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Chapter 56: Broadband – how much is enough?

10 Mbps, 25 Mbps, 100 Mbps, 1 Gbps, 10 Gbps, how much is enough? The world has gone bandwidth crazy. The junk science experts, lawyers, social and political activists, the media, government legislators, and pretty much any celebrity who hasn’t passed a high school biology or physics class, but gets to testify to Congress on some deep or controversial scientific topic or gets their own talk show, have invaded the bandwidth arena. I’m about to add to this list, the fiber proponents who think we need to add billions of dollars of taxpayer money to give every kid who plays Halo or every shut-in who watches NetFlix, an unlimited broadband experience.

Let’s start with legislators who give away billions of dollars to people who contribute to their re-election or to projects (also known as “pork barrel”) designed to make them popular with their constituencies. Except for Hillary (whose expertise in hiding and deleting emails remains unparalleled), many of these legislators can barely use email and the Internet. It’s pathetic when a country that wants to maintain its preeminence in high-tech, has a bunch of older people making decisions for the future — decisions that rarely serve the interests of the taxpayer or Middle America. They and the rest of the uninformed people in this country believe the rubbish fed to them — that (a) the world needs 1 Gbps fiber or more and (b) the cable companies and telecom companies have a stranglehold on broadband and are cheating taxpayers.

I’m not saying the cable and telecom operators are completely clean. If they are cheating people, they certainly aren’t doing it all by themselves. The politicians helped create these cable and telecom monopolies! I’m a realist and if some politician asks me for a few bucks in campaign contributions so they will write laws to suppress my competitors, I’ll listen to him.  Then I’ll imagine what it would be like to be CenturyLink, Verizon, and AT&T for about 30 seconds.  But I’ll point him to the front door and ask him not to leave any slime on the floor on the way out.

Just one example: in Arizona and other states, the powerful car dealer lobby pressured lawmakers to prevent Tesla from selling its cars directly to people. Tesla has to sell through dealerships. It’s why I won’t buy another car in Arizona from a dealer until the law is changed (and if that happens, I’ll probably get a Tesla).

Before I go off on another rant on corruption and stupidity in government, let’s just look at the facts on bandwidth usage. The vast majority of users simply surf the Web, use email, and watch online video. On my networks, NetFlix or some other video streaming service constitutes probably 60 to 70 percent of my traffic in the evening. NetFlix uses about 4 to 6 Mbps for HD video. Four to six Mbps is less than 1 percent of what 1 Gbps fiber can deliver. Let me repeat that for all the fiber fans so it can sink in, 1 percent, 1 percent, 1 percent, 1 percent. So basically if we only need 1 percent of the bandwidth fiber that proponents want us to have. Why are we paying for the other 99 percent? Now I can repeat this next mantra: residential fiber subsidized by the taxpayers is an  enormous waste of money today.

Okay, there are households where two or more people want to watch NetFlix, do homework, and wow, watch 4K video in the next 3 years. Fine, let’s calculate what that means in a worst case scenario. 4K video from NetFlix, 2 streams, checking to see who has the cutest dog or cat video of the day on YouTube, ordering some new mittens for the winter, and keeping up with friends on Facebook – the total is still less than 50 Mbps and I’m being very generous here (I’m not counting torrents in this because T-Tommy Wheeler apparently wants illegally copyrighted material to be quickly accessible to everyone in the country at the maximum speed possible). Grab the calculator again and voila, we find that 50 Mbps is 5 percent of 1 Gbps fiber or any 1 Gbps service. More repeats, if in 5 years we only need 5 percent of the bandwidth fiber can deliver, why are we paying for 20 times that amount now?

The argument for that is going to be, well, it takes several years to get this funded, then there are all sorts of legal and property issues that have to be addressed, then there is the design and engineering, etc. Hold on, I’m getting my violin out now. But wait, if we can deploy 50 Mbps wireless today in days, not years, at 2 to 10 percent of the cost, why are we even discussing this? Here’s why: the fiber guys know the government has big pockets, no oversight, and that they have wasted at least a $1 trillion in the last 12 years. They don’t want to be told that someone can do it in a week or less and meet everyone’s needs for up to 40 times less. If we do it that way, they don’t get a cut.

