Some Problems Do Not Go Away, Even if They Become Less Important

To get funding, any advocacy group must first demonstrate that a problem exists. To keep getting funds, an entity has to insist no progress is being made, necessitating continued funding. And if the original problem actually is solved, the entity has to find some new problem that needs to be solved. 

All that applies to “broadband access,” no less than any other undertaking. Despite much data indicating that internet access (mobile and fixed). One analysis by Fastly suggests that even the most-challenged digital subscriber line networks in the United States held up under the new at-home load. Cable TV networks also have held up well.

According to Ookla, U.S. internet access speeds  on fixed networks dipped about four percent during the pandemic. Mobile speeds actually improved by one percent. 

)has held up very well as nationwide stay-at-home policies were put into place because of the Covid pandemic, not every community was so fortunate. Oxnard, Calif., for example, was one such place, seeing a dip in downstream speeds of about 20 percent from mid-March to mid-April, although performance now is moving back up post-mid-April, according to BroadbandNow, using test data from M-Lab. 

Most of you are familiar with speed tests. Most of you also know you test your connections primarily when they seem “slow.” Almost nobody bothers to test when the networks are humming along. And M-Lab tests have increased significantly during the stay-at-home policies, suggesting customers are aware of greater congestion or slower experienced speeds. That would hardly be surprising, as all studies show at-home internet access data volume has grown 40 percent or so as people have been forced to work and learn at home. 

A study by Fastly indicates speed and income are related. That should not be surprising. Lots of consumer behaviors and spending patterns are correlated with income, education, wealth and geography. Up to 20 percent of U.S. consumers also say they rely on mobile internet access, and do not buy fixed network access. Rural speeds tend to be slower than urban speeds. Rural use of the internet, PC ownership and income also seem to be lower than in urban areas. 

The point is that there always will be room to argue that a digital divide continues to exist, even if it is narrowing and has been narrowing for a couple of decades. And statistics often too-casually dismiss the many nuances as speeds are improving fast. 

But differences might always exist.  Since networks are expensive, the last two percent of locations will always be an economic issue.

Where are All the Unserved U.S. Households?

Since the “digital divide” is closing everywhere in the world, it simply stands to reason that the divide ought to be narrowing in the United States as well. That is not to say the divide closes completely, only that clear and steady progress is being made to supply better internet access to citizens who wish to buy it. 

The Federal Communications Commission says “the number of Americans lacking access to fixed terrestrial broadband service at 25/3 Mbps continues to decline, going down by more than 14 percent in 2018 and more than 30 percent between 2016 and 2018.” 

The FCC also notes that the number of Americans without access to 4G Long Term Evolution (LTE) mobile broadband with a median speed of 10/3 Mbps fell approximately 54 percent between 2017 and 2018.

Also, more than 85 percent of U.S. residents now have access (can buy) fixed terrestrial broadband service at 250/25 Mbps, a 47 percent increase since 2017. Over the same period, the number of Americans living in rural areas with access to such service increased by 85 percent, the FCC says. 

 Inevitably, some will lament the existence of differences; decrying a lack of perfection or simply arguing that the numbers are incorrect, arguing that the number of people without broadband access is 42 million or even as high as 162 million. 

It is not clear where those higher figures come from. Looking at connected households is revealing, however. 

The Federal Reserve estimates there are about 140 million housing units., defined as “a house, an apartment, a group of rooms, or a single room occupied or intended for occupancy as separate living quarters.” 

To be more precise, we also would have to account for households that either choose not to buy, or cannot easily buy. Some of those latter cases might be boats that serve as a residence, trailers or rooms rented inside homes where the resident does not buy internet access because the owner or manager of the property supplies the access. 

More than 16 million units are vacant at any particular time, leaving a total of perhaps 124 million units, which accords well with the estimate of 121.6 million households we get if we assume the U.S. population is 304 million persons, with an average household size of 2.5. Then there are 121.6 million households. 

That is the base of total locations fixed networks must reach. But a significant number of households choose not to buy fixed network access. 

