Fearing the Competition

Over the last six months, practically every big carrier in the industry has made a formal announcement that they are not worried about specific competitors. The latest one I read was in LightReading where Nick Jeffery of Frontier said he’s not worried about competition from the cable companies upgrading to DOCSIS 4.0 or from cellular carriers offering FWA home broadband. Frontier is building a lot of fiber, and Jeffery was commenting that he thinks fiber is a superior technology compared to the alternatives. To be honest, this might be the only claim I read where the ISP was being truthful. Frontier has been at the bottom of the heap in the industry for many years and led in the percentage lost broadband and cable TV customers quarter after quarter. It’s got to be refreshing for the company to be deploying a technology that gives it a fighting chance to succeed.

I’m not citing all of the other CEOs that said the same thing – but these announcements were pretty much across the board – basically, no carrier is afraid of other competitors.

I’ve seen all of the big cable companies quoted as saying they aren’t afraid of FWA cellular broadband. And yet, in the second quarter of this year, T-Mobile and Verizon added over 800,000 new customers, while the large cable companies collectively lost 150,000 customers during the quarter. The cable companies rightfully say they have superior technology when competing against 100 Mbps download speeds, but the FWA cellular carriers have much lower rates and are attracting customers who think that cable broadband costs too much.

The big telcos that are building fiber have all made the same claim about not fearing FWA wireless. The big telcos collectively lost less than 100,000 customers in the second quarter of this year, the best they’ve done in ages. The small loss disguises the fact that the telcos continue to lose DSL customers but are largely replacing them with fiber customers – except Lumen, which had a net customer loss for the quarter of 93,000.

I’ve seen most of the big fiber overbuilders scorning cable company broadband and saying they aren’t worried about DOCSIS 4.0 – like Frontier said. That’s a fairly easy thing not to fear for now since we’re a number of years away from any conversions to DOCSIS 4.0. But Comcast and others are talking about soon introducing some of the higher split technologies on DOCSIS 3.1 to boost upload speeds sooner. Will fiber overbuilders fear the cable companies more after some upgrades?

The WISPs that will be installing new versions of fixed wireless, including some technologies that claim to be able to deliver speeds up to a gigabit, say they are not afraid of competing against rural fiber networks built with grant funding. That’s an interesting claim since the general public seems to have grasped that fiber is better. It will be interesting to see what happens in places where rural fiber competes against fast rural broadband.

The big three cellular carriers all claim they are not afraid of Dish Network becoming the fourth major cellular carrier. It’s an odd claim to make since Dish says the only way for it to gain market share is to be extremely aggressive with prices. The cellular industry is already highly competitive, and it can’t be good for any of the bigger carriers to have to lower rates.

I get a chuckle every time I read one of these statements because when a carrier goes out of its way to mention a competitor, it is worried. The reality is that every carrier in a competitive situation has to be concerned about competitors. In the end, this is a battle that is going to be fought at the local level, market by market. I can picture that the various technologies will get a different reception depending on local factors. But for now, apparently, nobody fears the competition.

Cable Company Cellular Growing

Cable companies are starting to quietly build a significant cellular business to bundle with broadband and other products. Consider the most recent customer count from the eight largest U.S. cellular carriers:

Verizon 143.0 M
T-Mobile 110.2 M
AT&T 101.6 M
Dish 8.5 M
US Cellular 4.9 M
Comcast 4.6 M
Charter 4.3 M
C-Spire 1.2 M

It’s worth noting that AT&T has over 200 million cellular customers worldwide, which makes them the eleventh largest cellular carrier in the world, with China Mobile first with over 851 million customers.

Comcast’s Xfinity Mobile added 317,000 customers in the second quarter of this year to bring the company to a total of 4.6 million customers. Comcast mostly uses the Verizon network to complete calls. However, Comcast demonstrates the major benefit of a cable company being in the cellular business since the company is able to offload a large portion of its outgoing mobile traffic to its WiFi network. Comcast has been experimenting with the use of 600 MHz spectrum to carry some of its cellular traffic. The company purchased $1.7 billion of spectrum in the 2017 incentive auction that freed up spectrum formerly used by television channels. Comcast also purchased $458 million of CBRS spectrum in 2020. The company says it may selectively offload traffic onto licensed spectrum in places where that is cheaper than buying wholesale minutes.

