Further expansion of Google Fiber appears to be on hold as the company contemplates moving away from fiber to the home service towards a wireless platform that could provide internet access in urban areas for less money.

The Wall Street Journal today reports Google parent Alphabet, Inc., is looking to cities to share more of the costs of building faster broadband networks or using cheaper wireless technology to reach customers instead.

Six years after Google first announced it would finance the construction of fiber to the home networks, the company has made progress in wiring just six communities, many incompletely. Progress has been hampered by infrastructure complications including pole access, permitting and zoning issues, unanticipated construction costs, and according to one Wall Street analyst, the possibility of lack of enthusiasm from potential subscribers.

Google’s recent acquisition of Webpass, a company specializing in beaming internet access over fiber-connected wireless antennas between large multi-dwelling units like apartments and condos appears to be a game-changer for Google. Webpass was designed mostly to service urban and population dense areas, not suburbs or neighborhoods of single-family dwellings. Webpass’ reliance on wireless signals that travel between buildings removes the cost and complexity of installing fiber optics, something that appears to be of great interest to Google.

Google Fiber is planning a system that would use fiber for its core network but rely on wireless antennas to connect each home to the network, according to a person familiar with the plans. Alphabet chairman Eric Schmidt said at the company’s shareholder meeting in June that wireless connections can be “cheaper than digging up your garden” to lay fiber. The only question is what kind of performance can users expect on a shared wireless network. Google’s plans reportedly do not involve 5G but something closer to fixed wireless or souped-up high-speed Wi-Fi. A web video on Webpass’ website seems to concede “you get best speeds with a wired connection.”

Even Google’s wireless technology solutions provider Webpass concedes that wired broadband is faster.

Former Webpass CEO Charles Barr, now an Alphabet employee, argues wireless solves a lot of problems that fiber can bring to the table.

“Everyone who has done fiber to the home has given up because it costs way too much money and takes way too much time,” Barr said.

Barr’s statements are factually inaccurate, however. Fiber to the home projects continue in many cities, but if they are run by private companies, chances are those rollouts are limited to areas where a proven rate of return is likely. Large incumbent phone and cable companies are also contemplating some fiber rollouts, at least to those who can afford it. Many of the best prospects for fiber to the home service are customers in under-competitive markets where the phone company offers slow speed DSL and cable broadband speeds are inadequate. Rural communities served by co-ops are also prospects for fiber upgrades because those operations answer to their members, not investors. Community broadband projects run by local government or public utilities have also proven successful in many areas.

But like all publicly traded companies, Google must answer to Wall Street and their investors and some are not happy with what they see from Google Fiber. Craig Moffett from Wall Street research firm MoffettNathanson has rarely been a fan of any broadband provider other than cable operators and Google Fiber is no different.

“One can’t help but feel that all of this has the flavor of a junior science fair,” Moffett said of Google Fiber, pointing out the service has managed to attract only 53,000 cable TV customers nationwide as of December. Moffett concedes there are significantly more broadband-only customers signed up for Google, but that didn’t stop him from suggesting Google Fiber has had very little impact on increasing broadband competition across the country.

Analysts suggest Google Fiber is spending about $500 per home passed by its new fiber network. But that is a fraction of the $3,000+ per customer often spent by cable operators buying one another.

Google’s wireless deployment will likely take place in Los Angeles, Dallas, and Chicago according to people familiar with the company’s plans. Less dense cities slated for Google Fiber including San Jose and Portland, Ore., may never get any service from Google at all, but they are likely to hear something after a six month wait.

Google is also reportedly asking cities if the company can lease access on existing fiber networks. Another tactic is requesting power companies or communities build fiber networks first and then turn them over to Google to administer. The latter seems less likely, considering there are successful public broadband networks operating on their own without Google’s help.

It wasn’t difficult to understand Verizon’s sudden reticence about continuing its fiber to the home expansion program begun under the leadership of its former chairman and CEO Ivan Seidenberg. Starting his career with Verizon predecessor New York Telephone as a cable splicer, he worked his way to the top. Seidenberg understood Verizon’s wireline future as a landline phone provider was limited at best. With his approval, Verizon began retiring decades-old copper wiring and replaced it with fiber optics, primarily in the company’s biggest service areas and most affluent suburbs along the east coast. The service was dubbed FiOS, and it has consistently won high marks from customers and consumer groups.