Somewhere between 15 percent and 20 percent of U.S. homes are “mobile-only” for internet access, which might represent as much between 18 million and 24 million households. Those customers choose not to buy fixed network internet access, for whatever reason they choose. 

If so, then the number of locations who might buy fixed network internet access is on the order of 97.6 million to 103.6 million sites. 

If take rates for all homes (including the vacant units) are about 80 percent, then we would expect total fixed network accounts to number about 97.3 million locations.

Leichtman Research Group estimates that the largest U.S. telcos and cable companies have about 101.2 million accounts, but that includes business accounts. That matches fairly well the estimate that total fixed network accounts should be about 97.3 million in number. 

The point is that there are very few U.S. locations that do not already buy some form of internet access--mobile or fixed or both. That is difficult to square with claims that huge numbers of peop;le literally cannot buy service at 25 Mbps. 

Consider also that internet access routinely is available from satellite and other wireless and mobile platforms. 

Satellite broadband and fixed wireless operators traditionally have targeted rural homes and small businesses as their primary market, in the past said to include as many as 35 million locations. But estimates vary widely. Some say 80 million people live in rural areas, others say 46 million do, using the U.S. Census Bureau methodology. 

 Satellite broadband providers seem to have three million subscriptions, though some estimates (wrong, in my opinion) suggest that  6.76 percent of U.S. internet subscriptions are provided by satellite. 

Assume there are 139 million U.S. housing units, the high estimate, without adjusting for vacant units or other locations that cannot be wired. That implies nine million U.S. satellite broadband subscribers. No estimate I have seen--ever--suggests there really are nine million U.S. satellite broadband accounts. 

HughesNet believes 18 million homes are its market opportunity. Rental units alone might represent 6.6 million units, although not locations, as some of those units are in multi-family complexes. 

According to Urban.org, 13 million homes are owned by rural residents. Those figures roughly accord with HughesNet estimates of market opportunity. 

A more conservative estimate is that perhaps two percent to three percent of U.S. homes are the primary target for satellite broadband. That would include the most-isolated areas, where there are no terrestrial fixed networks using cabling. In many rural areas that are slightly more dense, wireless ISPs already operate. And, of course, there are many parts of rural areas served by cable operators or telcos. 

The point is that many homes already can buy 25 Mbps service, albeit from a satellite provider. 

A big issue is the presence of fixed wireless ISPs. According to Broadband Now, some 148.4 million U.S. residents are covered by fixed wireless ISPs. Assume an average household size of 2.5. That implies some 59 million rural locations already are reached by fixed wireless ISPs. 

Add all that up and some of us cannot fathom how 42 million to 162 million people actually are not able to buy 25 Mbps internet access.

The Use and Misuse of Statistics

The use and misuse of statistics is an ever-recurring issue. Consider only the issue of how to count internet access availability or take rates. The former is a measure of supply, the latter a measure of demand. “Availability” means a consumer  can buy a product. “Access” means a customer does buy it. People confuse the two concepts, routinely. 

Ignore sampling errors or limitations for the moment.  Ignore the impact of definitions, which change. At one point, 10 Mbps was the top speed on a fiber to home network. Today we define “broadband” as a minimum of perhaps 25 Mbps downstream, and the definition will slide higher over time. The point is that we never are comparing apples to apples, over time. 

In isolated and rural areas, where there often is no business case for supplying such access, service only is available if subsidized, and so the issue of “how fast” is important, but arguably secondary to “availability.” We prefer equivalent grades of service everywhere, but the economics of supply mean that rural availability lags urban, virtually always. 

We frequently also often ignore some platforms entirely, as when we measure “fixed network” availability, but omit the additional coverage supplied by satellite providers or mobile networks. Sometimes it is not clear that wireless fixed networks are counted with other fixed networks. 

It arguably is one thing if a potential customer cannot buy a product; quite another thing if a potential customer chooses not to buy. The first might be considered a failure of policy; the latter a consumer exercise of choice. 

One also has to ignore lag times between data collection and publication. Most government data shows what was the case two years ago, not the situation as it stands today. So three years ago, using a minimum standard of 25 Mbps for “high speed,” perhaps 30 percent of “households” did not buy--or perhaps could not buy--the product. 