Charter’s Spectrum Mobile added 344,000 mobile customers in the second quarter of the year to bring the company to 4.3 million customers. Spectrum also uses the Verizon network. Charter purchased $464 million of PAL licenses in the CBRS spectrum in 2020. Charter says it intends to place its own radios in high-traffic areas where that will save money. Charter’s CEO Brian Roberts said a few months ago that Charter saw $700 million in new revenues from cellular over the past twelve months.

Altice has been selling mobile services branded as Optimum Mobile for several years and added 33,000 customers in the second quarter, bringing the company to 231,000 total mobile customers. Altice uses the T-Mobile network.

Cox announced the launch of a mobile pilot program on August 29, launching Cox Mobile in Hampton Roads, Virginia, Omaha, Nebraska, and Las Vegas.

All of these companies have a huge potential upside. For example, the mobile customer penetration rate for both Comcast and Charter is under 10%, and both companies believe they can become major mobile players in their markets.

The cable companies face an unusual marketing challenge since each cable company is only in selected urban markets, meaning that a lot of nationwide advertising goes to waste.

The primary reason that Comcast first entered the mobile market was to develop another product that would create a stickier bundle. Comcast figured it would be hard for a customer to leave if that meant finding a new cellular carrier along with a new ISP. Cable companies are still only selling to their own broadband customers, which is a good indication bundling is still a key reason for doing this. It’s also less costly to sell cellular to households that can offload cellular traffic to the cable company broadband network.

The big three cellular carriers have continued to grow in recent years, but the cable companies have definitely made a dent in the market with almost ten million retail mobile customers. The real test for the cellular industry is going to come when Dish finally gets its act together and offers low-cost mobile service in most markets. That’s going to put price pressure on everybody else. If Dish starts a price war, as promised, we’re going to see a real shake-up.

 

 

Traditional Big ISPs Stagnate

In the first quarter of this year, the big cable companies added 482,000 customers while telcos added over 50,000 customers. In what is a surprise to the industry, that growth has disappeared, and all of the big ISPs collectively lost almost 150,000 customers. That’s a loss of 60,000 customers for the cable companies and 88,000 for the big telcos.

The following statistics have been compiled by the Leichtman Research Group, which tracks the broadband performance of the largest ISPs in the country.

The other big news is that the Fixed Wireless Access (FWA) products of T-Mobile and Verizon added 816,000 customers in the second quarter to bring the sector to net growth of 668,000 customers. This is huge news – FWA is booming while the big ISPs are standing still. The FWA product is home broadband delivered using cellular frequencies. T-Mobile and Verizon are aggressively marketing the product, which is touted to have download speeds over 100 Mbps. The market is going to get even hotter when AT&T and Dish networks enter the market in a big way.

The numbers for the second quarter of 2022:

 2Q 2022 2Q Change % Change  
Comcast 32,163,000 0 0.0%  
Charter 30,253,000 (21,000) -0.1%  
AT&T 15,509,000 (24,000) -0.2%  
Verizon 7,412,000 12,000 0.2%  
Cox 5,560,000 0 0.0%  
Lumen 4,377,000 (93,000) -2.1%  
Altice 4,333,600 (39,600) -0.9%  
Frontier 2,827,000 8,000 0.3%  
T-Mobile FWA 1,544,000 560,000 56.9%  
Mediacom 1,468,000 0 0.0%  
Windstream 1,178,500 2,500 0.2%  
Cable ONE 1,059,000 2,000 0.2%  
Breezeline 717,919 (1,689) -0.2%  
Verizon FWA 700,000 256,000 57.7%  
TDS 500,800 5,600 1.1%  
Consolidated 381,213 1,063 -0.2%  
   Total 109,984,032 667,874 0.3%  
         
Total Cable 75,554,519 (60,289) -0.1%  
Total Telco 32,185,513 (87,837) -0.3%  
FWA 2,244,000 816,000 57.1%  

There is a lot to unpack in these numbers:

  • The cable companies have gained customers every quarter for far longer than a decade, so this net loss for the sector is a big surprise.
  • There is another story underneath the big telco losses – fiber is doing well. AT&T added 316,000 fiber customers in the quarter but still had a small net customer loss. Frontier added 54,000 fiber customers for the quarter and had a small net customer gain. Verizon added 36,000 FiOS customers in the quarter. Lumen added 28,000 fiber customers for the quarter but continued to bleed DSL customers.
  • T-Mobile leaped to become the ninth largest ISP in the country.
  • TDS repeated as the fastest growing traditional ISP.
  • Lumen lost the largest percentage of customers compared to other telcos. Altice was the biggest percentage loser among cable companies.

