Gov. Wolf

Pennsylvania Gov. Tom Wolf wants broadband service to be available to every Pennsylvania resident by the year 2022, but will offer only a token amount of state funding to private bidders in the upcoming FCC Connect America Fund Phase II Auction.

“I want to ensure every Pennsylvania household and business has access to modern day high-speed internet,” Wolf said. “Equal access to the internet, regardless of location or income, must be provided if Pennsylvania is to remain competitive, if we want to offer every child the best education, if we want to live in a state where we all can access modern day healthcare options, if we want a state where our farms and other businesses thrive, and the jobs of tomorrow are created.”

Wolf will create the Pennsylvania Office of Broadband Initiatives, which will develop and execute a forthcoming state plan to get service to every corner of the state over the next four years. The governor will also set aside up to $35 million for his new Pennsylvania Broadband Investment Incentive Program, which is supposed to convince incumbent phone and cable companies to extend service into adjacent rural areas that lack service today.

According to State Rep. Pam Snyder (D-Greene/Fayette/Washington), about 800,000 Pennsylvanians currently lack broadband access. About two-thirds are in rural areas while the rest are in underserved urban areas served by providers that don’t meet the FCC’s definition of broadband service. About 20% of rural Pennsylvania residents are stuck with DSL as their only option, compared to 3% in urban areas. Broadband service is defined under Pennsylvania law as at least 1.544 Mbps download speed and 128 kilobits per second upload speed. The FCC’s national standard is 25/3 Mbps.

Areas where at least 25Mbps broadband is available in Pennsylvania (Blue – Cable, Brown – Fiber) (Map courtesy of Pennsylvania Department of Community Economic Development)

To achieve 100% coverage, providers would have to upgrade their networks and extend them to places that are currently unserved, as well as upgrade older broadband technology incapable of achieving 25 Mbps, the minimum federally defined speed qualifying as broadband.

Two years ago, Verizon turned down federal subsidies to expand rural broadband in the northeast, including $140 million earmarked for Pennsylvania and nearly $170 million for New York. New York won back money originally offered to Verizon, Pennsylvania did not and its share was forfeit. What made the difference?

“New York had a half a billion dollars they brought to the table,” said Pennsylvania Public Utility Commission spokesman Nils Hagen-Frederiksen last November. Pennsylvania offers up to $35 million.

Gov. Wolf’s new initiatives may be part of an effort to give the state’s rural broadband program more credibility in Washington, especially as up to $2 billion in new federal funding becomes available for broadband expansion across the country.

A separate effort now underway at Penn State involves an 11-month study of broadband access in rural Pennsylvania, in part to determine exactly how bad rural broadband service is in the state.

“Very slow and constantly having to reset it,” Sharon Czarniak of Turbotville told WNEP-TV in Scranton. “We get it through Verizon because it’s not available any other way in our area because it’s too rural.”

If service in the town of Turbotville is challenging, outside of town it is impossible.

“Surrounding areas all outside of Turbotville in the mountainous areas, there is no service for internet,” Missy Magargle said.

George Sudol told the TV station his internet service is weather-dependent.

“Storms, a little bit of rain or anything, will knock us right offline. Besides being slow, we have problems just getting online a lot of times,” Sudol said.

Unfortunately for the residents of Turbotville, and other rural communities across Pennsylvania, $35 million won’t go very far providing broadband improvements. But it is a start.

WNEP-TV in Scranton reports on faster internet for rural Pennsylvania. (2:37)

A bipartisan group of senators from some of America’s most rural and broadband-challenged states blasted the mapping skills of the Federal Communications Commission in a hearing Tuesday.

The senators were upset because the FCC’s Universal Service Fund will pay subsidies to extend wireless connectivity only in areas deemed to have inadequate or non-existent coverage. The FCC’s latest wireless coverage map is the determining factor whether communities get subsidies to expand service or not, and many in attendance at the Communications, Technology, Innovation, and the Internet subcommittee hearing quickly called it worthless.

Sen. Jerry Moran (R-Kan.) said the map’s “value is nil,” quickly followed by the Subcommittee chair Sen. Roger Wicker (R-Miss.) who added, “we might as well say it, Mr. Moran, that map is utterly worthless of giving us good information.”

“The simple answer is: it’s garbage in, garbage out,” said Steve Berry, CEO of the Competitive Carriers Association, which counts several small, rural cell phone companies as members.

This FCC map shows (in blue) areas identified as eligible to receive wireless subsidies to expand service where little or none exists today. (click map to expand)

The latest version of the map was heralded by the FCC as a significant improvement over the 2012 map used during the first round of funding. But critics like Berry claimed the map still relies entirely on carrier-provided data, much of it based on network capacity, and there is an incentive for existing wireless carriers to overestimate coverage because it assures funds won’t be given to potential competitors to strengthen their cellular networks.