People often mistake “households” for “people,” as well. This illustration, using 2017 reporting data, says “30 percent of U.S. households don’t have a fixed high-speed internet connection.” 

That is wrong. The Federal Communications Commission figures for 2017 stated that 21.3 million people did not have access at that speed, not households. That overstates the degree of “lack of access” by more than 100 percent, as the typical number of people in a U.S. household is greater than two. 

source: Karma

This is a common error one sees in reports about the size of the digital divide. If one adds two satellite providers to the mix, there is almost no place within the continental landmass not already served by at least two networks selling 25 Mbps service, whatever the limitations of fixed networks in some locations. 

Of course, our goals always are aspirational. Most urban consumers consider 25 Mbps a problem. In my own household, anything less than 50 Mbps triggers the registration of a service issue report and an immediate reboot of the router. As a practical matter, even speeds below 100 Mbps might trigger a reboot. 

The point is that availability--the ability to buy internet access--is not generally a problem. I know people who live in isolated mountainous areas where neither fixed line service nor mobile service is available. They use their mobiles only when “in town.” But those people also choose not to buy satellite internet access. They could buy it; they simply choose not to do so. 

Speed and cost are issues, to be sure. Rare is the wireless platform that will match a hybrid fiber coax network or a fiber to home network in terms of speed or cost per bit. 

The point is not the definitions we use--as those change over time, and should change--so much as the misuse of terms. Availability is one matter; take rates another. People are one matter; households or locations another. 

One frequently sees and hears figures that confuse those concepts, with real implications for the meaning of the data. In the end, we care about take rates. Availability is a measure of our ability to support take rates. But there are grey areas. 

We want reasonable quality services and reasonable prices. That always is hard to do in rural areas. But even in urban areas, when quality and price are not issues, some customers still choose not to buy some services. They might prefer a mobile-only approach to buying fixed access, for example. 

Assessing trends in the real world is hard enough. It never helps when we are simply misapplying statistics (unintentionally, perhaps)  to make a point.

How Much Demand for 5G in Germany, When 3G is As Poplular as 4G?

Based on past behavior, it is hard to forecast the strength of consumer demand for 5G in Germany. So far, nearly half of all subscriptions might use 3G, instead of 4G. nearly a decade after 4G was introduced.

Governments and policymakers always are quick to quantify gaps in uptake, quality or availability of communications services, which is among the reasons stories about any form of digital divide are evergreen. Most often, studies about service gaps rely on supply or demand indices, including network availability, typical speeds and cost. 

Demand side choices by consumers tend to overlooked. In other words, some “gaps” might reflect consumer choices, not failures of supply. And that matters for 5G, as much as it did for 4G. Consider the case of Germany. 

We often are surprised at the resilience of legacy services, as those use of legacy services is always a case of supply failure. Not always. Sometimes demand choices are at work. 

That appears to be the case for German mobile users and 3G. According to a recent study by Opensignal, as many as half of German subscriber identity modules (mobile accounts) are not enabled for 4G service. 

In other words, a huge percentage of German mobile users seem to be opting to remain on 3G networks even when 4G networks now are in good supply, with good to improving performance metrics. 

In other words, the question is why so many German users opt to remain on 3G networks when 4G networks are widely available and offer better performance. Low consumption of mobile data might be part of the explanation, some could argue. 

source: Statista

Compared to customers in other developed nations, Germans seem to consume less data. Some might point to high cost per gigabyte as a contributing factor. At least in 2016, German per-gigabyte costs were on the high side, compared to other European nations. 

source: Point Topic

But per-gigabyte costs in Germany have fallen since 2016, as they have virtually everywhere else in the world. 

source: Statista

To be sure, the actual cost of using mobile data depends on which plans users have. And international comparisons require choices about which plans to compare. That can distort results if the plans most-often used in particular countries are not uniform. In other words, if most consumers in some countries buy large-usage plans, others buy small-allocation plans, while in yet other instances most consumers buy on group or bundled service plans, not stand-alone mobile plans, comparisons are going to skew in ways that do not actually reflect buyer choices across countries. 

