Tag Archives: rural broadband

Comcast tells CPUC it must say yes to rural cherrypicking because it can’t say no

by Steve Blum • , , , ,

Paicines pole route

Comcast took its best shot at explaining why it should be allowed to jump the queue and start competing against Ponderosa Telephone before the California Public Utilities Commission decides what the future will be for small, rural telephone companies. The answer: because the developer wants us and the Federal Communications Commission says we can.

The dispute centers on Tesoro Viejo, an upscale master planned community under construction in the foothills of Madera County. Comcast claims the developers offered Tesoro Viejo as a cherry ripe for picking, and it wants to oblige them. There’s nothing preventing Comcast from providing video and broadband service, but if it wants to bundle in telephone service and offer the full triple play, it needs the CPUC’s permission.

That’s because Ponderosa Telephone serves the foothills of Madera and Fresno counties, as well as more remote communities further up in the Sierra Nevada. It’s one of ten small, highly subsidised telephone companies that serve deeply rural areas of California, the edges of which are now right in the path of exurban development. The CPUC protects those rural telcos from competition in an effort to minimise the amount of taxpayer dollars it takes to keep them afloat.

That policy is under review, but Comcast doesn’t want to wait. Ponderosa, on the other hand, doesn’t want to be nibbled to death. It argues that top level policy has to be decided first “because competition raises public policy questions with a collective impact on stakeholders throughout the state”.

It’s a tough question. Comcast is an unlikely champion. It moves quickly to kill potential competition whenever its territory is threatened. But regardless of how disingenuous it’s being, Comcast is correct in saying that more choice brings greater benefits to consumers. Once its process is complete, the CPUC might trim, or even eliminate, the privileges that rural telcos enjoy.

Might.

That’s a decision that needs to be taken deliberately and with the full consequences for all – rural residents, exurban immigrants, California taxpayers – in mind. Doing it reactively in response to rich targets of opportunity is a disservice to everyone.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

Pai promises $20 billion for rural broadband, but offers little hope for meaningful change

by Steve Blum • , , ,

It makes for good headlines for a slow Friday at the white house, but so far that’s about all that’s resulted from a $20 billion pledge to support rural broadband development. Federal Communications Commission chair Ajit Pai joined president Donald Trump to hype 5G plans and spectrum auctions, and tossed in a new rural broadband initiative at the end.

Sorta.

Pai’s “Rural Digital Opportunity Fund” is just the next reboot of the long standing Connect America Fund (CAF) subsidy program, that similarly poured billions of dollars into rural broadband projects, according to a story by Jon Brodkin in Ars Technica

The new program will be part of the Universal Service Fund (USF), and it will be similar to an existing USF program that began during the Obama administration. In 2015, the USF’s Connect America Fund (CAF) awarded $9 billion for rural broadband deployment—$1.5 billion annually for six years—in order to connect 3.6 million homes and businesses…

At $2 billion a year over ten years, the fund will provide more money each year over a longer period of time than the CAF program it would replace…

In an email to reporters, Pai’s office said the Rural Digital Opportunity Fund will “provide up to gigabit-speed broadband in the parts of the country most in need of connectivity.”

Arguably, CAF caused many of the problems that Pai now says he wants to solve. The program was custom designed to funnel taxpayer money to big, incumbent telephone companies, who, in return, promised to deploy slow speed, low capacity service – 10 Mbps download and 1 Mbps upload speeds, often via bandwidth-limited fixed wireless systems – by the end of next year.

There’s no indication that the FCC’s telco-centric approach will change, or that subsidised rural broadband service will be significantly better than what’s been deployed in the past. There are tight restrictions on how USF money can be spent and who can get it. The game was rigged by telecoms companies a long time ago and the problem is only getting worse.

Promising “up to gigabit speed” service doesn’t really promise anything. Last year, Pai embraced the 25 Mbps down/3 Mbps up standard adopted by the federal agriculture department, but even that is mired in the past – homes and businesses need access to speeds of 100 Mbps down/20 Mbps up just to keep up with current demand.

Comcast has to explain why it’s okay to start cherry picking rich, rural customers right now

by Steve Blum • , , , ,

Tesoro viejo youtube

The California Public Utilities Commission won’t jump the gun and give Comcast permission to compete directly with the Ponderosa Telephone Company. At least not yet. Comcast has to first explain why past CPUC decisions don’t apply to its request for permission to offer telephone service in Tesoro Viejo, an upscale master planned community of 5,200 homes in Madera County. Among other things, those rules protect highly subsidised rural telephone companies from competitors that want to cherry pick affluent customers in densely populated exurban developments, and ignore people in poorer and more sparsely populated communities.

