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FCC Awards Viasat $87.1 Million to Connect 121,700 Rural Homes to Satellite Internet

More than 121,000 homes and businesses in 17 states will receive subsidized satellite internet service from Viasat, after the Federal Communications Commission awarded $87.1 million to connect customers at those locations at a cost of just over $715 per customer.

The money is part of the ongoing Connect America Fund (CAF) program, designed to subsidize the costs of delivering internet access in high-cost, typically rural areas. The current iteration of the program is dispensing funding over 10 years to 45 states. Viasat won the funding through an auction procedure that makes it easy for satellite providers to win funding because of low infrastructure costs to service rural areas that lack a wired internet service provider.

An additional $2.1 million was awarded to some other providers:

  • Fixed wireless provider LTD Broadband, which relies on 1,500 wireless internet tower sites covering over 40,000 square miles of Iowa, Minnesota, Nebraska and South Dakota.
  • Horry Telephone Cooperative, which serves rural customers in Horry County, S.C.
  • Bruce Telephone Company, which won funding for parts of Wisconsin to deliver gigabit internet service.
  • JCWIFI, which provides fixed wireless internet within a 3,000 square mile service area covering parts of Illinois, Iowa and Wisconsin.

In addition to the upper Midwest and South Carolina, the biggest states expected to benefit from the latest awards are (northern) California and Wyoming.

At least $2 billion in subsidy funds became available after larger providers — AT&T, CenturyLink and Verizon turned down funding because the companies had no interest in building out their networks in rural service areas.

Regulators… Captured: AT&T Gets FCC to Omit Bad Internet Speed Scores It Doesn’t Like

AT&T was unhappy with the low internet speed score the FCC was about to give the telecom giant, so it made a few phone calls and got the government regulator to effectively rig the results in its favor.

“Regulatory capture” is a term becoming more common in administrations that enable regulators that favor friendly relations with large companies over consumer protection, and under the Trump Administration, a very business-friendly FCC has demonstrated it is prepared to go the distance for some of the country’s largest telecom companies.

Today, the Wall Street Journal reported AT&T successfully got the FCC to omit DSL speed test results from the agency’s annual “Measuring Broadband America” report. Introduced during the Obama Administration, the internet speed analysis was designed to test whether cable and phone companies are being honest about delivering the broadband speed they advertise. Using a small army of test volunteers that host a free speed testing router in their home (full disclosure: Stop the Cap! is a volunteer host), automated testing of broadband performance is done silently by the equipment on an ongoing basis, with results sent to SamKnows, an independent company contracted to manage the data for the FCC’s project.

In 2011, the first full year of the program, results identified an early offender — Cablevision/Optimum, which advertised speed it couldn’t deliver to many of its customers because its network was oversold and congested. Within months, the company invested millions to dramatically expand internet capacity and speeds quickly rose, sometimes beyond the advertised level. In general, fiber and cable internet providers traditionally deliver the fastest and most reliable internet speed. Phone companies selling DSL service usually lag far behind in the results. One of those providers happened to be AT&T.

In the last year, the Journal reports AT&T successfully appealed to the FCC to keep its DSL service’s speed performance out of the report and withheld important information from the FCC required to validate some of the agency’s results.

The newspaper also found multiple potential conflicts of interest in both the program and SamKnows, its contracted partner:

  • Providers get the full names of customers using speed test equipment, and some (notably Cablevision/Optimum) regularly give speed test customers white glove treatment, including prioritized service, performance upgrades and extremely fast response times during outages that could affect the provider’s speed test score. Jack Burton, a former Cablevision engineer said “there was an effort to make sure known [users] had up-to-date equipment” like modems and routers. Cablevision also marked as “high priority” the neighborhoods that contained speed-testing users, ensuring that those neighborhoods got upgraded ahead of others, said other former Cablevision engineers close to the effort.
  • Providers can tinker with the raw data, including the right to exclude results from speed test volunteers subscribed to an “unpopular” speed tier (usually above 100 Mbps), those using outdated or troublesome equipment, or are signed up to an “obsolete” speed plan, like low-speed internet. Over 25% of speed test results (presumably unfavorable to the provider) were not included in the last annual report because cable and phone companies objected to their inclusion.
  • SamKnows sells providers immediate access to speed test data and the other data volunteers measure for a fee, ostensibly to allow providers to identify problems on their networks before they end up published in the FCC’s report. Critics claim this gives providers an incentive to give preferential treatment to customers with speed testing equipment.

