Tag Archives: rural broadband

USA Today says the slowest rural broadband is in California. The truth is even worse

by Steve Blum • , , ,

San benito pole route 13apr2019

USA Today fell for a click bait post about rural broadband speeds, but at least it was click bait that made a useful point about the growing gap between rural and urban service levels.

The top line, of the USA Today article and the post on an Internet-oriented aggregator website, is that Newcastle, along Interstate 80 in Placer County, has the slowest rural broadband service in the U.S., with an average download speed of 3.7 Mbps. That figure comes from speed tests conducted on another aggregator site.

That’s bad, but it’s not close to being the bottom of barrel.

A quick look at the data I have handy – the provider service reports collected by California Public Utilities Commission and current as of 31 December 2017 – shows that out of the 1,513 incorporated cities and census designated places in California, 184 have zero broadband service according the telephone and, sometimes, cable companies that serve them. sixs others have reported download speeds – both maximum and average – of less than 3.7 Mbps.

Reported speeds are what AT&T and Frontier Communications sell you. Measured speeds – what you actually get – are less, and the maximum speed in a town is usually only available near the telco central office. Cable coverage, whether it’s big boys like Charter and Comcast, or smaller providers like Wave, is usually restricted to neighborhoods where customers and money are sufficiently dense.

Newcastle provides an excellent illustration of this discrepancy. Wave reports service levels of up to 1 gigabit there, and AT&T claims a maximum download speed of 25 Mbps, with a 19 Mbps average throughout the town. The graphic below shows AT&T’s broadband holes in Newcastle, at least the ones they own up to. There’s no way of assessing the validity of the 3.7 Mbps click bait figure, but it certainly reflects the subjective experience of residents, as the anecdotal evidence in the USA Today article shows.

So Newcastle’s broadband service is bad, but it isn’t the worst in California, let alone the entire U.S. Based on the CPUC’s data, out of 1,513 communities, Newcastle has the 518th fastest average download speed and the 584th fastest maximum download speed. It ranks even higher when only residential service is considered.

Two-thirds of Californian communities have slower download speeds than Newcastle, which USA Today says has the slowest broadband service in the U.S. That’s a problem that needs fixing.

Newcastle cpuc map 27nov2019

I’ll be crunching the next round of CPUC data, current as of 31 December 2018, in the next few weeks. We’ll see if anything has changed.

“Framework” for telecoms competition in rural telco territories considered by CPUC

by Steve Blum • , , , ,

Tesoro viejo 2

A rousing and thoroughly disingenuous defence of telecommunications competition doesn’t appear to be enough for Comcast to get permission right now to cherry pick affluent households in Ponderosa Telephone Company’s territory. A pair of California Public Utilities Commission administrative law judges (ALJs) said in a ruling last Friday that even though allowing competitive telecoms companies into the protected service areas of California’s small, rural telcos should be considered on a case by case basis, those decisions should be made within a common framework.

The two ALJs – Mary McKenzie and Hazlyn Fortune – are managing what the CPUC calls a rulemaking proceeding that’s looking at the way California subsidises, and consequently protects, small telephone companies that serve remote and sparse rural communities that aren’t lucrative enough to attract big telecoms service providers. Or at least used to be. As California’s suburbs spread further out from cities, new developments are springing up on farm and ranch land that’s served by rural telcos.

Citing Comcast’s case as an example, they decided that the next step in that process is to establish a general set of rules that will guide future decisions about who should provide telephone service and, in some cases, broadband service in those new communities…

The Commission will first consider adopting general criteria in this Rulemaking as a framework for allowing competition, which will then be evaluated on a case-by-case basis considering local conditions for each individual small [rural telco] service territory where an application is filed by a potential competitive local exchange carrier (CLEC) seeking a certificate of public convenience and necessity (CPCN).

Comcast’s request to be allowed to provide telephone service in the upscale Tesoro Viejo development north of Fresno is being handled by another ALJ, Zhen Zhang, in a separate case. In theory, Zhang doesn’t have to wait for McKenzie and Fortune to finish their work, which could take months. In practice, since ALJ’s produce draft decisions for consideration by CPUC commissioners, it would probably be a waste of time to, as Ponderosa described it, put “the cart before the horse”.