Then there is the security argument. The United States is shockingly unprepared when it comes to cyber security. China, which should be called Kleptochina instead, steals everything not nailed down, from government data to technology (they now have their own Facebook for US government employees from the OPM hack). Russia, North Korea, Iran, and the Eastern Bloc mafias are stealing edit card and financial data so easily, you would think they have a branch office inside Visa or MasterCard. And either poor management, lack of IT spending and training, or just absolute incompetence on the part of Sony, Target, Home Depot, the US Government and others, make it look like they are putting a welcome mat in front of the ATM machine. If all these entities can’t protect their systems, what chance do the millions of people who think the DVD player is a pop-out drink coaster, have in stopping their computers from being used for a coordinated DDOS attack? Do you really want to give these unprotected Windows 98 computers 1 Gbps upload access? How many of those unprotected computers with 1 Gbps connections do you need to crash CitiBank or Facebook? Ah, but I detoured in to the area of, gee, why didn’t we think of consequences before we jumped off the cliff category.

So getting back to the world of reality and cars (my favorite subject after motorcycles), just as cars designed to run on regular gas don’t run any better on premium gas (sometimes even worse, it’s a compression thing), users who average less than 10 Mbps, even in their peaks, aren’t going to run any better on a 1 Gbps service. However, they are going to pay more. The question then becomes, how much bandwidth is enough?

In my experience, 99 percent of users can’t tell the difference between 10 Mbps or 100 Mbps. If they did, I would be paying out refunds to a lot of customers who we told would never see a difference. I can’t remember one and I think we saved them somewhere between $200 and $600 per year. I’ll admit 10 Mbps isn’t going to suffice for five more years and some users need more today (sorry file-sharers, not going to happen on our network). I’ll also concede that we need to hit 50 Mbps for 99 percent of the users by the end of those five years, but that’s pretty much it.

So why the heck (I have stronger words in the vocabulary but my wife says I might offend people – I told her, too late, that ship left the port 53 articles ago), are we overspending to build something nobody but zealots and consultants want? The public doesn’t want it or Cox and Xfinity would have already built it. They know it’s a complete waste of money since they won’t see 1 Mbps more of usage on their network at the egress point but if they don’t do it, some government bureaucrat who can’t keep control of the spending in his own office, thinks they still need to dictate to others how to waste money.

So in summary, the industry and the government think the public wants capacity they don’t need and don’t use, but that they should pay for through an inefficient and clearly corrupt processes. Just look up the Texas study which showed most ARRA broadband funds were steered to Democratic states and Democratic political constituents through their Democratic representatives. Whoever is in power, controls the purse strings and Republicans have been owned by cellular and telecom companies for a long time, so neither side can get on their high horse on this one. That, my friends, is another reason why the government mucking around in private industry is a bad idea.

To take this thought further, in the United States and most other countries, economies aren’t exactly booming; they are shrinking in many cases. Real income in the United States has dropped almost 10 percent in the last few years. The official unemployment number of 5 to 6 percent in the United States is much lower than actual unemployment rate. The reality is that 94,000,000 Americans don’t work for one reason or another and a large percentage of them are not counted in the unemployment figures. Regardless of the reason, many or most of them are on some type of fixed income. That means almost 30 percent of the population, not including the undocumented immigrants who might total as much as 11,000,000 more, really aren’t going to be able to afford more expensive Internet they don’t need (and that their children are buying on credit).

This reminds me of the discussion with my wife where I said that I need a motorcycle because gas prices were going through the roof. I told her I get to use the HOV lane which saves me time, a motorcycle gets better gas mileage and at $4 per gallon it will save us money. I didn’t mention that it goes 60mph in first gear and tops out at 180mph, but hey, as far as I’m concerned, those are facts that didn’t support my premise of great gas mileage and saving oodles of money, so I didn’t bring them up. Fortunately I bought the motorcycle before gas prices dropped below subsidized milk prices or I’d be driving a Moped with a ladder rack. The fact is that government needs to stop creating hype and shoveling tax dollars to the big companies that have no incentive to save the average guy any money, but who do have an incentive to crush more efficient small businesses and innovation. The sad part is that most people in this country don’t even know what side of the issue their President is on, let alone who he is half the time, and they simply aren’t smart enough or motivated enough to pull themselves out of their own ignorance. The result is that they are led like sheep and get sheared every time they pay a telecom or data bill.

It’s time to bring some sanity back to this argument. We all know the 80/20 argument. We can get 80 percent of what we need (notice I didn’t say “what we want” because after all, I may want a Ferrari, but I really need a minivan.) for 20 percent of the cost. Is the last 20 percent of what we want worth paying 4 times more for? Sometimes it is. But if the argument is 90/10, 95/5, or even 95/3, would any logical person even think of paying 20 to 30 times more for 100 percent of what they need and they won’t use it for 5 to 6years? Of course not, hence, the nature of the insanity of subsidized bandwidth with fiber or even forcing companies to build out infrastructure they don’t need to for several years.

