Signals & Bits
Signals & Bits
Sorry SpaceX and LTD, USF Firestorm Begins, and Pumpkin Spice Takes Over.
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Transcript

Bernie Arnason

Welcome to “Signals & Bits,” a podcast where Bernie Arnason, editor in chief of Telecompetitor breaks down some of the most important news coming out of the broadband industry. We’ll keep it short, and to the point. Let’s dive in.

Hello, friends, and welcome to the latest edition of “Signals & Bits.” Bernie Arnason here, and I’m on my way out the door for a couple of weeks of vacation, hopefully, to recharge the batteries. But one quick edition of “Signals & Bits” before I break out the fish and bro. So, let’s get after it. Big story this last week is the FCC’s rejection of SpaceX and LTD Broadband for over $2 billion in RDOF funding. Now, as we’ve been reporting at Telecompetitor, this outcome seemed likely, although, technically, the FCC could have just sat on this and really done nothing. So, kudos to them for bringing some finality to it. That being said, there’s still a bunch of questions this action raises, which I’ll get to in a second. So, where does SpaceX and Elon Musk go from here? Truth be told, it is a bit of a bummer that the company didn’t get a billion dollar windfall from the FCC to help its business model. But I suspect Musk isn’t all that flustered. I mean, in the grand scheme of things, this billion dollar deal won’t make or break SpaceX. It would’ve been a nice to have, but what’s that saying? “Que Sera, Sera” Musk and SpaceX might be a little more concerned about something else that happened this week. And that is a hack that was revealed that gives hackers access to Starlink’s Network through a $25 piece of equipment.

Now, I don’t know all the details and these things change quickly. But apparently, much of the deployed Starlink CPE, it’s susceptible to this hack, giving nefarious players a potential playground to screw with the Starlink Network and its subscribers. Now, to me, the bigger victim here is LTD Broadband, which was a relatively unknown player just a couple of years ago, until it became the largest winner in the RDOF phase one auction, winning over $1.2 billion in potential funding. This company was founded just over a decade ago in 2011, and it has its roots as a fixed wireless provider, serving primarily the Midwest. Now, LTD claims it’s the fourth largest fixed wireless provider in the U.S., although I believe that historical fixed wireless ranking is changing now, now that both T-Mobile and Verizon count hundreds of thousands of fixed wireless subscribers. You have to give LTD credit. They came a bit outta nowhere and grabbed the biggest RDOF kitty out there. That brought a heavy weight of scrutiny, which ultimately took the wind out of the sales and brought this company back down to Earth. I suspect though, we probably haven’t heard the last of LTD Broadband.

Now, as I mentioned, this rejection at the FCC raises a lot of questions. I mean, these two players alone, SpaceX and LTD, made up almost 1/4 of the Phase One $9 billion RDOF budget. That money will now go back into the RDOF coffers, increasing the budget for phase two of the RDOF program, I presume. And that already had $11 billion in it, prior to this. But then again, given all the other rural broadband funding opportunities available today, most of which weren’t available when RDOF was initially launched, does make you wonder what the FCC will do with phase two. Will they go forward as planned? Or does all of this new money out here in the market change that? The other elephant in the room, is there a still a number of large RDOF winners, three in particular, that haven’t got word yet about RDOF authorizations? They include Nextlink, Starry, and Resound Networks who collectively won roughly a $1 billion themselves in RDOF. Makes you wonder, you think they’re sweating a bit?