Frontier digs a deeper digital divide in rural California with taxpayers’ shovel

by Steve Blum • , , , ,

Frontier verizon pole santa barbara county 10oct2015

A handful of rural communities in Lassen, Modoc and Kern counties will get their first taste of wireline broadband service from Frontier Communications if the California Public Utilities Commission approves infrastructure construction grants next month.

Unfortunately, it’s just a taste.

Frontier’s (and AT&T’s) strategy, as identified by a CPUC study earlier this year, of “disinvesting in infrastructure overall”, which is “most pronounced in the more rural and low-income service areas”, continues to be business as usual. Both of Frontier’s projects up for California Advanced Services Fund grants propose to deliver low speed service over ageing copper telephone lines. The $11 million would be spend on a desperately needed 137 mile fiber route and essential central office equipment upgrades, but Frontier’s interest in improving rural infrastructure, even when taxpayers are picking up the tab, ends there. As the CPUC’s draft resolution approving the Kern County grant describes the project, “Frontier will upgrade the existing communications facilities to increase broadband capacity but will not replace the copper cable infrastructure”. Likewise, the northeastern California project adds middle fiber and electronic equipment, but leaves “legacy copper infrastructure” in place.

It’s not an accident or anomaly. It’s deliberate.

Frontier continues to bleed customers and revenue, and selective fiber upgrades are the solution, according to CEO Dan McCarthy, who spoke about the company’s third quarter 2019 financial results

We achieved a sequential improvement in fiber net losses with only 1,000 in the third quarter. However, consumer copper losses of 52,000 were worse than the second quarter. In copper, although we experienced a sequential increase in gross additions, this was offset by a sequential increase in churn and we continue to manage this business for a decline. Fiber broadband gross additions increased sequentially in the third quarter and we also had a slight sequential improvement in fiber broadband churn. With the completion of the upgrades of the fiber network to be 10 gigabit capable, we have increased our emphasis on selling at higher speed tiers.

Frontier’s strategy is economically rational, and is probably its best shot at pulling shareholder value out of penny stock territory. What makes it rational, though, is the California legislature’s irrational (but well compensated) decision to subsidise 1990s era broadband service over 1890s era copper wires, and not hold incumbent telcos to the same standards in rural communities as they voluntarily and rationally adopt in densely populated, high income cities and suburbs.

Ponderosa Telephone makes its case for blocking Comcast’s bid to cherrypick “high end” households

by Steve Blum • , , , ,

Tesoro viejo construction 25aug2019

Ponderosa Telephone shot back at Comcast’s claims that no harm would come from its proposed cherry picking of affluent households in a new, high end development outside of Fresno. In comments filed with the California Public Utilities Commission last week, Ponderosa made its case for denying Comcast permission to offer telephone service in its territory. The company argued that if the CPUC wants to change its current policy of protecting small rural telcos from competition, it should do so on a top level basis, and not on case by case requests from a major telecoms company.

Particularly if that telecoms company’s request for special treatment is “disingenuously misleading”.

California has 13 rural telephone companies that serve remote communities. Or in some cases, communities that used to be reckoned as remote, before the arrival of suburban and exurban sprawl. Rural telecoms service can be expensive – miles and miles of lines are needed to reach scattered homes and businesses. Low population density means low revenue density, so to keep telephone service affordable both the CPUC and the Federal Communications Commission back fill rural telco’s budgets with subsidies from universal service funds. To keep the tab for taxpayers as low as possible, the CPUC doesn’t allow competitive telephone companies, or big incumbents who want to exert their monopoly model might, to carve off service areas where the revenue potential is the highest and the need for subsidies is the lowest. If there’s a need at all.

That policy is under review, in a CPUC proceeding that could take years to resolve. Meanwhile, Comcast wants permission to add telephone service – it already can offer broadband and TV service – to newcomers able to afford a home in the (relatively) pricey Tesoro Viejo development, just north of Fresno. That would be costly to taxpayers, Ponderosa said…

Comcast seeks to raid the most profitable consumers in Ponderosa’s service territory. This “cherry-picking” concern by [non-carrier of last resort telcos] operating in [rural telco] territories was a factor that led the Commission to conclude that wireline competition would “leave behind residential, small business, and community anchor institution customers in more scattered and harder to serve areas of the rural carrier’s territory”; “adversely affect the bulk of the hard-to-serve and high cost customers”; and “result in the [small rural telcos] losing revenue and needing to seek a larger draw from the [California High Cost Fund rural subsidy] program.”

