The Perils of Self-Reported Broadband Speeds

Conexon recently reported on the FCC “upgrading” homes from served to unserved without really verifying the upgrade. Their take on the move is pretty straight forward…

At the end of the year, the FCC released data that it knows to be inaccurate, which will damage the lives and livelihoods of millions of our fellow citizens who live and work in rural America. In its publication of eligible census blocks for the Connect America Fund (CAF) auction, the FCC excluded 432,302 rural homes and businesses in areas that previously had been eligible to receive public support for broadband service.

The vast majority of these areas had been determined by the FCC and the telephone industry to be too costly for the telephone companies to serve with broadband – even with subsidies – so the FCC initially decided to auction financial support for these remote areas. And yet, in the closing days of 2017, the FCC removed 30% of all the eligible rural locations from the CAF auction by applying the filter of newly released data on the availability of broadband service.

The FCC is relying on data that purports to show that, between June 2015 and December 2016, broadband was newly made available to some of the most remote areas of the country covering 432,302 locations. And that all this new rural construction occurred without any federal universal support or any obligation to provide service.

Of course, no such thing happened. It is fake data. 432,302 rural homes and businesses now have phantom broadband service.

Turns out the problem is self-reported data…

What is the data that the FCC is using to make such a critical decision? The self-reported Form 477 data from ISPs regarding their maximum advertised speed in each census block where they provide service. When I was at the FCC, not a single economist who worked in my group believed the data to be accurate or reliable. The FCC’s misapplication of the data in the CAF auction will have consequences for millions of rural Americans.

The infirmities of the FCC’s methodology include:

  1. The FCC does little to verify the accuracy of the self-reported data. Even a simple search of ISP websites reveals that the 477 data reported by many ISPs do not match the advertised speeds. As I wrote last year, a check of the 37 wireless internet service providers claiming 100 Mbps speeds showed that 35 of the 37 did not even advertise such speeds on their websites.

  2. If an ISP claims to advertise internet service availability of 10/1 Mbps to a single locationin a census block, the entire census block has been removed from the auction.

  3. The maximum advertised speed is not the same as the delivered speed. So, when an ISP reports that it advertises 10/1 Mbps service, but only provides 4/1 Mbps service, the census block is still dropped from the auction. Worse still, since some technologies require site surveys to determine availability of service, just advertising 10/1 Mbps availability does not mean actual availability.

  4. 10/1 service isn’t broadband, even by the FCC’s anemic standards.

  5. The FCC refuses to allow challenges to this inaccurate and unreliable data, because it can’t be bothered.

The article clearly has its bias – but a theme is emerging this week. Yesterday, I reported on a Harvard study that tried to compare broadband pricing but was unable because that data isn’t collected. Today we’re hearing about unreliable data from the Form 477. What I’ve heard about the 477 forms is that they are a pain to fill out. Unfortunately, as the article points out, the contents of the form matter. Communities qualify or don’t qualify for potential funding for infrastructure based on the forms. It would be nice to have a community feedback loop. Can you image federal policy based on customer self-reported data? In the world of crowd-sourcing it seems like it could be done. Maybe there’s a balance to be made.

Position open on the Minnesota Broadband Task Force

Steve Lewsader left the Minnesota Broadband Task Force at the end of 2017. That leaves one seat open and they are looking for applications.

Here’s the mission as reported on the Boards & Commissions website

To develop, implement and promote state broadband policy, planning and initiatives to achieve State broadband needs and goals. Inventory, assess and report on various aspects of broadband. Develop a Minnesota Broadband Plan outline.

It looks like they will review applications on Feb 4. The group meetings monthly. Two people have already applied. You can apply directly from the website.

FCC proposes $500 million increase for Rural Broadband

According to Telecompetitor

FCC rural broadband funding could increase by over $500 million if the commission votes to adopt an order circulated by commission chairman Ajit Pai. According to an FCC spokesman, the funding would include about $180 million for the current funding year for the nation’s smaller rate-of-return (ROR) carriers who get their support through traditional legacy mechanisms and up to $360 million over the next 10 years to ROR carriers who receive support based on the A-CAM cost model.

In a statement Pai said he had heard “from community leaders, Congress and carriers that insufficient, unpredictable funding” has kept them from deploying broadband more extensively to close the digital divide. The funding, he said, will “boost broadband deployment in rural America and put our high-cost system on a more efficient path, helping to ensure that every American can benefit from the digital revolution.”

The $500 million would come, in part, from reserves, the spokesman said. In addition, the order seeks comment on the Universal Service Fund (USF) budget, he noted.

More funding is always good news. I would just like to see a current definition of broadband. I know this time last year (Jan 24, 2017), the FCC announced 182 rate of return companies that elected to received A-CAM support. Below is a chart of Minnesota companies in that list and their obligation to provide service as specified speeds. You’ll see not all of the speeds mentioned would meet the Minnesota speed goals for 2022 (25/3) and none of them meet the speed goals for 2026 (100/20).

(I know that table won’t translate well online – you can also download it in Word.)