The CPUC has been thinking about changing those rules for the past twelve years, with no decision yet on the horizon. It’s the normal course of business for the commission, which considers these kinds of issues in excruciating detail via an adversarial process that includes anyone with an interest in the outcome. It doesn’t happen quickly.

In a ruling last week, commissioner Liane Randolph rejected Comcast’s request for an immediate exception to current policy, saying that questions about why those rules do or don’t apply have to be answered first. That means considering a study of rural broadband and telephone competition completed last year, and a 2014 CPUC decision that concluded that companies like Comcast…

…may tend to serve only small portions of any of the [rural telco] service areas with high quality, high reliable voice service and…may be likely to “cherry pick” business customers rather than serve significant portions of rural service territories, particularly customers whose cost to serve is high.

That’s exactly what Comcast proposes to do in Madera County. It’s been clear that its ambitions are limited to the newly built homes, and that it does not plan to offer service to homes and businesses in the surrounding area. Ponderosa’s service territory includes traditional foothill ranch lands and remote Sierra Nevada towns, as well as new and wealthier exurbs.

Comcast and Ponderosa have two weeks to answer Randolph’s questions.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

Comcast protests we’re not cherrypicking, it’s our cherry that’s been picked

by Steve Blum • , , , ,

Comcast tried to paint itself as a champion consumer choice, as its lawyers clashed with those representing Ponderosa Telephone at the California Public Utilities Commission last week. The question is whether Comcast should be allowed to compete as a telephone company against Ponderosa, which is a small, heavily subsidised rural telco. But the core issue is whether allowing wireline telephone competitors to target high revenue potential customers in rural telco service areas will lead to even greater taxpayer subsidies for less affluent and less densely populated communities that companies like Ponderosa are required to serve.

In this case, the wrangling is mostly about Tesoro Viejo, a new, upscale master planned community of 5,200 homes in Madera County, although Comcast also hinted that other areas that are lucrative enough to meet its return on investment model will likewise be targeted. Ponderosa wants Comcast’s application for permission to enter its market to be iced until the CPUC makes a cosmic decision as to whether the dozen or so rural telcos remaining in California will face such competition. The commission’s concern is that competitors will cherrypick customers on the high side of the digital divide and leave the rest even worse off than before.

In a completely disingenuous argument – and that’s the kindest way to characterise it – Zeb Zankel, a lawyer representing Comcast, tried to make the administrative law judge hearing the case to believe that corporate strategy has nothing to do with it

We didn’t reach out. We didn’t pick. Comcast did not pick. We were picked. And we were picked presumably because Comcast has service offerings that presumably Tesoro Viejo just sought its service offerings in addition to Ponderosa, as it should. Consumers should have choice. So I think this repeated allegation of cherry picking is simply untrue.

What Zankel, um, neglected to mention was that redlined communities routinely reach out to Comcast and other cable companies for service, and are just as routinely turned down. Unless the potential customers can afford a sufficiently hefty monthly bill and they are densely packed enough to keep the cost of delivering service low.

If what Zankel said is true, then Comcast would be jumping on the chance to extend service throughout southern Madera County. But it’s not. It wants to serve Tesoro Viejo, with the income levels and household density of a suburb, and ignore the surrounding rural residents.

That’s cherrypicking.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

Comcast reveals plan to pick a juicy cherry in Madera County

by Steve Blum • , , , ,

Tesoro viejo

Comcast wants permission to offer phone service to a new Madera County development in Ponderosa Telephone’s territory. In a required public disclosure of a private meeting between a California Public Utilities Commission staffer and a lobbyist and a lawyer for Comcast, the company revealed that it is targeting Tesoro Viejo, a master planned community of 5,200 upscale homes on two and a half square miles of rural land in southern Madera County.

According to the filing, Comcast says that if it offers phone service in the development, it would create “additional consumer choice” but “would have limited effect on Ponderosa and its draw on [a rural telco subsidy] fund”. As a matter of general policy, the CPUC doesn’t authorise competitive phone service in areas where small, heavily subsidised rural telcos, like Ponderosa, operate. That policy is under review, but Comcast doesn’t want to wait, presumably because it’s already put out a press release saying it will provide…

A wide range of innovative and advanced technology solutions, including high speed broadband, WiFi, video entertainment and “smart home/smart business” security/automation offerings, to homes, businesses and public spaces throughout the new Tesoro Viejo master-planned community.