Abandoning, or at least substantially modifying, decades-old rural telecoms policy might be necessary, as 21st century digital services replace legacy telephone technology and business models that, in some respects, date back to the 19th century. It needs to be done thoughtfully and carefully, and not on the basis of requests for case by case special treatment by telecoms giants.

Large scale telco, cable and mobile service outages follow California power cuts

by Steve Blum • , , , ,

Cell site outages 28oct2019

Hundreds of thousands of Californians lost their wireline broadband and phone service over the past week, as the state’s major electric utilities cut off power to millions of people in an attempt to prevent wildfires from breaking out. Mobile broadband and telephone subscribers were equally hard hit, with one county – Marin – losing more than half of its cell sites at one point.

The Federal Communications Commission has been tracking wireline and mobile service outages since last Friday, when the power cuts were hitting hard in Pacific Gas and Electric’s northern California territory, and public safety power shutoffs were beginning to bite in the southern California service areas of San Diego Gas and Electric and Southern California Edison. I’ve compiled all of their reports through yesterday into a single document, which you can download here.

From a telecoms point of view, the outages were at their peak on the FCC’s Sunday morning (0830 California time, 28 October 2019) report. At that time 455,000 telco and cable subscribers in 32 counties were without their landline connections and 3.3% of the total number of cell sites were down.

Some counties were hit much harder than others. Marin County lost 57% of its cell sites, while there were no reports of cell site outages in Santa Barbara County. Calaveras, Humboldt, Lake, Napa, Santa Cruz and Sonoma counties lost between 19% and 39% of cell sites.

It’s not clear what the wireline outage figure represents. Participation in the FCC’s disaster reporting system is voluntary. The list of willing companies hasn’t been made public and there’s no way of knowing if all of the telephone and cable companies in those counties are cooperating. The reports from the ones that are cooperating are based on “communications infrastructure status and situational awareness information” and “network outage data”. Which might not include all, or maybe even most, of the households and businesses which are offline because their equipment – cable and DSL modems, for example – don’t have backup power. The network might be fully functional, but if customer premise equipment is down, then service is too.

So that 455,000 customer wireline outage figure might be low.

FCC chair Pai makes the case for rural 5G and basic broadband infrastructure subsidies

by Steve Blum • , , , ,

Pai mwc la 2019 22oct2019

Ajit Pai was at his geeky best yesterday as he played the big room at the Mobile World Congress trade show in Los Angeles. The Federal Communications Commission chair focused on topics he knows well – spectrum, network security, infrastructure deployment, service access – and mostly steered clear of weaknesses that have rightly drawn down a deluge of criticism on him: local government operations, common carrier/net neutrality policy and a taste for industry cheerleading.

Pai touted the FCC’s “5G Fast Plan”, which includes opening up more spectrum for mobile broadband use, building fiber backhaul and, more controversially, preempting local and state control over public right of ways and the assets they install, and own, there. He said his highest priority is closing the digital divide, particularly in rural areas, a job he compared to the federal rural electrification program that began 80 years ago…

I didn’t underestimate, by the way, the impact that 5G could have in some of these rural areas. This often one of the questions I get – ‘well, isn’t it just simply a densely populated urban use case?’ That is not the case at all…When you think about what farms and ranches are, it’s not simply the tangible things you can see, like corn, and soybean and wheat growing. These are essentially huge amounts of data that need to be uploaded into the cloud, analysed quickly and then the services that you need, to be deployed at scale. Similarly, I visited a farm recently in North Dakota…where we visited a corn farm that’s using connected combines to analyse virtually every single square yard…to analyse everything from the fertiliser that needs to be deployed on that square yard, the yield that they got this year compared to last year. All of that is going to require high bandwidth, symmetric service. I think that’s a particular 5G use case that’s going to be really compelling.

Pai said that the “$20 billion” Rural Digital Opportunity Fund, which the FCC is spinning up to replace the Connect America Fund program, will “create some of the hard infrastructure” to support 5G development in rural areas, such as “the fiber infrastructure that’s needed for backhaul”.

He’s right about all of that. 5G-class wireless connectivity can have huge benefits for agriculture and rural communities. The question remains, though, will it even happen? To date, the FCC’s rural broadband subsidies have mostly been spent on slow, outdated DSL technology, and not on modern broadband infrastructure. That needs to change.

