CCG Consulting

Impact of Prevailing Wages

Broadband providers have been complaining that the Broadband Equity, Access, and Deployment (BEAD) Program rules are adding a lot of cost to building broadband networks. One of the issues adding the most cost to BEAD-funded networks is the requirement that all construction be done using prevailing wages. That means wages that are paid at Davis-Bacon wage levels—to include benefits.

The FCC and USF

The Federal Communications Commission quietly won two court cases over the last month that most folks have not heard about. A group of complainants brought a suit against the FCC, saying that the agency didn’t have explicit direction from Congress for the creation of the Universal Service Fund (USF) or the authority to delegate the operation of the USF to a third party.

Rural Cellular Coverage

The cellular coverage in rural areas is drastically different than the national coverage maps that cellular carriers have been advertising for years. The Federal Communications Commission announced a process to address this issue in October 2020 when it announced the creation of a 5G Fund for Rural America. This will be a $9 billion fund that comes from the Universal Service Fund and that will provide subsidies for wireless carriers to build and equip new rural cell towers.

The Need for Mid-Band Spectrum

5G Americas recently released its annual white paper discussing the lack of activity at the Federal Communications Commission in making more mid-band spectrum available for cellular broadband. Midband spectrum is an industry-defined term for the spectrum between 1 GHz and 7 GHz spectrum. This is the sweet spot for cellular broadband because these bands of spectrum can cover the distances needed for cell phone data with a decent amount of bandwidth. The paper laments that there are no actions currently at the FCC to consider

Buy America and BEAD

In the State of the Union speech earlier in 2023, President Biden made it clear that he wants to see the monies spent on infrastructure projects follow the Buy America rules. The law says that purchasing funded by the US government should have a preference for using American-made products. The rules allow for waivers from this provision, but the presumption is that without a waiver that American goods must be used.

Shutting Down Obsolete Technologies

Verizon admitted that shutting down the 3G cellular networks cost it about 1.1 million retail cellular customers along with the corresponding revenues. This was long expected because there are still a lot of places where 3G technology was the only cellular signal available to rural customers living in remote areas, and a lot of people were still happy with 3G flip phones even where 4G was available. Verizon has been trying to shut down the 3G network for at least five years, but its original plans got delayed due to discussions with the Federal Communications Commission and then got further

The Increasing Cost of Building Fiber

AT&T CFO Pascal Desroches said that the cost of building fiber has increased and that those costs are pushing up against the company’s goal of not spending more than $900 – $1,000 per new fiber passing. Any time I see a broadband provider talking about fiber costs, my first question is: What's included in the costs? AT&T’s low target number highlights two things – its advantage of being able to overlash, and a willingness to skip neighborhoods with higher costs. AT&T’s low target price also highlights that the company is shooting for a higher margin goal than most overbuilders.

Should DSL Cost Less Than Fiber?

How do big broadband providers get away with charging the same prices in urban areas for both slow and fast broadband? An Associated Press article found that one customer was paying the same price for 1 Mbps DSL from AT&T as other city residents were paying for a fiber connection. It would be easy to justify charging the same price for both technologies if AT&T was in the process of converting everybody in New Orleans to fiber, but this is not the case.

Businesses Rely on Broadband

I don’t think most folks understand the extent to which businesses are adapting to broadband. One of the best examples I can give you is to talk about a specific business. It’s a casual bar/restaurant that attracts customers by offering good food and arcade games for customers. Consider the following ways this one local business uses broadband:

Jargon

There is a good chance that if you are reading this blog you are well-versed in a fair amount of telecommunications industry jargon. Every segment of the industry has its own jargon. Wireless folks know what’s meant when a colleague talks about MIMO, QAM, and RAN. Fiber folks understand what is meant by OLT, jitter, and backscattering. Cable company folk can talk about DAA, CMTS, and DOCSIS. The folks that finance broadband networks talk about yield, basis points, and acid tests. Regulators all know what is meant by NARUC, NOI, and CPNI. It’s hard to avoid using jargon.

Replacing Poles

When ased for an estimate of the cost of building aerial fiber, I always say that the cost is dependent upon the amount of required make-ready needed. Make-ready is well-named—it’s any work that must be done on poles to be ready to string the new fiber. Broadband providers complain when saddled with the full cost of pole replacement. Many of the issues described above should more rightfully be borne by the pole owner. But the federal and most state make-ready rules put the entire cost burden of a pole replacement on the new attacher. Poles don’t last forever.

Net Neutrality Again?

There is an interesting recent discussion in Europe about net neutrality that has relevance to the US broadband market. The European Commission that oversees telecommunications and broadband has started taking comments on a proposal to force content generators like Netflix to pay fees to Internet service providers (ISP) for using the Internet.

Is Broadband Regulation Dead?