Telephone service isn’t specifically mentioned – it would make for an awkward conversation at the CPUC – but the press release’s boilerplate includes phone service in the list of Comcast’s otherwise unregulated offerings.

Ponderosa wants to block Comcast, arguing that the CPUC already has concerns about competing telephone service leading to higher subsidy costs in rural areas, and if Comcast is allowed to pursue its plan, “the cherry-picking problem will be exacerbated”.

Comcast’s claim of a “limited effect” on CPUC subsidy requirements is disingenuous. The effect will be limited to the relatively affluent and densely packed customers in the development, who would otherwise be paying Ponderosa for phone and, perhaps, broadband, service. The CPUC will still have to help keep Ponderosa afloat so that its less well off and more scattered rural customers can continue to be served. Less revenue from the most profitable customers means more subsidies than would otherwise be required.

On the other hand, Comcast is correct when it says that allowing it to compete with Ponderosa will lead to greater consumer choice. At least for consumers who 1. have sufficient income to meet its revenue targets, and 2. are close enough together to minimise its cost and maximise its profit.

The CPUC has a hard decision to make: limit consumer choice and the need for taxpayer subsidies for all, or pick up the increased tab for rural residents while their new, more affluent neighbors reap the benefits of an open market. It’s a question that should be deliberatively answered at a top policy level, and not ad hoc in response to a company’s target of opportunity.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

FCC makes flabby broadband victory claims in a thin press release

by Steve Blum • , ,

Sumo suits

In a press release heavy on spin and very light on data, the Federal Communications Commission claimed broadband “is being deployed on a reasonable and timely basis” because the number of people without access to service at a minimum of 25 Mbps download and 3 Mbps upload speeds decreased by 25% in 2017. The reason for this stunning achievement? “FCC reforms”.

But a closer look at the cherrypicked data in the release shows that this feat isn’t so amazing after all.

The “more than 25% drop in Americans lacking access to fixed broadband” claim doesn’t mean that the percentage of unserved dropped from, say, 50% to 25%. The way the press release states it kinda makes you think that’s the case, but when you crunch the numbers you realise that the 6.5 million people who gained access represents about 2% of the population – overall, the number of unserved people dropped from 8% of the U.S. population to 6%.

That’s if you take the FCC’s numbers at face value. Which isn’t a smart thing to do. Yet. The full report, with supporting data, hasn’t been released. Commissioner Jessica Rosenworcel, a democrat, has seen it, though. Her tweeted response is “I beg to differ”.

One key question is where did the data come from?

If, as is likely, it comes directly from the availability reports filed by providers, it might represent increased reporting, rather than increased availability. The number of existing providers filing FCC availability reports – particularly fixed wireless operators of dubious performance – has increased over the past few years, and incumbent wireline operators have become more creative in their claims.

Another bit of manifest nonsense is that policies adopted by the republican majority on the FCC have much to do with actual improvements. The FCC’s claims are based on data that is current as of December 2017, less than a year after the Trump administration was sworn in, and the same month that the republican majority approved its first major policy change, the repeal of network neutrality regulations. For nearly all of 2017, the broadband industry played by Obama era rules.

A 2% increase in the number of people with access to moderately fast broadband would be a notable achievement. We won’t know if that number is legitimate until the FCC publishes all the data its claim is based on. According to the press release, that’s expected “in the coming weeks”.

Comcast seeks CPUC blessing to compete with rural telco, but only for not so rural customers

by Steve Blum • , , , ,

Sierra 625

Comcast says it’s striking a blow for telecoms competition, Ponderosa Telephone says no, it’s cherrypicking business customers at the expense of rural residents. At issue is Comcast’s request to expand the area in which it’s authorised to offer telephone service to include the service territory of Ponderosa Telephone Company, a small, incumbent local exchange carrier (ILEC) that serves parts of Fresno, Madera and San Bernardino counties. Presumably, Comcast is eyeing Fresno and/or Madera counties, where both it and Ponderosa operate.

