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Big Telecom Thrilled With Biden Admin’s $65 Billion Broadband Expansion; Most of the $ Will Go to Them

President Biden

Large cable and telephone companies are applauding the Biden Administration’s compromise $65 billion broadband infrastructure plan, designed to reduce the number of rural Americans without access to broadband service.

Many industry lobbyists and Wall Street analysts were wary of earlier plans by the Administration to spend $100 billion or more on internet infrastructure expansion, because amounts that high were seen to likely attract major proposals from municipalities to construct their own independent broadband projects, some in direct competition with cable and phone companies. The Biden Administration had sought preferential treatment to fund public broadband projects, suggesting the direct competition they could bring would lower prices. Unlike for-profit phone and cable companies, municipal projects were “less pressured to turn profits” and would have a natural incentive to commit to serve entire communities.

Heavy lobbying from for-profit phone, cable, and wireless companies, largely directed at Republicans in the Senate, sought a much lower budget for broadband expansion in the $35 billion range and a commitment to discourage municipal broadband.

Last week the Administration and a small group of Senate Republicans settled on a $65 billion compromise measure, with many of the details still unavailable early this week. But big ISPs are already breathing a sigh of relief, convinced a slimmed-down compromise measure will choke off any existential competitive threat from municipal providers invading their turf.

Wall Street analysts predict the compromise measure will be too small to provide funding for competing major city municipal broadband networks and would continue the tradition of targeting funds on unserved, high-cost rural areas. Historically, this has resulted in funding going to nearby cable and telephone companies to subsidize expansion of existing networks into areas currently deemed too unprofitable to wire for service. But ample funds are still likely to be awarded to rural telephone and electricity co-ops to expand internet access.

Analysts expect the final measure will include a requirement to offer service at minimum speeds of 100 Mbps, which would be a challenge for wireless companies and rural phone companies seeking to expand DSL service. Most providers would likely have to use fiber optics to build networks consistently capable of delivering that speed. If the compromise measure only insists on 100 Mbps download speed, expect the cable industry to be relieved. If the minimum speed requirement is substantially relaxed to as low as 25 Mbps, that would also benefit wireless ISPs offering fixed wireless access.

Also unknown is whether the compromise measure still contains language overriding state laws that restrict or prohibit municipal broadband projects.

New Bipartisan Bill Would Deliver $40 Billion to Expand Rural Internet Access, Subsidize Service for Poor Americans

Sen. Portman

Three moderate senators will reintroduce the latest in a line of broadband funding initiatives later today that would allocate $40 billion to expand rural internet access and provide subsidies to make service more affordable for income-challenged Americans.

The Broadband Reform and Investment to Drive Growth in the Economy Act (BRIDGE Act), is a bipartisan measure sponsored by Republican Sen. Rob Portman of Ohio, Democrat Michael Bennet of Colorado, and independent Angus King of Maine. Originally introduced in 2020, the measure has been expanded this year to combine rural funding of broadband projects with direct subsidies to keep service affordable for poorer Americans. The measure is considerably smaller than the Biden Administration’s own proposal to spend $100 billion on broadband initiatives, the $94 billion broadband proposal from Congressional Democrats, and the $65 billion compromise plan Republicans tentatively reached with the Biden Administration before talks were called off.

Funding would be provided to internet providers prepared to expand broadband service, but only using technology capable of providing speeds starting at 100/100 Mbps — gigabit being even better. The bill would also invalidate state laws that impede or prohibit the development of municipal/public broadband projects. This could eventually lead to additional competition in rural areas not adequately served by existing providers. Funding would also be used to reduce the retail cost of internet service for those qualified as economically disadvantaged.

The reduced cost of the bill would limit the number of rural subsidy projects and would likely not be enough to provide service to all unserved Americans.

 

Frontier Admits the DSL Service it Sells is Not High-Speed Broadband Service

Frontier Communications told a federal court judge last week that the DSL service it sells across much of its service area in New York State is not remotely “high-speed broadband service” and is not fit for purpose if New York’s Affordable Internet Law takes effect next week and requires Frontier to deliver at least 25/3 Mbps service to state residents.

“Simply put, Frontier New York’s DSL-based service is not a ‘high-speed broadband service’ within the meaning of the statute, and an unreasonable interpretation thereof could be read to mandate the massive efforts and expenditures that would be required to provide the high-speed service standards set forth in the [Affordable Internet] Statute,” Frontier wrote in a filing with the court.

New York’s Affordable Internet Law, now being challenged in federal court, would require internet service providers to deliver at least 25 Mbps broadband service for $15/month to low-income state residents.

Frontier fears that if that new law takes effect, it could face mandatory investments in the tens of millions to upgrade its dilapidated copper wire network across most of its service areas in New York. Frontier told the judge it cannot provide reliable service over its copper wire facilities even at 15 Mbps, and many addresses recently added to Frontier’s internet service area are only getting service at 10 Mbps.

“Any attempt to require the consistent delivery of 25 Mbps through copper loops would require different network architecture, new equipment at Frontier New York’s central offices, new equipment in the field, and alternative methods and procedures,” Frontier complained. “Any such changes would constitute a new service rather than an upgrade to Frontier New York’s existing DSL services. The extensive time, effort and  money required would require the reallocation of capital and resources that are focused on forward-looking projects rather than backward-looking technology.”

Frontier added that the state should look to other providers to deliver service that meets minimal qualifications for broadband — service it does not provide today to most of its New York customers.

“FCC data and mapping indicates that speeds equal to or exceeding 25 Mbps download and 3 Mbps upload through technologies such as cable, fiber, fixed wireless and satellite are available across the state,” Frontier wrote.

