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Transcript: Community Broadband Bits NC Bonus Episode 9
This is the transcript for North Carolina bonus episode 9 of the Community Broadband Bits podcast. In this episode, Christopher talks to Doug Dawson of CCG Consulting about various broadband issues currently in the news and how they have an effect in North Carolina. Listen to the episode, or read the transcript below.
Doug Dawson: People in the rural areas are not working from home because they can't. They can't lock onto a school server. They can't lock onto a business server. We're taking these things for granted in the urban areas. Just since 2017, that gap has doubled in that short of a period of time. It's getting so drastically different that the Internet in those two places is not the same thing anymore.
Ry Marcattilio-McCracken: We're bringing you another episode in our special community broadband bits podcast series, Why North Carolina Broadband Matters. I'm Ry Marcattilio-McCracken with the Institute for Local Self-Reliance in Minneapolis, Minnesota. North Carolina Broadband Matters is a North Carolina nonprofit. Their mission to attract, support, and champion universal availability of affordable, reliable, high capacity Internet access. The group has created the North Carolina chapter of CLIC, the Coalition for Local Internet Choice. ILSR is working with North Carolina Broadband Matters to produce this series, focusing on issues, affecting people in North Carolina that also impact folks in other regions.
Ry Marcattilio-McCracken: We're joined today by Doug Dawson, president of CCG Consulting, a veteran advisor to small public and private telecommunications carriers, and an experienced, thoughtful voice in the broadband space. During their discussion, Christopher and Doug give the various levels of government across the United states a report card for their connectivity efforts during the pandemic, and how the Coronavirus has brought into focus the two digital divides facing our communities today. They talk about what the broadband gap looks like between rural and urban areas, and the problem of adoption versus access for North Carolina communities with connectivity obstacles.
Ry Marcattilio-McCracken: Christopher and Doug also talk about whether Space X or other satellite providers are a solution to North Carolina's rural broadband challenge, which leads them to reflect on the problem of the FCC's current minimum broadband speed definition as a baseline for dispersing funds to providers connecting communities over the next 10 years. Now here's Christopher, with Doug Dawson.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcast bonus edition. This is another in our ongoing series from NC hearts Gigabit, which is sponsored by NC Hearts Gigabit, a local organization, part of NC Broadband Matters in North Carolina, which has really focused on making sure that all of North Carolina is well served by Internet access. So we've been having a series of conversations that illuminate different aspects of what it's going to take to get done.
Christopher Mitchell: Now we have Doug Dawson, the president of CCG, to join us to talk about a number of topics that are important in the news right now/ Doug, welcome to the show.
Doug Dawson: Thanks, Chris. I guess this is our third, fourth or fifth time we've talked.
Christopher Mitchell: Right. I think this might be the first bonus one that we're doing together.
Doug Dawson: Yes, indeed.
Christopher Mitchell: But just for background's sake, tell us just briefly about CCG, but also your involvement with NC Broadband Matters.
Doug Dawson: CCG Consulting, we're a full service telecom consulting firm. You name it, we do it: engineering, we do business plans, we do full regulatory compliance, we do back office software billing systems, we help people raise money. If someone needs help, we do all those odd things consultants do when someone calls and goes, "My 30 year old piece of gear is not working. Can you help?" So it's actually kind of fun stuff.
Christopher Mitchell: Get out the 3D printer.
Doug Dawson: Oh yeah. So I've been on the board of NC Hearts ?Gigabit or Gigabit Matters for, I guess, heading towards my second year. I moved to North Carolina about three years ago and decided that I needed to reach out to my own state, because North Carolina has as many broadband problems as all other states. A lot of our state has no good broadband.
Christopher Mitchell: And you have worked now with more than a thousand clients, I believe?
Doug Dawson: More than a thousand clients, yes. We've been around now, this is our 23rd year. So, yes.
Christopher Mitchell: And you're well known in the municipal space, but you've worked mostly with private companies, and I just think it's worth noting, you've you'll work with anyone that's trying to solve a broadband problem, it seems like.
Doug Dawson: Except the big companies. We don't work for AT&Ts and Comcasts, but yes, most of my clients have been telephone companies, cable companies, yes. [inaudible 00:04:15] co-ops.
