring gigabit speeds. When they say that, this is the kind of deployment they are talking about. The only way they are going to be able to bring gigabit wireless speeds to single family homes and to suburbs is if they can develop some sort of mini transmitters to go onto utility poles. That technology is going to require building fiber close to each house and the radios are going to replace fiber drops. The above deployment by Webpass is not hype – they already have customers in six markets. But this technology is not the panacea for fast broadband for everyone that you might believe from reading the press releases.

A Year of Changes

fast fiberI can’t recall a time when there were so many rumors of gigantic changes in the telecom industry swirling around at the same time. If even half of what is being rumored comes to pass this might be one of the most momentous years in the history of telecom. Consider the following:

Massive Remake of the FCC.  Ajat Pai has been named as the interim head of the FCC, but it’s been said that the president is already referring to him as the Chairman. We know that Pai was against almost every initiative of the Wheeler FCC and there are expectations that things like net neutrality and the new privacy rules will be reversed or greatly modified.

There are also strong rumors in the industry that the new administration is going to follow the advice of the transition telecom team of Jeff Eisenach, Roslyn Layton and Mark Jamison. That team has proposed the following:

  • A reapportionment of ‘duplicative’ functions at the FCC. Functions like fostering competition and consumer protection, for example would be moved the Federal Trade Commission.
  • A remake of telecom rules to remove ‘silos.’ For as long as I can remember we’ve had separate rules for telcos, cable companies, wireless companies and programmers. That probably made sense when these were separate industries, but today we see all of these business lines about to converge within the same corporation like Comcast or AT&T. The transition team says it’s time to change the rules to reflect the reality of technology and the marketplace.

At this point I’ve not seen any specific proposals on what those streamlined rules might be. And Congress will have to take an active role in any changes since the current FCC responsibilities are the results of several major telecom and cable acts.

Verizon Looking to Buy a Cable Company. It’s been reported that Lowell McAdams, the CEO of Verizon, has told friends that the company will be looking for a cable acquisition to boost demand for its wireless data. McAdams also talked to analysts in December and described how Charter might be a natural fit with Verizon. There is also speculation on Wall Street that Comcast could be the target for Verizon.

Mergers of this size are unprecedented in the industry. Charter has over 20 million residential data customers and is second behind Comcast’s 23 million data customers. And both companies now have a significant portfolio of business customers.

I remember a decade ago when AT&T started buying back some of the RBOCs that had splintered off during divestiture back in 1984. We all joked that they were slowly putting Ma Bell back together. But I don’t think anybody ever contemplated that the biggest telcos would ever merge with the cable companies. That would remove the last pretense that there is any competition for broadband in urban areas.

More Merger Mania. At one point it looked like the new administration would be against the AT&T and Time Warner merger. But Wall Street now seems to be convinced the merger will happen. The merger will likely come with the typical list of conditions, but we know from past experience that such conditions are only given lip service. AT&T has already taken a strong position that the merger doesn’t need FCC approval. That would mean that most of the government analysis would come from the Justice Department. Just like with the rumored Verizon acquisitions, this merger would create a giant company that operates in all of the FCC-controlled silos. We don’t really have an effective way today to regulate such giant companies.

Verizon might need to hurry if it wants to buy a giant cable company since there is a rumor that Comcast, Charter and Cox plan to go together and buy T-Mobile. That makes a lot more sense than for those companies to launch a wireless company using the Verizon or AT&T platform. Such an arbitrage arrangement would always allow the wireless companies to dictate the terms of using their networks.

Unlimited Cellular Data

SONY DSCAll four major wireless carriers have been in the news recently concerning unlimited wireless data plans. The unlimited plans get even more intriguing when you consider that the upcoming FCC is likely to be hands off and may allow the carriers to have zero-rating plans. With zero-rating the carriers will give customers unlimited data for the carrier’s own content, but put limits on all other data.

There has also been a lot of talk this year in the industry that people are dropping landline data plans and migrating back to cellphone data. But when you look at the plans available to customers it’s hard to see any of these plans being competitive with good landline data (emphasis on good). Here are the unlimited data plan options of the four big wireless carriers:

Verizon is the easiest to understand and they hate unlimited data plans. They had unlimited plans years ago and worked hard to migrate customers off unlimited data. But about 1% of Verizon customers are still on these plans. The company recently notified customers who actually use their unlimited data that they are going to be disconnected unless they migrate to a suitable plan. And by suitable, the company offers a plan with 100 GB of download for $450 per month. This means that only a customer who doesn’t use their unlimited plan will be allowed to keep it.

AT&T introduced a new unlimited data plan this year, but it has a lot of strings attached. For example, customers of this plan are not allowed to create mobile hotspots for their laptop or tablets. For anybody that travels a lot like me, this is my primary use of mobile data and there are still many hotels around where the bandwidth is barely adequate to read emails. The AT&T unlimited plan also allows the company to throttle customers in two instances – if they are in a congested area or if they exceed 22 GB per month of download. To put that into perspective, my family of three cord-cutters used 660 GB of data last month – so it’s hard to think of 22 GB as ‘unlimited.’ AT&T’s plan is not cheap and costs $60 for the data plus $40 per phone, meaning it costs $100 per month for a single user.

Sprint and T-Mobile both came out with unlimited plans at the end of the summer. Sprint’s ‘Unlimited Freedom’ plan costs $60 for the first line, $40 for the second and $30 per additional line up to ten lines. Sprint’s unlimited plan doesn’t allow HD video and streams all video in standard definition. They also restrict music steaming to 500 kbps and gaming to 2 Mbps.

T-Mobile’s unlimited plan costs $70 for the first user, $50 for the second and $20 after that up for to eight users. T-Mobile is probably the least restrictive of the four companies. Their only restriction on the unlimited data is that they stream video in standard definition. But for $25 more per month customers can get HD video.

The big caveat on all of these plans is that LET data speeds in the US are among the slowest among developed countries. The OpenSignal report this year ranked the US at 55th in the world, placed between Russia and Argentina, at an average speed just under 10 Mbps.

I read a lot of news articles on my phone when traveling using Flipboard – a news site that lets me customize my news feed. Reading articles on my smartphone is the one part of my digital world that is still agonizingly slow. I often have to wait for 30 seconds or more for a news article to open – and it reminds me of the days when trying to open files back in the dial-up days.

The restrictions on these plans really highlight the hypocrisy of zero-rating. These carriers don’t want you to use their cellular data because they say it harms their network. And yet they are perfectly okay with letting customers view company-supplied content all day without restriction. This, more than anything, tells us that cellular data caps and other restrictions are all about making money and not about the network.

It’s still hard to think of any of these plans as a substitute for a landline connection. A cellular data plan like T-Mobile’s might make sense for somebody who is always on the go and not physically in one place very often. These plans are not cheap and I can certainly see households having to make a choice between a landline connection and a cellular plan. My gut tells me that any migration of landline customers to mobile-only data is probably a lot more about family economics than it is about being happy with one of these cellular data plan.