Broadband Markets

Wireless data speed have been increasing at breakneck speeds over the last few years. Largely because it, along with price and coverage, is one of the differentiators the wireless service providers can use with customers. How effectively they are doing this is another matter. Ask your friends what “4G” means.

Anyway. Today an article I ran across discussed how LTE (the current newest fastest tech available currently) is already being updated to LTE-Advanced. Tests are showing speeds of over 200 Mb/s. To put that in perspective, I’ve gotten in the high 20s. I’ve heard of friends getting near 50 – but that’s a small miracle. And on the iphone 4/4s which didn’t have LTE I could never dream of getting over 7. Those phones are just a couple years old!

This is good news, because as several analysts and news outlets are pointing out- our traditional cable service providers, who offer hardline data to our homes, are not interested in increasing our speeds any time soon.

Bernstein Research analyst Craig Moffet tells Technology Review that the two biggest cable companies are posting 97% margins for their Internet services, a rate that Moffet describes as “almost comically profitable.”“If you are making that kind of margin, it’s hard to improve it,” Levin tells Technology Review. In other words, unless Google starts rolling its fiber service out nationwide, we shouldn’t expect the incumbent carriers to build fiber networks of their own.

The cable companies laid down the copper cable throughout towns years ago back for cable TV. The infrastructure is largely all paid for. So now, the costs of maintaining that network are pretty small. But, we have also tapped the full extent of its capability. To increase speeds would require switching the hardware to fiber optic cabling. Which costs large amounts of money. I’ve read numbers that it costs Verizon $4,000 per customer to lay down its FiOS network.

However, the cable companies are granted small monopolies for their towns. They were given these back in the 60s and 70s because they argued they needed to ensure they could make the money back for their investment of laying all that expensive cable down. This is why you can only get one cable company choice.

So, your options for high speed internet are also limited. And since there is no competition, there is no incentive for the cable companies to upgrade. My long-running argument is to take away the cable companies’ monopolies, and force them to lease out their networks – like we did with AT&T/MaBell back in the 70s/80s. This lead to more smaller competitors and lower prices for phone calls.

But, I digress.

So, a new alternative in wireless only providers seems increasingly plausible with these increasing speed capabilities. However, there are two big, big hurdles. Data caps and Net Neutrality.

First, Data Caps. My home DSL service taps out at about 9mbps. Like I said, I regularly get into the 20s on LTE on AT&T. I would switch in a heartbeat. However, AT&T to protect their network from being overwhelmed, puts limits on how much data a customer can use. A 2, 3, 5 or heck even 50mb limit is just too small for the average home user. Think about how many youtube videos you watch, online xbox games, and skyping one does and you could blow through those limits in a day.

But, thats an issue easily solved with more capacity. Its a technology issue. I think the larger problem is a policy problem, which makes it much harder to solve. Net Neutrality is a kind of fuzzy, nebulous concept. But, in mind it basically is the idea that you don’t treat some data different from any other data coming over your internet connection. So, if I go to Facebook, it should be preferred over YouTube. One should not come faster.

That might sound silly, but it is more important when you realize many cable companies have ties to content companies. So, perhaps Hulu gets sent to you at a higher rate than Netflix, to encourage you to use Hulu. Its a dark road.

The FCC put forth guidelines regulating Net Neutrality, and while they are still being fought over, one point is clear. The wireless companies don’t have to follow them.

The U.S. Federal Communications Commission, in a historic vote Tuesday, approved network neutrality rules prohibiting broadband providers from blocking customer access to legal Web content, but many consumer groups decried the new regulations as weak and full of loopholes.

The new rules provide fewer protections for mobile broadband subscribers and may lead to a fractured Internet, critics said. The new rules, a compromise championed by FCC Chairman Julius Genachowski, would bar wireline-based broadband providers—but not mobile broadband providers—from “unreasonable discrimination” against Web traffic, prompting some consumer groups to call the rules “fake” net neutrality.

Therefore, if one did switch to a completely wireless solution, you would always have to worry that when you tried to load YouTube, you would get a vastly slower connection than if you went to V-Cast. Or, you wouldn’t be permitted to access Amazon to rent a video, but if you rent on ATT’s video store, it would be ok.

Until this problem is solved, we are going to be stuck with pathetically slow home connections. Slowing productivity and handicapping innovations and developments that newer, faster tech can allow.