Christopher Mitchell: So, as we talk about the pandemic, now we're sitting here in the end of June recording this to be released in early July. We're seeing the rising rates in a number of states, but I'm not going to cede the question. I'm just going to ask you, what do you think about the reaction of government, and include both the state of North Carolina and the federal government, regarding broadband policy since COVID-19 became an issue three months ago?
Doug Dawson: Well, all the short term work has been put into what's called CARES Act funding. The feds gave CARES Act out to each state and they gave a very short list of ways the states could use it. They had to spend the money by December 31st. It has to be spent on items that are of an emergency nature caused directly by COVID. And it was hinted that ... It goes for a number of areas, not just broadband, it was hinted that states should try to use that to solve some of the broadband problems caused when we sent all the students home.
Doug Dawson: Every state is attacking that in a different way. Me and Dana, who you know well, who now works for CCG, actually were hired by the-
Christopher Mitchell: Dana McKenzie? What a hire.
Doug Dawson: We worked for the state of Vermont to help them figure out how to handle their cares money. In doing that, we talked to, I think, 13 or 14 other states. Everyone is tackling it in a different way, and it's very interesting to see them do it. What everybody wants to do with that money is to run out real fast and fund broadband, but it doesn't really fit those very short list of requirements, and unfortunately, that money can be taken back if spent poorly. There's a callback provision. If we recall from 2009, the government's going to take great glee in claiming that they were able to call back a lot of this emergency money that wasn't really needed.
Doug Dawson: States are faced with the dilemma of doing it in the very narrow definition, or doing it and being bold and going for it. We see both of those reactions. Some states are going for it. So almost all states are doing things like putting Wi-Fi on school buses and parking them in rural neighborhoods. They're putting in more rural Wi-Fi hotspots. A lot of states, Maine as an interesting one. They bought a Verizon hotspot plan for every student who didn't have a home broadband connection that expires on December 31st, and I think they're giving them all back.
Doug Dawson: I was like, "Why didn't you at least keep the hotspots?" And then, of course, if school goes back in, it's like, well, you didn't really need those, except you do. We know that students need broadband at home anyway. So we're seeing a lot of temporary solutions. There's probably not a lot of good longterm stuff coming out of that cares money. It's very short term stuff, so.
Christopher Mitchell: Let me ask you, A lot of the states are definitely ... Let me put it this way: in a lot of states, we are seeing the Wi-Fi on school buses and things like that. In Maine, the state has definitely taken bolder action, and Maine has long been a state that's well organized for that. I don't get the sense that many states, including North Carolina, that the state has actually done very much. It seems like it's more local governments that have been stepping up to do that sort of thing.
Doug Dawson: Well, what some of the states did was turn around and hand the money down to counties and cities. Some states made the decision at the state level. Other ones just said, "This is too overwhelming for us," and they passed it down as block grants one layer lower. That's why you're seeing some states where all the activities coming local. They said, "Look, you all know locally what you need." Interestingly enough, the local folks don't know what they need.
Doug Dawson: The typical county commissioner has no idea what he needs for broadband if he's not done a broadband study. They're like deer in a headlight over this issue. If you live in a place like in West Virginia where there's not any real ISPs, what do they do? You can't even give out hotspots when there's nobody to supply the broadband, so it's had some very big challenges for some parts of the country.
Christopher Mitchell: One of the things that we have heard is that broadband is more important now than ever.
Doug Dawson: That we've heard from everybody, yes.
Christopher Mitchell: I've been trying to figure out how to wrestle with understanding this new reality, because it seems like this would be the time for people like me to have the people suddenly interested in hearing about the solutions we've been putting forth for a long time. But I'm not really seeing that. I just hear people talking about how it's important, and I don't really see it reflecting in new priorities from any level of government, really.
Doug Dawson: Yeah. Well, at the federal level we see basically every other Congressman putting his name on a bill for a different solution. So at some point, hopefully, they pull those all into one, because they compete like crazy with each other. But most of those do not look like they consulted any experts. Some of the things they're proposing, they have these giant flaws in them. So hopefully, before those things become law, if any of them do, they go get some advice because you can't just throw money at broadband. You've got to do it the right way.
