Actually, there is broadband money in the big federal budget bill


An extra $600 million was added to federal broadband subsidies for rural areas, in the mammoth, all-in-one spending bill passed by the house of representatives yesterday, and up for a vote in the U.S. senate today. I missed it Wednesday night as I was skimming through its two thousand-plus pages, but the sharp eyed journos at Politico’s Morning Tech newsletter caught it.

The money is tagged for “a new broadband loan and grant pilot program” run by the federal agriculture department’s Rural Utilities Service (RUS). It doesn’t define what exactly the program is supposed to be piloting, though. Aside from language barring overlapping loans or grants, the only direct instructions in the bill set out specs for determining whether or not a rural community is eligible…

At least 90 percent of the households to be served by a project receiving a loan or grant under the pilot program shall be in a rural area without sufficient access to broadband, defined for this pilot program as 10 Mbps downstream, and 1 Mbps upstream, which shall be re-evaluated and redetermined, as necessary, on an annual basis by the Secretary of Agriculture.

RUS already uses a 10 Mbps down/1 Mbps up eligibility criterion for its other rural broadband programs, but any infrastructure it subsidises has to be capable of supporting service at the Federal Communications Commission’s advanced services standard of 25 Mbps down/3 Mbps up.

That’s significantly better than the slow, 1990s DSL speed levels demanded by telco and cable lobbyists and approved by California’s lawmakers last year. Assembly bill 1665 lowered California’s minimum acceptable broadband speed to 6 Mbps down/1 Mbps up, and allowed California Advanced Services Fund subsidies to be spent on infrastructure as slow as 10 Mbps down/1 Mbps up.

Questions still to be answered about the new federal program include what sort of broadband service providers are eligible – RUS rules and traditions favor the small rural cooperatives and telephone companies prevalent in the midwest and south, but not so common in California – and how the money will be split between grants and loans.

Dig once, broadband spectrum added to federal budget bill


Broadband is getting a boost in the mammoth spending bill under consideration today in the U.S. house of representatives. But not cash.

Instead, the deal negotiated by republican and democratic congressional leaders rolls in a telecoms bill unanimously approved earlier this month by the house of representatives. It includes some useful, if mild, dig once requirements for federally funded highway projects – state transportation agencies will have to share construction plans, but not necessarily trenches, with Internet service providers and local agencies – and it frees up 255 MHz of spectrum for broadband use.

The bill – formerly house resolution 4986, now called the Ray Baum act – also consolidates several broadband-related reports that the Federal Communications Commission is supposed to periodically issue into one “communications marketplace report”. That’s not a popular idea among consumer advocacy organisations. In a blog post, Phillip Berenroick with D.C.-based Public Knowledge argues that…

By substituting a one-stop-shop report covering the entire communications ecosystem in place of the current reporting regime that takes a detailed, focused look at competition among individual services, the FCC will ultimately receive less accurate, granular, and relevant data across all of the services included in the Communications Market Report. As a result, both policymakers and the public will have less detailed information to understand each individual market.

That’s not necessarily true. The FCC isn’t required to diminish the quality of its work, although it’s not crazy to think it might. I have some misgivings about that provision too, but I also think it’s long past time to start dismantling the artificial regulatory distinctions between broadband companies, based on their corporate ancestry. AT&T and Comcast, for example, offer the same kinds of services in the same markets. There’s no reason for them to have to play by two different sets of rules. In that regard, consolidated market evaluations are a step in the right direction.

The bill has to be approved by both houses of congress before Saturday, otherwise the federal government grinds to a half. Again.

Text of the Consolidated Appropriations Act, 2018, 21 March 2018

Open access fiber drives down consumer broadband prices in New Zealand


A national project to build fiber-to-the-premise infrastructure and offer it to any Internet service provider on a wholesale basis began in New Zealand in 2011, with an initial goal of reaching 75% of Kiwi homes and businesses. According to a study done by International Data Corporation, a research firm, and sponsored by Spark, the biggest NZ reseller of FTTP service, the build out has reached about 65% of NZ premises, and the goal is now to reach 87% by 2022.