Consider this analysis of mobile internet plans featuring big usage allowances of 20 to 42 gigabytes per month, compared to the analysis above of one-GB usage plans. Where smaller usage plans might feature per-GB costs as high as $12 per gigabyte, when bought in higher volume (22 Gbytes in this case), cost drops to about $2.50 per GB. 

source: Babajob

Still, the point is that cost per gigabyte, or absolute cost, might not explain why so many German consumers choose 3G over 4G. 

Still, according to Opensignal, perhaps 81 percent of 4G non-users have for some reason elected not to buy 4G service. Some might suggest the “poor” state of German 4G networks explains why people do not buy. That seems unlikely. 

In a July 2019 study by Tutela, 4G downstream speeds averaged 23.5 Mbps on Telekom’s network, 21 Mbps on Vodafone and 18 Mbps on O2 networks. 

To be sure, German downstream speeds tend to be slower than in Switzerland or Austria, as measured by Tutela, but average downstream speeds--based on both 3G and 4G activity--of about 14 Mbps do not seem out of line on a global basis. 

Also, recent tests show typical 4G speeds in German cities ranging from about 25 Mbps to 35 Mbps, which does not seem slow, as far as 4G goes. 

source: Opensignal

Nor do German 4G speeds seem to have lagged, by about 2017, in comparison to other developed nations. 

source: Akamai

The point is that it is not self evident that poor 4G experience explains the lag in uptake. But some might point to coverage, rather than speed, as an explanation. 

“Whereas network providers in the Netherlands, Belgium and Switzerland can almost all offer LTE (4G) connections nearly 90 percent of the time, German communications giant Deutsche Telekom in Germany achieves only a 75 percent rate,” a study by consulting firm P3 says. Vodafone in Germany has 57 percent LTE coverage, P3 says. 

By some estimates, 4G coverage in Germany does not seem underdeveloped, though, and less coverage in eastern regions might be explained by greater rural character in the east. 

source: nperf

According to Germany’s Federal Network Agency (Bundesnetzagentur),  at the end of 2018, there were 107.5m active SIM cards in Germany (excluding M2M and IoT cards), but only 50.5m 4G/LTE SIM cards in active use. This would indicate that roughly half of the active SIM cards were not LTE-enabled

According to Opensignal, 81.4 percent of users that have never connected to 4G had a 4G-capable phone and spent time in 4G-covered areas. “These users likely did not upgrade to a 4G subscription or have disabled 4G connections on their phones,” says Opensignal.

Perhaps 15.6 percent of users who did not connect to 4G networks spent time in 4G-covered areas but did not have a 4G-capable device. 

A small percentage of non-4G users (perhaps three percent) appear not to live in rural areas where 4G is available. 

The point is that consumers sometimes choose not to buy the better or best mobile data plans, based on speed, price, availability (coverage) or other considerations. German consumers seem to be content buying 3G, instead of 4G, for some combination of reasons. 

So one wonders what the reception for 5G might be.

U.S. Internet Access Speeds are Improving Fast

Without any question, the latest Federal Communications Commission report on U.S. broadband is going to be criticized. The data overstates deployment, it will be argued. Some might argue 25 Mbps is not broadband. The thrust of the complaints will be that the U.S. digital divide is either not closing or not closing fast enough. Some conceivably will argue the divide is getting worse.

But coverage and speeds are growing. Sure, there is a gap between rural and urban. There likely always will be some gap. But the gaps are closing.

source: FCC

All methodological shortcomings noted, it is hard to argue that the U.S. speeds are too low, or getting worse. There really is not any evidence for that view. In 2018 alone, U.S. average internet access speed  on fixed networks grew 36 percent, according to Ookla Speedtest.