Doug Dawson: We've known for years what the right way is. The states ... You're in one. The state of Minnesota has had a state broadband grant program. All they needed was more money. They know exactly how to solve the problem. They've been getting $20 and $30 million a year. That's a 100 year plan. That's not really going to help very much, right? Give more money to that plan and we can get things done. But a lot of states don't have anything like that.
Christopher Mitchell: Right. Now, I guess I'm curious. One of the best things that I see coming out of Congress on this issue is that we see a lot of talk around getting rid of the barriers that states have put up to stop municipal networks and partnerships. And now also language to stop some of the laws that hinder co-ops, particularly Kentucky and Nebraska seem to be really hindering co-ops. So, that language to me seems like a no-brainer.
Doug Dawson: Yeah. Several of the bills that have been introduced into the house have that language in it that eliminate all barriers, period. It doesn't really matter who steps up. In some places, the government's the only one who can stop. We've had this crazy idea that somehow the public sector would come and fix everything, but there's large parts of the country where there is no public sector. If there's not an ISP within 500 miles of you, who's going to come and help you? It takes all hands on deck. We've known that for years too. Everyone's got to have their own solution.
Christopher Mitchell: Yes. Yeah. That's something that I've tried to make more clear is that we're not here to say ... People know my bias is toward community solutions, but we're not here to say that that should be the only solution.
Doug Dawson: Well, and I have to say there, again, I've worked for heading towards 400 different municipalities now, counties and cities, and the vast majority of them have no desire to be an ISP, but they have a desire to throw money in to help solve the problem. And a lot of states, they can't even do that. Certainly, I am not one to tell a city, "You have to be the one to do it." Sometimes it's the only choice. But usually there's options. And cities, if you don't want to be an ISP, you probably shouldn't be an ISP. It's a really good sign that you're not ready to do that.
Christopher Mitchell: Yeah. It's hard for people that really want to do it, for those whose heart isn't in it. That's why, in North Carolina, we believe that we should have the ability of any city that really wants to pursue the Wilson solution, they should be educated on it, and they should have the right to do it, which is blocked to them. But in reality, if North Carolina had broader freedom for local governments to solve this problem, most of them would not use the Wilson solution, they would want to work with a local ISP.
Doug Dawson: There might be five or six, and there might not even be that many. I don't know why the ISPs are so afraid of it. There's not many folks who are going to do what Wilson did. It's just not that common of a solution. It takes a very brave city, and Wilson was in the right economic space. Their downtown was a ghost town. The city had gotten to that point because it used to be a tobacco farming area, and any industries they had left. They had a vibrant set of residential housing, but they had no jobs anymore. So that was their only solution that they could find. But there's not many cities that are going to be exactly in that same mode.
Christopher Mitchell: So in North Carolina, there's two proposals that I want to run by you. One, you've written about on your pots and pans by CCG blog, which is must reading for people that are interested in this stuff. North Carolina has a grant program, not unlike Minnesota's in some ways, that puts money into local private solutions to solve broadband. Some of that money can also go to the big ISPs as well, but it's called the GREAT program. And it seems like it's maybe actually getting a little bit worse over time, rather than improving. What is the nature of the GREAT program and what have you identified in terms of things that are holding it back?
Doug Dawson: Well, first off, when you call your grant program GREAT, it ought to be great. That was a pretty bold name. It's the only one in the country that has that proud of the name, right?
Christopher Mitchell: Right. Minnesota is border to border, which is also bold, but also-
Doug Dawson: Yeah, that's pretty bold.
Christopher Mitchell: It's not great. Calling it GREAT is right up there with utopia. You're asking for trouble.
Doug Dawson: Yeah. First off, it's only in its second year, so it doesn't have a long history, so this is a fairly new grant program. The problem they ran into right off the bat in the first year, is they awarded some grants and then post grant award, they came back and layered on a requirement that the winner of the grant had to be able to guarantee the funding for 100% of the grant, including the half that the state was giving.
Doug Dawson: So that's almost impossible to do for most ISPs. First off, why would you guarantee the half the state's giving you? Is the state not sure that their money is going to show up? Very interestingly, and I don't know what happened behind the scenes so I can only speculate, but that requirement popped up at the same time that the FCC tried to layer that requirement onto the RDOF grants at the federal level.
