CCG Consulting

After spending some time going over my predictions about the future of broadband, I've come to a few conclusions:

In 25 years, our broadband networks will likely be carrying at 12 to 15 times the volume of data that they carry today, and probably more. Unfortunately, there is no easy path to upgrade middle-mile networks to keep up with the expected future demand. Faster lasers can’t alone satisfy the future demand for increased middle-mile bandwidth.

What does future demand for broadband speed and usage mean for last mile technologies? The fastest broadband technology today is fiber, and the most common fiber technology is passive optical network (PON), which brings broadband to local clusters of customers.

The recent decision of the Federal Communications Commission (FCC) to increase the definition of broadband from 25/3 Mbps to 100/20 Mbps got me thinking about the long term trajectory of the demand for broadband speed. One way to think about future demand is to look back at the broadband speeds 25 years ago. In 1999, both telcos and cable companies offered 1 Mbps DSL broadband connection as an upgrade to dial-up—and 1 Mbps became the de facto definition of broadband at the time.

I’ve heard rumors for years that the policymakers in DC never expected the Affordable Connectivity Program (ACP) to be permanent. The expectation of the original architects of the plan was that ISPs would bow to public pressure to fill the void when ACP ran dry. However, the giant ISPs are not likely to self-fund the discounts and smaller ISPs can’t afford to do so. I’ve seen some recent articles that argue that the Federal Communications Commission could employ the Universal Service Fund.

In a survey of 8,000 broadband customers nationwide, Parks Associates found that FWA cellular wireless customers feel better about the price they pay for broadband than subscribers of other technologies. The survey asked broadband customers to react to the following statement: “I receive Internet service at a fair cost / good price”. The response by technology was as follows:

When internet service providers are asked about the impediments they encounter for building new fiber networks, they almost always list pole issues at or near to the top of the list. Why are poles of such big concern? Building aerial fiber means putting the fiber on poles. Most poles are owned by electric utilities, although some belong to telephone companies or municipalities. Invariably, some poles have to be replaced in order to add a new fiber line. This mostly occurs when there is not enough space for the nationally required distance between wires.

Federal Communications Commission Chairwoman Jessica Rosenworcel announced plans to introduce a Notice of Proposed Rulemaking (NPRM) that would expand customer choice in apartments, condos, public housing, and other multi-tenant buildings. The NPRM would allow tenants to opt out of bulk billing arrangements where landlords build broadband or cable TV into the price of rent.

State Broadband Offices and the BEAD grant process have designed grant rules that put pressure on internet service providers to provide inexpensive rural broadband. But in doing so, I’m not sure that they understand the high prices that rural folks are paying for broadband today. In rural areas I've looked at, most households are paying over $100 a month for broadband. There are state BEAD rules that are trying to force rates down to rates between $50 and $75 per month for gigabit speeds. I find several faults with these rate-setting efforts:

I believe we can’t ignore the history of our industry if we want to avoid the worst of it from happening again. There are a variety of factors that led to the rural mess that created the need for BEAD and other broadband grant programs. I think the downward trajectory started with the divestiture of AT&T into AT&T as a long-distance company and large regional telephone companies. The newly-formed company lobbied hard to be able to make profits over and above the low, but steady profits that could be earned by a regulated utility.