Signals & Bits
Signals & Bits
Broadband Growth Craters, Walking on What!?, and ReConnect Revs Up. 
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Transcript

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.

Bernie Arnason

Hello, friends. And welcome to the latest edition of “Signals & Bits”. Bernie Arnason here and hope wherever you are, you’re staying cool and dry, given the crazy weather we’ve had this summer already. So let’s dive in. Something a bit remarkable happened this week in the broadband industry, at least from my perspective. And that’s the cratering of broadband growth from large national cable companies like Charter and Comcast. Both reported their quarterly results this week and collectively, the two companies lost 21,000 broadband subscribers and that’s residential and business subscribers combined. If you just look at residential, the two actually lost 52,000 broadband subscribers. Folks, that’s an astonishing number, considering just last quarter, they collectively added 447,000 broadband customers. So that’s like half a million broadband customers during the first three months of 2022. And a year ago, for the same time period, the second quarter, they collectively added 754,000 broadband customers. So in the span of just one quarter, that’s three months, they’ve gone from adding hundreds of thousands of new broadband customers to losing tens of thousands of customers. That’s an incredible swing and one I didn’t see coming.

Now, we know these companies are seeing much more competition, including from smaller fiber providers who listen to this podcast. Additionally, T-Mobile and Verizon are having success with fixed wireless competition, but I would’ve expected a more gradual decline over several quarters due to this competition. But what we have is an absolute cratering in just one quarter, again, in just three months. It remains to be seen if this is an anomaly or the start of a changing of the broadband industry guard. Now keep in mind from an industry perspective, these two national players have taken the lion’s share of new broadband customers for really as long as I can remember. Now, has that forever changed or is this just a one-time blip? We’ll have to see over the next few quarters, but at least for now, if you’re competing with these two giants with fiber or fixed wireless, kudos to you, because apparently, you’re kicking some ass.

Okay, time for my first digression, which if you’re a loyal listener, you know I love to do. This next observation I put firmly in the why. Why, why, why, why would you do this category? Get this. The beer company, Heineken, which is one of my favorites, by the way. Who doesn’t like an ice cold Heineken on a hot summer day? Well, Heineken is stepping out of their comfort zone a bit and launching a new line of sneakers. Yes, the kind you put on your foot. A beer company launching sneakers, and here’s the kicker, the bottom of the sneakers are filled with, you guessed it, Heineken beer. Not as some clever way to drink it later at some point. It’s sealed in there, you know? Your sneaker filled with beer. Just for some crazy reason, I guess, maybe to have people like me talk about it. The sneakers are called, Heinekicks. According to Heineken, the point is to illustrate the idea of walking on beer. Really? Walking on beer? Now you tell me, have you and your friends ever sat around and wondered what it would be like to walk around on beer? If you have, maybe along with drinking a beer or two, you were smoking something. ‘Cause that’s my question for the Heineken team who came up with this idea. What have you guys been smoking? Anyways, good luck with the Heinekicks, Heineken.

Back to broadband. So I’ve been talking about funding a lot these days, because well, there’s an awful lot to talk about. The latest example is round four of the USDA ReConnect Program, Department of Agriculture, which is about to get underway. Now ReConnect has been around for quite a while and it predates the funding bonanza that has come from the result of the pandemic. There have already been three rounds of the program, and between those previous three and this new fourth round, we’re roughly looking at over $3 billion in funding, which can be offered as loans, grants, or loan/grant combinations. Now this latest round, round four, has a budget of 1.15 billion, and the rules were put out this week. USDA will begin accepting applications on September 6th and the application window will close on November 2nd. The program aims to offer funding for broadband construction in areas of the country that currently lack 100 megabits down and 20 megabits up service. Some notable rules for this round of the program include winning bidders will have to provide a hundred megs symmetrical service to all locations. Generally speaking, applicants requesting a hundred percent grant funding must provide 25% in matching funds, but there are some exceptions. The minimum amount of funding is a hundred thousand dollars and the maximum is 25 million. Although there are some exceptions to that too, particularly for very remote areas. All applicants face a scoring system, which awards points on various factors, including how rural is the area to be served. The economic need of the community, affordability, labor standards. Is it a tribal area? And even, net neutrality. Now by today’s standards, 1.15 billion may not seem like a lot, considering the B program for example, is 42 and a half billion. And the capital funds program is 10 billion, but it’s still a billion dollars and that’s a billion with a B. And that can help a lot of communities get better broadband. Now for more details, check out telecompetitor.com and search for ReConnect or USDA and we’ll have some links there to the actual notice and rules.

So broadband news hits are coming up, but one more thing I’d like to share with you first, this goes in the category of money to burn. So on Saudi Arabia, the ruling monarchy there is toying with an idea to build a skyscraper for the ages. The Mirror Line, as it’s called, will actually be two connected buildings. The height of the Empire State building there in New York and even taller in certain sections, and will be the length of, get this, 75 miles. Yes, a 75-mile-long double Empire State building that they wanna build in the middle of the desert. It would include its own marina in the desert, a sports stadium, and could house up to 5 million people. A high-speed train system would run the length of the structure. Now one challenge is that it will interrupt the flight path of migratory birds. You gotta love the birds. The kingdom’s leadership would like this all figured out and have construction well underway by 2030. The goal is to build something that’s never been done before on earth and rivaling the Pyramids of Egypt. They hope it turns into a global tourist destination. Now some estimates say it could cost $3 trillion and take up to 50 years to build. Well, I guess the oil-rich Kingdom of Saudi Arabia has to find some way to spend all that cash coming from $5-a-gallon gasoline.

Okay. Let’s run with broadband news hits of the past couple of weeks. The broadband speed race was just taken up another notch by Lumen who announced the symmetrical eight-gigabit service is coming to three of its markets very soon. The latest FCC spectrum auction for 2.5 gigahertz spectrum has somewhat stalled after the first round saw it raised $103,000,000. Two rounds later, the number only reached 108 million, indicating there’s not that much more interest.

A Texas jury that found Charter Communications liable for one of its technicians murdering an elderly woman, laid out punitive damages to the tune of a whopping $7 billion. Needless to say, Charter intends to appeal. The NCTC changed its name from the National Cable Television Cooperative to the National Content and Technology Cooperative, indicating a shift away from traditional cable TV content to a more streaming and technology solutions focus.

NTIA awarded the first funds from its Connecting Minority Communities Pilot Program, announcing over $10 million will go to five institutions. And another funding announcement, USDA announced over 400 million in funding from round three of the ReConnect Program, which we talked about earlier, and that will go to 21 companies for projects in 11 states. Altice USA has rebranded its Suddenlink Cable Properties to its Optimum brand. And lastly, Oak Hill Capital, long an investor in the telecom industry, formed and launched a new fiber overbuilder, OmniFiber, that will focus on building fiber networks in the Midwest through a $250-million investment. And they’ve already identified three communities in Ohio that they will start with.

Well, folks, that’s a wrap for this addition of “Signals and 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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