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5 thoughts on “Broadband Markets”

  1. You left out a huge hole in this idea:

    The wireless spectrum is finite. In fact it is running out. You can’t just pump out iphones and mifis by the millions and give a phone number to all of them and have their still be “enough” wireless.

    I have been on grandfathered 3g since 2006 as my main internet connection for all devices in my home. The highest speed I have seen in that time is 2 Mb/s, most of the time is around 1 Mb/s download and less upload.

    The only benefit of staying with 3g vs. some faster wireless is the data cap makes it a rip off. (I have no cap on grandfathered 3G).

    With the cap, Verizon slows you down after 2 GB transfer and charges you after 5 GB. I transfer 20 GB – 40 GB per month. They charge $20 per GB overage.

    If you are lucky enough to have cable or fiber where you are, go with that. Leave home based wireless plans (derived from the narrowing wireless spectrum) for the rural consumer who has no choice.

  2. I admittedly don’t know as much about broadband spectrum as I should. I have heard its an issue, mainly from the Telcos as an excuse for why they need to buy each other (AT&T wanted T-Mobile’s spectrum, etc) – so I am a bit skeptical.

    http://www.nytimes.com/2012/04/18/technology/mobile-carriers-warn-of-spectrum-crisis-others-see-hyperbole.html?pagewanted=all&_r=0

    “But is there really a crisis? Some scientists and engineers say the companies are playing a game that is more about protecting their businesses from competitors.

    Not even the inventor of the cellphone, Martin Cooper, is convinced that the wireless industry faces a serious challenge that cannot be overcome with technology. Mr. Cooper, a former vice president of Motorola and chairman of Dyna L.L.C., an incubator for new companies, says that claims of a so-called spectrum crisis are largely exaggerated.

    “Somehow in the last 100 years, every time there is a problem of getting more spectrum, there is a technology that comes along that solves that problem,” he said in an interview. Mr. Cooper also sits on the technical advisory committee of the Federal Communications Commission, and he previously founded ArrayComm, a company that develops software for mobile antenna technologies, which with he said he is no longer associated.

    He explained that for carriers, buying spectrum is the easiest way for them to expand their network, but newer technologies, like improved antennas and techniques for offloading mobile traffic to Wi-Fi networks, could multiply the number of mobile devices that carriers can serve by at least tenfold.”

    I am vaguely aware that the government took all that TV spectrum from the analog channels back. It seems like we could use some of that? Also, how does it work, does each phone get its own specific frequency? Considering there are more devices than people now, I’d doubt that is the case? There has to be some kind of technological leap we can make eventually there. I remember back before everyone started switching to LTE there was CDMA (verizon/sprint) and TDMA (att/tmo) and that they stood for “code division” while TD stood for “time division”. From my very limited non-scientific understanding, it referred to how the signal was divided at the tower. So ATT divided the same “signal” so that every slice of time beloned to someone using the tower’s bandwidth. Verizon divided the code up, so that a block was sent out at the same time, but we each shared a piece of it. Seems like there could be a solution there.

    Whether it is spectrum or the laying of physical lines, there will always be costs. We live in a finite world with finite materials.

  3. Where to start….

    First off, Martin Cooper, did not invent the cell phone. Don’t just copy and paste stuff without reading it man. Look up who really made that cell phone. It was made by Motorola, but not by him, not even in this country. Cooper unveiled it in New York, he didn’t research it, he didn’t design it, he didn’t test it.

    Secondly, CDMA = voice, LTE = data, so that’s not a good comparison.
    Third, about the spectrum: There are only so many frequencies in our physical world. Right now the FCC has sold 700 MHz – 2.6 GHz and the will soon sell the lower, near radio frequencies down to 500 MHz to last us “appr. the next ten years”. Then what? There is no more.

    What uses these waves besides phones? (GPS, radio, TV, etc.)

    It’s frivolous and idiotic. Instead of lining the pockets of Verizon and the FCC, how about let’s use what’s left of the spectrum to bring free internet to rural places where there is no cable so that farmers and cooperatives and people out here can get online and sell some American goods to Americans? Maybe build this shit economy, lift themselves out of poverty.

    (can you tell this issue pisses me off?) :)

  4. I think the dude is right on.

    FCC has auctioned the spectrum off for profit, they are gangsters.

    But so are the greedy telco trusts who are pimping the smart phones like crack.

    What will happen when the finite airwaves run out? The FCC decides what frequencies go to what shit (radio, phones, whatnot) so who decides who gets these coveted last numbers?

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