The FCC claimed it gave carriers new benchmarks to meet in its latest map, including a request to only identify an area as covered if it achieves 80% certainty of coverage at 4G LTE speeds of 5 Mbps or more. To identify underserved zones, the FCC asked carriers not to identify areas that passed the first test as served if cell towers in that zone exceeded 30% of capacity. But Berry noted the FCC did not include a signal strength component, which means a carrier could report a significant area as getting adequate coverage based on the capacity of their network in a strong reception zone, even if customers nearby reported ‘no bars’ of signal strength or coverage that dropped completely once indoors.

Sen. Wicker

Senators from Kansas, New Hampshire and Mississippi were astonished to see maps that claimed virtually 100% of all three states were fully covered with mobile broadband service. The senators rejected that assertion.

Sen. Maggie Hassan (D-N.H.) has devoted a section on her website to collecting reports from New Hampshire residents getting poor cell phone reception, and she has been a frequent critic of the FCC’s coverage maps which she has repeatedly called inaccurate.

In northern Mississippi, wireless coverage is so poor the Mississippi Public Service Commission launched an initiative to collect real-world data about reception through its “Zap the Gap” initiative. But the FCC’s latest map suggests the problem is solved in the most signal-challenged areas in the northern part of the state, with the exception of small pockets in the Holly Springs National Forest, the Enid Lake area, areas east of Coffeeville, parts of Belmont, and areas east of Smithville.

The four major national wireless carriers suggest there is no problem with wireless coverage in Mississippi either. AT&T claims to reach 98% of the state, Verizon Wireless 96.43%, T-Mobile 66.36%, and Sprint 30.92%. Regional carrier C Spire claims 4G LTE coverage that falls somewhere between T-Mobile and AT&T in reach.

Sen. Jon Tester (D-Mont.) told the subcommittee in his state, the FCC’s maps have little resemblance to reality, showing 4G LTE speeds in areas where no cellular reception exists at all.

“The FCC is wrong, they screwed up, we’re getting screwed because they screwed up, so how do we fix it?” Tester asked. “There has got to be a way to get the FCC’s attention on this issue. We’ve got to do better, folks, it’s not working.”

Mississippi’s program to report cellular coverage gaps.

Independent cell phone companies that specialize in serving areas the larger carriers ignore are hamstrung by the FCC and its maps, according to Mike Romano, senior vice president for policy for NTCA – The Rural Broadband Association — a trade group and lobbyist for smaller rural providers. Romano told the subcommittee if any cellular company reports coverage to even one household in a census block (which can cover a large geographic area in rural states), that entire block is ineligible for Connect America Fund subsidies.

The FCC, rural carriers complain, is relying on small wireless companies to serve as the map’s fact checkers and forces them to start a costly challenge procedure if they want to present evidence showing the map is wrong. Such proceedings are expensive and time-consuming, they argue. Even if successfully challenged, that does not win the companies a subsidy. It only opens the door to a competitive bidding process where challengers could face competing bids from larger companies that made no effort to challenge the map data.

A group of senators signed a joint letter to FCC Chairman Ajit Pai complaining about the accuracy issues surrounding the FCC’s wireless map:

Dear Chairman Pai:

We write this letter to express our serious concerns that the map released by the Federal Communications Commission last week showing presumptive eligible areas for Mobility Fund Phase II (MF II) support may not be an accurate depiction of areas in need of universal service support.  We understand that the map was developed based on a preliminary assessment from a one-time data collection effort that will be verified through a challenge process. However, we are concerned that the map misrepresents the existence of 4G LTE services in many areas.  As a result, the Commission’s proposed challenge process may not be robust enough to adequately address the shortcomings in the Commission’s assessment of geographic areas in need of support for this proceeding.

MF II is intended to provide $4.53 billion in support over 10 years to preserve and expand mobile coverage to rural areas. These resources will be made available to provide 4G LTE service where it is not economically viable today to deploy services through private sector means alone.  Having consistently traveled throughout rural areas in our states, it appears that there are significant gaps in mobile coverage beyond what is represented by the map’s initial presentation of “eligible areas.” To accurately target support to communities truly in need of broadband service, it is critical we collect standardized and accurate data.

For too long, millions of rural Americans have been living without consistent and reliable mobile broadband service.  Identifying rural areas as not eligible for support will exacerbate the digital divide, denying fundamental economic opportunities to these rural communities.  We strongly urge the Commission to accurately and consistently identify areas that do not have unsubsidized 4G LTE service and provide Congress with an update on final eligible areas before auctioning $4.53 billion of MF II support.

In addition to Senator Roger Wicker (R-Miss.), the letter was signed by Maggie Hassan (D-N.H.), Jerry Moran (R-Kan.), Angus King (I-Maine), Cory Gardner (R-Colo.), Amy Klobuchar (D-Minn.), Pat Roberts (R-Kan.), Roy Blunt (R-Mo.), Gary Peters (D-Mich.) and Thom Tillis (R-N.C.).

