Winners of the CAF II Auction

The FCC CAF II reverse auction recently closed with an award of $1.488 billion to build broadband in rural America. This funding was awarded to 103 recipients that will collect the money over ten years. The funded projects must be 40% complete by the end of three years and 100% complete by the end of six years. The original money slated for the auction was almost $2 billion, but the reverse auction reduced the amount of awards and some census blocks got no bidders.

The FCC claims that 713,176 rural homes will be getting better broadband, but the real number of homes with a benefit from the auction is 513,000 since the auction funded Viasat to provide already-existing satellite broadband to 190,000 homes in the auction.

The FCC claims that 19% of the homes covered by the grants will be offered gigabit speeds, 53% will be offered speeds of at least 100 Mbps and 99.75% will be offered speeds of at least 25 Mbps. These statistics have me scratching my head. The 19% of the homes that will be offered gigabit speeds are obviously going to be getting fiber. I know a number of the winners who will be using the funds to help pay for fiber expansion. I can’t figure what technology accounts for the rest of the 53% of homes that supposedly will be able to get 100 Mbps speeds.

As I look through the filings I note that many of the fixed wireless providers claim that they can serve speeds over 100 Mbps. It’s true that fixed wireless can be used to deliver 100 Mbps speeds. To achieve that speed customers either need to be close to the tower or else a wireless carrier has to dedicate extra resources to that customer to achieve that speed – meaning less of that tower can be used to serve other customers. I’m not aware of any WISPs that offer ubiquitous 100 Mbps speeds, because to do so means serving a relatively small number of customers from a given tower. To be fair to the WISPs, their CAF II filings also say they will be offering slower speeds like 25 Mbps and 50 Mbps. The FCC exaggerated the results of the auction by claiming that any recipient capable of delivering 100 Mbps to a few customers will be delivering it to all customers – something that isn’t true. The fact is that not many of the households over the 19% getting fiber will ever buy 100 Mbps broadband. I know the FCC wants to get credit for improving rural broadband, but there is no reason to hype the results to be better than they are.

I also scratch my head wondering why Viasat was awarded $122 million in the auction. The company is the winner of funding for 190,595 households, or 26.7% of the households covered by the entire auction. Satellite broadband is every rural customer’s last choice for broadband. The latency is so poor on satellite broadband that it can’t be used for any real time applications like watching live video, making a Skype call, connecting to school networks to do homework or for connecting to a corporate WAN to work from home. Why does satellite broadband even qualify for the CAF II funding? Viasat had to fight to get into the auction and their entry was opposed by groups like the American Cable Association. The Viasat satellites are already available to all of the households in the awarded footprint, so this seems like a huge government giveaway that won’t bring any new broadband option to the 190,000 homes.

Overall the outcome of the auction was positive. Over 135,000 rural households will be getting fiber. Another 387,000 homes will be getting broadband of at least 25 Mbps, mostly using fixed wireless, with the remaining 190,000 homes getting the same satellite option they already have today.

It’s easy to compare this to the original CAF II program that gave billions to the big telcos and only required speeds of 10/1 Mbps. That original CAF II program was originally intended to be a reverse auction open to anybody, but at the last minute the FCC gave all of the money to the big telcos. One has to imagine there was a huge amount of lobbying done to achieve that giant giveaway.

Most of the areas covered by the first CAF II program had higher household density than this auction pool, and a reverse auction would have attracted a lot of ISPs willing to invest in faster technologies than the telcos. The results of this auction show that most of those millions of homes would have gotten broadband of at least 25 Mbps instead of the beefed-up DSL or cellular broadband they are getting through the big telcos.

The Flood of New Satellite Networks

I wrote a blog a few months ago about SpaceX, Elon Musk’s plan to launch a massive network starting with over 4,400 low-orbit satellites to blanket the world with better broadband. SpaceX has already launched the first few test satellites to test the technology. It seems like a huge logistical undertaking to get that many satellites into orbit and SpaceX is not the only company with plans for satellite broadband. Last year the FCC got applications for approval for almost 9,000 different new communications satellites. Some are geared to provide rural broadband like SpaceX, but others are pursuing IoT connectivity, private voice networks and the creation of space-based backhaul and relay networks.

The following companies are targeting the delivery of broadband:

Boeing. Boeing plans a network of 2,956 satellites that will concentrate on providing broadband to government and commercial customers worldwide. They intend to launch 1,396 satellites within the next six years. This would be the aerospace company’s first foray into being an ISP, but they have experience building communications satellites for over fifty years.

OneWeb. The company is headquartered in Arlington, Virginia and was founded by Greg Wyler. The company would be a direct competitor to SpaceX for rural and residential broadband and plans a network of over 700 satellites. They have arranged launches through Virgin Galactic, the company founded by Richard Branson. The company plans to launch its first satellite next year.

O3b. The company’s name stands for the ‘other 3 billion’ meaning those in the world with no access to broadband today. This company is also owned by Greg Wyler. They already operate a few satellites today that provide broadband to cruise ships and to third-world governments. Their plan is to launch 24 additional satellites in a circular equatorial orbit. Rather than launching a huge number of small satellites they plan an interconnected network of high-capacity satellites.