The CHIPS Act and Wireless

The recently enacted CHIPS and Science Act of 2022 is providing a lot of funding to bring more chip manufacturing back to the U.S. This funding fills a big hole in the U.S. supply chain. We have some chip manufacturing in the U.S., but we only make about 12% of the chips that we use in cellphones, cars, computers, and broadband technology.

Making domestic chips became a national priority when we saw during the pandemic that international chipmakers took care of regional demand before U.S. demand. U.S. automakers are still largely on hold due to a lack of chips, and there has been a rumor floating around the broadband industry that we’re going to see another round of chip shortages for broadband gear. It will take some years to turn this new funding into chip factories, but in the long run, this is one of the more sensible things Congress has done in many years.

The CHIPs Act approved $52 billion to bring chip manufacturing back to the U.S. But like all big legislation, not all of the money appropriated goes to the main goal. For example, there is funding in the bill for new research and development in the technical sciences. Today’s blog looks at funding from the CHIPs Act that is being used for the mobile industry. Specifically, the CHIPS legislation:

Appropriates $1.5 billion for the Public Wireless Supply Chain Innovation Fund, to spur movement towards open-architecture, software-based wireless technologies, funding innovative, ‘leap-ahead’ technologies in the U.S. mobile broadband market. The fund would be managed by the National Telecommunications and Information Administration (NTIA), with input from the National Institute of Standards and Technology, Department of Homeland Security, and the Intelligence Advanced Research Projects Activity, among others.

This sounds like funding for wireless product research to find new market uses for 5G. I’m a big believer that the federal government should have a large role in funding basic science research and development. One of the reasons that the U.S. has had technological success in the past is that we funded the basic research that has made the breakthroughs that turned into our current technology industries. National funding for pure research has fallen in recent years to woefully low levels.

But I’m not a big fan of the U.S. government undertaking product research. That is something that ought to be left to the industries that will benefit from the research. This $1.5 billion feels like a handout to the big wireless companies – and they don’t need this money.

Consider dividends. Verizon paid out $10.4 billion in dividends to stockholders in 2021, or almost $2.50 for every outstanding share. In recent shareholder meetings, the company says the goal is to increase dividends in the coming years. AT&T most recently paid $8 billion per year in dividends or $1.11 per share in recent quarters.

T-Mobile is the most cash-flush of the big cellular carriers and told shareholders earlier this year that the company plans to spend $60 billion by the end of 2025 to buy back its own stock.

These three companies don’t need a $1.5 billion government handout, but as often happens, the industries that lobby the hardest often get rewarded with funding. If the $1.5 billion is spent wisely, it might turn into future profits for these companies. But this is research that these companies should be routinely funding directly.

This feels like a residual benefit to these companies from all of the effort they put into persuading the government that we were losing an imaginary 5G war with China. That discussion is still not completely dead, and we still occasionally hear a politician talking about our 5G crisis.

I love the concept behind the CHIPS Act, and I hope it spurs 100,000 new permanent manufacturing jobs and greatly expands the domestic chip supply. But I am not a fan when big legislation is used to pay back industries that spend huge money to lobby politicians.

Who is the Fastest ISP?

I regularly run across articles that ask which major ISP is the fastest. Most of these articles get their speed data from Ookla, which publishes comparative median broadband speeds for mobile and landline ISPs each quarter, like in this report for the second quarter of 2022.

Americans love a horse race – we like to rank things, and articles that rank ISPs grab readers. But we have to take articles based upon the Ookla rankings with a grain of salt. Ookla doesn’t make any claims about its numbers – it just presents the data.

