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  • Massive Disruption to the Cable Industry Coming – Part II

    Posted by Carl from Chicago on September 9th, 2014 (All posts by )

    Recently I wrote about the impact to the cable industry that is coming in the form of Microwave Fixed Wireless here.

    While on vacation in Door County I noticed a small store front office in Bailey’s Harbor for Door County Broadband. The first thing I thought of is how would a company like this operate out of a small storefront with just one truck (parked outside)? Then I realized that this firm is the local upstart providing Microwave Fixed Wireless against the incumbent phone / cable company in that region, Frontier. Unlike the local phone / cable company (who really are one and the same nowadays), you can run a microwave fixed wireless broadband company with few employees because you don’t have to pay for all the same physical infrastructure (telecom poles, physical connections) when you are doing a wireless model; you just need to 1) get the physical infrastructure (towers) in place and then 2) hook up the dish in the homes and point it at the tower. This model needs far fewer “boots on the ground” than the traditional model.

    While researching this further, I came across this document called

    America’s Broadband Heroes:
    Fixed Wireless Broadband Providers
    Delivering Broadband to Unserved and Underserved Americans

    This document is clearly biased in favor of the upstart fixed wireless providers, but has many interesting and sourced facts about the industry and is highly recommended reading.

    While wireline and mobile wireless carriers focus on regulatory gaming and manipulation of the Universal Service Fund to benefit their bottom lines, many Americans are left without access to broadband services because they reside in places that are deemed to be unprofitable by traditional carriers. Even more Americans have substandard or overpriced broadband access and no alternatives for obtaining better service because of the lack of competition in the broadband market. It is clear that the current system is broken, and the absence of competition, abuse of USF and the lack of access to critical network facilities for competitive entrants puts our nation into a position of disadvantage compared to other OECD countries.

    Fortunately, a solution for many of these broadband issues already exists and a rapidly growing segment of the country is able to take advantage of broadband services provided by fixed wireless broadband providers. Fixed wireless broadband providers, also known as WISPs (short for Wireless Internet Service Providers) utilize fixed terrestrial wireless (FTW) networks to deliver broadband to unserved and underserved areas of the country, rural and urban, providing badly needed access to broadband in many areas and the competitive pressure to keep prices low in places that are already served by existing providers. The majority of WISPs are privately owned, locally focused and entrepeneurial operations that expand into areas that either do not have broadband or do not have good choices for broadband service. The best way to improve broadband access to unserved and underserved populations in the US is to foster the development of smaller independent providers that can quickly address the needs of their communities using the most efficient technology available.

    There is a significant amount of truth to this story. The government forces transfers from the incumbents to those tasked with providing broadband to underserved areas of the country, and the result is still poor service and high prices to those less-populated areas. Like most things in this world, subsidies and government intervention breed a lack of innovation, high prices, and poor services, while the most important task is to maximize paperwork and handouts.

    When you start to research the net effect of 1) growing competition in the hinterlands provided by these upstarts 2) the cherry picking of high end residential buildings in major cities you can see a potential 1-2 punch for the incumbents. Right now it is a long way from critical mass and today it is still not common for people to “cut the cord” and get all their programming from Netflix / Hulu and other online sources, but every day those options become more viable. This is definitely something to watch.

    Cross posted at LITGM

     

    10 Responses to “Massive Disruption to the Cable Industry Coming – Part II”

    1. Dan D Says:

      The farm where I live is only a mile or so from cable coverage, and three miles from DSL coverage, but that last mile is uneconomical for high capacity lines; I would love to have fiber optic available. Even landline telephone service is static-ridden, an old 56k modem could not connect faster than 22k. Quite a few people live in areas not served at all by cable or telecoms, and generally rely on satellite TV providers like Direct TV and Dish Network, or do without television service.

      Fortunately our valley has available wireless internet, I am about five miles from the two mountaintop transmission towers. While I pay for 2.5meg per sec service, actual connection speeds tend to be around 1.1meg, too slow to play a typical Youtube video without some interruption. Dense fog and heavy rain also slow the connection. Still, wireless broadband has the potential with some technical upgrades to give much better bandwidth than I experience. One problem is attracting the investment in a region where more densely populated but still rural areas have access to cable and other wired connections.