Seidenberg

Seidenberg hoped by offering customers television, phone, and internet access, they would have a reason to stay with the phone company. Verizon’s choice of installing fiber right up the side of customer homes proved highly controversial on Wall Street. Seidenberg argued that reduced maintenance expenses and the ability to outperform their cable competitors made fiber the right choice, but many Wall Street analysts complained Verizon was spending too much on upgrades with no evidence it would cause a rush of returning customers. By early 2010, Verizon’s overall weak financial performance coupled with Wall Street’s chorus of criticism that Verizon was overspending to acquire new customers, forced Seidenberg to put further FiOS expansion on hold. Verizon committed to complete its existing commitments to expand FiOS, but with the exception of a handful of special cases, stopped further expansion into new areas until this past spring, when the company suddenly announced it would expand FiOS into the city of Boston.

Seidenberg stepped down as CEO in July 2011 and was replaced by Lowell McAdam. McAdam spent five years as CEO and chief operating officer of Verizon Wireless and had been involved in the wireless industry for many years prior to that. It has not surprised anyone that McAdam’s focus has remained on Verizon’s wireless business.

McAdam has never been a booster of FiOS as a copper wireline replacement. Verizon’s investments under McAdam have primarily benefited its wireless operations, which enjoy high average revenue per customer and a healthy profit margin. Over the last six years of FiOS expansion stagnation, Verizon’s legacy copper wireline business has continued to experience massive customer losses. Revenue from FiOS has been much stronger, yet Verizon’s management remained reticent about spending billions to restart fiber expansion. In fact, Verizon’s wireline network (including FiOS) continues to shrink as Verizon sells off parts of its service area to independent phone companies, predominately Frontier Communications. Many analysts expect this trend to continue, and some suspect Verizon could eventually abandon the wireline business altogether and become a wireless-only company.

With little interest in maintaining or upgrading its wired networks, customers stuck in FiOS-less communities complain Verizon’s service has been deteriorating. As long as McAdam remains at the head of Verizon, it seemed likely customers stuck with one option – Verizon DSL – would be trapped with slow speed internet access indefinitely.

Verizon’s FiOS expansion rises from the dead?

But McAdam has finally shown some excitement for a high-speed internet service he does seem willing to back. Verizon’s ongoing trials of 5G wireless service, if successful, could spark a major expansion of Verizon Wireless into the fixed wireless broadband business. Unlike earlier wireless data technologies, 5G is likely to be an extremely short-range wireless standard that will depend on a massive deployment of “small cells” that can deliver gigabit plus broadband speeds across a range of around 1,500 feet in the most ideal conditions. That’s better than Wi-Fi but a lot less than the range of traditional cell towers offering 4G service.

What particularly interests McAdam is the fact the cost of deploying 5G networks could be dramatically less than digging up neighborhoods to install fiber. Verizon’s marketing mavens have already taken to calling 5G “wireless fiber.”

“I think of 5G initially as wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer,” said McAdam during Verizon’s second-quarter earnings call. “With wireless fiber the so-called last mile can be a virtual connection, dramatically changing our cost structure.”

McAdam

Verizon’s engineers claim they can build 5G networking into existing 4G “small cells” that are already being deployed today as part of Verizon’s efforts to increase the density of its cellular network and share the increasing data demands being placed on its network. In fact, McAdam admitted Verizon’s near-future would not depend on acquiring a lot of new wireless spectrum. Instead, it will expand its network of cell towers and small cells to cut the number of customers trying to share the same wireless bandwidth.

McAdam’s 5G plan depends on using extremely high frequency millimeter wave spectrum, which can only travel line-of-sight. Buildings block the signal and thick foliage on trees can dramatically cut its effective range. That means a new housing development of 200 homes with few trees to get in the way could probably be served with small cells, if mounted high enough above the ground to avoid obstructions. But an older neighborhood with decades-old trees with a significant canopy could make reception much more difficult and require more small cells. Another potential downside: just like Wi-Fi in a busy mall or restaurant, 5G service will be shared among all subscribers within range of the signal. That could involve an entire neighborhood, potentially reducing speed and performance during peak usage times.

Verizon won’t know how well the service will perform in the real world until it can launch service trials, likely to come in 2017. But Verizon has also made it clear it wants to be a major, if not dominant player in the 5G marketplace, so plenty of money to construct 5G networks will likely be available if tests go well.