Historically the California Public Utilities Commission, which regulates telco operating authority, has protected small, rural phone companies from competition. That’s not because of sentimental attachment. Those small telcos serve communities that aren’t sufficiently lucrative markets to attract big incumbents like AT&T and, consequently, are heavily subsidised. As Ponderosa points out in its protest, the CPUC previously concluded that allowing competitors to pick and chose their customers in rural communities would “result in the small ILECs losing revenue and needing to seek a larger draw from the [telephone subsidy] program”.

With no apparent sense of irony, Comcast claims to be fighting for a competitive telecoms market, reminding the commission that it has “found that the presence of competition in local telecommunications markets leads to efficient pricing, improved service quality, expanded product and service capabilities, greater reliability, and increased consumer choice”. But Comcast’s application also says that it won’t expand its footprint and will only increase service in areas where it presently offers video service – areas that are densely populated enough to support its urban/suburban business model. This isn’t about upgrading service or infrastructure in truly rural communities.

Comcast is correct about the benefits of competition, despite going to great expense to avoid facing it elsewhere. But Ponderosa’s point is also true. The more it relies on revenue from remote and economically deprived communities, the more taxpayer subsidies it will need to continue to serve them.

The dispute is formally about voice telephone service, but it involves broadband policy too. Both Comcast and Ponderosa are retail Internet service providers, who rely on privileges granted by state law – either as telephone or video companies – to build wireline infrastructure in the public right of way and access wholesale services. Changing those privileges and protections will also change the economics, and consequently the availability, of broadband service in Ponderosa’s territory.

Do you limit the choices available to homes and businesses in places where revenue runs thicker in order to reduce the subsidies needed to maintain baseline service in more sparsely populated communities? Or do you maintain the status quo – in service as well as public support – for all?

That’s the choice the CPUC has to make, and it comes as no surprise. The commission is in the process of reexamining its telecoms competition policy in rural areas, as both Comcast and Ponderosa point out. Ponderosa argues, correctly, that this is a major policy decision and shouldn’t be made by default in a narrow, administrative proceeding. Near term, the CPUC should reject Comcast’s application, but long term, it has a difficult problem to solve.

Collected documents regarding Comcast’s expansion into Ponderosa’s territory are here.

Pai talks up rural 5G, but puts his money on 4G subsidies

by Steve Blum • , , , ,

Salinas windmill cell site

5G technology has a role to fill in rural broadband service, but it won’t be the kind of 5G that mobile carriers are hyping. That’s according to Federal Communications Commission chair (and Charlton Heston Courage Under Fire Award winner) Ajit Pai. He was speaking at rural broadband trade show in New Orleans last week.

There’s no makable business case on the horizon for densified 5G mobile networks in rural communities. AT&T dismisses rural 5G as an “infill” technology, and it and other carriers are not leaning on rural cities and counties for pole access, as they are in richer and more populated parts of California. Pai acknowledges that, but points to fixed 5G service to homes and businesses as a substitute for fiber to the premise systems…

“Contrary to what some people have suggested, I actually think 5G has a very promising future in rural America and part of the reason is, in terms of the possibilities of fixed wireless, given the fiber penetration that some of your members have,” he said. “I think the ability of rural telecom carriers to think broadly about the future of these networks and how to extend this great fiber penetration you’ve got, there’s a huge amount of promise there.”

Pai’s FCC has a mixed record on 5G fixed wireless. On the one hand, the FCC is working on opening up tremendous swaths of spectrum – in the 3.5 GHz, 4 GHz and 6 GHz bands, particularly – to support broadband service. On the other hand, the FCC and other federal agencies are spending billions of dollars to lock rural communities into fixed 4G service for generations to come.

The FCC’s Connect America Fund program is paying for AT&T’s program to replace rural copper networks with limited capacity 4G service, and supporting similar efforts by Frontier Communications. AT&T also won the contest for a national public safety network – FirstNet – that will likewise be 4G based. Pai is not putting his money where his mouth is: the 4G-based systems that the Trump administration is subsidising do not have the potential capacity of the copper networks they’re replacing, let alone substitute for fiber.

Microsoft’s rural broadband gamble might have millions of winners

by Steve Blum • , , ,

The rural/urban broadband divide is deep, according to a report by Microsoft. For people living and working in rural areas, it’s confirmation of what they already know, but it’s valuable nonetheless. Microsoft’s critique of the available data – and the 25 Mbps download/3 Mbps upload speed standard – is a useful corporate counterweight to the claims made by AT&T and Frontier, which are the telcos receiving the lion’s share of federal broadband subsidies for 10 Mbps down/1 Mbps up service in rural California.