    2. Michael Hiteshew Says:

      it is still not common for people to “cut the cord” and get all their programming from Netflix / Hulu and other online sources

      I cut the cord about 5 years ago. I no longer have a cable subscription, just internet. Basic cable is so bad I never watched any of it, and for anything I actually wanted to see I had to pay hefty premiums. These days, for those few things I want to watch, I buy DVDs or watch it on Amazon. It does disconnect you from pop culture though. When someone says, Have you seen X?, my answer is almost always no.

      BTW, I’ve bought a few cable series on DVD and have really gotten my money’s worth.

    3. Ginny Says:

      I think it depends on your generation and level of saavy or whatever. None of my children have cable, two of them don’t have landlines (the younger two), practically none of my students have either. Most of our friends have cable or direct-tv, one (retired and big movie fans) has both. This is a small sampling but I doubt that unrepresentative.

    4. Will Says:

      It certainly looks promising. We currently have DishTV, so that I can watch various sporting events, and TCM, and really that’s about it. Trouble is, we live in area that experiences a good deal of thunderstorm activity in the summer, and when that happens…no signal. For internet, we have something called Clear, and that seems to work alright, but not so good for video.

    5. dearieme Says:

      My wife and I don’t agree whether we have cable. We agree that we used to have it, and agree that the physical cable still enters the house. I suspect that nothing comes down that cable; she suspects that free channels do. Certainly we don’t pay for it.

      We have fibre-optic broadband but I’ve no idea how fast it is: we’re not much interested in films or whatever it is that needs high speeds. Actually “we’re not much interested in films” is wild understatement: we find almost films to be utter tosh and almost all TV shows likewise. We hardly ever watch the news because our taste for fiction is diminishing.

      We have a landline because we do. We have old-fashioned unsmart mobile phones which were free because they were hand-me-downs from our daughter. We retain our sim cards from the year dot; every few years I stick another £10 of credit onto mine. Our contracts require us to use each the phone at least once very six months. That we manage. Over all the years since I first bought a mobile phone I reckon the capital and running cost can’t have exceeded about $5 per annum. It helped that even that first purchase was free because of the vouchers that came with it, which defrayed the cost as long as I recruited a couple of other people to buy a phone from the same network. Come to think of it, I did so well as a salesman that I also got a case of wine from them! Remembering which, I ought to reduce that $5 p.a. estimate a bit. To approximately zero I suppose. It’s all been rather like magic really.

    6. veryretired Says:

      Cable tv will be the next Blockbuster. It has been a big deal, but times have passed it by.

    7. chuck Says:

      I don’t have cable except for broadband, and don’t have a landline either. I was a bit nervous about dropping the landline, just in case of emergency, but finally got a smartphone with a cheap contract instead. It cost a bit more, about $15/mo, but the maps and bus routes make it worth it, especially when traveling.

      I’ll happily replace cable broadband with fixed wireless broadband if it is cheaper and the speed is decent.

    8. Sgt. Mom Says:

      My daughter and I dropped the cable early last year and went to Roku, because the cost of the TV cable package kept going up and up and up, and we watched less and less of what was offered. Neither of us are into sports, or HBO, or various boutique channels. We kept the internet service, and got a subscription to Hulu, and my daughter has Acorn on Line and Amazon Prime. I can’t say that we’ve missed anything, particularly – and it’s been good fun, catching up on all those programs that we missed over the years when I was stationed overseas. An additional benefit is that we have not seen an annoying commercial or a political commercial in the last year and a half.

      The land-line, we gave up two years before – now we have cellphones that are always plugged in and charging when they are not actually with us.

    9. Kirk Parker Says:

      We have a land line still because of (1) inertia, and (2) emergency services. (I’ve heard a number of disturbing accounts at how the State Patrol dispatch, which is who you get if you dial 911 from your cell phone, has a hard time getting your call routed to your local 911 center if that’s what you need.)

    10. Texan99 Says:

      The cable doesn’t even come to us out here, if you can believe that. No DSL. It’s dial-up or wifi of some kind.