Comcast games expiring VoIP regulation ban to win CPUC permission to cherry pick suburbs

by Steve Blum • , , , ,

Tesoro viejo 25aug2019

Comcast’s sideways pleading for permission to compete against a subsidised rural telephone company demonstrates why it was wise to allow California’s ban on voice over Internet protocol (VoIP) service regulation to expire. And why Comcast, along with Charter Communications, AT&T and Frontier Communications, handed so much cash offered highly intellectual arguments to California legislators in their failed (so far) attempt to extend the ban.

Ponderosa Telephone Company offers service in the foothills and the Sierra generally north and east of Fresno. It’s one of 13 small telephone companies that serve rural California, and that depend on state and federal universal service subsidies to survive. As Fresno grows, suburban development is creeping into Ponderosa’s service territory. Tesoro Viejo is one such subdivision under construction along State Route 41, just beyond Fresno’s current development limit.

Comcast offers cable television and Internet service in Tesoro Viejo – households and disposable income are now dense enough to meet its return-on-investment objectives in an area it previously ignored. To offer phone service, though, it needs to connect its currently unregulated VoIP facilities to the traditional public telephone network. Comcast wants to do that via a legally isolated subsidiary that was specifically created to operate in that regulated environment, without creating any regulatory inconvenience for the rest of the company.

But that legally isolated subsidiary needs permission to set up shop in Ponderosa’s territory. The California Public Utilities Commission generally doesn’t allow competitors to cherry pick rural phone companies’ most lucrative customers, because it’s worried that doing so would result in ever increasing public subsidies to deliver retail service to poorer and more isolated people that don’t interest the likes of Comcast.

Nevertheless, Comcast asked for special permission to enter Ponderosa’s territory, and the CPUC is considering it. In support, Comcast is now citing the still current ban on VoIP regulation by the CPUC (it doesn’t expire until January) and disingenuously arguing that its regulated subsidiary only provides wholesale phone service, which doesn’t compete against Ponderosa’s retail offerings. The fact that its retail VoIP subsidiary would use that wholesale service to wholeheartedly compete against Ponderosa is irrelevant, Comcast’s argument goes, because it’s unregulated. At least for the present.

The CPUC has an inquiry under way that, eventually, could decide how it will protect, or not, California’s small telephone companies: should it allow competition, and the consumer benefits it brings, in affluent exurbs while spending more subsidy dollars to maintain service in communities with fewer people with less money to spend, or continue to try to maintain economic feasibility and baseline service availability, and minimise public subsidies by fencing off rural service territories?

It’s an important and timely question, not least because the telecoms industry is in the middle of a major, analog-to-digital shift. It’s the sort of technological revolution that only comes along every century or so. The answer should not come in bits and pieces, as major incumbents like Comcast (and AT&T, Charter and the rest) try to game the system with political and legal maneuvers based on irrelevant technological distinctions between otherwise identical services, and with falsehoods and evasions regarding their true intentions.

Faster broadband gains subscribers but slow service loses them, CenturyLink says

by Steve Blum • , , ,

Centurylink building

CenturyLink confirmed earlier this month that faster broadband service is the pathway to keeping subscribers on board, and gaining new ones.

In the company’s presentation outlining its second quarter 2019 financial results, it noted that it lost a total of 56,000 consumer-grade broadband customers. However, when that top level figure is broken out by speed, the company gained 48,000 subscribers at the 100 Mbps download speed level or better. The negative subscriber numbers were all at lower speeds: a net loss of 26,000 subscribers who were taking service at speeds levels of from 20 Mbps to less than 100 Mbps, and a loss of 78,000 subscribers who were buying service slower than 20 Mbps.

CenturyLink’s gains in the 100 Mbps or better category are accelerating. According to the Seeking Alpha transcript of CenturyLink’s second quarter conference call with analysts, chief financial officer Neel Dev said “growth in our greater than 100 meg subs is up more than 100% on a year over year basis”.

Fiber build outs are the key to CenturyLink’s future success, according to CEO Jeff Storey. Fiber is “highly flexible and increasing speeds, it is secure and really is the basis for all the other competing technologies”, he said. “We take fiber all the way to the customer, and customers always want fiber when they can get it”.