Doug Dawson: If you recall, that got killed within 10 days. Everyone in the United states screamed, "Are you crazy? You can't ... " The FCC wanted ISPs to get letters of credit, and they didn't know what a letter of credit is. A letter of credit is a loan. The banks actually have to set the money aside. The North Carolina one says you need a letter of credit, or you need one of the owners to pledge. That's the same thing as a letter of credit. You actually are putting your house and your home on the line to pledge for that grant. That's just a drastic thing to ask somebody to do.
Doug Dawson: So, several of those grants ended up getting canceled. They never got built because those were not in the original grant rolls, but then after they won the award, they said, "Oh, by the way, we have this new requirement." Now here in the second year, that is now one of the grant requirements, so a lot of those ISPs who didn't win the first time are not bothering to apply anymore. That money is only going to go through the richest ISPs. That's simply the result of that. As long as those ISPs build a good broad band, I guess that's okay. But it's certainly cut down.
Doug Dawson: Unfortunately, in North Carolina, there's broadband problems everywhere, but the very worst is at the far East and at the far West, and that's where the little ISPs operates. So they've sort of shut those guys out and those are the folks who are going to crawl through Appalachia with little pockets of wireless solutions, which is the best you can do here. The big companies aren't trying to solve this stuff here. So they've effectively cut out a lot of the people who would be bringing solutions. It's just, why you would limit anybody is beyond me because those funds were not at risk. The other states don't do that. We know that when people win these awards, they build what they're supposed to build.
Christopher Mitchell: Well, I think from a business perspective, for someone who doesn't have an MBA, it's worth explaining what that means. What it means is that, if you have $10 million dollars available to you to build a network, the state is basically asking you not to build as much network as you can. It's saying you need to keep a bunch of money aside for no reason except for the state is requiring you to. And small providers, they aren't doing that. When I look at the small providers that I'm familiar with, if they have a cent they can put into a network, they're putting it into the network.
Doug Dawson: Well, when you say small, there's ISPs with 20, 30, 50,000 customers who have a million dollars at most in the bank. They can't do what these grants are asking because they spend it all. The government has preached for years, the private sector needs to take care of broad band. They're out doing that, so they don't have any money in the bank. They spend it. Every nickel that comes in, they spend it. You're absolutely right. It's very difficult for the folks to do that. So it's just simply is an unneeded hindrance. My guess is that came from the big ISPs that got layered on. I don't know that for a fact. That's just a guess.
Christopher Mitchell: But that's the pattern. Let's just be clear.
Doug Dawson: That's the pattern.
Christopher Mitchell: I don't want to make this partisan because anyone who knows me knows that I have plenty of the vituperation for both the Democrats and the Republicans, but the Republicans that took over North Carolina in 2011 have entered in and just basically done whatever the big cable and telephone companies wanted. There's been very little push back.
Doug Dawson: I have to say, it goes way back beyond that. The legislature in North Carolina has been owned by the big ISPs for my entire memory, so it goes way back before 2000.
Christopher Mitchell: Sure. Well, I think that's ... We did the podcast, we did two hour coverage with Jack Cozort and Katherine Rice talking about this and identifying how, when the Democrats were in charge, Time Warner cable did the statewide franchising. That was a process that really rolled local rules and local authority. But they did have the sense not to let AT&T and Time Warner cable restrict competition in the way that, in 2011, the Republicans did.
Christopher Mitchell: So it seemed like there's never been a good time. I'll just say that if anyone wants to see Democrats doing AT&T's bidding as fast as possible, he should visit Sacramento someday, or Madison in Wisconsin. It's incredibly frustrating. That leads us to the second bill that I wanted to ask you about, which is, it looks like now ... And actually, we saw a Washington Times editorial from a North Carolina lawmaker, who I don't know if he's just trying to try out for something, but he's making the case that the state should give a bunch of money to Space X for a satellite based system.
Doug Dawson: Right. Two and a half million dollars, yes.
Christopher Mitchell: I don't like to personalize this to say like, Oh, he's giving money to Elon Musk. But when the state is desperate and looking at ... Every state is very, very worried about future revenues. To be talking right now about giving money for satellite based service, doesn't make a lot of sense to me. What's the plan there, and what's a critique of it?