State (RoR) Holding Company Annual ACAM Support Locations in Census Blocks Receiving Model-Based Funding Locations with Obligation at 25/3 Mbps Locations with Obligation at 10/1 Mbps Locations with Obligation at 4/1 Mbps Locations Remaining on Reasonable Request Standard
MN  ARVG  Arvig Enterprises, Inc.           21,559,568                    33,455                      20,993                        6,998                        2,732                        2,732
 MN  CHRS  Christensen Communications Company                536,263                        420                            83                            28                          154                          155
 MN  HNSN  Hanson Communications, Inc.             2,572,081                      2,466                       1,179                          393                          447                          447
 MN  INTR4  Interstate Telecommunications Cooperative, Inc.                994,999                        779                          155                          156                          117                          351
 MN  LRSN  Larson Utilities, Inc.             1,423,622                      1,160                          243                          244                          168                          505
 MN  MBLC  Mabel Cooperative Telephone Company                633,384                        518                          186                            63                          134                          135
 MN  NRTH8  Northern Telephone Company/Wilderness Valley Telephone Company                330,942                        231                            33                          101                            24                            73
 MN  NWLM  New Ulm Telecom, Inc.             6,118,567                      7,913                       3,414                        1,138                        1,680                        1,681
 MN  PRKR  Park Region Mutual Telephone Company             3,092,315                      4,351                       2,735                          912                          352                          352
 MN  RRLC  Rural Communications Holding Corporation             4,433,893                      6,035                       2,784                          928                        1,161                        1,162
 MN  RTHS  Rothsay Telephone Co. Inc.                448,181                        335                            24                            73                            59                          179
 MN  TDS  Telephone and Data Systems, Inc.             5,099,964                    10,788                       7,362                        2,454                          486                          486
 MN  VNCE  VNC Enterprises, LLC                274,969                        302                            36                          108                            39                          119
 MN  WKST  Wikstrom Telephone Company, Inc.             6,782,806                      6,587                          997                        2,992                          649                        1,949

I’ve abbreviated heading row above from : “Number of Locations in Eligible Census Blocks with Obligation to Offer” to “Locations with Obligation at”

Study shows Community-Owned Broadband Networks provide best value – and access to pricing info is difficult to get

Harvard University recently published a report that compared public-owned FTTH networks with private options in the same market. They learned a few things – perhaps most important to note i- they learned it’s difficult to get info on pricing and packages available from some providers in some markets, which makes it very difficult to have a real conversation about broadband affordability. In this study or any other.

Here’s the abstract from the report…

We collected advertised prices for residential data plans offered by 40 community-owned (typically municipally owned) Internet service providers (ISPs) that offer fiber-to-the-home (FTTH) service. We then identified the least-expensive service that meets the federal definition of broadband—at least 25 Mbps download and 3 Mbps upload—and compared advertised prices to those of private competitors in the same markets. We found that most community-owned FTTH networks charged less and offered prices that were clear and unchanging, whereas private ISPs typically charged initial low promotional or “teaser” rates that later sharply rose, usually after 12 months. We were able to make comparisons in 27 communities. We found that in 23 cases, the community-owned FTTH providers’ pricing was lower when averaged over four years. (Using a three year-average changed this fraction to 22 out of 27.) In the other 13 communities, comparisons were not possible, either because the private providers’ website terms of service deterred or prohibited data collection or because no competitor offered service that qualified as broadband. We also made the incidental finding that Comcast offered different prices and terms for the same service in different regions.

Here are their highlights…

  • When considering entry-level broadband service—the least-expensive plan that provides at least 25/3 Mbps service—23 out of 27 community-owned FTTH providers we studied charged the lowest prices in their community when considering the annual average cost of service over a four-year period, taking into account installation and equipment costs and averaging any initial teaser rates with later, higher, rates. This is based on data collected in late 2015 and 2016.
  • In these 23 communities, prices for the lowest-cost program that met the current definition of broadband were between 2.9 percent and 50 percent less than the lowest-cost such service offered by a private provider (or providers) in that market. In the other four cases, a private provider’s service cost between 6.9 percent and 30.5 percent less.
  • While community-owned FTTH providers’ pricing is generally clear and unchanging, private providers almost always offer initial “teaser” prices and then raise the monthly price sharply. This price hike in the communities we studied ranged between $10 (20 percent) and $30 (42.8 percent) after 12 months, both imposed by Comcast, but in different communities. Only one community-owned FTTH provider employed this marketing practice for a data-only plan. This exception was a student discount offered by the MINET network in Oregon.
  • Language in the website “terms of service” (TOS) of some private ISPs strongly inhibits research on pricing. The TOS for AT&T, Verizon, and Time Warner Cable (now owned by Charter), were particularly strong in deterring such efforts; as a result, we did not record data from these three companies.
  • While the United States has 40 community networks offering broadband FTTH service (many of them serving more than one municipality), we did not make comparisons with private competitors in 13 cases, either because the TOS prohibited data collection or because no competing broadband service existed in the community network’s home community.
  • We noted that Comcast varied its teaser rates and other pricing details from region to region. Our sample size was small; just seven of the communities we studied were served by Comcast. Understanding Comcast’s pricing practices and their consumer impacts across the United States would require much deeper study.
  • In general we found that making comprehensive pricing comparisons among U.S. Internet service plans is extraordinarily difficult. The U.S. Federal Communications Commission (FCC) does not disseminate pricing data or track broadband availability by address. Additionally, service offerings follow no standard speed tiers or definitions (such as the specifics of video or phone service bundles). We focused on comparing entry-level broadband plans in part because of these complexities.

