Coronavirus Era Shines a Light on the Importance of Broadband

Broadband and wireless networks have held up quite well during this month of dramatically shifting work and traffic patterns. Some of the stats are otherworldly, such as the 50%+ drop in mobile handoffs in places such as NYC, a near doubling of home streaming and work collaboration traffic, and a 50-60% increase in home voice calling minutes. Kudos are due to the service providers and the FCC for some agile, outside the box thinking, and gratitude is due to the front-line workers who are keeping the networks up and running.

The communications needs during the coronavirus crisis have cast a particular light on the importance of broadband networks. Yes, there has been a marked increase in wireless network traffic, but much of this drafts off home broadband/Wi-Fi. Even the increase in wireless voice minutes (since so many fewer homes have landlines) is using ‘voice over Wi-Fi’. For the most part, home broadband networks have held up pretty well. For the 60-70% of homes in the United States that have a 50 MB connection or better, broadband has met most of those  Zooming and Streaming requirements. Much as we might beat up the cable companies, they’ve done a pretty good job upgrading their networks over the past 3-5 years – albeit with far less fanfare than the wireless service providers. Average home broadband speed has basically doubled since 2015, and most consumers aren’t paying more.

However, these steady improvements have, like so much else in the economy, illuminated the stark difference between the haves and the have-nots. Some 30% of households in the United States are unserved or underserved by broadband, in that they have no access at all, or can only get some sort of crummy DSL service (or worse). I consider anything below a 25 MB download service as inadequate for today’s needs.

There’s a whole other category here, which is more difficult to quantify: the percentage of households who don’t have broadband simply because they can’t afford it. Then there’s the percentage of who pay the $60 monthly average cost of broadband, but struggle to do so – a number that’s sure to increase as the recession deepens. Note that even though broadband service has improved in recent years, the industry in the United States is not at all competitive. Only 50% of U.S. households have a choice of more than one good broadband service, with little prospects for this changing in a widespread way in the near-future.

There have been some important measures and initiatives to address issues of broadband availability/quality/affordability over these past few weeks. Most of the broadband service providers (SPs) have waived data caps and late payment fees, and have said they won’t turn customers’ networks off for non-payment. We’ll see how long that magnanimity lasts. Some SPs have also offered a free or very low-cost entry-level broadband service. Comcast, for example, is offering its Xfinity Internet Essentials service for free for 60 days (it’s normally $9.95) and increasing download speeds from 15 Mbps to 25 Mbps. But, we should bear in mind that the usual 15 MB service is the communications equivalent of the $15 minimum wage: it might be a ‘living wage’, but it’s not enough to live on.

In another promising sign, a not insignificant sum of money has been allocated to help improve broadband in un-served/underserved areas as part of the coronavirus stimulus bill. This should help some of the Wireless Internet Service Providers (WISPs), some smaller/rural telcos, and others who are seeking to upgrade their networks. Laudable though this is, it must be noted that there is no quick, easy or cheap way to get to areas not served by current physical plant. Reaching that last 10% of households is really, really hard. Satellite remains the service of last resort, but the quality ranges from abysmal to inadequate…and is super-expensive. Multiple attempts at a ‘next gen’ satellite service have either failed or fallen under the weight of the enormous capital required, OneWeb being the most recent casualty.

The telecom historian in me remains cynical of the prospects of the ‘stimulus broadband’ dollars producing any large-scale results. Billions of dollars, across multiple initiatives, have been allocated to ‘rural broadband’ over the past ten years, with very little to show for it. It’s a real mystery where some of this money has gone.

Finally, there’s the idea of wireless to the rescue. A significant increase in wireless network capacity is on the way over the next few years, through a series of already completed and upcoming spectrum auctions, in both the high (mmWave) and mid- (sub 6 GHz) bands. This, combined with the spectral efficiencies of 5G (which lower the cost of providing data), put wireless networks at least in the league of being considered as an option for unserved/underserved areas, and/or a competitive alternative in cities, which could lower the cost for consumers. Verizon remains committed to serving 30 million households with its 5G Home service within three years, and T-Mobile as part of its deal to acquire Sprint, has promised to offer a competitive broadband service to tens of millions of households, especially in un/under-served rural areas.

However, what we’ve seen out of coronavirus era usage patterns should give a sense of pause when it comes to the prospects of wireless as a home broadband alternative. Average wireless data consumption (not using Wi-Fi) from smartphones is about 8 GB per month in the United States. Average U.S. household broadband data consumption is about 300 GB per month, and now getting closer to 500 GB with the coronavirus spike. Those looking at the 3-year planning horizon should probably assume household usage approaches 1 TB per month. Even with all the improvements in wireless network capacity and spectral efficiency brought by new spectrum, industry consolidation, and 5G, wireless networks will not be able to support data requirements anywhere near that level. Wireless might be a viable alternative for a 50-100 Mbps plan with usage caps in the 200 GB range. Perhaps at a discounted level to current broadband pricing. A ‘Metro PCS’ for broadband, if you will.   Wireless should be seen as a niche home broadband service, not a broad-based solution or competitive alternative.

During this very long past month, most home-bound folks will say there are four things they wouldn’t have been able to live without: toilet paper (apparently), liquor (50% increase in sales), Netflix, and broadband. The ‘haves’ — those who live in cities and with decent incomes — are well-served by broadband networks. But good broadband service remains far from universal. And it’s big monthly nugget for many. The number of households that that will struggle to pay that broadband bill will undoubtedly increase as the coronavirus economic fallout continues in the coming months. This is something we need to think more about, and address.

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Mark Lowenstein

Mark Lowenstein is Managing Director of Mobile Ecosystem, an advisory services firm focused on mobile and digital media. He founded and led the Yankee Group's global wireless practices and was also VP, Market Strategy at Verizon Wireless. You can follow him on Twitter at @marklowenstein and sign up for his free Lens on Wireless newsletter here.

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