I ask this question after Gigi Sohn [Senior Fellow and Public Advocate at the Benton Institute for Broadband & Society] recently withdrew her name from consideration as a Federal Communication Commissioner. But the objections to Sohn were all the kinds of smokescreens that politicians use to not admit the real reason they opposed the nomination; because she is in favor of regulating broadband and the public airwaves. The big broadband providers and the large broadcasting companies (some companies which are both) have been lobbying hard against the Sohn nomination since it was first anno

Higher Prices for Rural Broadband

Innovative Systems of Mitchell (SD) commissioned a survey of broadband and bundled rates paid by rural residents. This is the eighth year of the survey. The 2022 survey focused on zip codes that are completely rural in order to find out about rural rates. The results come from surveys administered to 841 rural residents. The study showed that the average rate paid for rural broadband increased from $68 per month in 2021 to $71 in 2022.

BEAD Grants – File Early or Wait?

Several states have already announced that there will be multiple rounds of Broadband Equity, Access, and Deployment (BEAD) Program grant applications. This makes a lot of sense for states that will be receiving a significant amount of BEAD funding.

A Last Gasp at Regulating Copper

The Minnesota Public Utilities Commission recently ordered a series of public hearings to investigate the quality of service on the CenturyLink copper networks. The hearings were prompted by a complaint filed by the Communications Workers of America (CWA). The complaint listed the failures of CenturyLink to meet state service standards due to the deterioration of the copper network. CWA also noted that CenturyLink is planning to eliminate half of the remaining technicians who work on copper.

Good Enough Broadband

Several local politicians ask me why they should pursue getting grant funding for their county since Starlink satellite and fixed-wireless access (FWA) cellular broadband seem like good broadband alternatives that are already here today. I hate to tell them that these technologies are not a good permanent solution. At the same time, I stress that they should be promoting these technologies to make sure that folks know there are some better alternatives available today than other extremely slow broadband options.

Picking a Good Steward

The hardest question I get asked by counties and cities is how to know if they can trust an ISP to fulfill its promises. I suggest a series of questions that makes them dig deeper into the real nature of a given ISP and why they want the local funding.

Is the Broadband Market Mature?

Is the broadband industry reaching maturity? There was still significant growth in broadband over the last few years. In 2019, national broadband subscribers grew by 2.6%. That leaped to 4.5% in the 2020 pandemic year. In 2021, broadband growth slowed to 2.8% but rebounded to 3.3% in 2022. The 2022 growth rate is likely inflated by rural broadband growth, as practically all the overall industry growth for the year came from cellular fixed wireless access (FWA) broadband provided by T-Mobile and Verizon. What would a mature broadband market look like?

The Most Challenging Fiber Permits

The Virginia House of Delegates recently took up the issue of regulating the fees and the time it takes to get a permit to cross railroad tracks with fiber or other wire infrastructure. We rarely hear about the problems encountered when trying to cross railroad tracks, bridges, interstate highway underpasses, or parklands. Each of these situations can add both time and cost to a fiber construction project. There are lot more miles of railroads than a lot of people assume. In a rural area, the first challenge is often finding out who owns a given set of tracks.

My Fiber Bias

In my mind, infrastructure is an asset with a long useful life. If you assume that fiber is good for 40 years, the weighted average useful life of the a network is 53 years. If you assume the average life of fiber is 60 years, the useful life climbs to 65 years. Aerial fiber networks have a lower economic life without conduit, but the range of expected life is still between 37 years and 53 years. Other broadband technologies have a much shorter economic life.

Will Cellular Companies Pursue BEAD Grants?

Several people have asked me recently if cellular companies will be pursuing Broadband Equity, Access, and Deployment (BEAD) grants. Until recently, cellular companies didn’t have a product that would have qualified for broadband grants. BEAD and other grants are awarded to internet service providers (ISP) that serve homes and businesses, not cell phones.

Can WISPs Compete Against fiber?

I fully expect high-quality wireless internet service providers (WISPs) to be able to compete against fiber networks. While the industry lately seems to be fixated on broadband speeds, there are customers that value other aspects an internet service provider (ISP), such as trust and reliability. I think WISPs (and every other ISP) will have a hard time competing against a cooperative that builds fiber, particularly one that sets low prices like $50 or $60 for a gigabit.

Influencing the BEAD Rules

One of the most interesting aspects of the upcoming Broadband Equity, Access, and Deployment (BEAD) grants is that the Infrastructure Ivestment and Jobs Acy requires states to solicit feedback from the public. I can’t recall that ever happening with any grants in the past—normally the rules are handed down from on-high, and that’s that. States have to solicit feedback on two grant programs. First will be each state’s share of the $42.5 billion of BEAD broadband infrastructure grants. Second is the state’s portion of $1.44 billion in digital equity grants.