Some have claimed internet companies have gained almost total leverage over the FCC speed testing project.

The Journal:

Internet experts and former FCC officials said the setup gives the internet companies enormous leverage. “How can you go to the party who controls the information and say, ‘please give me information that may implicate you?’ ” said Tom Wheeler, a former FCC chairman who stepped down in January 2017. Jim Warner, a retired network engineer who has helped advise the agency on the test for years, told the FCC in 2015 that the rules for providers were too lax. “It’s not much of a code of conduct,” Mr. Warner said.

An FCC spokesman told the Journal the program has a transparent process and that the agency will continue to enable it “to improve, evolve, and provide meaningful results as we move forward.”

The stakes of the FCC’s speed tests are enormous for providers, now more reliant than ever on the highly profitable broadband segment of their businesses. They also allow providers to weaponize  favorable performance results to fight off consumer protection efforts that attempt to hold providers accountable for selling internet speeds undelivered. In some high stakes court cases, the FCC’s speed test reports have been used to defend providers, such as the lawsuit filed by New York’s Attorney General against Charter Communications over the poor performance of Time Warner Cable. The parties eventually settled that case.

In 2018, the key takeaway from the report celebrated by providers in testimony, marketing, and lobbying, was that “for most of the major broadband providers that were tested, measured download speeds were 100% or better of advertised speeds during the peak hours.”

Comcast often refers to the FCC’s results in claims about XFINITY internet service: “Recent testing performed by the FCC confirms that Comcast’s broadband internet access service is one of the fastest, most reliable broadband services in the United States.” But in 2018, Comcast also successfully petitioned to FCC to exclude speed test results from 214 of its testing customers, the highest number surveyed among individual providers. In contrast, Charter got the FCC to ignore results from 148 of its customers, Mediacom asked the FCC to ignore results from 46 of its internet customers.

Among the most remarkable findings uncovered by the Journal was the revelation AT&T successfully got the FCC to exclude all of its DSL customers’ speed test results, claiming that it would not be proper to include data for a service no longer being marketed to customers. AT&T deems its DSL service “obsolete” and no longer worthy of being covered by the FCC. But the company still actively markets DSL to prospective customers. This year, AT&T also announced it was no longer cooperating with SamKnows and its speed test project, claiming AT&T has devised a far more accurate speed testing project itself that it intends to use to self-report customer speed testing data.

Cox also managed to find an innovative way out of its poor score for internet speed consistency, which the FCC initially rated a rock bottom 37% of what Cox advertises. Cox claimed its speed test results were faulty because SamKnows’ tests sent traffic through an overcongested internet link yet to be upgraded. That ‘unfairly lowered Cox’s ratings’ for many of its Arizona customers, the company successfully argued, and the FCC put Cox’s poor speed consistency rating in a fine print footnote, which included both the 37% rating and a predicted/estimated reliability rating of 85%, assuming Cox properly routed its internet traffic.

The FCC report also downplays or doesn’t include data about internet slowdowns on specific websites, like Netflix or YouTube. Complaints about buffering on both popular streaming sites have been regularly cited by angry customers, but the FCC’s annual report signals there is literally nothing wrong with most providers.

Providers still fear their own network slowdowns or problems during known testing periods. The Journal reports many have a solution for that problem as well — temporarily boosting speeds and targeting better performance of popular websites and services during testing periods and returning service to normal after tests are finished.

James Cannon, a longtime cable and telecom engineering executive who left Charter in February admitted that is standard practice at Spectrum.

“I know that goes on,” he told the Journal. “If they have a scheduled test with a government agency, they will be very careful about how that traffic is routed on the network.”