A total of 92 resellers are using the wholesale network to offer retail service. The resulting competition resulted in a drastic drop in retail prices, according to the report

New Zealand telecommunication’s structural separation and national broadband plan have created new constructs and market dynamics. The [Ultra Fast Broadband] initiative has commoditised fibre in New Zealand. Consumer fibre plan prices have plummeted from averaging over NZ$200 per month in 2013 to around NZ$85 per month as at February 2018.

In U.S. dollars, that’s a drop from $144 (or more) per month in 2013 to $61 per month now.

The report questions whether the current level of competition can be sustained. But it also shows that there’s a big gap between the a long tail of small competitors and the handful of market leaders who, presumably, have staying power. Five companies own 91% of subscribers, and all have complementary businesses that share much of the operating costs, including marketing and subscriber management. One is Spark, which is the legacy telephone company in New Zealand, two are mobile carriers – Vodafone and 2degrees – and two are energy companies.

Even if there’s a huge cull amongst the remaining 86 providers, the level of competition will remain high. Five companies competing to offer gigabit class Internet service for $60 or so a month is a robust market, far more competitive than the monopoly/duopoly conditions in nearly all of the U.S..

15 Mbps is the holy grail for 4K video


Different online video companies put it differently, but the net result is the same: if you want to watch 4K streaming video – aka ultra high definition – you need a broadband connection that reliably delivers 15 Mbps and has enough head room to support whatever other Internet traffic is passing in and out of your house.

A story by Rob Pegoraro in USA Today provides a run down of the 4K bandwidth recommendations from the two big dogs in the over-the-top video game…

  • Amazon says “you need an Internet connection of at least 15 Mbps to watch videos in UHD”.
  • Netflix recommends “an internet connection speed of at least 25 megabits per second to stream Ultra HD titles”. But it also says you’ll burn through 7 gigabytes an hour of your data cap. Taking rounding into account, that’s the same as saying you need a steady stream at 15 Mbps over the course of that hour.

Given that Internet service providers don’t really promise to deliver a particular service level – typically, speeds are offered up to a certain level – a 15 Mbps download package won’t cut it. So Netflix’s 25 Mbps recommendation is a little more realistic, assuming you’re the only person in your home and you turn everything else off.

That rate coincides with the Federal Communications Commission’s 25 Mbps down/3 Mbps up standard for advanced services capability.

It’s also where the market is heading. Big cable companies, which typically offer download speeds starting at 60 Mbps and frequently climbing to 200 Mbps or more, own 61% of U.S. broadband subscribers. Telcos, which have a 34% market share, struggle to get to 25 Mbps on even recently upgraded and well maintained copper systems.

With 4K television sets expected to be in half of U.S. homes by the end of next year, the gap between cable and telco market share, and the gap between cable-rich urban and telco-monopoly rural areas – will continue to grow.

Frontier, cable lobbyists urge CPUC to cut them in on public housing, broadband adoption decisions


Big telco and cable interests accounted for two of the fourteen organisations that commented on proposed changes to the California Advanced Services Fund’s (CASF) broadband subsidy program for public housing and the new digital literacy and broadband access grants that’ll be available later this year. Frontier Communications and cable lobbyists submitted their remarks on Friday. AT&T was silent.

The California Cable and Telecommunications Association (CCTA), which is the lobbying front for Comcast, Charter Communications and other cable companies in California, wants the CPUC to better protect its members’ monopoly business model in public housing communities. Changes in the law – pushed by CCTA and cable company lobbyists – make it impossible to use CASF grants to install free WiFi in public housing properties where there’s cable service. Cable companies do offer low cost Internet service to people who qualify, as most, if not all, those who live in public housing do. But they also use those programs as opportunities to up sell residents into expensive, market rate TV (and broadband and phone) bundles.