Doug Dawson: Well, you've got to remember that two thirds of all bills that are introduced are to please a donor. I don't think that he probably expected that bill to pass, but you never know in this crazy state. So obviously, Elon has been throwing money around here, and some of his biggest proponents in the federal Congress happen to be North Carolina Congressman. So, I think that's where that came from.
Doug Dawson: Space X may never have a broadband customer. They are far away yet from actually being a successful company. They have to raise something like another eight or $9 billion dollars to make this work, and that may never happen. All their big financiers have gotten cold feet and backed out, so there's no one writing big checks to them right now. Why a state would give money to an ISP that doesn't exist is the big question.
Doug Dawson: That little amount of money makes no difference to Space X. What if they never have a customer? On top of that, even when Space X has a customer, they've gotten approval to have one million licenses nationwide for ... Because they have a limit on how much and what they can move up and down. It's not unlimited. And so, if they only get a million customers in the United states, that doesn't begin to touch the rural broadband gap. That solves maybe a fifth or sixth of it.
Doug Dawson: It's not going to be this wide solution. You look at Appalachia here, you have to realize now, if you are in a southern place like Arizona, and you're a flat place, one of those satellites is in the air for about 90 minutes over you. The further North you go, and that's a shorter amount of time, and then if you live anywhere where it's hilly, now the hills block off part of the time you can see the satellites.
Doug Dawson: If you live in Appalachia, you might see that satellite for five minutes. I don't know if he can put up enough satellites to serve Appalachia. Satellites would have to be 20 in the sky at the same time in order to serve a house in these valleys in Appalachia. Fact is, it's probably not coming here. It's probably never going to work in these kinds of places ever, because it's just the wrong solution, because you can't see the satellites well enough. Not to mention the trees. You'd have to cut down on all the trees, literally. So it's a crazy idea. I hope that Elon Musk makes it work. I'm certainly not against it. We don't know what his fees will be. We don't know what his prices will be. I think he's going to charge high prices.
Doug Dawson: I think he's got to cherry pick and I would if I was him. Now rural folks we'll pay it, but because he's only going to serve a percentage of them, they're going to be competing to get it. It's not going to be the panacea that everyone's talking about. I just saw an article yesterday from Canada, and they've been talking about the exact same thing, how he's going to solve it. They're all going, "Folks, you realize you can't see those satellites from Canada?" He's not solving any of their ... He's never asked for a license there. It's like, no, he's not coming. Even if he launches all 4,000 of the satellites, of which he now has 423. He has a long way to go.
Christopher Mitchell: Well, I think it's worth noting though, people may listen to you now, and in a few months, I think we're going to start seeing stories from the early beta testers about how this is the greatest thing since sliced bread.
Doug Dawson: Of course it is. There's going to be one customer-
Christopher Mitchell: Exactly.
Doug Dawson: ... on one satellite for 20 minutes and he's going to get two gigabits, because that's what they're going to force for the beta test. That's not what happens in real life. I remember when the very first 3G cell sites came in, and they put them in, in DC. That was where the very first test site was. I lived there at the time. The first guys who got on there thought it was the most amazing thing because there was one guy on a cell site. It's like, yeah, it's pretty darn good. But once you put 10,000 people on it, it became pretty crappy, and that's exactly what will happen to the satellites. So yeah, the beta test will look amazing, but it won't have anything to do with real life.
Christopher Mitchell: That's what I'm expecting. That's what I want to try and inoculate people about. I also think that one of the things is even if the recurring price, the monthly price is reasonable, let's say $60 or $70 a month. I think it would be curious to see what the install fee is, because the kind of equipment that you'll have to have, to track all these different satellites to be pointing in the right direction and stuff like that, it seems to me like that's going to be something that'll be costly to get set up from the first time.
Doug Dawson: He hasn't said what the price is, but I'm guessing that with mass production, it'll just be two or $300 bucks is my guess. But who knows. Yeah, who knows.
Christopher Mitchell: So let me ask you about the digital divide more generally. I feel like saying the digital divide sets us up for just arguing about what it actually means, But, let's say two digital divides: rural versus urban, and then also adoption versus people who are online. The people who are online versus not regardless of whether it's available. Are these problems getting better?