If Cox, Xfinity, and others, can theoretically deliver 300 Mbps over cable today, why do they need to put fiber in? They don’t, but there’s pressure on them to do it. At $3000 to $10,000 per house or more, it’s just nuts. If I’m a cable company today, I’d tell the FCC to stuff it in their ear. The cable companies aren’t the ones getting the subsidies anyway. In Arizona, Cox and Comcast wrote a joint letter telling the government to quit giving CenturyLink money. It’s simply unfair.

After bouncing my head off the wall, I realized it’s about money, power, and crushing competition. At every turn, the people who are behind these ideas have their hands out. From fiber pundits, cellular companies, Internet behemoths, politicians, and end users who want to illegally download the entire Sony library in 32 seconds, they all have an agenda. None of them are looking out for the rest of the people — that is, people who need more cost effective service. I’m thinking that giving 98 percent of those users what they need is more important, and is a huge market opportunity.

Here is my agenda. I believe we can deliver 30 Mbps wireless service in urban markets to everyone at a cost of less than $250 or less today for a one-time charge. How do I know we can do it today? Because we are doing it right now. I’ve got users sending me speed tests of 50+ Mbps. And we are doing it with last generation Ubiquiti 802.11n equipment that is more than three years old.

In a week I’m opening up new areas with 50 Mbps using Ubiquiti 802.11ac equipment. They FINALLY got DFS certification (in the meantime, three of my APs started getting their AARP cards). In two more months, we are going to start migrating some of the 802.11n areas with another next-generation product to increase that speed. The plan is to make cable companies sweat and DSL companies to just throw in the towel. I’ll post final numbers in a couple months, once we have everything in place, but it will be a new standard for wireless point-to-multipoint deployments.

VDSL2 is the only tool left in the twisted pair tool shed, but nobody wants to upgrade their copper to make that happen and the wires are getting older and older (.5 Km range for maximum speed). By the way, it still won’t be fast enough to compete with our next generation wireless design (I’m seriously excited about this, can you tell?) and will be too expensive. There are pockets of it here in higher income areas that support Triple-Play.

True story because I just don’t have that good of an imagination: I live in an upper middle class area of Phoenix and I had a CenturyLink representative come to my door two weeks ago. They told me they upgraded their fiber network in the area and I’m now eligible for their new high-speed DSL service: 12 Mbps. I didn’t know whether to laugh or cry, but this is the same company to whom the dolts in various federal agencies gave billions of dollars. Nice job using my tax dollars efficiently, dear government person. You helped bring CenturyLink up to 2008 and dissuaded small businesses from competing.

For fun, in two weeks, I’m going to launch service in an area that CenturyLink just got several hundred thousand dollars to upgrade to 25 Mbps. We are going to undercut them in price and provide way more bandwidth long before it even gets built out. I want to see the face on the salesperson who knocks on that door and says, “Because the government gave us all sorts of money to enhance the pathetic Internet service we have been providing you for the last few years, we can now offer you our government mandated 25 Mbps service for a price that is 20 percent higher than we were charging you before.”

The phrase, “we dropped you a year ago because our service from a competitor is faster, cheaper, and the CEO is much better looking (my wife made me throw that one in there)” is going to cause nightmares for these door knockers. Hey, T-Tommy Wheeler, maybe you should funnel CenturyLink more money because the first $500M isn’t enough to even get them into the current decade.

Wireless ISPs have an ability to hit many urban areas in days rather than years with more than sufficient bandwidth to be competitive. That’s a genie I’d like to see get out of the bottle — thousands of WISPS taking on wireline providers quickly and nimbly while making a mockery of the extortion and payola the government gives to the big incumbents. Ubiquiti 802.11ac equipment can easily deliver the bandwidth to hammer local providers in pockets all over cities or the edges of cities. It doesn’t take more than 10 customers to make a deployment profitable in that environment. From there, you can expand quickly and take them on. Don’t be scared of the 150 Mbps, 300 Mbps, or even 1 Gbps fiber. There aren’t a lot of areas that will have it and even where they do, it’s going to be so expensive, that at least 30 percent of the population won’t be able to afford it. Give the customers 10 Mbps to 50 Mbps for a reasonable price and you will own the area. Keep in mind that you have bigger hammers coming which we will cover as soon as I can. So, what’s stopping you, just get out there and do it.

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