In 2019, U.S. fixed internet service provider were 96 Mbps downstream, according to Speedtest. Even mobile average speeds were in the 33 Mbps range in 2018.

source: Speedtest

source: Akamai

U.S. Broadband Availability Remains a "Last 2%" Problem

The last two percent of U.S. housing locations, as shown by the U.S. Federal Communications Commission National Broadband Plan and Broadband Availability Gap analysis, are the areas where the geographically-produced digital divide is most acute.

source: FCC

That seems to be true for military veterans, no less than other citizens. According to the Federal Communications Commission, 92.5 percent of veterans have access to 25 Mbps downstream, 3 Mbps upstream, using terrestrial networks. Some 87 percent of veterans have access at speeds of 100 Mbps or higher.

Also, 99.8 percent of veterans have coverage of 5 Mbps/1 Mbps mobile LTE, based on required FCC reporting from service providers, about which there always is some dispute as to accuracy.

But those figures also are minimums, not typical or average, the FCC says. “We recognize, however, that actual speeds tend to be much faster than the minimum advertised speed reported on Form 477.”

source: FCC

Ookla speed test data suggests that 78.4 percent of veterans have 10 Mbps/3 Mbps mobile LTE broadband coverage.

The report concludes that 78 percent of veterans have coverage of both mobile LTE with a median speed of 10 Mbps/3 Mbps and any fixed broadband of at least 25 Mbps/3 Mbps.

Also, 76 percent of veterans have coverage for both mobile LTE with a median speed of 10 Mbps/3 Mbps and any fixed broadband technology of at least 100 Mbps/10 Mbps service.

About three percent of veterans lack coverage for both 10 Mbps/3 Mbps mobile broadband and 100 Mbps/10 Mbps fixed broadband service.

The bottom line is that “FCC Form 477 deployment data suggest availability of broadband is not substantially different for veterans than for the population overall,” the FCC says. “For most veterans, broadband access is not the barrier to connectivity.”

That speaks to availability, not usage, of course. We sometimes confuse the ability to buy and use quality broadband with the actual consumer willingness to buy the product. We also sometimes conflate supply and demand: what is important is that quality broadband be available at affordable prices, not that consumers choose to buy one product over another.

There is a public policy that citizens and consumers are able to buy quality broadband. There is no similar public policy demand that they buy specific packages, from specific providers.

In other words, as it is not a failure of public policy that consumers choose to buy iPhones rather than some other phone brands, neither is it a failure of public policy that consumers choose to buy specific access plans, from some providers rather than others, or not to use some services at all.

In other areas of public life, that distinction can be described as “opportunity,” rather than “guaranteed results;” the right to exercise a choice, not the right to specific products. In other words, some consumers choose to use mobile for internet access, not a fixed network product.

That can represent the exercise of choice (it is what the customer wants). It might also represent a market failure (supply is not available). It sometimes is argued that consumers make the mobile substitution choice because fixed network access is too expensive. Public policy advocates may differ on what “expensive” means.

Some would note that internet access in the developed world does not cost too much. In developed country markets, internet access costs about 0.7 percent of gross national income, per person, and is far below world averages.

As of 2017, approximately 85 percent of households with veterans reported that they had paid connections to the Internet in their homes. That is higher than the rate of internet access use nationwide, by some accounts.

Price arguably is not an issue, as that is in line with household fixed network internet access overall. Some 1.5 million veterans use the E-rate program providing low-cost internet access.

And there is growing evidence that prices really are not that big a problem (in terms of supply), based on income.

In Seattle, for example, rates of usage (actual buying behavior) between the highest-income and lowest-income neighborhoods varies by just four percentage points (97 percent the high; 95 percent the median; 94 percent the low).

For those veterans who do not buy broadband (even when it is available), barriers may include actual lack of facilities (if one excludes satellite access), willingness to pay, digital illiteracy or perceived irrelevance, the FCC notes. In a growing number of cases, though, mobile broadband is the preferred product, as consumers prefer mobile over fixed facilities for voice.

Estimates of mobile-only internet access households range from 10 percent to 20 percent of homes, and many believe 5G will lead to more substitution, as fixed and mobile access offers, combined with public Wi-Fi hotspot access, will keep gaining appeal as 5G speeds are able to satisfy a wider range of substitution use cases, and pricing plans make fixed and mobile access more directly competitive.