Still, CenturyLink is losing consumer broadband customers overall, nearly as rapidly as Frontier Communications, which lost high and low speed customers alike last quarter. Both companies took hits on Wall Street after second quarter results were announced, continuing a trend that began a year ago for CenturyLink – it’s lost about half its share value since then. Frontier, on the other hand, lost nearly half its already depleted market value following its second quarter conference call – dropping from $1.23 a share to a low of 68 cents, before starting to climb back a week ago. Yesterday Frontier closed at 84 cents a share, less than 30% of what it was worth at the end of April, and still in penny stock range.

With Frontier in free fall, California needs a Plan B

Frontier stock chart 8aug2019

Frontier Communications’ strategy of upgrading fiber speeds for high income, urban customers, and letting poor, rural ones rely on slow, wireless broadband systems didn’t seem to make an impression on Wall Street. The company’s stock price lost nearly 25% of its already diminished value after the release of second quarter 2019 results on Tuesday.

Even before this latest crash, a study by the California Public Utilities Commission concluded that Frontier is sinking in California, and it’s time to start thinking about what happens next…

While Frontier’s priorities are in maintaining and growing its [legacy telephone] properties, the company’s financial resources have become so deteriorated as to threaten its ongoing ability to pursue these priorities going forward. Frontier’s common stock price has dropped by around 98% since its high in February 2015, and as of April 10, 2019 its market cap was at $261.2- million – notably, Frontier has invested more than that in California alone over the first 21 months of its ownership. The parent company’s earnings have been consistently negative since the second quarter of 2016. Its annual debt service payments are now consuming more than one- fifth of its total operating revenues, making prospects for raising additional debt or equity financing extremely challenging. It is now abundantly clear that Frontier’s decision to purchase Verizon California in 2015 was both ill-timed and ill-conceived…

The Commission should establish a process to proactively examine the alternatives that would be available to maintain adequate service to Frontier California customers in the event that the parent company no longer has the financial resources to provide safe and reliable services in California.

That warning was published last month, and relied on data that was current as of April 2019. At the end of that month, Frontier’s share price was $2.85, which was about 2% of its 2015 high of $125.70 (after factoring in a reverse split). Yesterday it closed in penny stock territory at 93¢, less than 1% of its peak value and less than a third of its April high.

Two million Californian homes look to Frontier for telephone and broadband service, and many of them have no other option, as the CPUC report notes. The time for being proactive is running out.

Frontier CEO confirms affluent, urban communities to get 1,000X better broadband than poor, rural ones

Frontier 2q2019 broadband results

On Tuesday, Frontier Communications’ CEO confirmed the findings of a California Public Utilities Commission study that concluded that Frontier (as well as AT&T) is “disinvesting in infrastructure overall”, and the disinvestment is “most pronounced in the more rural and low-income service areas”. The company released its financial results for the second quarter of this year on Tuesday, announcing a $5.3 billion loss for the three months and 71,000 fewer broadband subscribers.

Most of the lost accounts – 46,000 – were DSL customers, served, at least in California, via decaying copper networks Frontier acquired from Verizon. Much of that territory is rural, and falls under the federal Connect America Fund subsidy program. Frontier affirmed it is switching to low capacity fixed wireless broadband systems in CAF territories, which in theory will deliver the 10 Mbps download and 1 Mbps upload speeds (actually, 8 Mbps down/800 Kbps up, 80% of the time) that the program requires.

That’s in contrast to the 10 Gbps upgrades that Frontier announced it was making in high capacity, fiber-to-the-home (FTTH) systems formerly owned by Verizon, which are predominantly in more affluent urban and suburban communities. This thousand-fold disparity between Frontier’s rural and urban infrastructure is a deliberate strategy, according to the Seeking Alpha transcript of CEO Dan Murphy’s conference call with Wall Street analysts…

Our objective continues to be to optimize our business, leveraging our best assets for future growth, while managing the elements of our business in secular decline by executing on cost efficiency programs and selective capital investment.

“Best assets” = FTTH to people with money to spend; “elements…in secular decline” = copper systems where household incomes are low. Murphy was straightforward with the analysts, not just because that’s what they wanted to hear but also because there are criminal penalties for lying to Wall Street.

Unlike lying to the CPUC: when seeking approval to take over Verizon’s systems, it claimed it “is strategically focused solely on wireline telecommunications” and “all of Frontier’s capital and human resources are concentrated on wireline communications services”.