Doug Dawson: No, they're both widening like crazy. The urban/ rural one is undergoing a transformation that's almost too big to grasp. There's folks in rural areas, we do speed tests and we do studies all the time, and you'll go to whole counties where nobody in the whole county is getting more than five megabits per second. Some of them are getting a fourth of a megabit per second, barely better than dial up.
Doug Dawson: So, those folks have been locked in those same speeds ... Well, they haven't been locked in them, those speeds have been getting worse, because during COVID, when more people came home to work, they actually degraded the networks by overloading them, so your DSL one from five to three megabits per second. So their speeds are really lousy and they're just sitting there and they're not getting better. Meanwhile, in the cities, we've had a giant transformation of broadband speeds. In the last three years, all the cable companies have unilaterally increased their speeds to one to 200 megabits per second.
Doug Dawson: One day, two years ago ... I have Charter. Charter raised me from 60 to 135 megabits per second, same price. It just showed up one day. That's happened nationwide. So what we see now is the national average broadband speeds are over a 100 megabits per second, and that includes bringing in the slow people who have three. So, that's the average.
Doug Dawson: So the cities have gotten so much faster than the rural areas that the gap is just gigantic, and what they can do with it is now drastically different. That can be expressed in terms of the amount of broadband that homes use. So, at the end of 2017, the average home for all of United States .. and this was measured, black company called Open Vault, and they have equipment in all the ISP hubs and stuff, so they're able to measure these things ... 215 gigabytes is what the average home used in a month, combining upload and download. Almost all of that is download.
Doug Dawson: By the end of 2019, that had grown to 344 gigabits, 215 to 344. At the end of March of this year because of COVID, that had grown the 405 gigabytes that. Somebody on a one megabyte per second rural is not even getting to 215. You can't use that much broadband in a month. So those folks are limited to very basic: emails, trying to do some online shopping, maybe on days when all the Internet gods line up correctly in the right direction.
Christopher Mitchell: Right.
Doug Dawson: All those things, right? Meanwhile, in the cities, folks are really, they're figuring out how to really use their broadband. Houses are just running three, four or five, six, seven devices at the same time. They're doing big broadband applications. People in the rural areas are not working from home because they can't. They can't lock onto a school server. They can't lock onto a business server. They're not doing Zoom meetings. I've been doing zoom meetings in rural areas. You get seven people on the screen who are in towns and everyone else is a call in because they can't make that connection.
Doug Dawson: So just very basic stuff doesn't work in the rural areas, and we're taking these things for granted in the urban areas. That gap ... Just since 2017, that gap has doubled in that short of a period of time. It's getting so drastically different that the Internet in those two places is not the same thing anymore. It's simply not the same thing. We can't say that somebody who's got a 10 megabit connection in a rural area has the same product as someone who's got 150 megabit cable connection. It's just not the same product anymore.
Christopher Mitchell: One of the ways that we see that is, when we design websites ... and I used to do web design quite a bit and server administration type stuff, so I still pay attention to this stuff. When we're putting up images now on muninetworks.org for feature stories, we have to scale them large so that they will look nice on a 4K screen for some someone that's really advanced and using the cutting edge technology.
Christopher Mitchell: And then that same image is then forced down the pipe of someone who's trying to view it on a three megabit connection, and they're just choking on it because we're sending so much data their way, because that's the way the pages are optimized.
Doug Dawson: This is a flat website. It's just an article. I have a blog. People ask me to email them copies of my blog all the time because they can't look at it. They go, "I heard you had this article on so and so. Could you send me a copy?" Because their home broadband connection is ... or even their business broadband connection. You got to remember, I just did a study in West Virginia, rural libraries have three megabit connections. It's like, nobody there in the whole county can do anything. It's just unbelievably terrible. Can you imagine a whole county cut off from the Internet, basically? That's all over the country. There's just so many places like that, it's just unbelievable.
Christopher Mitchell: I think the better map is just, who is your provider? If you have a local company, even if you're in a very low density area like North Dakota, it's not just that ... It's not like the federal government said, "We're going to make money available only to cooperatives in North Dakota." They made money available to the United states, and the cooperatives in North Dakota took advantage of it.