Ironically, to make 5G service possible, Verizon will need to replace a lot of its existing copper network it has consistently refused to upgrade with the same fiber optic cables that make FiOS possible. It needs the fiber infrastructure to connect the large number of small cells that would have to be installed throughout cities and suburbs. That may be the driving force behind Verizon’s sudden resumed interest in restarting FiOS expansion this year, beginning in Boston.

“We will create a single fiber optic network platform capable of supporting wireless and wireline technologies and multiple products,” McAdam told investors. “In particular, we believe the fiber deployment will create economic growth for Boston. And we are talking to other cities about similar partnerships. No longer are discussions solely about local franchise rights, but how to make forward-looking cities more productive and effective.”

If McAdam can convince investors fiber expansion is right for them, the company can also bring traditional FiOS to neighborhoods where demand warrants or wait until 5G becomes a commercially available product and offer that instead. Or both.

There are a lot of unanswered questions about how Verizon will ultimately market 5G. The company could adopt its wireless philosophy of not offering customers unlimited use service, and charge premium prices for fast speeds tied to a 5G data plan. Or it could market the service exactly the same as it sells essentially unlimited FiOS. Customer reaction will likely depend on usage caps, pricing, and performance. As a shared technology, if speeds lag on Verizon’s 5G network as a result of customer demand, it will prove a poor substitute to FiOS.

The European Union believes every home in the bloc should have ready access to at least 100Mbps broadband speeds within the next decade.

Regulators in Brussels want uniformly fast broadband across the continent according to a report from the Financial Times, and is expected to adopt new telecom rules in September to get it. It is part of the EU’s ambitions “Gigabit Society” initiative that will assure every school and business will have access to gigabit speeds, while homes will now receive at least 100Mbps.

Private telecom companies are skeptical Brussels will kick in substantial aid to finance broadband upgrades, despite assurances it would be a public-private initiative. An initial estimate pegs the cost to upgrade the continent at $171 billion. At least 80 percent of that budget will cover the infrastructure installation costs, such as stringing fiber on poles and underground and bringing connections to homes and businesses.

A potential issue for Brussels is dealing with one of Europe’s most powerful telecom companies – Germany’s Deutsche Telekom, which wants to use vectoring technology to improve copper-based DSL service in Germany instead of upgrading to optical fiber technology.

This morning, Brussels gave partial approval for DT to go ahead with vectoring upgrades, so long as it doesn’t inhibit competition. As a result, the German phone company will offer DSL upgrades as fast as 100Mbps and offer all of its rivals access to the same network, allowing consumers to choose different ISPs delivering service over the same copper network.

Like in North America, analysts say there is little interest among companies to build rival networks, especially in areas already served by a cable and telephone company. The alternative is to open those networks to competitors, who can use them to reach customers with their own internet service plans.

June 16, 2016

Hon. Kathleen H. Burgess
Secretary, Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Dear Ms. Burgess,

Today, we confirmed that Charter Communications has ordered an indefinite suspension of the Time Warner Cable Maxx broadband upgrade program pending a review that seems to carry no specific timeline for completion.[1]

We are deeply concerned about the implications of this decision, particularly as Time Warner Cable has been performing broadband upgrades this spring and summer in the Hudson Valley[2] and Syracuse/Central New York[3] regions that deliver important speed upgrades to customers in New York State. We have good information that Rochester was the next city scheduled for these upgrades, followed by Buffalo. These upgrades would have provided customers with up to 300Mbps broadband service as soon as late this year across a significant section of upstate New York, with the western New York/Buffalo region upgraded in 2017.

It is clear the only reason these upgrades have been suspended relates to the recent ownership change of Time Warner Cable, approved by the N.Y. Public Service Commission.

As you know, Stop the Cap! argued our concerns about approving the merger transaction between Charter Communications and Time Warner Cable, in part because Time Warner Cable’s Maxx upgrade program offered more compelling broadband upgrades, at a lower price, and introduced faster than Charter’s own offer.[4]

The alarming development of an indefinite nationwide suspension of the Maxx upgrade program has profound implications on large sections of upstate New York waiting for urgently needed broadband speed upgrades. The announcement also suggests large sections of New York will be waiting much longer to reach speed parity with cities, mostly downstate, that already enjoy up to 300Mbps service on an upgraded, less trouble-prone network.

Once again, New Yorkers are being divided into those with reasonably fast speeds, and those without. Should Charter adopt the slowest possible upgrade schedule permitted by the Commission, several upstate cities will be waiting until the end of 2018 – almost two years, to receive 100Mbps broadband.[5] I’d remind the Commission other major cable companies are offering residential customers speeds up to 2Gbps today[6], and many already offer tiers that well exceed Charter’s promised maximum speed.