The Senate Commerce, Science and Transportation Subcommittee held a hearing on broadband infrastructure needs. The FCC’s wireless broadband coverage map was a main issue in contention. (Note, the hearing begins at the 30:00 mark.) (2:05:00)

Cable One, the Phoenix-based mid-sized cable operator serving some of the poorest communities in the country is charging some of the nation’s highest prices for broadband service, raking in an unprecedented 47% margin in the fourth quarter of 2017, the highest in the cable industry.

That growth has come courtesy of CEO Julie Laulis, who has doubled down on data caps — automatically enrolling customers in higher priced plans if they exceed data caps three times in any 12-month period, raised prices, and ended most new customer and customer retention promotions in favor of ‘take it or leave it‘ pricing, especially on broadband service. Laulis has also decided to devote most of Cable One’s marketing efforts on selling broadband service, while de-emphasizing cable television. As a result, customers dissatisfied with Cable One’s lineup are encouraged to leave quietly.

Because video programming is costly to provide and broadband is relatively cheap to offer, the more the company can extract from its internet customers, the higher the profits earned. In 2011, cable television represented 49.1% of Cable One’s $779 million in revenue, with residential and commercial broadband comprising 34%. Today, 57% of Cable One’s $960 million in revenue comes from selling internet service. Cable One not only de-emphasized its video business, it also raised prices on internet service to further enhance earnings.

New customers coming to Cable One can subscribe to an entry-level broadband plan of 100 Mbps with a 300 GB monthly data cap for $55 a month. There are no discounts or promotions on this plan. But Cable One also requires customers to lease ($10.50/mo.) or buy an added-cost cable modem, raising the price higher. To prevent customers from taking advantage of promotions on higher speed products, Cable One requires customers to disconnect from service for a full year before being considered a new customer once again.

Laulis

Cable One has been able to raise prices and attach stingy usage caps to customers primarily because there are no good alternatives in the rural markets it prefers. One analyst said 77% of Cable One’s customers are in largely rural areas of Arizona, Idaho, Illinois, Missouri, Montana and Oklahoma. But prices are clearly getting too high for some, because the company lost more video and phone customers that it gained in new broadband subscriptions during the fourth quarter of 2017.

The fact Cable One broadband is now considered by many subscribers to be “too expensive” is also reflected by the extremely anemic broadband growth at Cable One. In 2017, the company added just 1.5% to its residential broadband customer base, despite very limited competition from phone companies.

MoffettNathanson’s Craig Moffett has complained all winter that Cable One is sacrificing broadband subscriber growth in favor of profits from price increases.

“[Cable One has] the most limited broadband competition of any publicly traded operator, and they have the lowest starting penetration,” Moffett told his investors. “Should they not be growing broadband the fastest of anyone? If price elasticity is greater than anyone thinks, how long is the runway, not just for Cable One, but for any operator choosing a strategy of price increases rather than unit growth?”

Cable One is also squeezing its newest customers at its latest acquisition – NewWave, which now features pricing very similar to Cable One. It recently started to turn over past due NewWave customers to collections after going 40 days past due. Previously, it was 90 days before account holders were threatened with cancellation and collections.

For now, NewWave’s introductory offer remains: 100 Mbps High-Speed Internet is $39 for the first three months before these rates kick in:

The Democrats are countering the Trump Administration’s economic proposals with plans of their own they broadly call “A Better Deal.”

Democrats in Washington are countering President Donald Trump’s lack of commitment to earmark funding for rural broadband with a $40 billion plan of their own that is part of a broader trillion-dollar infrastructure investment package released Wednesday.

The plan, “Returning the Republican Tax Giveaways for the Wealthy to the American People,” specifically targets funding for a new, last-mile focused, broadband expansion program that would target funding specifically to providing broadband service to the homes and businesses in the country that cannot get the service now.

“The electricity of 2017 is high-speed Internet,” according to the Democrats. “While the private sector has delivered high-speed internet to many, millions of Americans in less profitable rural and urban areas have been left out.”

Rural broadband is expected to become a campaign issue in the midterm elections, as Democrats push their new working and middle class recovery program they call “A Better Deal,” reminiscent of President Franklin D. Roosevelt’s “New Deal” program during the Depression of the 1930s.

The Democrats claim they will do a better job overcoming the digital divide by forcing providers to compete for public funding. In contrast, the Trump Administration’s general infrastructure program offered $200 billion for all types of infrastructure projects, with no funding earmarked for broadband. But most of that money can only be unlocked if a private company enters into a public-private partnership with the government and agrees to invest even more in private dollars than the federal government will offer in supplementary funding.