Okay. Let’s digress my favorite part of “Signals & Bits.” This next observation while it fits into the enough already category. Summer is winding down, and we all know what that means, right? Wait for it. It means the scourge of pumpkin spice is already upon us. And for most of us, we’re still wearing shorts. Honestly, I think that should be the rule. We shouldn’t hear anything about pumpkin spice, until you have to wear a heavy winter coat. Anyway, here’s when I realized this pumpkin spice plague has gone completely off the rails. I was walking through the pet store the other day and came across pumpkin spice dog treats. Yes. Pumpkin spice for your dog. Seriously? I mean, is pumpkin even good for your dog? I mean, we humans, have dealt with discourage of pumpkin spice for decades. Now, they’re pulling our dogs into it too? And the sad reality, there’s probably not even any pumpkin spice in the damn dog treats. It’s just a marketing ploy for gullible dog owners who are part of some pumpkin spice cult. Brilliant marketing, I say. Brilliant marketing spin, Alpo, or whoever came up with it. Get ready, ’cause you know pumpkin spice fish food is coming next.

Back to broadband. Another important FCC issue this week. Universal Service Fund or USF Reform is in full swing. Now, in the midst of all this broadband funding, where tens of billions of dollars are being thrown around like candy, we lose sight of the fact that USF has an annual budget of $9 billion itself. Money used to do a variety of things, including supporting rural areas to make broadband and telecom affordable in high cost areas, supporting low income families, supporting schools and libraries, some rural healthcare initiatives, and other things as well. Now, where that money comes from, is what is driving the reform debate. Historically, it comes from a tax, if you will on voice service revenues from interstate telecom carriers. Now, as we all know, voice service, isn’t exactly the most popular service these days, making that funding mechanism unsustainable. The FCC has realized that for some time, and is in the process of trying to figure out how to fix it. And that’s where it gets really interesting. Because get ready for a firestorm. Ideas include having broadband revenues from ISPs subject to USF collections. Or having edge providers like Netflix, Amazon, and Google, pay into the USF fund, maybe in the form of taxes on digital advertising revenues. It should make for an interesting battle, as the FCC is now asking Congress to give it the right authority to do one of the above. This is gonna be a classic example of not in mind digital neighborhood debate with the future of USF hanging into balance.

Now, before I get to Broadband News Hits, some news for airplane nerds, which I do count myself as one. Remember the Concord or supersonic travel? Well, it’s making a comeback in the form of Boom Aviation. Boom is building a supersonic jet that would cut the time to travel, from say, the West Coast of the U.S to China, cut that from 10 hours of flight time to 6. Now, Boom has received orders for its yet-to-be built jet from both American Airlines and United Airlines. And the first flight, is expected to take place by 2026. Cross your fingers. I just hope you don’t have to be super rich to enjoy super sonic travel like what Boom is about to do. Because previously, in order to fly on the Concord, you had to be pretty rich. I mean, you didn’t have to be Elon Musk money rich, but damn close.

Okay, let’s run with the Broadband News Hits of the past couple of weeks. Loman Technologies, the former Century Link has ambitious fiber broadband plans of its own, with its latest expansion targeting 20 markets across 12 states. After a bit of a quiet period, Google Fiber is back. The ISP that helped push gigabit into the mainstream, says it plans to expand into markets across five states with more details to come soon. NTIA doubled its tribal broadband funding program by adding another $1 billion to it. Lumos Networks and North State, two separate brands under one corporate parent, will now operate as just Lumos. The FCC approved plans to expand the reach of the affordable connectivity program, with the launch of the Your Home Your Internet outreach plan. Another new private equity backed fiber broadband Over Builder and Arch Top Fiber launch this week, with plans to serve the Northeast starting in New York state. Post Road Group plans to initially invest $350 million. Georgia announced funding from the treasury’s Capital Funds Project offering $240 million in competitive broadband grants. And lastly, Walmart announced a partnership with Paramount Plus, bringing that streaming service to its Walmart Plus subscription service, which is a competing service to Amazon Prime, which also features its own streaming service.

Well, folks, that’s a wrap for this edition of “Signals & Bits.” Thanks so much for listening. And I’d love to hear your feedback, good or bad. Drop me a line at bernie@telecompetitor.com. Look for new episodes every couple of weeks or so, and use it to get caught up with the most important developments in broadband, plus my snarky observations on a bunch of other stuff too. Thanks again, and as always, check us out at telecompetitor.com. Take care, everyone.

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