There are a few things to note about the Ookla numbers. First, the results come from the many speed tests reported to Ookla. We know that a significant number of speed tests aren’t perfect due to issues at the customer end, such as an old WiFi router or taking the speed test at the far end of the house away from the WiFi router. Most importantly, Ookla reports median speeds – meaning half of all speed tests for a given ISP are faster, and half are slower than the value shown. Median speeds don’t seem to be a great metric for comparing ISPs.

Here are the median speeds for the second quarter from Ookla for the largest landline ISPs.

Download Upload
Cox 196.73 10.60
Xfinity 184.08 18.88
Spectrum 183.84 11.70
Verizon 171.01 112.36
AT&T Internet 146.64 112.27
Frontier 136.99 113.21
CenturyLink 41.29 12.02

What do these numbers tell us (and not tell us)?

  • The results are only from customers who took speed tests. I have to think that customers who have blazingly fast Internet don’t take a speed test as often as customers who are seeing sluggish performance. Summarizing the speeds for only those who take a speed test is very different than measuring the average speed being delivered to all customers by an ISP.
  • One of the factors that likely has a big impact on the median speed is the mix of broadband speed products offered by each ISP. An ISP that sells a lot of 50 Mbps or 100 Mbps download products is likely to have a lower median speed than an ISP that has a minimum speed of 200 Mbps. The numbers above include ISPs with widely different speed products and prices.
  • This list only includes the largest ISPs. Smaller ISPs that offer fast products, like Ting, Sonic, US Internet, and many others, would blow away these median speeds.
  • I saw two articles that declared that Cox is now the fastest ISP in the country. Is it really? Just two quarters ago, at the end of 2021, Verizon had a median download speed of 201 while Cox was at 172. This variability from quarter to quarter is a good indication that you can’t make any serious judgment about an ISP based on median speeds. I can’t imagine that Verizon got slower – there was just a different mix of Verizon customers who took the Ookla speed test in the fourth quarter and the second quarter.
  • It’s interesting that none of the median upload speeds for cable companies is at the proposed 20 Mbps definition of broadband being considered by the FCC. This suggests more than half of all customers of the cable companies have upload speeds of less than 20 Mbps – and it’s likely that far more than half don’t achieve the 20 Mbps upload threshold. Is Cox really the fastest ISP when it doesn’t seem to meet the FCC’s proposed definition of broadband?
  • It’s clear that the measurements for CenturyLink include DSL. I’ve seen individual speed test results from CenturyLink Fiber customers that show symmetrical speeds – and far faster speeds than these numbers. By comparison, it looks like the Frontier, AT&T, and Verizon speeds are for fiber customers and don’t include DSL.

I like ranking as much as anybody, but I am unable to draw too many conclusions from the Ookla numbers. Perhaps the most you can say is that both fiber and cable companies are delivering decent download speeds – at least to the top 50% of customers. But these numbers are another example of the paltry upload speeds being delivered by the cable companies. I can’t pick the fastest ISP from this table – if I was forced to choose, I’d say Verizon. But that’s a pretty weak pick using median speeds. All of these ISPs offer a gigabit download product, and from that perspective, they are all the fastest – except for the ISPs not on this list that now offer a residential 10 Gbps broadband product.

The Upcoming Marketing Wars

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

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

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

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

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

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

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

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

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

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

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

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

The Speed of Thought

Verizon has created a 1-hour documentary on the potential for 5G called the Speed of Thought. It’s available on Amazon Prime, on Comcast’s Peacock, as well as on Verizon FiOS on demand. Here is the trailer for the film.

It’s an interesting video that looks a decade into the future from the eyes of 5G developers. The main thrust of the video is that the future of 5G is going to offer a lot more than just faster data speeds for cellphones. The documentary looks at some specific examples of how 5G might interface with other technologies in the future to provide solutions that are not needed today.

The documentary looks at the potential for marrying 5G and augmented reality for firefighters to better let them navigate inside buildings during fire to find and save people. This will require having building plans on file for the fire department that could then be used by firefighters to navigate during the near zero visibility during a fire. I have to admit that this is a pretty cool application that would save lives if it can ever be made to work. The application requires fast wireless broadband in order to communicate a 3D image of the inside of a building in real-time.