The report highlights the annual coverage data submitted to the Federal Communications Commission by Internet service providers. The latest numbers show that 25 million people in the U.S. lack access to what Microsoft calls “a broadband-speed connection to the internet”, i.e. 25 Mbps down/3 Mbps up. Of those, 19 million people live in rural communities – 31% of the U.S. rural population.

California has 1.2 million unserved rural residents, representing 54% of our rural population, according to Microsoft.

But the FCC data probably overstates broadband availability, Microsoft says…

Data that Microsoft collects as part of our ongoing work to improve the performance and security of our software and services for customers provides additional evidence that the FCC overestimates broadband usage in the United States. While the FCC reports that 92 percent of Americans have access to broadband, our data indicates that the number of people who connect to the internet at 25 Mbps is probably closer to 49 percent. Largely rural states including West Virginia, Alaska, New Mexico, Arkansas, and Mississippi that rank among the lowest for broadband access according to the FCC are also among the lowest in our data.

Microsoft’s solution is its “Airband Initiative” which, the company says, is aimed at “harnessing unassigned broadcast spectrum known as TV white spaces to bring broadband connectivity to 2 million unserved rural Americans”.

That spectrum is in the 700 MHz range, which is better able to propagate over rural distances and cut through foliage and other obstructions, but also carries less data than more finicky higher frequency bands. That’s the reality of wireless engineering trade offs: there are no magic solutions, only different – and valuable – tools in the kit.

So far, Microsoft has invested in eight companies – including Cal.net in California – that plan to eventually reach about 1.1 million unserved people via fixed wireless service. Microsoft is not releasing actual subscriber or availability data, or disclosing how much it’s investing, though.

The initiative is not philanthropy on Microsoft’s part (nor should it be). The investments might or might not generate a direct return, but the “royalty-free access to…patents and sample source code related to TV white spaces technology” that Microsoft is also contributing could be significant. Using white spaces without interfering with TV broadcasts requires a central frequency coordinator, such as Microsoft or Google, another contender for that role.

The more rural households that Microsoft’s partners serve, then the greater the adoption of Microsoft’s core technology and the better the chance it has of cornering the top spot in that market. If that strategy works, everyone wins. If it doesn’t, Microsoft loses.

Just so.

U.S. broadband is expensive, even more so where bundles aren’t available

by Steve Blum • , , , ,

Us ave broadband price 2feb2018

The U.S. is in the bottom half of the broadband price league table, according to a report by the Federal Communications Commission. It was published last February, but I just unearthed it and had a chance to take a hard look at the numbers. When you take both standalone and bundled Internet service packages into account, and weight it by the FCC’s market share figures of 25% standalone and 75% bundled subscriptions, the average monthly price ranges from $38 per month to $74 per month, depending on speed.

As you can see from the table above, bundled prices are noticeably cheaper than standalone rates. That implies that broadband service is significantly more expensive in rural areas, where bundle-happy cable operators do not go and expensive Internet-only wireless providers are common.

The FCC used three methods to compare broadband prices in the U.S. to other developed countries. Two were relatively straightforward comparisons, that show that broadband costs more in the U.S. than in most of the other countries studied…

For fixed broadband prices, under the first method comparing unweighted average prices, the United States ranks 18th out of 23 countries that offer fixed standalone broadband plans with download speeds of at least 25 Mbps and less than 100 Mbps, and 26th out of 28 countries that have fixed standalone plans with download speeds of 100 Mbps or greater. When taking into account fixed broadband bundled with video service, the United States ranks 10th out of 20 countries with download speeds of at least 25 Mbps and less than 100 Mbps. For the highest speed bundle plans with download speeds of 100 Mbps or greater, fixed broadband in the United States ranks 23rd out of 25 countries that offer such plans. Using the second approach, the fixed broadband price index analysis, the United States ranks 21st out of 29 countries aggregating both standalone and bundled broadband products.

The third method – a more complicated regression analysis – bumped the U.S. up the charts to number 7. It tries to account for cost differences between countries, and reckons that because customers have so much more online content available in the U.S., broadband is really cheaper because it’s worth so much. Or something like that. On a cash out of pocket basis, it’s still expensive, though.