To make sure that Charter and Comcast and the others can defend those walled gardens, CCTA’s comments recommend that the CPUC allow greater opportunities to challenge public housing grant proposals, even to the extent of knocking applications off the current fast track review process simply by raising “legitimate concerns”. Which can mean pretty much anything. Including digging around to see if applicants are using cable connections to feed WiFi hotspots, which is another of CCTA’s peeves.

Frontier’s comments can summed as give me the money. One recommendation is that adoption programs should be tied to, or at least prioritised for, CASF infrastructure projects. Which is convenient because last year’s legislative changes largely limit those grants to Frontier and AT&T. Other recommendations go sideways from there, asking the CPUC to hurry up and approve Frontier’s infrastructure project subsidies.

Reply comments – rebuttals or otherwise – are due 2 April 2018, and the CPUC is expected to decide how to move forward with the public housing and adoption grant programs sometime in June.

People who live in public housing deserve equal treatment from California broadband subsidy program


Public housing property owners can get grants from the California Advanced Services Fund (CASF) to install broadband facilities and serve residents. Hundreds of communities have taken advantage of it, despite churlish opposition from cable companies, particularly Charter Communications. The California Public Utilities Commission is revising the program, to bring it into line with new rules laid down by assembly bill 1665 last year.

The biggest change is to retroactively enforce restrictions, imposed by an earlier measure, senate bill 745, that require properties receiving grants to be “unserved”, which means that at least one residence lacks service at 6 Mbps download and 1 Mbps upload speeds. That was done at the behest of cable lobbyists, who want to protect their turf, and the pricey TV and Internet bundles they sell on it, from the horrors of free WiFi.

It was a bad decision – one of many made by the legislators who voted for AB 1665 and the organisations, particularly the California Emerging Technology Fund, who backed it. But it’s a done deal and the CPUC has no choice but to adapt.

One change the CPUC should make is to raise the standard for subsidised broadband service in public housing communities that do qualify under the new rules. Right now, the CPUC allows subsidised public housing broadband projects to deliver download speeds as slow as 1.5 Mbps, with no requirement for upload performance. As I wrote in the formal comments I drafted for the Central Coast Broadband Consortium and submitted to the CPUC on Friday, that’s not enough…

Californians who live in [publicly supported communities (PSCs)] have the same needs as Californians living elsewhere. Assembly bill 1665 set a minimum of 10 Mbps download and 1 Mbps upload speeds for CASF- funded infrastructure projects. This level of service is below the 25 Mbps download/3 Mbps upload advanced services standard established by the Federal Communications Commission, adopted by the U.S. Department of Agriculture for its broadband funding programs, and contemplated by the U.S. Department of Housing and Urban Development for its PSC broadband program. The CCBC recommends establishing the minimum speed standard for PSC facilities at the same 10 Mbps down/1 Mbps up level that is required for other CASF-funded infrastructure projects, and establishing a priority for projects that meet the 25 Mbps down/3 Mbps up standard.

Thirteen other organisations submitted comments on Friday, including public housing organisations and the California cable industry’s lobbying front. You can find them all here. Rebuttal filings are due in two weeks.

Comments on proposed changes to California’s broadband subsidy program posted


Fourteen organisations offered comments on Friday regarding California Advanced Services Fund (CASF) grant requirements and application procedures for public housing broadband facilities and for broadband adoption efforts, which are generally reckoned to be digital literacy classes and “broadband access” programs – i.e. computer centers, hotspots and free computers – programs. Suggestions for how the CASF broadband infrastructure loan program should be wound down were also submitted.

The new adoption grant program, and the revisions to the public housing and infrastructure loan programs were mandated by assembly bill 1665, which was approved by the California legislature and signed into law last year. It also made drastic changes to the way CASF subsidises broadband infrastructure projects, making independent broadband projects all but impossible to pursue and effectively turning the new $300 million account into a piggy bank for AT&T and Frontier Communications. Those new rules will be written later this year.

