The U.S. Broadband Ecosystem is Broken: Time for a New Game!
Greg Whelan
Innovation Analyst, Executive Advisor, Venture Mentor focused on the Communications Ecosystem (6G and beyond), IoT, Smart City, Smart Home, etc.
The current U.S. broadband market is a stalemated game of RISK® dominated by five large companies. Their best move is to do nothing. The second-best move is to issue releases announcing an upgrade at some time in the future. This freezes the market from competitors and assuages local politicians and regulators. They (AT&T, Verizon, Comcast, Spectrum/Charter and The New T-Mobile have written the rules of this game over the last 80 to 100 years and they are not only the players, they are also the referees, time keepers and judges. It’s not favorable to new players, as GoogleFiber proved(1).
5G is not the answer either as the big incumbent MNO’s would like you to believe. 5G is part of the solution but if left unchecked it will be part of the community’s problem.
This stalemate has created a number of digital divides. The media and political focus have been on the rural digital divide. These areas have under 3 Mbps DSL or even rely on dial-up modems (56 Kbps). If they need more bandwidth they need expensive and high latency satellite broadband. The lack of density (Subscribers per mile) in rural areas has always made rural broadband challenging. Rural broadband isn't broken, it was never fixed. There are also urban digital divides in neighborhoods that do not have access to a single provider with the FCC minimum data rates (25/5). This lack of digital inclusion can be a driving force in municipal broadband initiatives. To date, no big incumbent has stepped up to deploy new facilities in less than affluent neighborhoods.
This stalemate has created a second digital divide: Those neighborhoods with a single provider who barely meets the FCC minimum rates. This is often the Cable company as well. Residents of these neighborhoods watch others in competitive areas get reasonable costs gigabit speeds. Since there’s no competition all the Cable company has to do is announce a future DOCSIS 3.1 ugprade. Which they will do, just after they’ve upgraded the rest of their national footprint that has telco fiber competition.
These digital divides highlight why broadband is critical infrastructure and why lack of modern broadband leads to a downward community death spiral.
Broadband, or the last mile access network, is more than the wires we see running down nearly every street, often hanging from utility pole-to-pole. It’s more than accessing Netflix and Amazon and it’s more than Wi-Fi and 5G. To communities, Broadband is critical civic infrastructure that’s mandatory for community survival. It really is the 21st century local road system and is the foundation for future economies and smart cities. To national economies, broadband is the on-ramp to the Global Internet, the Web, the Cloud and to e-Government, medicine and education services. Nations around the globe have also determined that modern broadband is critical economic infrastructure and are taking steps to ensure they are not left behind.
Yet, in the U.S. the “Big 5” would rather buy movies producers and other media/content assets and focus on stock buybacks and dividend increases. Let’s face it, for AT&T and Verizon, the last mile has become legacy burden and their best moves in our game of RISK are to freeze out new entrants, slow roll minor incremental upgrades, use every rule in the book to thwart competition and milk the installed base. For Comcast and Charter/Spectrum, and to a lesser extent AT&T and Verizon, their traditional, or linear, Cable TV service has become an albatross with downward spiraling economics.
Making the industry more interesting is the clash between the Big 5 Broadband providers and the Web/Cloud companies (Google, Amazon, Facebook et al). The latter group of titans’ futures are largely dependent on the world’s broadband providers upgrading and expanding their broadband networks. The need more people connected, and they need more high-speed people connected. They are not happy with this progress and are seeking, and funding, ways to accelerate this. Open Compute and the Telecom Infrastructure Project (TIP) are two good examples of web companies spending their own money to simplify others’ deployment of broadband and high-speed broadband. (2)
The existing network architectures give the incumbent broadband providers’ services preferential treatment as compared to all of the Web’s services. This is one reason why the toxic topic of Net Neutral is so misunderstood. In today’s broken broadband ecosystem, the broadband providers already have an advantage in delivering their services. Thus, Web/Cloud companies are at the mercy of the broadband providers to deliver their digital services. At the same time, these broadband providers are becoming direct competitors to them. Net neutrality is also a myth since Netflix forces their way to have a physical presence in the local central office. This is clearly prioritization, it’s just not “paid prioritization”. There’s nothing neutral about today’s ecosystem, it’s broken.
Adding to the intrigue around broadband are the many false industry narratives that exist. One of them is the emerging wireless “5G” standard that will solve not only every city’s needs, it will in fact solve world hunger. This narrative benefits those entities that own billions of dollars of spectrum and don’t want to be forced into large scale fiber upgrades (e.g., big incumbents). It’s designed to freeze alternative broadband overbuilders, minimize outside plant and fiber investments and maintain the current rules of the game.