The documentary also explores using 5G to assist in emergency medicine in remote places. In Western North Carolina where I live this is a real issue in that residents of many western counties live hours away from a hospital that could save lives for heart attacks, strokes, and accidents. The example used in the film is the use of a robot that assists with a heart procedure in San Francisco, but controlled from Boston. I have a hard time thinking that’ll we’ll ever trust broadband-enabled surgery in major hospitals since an unexpected broadband outage – something that happens far too often – means a loss of life. But the idea of being able to administer to remote heart attack and stroke victims has major potential as a lifesaver.

There is also a segment where students are taught about the civil rights movement in an interactive environment using augmented reality. I have to think this technology will be introduced first in schools which largely have been connected to gigabit fiber in most of the country. However, the idea of tying augmented reality to places like a battlefield or an art museum sounds appealing. It’s hard like immersive learning – actually seeing and participating in events – would be a much more effective way to learn than reading books.

Finally, there is a segment on a test program in Sacramento that uses 5G to provide instant feedback on traffic conditions to drivers, pedestrians, and bicycle riders. This is obviously the first generation of using 5G to create smarter or self-driving vehicles while also benefitting pedestrians and others who enter traffic lanes. Verizon has been talking about using 5G for smart cars since the earliest days of talking about 5G. There is still a long way to go, and even when this gets here it’s likely to appear in places like Sacramento and not in rural America.

The documentary is well done and ought to be interesting to anybody in the industry. But it is still an advertising piece intended to convince people that 5G is a great thing. What I don’t see in all of these applications is a giant new revenue stream for Verizon. Using augmented reality for education is likely to evolve and use landline broadband long before it’s made mobile. Applications like the one that makes life easier for firefighters are intriguing, but it’s hard to envision that as a mover and shaker of Verizon’s bottom line. I think the one that Verizon is hoping for is smart vehicles and traffic control. The company hopes that every car of the future comes with a 5G subscription. Verizon also hopes that people in the future will wear augmented reality glasses in daily life. I really like the imagery and stories told in the documentary, but I remain leery about the predictions.

CBRS Auction Winners

The FCC held a recent auction for the  3.5GHz Citizens Band Radio Spectrum (CBRS). The auction went for 76 rounds and raised over $4.5 billion for the FCC. This auction was unique in that spectrum was licensed at the county-level awarding up to seven licensed 10 MHz channels in each county. Each PAL (Priority Access License) is good for 10 years.

CBRS spectrum can be used in several applications. The spectrum has good field operating parameters and falls in the middle between the two existing blocks of spectrum used for WiFi. This makes the spectrum ideal for rural point-to-multipoint fixed wireless broadband since it can carry a decent amount of bandwidth for a decent distance. The best aspect of this spectrum is that it’s licensed and will largely be free from interference. For the same reasons, this is also a good spectrum for cellular data.

The biggest winner in the auction was Verizon which spent $1.89 billion on the spectrum. The company landed 557 PALs licenses in 57 counties. The company needed this spectrum to fill-in mid-range spectrum for 5G. Verizon has also recently announced a fixed cellular broadband product for rural homes and this spectrum could provide an interference-free way to deliver that product from rural cell sites.

As expected, Dish networks was also a big winner and will be paying $913 million for CBRS spectrum. As the newest nationwide cellular carrier, the company needed this spectrum to fill in the holes in the cellular spectrum it already controls. The other traditional cellular companies were a no-show. AT&T didn’t buy any of the CBRS spectrum. T-Mobile only purchased 8 PALs licenses in six counties.

The largest cable companies scored big in the auction. Charter bought $464 million of spectrum, Comcast is paying $458 million for spectrum, and Cox purchased $212 million of spectrum. As the newest entrants in the cellular business, Comcast and Charter have been buying wholesale cellular broadband from Verizon – this spectrum will let them shift to their own cell sites for a lot of cellular traffic. There is also speculation that cable companies might be planning on using the new spectrum to launch a fixed-wireless product in the rural areas surrounding their cable properties. Both Charter and Cox have entered the upcoming RDOF auction that is awarding $16.4 billion for rural broadband and the companies might be planning on using this spectrum to cover any areas they can win in that reverse auction.

