Doug Dawson

It’s big news that both Comcast and Charter lost broadband customers in the second quarter of 2022. Both companies have steadily gained customers every quarter over the last decade. Comcast blames the customer loss on two factors.

Recent Ookla analysis has revealed some interesting trends in mobile broadband usage that I think have implications for internet service providers (ISPs). The percentage of consumers who describe themselves as always online grew from 30 percent to 69 percent during the pandemic, and Ookla delves into some of the reasons why. By 2021, users who identified as always online were twice as likely to have reported an issue to customer service. About one-third of cellular customers are unhappy with customer service.

When I look at all of the new market entrants into the broadband industry and the frenetic pace that internet service providers (ISPs) of all sizes are building fiber, one of the first thoughts that come to my mind is this is an industry that is headed for a roll-up. There has already been some consolidation of last-mile fiber networks, but the handful of networks that have been purchased will pale against the big roll-ups that I think will be coming in a few years. The industry will be ripe for roll-ups for several reasons.

Broadband Equity, Access and Deployment (BEAD) Program grants in a given location could go sideways because of the National Telecommunications and Information Administration (NTIA)’s decision to declare facility-based wireless technologies that use licensed spectrum to be considered as a reliable technology that is eligible for BEAD grants. I can foresee two different problems that might result from this decision.

Keller & Heckman recently highlighted an issue that anybody building fiber on utility poles should be aware of. In some cases, an easement obtained for using private land to bring electric service might not automatically allow an easement for bringing fiber. There is a subtle difference between easements and rights-of-of way. An easement allows somebody to carry out an activity on private land.

Should higher-than-market rates be allowed on a broadband network that is being subsidized with public funding? Should an agency that awards grants or other broadband subsidies somehow insist that broadband rates are somehow tied to market rates? That’s a lot harder question to answer than you might think because the question implies that these agencies have the power to regulate or cap broadband prices in grant areas. The Ajit Pai Federal Communications Commission voluntarily gave away the right for the FCC to regulate broadband rates when it gave up Title II authority.

Most broadband grant programs do not publish open grant applications for the public to see. But we are in a time when a broadband provider that is awarded funding for bringing a new broadband network is likely to become the near-monopoly provider in a rural area for a decade or two to come. The public ought to get to see who is proposing to bring them broadband so that these decisions are not made behind closed doors. It turns out that the Nebraska Public Service Commission posts grant applications online.

Several small broadband providers are having trouble navigating the Federal Communications Commission’s Affordable Care Program (ACP). They are wondering if they should drop their participation. There is no one major specific complaint about the administration of the program but a string of problems. The ACP rules are overly complex. There doesn’t seem to be any training available to providers joining the program. The ACP system returns unhelpful error messages when something doesn’t work. Why are these kinds of issues problematic for smaller providers?

One of the factors that need to be considered in any business plan or forecast is churn – which is when customers drop service. I often see internet service providers (ISPs) build business plans that don’t acknowledge churn, which can be a costly oversight. There is a maxim among last-mile fiber networks that nobody ever leaves fiber to go back to a cable company network. That’s not entirely true, but it’s a recognition that churn tends to be lower on a last-mile fiber network than with other technologies. I wrote a recent blog that asked if broadband is recession-proof.

In March 2022, the Federal Communications Commission issued a Second Further Notice of Proposed Rulemaking (FCC 22-20) that asks if the rules should change for allocating the costs of a pole replacement that occurs when a new carrier asks to add a new wire or device onto an existing pole. The timing of this docket is in anticipation of a huge amount of rural fiber construction that will be coming as a result of the tsunami of state and federal broadband grants. The current rules push the full cost of replacing a pole onto the entity that is asking to get onto the pole.