Before we get to my ideas about how we might incent companies to install more Broadband, I need to cover the announcement this week made by the FCC. They changed the definition of Broadband to mean 25 Mbps downstream and 3 Mbps upstream minimum (aka 25/3).
I asked myself today, “Why does this matter?” Whatever you call the service it is still the same. So, I concluded the reason is to make Broadband coverage statistics worse. Now why would somebody want to do it? The reason became apparent after a bit of thinking. Somebody wants to justify some subsidies for installing Broadband. By making the statistics worse, it will be easier to make a case for new money to be made available.
One of the big issues with this in the ISP world is the size of many of the companies involved. The large ones don’t ever want to deal with the strings attached to the money. So giving them this money has not worked to date. The small companies (and between telcos and cable cos there are well over 1,000 of them) have taken advantage of the money to upgrade their networks. The small companies have been aggressively upgrading anyway and this money just moves some of these upgrades earlier into the cycle.
So, what has been the Net Affect of these grants and loans? A very small number of rural subscribers have very nice networks. The bulk of the customers have not been upgraded by the large companies and there is little activity to overbuild these low performance networks. The company that claims that it is doing lots of network upgrades (and promises to do good) has not addressed any of these areas. That is Google if you have not figured it out.
So many people don’t really think about how far away some of these small towns are in the US – especially in the Western US. I live in Santa Rosa, CA – about an hour north of San Francisco. We are called “Northern California”, but if you look at a map you would call it Central California. It is over a 300 mile drive to Oregon from Santa Rosa. I make a statement (in order to make people to think) that there are as many people in Santa Rosa as there are along 101 from here to the Oregon border. It may not be true, but if it isn’t it is really close. Even then most of those live in a couple of population concentrations. There are several very small towns, Garberville and Laytonville for example, along the way. Building networks for them is not very efficient no matter what we do.
That means that there is little competition for those communities and thus ISPs spend money other places where they are have more chance at more revenue or more competition. It doesn’t make sense for them to spend on those communities. The comparative returns are just not there.
So what can we do to make these underserved communities work in these models? Well, I will save that for next week.
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