One of the smaller cable companies, Midcontinent Communications, spent over $8.8 million for PALs licenses. Midco already won sizable rural grants to deploy 100 Mbps broadband in Minnesota and the Dakotas. This spectrum will help the company meet those grant pledges and perhaps allow it to pursue RDOF grants.

There were a few other large bidders. One was Nextlink which provides fixed wireless broadband today in Texas, Oklahoma, Kansas, Nebraska, Iowa, and Illinois. Windstream purchased over 1,000 PALs and the traditional telco is likely going to replace aging rural copper with wireless service, while also possibly be expanding into new service territories with fixed wireless. SAL Spectrum LLC won 1,569 PALs. This company owns numerous other blocks of spectrum and it’s not clear who the user of this new spectrum might be.

The biggest news is that the auction allowed smaller bidders to win licensed spectrum. There were 228 different winners in the auction, most of which are small WISPs, telcos, and electric cooperatives. These entities benefited by the FCC’s willingness to auction the spectrum at the county level. Most previous wireless spectrum was allocated using much larger footprints, which kept small bidders from acquiring spectrum.

Loving to Hate Our Big ISPs

The American Customer Satisfaction Survey (ACSI) was released earlier this summer that ranks hundreds of companies that provide services for consumers. Historically cable companies and ISPs have fared poorly in these rankings compared to other businesses in the country. The running joke reported in numerous articles about this survey is that people like the IRS more than they like their cable company (and that is still true this year).

But something interesting happened in this year’s survey and the ranking for cable companies collectively improved by 3% and consumer confidence in ISPs climbed 5%. There is no easy way to understand a national satisfaction survey, but those trends are interesting to contemplate.

Let’s start by looking at the numbers. Consumers still rank cable TV providers as the least liked group of companies in the country across all industries, joined at the bottom by ISPs. The ACSI ranks each company and each industry segment on a scale of 1 to 100. The top-rated industries are breweries (84%), personal care and cleaning products (82), soft drinks (82), and food manufacturing (81).

By contrast, cable providers are ranked the lowest at 64 followed closely by ISPs at 65. Joining these companies at the bottom are local governments (65.5), video-on-demand providers (68), and the federal government (68.1).

The overall ranking for cable providers grew from a 62 in 2019 to a 64 in 2020. I can only speculate why people like cable companies a little more this year. This could be due in part to huge growth in cord-cutters who no longer watch traditional cable TV and who might perhaps no longer rate a product they don’t use. Or perhaps folks have come to appreciate the cable product more during the pandemic when people are going out less, and likely watching TV more.

The cable providers at the bottom of the rankings continue to get low satisfaction ratings, with Suddenlink (56), Frontier (58), and Mediacom (60). Just above these companies are two of the largest cable providers – Charter (60) and Cox (61). But all of these companies had a slightly improved satisfaction ranking over 2019. The highest-ranked cable providers continue to be Verizon FiOS (70) and AT&T U-verse (70), now relabeled as AT&T TV.

ISPs didn’t fare much better. It’s worth noting that this list contains many of the same companies on the cable provider list, but consumers are asked to rank cable services separately from broadband services. The overall satisfaction for ISPs grew from a 62 in 2019 to a 65 in 2020. The same three providers are at the bottom – Frontier (55), Suddenlink (57), and Mediacom (59). At the top are the same two providers – Verizon FiOS (73) and AT&T Internet (68).

Part of the explanation of the change in approval ratings for the industries might be little more than statistical variance within the range of sampling. The rankings of individual ISPs vary from year to year. Consider Charter, ranked as an ISP. The company was ranked highest in 2013 and 2017 at a 65 ranking and lowest in 2015 (57) and 2019 (59). This year’s increase might just be variance within the expected range of sampling results.

What matters a lot more is that our cable companies and ISPs are generally consumer’s least favorite companies. This has always benefited smaller ISPs that compete against the big companies. One of the most common forms of advertising for smaller ISPs is, “We are not them”.

People don’t rate cable companies and ISPs so low due because they deliver technical products. Other technology sectors have much higher satisfaction ratings such as landline telephones (70), cellphones (74), computer software (78), internet search engines (76), and social media (70). Consumers are also like electric utilities a lot more than cable companies and ISPs – electric coops (73), and investor-owned and muni electric companies (72).