Christopher Mitchell: But if you lived in the Century Link area, or before that a Quest area, or an AT&T area, you just didn't get anything. But the point is, I feel like in many ways, we talk about this as though it's a rural problem. But fundamentally, if you break it down to areas of rural America that have local providers versus rural areas that had AT&T as the telephone company, that's the divide.
Doug Dawson: Yeah. We have four or five counties in North Carolina who have broadband everywhere. Wilkes County is a very good example, because they had a co-op there who built it. If you're the county next door, you're really jealous cause they still have three megabit DSL.
Christopher Mitchell: Right. The one thing I wanted to note also is just that, to some extent, I don't think saying three megabit or a quarter megabit even gets at it, because those connections typically reset regularly. You have all kinds of reliability issues. So, even if you wanted to do something, it's not just a matter of saying it's going to take longer. You may never be able to handle a longer transaction because the connection won't stay alive long enough.
Doug Dawson: Well no, if you have DSL on a really bad copper network, just as you're dropped, your house flips into wind to cut you off.
Christopher Mitchell: As a final issue that I want to talk about, let's just talk about moving forward. We see a lot of state broadband programs, even ones that are using CARES Act money, and they're requiring connections to be 25/3 at a minimum. The federal government with the rural digital opportunity fund, putting $20 billion dollars into rural broadband soon, will allow people to bid to provide 25/3 service for the next 10 years.
Christopher Mitchell: So 25/3, you've done a lot of work on this. That's the 25 megabits down, three megabits up, was set five years ago, more than five years ago, which means the research was done seven years ago as to what the proper speeds were. Now we have COVID-19 where we have multiple video feeds at home from parents and kids. So, what is a good minimum speed that we should be looking at now, and how do we think about calculating that?
Doug Dawson: Well, if you just ... There's two or three ways to look at it. The very most conservative way would be to say, "We know that broadband usage has been growing roughly 21 to 24% a year for the last almost two decades." And if you assume that the 25/3 was a good definition, just applying that, that has nothing to do with any real life experiences. That alone would get you somewhere today, between 60 and 80 megabits per second. We all know that the three megabit upload was in a different time and place where people didn't use upload. It's got to be way faster today because all these things we just talked about, schools and Zoom and everything-
Christopher Mitchell: Not to mention the Ring doorbell, all the FaceTime, that's all after this research was done.
Doug Dawson: That's all upload, that stuff, right? But if you start looking at what houses are really using, I've talked to houses who have a 100 megabit connection who ran into trouble during COVID. So the fact is, that's probably the minimum speed today. But if you're getting a federal grant to build, quite honestly, if you look forward to six years from now when they have to finish that construction. Do that same math and trend it out, it's about 250 megabits. We shouldn't be building anything slower than that with federal money, because anything slower than that is not going to feel adequate by the time it's finished.
Doug Dawson: If you build today and you built a 100 megabit network, your customers are going to be very happy. They're not going to be happy a decade from now. A lot of them will, but a chunk of them will not be happy a decade from now. We are now ... Here's what an amazing statistic that people are talking about. 11% of homes in the US now have fiber. That's what's growing and that's what's really driving up the speeds. The national penetration rate of gigabit connections is now seven and a half percent.
Doug Dawson: We're now developing, for the first time, applications that really use that much broadband. Those folks are going to do things that nobody else can do. I won't be able to do them. You have cable at your house, and I'm on Charter. The fact is, we won't be able to do the things that those folks are going to be able to do. They are going to finally be able to do telepresence, where I can have this meeting with you today, and on today's bandwidth, you would be a little fuzzy. You would be sort of a transparent guy sitting in the room with me. But it would be kind of cool, and it would look like you, and you would move. In another 10 years, it'll look just like you. I'll be able to tell it's not Chris enough. That's something we were promised by AT&T in about 1980. Fact is, it's not possible.
Christopher Mitchell: I don't remember that so well in the moment, because I was two.
Doug Dawson: Yeah, well, I'll just remind you that we were promised that. The fact is, those kinds of things are now becoming reality. That leads literally to the living room Holodeck. That's where folks are headed. But the business applications are the important ones. I don't know about you, but I'm going to be hard pressed to be talked into getting to an airplane after COVID's over. It's like, I'm not flying somewhere for a one hour meeting anymore.