The Democrats also claim their broadband investment program will be open to public providers like municipalities, co-ops, and publicly owned utilities, not just private companies. The Republicans have generally opposed municipal broadband projects, although there are some exceptions in rural areas where local and state officials share the frustration of bypassed local residents.

Manchin

“If you actually get out to Trump country and talk to folks, you will discover that they are angry and frustrated and pissed off that the companies won’t serve them (because it is too expensive to provide service) and won’t let them deploy their own networks,” wrote Harold Feld, senior vice president at the consumer advocacy group Public Knowledge, in a Facebook post this week. “Traditionally, rural Republicans have been eager to use the tools of government to bring essential services to rural America. If this helps pressure rural Republicans to break with the anti-government mantra and return to traditional bipartisan approaches to bringing service to rural America, so much the better.”

Moderate Democrats in states with large rural populations are especially excited by the Democratic plan.

“The way we speak in plain-speaking West Virginia, this is a really good deal,” said Sen. Joe Manchin III (D-W.V.) at a news conference Thursday. “All of you who’ve come from urban areas, you take this for granted.”

The rural broadband funding is part of a much larger $1 trillion investment package paid for by reversing certain tax breaks. The corporate tax rate, which was slashed from 35 percent to 21 percent under the Republican plan, would be raised to 25 percent under the Democratic plan. Democrats are also seeking to restore estate taxes on couples earning over $11 million annually.

There are three tiers of Citizens Broadband Radio Service users – incumbent users (usually military) that get top priority access and protection from interference, a mid-class Priority Access License group of users that win limits on potential interference from other users, and unlicensed users that have to share the spectrum, and interference, if any.

Charter Communications wants to license a portion of the 3.5 GHz Citizens Broadband Radio Service (CBRS) band to launch a new wireless broadband service for its future mobile customers and potentially also offer its own rural broadband solution.

The CBRS band has sat largely unused except by the U.S. military since it was created, but now the Federal Communications Commission is exploring opening up the very high frequencies to attract wireless broadband services with Priority Access Licenses that will assure minimal interference.

One of the most enthusiastic supporters of CBRS is Charter/Spectrum, which has been testing a 3.5 GHz wireless broadband service using CBRS spectrum in Centennial and Englewood, Col., Bakersfield, Calif., Coldwater, Mich., and Charlotte, N.C. Those tests, according to Charter, reveal the cable company “can provide speeds of at least 25/3 Mbps at significant distances,” which it believes could become a rural broadband solution for customers outside of the reach of its wired cable network.

But Charter’s interest in CBRS extends well beyond its potential use to reach rural areas. Charter’s primary goal is to offer wireless connectivity in neighborhoods for its forthcoming mobile phone service. Charter plans to enter the wireless business this year, selling smartphones and other wireless devices that will depend on in-home Wi-Fi, CBRS, and a contract with Verizon Wireless to provide coverage everywhere else.

Charter wants to keep as much data usage on its own networks as possible to reduce costs. It has no interest in building a costly, competing LTE 4G or 5G wireless network to compete with AT&T, Verizon, Sprint, and T-Mobile. But it is interested in the prospect of using LTE technology on CBRS frequencies, which are likely to be licensed at much lower costs than traditional mobile spectrum.

Primary Economic Areas

There are several proposals on the table on how to license this spectrum. Large wireless companies want Priority Access Licenses (PALs) based on Partial Economic Areas (PEAs) — 416 wireless service areas the FCC established as part of its spectrum auctions. PEAs are roughly equivalent to metropolitan areas and typically cover multiple counties surrounding a major city. Major wireless carriers are already familiar with PEAs and their networks cover large portions of them.

Charter is proposing to license PALs based on county lines, not PEAs, which will likely reduce the costs of licensing and, in Charter’s view, will “attract interest and investment from new entrants to small and large providers.” If Charter’s proposal is adopted, its costs deploying small cell technology used with CBRS will be much lower, because it will not have to serve larger geographic areas.

The FCC envisioned licensing PALs based on census tract boundaries, which would result in licenses for areas as small as portions of neighborhoods. That proposal has not won favor with like wireless companies or cable operators. The wireless giants would prefer licenses based on PEAs, but companies like AT&T seem also amenable to the cable industry proposal.

Charter’s proposed CBRS network would likely allow the cable company to offload a lot of its mobile data traffic away from Verizon Wireless, reducing the company’s data costs. Charter’s deployment costs are relatively low as well, because the backhaul fiber network used to power small cells is already present throughout Charter’s service areas.

Just how far into rural unserved areas Charter’s CBRS network can reach isn’t publicly known, but it would likely not extend into the most difficult-to-serve areas far away from Charter’s current infrastructure. But if the FCC establishes county boundaries and a requirement that those companies obtaining priority licenses actually serve those areas, it could help resolve some rural broadband problems.