As a result, the FCC’s “independent” annual speed test report is now compromised by large telecom companies, admits Maurice Dean, a telecom and media consultant with 22 years’ experience working on streaming, cable and telecom projects.

“It is problematic,” Dean said. “This attempt to ‘enhance’ performance for these measurements is a well-known practice in the industry,’ and makes the FCC results “almost meaningless for describing actual user experience.”

Tim Wu, a longtime internet advocate, likened the speed test program as more theoretical than actual, suggesting it was like measuring the speed of a car after getting rid of traffic.

Sprint Admits Its Network Not Fit for Purpose, Struggles to Keep Up With Competitors

NEW YORK (Reuters) – Executives from Sprint Corp testified on Monday that the U.S. wireless carrier has struggled to improve its network, hindering its growth and underscoring the need to merge with larger rival T-Mobile US Inc.

U.S. state attorneys general, led by New York and California, are suing to stop the merger.

The states seek to prove in Manhattan federal court that the deal between the No. 3 and No. 4 wireless carriers would raise prices, particularly for users on prepaid plans. The state attorneys general, all Democrats, asked Judge Victor Marrero to order the companies to abandon the deal.

Sprint Chief Marketing Officer Roger Solé testified that the company’s strategy for enticing customers from competitors included slashing prices.

But he said the promotion’s “early success faded away pretty soon” due to customers having a negative experience with Sprint’s network quality.

In an effort to show how competition lowered prices, the states presented evidence that when Sprint introduced an aggressive promotion in 2016 to offer phone plans comparable to those of Verizon, AT&T and T-Mobile, T-Mobile’s MetroPCS prepaid brand immediately lowered prices on its plans.

The evidence is central to the states’ argument that Sprint and T-Mobile as standalone companies force competition between carriers, providing the best deal for consumers.

Solé

Solé

Lawyers for the states also presented evidence suggesting Sprint wanted a deal so more money could be earned from each customer.

In WhatsApp messages from 2017 between Solé and Marcelo Claure, who was then CEO of Sprint, Solé suggested a merger with T-Mobile could raise Sprint’s average revenue per user by $5.

In his deposition before the trial, Solé said he was simply offering a thought that price increases could happen “very far down the road.”

The companies argue that the stronger T-Mobile that would result from the proposed $26.5 billion takeover would be better able to innovate and compete to reduce wireless prices. The case represents a break with the usual process of states coordinating with the federal government in reviewing mergers and generally coming to a joint conclusion.

The deal had been contemplated in 2014 during the Obama administration, but the Justice Department and Federal Communications Commission urged the companies to drop it, which they did.

The Trump administration signed off on it after the companies agreed to sell Sprint’s prepaid businesses, popular with people with poor credit, to satellite television company Dish Network Corp.

But setting up DISH as a wireless carrier is “patently insufficient to mitigate the merger’s competitive harm,” the states argued in a court filing.

Deutsche Telekom CEO Timotheus Höttges, whose company is the largest shareholder of T-Mobile, will testify on Tuesday.

Reporting by Diane Bartz and Sheila Dang; Additional reporting by Brendan Pierson; Editing by Daniel Wallis, Nick Zieminski and Dan Grebler

China Well Ahead of U.S. in Fiber Deployment; Lack of U.S. Competition Responsible for Lag

China is outpacing the U.S. in fiber broadband expansion. (Image: Broadband Now)

At least 86% of China now has access to fiber broadband connectivity after six years of aggressive fiber optic network expansion, putting the United States at a significant disadvantage.

Only 25% of the United States is served by fiber service, creating a giant digital divide that leaves most Americans without fiber high speed broadband. That is the finding of Broadband Now, which summarized the results of its investigation in an article published this week, blaming the country’s reliance on deregulated monopoly/duopoly telecom companies for much of the problem.

“While America continues to suffer from an immense digital divide, China’s government has made incredible progress building out a state-sponsored super network of fiber optic connections. This infrastructure will allow the country to take early advantage of some of the most impactful applications resulting from the fourth industrial revolution,” Broadband Now reports.