A Tale of Two Homes in Spectrum Territory: What Competition Does to Pricing

Phillip Dampier May 26, 2021 Charter Spectrum, Competition, Consumer News 6 Comments

Competition is a wonderful thing. A case in point is the enormous difference Charter Spectrum charges new customers in areas where competition exists, and where it does not.

Charter’s offers are address sensitive. The cable company knows its competition and almost exactly where those competitors offer service. That is why the company asks for your service address before it quotes you pricing.

Stop the Cap! compared promotional new customer offers in the metro Rochester, N.Y. market where Spectrum faces token competition from Frontier’s slow speed DSL service. Then we checked pricing in neighborhoods where a fiber to the home overbuilder called Greenlight also offers service.

In neighborhoods where Spectrum enjoys a broadband monopoly, here are the offers for internet-only service available to new customers. Notice they expire after 12 months:

Spectrum promotional prices in non-competitive service areas.

Just one street away, where Greenlight offers customers the option of gigabit speed over a fiber to the home network, Spectrum’s promotional prices are quite different. Notice these offers last 24 months, twice as long as in non-competitive neighborhoods:

Spectrum promotional prices in some areas where customers can choose a competitor offering fiber to the home service.

Spectrum does not even bother offering new customers its entry-level 200 Mbps plan in areas where it has significant fiber competition. For $20 less per month, you get double that speed. Gigabit service is $20 less in competitive areas, too.

Spectrum charges a hefty $199.99 compulsory installation fee for gigabit service in non-competitive neighborhoods. Where fiber competition exists, sometimes just a street away, that installation fee plummets to just $49.99.

Note similar pricing variability exists in Spectrum service areas around the country, with the most aggressively priced offers reserved for addresses also served by a fiber to the home provider or multiple competitors (e.g. cable company, phone company, Google Fiber or other overbuilder). Current customers typically have to cancel existing service and sign up as a new customer to get these prices.

Greenlight Networks has four internet plans that range from $50-200 a month. They do not offer promotional prices, instead marketing “what you see is exactly what you will pay” pricing. As a relatively new company, they charge an installation fee that helps recoup the investments they are making to dig and string fiber cables in neighborhoods across Rochester (and Buffalo as well, where they are expanding). Spectrum (and its predecessors) use pre-existing cable lines that have been there for decades.

Greenlight Networks pricing

Charter’s promotion strategy is designed to undercut the competition on price, believing customers will choose 400/20 Mbps service for $29.99 a month over Greenlight’s 500/50 Mbps service for $50 a month. Of course, after two years Spectrum’s regular prices can kick in, more than tripling the cost to around $94.99 a month, although customers usually get a less attractive secondary promotion after the original one expires, usually offering around $10 off per month.

AT&T To Strand Some DSL Customers With Fixed Wireless; Rural Areas Unlikely to See Fiber Upgrades for Years

AT&T CEO John Stankey is still looking to wring costs out of the business, and the company’s rural landline customers are next to take the cut.

At this morning’s J.P. Morgan Technology, Media and Communications Conference for investors, Stankey said AT&T is considering mothballing landline facilities in rural parts of its service area and offer wireless service instead.

“We have a voice replacement service now, so that allows us to look at our options around the footprint […] and begin the work of starting to shed some of that footprint and reduce the number of square miles that have that fixed infrastructure in place [where] you’re never going to have an incentive to ultimately upgrade to fiber,” Stankey told investors, quickly correcting himself over use the word ‘never’ in favor of “the next several years.”

“The best way to serve them is with robust wireless infrastructure and stepped up investment in that case and we will do that,” he added.

AT&T has been testing fixed wireless replacement phone service in parts of the southern United States for several years, to very mixed reviews. In these trials, AT&T rural landline customers receive a wireless modem that connects with existing home phone lines. Internet service is provided over AT&T’s 4G LTE network.

Stankey

AT&T ceased marketing its DSL service last October, although some Stop the Cap! readers claim they still occasionally receive targeted invitations for DSL service in some areas. The company has allowed its current rural DSL customers to keep their service, but many don’t. The company lost almost 39,000 DSL customers in the first three months of this year, with so signs of stopping. Across AT&T’s landline footprint, which extends from the Great Lakes region to the South as far west as Texas and east to Florida, there are only about a half-million AT&T DSL customers remaining. Most of those customers keep the service because they have no other options.

If AT&T wins FCC approval to decommission its wired network in rural areas where it has no plans to provide fiber to the home service, customers will lose traditional landline phone service and DSL.

Stankey said any serious effort in that direction is unlikely to begin until 2023, largely because AT&T will not make the investments to bolster its rural wireless infrastructure until then.

The CEO also foreshadowed no immediate plans to follow Verizon into the 5G wireless home internet business. In fact, Stankey admitted AT&T’s network is likely inadequate to support the data demands of home broadband customers.

That leaves rural customers in AT&T’s service areas with no hope of high-speed upgrades unless a community broadband provider launches or a cable operator agrees to wire rural areas. There are still questions about the capacity next generation satellite internet service will have in rural areas and whether service will be adequate to meet today’s data demands.

AT&T’s customers in urban and major suburban areas have a brighter future, however. Stankey told investors AT&T will expand its fiber to the home service to another three million households in 2021 and at least four million more in 2022. Overall, AT&T plans to provide fiber service to around 30 million homes and businesses in its wireline service area. If adequate returns on investment can be realized, along with reduced upgrade costs to reach each home, Stankey suggested another 10 million customer locations could one day see fiber service as well.

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