I’ll have more to say later about Friday’s filings. Full disclosure: I drafted and submitted the comments from the Central Coast Broadband Consortium – I’m as guilty as the rest. For now, you can find links to it all below – fine reading for a rainy weekend afternoon. Enjoy.

Comments on phase 1 (public housing, adoption and infrastructure loans – see appendix B below) of proposed changes to the California Advanced Services Fund program, filed on 16 March 2016:

Regional Broadband Consortia
Central Coast Broadband Consortium
CSU Chico Geographical Information Center (Northeastern and Upstate California Connect Consortia)
Gold Country Broadband Consortium
North Bay North Coast Broadband Consortium

Public Agency
City and County of San Francisco

Internet Service Providers
Bright Fiber Network, Inc.
California Cable and Telecommunications Association
Frontier Communications

Non Profit Organisations
California Emerging Technology Fund
Radio Bilingue, Inc.
Satellite Affordable Housing Associates
Tech Exchange
Tenderloin Neighborhood Development Corporation

CPUC scoping memo and proposals
Scoping memo and ruling of assigned commissioner, Martha Guzman Aceves, CASF program changes, 14 February 2018
Appendix A, AB 1665 changes to CASF program
Appendix B, CPUC staff proposals for broadband adoption, public housing and loan programs
Appendix C, CPUC staff proposed changes for broadband infrastructure grant, line extension and regional broadband consortia programs

Cable’s broadband monopoly profile sharpens with 2017 results


Share of U.S. broadband households, as of 31 December 2017. Source: Leichtman Research Group.

Comcast and Charter own half of U.S. residential broadband subscribers, and their share of the market – if you want to call it that – is growing. That’s one of the conclusions gleaned from a tabulation of year-end 2017 financial reports by Leichtman Research Group. As with a similar count by FierceTelecom, the numbers show telcos continue to bleed subscribers profusely, while cable – and the overall broadband universe – keep on growing.

Leichtman’s report was published before Wow cable released its final 2017 financial results, so I added those into the totals. Over the course of 2017, the top cable companies added 2.7 million broadband subscribers, while the top telcos lost 626,000 subs. Big cable’s share of the, um, market was up a point to 61%, while the largest telcos lost a point, dropping to 34%.

Overall, the race for broadband customers is down to a two and a half horses. Comcast has 26% and Charter is behind by a nose at 24%. Their combined 50% share (after rounding) is up from 48% at the end of 2016.

AT&T was the only other broadband provider to hit double digits, with 16% of U.S. broadband households. It was also the only big telco to show growth in broadband customers – fiber-to-the-home gains offset DSL loses, producing a net increase of 114,000 subs. Cincinnati Bell, a much smaller fry, was also in the black, adding 5,500 subs. All the other big telcos – Verizon, Frontier, Windstream and FairPoint – ended 2017 with fewer broadband customers than they started it with.

The top providers – seven cable companies and seven telcos – account for 95% of U.S. broadband households, according to Leichtman. Since it’s a choice between one cable and one telephone company, at most, for any given home, it’s technically a duopoly. But one with a junior partner who is on the ropes. Factor in cable’s overwhelming superiority in the 25 Mbps down/3 Mbps up and better category – the minimum federal standard for modern broadband service – and it looks more and more like a one player game.

If it prices like a monopoly, slams and crams like a monopoly and shows a monopoly’s lack of respect to its customers, then it’s a monopoly.

California senate considers expanded net neutrality rights and enforcement tools


A second, more detailed network neutrality revival bill is on the table at the California capitol. Senator Scott Wiener (D – San Francisco) introduced senate bill 822 earlier this year, but it was little more than a statement of intent to jump into the Internet regulation void left by the Federal Communications Commission when it repealed network neutrality rules and stripped broadband of its common carrier status. He amended it on Tuesday, adding in a long list of outlawed practices and ways to enforce the ban.

Like senate bill 460, which was approved by the senate and sent on to the assembly in January, Weiner’s bill bakes net neutrality into California’s consumer protection laws and requires state and local governments to buy broadband service from companies that follow those rules.