Chinese state policy has emphasized the importance of deploying modern telecommunications networks, including fiber-to-the-home and 5G wireless service. The Chinese central government is spending billions to build a core public broadband network, which providers can lease to offer service to their customers. U.S. providers rely on private investment that depends on a financial formula to determine if fiber upgrades will deliver a competitive advantage or a potential for robust profits.

Broadband Now notes that most U.S. providers face little significant competition — “a difficult proposition to justify installing robust fiber networks, especially in less populous areas of the U.S.”

The “return on investment” formula is also responsible for the lack of rural broadband access, a problem the Chinese government solved by directly subsidizing the construction of fiber networks across the country, deeming high speed connectivity a national priority. As a result, 96% of rural Chinese villages now have access to fast internet service.

Broadband Now advocates for more aggressive fiber broadband deployment in the United States, including policies that promote fiber expansion and reduce deployment costs. For example, Broadband Now believes that a national “dig once” policy that would require fiber optic conduit to be installed wherever roadway projects are undertaken could allow providers quick and inexpensive access to deploy fiber technology. The group estimates that nationwide fiber expansion costs could be reduced from $140 billion to $14 billion if dig once policies were the national standard.

Chinese fiber deployment has already laid a foundation for China to outpace the United States in the race to deploy 5G wireless networks. Fiber connections are required to power gigabit speed small cells integral to millimeter wave 5G services. With China well ahead of the U.S. in fiber deployment, the country is poised to rapidly expand 5G wireless service.

FCC Considering New 5.9 GHz Wi-Fi Band

Pai

Pai

After significant lobbying by the cable industry, FCC Chairman Ajit Pai made a decision to propose splitting up the 5.9 GHz so-called Vehicle-to-Vehicle (V2V) band to open up 45 MHz for unlicensed Wi-Fi services and leave 30 MHz reserved for emerging crash avoidance technology that will allow cars to communicate with each other to reduce accidents.

Pai has been frustrated by the slow development of intelligent vehicle communications, especially as different competing technologies appear to have delayed deployment as carmakers ponder a technology shift. Pai’s proposal would allow auto manufacturers to debate what kind of spectrum division might be appropriate within the remaining band if different technologies are eventually deployed. But Pai would also quickly move to open up much of the rest of the band for cable industry and consumer Wi-Fi services.

“My proposal would do far more for both automotive safety and Wi-Fi than the status quo,” Pai said, noting he was adding his proposal for FCC consideration at a meeting on Dec. 12.

The cable industry, through its national lobbying group NCTA-The Internet & Television Association, quickly applauded Pai’s proposal, which nearly mirrors the plan recommended by the nation’s biggest cable companies.

“We applaud Chairman Pai’s announcement today that the Commission intends to move forward in considering a new plan for 5.9 GHz spectrum band that will chart a constructive path forward in putting these frequencies to better use for consumers,” said NCTA President Michael Powell. “The Chairman’s proposal will enable the fastest gigabit Wi-Fi speeds in America, ensuring that Wi-Fi can keep pace with growing consumer demand and the deployment of next-generation wireless broadband technologies. We also thank Commissioners O’Rielly and Rosenworcel for their tireless efforts in support of unlicensed spectrum, especially enabling Wi-Fi in the 5.9 GHz band.”

Cable operators including Charter and Comcast want to deploy a large network of Wi-Fi hotspots in the new band to support their growing mobile service operations. Both stand to save substantially by offloading network traffic to their own wireless networks instead of relying on Verizon Wireless, which is contracted to provide 4G LTE service.

Consumers will eventually also be able to purchase in-home routers that will support the new 5.9 GHz band, if Pai’s proposal is approved. The new Wi-Fi band, located between 5.85-5.895 GHz is adjacent to the existing 5.9 GHz Wi-Fi band in the United States (5.725-5.850 GHz)

Expanding available Wi-Fi spectrum may help consumers get faster wireless connections, especially in areas where signal congestion from other users is significant. Some proponents suggest that the new band could allow consumers to experience near-gigabit Wi-Fi speeds, but that will largely be dependent on the equipment used, one’s distance from a Wi-Fi hotspot, and any prevailing wireless traffic congestion.

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