The MNO’s tell municipal officials that 5G eliminates the need for fiber-to-the-home. These muni officials are largely part time and their day job is not in Telecommunications nor Broadband. This false narrative is designed to thwart emerging municipal broadband initiatives at the starting gate. 5G and LTE, along with billion dollars of spectrum, will create market hegemony for the Big 5 for decades to come. This, and other, false narratives are all designed to maintain the big incumbent status quo.
Making local conditions worse is the Big 5 companies’ broadband goals are growing more and more divergent with the broadband goals of local communities and the entire broadband ecosystem. The Big 5 have zero intention of closing urban and suburban digital divides and will only deploy Fiber to big shiny buildings and cell sites. This has the intended consequence of further crowding utility poles which will raise the economic bar (additional make-ready costs) should the city, or another entity, want to deploy ubiquitous fiber-to-the-premise. They know this.
The current U.S. Broadband Ecosystem is broken, and it has been since its inception. Net Neutrality is just one symptom of this and is an illustration of the battle between big incumbent service providers and the big web/cloud companies. It boils down to who can inspected your packets and make money off you and the contents of your packets. That, by the way, is why privacy and net neutrality are two sides of the same coin. Wheeler’s FCC swung the pendulum too far to Silicon Valley and Pai’s FCC is swinging the pendulum too far to the big incumbents. This 4- or 8-year seesaw wreaks havoc on long term planning and acerbates short term thinking.
As a result of these industry dynamic, there is a large and growing demand for alternative broadband solutions and specifically city-owned broadband networks. This has been a trickling trend based on cities’ realization that incumbents are not meeting their community needs. The recent public debates about Net Neutrality and Privacy has ignited community interest in locally controlled municipal broadband as an alternative to the unresponsive incumbent telephone and cable companies.
What are American cities and towns to do, play the existing game and compete with the incumbents on their terms? The all-powerful Google/Alphabet tried with GoogleFiber and got clobbered. That’s incumbent economic power at work. Americans needs a new game that's open and neutral. This game needs to be created with the entire broadband ecosystem in mind. It cannot be driven by the big incumbents as is currently the case with their total control of the U.S. FCC. Thus, we cannot expect the FCC, nor BDAC, to be the creators of this new game.
Nor can this new game be driven only by municipalities at the expense of the incumbents. A large percentage of municipal leaders lack telecommunication and broadband subject matter expertise. The resultant extremes of behavior range from accepting everything the incumbents say to wanting to create a Municipal ISP not only to hurt the big incumbents but to fund “the entire school system”. The latter is an exaggeration to make the point that it’s not uncommon for city officials to see the broadband network as a substantial revenue generator. Ask if they make money off their water system. This must be tempting as budgetary pressures are real in every city and town. This needs to be addressed in the rules of the new game as this temptation must be eliminated. My quip is “plan to fund the parade and not the school system”.
This new game need not be a zero-sum game between the incumbents and municipal broadband networks as is this case when the city becomes an Internet Service Providers (ISP). It must address the entire local community and the entire broadband ecosystem. (3)
Former Speaker of the U.S. House of Representative Tip O’Neal (D-MA) once said “all politics are local”. I’ve coin “All local loops are local”. Thus, one can infer that “all local loops are political”. Sadly, they are. The point is local broadband architectures need to be created based on local conditions literally on the ground or up on the poles.
Broadband is easy until you leave Powerpoint. But it’s not impossible if local communities select the ideal Architectures based on local conditions. America needs a new broadband game, a game that’s open, neutral and transparent and is also fair, reasonable and non-discriminatory. This new broadband game will drive the U.S. economy for the next 3-5 decades. Let's start writing the rules.
To discuss this please email me at gwhelan@greywale.com
#broadband #5G #CBRS #openaccess #FCC #fiber
Greg, what you have written here is timely, necessary and information driven. There is a community of forward-leaning ISP's, towns and entities who are committed to providing choice, reliability and 21st century infrastructure for citizens. Doing what is democratic and breaking the influence of monopolies is an everyday/all-day effort and we at GWI are glad you continue to articulate and champion this essential cause.
Mayor at City of Ammon
6yThanks, Greg. This is absolutely correct. We just wrapped up the second phase of our FTTH project, and will be moving into phase three shortly.