His definition of net neutrality is more expansive, though, adding zero rating to the list. That’s the practice of giving particular Internet traffic – an Internet service provider’s own video streams, for example – a competitive advantage by not counting it toward a customer’s data caps. ISPs wouldn’t be allowed to put up a toll gate and charge content companies for the privilege of reaching subscribers, or to charge customers different prices for the bandwidth used by different applications, or squeeze other services – think, cable channels – onto a consumer broadband connection. The FCC’s three bright line rules would also be revived: no blocking, throttling or paid prioritisation.

Proposed enforcement mechanisms include:

  • Lawsuits by consumers or the California attorney general.
  • Requiring state and local governments to buy broadband service from ISPs that follow the rules, unless there’s only one service provider available in a given area.
  • Allowing government agencies to claw back past payments if their ISP changes its mind.
  • Limiting state broadband subsidies – for infrastructure or universal service – to companies that follow net neutrality rules.
  • Specifically requiring cable and other video service companies that have a statewide franchise to comply with net neutrality requirements.
  • Taking net neutrality benefits into account when planning the state’s smart energy grid.
  • Give the some of the job of sorting out what’s allowed or not to the California Public Utilities Commission.

Weiner included a couple of big exceptions. Public safety communications could be prioritised or otherwise given a fast lane, and individual subscribers could choose to pay for restricted service, so long as “basic default service” was available and the restrictions were generic. In other words, an ISP could sell a service plan that speeds up all video traffic, but not one that only gives priority to, say, Netflix. The details of those kinds of plans – and any other service terms – would have to be fully disclosed to consumers and reviewed by the CPUC.

Some, if not all, of the bill is on thin legal ice, as a senate judiciary committee staff analysis concluded. The FCC tried to categorically preempt state law of this sort in its net neutrality repeal decision – it’ll be up to the courts to decided if it succeeded. Adding broadband obligations to statewide video franchises crosses another red line – up until now, at least, there’s been a regulatory firewall between the two kinds of services. Adding blanket broadband conditions to universal telephone service programs poses the same issues.

But those become problems only after lawmakers approve the bill and the governor signs it. There’s a long and uncertain legislative road to travel before that happens.

Cable wins the broadband market fight, telcos lose. Again


The U.S. cable industry’s broadband subscriber count grew by 1.7% in the last quarter of 2017, while telephone companies continued to lose customers. That’s the top line from a tally by FierceTelecom of 15 of the 16 largest Internet service providers (Wow Cable hasn’t reported yet, although check the link – FierceTelecom will be updating its numbers). It’s a trend that continued throughout 2017.

In total, cable companies added 918,000 Internet subscribers, while the telco loss was a bit more than 7,000 subs – negligible in terms of percentage, but a significantly bad result in a growing market.

There are six cable companies and nine telcos on the list, with Comcast topping the chart at 22.8 million broadband subscribers, and Charter close behind with 22.5 million subs. A more distant third place goes to AT&T with 14.3 million subs, and Verizon came fourth with 12.0 million subs. All four added to their broadband subscriber counts in the final three months of last year, but not at the same rate. The two top cable companies increased their customer base by 1.4%, while the two big telcos only grew by 0.5%.

Further down the list, telcos start showing losses. CenturyLink lost 90,000 subs, Frontier shed 62,000 subs and Windstream’s loss was 11,000 subs.

The reason cable companies are gaining while telcos, in aggregate, are losing customers – despite a 1.1% increase for the broadband industry (or at least the big dogs) as a whole – is clear. AT&T reported that it gained 95,000 broadband customers overall, but that includes a loss of 76,000 DSL subscribers. Frontier lost both subscribers on both DSL and fiber to the home systems, but the bleeding was much heavier on the copper side of the ledger.

Speed matters. Although cable-based Internet service is not uniformly excellent, it is virtually always better than DSL service telcos can offer. It’s better than the federal advanced services standard of 25 Mbps download and 3 Mbps upload speeds, which only the top tier of copper-based telco systems can touch.