They looked at two communities in Minnesota and this is what they found in terms of average cost per year over four years; it takes into account all fees and recurring cost:

In Monticello:

  • Monticello Fiber Network a 50/50 connection is $640.29
  • TDS Telecom a 25/10 connection is $763.03
  • Charter Spectrum a 60/4 connection is $678.63

In Crosslake:

  • Crosslake Communications a 30/20 connection is $1,030.40
  • Emily Cooperative Telephone Company a 30/30 connection is $1,067.65

It’s interesting to see the differences in those two areas. And to see that we really aren’t talking about apples to apples comparisons – especially when you account for upload and download speeds. Again to me half of the story here is the difficulty in getting the information. The National Broadband Plan paid lip service to gathering more standardized info on services and prices…

Recommendation 4.2: The FCC and the U.S. Bureau of Labor Statistics (BLS) should collect more detailed and accurate data on actual availability, penetration, prices, churn and bundles offered by broadband service providers to consumers and businesses, and should publish analyses of these data.

But that doesn’t seem to have happened. Think about the impact of the cost (or calorie) per serving info at the grocery store. Now image how nice that would be for broadband and how that would help us pinpoint real issues based on areas and technologies. Is the problem access or affordability (or something else)? And are there some providers who have been able to overcome challenges to provide affordable access in rural areas – how can we reward and/or emulate them in other areas. Because I know there are providers (public, private and cooperative) who are serving happy customers in hard to reach places.

Supreme Court is looking at online sales tax issue

According to The Hill

The Supreme Court on Friday agreed to hear a case about whether states can require out-of-state online retailers to collect their sales taxes.

In agreeing to hear the case, South Dakota v. Wayfair, the court will revisit a 1992 decision in which it ruled that states could only require remote sellers to collect their sales taxes if the business had a physical presence in the state.

State and local governments have been pushing for a greater ability to collect sales taxes from internet purchases in recent years, as the growth of e-commerce has made it harder for governments to reach their revenue targets.

The Senate passed bipartisan legislation in 2013 that would allow states to require out-of-state businesses to collect their sales taxes if the states simplified their sales tax laws.

Similar legislation was introduced last year with bipartisan support, but the effort has stalled in Congress because House Judiciary Committee Chairman Bob Goodlatte (R-Va.) has wanted to take a different approach on the issue.

The online folks want to not collect tax, brick and mortar places want online tax, local communities are interested in the extra revenue tax brings with it and many are concerned about the complication of asking businesses to comply with multiple state tax policies.

Mille Lacs unhappy about not getting broadband grant

The Pine and Lakes Echo Journal reports on Mille Lacs not getting a broadband grant…

The denial of a state grant to partially fund a countywide wireless network in Mille Lacs County has officials frustrated, the Mille Lacs Messenger reported. The Minnesota Department of Employment and Economic Development did not select the county’s application for broadband funding.

This rejection comes after a year’s worth of studies and public outreach, and county officials said they believed their project received less consideration than some that would impact 100 or fewer residents. The Mille Lacs County project would serve approximately 26,000 residents.

A consulting firm working with the county on the project intends to request information from the state concerning grant selection criteria.

The article captures the frustration that all of the communities that don’t get funding must feel – because applying for broadband funding is an undertaking as the article points out. Many communities will do a feasibility study, public outreach, partnership development and even some engineering planning before applying for funding. Many are good projects but there just isn’t enough funding to meet the need. The difficult thing about the effort is that without ongoing grants, if your community isn’t selected, you don’t know if you’ll get a chance to try again and even if you do, you’ll probably need to update the research and application.

The Minnesota Broadband Task Force has recommended ongoing funding for grants – that would ease some of the frustration I’m sure.

Comcast Increasing Internet Speeds for Twin Cities Customers

Good news for some folks in the Twin Cities, according to Business Wire

Comcast today announced it is increasing the speeds of its Xfinity Internet service packages for existing customers in the Twin Cities area at no additional cost.

The speed increases will vary based on the Xfinity Internet customers’ current speed subscriptions, and the majority of customers will see an increase of 50 Mbps. New and existing customers can expect to experience enhanced speeds this month.

“In today’s fast-moving, always-on world, quickly connecting to the internet is more important than ever,” said J.D. Keller, regional vice president, Comcast Twin Cities. “These increases reflect our ongoing commitment to offer the fastest speeds to our customers and deliver a great experience anytime, anywhere.”

To get the increased speeds, most customers will simply need to re-start their modems when notified by Comcast that the new speed is available. Comcast will also notify customers who may need to upgrade their modems to receive the increased speeds. Those who own their own modems and need to upgrade them to receive the increased speeds will need to purchase a new one or can lease a new modem from Comcast.