Christopher Mitchell: I've been saying that too. I was trying to imagine what would get me out of my city on an airplane. I used to travel every other week. I'm sure you traveled a lot more than that, but I've traveled 20 or 30 times a year, and I can't imagine ... In 2021, I'll reconsider. But until then, I can't imagine traveling right now.
Doug Dawson: Yeah, no, I've traveled 50 to 70 times a year for 25 years. I have a lot of miles.
Christopher Mitchell: Yeah, I know. That's the thing too is I've racked up some miles and I was looking forward to some family vacations, but I have all of our grandparents for my son are alive and at risk, so I'm not going to be the one traveling around.
Doug Dawson: Right. So, the answer is, if you're going to build networks, you have to build them for the future needs, especially with money that's going to give you six years to build them. The 25/3 is already obsolete. It's completely obsolete. Now, I say that and that poor guy who's got the three megabit connection is thrilled to get the 25/3 for about two or three months, until he tries to work from home and it doesn't work. And he's like, "Well, this isn't that good."
Doug Dawson: So as soon as they actually try to use it, they will find themselves just as unhappy with that within a year as they were with the three. But at least two of them can get on the Internet at the same time. I've talked to so many families who, during COVID, had a schedule in their house. You can work on your schoolwork from 10 to 11, and then I have a business meeting, and one person at a time. That's not a way to live.
Christopher Mitchell: Well, I remember when FCC commissioners like Michael Riley were defending the 10 megabit by one megabit, which I think was a decision made before his time. But he's still defending it in terms of the idea that we should get people a Chevy before we get them a Cadillac. And the problem is, is that if you spend all that money getting people something that doesn't actually work, it doesn't necessarily put you closer to the next goal.
Doug Dawson: Well, that didn't get people a Chevy. It upgraded people from only having a front bumper to having a rear and a back bumper. They still were missing the car in the middle.
Christopher Mitchell: Right. But there's a lot of places to go. But I do feel like people who are not technical, one of the things that I've always appreciated about you is that you're a technical person who can talk to non-technical people. But putting money into a 25/3 connection doesn't mean that we're closer to a hundred megabits.
Doug Dawson: No, if that technology can't be upgraded, then we're not one bit closer. And unfortunately what's going to happen is, the FCC is now going to say, "That geographic area's solved. We're not giving them any more money." That's the bad side of that. They're saying that for areas where they gave the money in the reverse auction to the satellite carriers. The fourth biggest winner of that auction was Viasat. They brought nothing new. They've been available for years. It's like, anyone in those areas could have bought it. They didn't buy it because they hate it.
Doug Dawson: Everyone in the Rory has tried satellite once and went, this stuff is horrible, and they got rid of it. We don't find more than five to 10% penetrations in rural areas on satellite, and those folks hate ... Not one of them says a good thing about it. And the federal money is letting them in these auctions. This is insane. They do have fast speeds, but the fast speeds are no good because their latency, which is the delays, are so bad that you can't do Zoom on satellite. They'll tell you you can, but try to do it. You cut off every three minutes.
Christopher Mitchell: Well, if you do a half hour Zoom, you're probably cut off for the rest of the day the way their bandwidth caps work.
Doug Dawson: Right, that's true. Yeah.
Christopher Mitchell: Well, there's a lot of things to work on, but I'm hoping we gave people some more insight into some of the challenges, how that's changed a little bit with COVID-19. Doug, I really appreciate your time to share your wisdom with us.
Doug Dawson: Well, it's always good talking to you, Chris.
Ry Marcattilio-McCracken: Thanks for tuning into this episode in our Why North Carolina Broadband Matters podcast here, and for listening to the Community Broadband Bits podcast of the Institute for Local Self-Reliance. Remember to follow Christopher on Twitter. His handle is @communitynets. If you follow @NCheartsGB on Twitter, you'll tap into all the North Carolina Broadband matters material. We want to thank Shane Ivers at Silvermansound.com for the series music, "What's The Angle?" licensed through creative commons. We want to thank you for listening. Until next time.
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