It’s always been somewhat disheartening to work in an industry that folks love to hate. But I’ve always been comforted by the fact that my smaller ISP and cable clients generally fare extremely well when competing against the big ISPs and cable companies. I have to assume this means people like small ISPs more than the big ones – or perhaps hate them a little less. That’s something every small ISP should periodically consider.

Who’s Chasing RDOF Grants?

There is a veritable Who’s Who of big companies that have registered for the upcoming RDOF auction. All of the hundreds of small potential bidders to the auction have to be a bit nervous seeing the list of companies they could end up bidding against.

As a reminder, RDOF stands for Rural Digital Opportunity Fund and is an auction that starts in October that will award up to $16.4 billion in broadband funding. The money will be awarded by reverse auction in a process that favors faster technologies, but also favors those willing to take the lowest amount of grant per customer. The areas that are eligible for the funding are among the most remote places in the country, which is why the list of potential large bidders is puzzling.

There are some big cable companies on the list: Altice, Charter Communications, Cox Communications, Atlantic Broadband, Midco, and Mediacom Communications. These companies serve many of the county seats or other nearby towns to many of the RDOF areas. One has to wonder what these companies have in mind. The only one that has chased any significant federal grants in the past is Midco in Minnesota and North Dakota. Midco has been using grant money to extend fiber backhaul to connect its smallest markets, to build last-mile broadband in some tiny towns, and to build fixed wireless in rural areas surrounding its cable markets.

One has to wonder if the other cable companies have a similar plan. It’s incredibly inefficient to build traditional hybrid coaxial-fiber networks in rural areas, so it’s unlikely that the cable companies will be extending their existing networks. The RDOF auction is being done by Census blocks, which in rural areas can cover a large area. The winner of the auction for a given Census block must offer service to everybody in that block. I also have a hard time envisioning all of these big cable companies getting into the wireless business like Midco is doing, so their presence in the auction is a bit of a mystery.

Then there are the traditional large telcos including Frontier, Windstream, Consolidated Communications, and CenturyLink. These companies already serve many of the areas that are covered by the reverse auction. These are the rural areas where these companies have largely neglected the old copper wiring and either offer no broadband or dreadfully slow DSL. The minimum technology allowed to enter the auction must deliver 25/3 Mbps broadband. It’s almost painful to think that these companies would chase the funding and promise to upgrade DSL to 25/3 Mbps after these companies largely botched an upgrade to 10/1 Mbps DSL in the just-ending CAF II grants. The cynic in me says they are willing to pretend to upgrade DSL all over again if that means substantial grant money. I have to think that some of these companies are considering deploying fixed wireless. To the extent any of these companies is willing to take on new debt or use equity, they could also build fiber. None of these companies has built a substantial amount of fiber to truly rural places, but may these grants are the inducement they were waiting for.

Verizon and U.S. Cellular have registered for the auction. You have to think the cellular carriers will be deploying fixed cellular broadband like the 4G FWA product that Verizon just announced recently. These companies already have equipment on towers in many of the RDOF grant areas and would love to grab a subsidy to roll out a product they might be selling in these areas anyway.

Then there are the satellite companies SpaceX, Hughes Network Systems, and Viasat. Viasat has won federal grant money before for selling broadband from its high-altitude satellites. SpaceX is the wildcard since nobody knows anything about the pricing or real speeds they can provide. We know that Elon Musk has been lobbying the FCC to let him have a shot at the billions up for grabs in this auction.

There is another interesting wildcard with Starry. Their business plan is currently selling fixed wireless to large apartment buildings in center cities and they’ve developed a proprietary technology that’s perfect for that application. They must have something else in mind in chasing grant money in remote areas that are 180 degrees different than their normal business model. Starry founder Chet Kanojia is incredibly creative, so he probably has a new technology in mind if he wins auction funding.

There may be other big players in the auction as well since many of the registered bidders are participating under partnerships or corporations that are disguising their identity for now. I think one thing is clear and some of the rural ISPs and cooperative who think nobody else is interested in their markets will get a surprise early in the auction. These big companies didn’t register for the grant auction to sit on the sidelines.