ViaSat. The company already provides rural broadband today and plans to add an additional 24 satellites at an altitude of about 4,000 miles. The company recently launched a new ViaSat-2 satellite this year to augment the existing broadband satellite service across the western hemisphere. The company is promising speeds of up to 100 Mbps. In addition to targeting rural broadband customers the satellite is targeting broadband delivery to cruise ships and airplanes.

Space Norway. The company wants to launch two satellites that specifically target broadband delivery to the Arctic region in Europe, Asia and Alaska.

The business plans of the following companies vary widely and shows the range of opportunities for space-based communications:

Kepler Communications. This Canadian company headquartered in Toronto is proposing a network of up to 140 tiny satellites the size of a football which will be used to provide private phone connectivity for shipping, transportation fleets and smart agriculture. Rather than providing broadband, the goal is to provide private cellphone networks to companies with widely dispersed fleets and locations.

Theia Holdings. The company is proposing a network of 112 satellites aimed at telemetry and data gathering for services such as weather monitoring, agricultural IoT, natural resource monitoring, general infrastructure monitoring and security systems. The network will consist almost entirely of machine to machine communication.

Telesat Canada. This Canadian company already operates satellites today that provide private voice communications networks for corporate and government customers. The company is launching two new satellites to supplement the 15 already in orbit and has plans for a network consisting of at least 117 satellites. The company’s largest targeted customer is the US Military.

LeoSat MA. The company is planning a worldwide satellite network that can speed a transmission around the globe about 1.5 times faster than terrestrial fiber networks. Their market will be large businesses and governments that need real-time communication around the globe for applications like stock exchanges, business communications, scientific applications and government communications.

Audacy Corp. The company want to provide the first satellite network aimed at providing communications between satellites and spacecraft. Today there is a bandwidth bottleneck between terrestrial earth stations and satellites and Audacy proposes to create a space-only broadband relay network to enable better communications between satellites, making them the first space-based backbone network.

Broadband Shorts – July 2017

Today I’m going to talk about a few topics that relate to broadband, but that are too short for a separate blog.

Popularity of Telehealth. The Health Industry Distributors Association conducted a follow-up survey of people who had met with a doctor via a broadband connection instead of a live office visit. The survey found that a majority of people were very satisfied with the telehealth visit and 54% said that they thought the experience was better than a live office visit.

Interestingly over half of the telehealth users were under 50 and they preferred telehealth because of the convenience. Many said that once they found their doctor would allow telehealth visits that they requested them whenever possible. Of course, many telehealth users live in rural areas where it can be a long drive to make a routine doctor office visit. The doctors involved in telehealth also like it for routine office visits. They do complain, however, that not enough insurance companies have caught up with the concept and that they often encounter reimbursement problems.

Explosion of Mobile Data Usage. Ericsson, the company that supplies a lot of electronics for the cellular industry, has warned cellular companies to prepare for an explosive growth in cellular data traffic over the next five years. They warn that within five years that the average cellphone user will grow from the average of today’s monthly usage of 5 gigabytes to a monthly usage of 26 gigabytes. They say the usage will be up to 6.9 gigabytes just by the end of this year – a 40% growth over last year.

They say that several factors will contribute to the strong growth. Obviously video usage drives a lot of the usage, but there is also huge annual growth from social media usage as those platforms incorporate more video. They also predict that by 2022, as we start to meld 5G cellular into the network, that users will feel more comfortable using data on their cellphones.

New Satellite Broadband. ViaSat just launched a new satellite that will allow for data speeds up to 200 Mbps. The satellite was recently launched and that has a throughput of 300 gigabits per second. The satellite is expected to be placed into service in early 2018 and will boost the company’s Excede broadband product.

The new satellite, dubbed ViaSat 2, will originally augment and eventually replace the company’s current ViaSat 1 satellite. The company currently serves 659,000 customers from the ViaSat 1 satellite plus a few it purchased from WildBlue in 2009. The new satellite will allow an expansion of the customer base.

The company expects that the majority of customers will continue to buy data products with speeds up to 25 Mbps, like those already offered by Excede. This tells me that the faster speeds, while available, are going to be expensive. This satellite will still be in a high earth orbit, which means the continued high latency that makes satellite service incompatible with any real-time applications. And there is no word if the larger capacity will allow the company to raise the stingy data caps that customers seem to universally hate.

Growth of Music Streaming. Nielsen released statistics that show that streaming audio is growing at an explosive rate and seems to have crossed the threshold to become the primary way that most people listen to music. Audio streams in 2017 are 62% higher than just a year ago. The industry has grown from an annual number of 113.5 billion steams to 184 billion in just one year.

Nielsen estimates that total listens to music from all media including albums and music downloads will be 235 billion this year, meaning that streaming video now accounts for 78% of all music listened to.

And this growth has made for some eye-popping numbers. For example, Drake’s release of More Life in March saw 385 million streams in the week after release. Those kinds of numbers swamp the number of people that would listen to a new artist under older media.