Charter’s corporate decisions also impact New Yorkers more profoundly than other states because of the absence of significant competition. Outside of limited deployments of Verizon FiOS, DSL continues to predominate from New York telephone companies, including Verizon, Frontier, TDS, Windstream, and others. In most cases, these speeds do not come close to achieving the minimum 25Mbps speed that the FCC defines as “broadband.”

In states to our west, AT&T is already offering gigabit Internet service to residential customers, and Google Fiber (which has bypassed the entire northeastern U.S. for fiber deployment) continues its own expansion.

We urge the Commission to obtain definitive information about the current Maxx upgrade delay, the reasons for it, the timetable to resume upgrades (if ever), and an assurance that Charter Communications will resume a comparably rapid Maxx-equivalent upgrade for New Yorkers that Time Warner Cable was well on its way to complete within the next two years. We also hope the Commission will share its findings with the general public.

Yours very truly,

Phillip M. Dampier
Director

[1] Text of a company memo obtained by Stop the Cap! originally sent to Time Warner Cable’s engineering/customer support team: “The Maxx Internet Speed Increase Program is currently undergoing review by our leadership team. As a result, all speed increases and customer communications were placed on a temporary hold beginning Thursday, May 26. Once the updated launch schedule is determined, updated hub schedules will be posted to KEY and area management will be notified. Customers will continue to receive notification when the new speeds are available in their hubs.” (http://stopthecap.com/2016/06/16/charter-indefinitely-suspends-time-warner-cable-maxx-upgrades-pending-review/)

[2] http://www.timewarnercable.com/en/about-us/press/twc-increases-internet-speed-hudson-valley.html

[3] http://www.timewarnercable.com/en/about-us/press/twc-to-transform-tv-internet-experience-central-northern-ny.html

[4] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={FCB40F67-B91F-4F65-8CCD-66D8C22AF6B1}

[5] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={DEE1823A-AADD-48D4-94BD-B96BAC096DAA}

[6] http://www.xfinity.com/multi-gig-offers.html

Time Warner Cable customers getting inundated with ads promising great things from Charter’s buyout of Time Warner Cable have their first broken promise from “Spectrum” to contend with instead.

Charter Communications has quietly informed Time Warner technicians and network engineers — but not customers — it has indefinitely suspended the Time Warner Cable Maxx upgrade program until further notice until the new leadership team “reviews” the program.

“The Maxx Internet Speed Increase Program is currently undergoing review by our leadership team. As a result, all speed increases and customer communications were placed on a temporary hold beginning Thursday, May 26. Once the updated launch schedule is determined, updated hub schedules will be posted to KEY and area management will be notified. Customers will continue to receive notification when the new speeds are available in their hubs.”

The internal Time Warner Cable memo, now confirmed as genuine by Time Warner, suggests the hold is temporary, but sources tell us Charter executives are reviewing expenses across the board to find cost saving opportunities. Most states approving the transaction gave Charter plenty of room to maneuver while approving its merger deal because of Charter’s considerably less aggressive upgrade schedule, in comparison to Time Warner Cable. Few states asked Charter for anything more than what Charter volunteered itself.

Charter has formally committed to offering two broadband speed tiers: 60 and 100Mbps by 2019. Except in New York, where regulators insisted on more aggressive upgrades that match Maxx speeds, Charter is within its rights as the new owner to discard or ignore any earlier commitments or public statements previously made by Time Warner Cable management.

Stop the Cap! filed comments last year opposing Charter’s merger in New York, California, and with the Federal Communications Commission, arguing Charter’s claimed merger deal benefits offered to regulators represented a step backwards for Time Warner Cable customers. Time Warner Cable had previously committed to move forward on its Maxx upgrade program, which offers Internet speeds three times faster than what Charter is promising, on a schedule that would have likely finished upgrades by the end of next year or early 2018. Charter has only committed to complete its less compelling speed upgrade to a maximum 100Mbps by the end of 2019 — three years from now.

We will continue to notify regulators about Charter’s performance to compel action and raise public awareness of any gaps between Charter’s glowing promises of better things to come in their letters and TV spots and what actually happens on the ground. It is not a good start for “Spectrum” with consumers, just days after customers received a welcome letter in the mail signed by Charter CEO Tom Rutledge. Less than two weeks later, some customers already feel like they’ve been lied to.